Before the summer, Von der Leyen proposed a redesign of the World Trade Organization (WTO), and in her September State of the Union address she called for doubling efforts in trade diversification and partnerships, as well as building a coalition of “like-minded” countries with the aim of reforming the global trade system. This task has been undertaken for nearly a year by Trade Commissioner Maroš Šefčovič.

Maroš Šefčovič’s liberal campaign

The Union must pull together, and despite some differing views of member states on elements of individual free trade agreements, the EU must now demonstrate speed, flexibility, and above all unity in negotiations (ultimately, any deal must also be approved by the EU Council and the European Parliament).

After all, these are markets with a population of over two billion. At this point, Maroš Šefčovič’s liberal campaign (pushing for free trade agreements) is a strategic interest of the entire EU.

The Slovak EU Trade Commissioner recently stated that the EU has made progress in negotiations with Indonesia, while other ASEAN countries (Vietnam, Thailand, Malaysia) are also highly interested in cooperation with the EU, which is not surprising given the level of U.S. tariffs in the region. Efforts are also being made in Latin America and the Middle East.

The biggest player, however, is India, with which the ambition is to reach an agreement this year. This campaign in the name of free trade and diversification represents an unprecedented pace of progress in negotiating free trade agreements.

The law of action and reaction

The world is on the move. The race to secure favorable deals is happening everywhere. South Korea is considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (12 countries under a free trade agreement). Von der Leyen specifically mentioned this bloc in her September 10 speech. The United Kingdom has signed a deal with India. At the BRICS summit, the Chinese president declared that “we must continue to support the building of an open global economy,” while in June China announced zero tariffs for the entire African continent.

The law of action and reaction did not take long to appear, and new projects are emerging in other regions as well. A new group—the Partnership for Future Investment and Trade (FIT-P)—is expected to bring together about 10 countries. Founding members will be the United Arab Emirates, Singapore, and New Zealand, with Morocco, Rwanda, Norway, Uruguay, Costa Rica, Panama, Paraguay, and Malaysia also expected to join. The group’s goal is to strengthen economic ties between countries while adhering to international trade rules.

It is clear that geo-economically, fragmentation is occurring alongside efforts to preserve free trade. And geopolitically? The joint photo of the top leaders of China, India, and Russia is, at this moment, more PR than a real power shift (historical tensions, disagreements, and even recent open border conflicts so far condition only pragmatic cooperation between India and China).

However, it is true that “we will lose this contest,” as the Finnish president bluntly warns, if we as the transatlantic community do not pursue a more cooperative and dignified foreign policy toward the Global South.

The EU in decline – the numbers don’t lie

A year ago, Mario Draghi drafted a plan to boost the EU’s competitiveness, but it seems that only 11% of his recommendations have been implemented after a year.

The EU’s largest economic engine is also struggling. The German Bundesbank reports a loss of competitiveness of German exporters in global markets, facing competition mainly from China.

Austria is responding with a financial support package for exporters seeking to enter new markets such as Mexico, Vietnam, India, Japan, Southeast Asia, or the Western Balkans. Poland is experiencing unprecedented economic success and is aiming for a lucrative position in the G20, with an economy approaching €1 trillion.

And Slovakia? Yes, the government has signaled kurzarbeit (short-time work schemes) for Slovak carmakers due to U.S. tariffs. In economic diplomacy, we are also establishing old-new embassies, though some are being closed at the same time. Geographically, they are being allocated to geo-economically trending regions in Africa and Asia, but the effort to increase the number of economic diplomats from 17 to 43 is insufficient compared to Hungary (115 economic diplomats in 83 countries).

Export support, thanks in part to the EU, may bring interesting opportunities in new, rapidly developing markets as well as in Ukraine’s reconstruction (especially in infrastructure and energy). Therefore, a period of consolidation paradoxically also represents an opportunity—for change, for setting goals, and for shaping perspective. However, with the next announced consolidation, Slovakia is likely to squander it.

Author: Filip Šandor, analyst and co-founder of EXPORT ANALYTICA for SITA