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Impact of the corona crisis on EU trade policy: Our five cents to the debate

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In this reflection paper, Jan Orbie and Ferdi De Ville contribute their 5 cents to the debate on the impact of the corona crisis. They look at a specific policy domain, European Union (EU) trade policy, by engaging in ‘academic distancing’, namely through the lens of paradigm change theory. In doing so, they make an analytical distinction between three paradigms: neoliberalism, securitization, and deglobalization. The resilience of the neoliberal free trade paradigm in the post-covid-19 era should not be underestimated, at least in the short term. The EU’s trade policy response has so far been compliant with free trade philosophy and this has not faced serious challenges yet. Ostensibly protectionist measures are explicitly framed as temporary and exceptional and have been accompanied by liberalizing proposals. In the medium and long term, paradigm change may happen. However, the authors warn that such shifts may not be as romantic as envisaged by deglobalization advocates, because also securitization looms as a realistic and dangerous alternative. While both deglobalization and securitization involve less trade, their political underpinnings are radically different.
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Executive Summary
The resilience of the neoliberal free trade paradigm in the post-
COVID-19 era should not be underestimated, at least in the short
term. The EU’s trade policy response has so far been compliant with
free trade philosophy and this has not faced serious challenges yet.
Ostensibly protectionist measures are explicitly framed as temporary
and exceptional and have been accompanied by liberalising
proposals. In the medium and long term, paradigm change may
happen. However, the authors warn that such shifts may not be as
romantic as envisaged by deglobalisation advocates, because also
securitisation looms as a realistic and dangerous alternative.
While both deglobalisation and securitisation involve less trade, their
political underpinnings are radically different.
Written by JAN ORBIE and FERDI DE VILLE
Edited by Andrew Dunn
© United Nations University Institute on Comparative Regional Integration Studies, 2020
The views expressed in this publication are those of the author and do not necessarily reflect the view of the
United Nations University.
P
OLICY
B
RIEF
# 0 2 , 2020
Impact of the COVID-19 Crisis on EU
Trade Policy:
Our Five Cents to the Debate
Policy Brief 2
Introduction
Undoubtedly, the world will never be the same
after the corona crisis. Notwithstanding the
dreadful events all over the world, the current
crisis also provides a fascinating episode for
researchers. We refer not only to virologists but
also to social scientists who have, by default, a
keen interest in political, economic and societal
shifts. Scholars studying the European Union
(EU) already have some experience with
analysing crises. Not only are EU policies bound
to change, many observers alert that the entire
European project is at stake. The scholarly
debate and political struggle to understand the
crisis has already started.
With this policy brief, we aim to contribute our
‘five cents’ to this debate. In doing so, we focus
on the EU’s trade policy. Trade is one of the EU’s
strongest policy domains: the EU has an
exclusive legal competence, significant market
power, and strong historical track record.
Europe’s common commercial policy projects
the essence of the European construction,
which is the political economy of market
integration, towards its relations with the wider
world. The future of trade, as one of the key
dimensions of globalisation, has also been
central in the debates on the impact of the
corona crisis.
At first glance, soundbites given and measures
taken by EU trade policy representatives seem
confusing. While the European Commissioner
for International Trade, Phil Hogan, stresses the
need for open trade and even more intensified
liberalisation (especially in medical equipment),
the French Minister of Finance Bruno Le Maire
argues in favour of European industrial
sovereigntyand legitimate protection, and
even the Dutch Trade Minister (not known for
protectionist inclinations) says that it is time to
take a step backand rethink our trade deals to
take a closer look at sustainability in value
chains”. Some warn that the corona crisis
facilitates protectionist sentiments and perhaps
even shifts towards authoritarianism, which
reminds of the interbellum period of beggar-
thy-neighbour protectionism. others see an
opportunity to dismantle globalisation in favour
of more local and more sustainable production.
There are calls for ‘reshoring’ of critical and
strategic industries, practices of
‘nationalisation’, and border controls have been
re-established, but it is unclear how sustainable
(in both senses of the word) government
interventions will be.
When aiming to come to grips with changes and
continuities in EU trade policy, our starting point
is blunt and clear: EU trade policy is outspokenly
neoliberal. This is despite some emphasis on
harnessing’ or ‘managing globalisation
through trade and ‘sustainable’ or ‘ethical’ trade
arrangements, as well as protectionist and
mercantilist tendencies in defence of sensitive
industries and toward economic competitors.
Overall, the EU has assertively (some would say,
aggressively) pursued free trade at the
multilateral level of the World Trade
Organization (WTO) and most visibly through a
new generation of bilateral free trade
agreements (FTAs) concluded with Korea,
Japan, Canada, Vietnam, the Andean
Community and many other countries in the
Global South. Since the end 1980s, interests,
ideas and institutions of EU trade policy have
consistently coalesced into a neoliberal trade
paradigm. This involves an obstinate belief that
ever more export and liberalisation will bring
growth, which eventually entails peace and
welfare to societies.
We are thus mainly interested in how this
neoliberal paradigm might be affected by the
corona crisis. We also pay attention to new and
nitty-gritty EU trade policy measures, but mainly
from the vantage point of whether and how
these relate to changes of the EU’s free trade
orientation. How might the current crisis impact
on the neoliberal trade paradigm and under
what conditions might we see alternative
Policy Brief
3
paradigms emerging? A long procession of
pundits is announcing an entirely different
world when the corona crisis is over, but can we
expect the EU to throw its free trade recipes out
of the window in order to be replaced by…
what?
