Brussels: Over the past five years as the European Union’s trade chief, Cecilia Malmstrom has reached deals to expand more than 295 billion euros ($325 billion) of the bloc’s commerce with the rest of the world.
That market-opening success is no small feat as Malmstrom, known for her civility and consistency, pushed to counter U.S. President Donald Trump’s protectionist challenge to the global trade order.
Due to step down on Saturday, the 51-year-old Swede leaves behind a series of concrete accomplishments — including three blockbuster free-trade agreements — that will chart the EU’s course for decades beyond the current tumult in international commerce.
“Malmstrom doesn’t shout, but she is far from toothless,” said Jacques Pelkmans, a trade-policy expert and senior fellow at the CEPS think tank in Brussels. “She will always remain a diplomat rather than bang tables. That is not a weakness.”
As the only female European trade commissioner to date to serve a full term, Malmstrom has overseen the biggest EU offensive in the field of international commerce in the bloc’s history.
U.S., China Threat
At the same time, she has led a defensive campaign to prevent the World Trade Organization system from collapsing under the combined strains of U.S. protectionism and China’s failure to become a full market economy almost two decades after joining the WTO.
“While being very open, civilized and thoughtful, Malmstrom has also been principled and tough when needed,” said Eleonora Catella, a senior adviser on trade matters at the Business Europe confederation in Brussels. “She has achieved a lot.”
To be sure, the deterioration in EU relations with the U.S. as a result of Trump’s “America First” agenda and the inconclusive efforts to prod economic changes in communist China will form bitter components of Malmstrom’s legacy. They will also preoccupy her successor, Ireland’s Phil Hogan, who has been European agriculture commissioner.
The U.S. and China may be the EU’s top two trade partners, but they are threatening in different ways the global commercial order to which the 28-nation bloc is committed. And with the U.S. and China locked in a trade war, the threats are as serious as ever.
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But the tests posed by Trump and Chinese President Xi Jinping have played roles in Malmstrom’s policy successes by adding urgency to Europe’s efforts to open international markets and uphold the rules-based multilateral commercial order.
“It’s been five fantastic, dramatic and challenging years,” Malmstrom, who plans to teach at a Swedish university next year, said in the Belgian capital on Nov. 21 after her last meeting with the EU’s national trade ministers.
In rapid succession the EU reached landmark trade accords with Canada and Japan after five years of negotiations, securing the bloc’s first such pacts with fellow members of the Group of Seven leading industrialized nations. Then Malmstrom and her team struck an accord with Argentina, Brazil, Paraguay and Uruguay — the so-called Mercosur group — following two decades of talks, surprising even seasoned EU observers.
“Perhaps the conclusion of the EU-Mercosur agreement was even more satisfying,” Malmstrom told Bloomberg on Nov. 26. “There were many, including within the EU, that thought it would never happen” and “when it was finally done the whole room stood up to applaud each other. It had really been a negotiating marathon and not many of us had got much sleep by that point.”
In each case, the message from the parties was that free-trade agreements are important not just because they generate economic benefits but also because they mark a political bulwark against protectionism. This stance is likely to propel EU market-opening negotiations that Malmstrom kicked off last year with Australia and New Zealand.
While U.S. unilateralism has driven the EU’s agenda of free-trade deals, China’s state-sponsored programs to expand exports and foreign investment lie behind two other European policy breakthroughs under Malmstrom.
The first involved a revamp of European rules on countering below-cost — or “dumped” — imports in a way that both met EU legal obligations tied to China’s WTO membership and maintained the bloc’s ability to curb unfairly priced foreign goods with duties. The overhaul, which Pelkmans of CEPS called “very smart,” reflected a compromise between the competing interests of European importers and manufacturers.
The second major success on this front was European legislation — the first of its kind — meant to prevent foreign investments from threatening national security. Deemed for years too controversial even to propose because of opposition in EU national capitals, the new law ended up winning final political approval in just 17 months.
Saving the WTO
On the global front under Malmstrom, the EU has led efforts to bolster the WTO by enabling it to tackle industrial subsidies and to sidestep an imminent deadlock on the trade arbiter’s appellate body caused by a U.S. refusal to consider new appointments.
These two initiatives have no guarantee of success, highlighting Europe’s lingering vulnerabilities. In addition, the EU’s own agenda of striking free-trade deals has weaknesses because talks with key emerging economies such as India are on hold and because it excludes China, with which the bloc first wants to reach an investment pact.
In navigating through this uncertainty, Malmstrom has been steadfast in extolling the benefits of free trade and in urging China and the U.S. to act in ways that support it.
“To both the U.S. and China I say this: don’t take the WTO for granted,” Malmstrom said in her remarks to Bloomberg on Tuesday. “We need to work together to make it fit for purpose for the modern economy.”
Her main demand of Beijing has been to make good on pledges to pursue more open trade and investment policies. Her primary request of Washington has been to work with the EU to defend a global commercial order that the U.S. itself was instrumental in establishing.
“The U.S. needs to find the space between pulling the punches and pulling the plug,” Malmstrom said in March. “We are worried that the system is threatening to break altogether.”-Bloomberg
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