Italy in the 1982 World Cup, Greece in the 2004 Euro Cup, Leicester winning the Premier in 2016 or the last League achieved by Atlético de Madrid this year. All these teams have a common concept: the catenaccio. This defensive game system seems to have triumphed within the European institutions, which are preparing a set of measures designed to use defense as a commercial response. After four years of Donald Trump at the helm of the United States, almost two years of pandemic and the forced exit from Afghanistan, Europe evaluates its place in the world with a mixture of caution, distrust and disapproval. The feeling of insecurity has increased and, as a consequence, so has the need for protection. The result is that the EU prepares the biggest change in its trade policy since the member states decided to establish a customs union in 1968.
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Analyzed one by one, the policies that are part of this legislative package make perfect sense. However, on the whole, this particular catenaccio of the Union has the potential to radically change the way Europe deals with the rest of the world.
Among others, Brussels is preparing a mechanism for imports of certain products to pay an additional fee for the polluting emissions necessary to produce them, also an instrument that penalizes foreign companies that receive subsidies that European companies cannot receive. In addition, a new industrial strategy is being worked on, which reduces the dependence of the EU on the rest of the world and an instrument for foreign companies to access the public procurement market only if European companies receive similar treatment. These measures have two characteristics in common: their implementation is justified, but they all use the restrictions on the European market as the main lever. The logic is that if an external company wants to sell its products in Europe it must comply with the community rules. The aim is not just for everyone to compete on equal terms, but by doing so, the rest of the world becomes more like the European Union.
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On the surface it is reasoning with a lot of sense. The bad news is that the gap between European wishes and global economic reality is widening. An example is the border carbon adjustment mechanism, which has among its objectives the reduction of CO2 emissions in cement production. However, the European market accounts for only 1% of the sales of the world’s largest exporter, Vietnam, so it is unlikely that this country will change its production techniques to comply with European regulations.
The application of these new policies could also generate counterproductive results. European industrial policy, for example, prioritizes the production of electric batteries in Europe to the detriment of those produced in China at a lower price. As a consequence, products that incorporate them will increase their price and the cost of measures against climate change will increase. In addition, the public subsidies to produce them are the same for which the EU will penalize non-European companies that want to sell in Europe.
The response to these measures by the affected countries is another consequence, since they could penalize exports. Although Europe seeks to create an autonomous space, the truth is that it is not an island. Quite the contrary: it is the largest exporter of goods and services. Together, international trade represents more than a third of the Union’s GDP and employs 36 million Europeans.
A more closed world will have negative effects on the European economy because the reality is that it is the rest of the world who buys more from Europe and not the other way around. Therefore, to generate wealth, the EU has to look outward, not inward. As of 2024, 85% of world economic growth will take place outside the Union and its trade policy cannot only be defensive. However, none of the planned policies is aimed at connecting with the sources of global growth.
In 1972, Rinus Michels’ Ajax dismantled the catenaccio defender of Inter Milan, whom he beat in the Champions League final with his offensive style of total football. If the EU wants to influence the policy of other countries, instead of closing in on itself, the best option would be to offer facilities to those countries with which it shares objectives. In this way, the new European trade policy would be able to defend and attack at the same time, improving its efficiency and playability.
Óscar Guinea es economista en European Centre for International Political Economy. Isabel Pérez del Puerto He is a journalist.