Import-competing companies from the CEE region and policymakers should push forward the green trade policy agenda and strongly advocate for its implementation in a robust framework and coherent manner. “Green realism” is an attitude that perceives the conditions related to sustainability introduced to trade agreements and domestic regulation through the lens of the position of domestic producers within global value chains. Simultaneously, to avoid accusation of merely being “green protectionism”, the green reorientation of trade policy must be accompanied and mutually strengthen the domestic policies and regulations.
- Due to its strong position and its big share in the world trade, the EU has the potential to use its trade policy as the “powerful tool” to extend the range of its domestic policies beyond the Union borders. This opportunity has also been recognised by the European Commission with respect to climate policies, such as its landmark green growth strategy: the European Green Deal. With the smart use of trade policy instruments, the EU may increase global outreach of the European Green Deal and increase the level of global ambition. The war in Ukraine, raising new security issues for Europe, adds a significant impetus to the European Green Deal. The EU has already declared its goal of fast reducing dependency on Russian fossil fuels and ramping up the production of clean energy. This acceleration may have a broad influence on various EU policies.
- The EU, until very recently, has not used the full potential of its global trade position to the benefit of climate policies. However, since 2019 – through its trade policy review – the Commission has undertaken a “green shift” of its attitude towards trade, accompanied by a fundamental change of its approach to the strategic autonomy concept. The war in Ukraine adds an additional argument for pursuing the path of combining the two elements and implementing the concept of the “green strategic autonomy”. However, this reorientation demands a more proactive and coordinated approach of the Commission, European Parliament, and Member States towards unselective and coherent application of trade instruments and adopting new ones.
- The trade policy of the EU has traditionally been driven by the Treaty obligation of promoting trade liberalisation and the EU maintained “openness” to trade even in changing circumstances. Introducing measures that strengthen the TSD provisions in trade agreements or introduce additional market access conditions related to the environmental footprint of the products inevitably leads to a decrease in “openness”. It however enables better safeguarding of the competitive position of import-competing companies and introduces a global “level playing field” in terms of sustainability standards.
- The green trade agenda of the Commission, as well as the assumptions and policy instruments, are still not recognised as the political priority in the Central and Eastern Europe region. The political discussion and public debate are focused more on domestic policies of the EU, although “greening” of the trade policy of the EU may have significant consequences for the trade flows of the CEE countries and thus their overall economic situation. EU membership had a positive effect on their trade volumes, both within and outside the EU, but the position and share in trade with the main partners of the leaders in the region – Czechia, Hungary, and Poland – is relatively stable.
- The green shift of the EU trade agenda poses twofold opportunities for CEE countries. Firstly, levelling the regulatory sustainability requirements for EU-based and foreign-based producers can create incentives for reallocating production from polluting overseas countries to CEE countries. Such “nearshoring” can be driven by the stability of supply, lower environmental footprint of production itself, and lower transport emissions and costs. Secondly, green trade creates export opportunities for producers of the emerging sustainable technologies and can strengthen their production capacity. However, to take advantage of these opportunities, the CEE countries should take decisive actions in the field of green transformation and create favourable conditions to benefit from first-mover advantage.
- Therefore, import-competing companies from the CEE region and policymakers should push forward the green trade policy agenda and strongly advocate for its implementation in a robust framework and coherent manner. CEE representatives are best advised to emphasise the need to implement policy adjustments and sustainability conditions as a part of the approach described therein as “green realism”. Pursuant to its basic assumption, green realism is an attitude that perceives the conditions related to sustainability introduced to trade agreements and domestic regulation through the lens of the position of domestic producers within global value chains. Simultaneously, to avoid accusation of merely being “green protectionism”, the green reorientation of trade policy must be accompanied and mutually strengthen the domestic policies and regulations.
- This policy brief brings a comprehensive analysis of the European Union approach, as well as assesses its effectiveness to 23 February 2022. From then on, the EU has adopted various restrictive measures on Russia in connection with the war in Ukraine. They inculde, but are not limited to, sanctions imposed on the Russia’s financial, energy, airspace and transport sectors, and the Russia-EU exchange of dual-use goods and advanced technology items. It remains clear that these restrictive measures will have the impact on the EU trade in many areas, which provides an additional argument for speeding up the green transformation in the EU to reduce dependency on imports from Russia. This development is signalized in this paper in the part related to the “green strategic autonomy”, however, the mid- and long-term scenarios of this will be outlined in the final report in this project.