Cent 1: We Don’t Know
Let’s start with an easy but important caveat: just
like virologists have apparently not really had a
clue about the virus’ implications and are
learning-by-doing, social scientists should also
be wary about making predictions and can only
hope for progressive insights (pun intended).
Political scientists have proven to be particularly
bad at forecasting the future particularly in
advance. We tend to overemphasise continuity
in uneventful times and overestimate changes in
times of crisis. Much depends also on how a
‘crisis’ is defined and interpreted, something
about which academics typically disagree as it
often closely relates to their personal
preferences and (sub)disciplines. People’s
worst fears and fiercest hopes become
projected onto predicted change and
continuities.
Predictions on the future course of a policy
domain such as commercial policy become
even more difficult as this is inevitably
entangled with wider domestic and
international developments. EU trade policy
changes would be contingent on how the
economic recession will be addressed, on
whether the crisis leads to more conflict or
cooperation between countries in Europe and
worldwide, on domestic political changes all
over the world, and many other (f)actors.
What makes it even more difficult is that analysts
use different benchmarks to evaluate change.
What constitutes meaningful change? Do we
notice relevant policy shifts when instruments
are modified to cope with the new situation, or
do we refrain from talking about real change
until a complete overhaul of existing structures
has taken place?
While it is too early to make predictions, it is
high time for debating the post-corona era.
Despite uncertainties, we do have some basic
theoretical frameworks and insights from
historical precedents, as will be shown in the
next two sections.
Cent 2: Paradigm Change:
A Basic Framework
We do have some conceptual tools at our
disposal to think about change and continuity.
Based on Peter Hall’s work, scholars generally
distinguish three ‘orders of change’ in politics.
First-order change or ‘policy change’ only
involves an adjustment in the settings of existing
instruments. Second-order change or
‘programme change’ refers to innovations in the
policy instruments themselves. Most
fundamentally, third-order change entails a true
paradigmatic shift. Importantly, ‘paradigm
change’ involves a radical rejection of how we
used to think about organising society and a
shift in its philosophical underpinnings.
Therefore, our interest in paradigm change of
EU trade policy involves not only measures that
pursue free trade and export-led growth
somehow differently, but more fundamentally
whether its neoliberal foundations (the belief
that free trade is desirable as it maximizes well-
being and every deviation from that principle
should be strictly exceptional and conditional)
may be eroded or even replaced.
Moreover, the drivers of paradigm change are
also well known. From existing studies, three
conditions for change can be identified. First,
the extent to which a crisis is seen as seriously
undermining existing beliefs. Rather than
‘objective’ causes, it is important to understand
the perceived roots of the crisis which are
typically manifold and hence open for political
Policy Brief 4
debate. What exactly is this a crisis of, and
therefore how should it be tackled? Second,
whether alternative paradigms are readily
available and considered to be legitimate. Does
the slogan used by Margaret Thatcher that
There Is No Alternative(TINA) still hold today?
Third, how much the crisis has shaken up
existing power structures. Established forces
might be obligated to give up on their
privileges, but they may also retain their
positions and even use the opportunity to
strengthen their power. Who wins and loses
from the crisis and possible alternatives?
Figure 1: Paradigms and drivers of change
Hence, we need to evaluate how the corona
crisis would be perceived from a trade
perspective, how it affects our thinking on EU
external trade, and whether it has impacted on
power relations inside and outside the EU. This
framework (Figure 1), which we have also
explored in relation to the EU’s trade policy
response to the euro crisis and the current
challenges in EU development policy, makes it
easier to structure and critically assess the
impacts of the corona crisis on EU trade policy.
It helps not only to put putative changes into
perspective (policy shifts are not always as
radical as they are presented!) but also to foster
alternative imaginaries of what trade policy
could be (what is out-of-the box?). While it
remains difficult to know what such alternatives
might be, we will below elaborate on two
candidates: securitisation and deglobalisation.
But first, it needs to be stressed that despite
some superficial indications of the contrary, the
current free trade paradigm is not likely to go
away anytime soon.
Cent 3: Neoliberalism is
Resilient and Re-inventive
Paradigm change is rare. Based on precedents,
it seems premature to announce it during times
of crises. Despite manifold predictions of a new
Keynesian and anti-neoliberal era, the Asian and
global financial disruption of 1997-1999 and the
American and European banking crisis of 2008-
2009, have not involved significant change. For
some, these crises have damaged the
legitimacy of the neoliberal paradigm, but
overall, the EU has reverted to ‘business as
usual’ policies. Moreover, crises might even
reinforce neoliberal policies and beliefs,
depending on how they are interpreted, on
what beliefs are dominant, and on who is in
power (see the three conditions above). As we
will see below, this is a feasible scenario.
Paradigms are no fixed objects that can be
overthrown with a single well-aimed shot. They
are dynamic and inventive in readjusting
themselves through crises. Such creative
reinvention (rather than destruction) typically
involves new policy measures and experiments
that are sometimes portrayed as radical
departures from previous, delegitimised
practices which adds to their legitimacy.
