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Webinar report: EU-Asia Trade Relations after Covid-19

17 June 2020

On 17 June the EU-Asia Centre hosted a webinar ‘EU-Asia Trade Relations after Covid-19’ with Helena Koenig (Deputy Director General, DG Trade) and Iana Dreyer, Editor of Borderlex. The event was moderated by Fraser Cameron (Director, EU-Asia Centre).

Helena Koenig noted the EU trade policy review announced by the Trade Commissioner Hogan and said that while it is uncertain what will come out of the crisis, there are issues, such as re-building value chains and the discussion of re-shoring and de-globalization, that need to be examined. We also need to see how to help SMEs to get on their feet and adaptations needed for the development and digital agendas. There is little difference between how the crisis has hit Asia and Europe, but the ability of many countries to support their companies varies. The crisis has shown how interconnected the world economies are and more cooperation and dialogue are crucial going forward.

Iand Dreyer prioritized consistency of the EU trade strategy developed by the review with security, human rights digital and other EU agendas. The Commission would hopefully have an integrated approach that takes account of the other global topics, through mechanism such as the carbon border adjustment. So far, the China and Asia had received less attention than she would have hoped or expected, compared for example to the European neighborhood.

The FTAs being negotiated in Asia by the EU were discussed from various perspectives. On human rights and environmental conditionality, the trade partners understand why the EU integrates them into its agreements. Most countries share the EU outlook and have an interest in living up to international commitments in the context of their domestic debates in the on the same topics. Ms Dreyer emphasized incentivizing compliance over punitive approaches.

According Ms Koenig the FTAs with Korea, Japan, Singapore and Vietnam were working well and an indication of the outward approach of the EU. The envisioned regional FTA with ASEAN still requires progress in many countries before it becomes a possibility. Ratifying a major bilateral FTAs can determine the economic outlook for a decade and makes the necessary changes to the business, trade and legislative environments in the countries. Also democratic and human rights issues can become roadblocks, as happened in the Philippines. On the EU side, the agreements have to be broad to accommodate the many interests of the 27 member states, adding to the complexity.

The negotiations for the EU-China bilateral investment agreements have continued intensely through-out the corona crisis, but many of the challenging parts taking longest to negotiate remain on the table. The EU wishes for China to make bold steps to open its market to the level of openness that the EU is offering. The trilateral discussions with the EU, Japan and the US on steel subsidies also play role in opening China’s markets. The EU hopes to cooperate better with the US on the difficult issues, despite the US hesitations about multilateralism. .

The participants agreed that re-shoring and supply chain re-structruring discussions together with populist sentiments in many corners of the society entail the danger of protectionism. Also the massive recovery funds injected into the ecomomy could end up distorting the markets, if they don’t stay temporary. Ms Koenig underlined that the EU should continue to chip in on the side of globalization in the debate. The open markets with a level playing field remain the best way for forward for the European and world economy.

Full recording of the webinar available here.