European Commission Speech [Check against delivery] Transforming Trade Berlin, Germany, 15 October 2018 EU Trade Commissioner Cecilia Malmström Humboldt University Mr Dean, Professors, Students, Ladies and Gentlemen, I am very honoured to be here in Humboldt University. My thanks for the invitation. I feel honoured indeed that I have been invited today, because as you know today is the 15th of October, which is actually the day that Humboldt University celebrates its 208th birthday. This university has no shortage of esteemed alumni. It has been home to many of Germany s greatest thinkers. Physicists who studied the symphony of the universe, like Max Planck and Albert Einstein. Lawyers who concerned themselves with justice, like Max Huber and Friedrich Carl von Savigny. And the father of this university himself, Wilhelm von Humboldt. As a Liberal thinker, he pursued human development in its richest diversity. Liberalism means different things to different people. To some it means gender equality and civil rights. To others it means a free market and open trade. But fundamentally it is, at its core, a belief in liberty and equality that everyone should have the same choices and the same chances. It believes that people know what is best for them, and the state should be limited in its power. In von Humboldt s time, many believed that god was the source of a ruler s power, giving them absolute moral and political authority. The church and state were intertwined. Suffrage, where it existed, was very limited. Freedom of speech was a mere idea, and markets could be upset at the whims of powerful people. Von Humboldt and his contemporaries suggested otherwise. They said the state s power should be limited, and that individual freedom should be exercised.
They asked questions like What right does the state have to obstruct trade between people? or Why should the state decide what religion we practice? These progressive ideas were not always welcomed. In some cases, they were harshly repressed. But by the 19th century liberal governments were established throughout Europe and the Americas. Liberalism ideas were winning. LIBERAL STRUGGLES The shift in thinking did not come easily, and it did not come without a cost. Very often, it involved struggle. England s Glorious Revolution of 1688 limited the power of the monarch. Establishing the Bill of Rights and laid the foundation for the modern state. The French Revolution overthrew hereditary aristocracy. It introduced the Declaration of Rights of Man and of the Citizen the foundation document of liberalism and human rights. Other times progress was won in more peaceful ways. The 19th century saw victories for open trade. The Corn Laws protectionist tariffs supported by narrow interests were defeated by a coalition of workers and liberal campaigners. Both groups saw benefits of open trade, and they managed to overcome a powerful lobby by working together. Now many people think the battle is over. That individual freedom has now established itself permanently. Indeed, it is tempting to become complacent. The number of democracies has never been higher and some of the most powerful nations in the world are democratic, many with extensive social safety nets. Open global trade and its framework established after the Second World War has lifted millions out of poverty. So, the achievements are clear, but we do face a new set of challenges these days I think that you mentioned some of them before. TRANSFORMING TRADE POLICY Globalisation. Economic shocks. Tensions in global trade. Despite the benefits it has brought humanity, often we have seen liberalism blamed for these challenges. Partly this is because an open, liberal view of the world is no longer considered something radical. Openness and freedom are taken for granted, and threatened as a result. So how do we respond? Well, I would suggest we take the transformation of EU trade policy as an example. Because when the system does not work for people, we should look to reshape it so it does. And when looking at ways to do this, sometimes a little radicalism helps. Over the past several years, the way we talk about trade policy has changed. It used to be a topic for experts. Now it is in the news regularly. And in the beginning of my mandate as Commissioner for Trade there were demonstrations very often outside my window. People criticised our trade policy. They said it was not transparent enough. They thought the benefits were not being spread in an equal way. They were concerned that it might affect product standards, and that it did not to contribute to a better world. In many cases trade has been blamed for the pains of globalisation, and the shortcomings of domestic policy. But some of these criticisms were valid. They deserved a response. So we have tried to respond we tried to transform our trade policy. RESPONDING TO CRITICISM Traditionally you may not have connected trade with values. Trade can be quite technical, abstract and distant. More often, it is associated with business interests in international 2
politics. But we changed that because we listened to people, we tried to understand their concerns, and respond to those concerns. We were criticised for being secretive, then we became the most transparent trade negotiator in the world. These days we publish all negotiating texts from the Commission and recommendations. We do that with material to explain them in a user-friendly way on our website. To make the negotiations more inclusive, we engage widely with civil society all across the European Union, but more regularly in Brussels. We even have a specific group of experts from civil society who advise us on our trade agreements. We hold all of our negotiations to these standards now. Through openness and accountability we have rebuilt trust in trade. So we were criticised for not being inclusive, so then we doubled our efforts to spread the benefits of globalisation. For example, with small and medium-sized companies or SMEs. They are chronically underrepresented in trade, and yet they are 99% of all businesses in the EU. They have created 85% of all the new jobs in the EU in the last 5 years. They were a good target for spreading the benefits of globalisation. So in our agreement with Japan for instance, we now have a specific chapter dedicated to SMEs, and now it s included in all negotiations. Because Japan is a significantly different market to ours. Language, customs and marketing are a challenge for a company, but adding tariffs makes life even harder. These costs can often be handled by big companies they have people who can look at it, but smaller companies they are not up to addressing these barriers. So to help them to overcome them we have committed, with Japan and other partners, to: Provide SMEs with information online on how to access markets; Set up specific "Small Business Contact Points"; And acknowledge the importance of SME access to global trade This is a way to try to spread the benefits of globalisation. To show that trade is good for people across countries, in different communities. It shows open trade is good for creating jobs, investment and growth all over. Finally, it was also said that trade policy lowered standards. So our response to that was to embed values in our trade agreements. The European Union is the biggest trader in the world. The biggest exporter. The biggest importer. The biggest investor. So we have a responsibility in how we trade. We have to do that in a responsible way. We have Trade and Sustainable Development chapters in all trade agreements. They include provisions on: Human rights Social justice High labour standards And high environmental standards These chapters which refer to international United Nations conventions are included in all our agreements. We have recently laid out a 15 point plan to make sure we enforce them better, and to make sure they correspond to what we agreed upon. 3