Paradigms are continuously being stretched
and transformed, without touching the
underlying ‘third-order’ beliefs. One strategy in
this regard is to co-opt concepts from critical
corners, such as ‘sustainability’, ‘participation’,
‘partnership’, ‘fairness’, ‘global justice’,
‘resilience’, ‘inclusion’, ‘participation’,
governance’ and ‘multi-stakeholderism’, and
soon perhaps ‘strategic security’ or
‘deglobalisation’. Once radical concepts are
stripped of their political meaning and subtly
Policy Brief
5
moulded with neoliberal logics, they can be
used in a technocratic way.
The “strange non-death of neoliberalism has
been observed before. In relation to the euro
crisis, protectionism was seen as the problem
and more free trade as a solution, which made
the EU even reinforce its free trade orientation.
While critical observers and activists saw the
crisis as clear evidence of the failure of the
growth-led economic paradigm, the impressive
range of measures taken seemed only of first-
and second-order extent. In terms of trade, the
European Commission even reinforced its
efforts in negotiating trade liberalisation
agreements with strong economies such as
Canada, Japan and the US.
Applied to today’s EU trade policy, the concrete
measures and proposals that we have heard so
far clearly signal continuity more than anything
else. Despite calls that we may witness a new
Keynesian moment or even an overthrowing of
capitalism, nothing close to paradigm change
seems to be happening so far. Two points are
important to emphasise in this regard. First,
there has been much talk about ‘reshoring’ the
production of ‘strategic’ industries to Europe.
This is not surprising given the inadequate
supply of medical and pharmaceutical
products. However, there are so far no
indications that this would go beyond a limited
number of ‘critical products’ such as protective
workwear, ventilators and other medical
equipment. It would be premature to see this as
the hallmark of a new industrial policy (in fact,
the EU had already adopted a ‘new’ industrial
policy following the euro crisis which turned out
to be old wine in new bottles). Former Trade
Commissioner Peter Mandelson was quick to
warn that the list of critical industriesshould
not be interpreted too widely and to mention an
anecdote whereby the French once designated
yoghurt as a strategic industry (anecdotes and
stereotypes about the French are always helpful
to warn against supposedly protectionist
tendencies). An influential MEP and former
trade minister equally emphasised that the idea
of strategic reshoring makes sense only if it is
limited to certain very specific sectors such as
steel”. Similarly, the chairman of the
International Trade Committee of the European
Parliament, Bernd Lange, qualified that just-in
time production will be reduced a little bit.
While far-reaching and permanent reshoring
might entail deglobalisation, the EU’s response
so far has been much more modest:
compromising a bit on efficiency to guarantee
supply of a confined number of products. In
addition, EU trade policymakers have
highlighted that the strengthening of the WTO,
including the creation of an interim appeals
mechanism, the so-called ‘Multi-Party Interim
Arbitration Arrangement’, is all the more
important to help us recover from this crisis.
The same applies to European export
restrictions. While initially there were many
concerns about export restrictions of some EU
member states like Germany, the European
Commission quickly took the initiative to
Europeanize an export authorisation regime in
mid-March, which would be further narrowed
down to a limited number of products by end-
April. EU Trade Commissioner Phil Hogan
stressed that these are emergency measures
that should be targeted, proportionate,
transparent and temporary” – adding that no
export restrictions should be applied in the agri-
food sector; and on 16 April he reiterated that
a full reshoring of European industries would
be impossible. Also the chairman of the
European Parliament trade committee and the
Croatian President of the Council of EU Trade
Ministers nuanced the need for reshoring. The
latter stated that our immediate challenge is to
keep trade flows open”.
Second, some measures intensify the free trade
logic rather than deviating from it. We may
indeed see EU trade policy going beyond the
status quo by pursuing ever more liberalisation.
Early April 2020, the European Commission
Policy Brief 6
decided to temporarily waive import tariffs of
medical devices, and protective equipment,
from third countries. Similar initiatives to
facilitate trade in products that are essential to
fight COVID-19 are taken at the levels of the
WTO and the World Customs Organization. At
the virtual G20 summit on 30 March 2020, Trade
Commissioner Phil Hogan strongly argued to
remove all restrictive measures on imports,
notably on the tariff side, that were introduced
before the pandemic, and set a moratorium on
new unilateral tariffs, and to eliminate all tariffs
on COVID-19 related products. In the same
context, he urged the WTO members to
urgently work on the development of
international rules on digital trade. Also Bernd
Lange and the European Parliament ask for the
swift conclusion of an e-commerce agreement
at the level of the WTO. Phil Hogan summarised
his speech by arguing for “greater competition
and the removal of unjustified barriers.On 16
April, the Commissioner reiterated this call and
argued for a plurilateral agreement that would
lead to a level playing field, including the
possible permanent liberalisation of tariffs on
medical equipment.
Remarkably, in response to the COVID-19 crisis
the European Commission also announced its
intention to speed up talks with a far-reaching
free trade agreement with the United States. A
Commission spokesperson clarified that efforts
to improve transatlantic regulatory cooperation
include areas very relevant for the fight against
the coronavirus outbreak, such as medical
devices and pharmaceuticals, including
vaccines”. If that works out, the crisis would
facilitate the finalisation of an agreement that
was in its previous form (the Transatlantic Trade
and Investment Partnership, TTIP) highly
contested for its undemocratic and liberalising
nature. The European Parliament’s international
trade chair, in contrast, stated that the United
States are out of the game at the moment”.
