EU’s external trade: new aspects in development strategy

Complexities of the European external trade and neighbors’ policy represent an important part of the broad and cross-sectoral European integration process. Both European states and various countries around the world urgently need positive investment initiatives: hence the EU starts using new investment facilities called “global gateway” to stimulate growth around the world.

Global and European geopolitical uncertainties, as well as modern challenges and climate change, to name a few, have raised vital issues in national political economies concerning progressive investments and adaptive development strategies. The presently active European external growth strategy (since the end of 2021), the so-called European Global Gateway, EGG – offers massive investments to the less fortunate countries in the world in creating resilient and sustainable growth patterns.
For several years, the European Consensus on Development (adopted in 2017) was committed to eradicating poverty and building a fairer and more stable world, as part of its response to the UN 2030 Agenda for Sustainable Development and its Sustainable Development Goals, SDGs; the consensus defines the EU shared vision and action framework for development cooperation.
On European strategic priorities in development in: https://eeas.europa.eu/archives/docs/enp/pdf/financing-the-enp/enp_wide_strategic_priorities_2014_2020_and_multi_annual_indicative_programme_2014_2017_en.pdf

The European Commission’s EGG pursues two main goals:
a) To boost EU development aid efficiency and effectiveness; it works with numerous Commissions’ departments (so-called DGs), the European External Action Service (EEAS) and other EU institutions/bodies and the EU delegations around the world. The head person in this direction is Josep Borrell, High Representative for Foreign Affairs and Security Policy (and vice-president of the Commission).
More in:
https://ec.europa.eu/international-partnerships/our-partners/eu-institutions-and-countries_en

b) To accelerate the “EU in the world” policy-connections, with the Commissioner for neighboring policy (Olivér Várhelyi, working closely with the European External Action Service) plying a vital role.
Reference to:
https://ec.europa.eu/info/departments/european-neighbourhood-policy-and-enlargement-negotiations_en#responsibilities

Changing global developmental dynamics
Rapidly changing geopolitical situation require new approaches to global growth and investment; thus, present Russia-Ukraine military conflict has added additional pressures on both EU and global economies: energy prices have skyrocketed alongside inflation and food products; hence, vulnerable countries and their consumers feel massive food crisis. At a time when the global economy is longing for stability, recovering measures and transformation, investors are facing growing uncertainty: both Europe and the world urgently need positive investment initiatives.
Most important are presently investment in clean energy, in roads and bridges that are flood-proof or buildings that can withstand extreme heat waves, etc.
It is also necessary to investment in such priority spheres like progressive health systems to withstand possible pandemics in future, as well as, for example, investing in measures to adapt farming to drier conditions.
Some other sectors are vital for investment too: e.g. investment to equip European workers with skills that match the jobs of tomorrow, to invest in digital infrastructure and modern ICT as a perspective trend in sustainable and digital new economic patterns.
In short, life of future generations depends more than ever before on the quality and quantity of the EU and the states’ investment in modern socio-economic infrastructure.

New aspects in the EU’s aid strategy: global gateway’s concept
In December 2021, the EU unveiled the Global Gateway, i.e. a plan to support infrastructure development around the world with an idea of mobilizing about €300 billion between 2021-2027 for connectivity projects, notably in the digital, climate and energy, transport, health, education and research sectors. Hence, the Global Gateway is about increasing investments promoting democratic values and high standards, good governance and transparency, equal partnerships, green and clean, secure infrastructures and that catalyse private sector investment.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6433

The rationale behind this European investment initiative is clear: the world needs major infrastructure investments. For example, the World Bank has estimated that to achieve the goals of climate and environmental protection, as well as providing a universal access to energy, water and sanitation, greater mobility, and improved food security, the world must invest around €1.3 trillion per year in infrastructure. In this regard, the new European development strategy is aimed at boosting smart, clean and sustainable growth with secure links in digital, energy and transport infrastructures. It would also strengthen health, education and research systems across the world.
The strategy stands for sustainable and trusted connections that work for people and the planet, to tackle the most pressing global challenges, from climate change and protecting the environment, to improving health security and boosting competitiveness and global supply chains.
Global Gateway with €300 billion in investments for 2021- 2027 would accelerate global and regional recovery, taking into account partners needs and the EU’s own interests.
More in: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6433

The European external growth strategy – the EGG – offers massive investments to the countries in the world that need them; out of expected € 300 billion support about half is destined for Africa. The EGG has “the size to make a difference”; it is both important and lays out a new approach to big infrastructure projects around the world.
In many partner-countries, investment options are often limited and available at a very high price – quite often at the expense of environmental quality and a compromised sovereignty.
Sustainable mutual benefits are the EGG’s main philosophy’s component: they can help to bridge the global investment gap. Therefore, the EGG represents an opportunity to end unhealthy dependencies and invest in partnerships of equals; thus, the EGG is a sign of European future development cooperation with the outside world.
However, the EGGs projects and investments have to be sustainable both for the environment and for the partners’ finances with social responsibility and delivering lasting benefits for local communities and making the EU neighbors and partners more resilient to all kind of risks and shocks. With the EGG, the EU states would replace some countries’ unsustainable dependencies with more balanced inter-dependencies; hence, the demand for a transparent and value-based investment programs will grow stronger.
Source: https://ec.europa.eu/commission/presscorner/detail/en/speech_22_3903