So we are trying to innovate in our trade policy. Of course we are not finished yet. FLYING A FLAG FOR TRADE These responses, and more, have been laid out in a long term strategy called Trade for All a plan that takes the power of trade and directs it in new ways. It not only eased concerns here in the EU, but it has had an international impact as well. We have agreed to have a specific chapter on Gender and Trade in our Chile agreement. We have seen similar chapters now being used by others Argentina, Canada and Ecuador. New Zealand published their own Trade for All strategy, and Canada has a very ambitious plan on how to modernise the WTO. Countries see the value in a progressive trade strategy, this is a global trend. So we have set out a European vision. We made it clear where we stand - progressive, open global traders. Responsible traders. Since flying that flag, countries have are lining up with us, and our trade agenda has never been busier. We have closed negotiations with Japan, Canada and Mexico. The Canada agreement is in force one year. We have agreements with Vietnam and Singapore ready for signature. We continue to negotiation with Chile, Mercosur, with Indonesia, Tunisia. We also just recently opened talks with New Zealand and Australia. We must show that trade, when done in a free and open way, delivers so that people can trust our promises. And this will be even more important in the coming years. Each of these trade agreements is about more than just trade. It s about relationships. It s about connecting people. It s about strategic alliances. Open up a market, we make each other stronger but we also acquire new allies in the fight for open global trade and in the defence of multilateralism. SAVING THE WTO Multilateralism is enshrined in the WTO the World Trade Organisation. It has underpinned global trade for decades allowing stability and the gradual opening of markets. Without it, there is no rulebook. International trade would become totally anarchic. Countries would be bullied and companies fall victim to unfair practices. There would be no reliability, no stability. But we believe, and many others as well, in a rules-based global system, and we are prepared to stand up for it. Because the system is now being challenged. Unilateral actions are taken by individual countries in violation of WTO rules. The WTO has been unable to make decisions over the past years. The dispute settlement system the Appellate Body is supposed to enforce the rules we have set up together. It is made up of arbitrators or judges to impartially decide on disputes. That has been a system that served us well. But now the United States are blocking the appointment of these judges. Soon we will not have enough judges to operate. Within a year we will run out of judges. And then the rules have no meaning if they are not enforced. And then of course we will see the WTO totally falling apart. It would bring an end to a critical part of the liberal world order an order which has stood against totalitarianism and anarchy for generations. Because the multilateral trading system has provided us with international rules and standards, it has broken down barriers and it has generated great wealth. And it has done a lot to bring the developing world onto the global scene. 4
It is not a perfect system. It needs to be updated and unblocked. It needs to be modernised in order to respond to today s challenges. But we are all better off with it than without it. We cannot let it collapse. And we hope the US is seeing the benefits of working together. We are actually working with the US and Japan to cooperate and update the rulebook. For instance, in addressing the challenges posed by China's state-led economy, which leads to massive industrial subsidies and forced technology transfer. Here we need new rules. The US and the EU agree on the definition of the problems here, but not always on the solutions. We firmly believe, in the European Union, that we need to remedy the situation within the global rules, within the WTO. And we are prepared to negotiate and find solutions. So we have presented a plan to defend the WTO, we think it s a good one. The EU has quite a lot of experience, via its 28 member states, in finding compromises and solutions. We need to modernise and save the WTO in three ways. First, we need to save the dispute settlement mechanism. It has served us well, and it has served the US well. Second, we should improve the day-to-day work of the organisation make it more transparent, more efficient. Third, we need to update the rulebook to face the challenges of our century. We wrote the rules for the WTO over 20 years ago. It has worked, it worked well, but of course they need to be modernised this is how we will guarantee the future of the WTO, and the benefits of trade for another generation. So we are working broadly with countries across the globe to try to gain support to strengthen and modernise the WTO. We do that because the positive trade agenda is part of our vision, and there are many countries a circle of friends who want to support this vision and want to work with us to strengthen the multilateral system. CONCLUSION Because when others raise barriers and become protectionist, it is tempting to adopt similar tactics. When some use unfair trading practices, and we see non-market economies succeeding as a result, there will always be those who call for us to imitate them. But before I finish I would like to recall another German philosopher. It is appropriate today, because is not just the birthday of Humboldt University it is Friedrich Nietzsche s birthday. Nietzsche said that, He who fights with monsters might take care lest he thereby become a monster. So it is important to remember what we stand for, and not become a monster. Europe has radically transformed since the beginning of the 20th century. We have gone from a bloody, violent continent, to a bastion of human rights and democracy. Once in ruins, now we are an economic powerhouse. It is important where this transformation has come from. Not from authoritarianism and not from protectionism - Europe s gains are from building rules, institutions and defending our values. That was true then, and it is true today. This is what we have to thank for Europe s success, and it is by following these principles we will ensure Europe s success in future. Thank you very much for your kind attention. 5