Meanwhile, several European brands and
retailers have failed to honour their contracts
with suppliers in the Global South, for instance
the garment industry in Bangladesh. While the
initial focus on European health and economic
concerns is understandable, it remains to be
seen how the EU or the member states might
deal with companies that cancel orders and fail
to pay for products that have already been
made. The EU could take initiatives in this
respect. For instance, EU member states could
transpose the Unfair Trading Practices directive
more swiftly and extend it beyond agri-food
protects to include textiles and garments.
Budgetary support to European enterprises in
the context of the crisis could also be made
conditional on honouring fair trade
commitments. It seems that EU trade policy
makers have not yet communicated on this
dimension of the crisis. Following the EU’s
neoliberal and ‘hands off’ approach to fair trade,
such ethical concerns remain the responsibility
of companies, while the EU typically provides
development aid rather than changing trade
structures. Early April, the EU announced the
creation of a €5 million emergence cash fund for
garment workers in Myanmar. The European
Parliament does mention the interests of
Southern countries, namely by emphasising that
these would benefit from more open
international trade.
In terms of co-optation of (formerly) critical
concepts, EU trade policymakers at an informal
Meeting of EU Trade Ministers on 16 April
emphasise that supply chains should become
resilient and sustainable. Afterward, the
Dutch Trade Minister Sigrid Kaag explicitly
stated that EU trade deals should become more
sustainableand “inclusive”. Previous research
shows that the emergency of resilience and
sustainability” concepts in EU trade discourse
can be quite compatible with neoliberalism.
To be sure, there are signs of stronger
government intervention through trade. Mid-
April the European Commission proposed a
new export authorisation measure for certain
items of personal protective equipment.
Policy Brief
7
However, these are temporary, confined to
specific products, and successfully aimed to
prevent export restrictions within the EU and
guarantee the internal market. The Commission
also published guidelines on screening of
incoming foreign direct investment, aimed to
avoid predatory take-overs of weakened and
strategic European firms such as
pharmaceutical enterprises developing a
vaccine. However, this merely concerns
legislation that was approved already in 2019.
And while many analysts have quoted the
French Minister Le Maire’s statement about
economic sovereignty, reorganisation of
value chains and legitimate protectionism,
they often fail to notice the explicit statement
that the protection of strategic industries will not
concern a major shift towards economic
intervention and that any nationalisation would
be temporary. As noticed by Le Maire himself,
the position is quite consistent with French
approaches to political economy at the EU level
over the past years. More generally, it should be
noticed that French calls for protectionism seem
to be a typical ingredient of economic crises
see also the global financial crisis of 1997-1999
and the eurocrisis of 2008-2011 and should
therefore be taken with a grain of salt. It is also
clear that the French government does not
argue for alternative production models
involving less economic growth.
Overall, it would be premature, to say the least,
to see Le Maire as the vanguard of the
deglobalisation paradigm. Similar disclaimers
apply to the Dutch Trade Minister’s plea for
rethinking EU trade deals to make them more
sustainable and inclusive: these concepts have
in recent years been successfully combined with
a neoliberal trade course (see above) and the
Minister clearly adds that the Netherlands
remains an open trade country, that Europe
should keep faith in global trade and global
value chains, and that the Commission should
take up initiatives that are based on the rules of
the World Trade Organization. Similarly, Bernd
Lange argues for due diligencelegislation and
making sure that the global supply chains are
really fair. In a resolution, also the European
Parliament states to be convinced that
corporate human rights and environmental due
diligence are necessary conditions in order to
prevent and mitigate future crises and ensure
sustainable value chains. Again, however, this
is in line with previous demands and the free
trade and growth model is not questioned.
In sum, what we have seen and heard on EU
policy measures so far suggests continuity, with
some first-order change. Interventions have
been relatively limited and embedded within a
free trade discourse. It should also be noted that
even the neoliberal night-watchman state would
not exclude firm government intervention
during times of emergency. Proponents of this
vision have recognised that in the very acute
phase of the crisis, we are all Keynesians”, but
are already calling for a return to ‘normal’ as
quickly as possible. Meanwhile, there have been
initiatives for further liberalisation and
strengthening of the WTO. Ongoing
negotiations of free trade agreements with
Australia and New Zealand which arguably do
not contribute to shorter supply-chains or
reshoring ambitions have not been
questioned by the main trade policymakers in
the Commission, Council and Parliament. On 28
April, the Commission concluded an ambitious
trade agreement with Mexico.
Policy Brief 8
Table 1: What’s the problem? Causes, solutions, and EU trade policy
In order to understand this status quo, we refer
to the three conditions above. The perception
of the crisis seems particularly important. In the
ongoing discursive struggle on the nature of the
crisis the causes and solutions those
advocating the status quo point at three causes.
First, the crisis as a quirk of nature (indeed, a
virus). It is an externality that requires technical
solutions and emergency measures. There is
hence no need for structural changes. Second,
there is a problem of insufficient capacity to
produce equipment to fight COVID-19 and
insufficient strategic reserves of such products.
The best ‘guarantee’ to solve this is through the
global integration of supply chains. Hence the
problem lies with the supply side, which should
be adjusted; and the maximum that
governments can do is encourage all
manufacturers to increase capacity, not by
investing in these industries but by making
standards for medical supplies freely available
to any interested company. As said above,
another response has been to abolish tariffs for
imports of medical equipment, which will,
according to EU Commissioner for Economy
Paolo Gentiloni help (European health
workers) to receive the equipment they need to
protect themselves and continue saving lives”.