EGG’s goals and possibilities
Three goals are expected to be achieved due to EGG investment opportunities in perspective growth in other states’ development: resilience, sustainability and mutually beneficial cooperation.
First initiative is towards resilience: the last few months have shed light on some of the great imbalances of the global economy; several continents (e.g. Africa, Latin America and the Caribbean, etc.) while having immense potentials with huge mineral resources, skilled researchers and a growing manufacturing capacities, etc. are still importing, for example, ten times more pharmaceutical products than exported. With the EGG, the EU member states can make these countries and business partners stronger and more resilient, because the stronger they are, the stronger would be the European states.
More in: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6433

Food security is about resilience too: about 50 years ago Africa produced all the food it needed; constant military conflicts on the continent and climate change have made the states heavily dependent on food imports. With the presently looming the EU is working on getting more grain to global markets and to assist most vulnerable countries facing emergency. Besides, the EU’s policy is to step up every continent’s own production capacity and resilience.
For example, the so-called African “Great Green Wall” strategy has already retaken millions of hectares of land from the desert, boosting food production from Senegal and Niger to Ethiopia. Although only 15 percent of the strategy has been completed, the EU’s global gateway will provide assistance to combat food insecurity and measures to prevent climate change.
The EU has just proposed to mobilise an additional € 600 million to strengthen local production in vulnerable countries, on top of the existing package of € 3 billion for global food security, with the mid- and long-term solution is local production and national resilience.

Second initiative is sustainability: in a world of limited resources urgent climate action measures, all infrastructure investment must be future-proof; however, now about 600 million Africans do not have access to electricity and clean energy – that’s more than the EU’s entire population. Clean energy from renewables is the only option that can both turn the lights on and preserve Africa’s unique nature; and Africa has an abundance of wind and sun.
With the EU’s global gateway, it is possible to provide access to electricity from renewable sources to 100 million people by 2030. Besides, with clean hydrogen, Africa can both power its rising industry and sell clean energy to other continents: this is good both for all partners’ economies and for the global sustainability.

And thirdly, the EGG is about cooperation with various partners and neighbors, as economic cooperation is the best way to peaceful coexistence. But in many parts of the world the next-to-door trade is becoming more difficult than trading with far-away countries; thus, the EGG will invest in strategic transport corridors, with a focus on clean modes of transport, for instance to link landlocked areas with sea ports.
The EU is already work with partners to identify and develop these corridors, e.g. in the Western Balkans, in Africa and in Central Asia; this initiative will create both new trade opportunities and make better neighborly relations, as the global gateway is not only open for cooperation with all states but shows the positive effect of a value-driven investment.
Besides, cooperation is needed in resolving vital global challenges like climate change. At the end of March 2022 the leading international authority on climate change (IPCC) issued a strong warning to the global community by demonstrating that the plant’s climate was changing faster than the nature capacity to adapt to anthropogenic changes. Therefore, all states have to “speed up investment” in adequate climate regulatory measures, cut emissions, adopt sustainable growth models, etc.; otherwise humanity is going to face dramatic consequences.
The opportunities for action are numerous, though the global climate-investment gap is still growing and global infrastructure investment collapsed during 2020-21 because of the pandemic; it is going to take some years to get back to pre-pandemic levels of investment.

Other comments…
The EU’s governance believe that the “global gateway“ would turn back the clock to the days when the EU not only focussed its external aid‘s investment/spending on infrastructure but also emphasised its “political neutrality”.
The geopolitical context in the EU external finds, however, have been dramatically transformed by pandemic and post-pandemic years, by military conflicts and global multipolarity in the world: these events are still playing vital role in political economies.
Hence, the EGG sends a signal to the world that major adjustment in the EU’s response is to facilitate modern socio-economic transformations, particularly regarding the EU engagement with the “global south”; the letter is going to create a new paradigm in the EU’s external development policy, defined by the block‘s strategic interests in the world.
However, the EGG as a new European geostrategic framework could weaken the EU’s traditional commitment to other core external develop¬ment policy principles, which have been focused primarily on poverty, equality human rights in partner-countries and “do no harm” principle. The EGG is using “aid investment“ principle to reduce commercial and corporate investment risks; in this regard, some specific measures would be needed to safeguard and promote other EU principles and values.
Reference to: https://www.die-gdi.de/en/briefing-paper/article/europes-global-gateway-a-new-geostrategic-framework-for-development-policy/

More information in: = Joint communication by the European Commission and the High Representative on Global Gateway; = Questions & answers on Global Gateway; = Factsheet on Global Gateway; = State of the Union Address by President von der Leyen

 

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