There is a story going around these days. It is that the world is closing. We see people demanding new borders, walls and divisions, loudly claiming that such a development is inevitable.
After decades of connections made, relationships strengthened and opportunities seized, they claim that the pendulum now, inescapably, is swinging back in the other direction. It would be a compelling narrative but for one thing: it is a fiction.
While some stark exceptions exist – some are indeed doing their best to close borders – the trend is still overwhelmingly towards more connection and cooperation. While a few come apart, many more come together, becoming much stronger as a result.
The EU is a great example of how win-wins are possible – in the area of trade in particular. Bargaining as 500 million people is a vastly stronger position.
Tomorrow, European cooperation in trade policy culminates in one of its biggest successes of the past decade – the Economic Partnership Agreement between the EU and Japan will enter into force. It will be a vital economic boon for the EU and for Malta. It is the biggest bilateral trade agreement ever negotiated, covering an area of over 630 million people.
Japan is already Malta’s sixth biggest trade partner outside the EU. The agreement brings down barriers for business, like tariffs and expensive, overlapping bureaucracy. This is good news, especially for smaller companies.
While larger companies may be able to handle the costs of such barriers, smaller companies often suffer – and small and medium-sized enterprises, or SMEs, are 99 per cent of businesses in the EU.
More than 44 Maltese companies export to Japan, and 83 per cent of those are SMEs. Aside from lowered barriers, the EU includes special provisions to help smaller companies access markets – like Small Business Contact Points and online information.
Around 1,262 jobs in Malta are supported by trade with Japan
Small companies create 85 per cent of new jobs in the EU, so increasing their access to trade will be an engine for job growth too. At the moment, around 1,262 jobs in Malta are supported by trade with Japan.
When you zoom out to the whole EU that number is around 740,000 jobs. If you account for all EU trade together, it supports 36 million jobs all over Europe.
On average, these are better jobs too, paying 12 per cent more. Open trade has been a driver of jobs and growth in Europe – and we are good at it.
We have been working in recent years on truly modernising our trade policy. Our agreement with Japan is a state-of-the-art trade deal, including provisions promoting green tech, strong legal standards to protect worker’s rights, opening up of Japan’s services markets, and allowing EU firms to bid on public contracts – most notably on contracts in the railway sector.
It commits Japan to international car standards, so EU exports of cars to Japan is made much easier. It also ensures that intellectual property is respected and gives protection to over 200 certified European delicacies.
While all of these are welcome benefits for Malta’s economy, it is important to remember that this agreement is about more than economics – it is also a strategic alliance.
When some are closing their doors, it is important that those who believe in openness come together. We need to demonstrate the benefits of cooperation, while standing up for the institutions that have underpinned global stability for decades.
Following years of instability and war, those who came before us built institutions to reinforce our economic and political security. The United Nations for political cooperation and the World Trade Organisation (WTO) to create a predictable environment for international trade.
We cannot go back to trade as it was before – with tit-for-tat trade wars, fluctuating tariffs and no rules on services or intellectual property.
The current system is not perfect, but we cannot afford to lose it.
Europe is willing to stand up for these institutions and Japan will stand with us. This trade agreement serves to strengthen our ties, paving the way for deeper cooperation also in areas like reforming the WTO.
There are hard truths to face in the coming years. More than 90 per cent of global growth will soon take place outside the EU. Our competitors are building connections and growing stronger.
Both our bilateral trade agreements and the WTO are critical to ensuring that globalisation happens in a fair, rules-based way.
If we want to stay ahead of the curve, we must create the bonds that will help us stay afloat in the shifting seas of global politics.
Our Japan agreement is one such tie – strengthening our economy and the economy of our Japanese partners, while building a circle of like-minded friends that will be vital in the years ahead.
Cecilia Malmström is European Trade Commissioner.
This is a Times of Malta print opinion piece
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