Sunday May 31, 2020

Comment: This is not the time to turn our back on global trade

International trade has many flaws, but it still offers the greatest opportunity for Europe to return to prosperity post-pandemic – as well as a chance for Africa to share in the benefits

19th May, 2020
The Covid-19 pandemic has shaken the foundations of our understanding of the global trade system

Global trade has long been at the core of global politics: who exchanges goods and services with others, under what conditions, and how can we use this exchange to lift living standards and quality of life for all?

Free trade has been of significant benefit to Ireland for decades, and is the foundation on which the European Union was built. The EU began through the European Coal and Steel Community, aiming to ensure that no country would go to war with another, having mutual dependency through common trade.

Since then it has been developed and enhanced with peace as its foundation and its core. Membership of the EU has been good to Ireland, giving the country access to its single market, opening up the potential to trade to many millions of people and thus allowing us to attract investment and companies from all over the world.

Today, 60 per cent of US foreign direct investment comes from the EU, while 55 per cent of EU foreign direct investment comes from the US: win-win. It is fair to say that without access to the EU, we would be nowhere near as prosperous as we are today.

The Covid-19 pandemic has shaken the foundations of our understanding of the global trade system. China’s dominance in essential sectors, as well as the lack of availability of essential tools to fight the coronavirus due to longer supply chains, have been difficult issues to manage for the Irish government.

Across the EU, national governments and the European Commission have struggled with delays in access to personal protective equipment (PPE) and reagents for processing tests. As a result, private citizens and indigenous companies have pivoted their manufacturing to produce what we could not buy on the global markets.

At the same time, the receipt of faulty or unsuitable equipment from overseas on occasion has raised fair and reasonable questions about trading in good faith.

International trade is imperfect. When global demand for an item peaks unexpectedly, there may be shortages. Some international companies display a disregard for the environment and exploit the most vulnerable as part of their drive for ever bigger profits, which is highly damaging and very concerning.

These are flaws in the system, serious ones, which must be addressed. Higher environmental standards and a commitment to workers’ rights are essential for the future of trade. A binding United Nations treaty on business and human rights would contribute significantly to these objectives.

However, those who seek to demonise the trade deals reached with far-flung places regrettably forget that they are often used as a tool to combat those very wrongs. Without global trade and the conditions that can be applied to deals, issues such as good governance, human rights and environmental protection would often remain unaddressed.

To withdraw into ourselves and seek to produce only what we need at any given time would be retrograde. It would not just cost us much of the prosperity we have come to enjoy, but would deny that prosperity to millions of people across the world.

Having watched Ireland grow out of the dark days of the 1980s to a prosperous and forward-looking country, I know the benefits that trade can bring and the legacy it can leave behind. We must share those benefits as they were shared with us, starting with Africa, Europe’s nearest neighbour.

The EU’s new strategy for Africa is a top priority within the European Parliament. Africa is beginning to prosper and thrive, despite the many injustices perpetuated by Europeans on it and its people for centuries. There is huge potential within the continent which is seeking to shake off the poverty-stricken image of its past.

It is in Europe’s interest to ensure peace and prosperity in Africa. This will be essential to ending those heartbreaking and treacherous journeys across the Mediterranean by desperate people who see no other choice.

For too long, aid, grants, loans, debts and missions to Africa from Europe have been delivered in a paternalistic and often condescending manner. A new strategy for Africa must be one based on partnership, friendship, cooperation and investment, both of a public and private nature.

We must forge a reciprocal relationship centred on the education of a knowledge-hungry and growing young workforce, with the promise of jobs and a good economy. Crucial to this will be global trade and investment.

The Africa-Europe Alliance for sustainable investment and jobs was announced in 2018 and is the right approach. An agreement built on mutual trust and partnership, it commits both sides to trading goods and services as equals for mutual benefit. This is not just a political priority, this is a joint imperative.

In these days of Covid-19, we should not turn our back on global trade but rather continue to invest it in. As we were lifted up by it, so too should we do the same for others.

Frances Fitzgerald is a former Tánaiste and Minister for Business, Enterprise and Innovation. She is an MEP for the Dublin constituency and sits on the European Parliament‘s economic and monetary affairs committee

Related Stories

Irish and British universities have discovered the fragility of their reliance on the huge fees paid by a seemingly limitless pool of international students, and will also have to ask themselves whether they are educational institutions focused on the public good, or primarily businesses focused on revenue raising

Deirdre Heenan | 12 hours ago

The government instantly slapped down Michael O‘Leary for questioning the requirement of air travellers to self-quarantine for two weeks. But the lack of debate about the trade-off between Covid-19 risks and long-term damage to the economy is frustrating many businesses

Ian Guider | 12 hours ago

It’s understandable that Michael O’Leary and other business leaders are lobbying for restrictions to be lifted immediately, but they cannot be allowed to undermine Nphet or determine policy

Elaine Byrne | 12 hours ago