EU Trade Policy: DGAP Expert Calls for New Global Partners and “Mini-Deals

European Union Trade Strategy Overhaul Needed to Counter US and China, DGAP Expert Warns

The European Union must rapidly forge new trade agreements and modernize existing frameworks to protect its economic security against the aggressive trade policies of the United States and China, according to Claudia Schmucker of the German Council on Foreign Relations (DGAP), Frankfurter Rundschau reported. Speaking in an interview with the outlet, Schmucker stated that the EU’s current focus on protective tariffs falls short without robust international partnerships.

Europe faces intense geo-economic pressure from trade disputes, disrupted supply chains, and the broader superpower rivalry between Washington and Beijing. The EU’s economic security strategy relies on three pillars: protecting against unfair trade, promoting strategic domestic industrial bases, and building international partnerships. Schmucker emphasized that the third pillar regarding partnerships currently receives too little attention from policymakers.

Expanding and Modernizing the EU Trade Network

The European Union already maintains a vast network of trade partners, encompassing roughly 80 nations globally. With traditional free trade agreements nearing completion following expected deals with the Philippines, Malaysia, Thailand, and the United Arab Emirates, Schmucker told Frankfurter Rundschau that the bloc must shift its focus toward deepening current relationships and cutting through bureaucratic hurdles.

This modernization effort requires a three-pronged approach:

• Ratifying stagnant agreements quickly, noting that even the trade deal between the EU and Canada, known as CETA, still only operates on a provisional basis.
• Updating older agreements from the 1990s and early 2000s to cover modern economic sectors, a step already taken with Mexico and Chile to secure access to critical raw materials.
• Consolidating bilateral treaties into broader frameworks to help businesses bypass complex, individual rules of origin.

Implementing Mini-Deals and Regional Rules for Supply Chains

To bypass the lengthy negotiations required for comprehensive 25-chapter trade pacts that comply with World Trade Organization standards, Schmucker advocates for targeted sector-specific agreements termed “mini-deals.” These pacts would establish rapid rules for digital commerce, cross-border data flows, artificial intelligence standards, online consumer protection, and sustainable supply chain investments in clean technologies, similar to existing efforts with South Africa.

To ease corporate compliance burdens across complex supply chains, Schmucker proposed utilizing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) network—which includes nations like Japan, Australia, Canada, and Mexico—to introduce regional origin protocols and diagonal cumulation. This flexibility would allow companies to source intermediate goods from a broader pool of 39 nations to meet the standard 50 to 60 percent value-creation thresholds while keeping sensitive domestic industries protected.

Trade friction also stems from EU environmental regulations like the Carbon Border Adjustment Mechanism, the deforestation regulation, and supply chain due diligence laws. Partners in the Global South frequently criticize these unilateral mandates as green protectionism. Schmucker noted that the EU must support developing nations financially through initiatives like Global Gateway rather than imposing strict compliance deadlines without adequate assistance.

While the WTO remains weakened and its rulebook retains the framework of 1995 without modern provisions for digital markets or AI, more than 70 percent of global trade still follows its foundational rules. Schmucker urged the European Commission and the German federal government to step up bilateral alliances and join plurilateral coalitions of willing nations to counter China’s dominance over critical raw materials in foreign growth markets.

Frequently Asked Questions About EU Trade Policy

What specific countries are next on the EU’s traditional trade agenda?

Following the conclusion of agreements with the Philippines, the EU is currently pursuing or finalizing trade talks with Malaysia, Thailand, and the United Arab Emirates, Frankfurter Rundschau reported.

How do existing rules of origin affect European companies?

Because the EU relies heavily on separate bilateral treaties rather than unified regional pacts, companies face heavy bureaucratic overhead by having to individually verify origin regulations for intermediate goods across different countries, according to the DGAP analysis.

What does diagonal cumulation mean for manufacturing supply chains?

Diagonal cumulation allows companies to count intermediate goods sourced from any country within a broader regional trade network toward the required 50 to 60 percent local value-creation quota, providing manufacturers with greater flexibility.

Over 70 percent of global trade continues to operate under World Trade Organization rules established in 1995.

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