Brussels’ shift in the Indo-Pacific

Ursula von der Leyen can claim another success in her trade diversification strategy designed to counter Donald Trump’s protectionism and the economic threat from China. The President of the European Commission has announced a breakthrough on a free trade agreement with the Philippines, which is expected to be finalised within a few months. The details have yet to be finalised. However, the outlook is positive for the EU. The Philippines have agreed to reduce tariffs on European exports of pork and poultry, two sensitive products for the country. For the first time, they will also open up the public procurement market to foreign firms – specifically European ones. The EU has made some painful concessions, such as a reduction in tariffs on tinned tuna. However, with a population of 118 million, the Philippines represent a rapidly expanding market. This agreement, which follows on from those concluded with India, Indonesia and Australia, confirms the EU’s determination to expand its presence in the Indo-Pacific. The next targets in Asia are Thailand and Malaysia. On other continents, von der Leyen can point to the agreements with Mercosur and Mexico. The EU is also preparing to make Canada its closest partner.

The Commission is demonstrating once again that trade is what it does best. The elephants in the room remain: Donald Trump, with the constant threat of new tariffs, and China, with whom von der Leyen wants a dialogue that yields results. Trade Commissioner Maros Sefcovic will travel to Beijing in October to reap the rewards. The stakes go far beyond trade relations. “Given the size of the trade deficit with China, the speed at which it is growing and the impact on key economic and industrial sectors in the EU, we are talking about the future of our economy, our industry and the European social model,” said Sefcovic. A “political shift” is needed on Beijing’s part. But the signs are not encouraging.