The EU faces economic challenges due to geopolitical tensions and protectionism, affecting growth and investment. An analysis of global and EU capital flows up to mid-2024 shows concern over foreign direct investment and financial integration, threatened by the decline of intra-EU FDI.
The European Union seeks to strengthen its trade policy with partners such as Mercosur, Indonesia, India, and Australia. However, France is calling for mirror clauses that require foreign exporters to comply with the same production standards as the EU, which could hinder agreements and generate conflicts. It is necessary to cooperate with partners to define common goals and promote international standards rather than European ones.
The EU seeks to deepen trade with partners such as Canada, Japan, and the UK, considering rules of origin and expanding the Pan-Euro-Med free trade area. It also plans to cooperate with CPTPP countries and discuss digital trade and agreements with Mercosur. Plurilateral coalitions in the WTO could modernize trade rules. The EU and Germany need new agreements and alliances in a conflictive geo-economic environment.
Europe faces challenges with Russian military aggression and Chinese technological advancements. The EU must seek strategic autonomy, reform policies, strengthen the defense industry, promote AI, and create an innovation agency for dual-use technologies. Additionally, drive a digital euro, integrate electrical grids, foster a circular economy for critical materials, and reform fiscal rules. Globally, avoid protectionism, lead rule-based trade agendas, and protect global public goods.
Europe is in the midst of the competition between the US and China. The EU shares concerns with the US about China’s support for Russia and its trade practices, but economic dependence and diversity of opinions complicate political alignment. The US cannot expect direct military assistance, but rather economic and security cooperation. Both must unify efforts to reform global norms and face the economic challenge.
