Check Mate to the Rules of the Game
By: Oscar Guinea
Subjects: EU Trade Agreements European Union
This piece was co-authored with Isabel Pérez del Puerto, a journalist and communicator in financing for development.
“The king is an attacking piece, use it!” said the Austrian chess player Wilhelm Steinitz. On the current geopolitical board, power and influence are king, and for this reason, international trade is moving from the rule of law to the law of the strongest. This is not a minor change. When geopolitics dominates every decision, countries are willing to use their firm’s market power to achieve their political objectives abroad, even if that means going against the market’s logic, generating costs to their economies. The European Union’s (EU) response to the Russian invasion of Ukraine is the most recent example in which social principles and values have trumped purely economic interests.
In a context where existing regulations are put aside and key strategies are formulated following the rules of power, which are the right moves and the key pieces to win the game of international trade?
“It is not enough to be a good player… you must also play well”, stated the German chess player Siegbert Tarrasch. In this match, the EU needs to speed up the development and implementation of tools to respond to new challenges in security, sustainability, and economic competition. Many policies and regulations with these objectives are already underway. Some will act as a deterrent and the EU will be able to decide whether to active the measure. Others, however, will change the requirements to export to Europe and will affect all foreign firms equally. In the current context, it is important that the EU builds regulatory bridges to lower the costs that some of its policies will have on the businesses of Europe’s closest allies.
“No one ever won a game by resigning”, said the Polish and French chess player Savielly Tartakower. For that reason, Europe should not castle at the beginning of the game but occupy the centre of the board. International trade agreements can be a fundamental piece for accomplishing this. They offer access to foreign markets in favourable conditions, as well as the necessary diversification to lower trade dependencies. It is important to notice that, despite most countries voting in favour of the UN resolution condemning the Russian invasion of Ukraine, only twelve countries, in addition to the EU, have imposed economic sanctions against Russia. Therefore, in order to achieve its geopolitical objectives, the EU needs to deepen its economic, cultural, and political relationships with other countries. Concluding and ratifying trade agreements with Mercosur, Chile, Mexico, New Zealand, or Australia, and growing Europe’s network of suppliers and buyers as a result, is not just a trade priority but also a political one.
Moreover, economics and geopolitics go hand in hand. “One bad move nullifies forty good ones”, said Bernhard Horwitz, the German and British chess player. The capacity of the EU to achieve its geopolitical objectives requires an attractive economy capable of expanding its influence. Nonetheless, in the last decade Europe has lost its ambition to become “the most competitive and dynamic knowledge-based economy in the world”. Nowadays, the EU insists that the size of its market is sufficient to persuade foreign companies to adopt European policies and to export its standards to trade partners. The bad news is that economic projections indicate that the relative weight of the European economy in the global economy is diminishing. Against this challenge, Europe needs to take risks in the game of geopolitics. To do that, the EU needs to rediscover its ambition and promote policies capable of generating a vibrant and innovative economy, attractive to foreign companies that are willing to sell their products and invest in Europe, no matter the size of the EU’s single market.
European trade policy, traditionally based in international rules and institutions, is evolving in a new world governed by the logic of power. Within this transition, when geopolitical strategies are as or more important than multilateral rules, the EU needs to find the balance between defensive and offensive policies. “Chess is a test of wills”, stated the Estonian chess player Paul Keres, and with each policy shift, Europe’s true character is revealed. For Europe, it is critical to know not only how to protect its economy, but also how to carry out reforms to generate economic dynamism and openness to continue being an attractive and relevant region on the board of the global economy.
A Spanish version of this article was published in El Pais on 5 June 2022, it can be found here.