The United States and China are increasingly using their economies to shape international relations, as well as regional and global regulatory structures.

Currently, the EU is in the process of developing sufficient measures and policies to react to – as well as influence – these strategies, thus addressing increasing concerns about being taken advantage of by China (and possibly the United States). The EU needs to use its trade policy actively to achieve strategic goals and to defend its interests and values, which are under pressure. In order to achieve the best-case scenario, which focuses on effective multilateral cooperation within the framework of the WTO, the EU needs the support of the United States and China in the long run, and this means finding ways to influence and team up with them, despite the present competitive international environment.

There has been a realization by the EU that it needs to reinforce its own trade toolbox to restore an economic level playing field with China and to address Beijing’s trade-distorting measures. The EU has thus acknowledged that an overhaul of its trade measures is necessary to adapt to a newly geo-economic trading environment. The arrival of the Biden administration also shows the need to think about how to re-engage with old partners, and to work more closely together with the United States to induce reforms in China; but the EU also needs to diversify and look for additional strategic partners.

Trade has become one of the most important and stable pillars of the strategic relationship between the EU and third countries. Due to the well-established structure of EU trade policy, the EU is a very active agenda-setter regarding the activities of its member states across a growing range of related policy fields. Due to the exclusive EU competence over trade, the European Commission has also been able to quickly react to crises. Nevertheless, European unity will remain key if the EU wants to continue its successful and strategic trade policy in the future.

On a bilateral level, the EU is increasing its resilience with regard to the great power competition and exporting its norms and values through the successful negotiation of various bilateral and regional trade agreements. The EU has an almost global net of different kinds of trade agreements in place. In the future, the EU also wants to strengthen the connection and enforcement between trade and climate issues. On a multilateral level, the EU is highly dependent on the transparent and rulesbased trading system of the WTO. But the organization itself is experiencing its deepest crisis since its creation in 1995 with all four pillars of the WTO deadlocked to a greater or lesser degree.