Reshoring should be limited to a specific
number of products. In this regard Bernd Lange
refers not only to the fact that the price of
products might increase as a consequence of
reshoring, but also to the harmful impact of
reshoring production on developing countries
that rely on exports of textile and other products
to Europe. Third, the export restrictions that
some EU member states and other countries
have imposed on critical equipment are framed
as the problem not the solution. They are
framed as instances of ‘coronationalism’ that
endanger the European project. Thus again, the
solution is more free trade. As argued by the
Policy Brief
9
Simon Evenett, director of Global Trade Alert
and influential free trade advocate: trade
barriers put countless lives at riskwhereas
open trade can help in fighting the pandemic
as well as the future economic fallout”.
Whether this narrative would be successful,
depends also on whether alternative paradigms
are available and accepted by those who
occupy power positions. Although the
neoliberal paradigm may once more lose some
of its feathers, and EU policymakers may be less
convinced this time, compared to the time of
the euro crisis, that free trade is the solution to
the crisis, it remains hard to find challenging
paradigms that are comprehensive and that
receive wide support. Indeed, it seems that
There Is No Alternative(TINA). The myth that
we all have benefited from free trade (‘win-win’)
after the second world war, which was caused
by protectionism in the 1930s, remains
intuitively appealing. Against this background,
numerous observers have warned against
‘coronationalism’ related to protective trade
measures.
It is also a powerful narrative. Not only export
competitive businesses in the ‘North’ benefit
from free trade but also ‘emerging’ (or
emerged) economies such as China have a
strong interest in pursuing free trade. Despite
second-order variations, also states such as
China, Brazil, India and South Africa have
embraced the growth-based paradigm. Within
the EU, Business Europe, the biggest EU lobby
group of corporations, and the pharmaceutical
industry associations have explicitly demanded
to to maintain open trade and efficient supply
chains, both within the EU and with the EU’s
trading partners and to manifest the EU’s
leadership role in defending an open and rules-
based global trading system. Influential think
tanks also highlight the need to avoid trade
restrictions and promote liberalisation to
address this crisis. This is a message that very
much resonates with the European
Commission’s response as stipulated above.
Nevertheless, there are alternative views in the
making and the current crisis might strengthen
them. We have shown above that the EU is
stretching the neoliberal paradigm rather than
replacing it with something else. However, if
stretched too far its legitimacy may be
undermined. The next section warns that in
addition to deglobalisation, also securitisation
might be a candidate for paradigm change.
Cent 4: The Alternative May
Not Be Romantic
Progressive thinkers and activists arguing for
deglobalisation surely have a point that There
Are Many Alternatives Ready and Available
(TAMARA) that have been developed before
the outbreak of the corona crisis. There have
been plenty of calls for degrowth, postgrowth,
postdevelopment, foundational economy,
economy of the common good, circular and
other doughnut economies. Thought exercises
on progressive, emancipatory and
transformative alternatives have received a
growing popularity and for good reasons.
Experiments with more sustainable food chains,
alternative energy arrangements and banking
systems have been mushrooming, particularly
at the local level. Such initiatives may be less
prominent in news reporting on the crisis, but
they are happening on the ground. The
deglobalisation scenario involves the
disintegration of global value chains. It aims for
more local and sustainable trade flows, and
hence also less trade overall. However, that
does not exclude solidarity at the international
level. Radical reforms of the world economy
should address social and ecological injustices,
for instance by reforming international
institutions such as the WTO and the World
Bank, guaranteeing fair taxation of multinational
companies, providing debt relief for highly
indebted countries, re-establishing capital
Policy Brief 10
controls against speculative capital, and indeed
legitimate brakes on global trade.
The problem may not be the substance of the
proposed alternatives, but rather the lack of a
clear and single model (condition 2) that
receives wide acceptance with those in power
(condition 3). When the world shifted to
Keynesianism in the late 1940s, this not only
followed the disaster of a second world war but
also the general acceptance of the ideas of John
Maynard Keynes, which had been elaborated
and even partly applied in the 1930s. The turn
to neoliberalism in the late 1970s and 1980s
followed not only a decade of stagflation but
also 30 years of advocacy of alternative
economic ideas by Milton Friedman, Friedrich
Hayek and their followers. Unfortunately,
advocates of deglobalisation have not yet
reached such a prominent status, and certainly
not with those in power. There also seems
disagreement between progressive thinkers
about the role of economic growth (versus
degrowth?) and whether the WTO should be
reformed or replaced by a more legitimate
institution.
To be sure, deglobalisation alternatives are in a
stronger position than they were during the
crisis of 2008. Activists can rely on previous
experience, networks and expertise. Relating to
trade policy contestation, there is experience
with the ‘Seattle to Brussels Network’ and the
Alternative Trade Mandate’. There are already
meaningful changes following the
‘coronashock’, such as the city of Amsterdam
embracing Kate Raworth’s doughnut model at
city level, and a recent Financial Times (the
newspaper of the global financial elite) editorial
arguing that formerly utopian ideas such as a
wealth taxes should now be taken seriously.
