Within the scope of the Green Deal, the European Union (EU) is preparing for many actions that will affect both its own market and its trading partners in various fields of sustainability.
One of the most important was the declaration of the commercial dimension of the Green Reconciliation Industry Plan announced by the European Commission on February 1, 2023, at the meeting of the European Parliament International Trade Commission (INTA) held on March 1, 2023.
According to Jak Eskinazi, Head of Aegean Exporters' Associations, the greatest industrial transformation of all time initiated by the EU signals that it may result in a trade war.
Aegean Exporters' Unions Coordinator President Jak Eskinazi said, “EU Commission President Ursula von der Leyen announced the Green Deal Industrial Plan for the first time this year in Davos. In the past days, the same issue was discussed between US President Biden and Leyen. The EU Green Agreement of the Turkish exporter, which has been having difficulties in both accessing finance and maintaining its competitiveness for a long time due to the trade war on the Washington-Beijing line, export restrictions and protectionism measures, coronavirus pandemic, Ukraine-Russia war, inflation, energy crisis, recession, economic uncertainty, climate crisis. We think it will be heavily impacted. The most important for exporters are the Eco-Label, Digital Product Passport, and Border Carbon Tax (CBAM). The European Green Deal Industry Plan, prepared in this context, deepens our concerns.” said.
The European Union protects itself with the Green Deal Industry Plan
President Eskinazi said, “Turkey's largest export and import partner, the European Continent, takes a 48 percent share of our exports and we have an export of 109 billion dollars. We make about 25 percent of our imports from the EU. The European Union not only changed the supply chain from top to bottom with the Green Reconciliation, but also protects itself against the worldwide financial crisis and creates its own internal dynamics with the Green Reconciliation Industry Plan. Within the framework of the Green Deal, it allows for a series of exemptions such as increasing support to EU countries, facilitating, diversifying, increasing and extending the processes.” he said.
We are faced with a mechanism that will weaken our competitiveness.
Jak Eskinazi emphasized that this move of the EU will not only make exports difficult, but also increase import costs, thus bringing protectionist measures around the world.
“At the end of the day, we will either have to procure our supplies from the EU, both from the markets we export to and from the markets where we buy semi-finished products while importing, or the countries from which we buy semi-finished products will also have to fulfill the EU Green Agreement requirements. In short, we are faced with a mechanism that will weaken our competitiveness. While our Customs Union agreement, which has been waiting for an update for a long time, has been seriously damaged by the barriers to bilateral trade, trade war clusters and protectionism measures, new strategies must be developed by the state and harmonized according to EU standards so that the Green Reconciliation Industry Plan does not turn into a new trade war.
Legislative changes should be made within the framework of the EU Green Deal.
Eskinazi said, “We urgently need to sit down at the table to activate an up-to-date model that will transform the Customs Union between Turkey and the EU into a Free Trade Agreement. We also need to ensure control in the countries we import. Legislative changes need to be made within the framework of the EU Green Deal. Starting with carbon-intensive sectors that need urgent transformation, other sectors with a high share in our trade with the EU need to be supported. We have already written a letter to the Ministry of Commerce expressing our views on the subject and we hope that an updated support package on sustainability will be announced. We need regulations in line with the EU Green Deal.” said.
At the meeting of the European Parliament International Trade Commission (INTA) held on March 1, 2023, the following issues were discussed at the meeting regarding the commercial dimension of the Green Reconciliation Industry Plan;
– The overall objective of the Green Deal Industry Plan is to make the EU a more competitive and climate neutral economy,
– A large number of policy instruments are needed in this direction and trade policy is one of the four elements laid out in the Plan (others: regulatory framework, access to finance and skills),
– Trade policy increases efficiency, creates economies of scale, facilitates access to essential raw materials, diversifies supply chains to make the EU more resilient, supports the development of the internal market and contributes to the EU's trade partners' transition to a climate-neutral economy,
– With the trade policy within the scope of the plan; (i) great importance is attached to the establishment of a rule-based trading system, particularly the World Trade Organization; (ii) the active Free Trade Agreement (FTA) works at bilateral level will continue; (iii) In addition to FTAs, alternative cooperation mechanisms such as the Trade and Technology Council, sustainable investment agreements and the establishment of a critical raw materials club will be considered; (iv) It was stated that for the protection of the EU's own commercial and economic interests, unilateral instruments such as means of commercial defense against unfair trade policies implemented by third countries and the means of combating economic pressure will be used effectively.
In general, it was stated by the representatives who took the floor in the Parliament that having a climate neutral and competitive economy is possible with an ambitious, open and, when necessary, an active trade policy and trade diversification that can combat unfair competition; in this context, it is pleasing that the Green Deal Industry Plan includes the trade dimension; however, it has been stated that the rule-based system within the WTO and the participation of third countries in policies in this direction are of critical importance in order to achieve the desired goals.