Op-ed: New trading partners, but not on the same terms

This article was originally published in Dutch on Joop.nl. 

In December 1999, 40,000 people marched through the streets of Seattle, USA, to protest against the excesses of globalisation, free trade and the World Trade Organisation (WTO). This protest, also known as The Battle for Seattle, is still considered one of the highlights of the movement against globalisation and unbridled free trade. It is now twenty-five years later and Trump has erected the tariff wall that the WTO was supposed to dismantle. Ironically, this time it is the US itself that is undermining the free trade system it helped to establish.

The American tariffs have turned global trade upside down and rewritten the rules of the game. As Europe and as the Netherlands, a trading nation par excellence, we have to respond to this. But so far, we have been reacting in the wrong way. Instead of seizing this moment to establish a trade system that is future-proof, sustainable and fair, Europe is pressing ahead on a path that even the US has now abandoned: that of unbridled and unregulated free trade, whatever the cost.

New friends

It is telling that since Trump's inauguration, European negotiations on free trade agreements that had been deadlocked for years have suddenly gained momentum. The call to speed up these agreements is growing. Take, for example, the so-called EU-Mercosur agreement with South America, which the Netherlands will vote on this summer. At first glance, this seems only logical: the courtship with the US is over, so we in Europe must now rush to find new friends, including in the global South. And what better sign of friendship than signing a trade agreement?

Yet there are some caveats. For example, the objections to this type of agreement have been the same since “Seattle”: unregulated free trade leads to countries competing on the lowest prices and the most lenient environmental and labour legislation. The profits are also unfairly distributed: large, established companies know how to take advantage of the international market, but local entrepreneurs are priced out of the market. All these concerns are reflected in the negotiations on the EU-Mercosur agreement: Dutch and European farmers, environmental organisations and trade unions from Europe and the Mercosur countries have been pointing out for years that the agreement will increase deforestation in the Amazon region, drive farmers in Europe and South America out of business and allow toxic products to enter the European market. Recent research shows that Dutch livestock farmers in particular will be hit hard by the agreement, while its economic importance is minimal.

Fair and sustainable trade

And what do our new friends in the rest of the world actually want from us? For years, large developing economies such as India and Indonesia have been arguing in international forums not for the abolition of all tariffs, but for tailor-made solutions and agreements that help protect their economies and stimulate sustainable investment. India wants to protect local rice farmers through quotas and wants to be able to levy taxes on digital trade, such as ICT services. Indonesia wants a fair price for the nickel it produces by restricting its export. African countries want to prevent large trawlers from Europe and China from emptying the waters off their coasts by introducing regulations. These are all measures that are difficult to reconcile with the model of unregulated free trade.

Trump has turned the world of international trade upside down in a short space of time. But Europe should not use this crisis to push through outdated and harmful agreements, the consequences of which will be felt for decades to come. Let us use this moment to forge new alliances based on respect, mutual interests and equality. But that should also mean not on the same old terms. That way, Europe will soon make new friends.