French President Emanuel Macron pleaded for
a massive debt cancellation for African
countries. Let’s see if such initiatives are the
harbinger of paradigm change or rather
another co-optation strategy whereby
(formerly) radical concepts are hollowed out.
The proof of the doughnut is in the eating.
On a structural level, the failure of the ‘west’ to
address the current crisis may catalyse the
dewesternisation’ and even the ‘decolonisation’
of the world. This involves a material shift in
power, for instance through the renegotiation of
EU trade agreements with African countries and
the strengthening of the African Free Trade
Agreement, as argued by David Mwambari. At
the same time, as noted by Olivia Rutazibwa, it
involves an epistemic shift of the geopolitics of
knowledge whereby western superiority
receives a blow and alternative (anti-colonial)
solidaritiesemerge. In terms of alternatives to
neoliberal globalisation, it will be important to
follow-up on whether the corona crisis
effectively shakes up global power structures
and how exactly new powers stand towards the
free trade dogma.
It is also unclear how successful deglobalisation
advocates will be in interpreting the current
crisis for their agenda (condition 1; see Table 1).
When it comes to the cause of the epidemic, two
issues have been stressed. First, the growing
number of zoonotic diseases (such as Ebola,
swine flu, and COVID-19) stems from the
increased expansion of humans in previously
undistorted ecosystems. Equally, critics have
pointed to links between zoonotic epidemics
and the growth of industrial farming. The
consequence of this analysis is that humans
should find a new balance with ecosystems, as
environmentalists have been arguing for
decades. Or concretely, that people should shift
to plant-based eating. Specifically relating to EU
trade policy, there have already been calls from
some members of the European Parliament and
environmental groups to ban wildlife trade.
Given the amount of legal and illegal trade of
exotic animals in the EU, a new zoonotic disease
could as well have emerged in Europe instead
of China, they argue. Second, globalisation has
made it easier for viruses to quickly spread all
over the world. The current crisis exposes the
Policy Brief
11
vulnerability of world-wide transaction flows.
Worldwide trade and mobility have made our
societies extremely vulnerable for the spread of
diseases, while global value chains have
exposed our dependency on key equipment
such as masks or ventilators and have made us
generally vulnerable for distortions that may
occur unexpectedly in the ‘just-in-time’ delivery
model that characterise these value chains. As
with the climate crisis, the COVID-19 episode
once again illustrates that our obsession with
economic growth leads to unsustainable
outcomes. It also reinforces inequalities within
and between societies. Interestingly, not only
the ascribed causes of the crisis but also the
current response is being interpreted as
something that can favour this agenda. By
putting a break on globalisation, we are now
forced to cope with negative growth, to
reconsider local production, to break global
value chains, and to strengthen solidarity
between people. As the fair trade movement
puts it, the crisis provides an opportunity to
radically rethink the unsustainable and unequal
global growth model and replace it with an
emphasis on well-being, sustainability and
equity. Strengthened by evidence that the
lockdown societies have shown exceptional
solidarity between people and changed our
views on work-life balance and the need of a
healthy life, this scenario would advocate a
radical restructuring of the global economy
towards more local and sustainable units. In this
scenario, degrowth is likely while social and
ecological concerns drive trade (and other)
policies. Inevitably, this involves the
marginalisation of trade policy in the armoury of
the EU and/or the renegotiation of bilateral and
multilateral trade agreements into
arrangements that foster sustainable trade.
It is too early to assess how convincing this
problem definition would be, and as argued
above whether it will manage to present a clear
alternative and powerful paradigm. It is more
likely to become successful if the corona crisis
turns into a crisis of food security and also
damages the EU system of food supply.
European civil society organisations claim that
the current crisis shows the need for an
ambitious ‘Farm to Fork’ EU food strategy;
although a food crisis could be interpreted as
evidence for the need of even more free trade.
So far, open trade has been the dominant EU
discourse in reaction to the crisis, as explained
above. European trade policymakers have not
fundamentally questioned global value chains
except that for specific products reshoring back
to Europe has been advanced and it has been
argued that global value chains need to
become ‘resilient’, ‘sustainable’ and ‘inclusive’.
Instead, there are indications of the trade
measures that might herald another paradigm,
namely securitisation. There are indeed also not
attractive alternatives (TAANAA). Under the
more dangerous ‘securitisation’ paradigm,
nation-states (or perhaps the EU as a whole)
pursue first and foremost their security and
sovereignty in what they consider a Hobbesian
world where people and countries are in a
continuous struggle for survival. This basically
corresponds with what International Relations
scholars, cynically, call the ‘realist’ school.
Liberal values such as freedom of speech and
international interdependence become
subordinated to the overriding goal of security.
The securitisation paradigm involves a high
suspicion towards anything ‘foreign’ and ever-
changing coalitions of allies and enemies at the
international level. The corona crisis is then
above all a security threat, even a state of war,
that needs to be combatted with all available
forces and at the expense of liberal democratic
values.
How would these movements then interpret the
corona crisis for their own benefit? Two points
can be suggested (see Table 1). First,
‘foreigners’ would be blamed for the virus.
There is anecdotal evidence of rising hostility
against Chinese nationals in the beginning of
the corona crisis, and Asian hostility against
Policy Brief 12
Europeans in the subsequent phase. In public
debates, the fact that the virus (‘again’) came
from China has confirmed latent racist
stereotypes about the habits of Chinese people
(“eating wild animals) or even confirming
conspiracy theories (it was a biological weapon
produced in a Chinese lab”). US President
Donald Trump’s framing in terms of the ‘China
virus’ or ‘Wuhan virus’ fits in this context.
