EU puts WTO at the heart of greener trade reform push

On Thursday, the European Union placed the reform of the World Trade Organization at the heart of its trade strategy for the next decade, saying that global trade rules need to be greener, more accountable for state subsidies, and enforced.

The executive body of the 27-nation bloc also said it would seek to work with the U.S. administration of President Joe Biden to address a confidence crisis in the WTO, where trade dispute settlements and negotiations are deadlocked.

“A key driver of the crisis is that China’s accession to the WTO has not led to its transformation into a market economy,” the European Commission said in a communication. “The WTO has not been able to negotiate new rules to tackle this.”

The Commission, which oversees the EU’s trade policy, places the fight against climate change at the core of its new “open sustainable and assertive” strategy. It wants green action to be integrated into trade deals and wants a more environmentally conscious WTO as well.

This could include trade liberalization for certain green goods and services, or agreements to reduce subsidies for fossil fuels.

Following Monday’s appointment of Nigerian Ngozi Okonjo-Iweala as the first woman and the first African to head the WTO, the Commission said it was encouraged.

The EU executive said it would propose a package of WTO reforms based on sustainable growth, including gender and labor rights, and would begin talks on new rules to prevent distortions of a trade by state-owned enterprises.

It will also aim to restore the Appellate Body of the WTO, the ultimate arbiter on foreign trade crippled by the previous administration of the United States.

It claimed that it hoped for an early indication from the United States that it wanted to enter into good-faith talks, which might restore confidence and lead to an agreement.

When critics concentrated on the proposed EU-US Transatlantic Trade and Investment Partnership (TTIP), the EU’s Trade for All Analysis of 2015 aimed to prove that free trade benefits customers, employees, and small businesses, and to answer the fears of those who fear they are losing out of globalization.

The new strategy is mainly a reaction to the U.S. The withdrawal from globalization by President Donald Trump into an “America First” policy.

The EU itself feels bruised by trade wars, Brexit, and what China sees as unfair rivalry, which it perceives as a ‘systemic rival’ and takes more assertive action to uphold global trade laws and to maintain a level playing field.