Turbulent autumn ahead for trade policy

The crisis in the multilateral trade system, the US–China trade war, and the promotion of the EU's wide interests have dominated the trade policy agenda during Finland’s six-month Presidency of the Council of the EU. What are the next topics to watch out for? We asked Pasi-Heikki Vaaranmaa, Director of the Trade Policy Unit at the Department for External Economic Relations at the Ministry for Foreign Affairs, for his thoughts in this fourth part of the “Sustainable Foreign Policy” series.

Tuomas Lähteenmäki interviewed Pasi-Heikki Vaaranmaa, Director of the Trade Policy Unit at the Department for External Economic Relations.

“This autumn has been definitely coloured by the Presidency of the Council of the EU. Discussion has focused, in particular, on challenges related to the multilateral trading system and promotion of the EU's trade policy interests with countries such as the United States and China. Furthermore, we are of course working to influence the direction of the new Commission’s trade policy,” says Pasi-Heikki Vaaranmaa.

Pasi-Heikki Vaaranmaa.

Vaaranmaa has worked on trade policy matters throughout most of his career in the Foreign Service. He has been posted twice to the Permanent Mission at the World Trade Organization (WTO) in Geneva and, in addition, he has spent four years at the Permanent Delegation of Finland to the OECD in Paris. Vaaranmaa joined the Ministry for Foreign Affairs in 1997, and he has been working as Director of the Trade Policy Unit for two years.

Vaaranmaa notes that trade policy topics warrant debate in the society as a whole and points out some that have received less media attention in the autumn.

“First of all, I would like to see more discussion about the challenges of the WTO and the multilateral trading system. Towards the end of the year, we need to keep an eye on what is happening to the rules-based trading system and, in particular, to the WTO Dispute Settlement Body,” Vaaranmaa says.

The WTO dispute settlement mechanism has played a key role in resolving international trade disputes. However, its Appellate Body will cease to function as the United States is blocking the appointment of new members. In practical terms, the situation is leading to a paralysis of the whole dispute settlement system.

“I find it worrying that the rules-based procedures for the settling of trade disputes are being undermined. It is obvious that this will not reduce the number of trade disputes, but rather this raises the risk of an increase in unilateral measures. Trade barriers are harmful to a country such as Finland, which is dependent on exports and imports. The multilateral system helps to reduce the uncertainties in trade. While we do need to maintain it, we must also continue to reform it.”

Despite being caught between the United States and China conflict, the European Union is trying to find its own path. But, this is not easy. What does the near future hold for trade policy?

I would say there are two developments that we should follow. We need to keep an eye on what direction the EU's trade policy will take in the new Commission's work programme. Responding to the tightening of global competition will certainly be high on the agenda,” says Vaaranmaa.

“Secondly, it will be interesting to see how the trade negotiations between the United States and China progress. It is quite possible that they will come to a temporary agreement. However, this won’t resolve the strategic confrontation between the countries. Meanwhile, the EU must take care of its own interests in a volatile world,” Vaaranmaa continues.

We will not have a shortage of challenges and causes for concern in trade policy. How are Finland and the Ministry for Foreign Affairs preparing for these challenges?

“We are working to maintain and develop the international rules-based trading system. In the EU, Finland advocates an ambitious and open trade policy. It is in the interest of Finland to promote fair global competition,” says Vaaranmaa.

“I must say that I am pleased to see that trade policy attracts interest in a very different way from how it was viewed earlier, for example 15 years ago. It is now seen – as is right – to be an active and important part of Finland's foreign policy. I hope that we will stay on this good path. International trade will continue to be vital for us in the future," Vaaranmaa sums up.

See Pasi-Heikki Vaaranmaa's video interview:

The “Sustainable Foreign Policy” video series discuss the priorities of Finland's foreign and security policy and the key themes of Finland’s Presidency of the Council of the EU. The parts that have been published can be viewed below:

Hybrid Influencing, Satu Mattila-Budich

In the first episode of this series of interviews, Satu Mattila-Budich explains her work as Ambassador for Hybrid Affairs and tells what Finland has done in its capacity of President of the Council of the European Union to bring hybrid threats to the agenda of EU meetings.

Common Foreign and Security Policy?

In the second part of the series, Ambassador Hanna Lehtinen, Finland's representative to the EU Political and Security Committee in Brussels, tells about the EU's Common Foreign and Security Policy.

Mediator, Pekka Haavisto

How is mediation reflected in the handling of Finland's external relations? We asked Minister for Foreign Affairs Pekka Haavisto for his thoughts in the third part of the series.