Second, liberal values may be framed as
obstacles against the security of the state and its
people. In this regard, authoritarian states such
as China or Vietnam could serve as an example
of how a health crisis should be addressed.
Those countries that take most pride in their
liberal superiority and initially assumed that the
corona crisis could be averted without strong
government intervention the United States
and the United Kingdom have proven to be
hopelessly naïve. As noted by a Chinese
diplomat, ‘some western countries are starting
to lose confidence in liberal democracy’.
In this scenario, trade policy loses its relatively
autonomous position in the EU’s institutions.
Trade instruments become geostrategic tools of
the EU’s foreign and security policy. Although
economic growth continues to be important, it
is no longer a panacea. Instead of pursuing free
trade under the assumption that eventually
everyone will benefit, trade policy henceforth
discriminates specific countries depending on
whether they are allies or enemies.
Institutionally, trade policy would be transferred
from the European Commission to the
European External Action Service (EEAS) or
even back to the member states.
This scenario may (hopefully) seem unlikely.
However, it resonates with anti-liberal, radical
right-wing forces that have been emerging in
Europe (and elsewhere) over the past decades.
In other words, the securitisation scenario is
already being written as an alternative
paradigm against the ‘liberal’ and
‘cosmopolitan’ elites. Moreover, authoritarian
regimes are already effectively using the crisis
for their own agenda, as we have seen in
Hungary. Also mainstream politicians in Europe
for instance, French President Emmanuel
Macron have frequently used war-related
terminologies to justify the fight against corona.
Interestingly, the perceived danger of strategic
companies losing control to China was not only
discussed around the (virtual) meeting tables of
Trade Ministers: also the NATO Defence
Ministers discussed the issue on 15 April 2020.
In other words, the three conditions for
paradigm change in this direction are partly
fulfilled.
When it comes to EU trade policy and external
relations in general, securitisation tendencies
have already been noticed in recent years.
Scholars have pointed out that the EU’s
neoliberal agenda also tends to shift towards
securitisation). Some have coined the new trend
of geopoliticisation of EU trade policy. It may
also fit within the ambition of Commission
President Ursula von der Leyen to become a
‘geopolitical Commission’. The ‘hardening’ of
the EU’s commercial policy can be seen most
notably towards China, which was recently
labelled an ‘systemic rival’ by the European
Commission. In the context of the corona crisis,
the Commission decided to publish guidelines
on screening of incoming investments, which
might entail a stronger approach than what was
agreed in 2019. While the Commission
continues to argue in favour of ‘open trade’ and
‘open investment’, some member states are
clearly keener on protecting national and/or
European markets.
Undoubtedly, we are far from a full-fledged
securitisation and any indications should be
interpreted cautiously. Our main point is that if
a true paradigm shift would happen, the
progressive deglobalisation scenario is not the
only candidate, and we should keep an eye on
the alternative of securitisation. Pursuing the
end of neoliberalism carries the danger to throw
the baby out with the bathwater or the liberal
Policy Brief
13
values of western democracies with the ‘new’
radical agenda of the 1980s to deregulate,
privatise and liberalise at the expense of
collective interests. In addition to watching
closely how things evolve, concrete actions of
individuals and groups also matter as
highlighted below.
Cent 5: Agency Matters
People make a difference. None of the changes
or continuities are fully determined by some
logic that is outside human behaviour. All three
conditions for change - the perception and
interpretation of the crisis, the construction of
alternative paradigms, and shifting power
relations implies a struggle between people.
On EU trade policy, we have seen that the scope
of conflict has radically enlarged since the
‘battle of Seattle’ in 1999, the campaign against
the Economic Partnership Agreements in 2007-
2008 and most famously the protests against
the free trade agreements with the US and
Canada. The genie is out of the bottle and trade
policy will be at the centre of any debate on the
future of the EU.
That said, structures are adaptable and resilient.
Just like it took Friedman, Hayek and other
members of the Mont Pelerin Society several
decades to create, defend and disseminate
their ideas before they became dominant in the
1980s, so can we see that today people from
diverse corners are bricolaging alternative
ideas against neoliberalism. The anti-TTIP
campaigns have been relatively successful
because they draw on networks and expertise
that activists and researchers had started to
build in the end 1990s during the protests
against the WTO. While a crisis can hit hard and
fast, paradigm change is likely to be a matter of
generations. How this evolves depends on how
millions of individuals and groups challenge
existing ideas and structures.
Conclusion
The EU’s trade policy response to the corona
crisis has so far been in line with the reaction to
the euro crisis: export restrictions should be
limited and temporary, open trade is essential
for guaranteeing medical equipment, more
liberalisation will be part of the solution and may
eventually be necessary to recover from the
economic fallout. While the problem is framed
in terms of technicalities (health system
functioning and productive capacity of key
industries), solutions comply with the EU’s
strong belief in the benefits of free trade and
remain at first- or second-order levels.
