Keynote speech State of the Union Conference 2021
By Tom de Bruijn, Minister for Foreign Trade and Development Cooperation
Thank you very much Rem, thank you very much Monika. It is a great pleasure to be back at Clingendael. The weather is beautiful and it is also a great pleasure to meet Clement Beaune. I hope to see you in Paris in summer in the coming weeks and I wish you every success with the upcoming French presidency of the Council of the European Union.
But today’s conference is about narratives, and I would like to share some thoughts with you on a very important topic: open strategic autonomy. You could say that it is the title of a narrative that we do not always know the content of. So let me try to tell you what open strategic autonomy means for me in my capacity as Minister for international trade. Therefore, it is probably a little bit less philosophical but more down-to-earth as trade is. Open strategic autonomy for me is, in short, the EU’s ability to safeguard its values and interests. A balance between an open economy on the one hand and strategic autonomy on the other. And by an open economy I don’t mean a free for all, on the contrary, we have an interest in a predictable and rules-based international trading system. However, a rules-based order is not what we meant by it 25 years ago, or in the good old days of the GATT. In those days international trade was more or less a sort of autonomous system. Its purpose was to form a set of rules with a dispute settle mechanism on the one hand and on the other successive rounds of trade liberalization. It was about market access by lowering tariffs and non-tariff barriers in order to foster economic growth. And of course there were special rules for developing countries.
All these rules are still crucial but at the same time things are changing, or rather, we are in a transition. International trade and investment is not anymore a secluded biotope. Trade has a direct relation with sustainable development and climate change. Even more so I would say, trade agreements are becoming instruments to enhance sustainable development including issues like decent work, the fight against child labor, the protection of the environment and, last but not least, the mitigation of climate change.
This leads to tensions between the old and the new paradigm. As we have seen for example in the controversies of trade agreements like CETA with Canada or Mercosur with a number of Latin-American countries. But ultimately, I see no contradiction. If we want to enhance international trade in order to create welfare, we have to make sure that trade agreements foster sustainable development and help to fight climate change. And vice versa. In pursuing these objectives, trade agreements are a support, not an impediment. This has nothing to do I would like to stress with protectionism, but with creating a better world.
France and the Netherlands are working closely together on this. Recently, we have presented a common paper on it to the European Commission in which we, for example, suggest that tariff reductions could be linked to the implementation of sustainable development commitments. Another example where trade policy would help in the fight against climate change is the proposal within the framework of Fit for 55, the CBAM, the Carbon Border Adjustment Mechanism. In more normal terms, a sort of tariff on the CO2 component of imported products. This measure will incentivize third countries to adopt measures to reduce CO2 emissions. And it is my firm wish that this modernization of trade policy by the EU will also be reflected in the upcoming work of the WTO, the World Trade Organization. France and the Netherlands will plead for that in the upcoming ministerial meeting of the WTO in Geneva. This could reinvigorate the multilateral trading system that is still so fundamental for us and also to foster a level playing field with regard particularly to countries that support their industry by mass state capital.
That brings me to the other component of the balance to strategic autonomy. What do I understand by it? Certainly not a decoupling from trading partners who we increasingly see as a systematic rival. This is undesirable and impossible, it would come at great costs. But, like minister Beaune said, we should not be naïve either. We have to make a solid analysis where we are vulnerable in the international supply lines of important products. The Covid-19 pandemic has taught us a lesson. Once we have made such an analysis, we will have to act upon it. I am happy that the Vice-President of the European Commission, my friend Maroš Šefčovič, has recently in his published strategic foresight report touched upon this issue. But once we have made this analysis, we will have to act upon it. We will have to implement it. That will not be easy and might put us at times in front of very difficult dilemma’s. Making strategic choices may come at short-term economic costs. But we have to come to grips with the asymmetric situation where we have been for a long time. Where we consider something as essentially a commercial activity but our systemic rivals see it as purely geopolitical.
But there are also opportunities, analyzing vulnerabilities caused by unwanted dependencies can also lead to positive action. For example: President Ursula von der Leyen in her State of the Union speech has proposed a European Chips Act. The Netherlands wholeheartedly supports this idea. Because the global chips shortages has caused widespread disturbances in several industries. The EU is vulnerable because its worldwide market share in semiconductor is less than 10 percent. And it is in our strategic interest that Europe in this field should become rather a giant. The Netherlands is home to some of the most advanced manufacturers in the semiconductor industry. Together with France once again, we can provide valuable input to the upcoming European Commission’s proposal on a Chips Act. And to conclude more broadly speaking; EU industries and value chains should become more resilient both economically and geopolitically. An open trading system must go hand in hand with strategic autonomy.