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 A sustainable trade policy that benefits local and regional economies  

In this interview, Michael Murphy (IE/EPP), Member of Tipperary County Council, answers five questions on the importance of global trade for Europe's local economies, both in tackling the consequences of the pandemic and in promoting sustainability. The Chair of the CoR's Commission for Economic Policy (ECON) is the rapporteur of the opinion 'Implementation of Free Trade Agreement (FTAs): the regional and local perspective' to be adopted at the 1-2 July plenary session.

As the CoR Rapporteur on the 'Implementation of Free Trade Agreement (FTAs): the regional and local perspective', can you tell us why this topic is important, also in the context of the transitions to a more sustainable economic model that takes on the challenges and opportunities of the digital and environmental transitions?

The importance of international trade for the EU local economy is undeniable – 36 million jobs in the EU depend on exports outside the EU and small businesses exporting outside the EU employ over 13 million people. We are talking about the livelihoods of countless families and communities. Although the negotiation of FTAs is the responsibility of the European Commission, ensuring that global economic engagement does not increase inequality among EU regions is the prerogative of national governments, and in many cases, local and regional authorities. Companies that export internationally provide jobs and investment in communities locally – hence the topic is very important to the local levels of government. In current times of increased focus on sustainability and ensuring the implementation of the Green Deal and seizing new digital technologies, it is clear that global trade, via the provision of goods and services, has its role to play.

How has the COVID-19 crisis affected supply chains in the EU? Do you see a need for particular support for the sectors being hit hard by the crisis?

The COVID-19 pandemic has brought unprecedented change to the global trade order. Supply chains were shaken; lockdowns in all corners of the world significantly reduced demand; temporary border controls disrupted trade flows. We faced disrupted value chains and increased protectionism for essential goods such as personal protective equipment (PPE). Unfortunately, we have seen the drawbacks of an uncompleted single market. Europe must focus on enhancing its autonomy and economic security, as well as potential for job creation. We need the right set of tools to fight the impact of the pandemic and so I think that the revised Multiannual Financial Framework (MFF) proposal and its Strategic Investment Facility provides the much needed investment certainty to ensure that the EU industry can do more than just bounce and actually bounce forward. Overall, I think that this pandemic has really shown the importance of local value chains and strengthened the logic behind buying and investing locally.

Despite the overall benefits of FTAs for the EU economy, there is some evidence indicating that big companies disproportionately benefit. Have you had the chance to discuss this aspect with relevant stakeholders representing the regional/local levels in your opinion drafting process? What can the EU do to effectively help SMEs reap the benefits of open trade?

Throughout the preparation of this opinion, I met with a wide range of stakeholders representing EU's SMEs generally and also sectorally. Our dialogue showed that the uptake of FTAs among businesses is strongly affected by access to information about FTAs – and this is particularly important for smaller businesses. I think the EU should work on multiple levels. More needs to be done to address the knowledge gap surrounding EU FTAs by providing practical information. This includes making the available free tools to support businesses more user-friendly. I think local and regional governments can work alongside the European Commission to provide this hands-on support to businesses. The Commission must ensure that its work on promoting multilateralism and WTO reform to provide a level playing-field for European industry in global markets continues. This is particularly important in also fighting the COVID-19 pandemic economic crisis and restoring EU's competitiveness in global markets.

The recent Commission proposals on the next MFF and European Recovery Plan clearly show that the compass for Europe's recovery will be the green and digital transitions. Given the scale and depth of these two monumental challenges, what role trade policy could play in that regard? How do you think European SMEs can prepare for these transitions to reap their benefits with regards to trade?

I firmly believe trade policy is a powerful means to encourage and promote sustainability and digitalisation not only in our partner countries, but also throughout the EU's industry. In times of COVID-19 but also rising protectionism, it is clear that if the EU is to strive for sustainability outside the Union, we must do so at home with each stakeholder playing their role. It is manifest how global trade affects the world order – over the years, we have seen the impact on the creation of jobs, reducing poverty and powering economic growth. The leadership we have seen from the EU, in promoting trade that is free but fair, in its negotiations with third countries must continue. It has also always been very vocal in the sustainability chapters in trade agreements which ensure that sustainability and green rules are followed both by our partners and EU companies alike.

The date for the actual economic Brexit is very close. With the UK now having confirmed it will not seek an extension to the transition period, and negotiations on an overall future relations agreement proving difficult, how would this affect regional and local authorities in the EU27? What are the type of measures needed to mitigate the impact?

The CoR, since the very beginning of the Brexit debacle, has always been very vocal about its asymmetrical socio-economic ramifications. Let's be clear, the UK leaving the EU will mean significant and overwhelmingly negative changes for local and regional economies.  Ireland has been named as one of the most negatively exposed countries when it comes to Brexit but especially The Netherlands, Denmark, France, Germany, Sweden, Portugal, Poland, the Czech Republic, Cyprus, Malta and Hungary have a high level of exposure too.  In my own region, County Tipperary, like the rest of Ireland, local SMEs continue to work with local enterprise offices to improve diversification and reduce reliance on UK markets. Furthermore, the Irish government has put in place a number of funding schemes to support businesses in developing and implementing strategies to expanding trading in the EU. The hard work must continue. I appeal to policymakers to ensure the looming Brexit is not left off the radar!

Press Contact:

David Crous
Tel.: +32 (0) 470 88 10 37
david.crous@cor.europa.eu