We have suggested that the neoliberal
paradigm remains powerful and displays
resilience, despite the emergence of
alternatives such as deglobalisation (the
progressive scenario that involves radical
democracy) and securitisation (the conservative
scenario involving anti-liberalism and
authoritarianism). The latter should not be
underestimated. Recently, Thomas Piketty
warned that if Europe does not manage to ‘tame
globalisation’ and address inequalities that are
exacerbated through the COVID-19 crisis,
further victories of right-winged populist parties
can be expected.
There is no doubt that the neoliberal free trade
paradigm will continue to be challenged and
eventually replaced. It is however highly
speculative when and how this will happen and
what role the COVID-19 might plays in this
regard. Going back to our initial remark: it is
complicated. First, the paradigms are ideal
typical and still sketchy. Thinking about
alternative paradigms by definition involves an
exploration of the unthinkable. We have
indications of deglobalisation and
securitisation, but their contours remain vague.
There may also be alternatives that we have not
considered. It would be easier to analyse
whether trade policy initiatives taken in the
Policy Brief 14
current crisis make the EU slightly more
protectionist or liberalised. While it is important
to map such first- and second-order changes, it
is equally crucial to perform some academic
distancing and understand how these measures
relate to paradigm change. This requires much
more in-depth research that relies on different
disciplines.
Second, we may witness the confluence of
different paradigms. Societal changes typically
involve the implicit or explicit cooperation of
strange bedfellows. Sticking to the trichotomy,
we could identify three coalitions. First,
neoliberalism and securitisation proponents
have in common that they don’t fundamentally
question the holy grail of economic growth.
Both are wary about emancipatory politics that
aim to address social and ecological injustices.
Indeed, also in the context of the EU, scholars
have pointed to the ‘authoritarian’ nature of
neoliberalism. Second, the securitisation and
deglobalisation advocates obviously share an
aversion to the current political and economic
elites. Both are also open to more
protectionism, and hence less free trade. Here
too, we could find indications in arguments
against dependency on global value chains,
and in favour of reshoring and even
nationalisation of strategic industries. Third, the
neoliberal and deglobalisation scenarios share
common roots in liberal philosophies. Although
these play out differently, commonalities might
become visible through shared opposition to
authoritarian movements. Hence, the
trichotomy is not a trilemma but rather a device
to reflect on possible paradigm change, thereby
transcending the oft-made distinction between
free trade versus protectionism. Which
paradigm will reign in the future may well
depend on how successful these alliances turn
out to be.
The United Nations University Institute on Comparative
Regional Integration Studies (UNU-CRIS) is a research and
training institute of the United Nations University whose
mission is “to generate policy-relevant knowledge about new
forms of governance and cooperation on the regional and
global level, about patterns of collective action and decision-
making.
www.cris.unu.edu
About the Authors
Jan Orbie is Associate Professor in the Department of Political Science at Ghent University.
Jan.Orbie@UGent.be / @janorbie
Ferdi De Ville is Assistant Professor at the Centre for EU Studies. Ferdi.Deville@UGent.be /
@FerdiDeVille
Acknowledgements
We are grateful to Deborah Martens, Patrick Holden, Niels Gheyle, Jonathan Matthysen and Diana
Potjomkina for useful feedback on earlier versions. All remaining errors are our own.
... 81 Naime, Piter Hol uopšteno razlikuje tri reda promena u politici. Promene prvog reda ili "promene politike" podrazumevaju samo prilagođavanje postavki postojećih instrumenata; promene drugog reda ili "promene programa" odnose se na inovacije u samim instrumentima politike; najfundamentalnije su, međutim, promene trećeg reda koje podrazumevaju istinski pomak u paradigmi odnosno "promenu paradigme" koje podrazumevaju radikalno odbacivanje načina na koji se nekad razmišljalo o organizovanju društva i promenu njegovih filozofskih osnova (Hall, 1993;Orbie and De Ville 2020). ...
... 1. kako će se kriza definisati i interpretirati; 2. kakav je kredibilitet alternativa i 3. kolika je snaga i moć saveza koje promovišu te alternative (Orbie and de Ville, 2020). ...
Thesis
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Understanding the impact of neoliberalism on society also implies understanding the social consequences of the extension of market relations and what is called the commodification of everything, including those areas that are not (or are not primarily) market-oriented – such as health, social care, culture, education and science. Consequently, the critical tone of this paper does not arise from not only a simplified, but an essentially false dilemma for or against the (free) market. In an effort to deconstruct the mechanisms and ways in which neoliberalism colonizes everyday life and remains the dominant modus vivendi, the sociological critique of neoliberalism must raise the question of justification, implications and consequences of the overall subordination of the state, society, human actions and behavior to market needs and values. In that sense, the basic scientific contribution of this research is the demystification of the causes and consequences of transposing economic models, ethics and metrics also into those areas of (social) reality that are not or are not primarily market-oriented – demystification of the way reality was constructed according to the model and principles of the market. Key words: neoliberalism, capitalism, market, society, state, domination, violence.
... A new chapter of globalisation debates is unfolding, pitting defenders of free trade against an increasingly vocal chorus of decision-makers calling for trade restrictions and the renationalisation of production processes. Open trade advocates have warned the world against the 'sicken thy neighbour' logic of export restrictions and the perils of 'vaccine nationalism' (Evenett 2020, Bollyky and Bown 2020) while trade critics have capitalised on the disruption brought by the pandemic to promote a new 'securitised' discourse on trade and health (Orbie andDe Ville 2020, Siles-Brügge 2020). ...
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Chapter
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