Trade and the populist upheaval

Daniel Abreu Costa & Sorana Gheorghiade // 8 July 2019

In the recent European elections, authoritarian populist parties, gained a great number of seats (almost 24% of the total) in the European Parliament (EP). This was a huge success for parties such as the Hungarian Fidesz or Salvini’s Lega. But even with those results in mind, asserting influence in plenary sessions will be difficult for the newly elected MEPs.

EPICENTER’s Swedish member think tank, Timbro, published the annual Authoritarian Populism Index contouring a complex image of this political ideology and its variations. Described as a phenomenon carrying a political vision, today’s authoritarian populists have a particular approach to foreign policy and trade. Before the 2019 elections, policy-making was not the goal of rising authoritarian populist leaders but a means to consolidate their viewpoints on the European agenda. Considering the powerful voice that they will have for the next five years, it is very unlikely that they will keep a low profile as before. These MEPs will be ready to take every chance to criticise the gap between ‘the elite’ and ‘the people’ through the new policies that they will elaborate. Their most powerful tool of domestic influence remains their role in European policy making.

Before the European elections, there was a possibility of having a strong authoritarian populist caucus as proposed by Salvini- recently named ‘Identity and Democracy’. However, movements created to protect national interests and identities tend to make awkward partners. For instance, Farage (The Brexit Party) and Kaczynski (PiS) decided that their parties would not join such an alliance as there are strong discrepancies not only in the policies that such a group would support but also in the members that would encompass such an alliance. However, even if these parties cannot form a cohesive alliance on all policy areas, there is a strong tendency for authoritarian populist parties, from entirely opposite ends of the left-right scale, to align on trade policy. As we saw in the EP, both extreme French parties rejected the CETA and the continuations of the TTIP negotiations.

There is a broad consensus within the authoritarian populist parties on the need to strengthen nation-states, to reform the EU, and to limit its competences as much as possible. Authoritarian populist trade policy, thus, strongly supports protectionist measures – especially in Western Europe. For instance, Le Pen’s manifesto for the European elections focused on replacing free trade with ‘fair trade’, as it claimed that current deals are killing European industry and agriculture. The creation of a ‘trade fortress’ Europe with higher tariffs and quotas would, for her, be the most appropriate and sensible way forward for the European economy. Such measures not only could undermine the Union’s ability to innovate but also enormously harm its already fragile growth. Authoritarian populist commercial policy, on both sides of the Atlantic, could also affect the TTIP. Apart from hampering decision-making in the EP, the large numbers of authoritarian populists MEPs can now shift the parliament’s view on trade policy, contributing to further tensions and disputes in an increasingly disunited Union. This is the case as other MEPs, such as the Greens, can also pursue protectionist policies on trade.

Still, it is important to question the role of the EU in creating these protectionist populist discourses. A key problem of EU trade policy is that there is a lack of trust in the decision-making by all stakeholders. Addressing this lack of transparency would facilitate an open and informed debate about trade policy and could counter the shift towards authoritarian populism in European politics. National governments need to share this responsibility as the role of trade and investment policy needs not only to find a balance set by the Treaty on European Union (TEU) – such as an open trading system- but it should also strive to not leave regions uncompensated in trade deals. Any model of trade needs to account not only with the positives of trade but also with many of its consequences such as the uneven spatial distribution of economic activity created. Negotiators should pay considerable attention to such regions and addressing this might help the Union to combat the striking inequalities between regions, thus reducing the support for authoritarian populism and its economic policies in Europe.

European trade legislation, in general, won’t drastically change as a consequence of the election results. But authoritarian populists and their trade policies can still create inconveniences for European trade policy in parliament even if they are not united in a strong caucus. As free trade is not a zero-sum game, the Union needs to gather its forces and promote not only free trade and a more transparent trade policy; but also, one which accounts for the many who feel left behind.

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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