Checkmate to the rules of the game

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The king is a fighting piece. “Use it!” said the Austrian chess player Wilhelm Steinitz. In today’s geopolitical chessboard, power and influence are king, and so international trade is moving from the rule of law to the realm of the law of the strongest. This is no small change. When geopolitics dominates every decision, countries use the dominant position of their companies to achieve political objectives outside their borders, even if this means going against market logic and generating costs for their economies. The most recent example is the response of the European Union to the Russian invasion of Ukraine, where social principles and values ​​have prevailed over purely economic interests. In this context, where pre-existing regulations are set aside and strategies are governed by the rules of power, what are the appropriate moves and what are the fundamental pieces to win the game of international trade? In chess, as in life, the best move is always the one that is made, said the German chess player Siegbert Tarrasch. In this game, the European Union needs to speed up the development and incorporation of tools to respond to the new challenges in terms of security, sustainability and economic competition. Many regulations and policies with this objective are already in the works. Some have a deterrent character and there will be discretion in their application. Others, however, will change the conditions for exporting to Europe and will affect all foreign companies equally. In the context of power, it is important for the European Union to build regulatory bridges, which reduce the cost that some of its policies impose on the companies of its closest allies. A game has never been won by abandoning it, said the Franco-Polish chess player Savielly Tartakower and, therefore, Europe should not castle at the beginning of the game, but occupy the centre of the board. Trade agreements can be a fundamental piece. Not only do they offer access to foreign markets on favourable terms, but they also allow for the diversification of imports and the reduction of trade dependence. It should be noted that, although the vast majority of countries voted in favour of the UN resolution condemning the Russian invasion of Ukraine, only 12 countries, in addition to the EU, have imposed economic sanctions on Russia. In order to achieve its geopolitical goals, the EU therefore needs to deepen its economic, cultural and political relations with other countries. Concluding and ratifying trade agreements with Mercosur, Chile, Mexico, New Zealand and Australia, and thus increasing its network of suppliers and buyers, is a commercial priority, but also a political one. Moreover, we must remember that economics and geopolitics go hand in hand. One bad move cancels out 40 good ones, said the German-British chess player Bernhard Horwitz. The ability of the EU to achieve its geopolitical goals requires an attractive economy capable of expanding its influence. However, in recent decades, Europe has lost its ambition to achieve “the most competitive and dynamic knowledge-based economy in the world”. Today, there is an insistence that the size of the internal market is sufficient for foreign companies to adopt European policies as their own and export them to their trading partners. The bad news is that projections indicate that the relative weight of the European economy in the global economy will continue to decline. Faced with this dilemma, it is essential to take risks in the geopolitical game. To do so, the EU must recover its ambition and promote policies capable of generating a vibrant and innovative economy, attractive for foreign companies to want to sell their products and establish themselves, regardless of the size of the single market. European trade policy, traditionally based on international rules and institutions, is evolving towards a new world governed by the logic of power. In this transition, where geopolitical strategy is as important or more important than multilateral rules, the EU must find the balance between defensive and offensive policies. Chess is a test of wills, said Estonian chess player Paul Keres, and with each move Europe reveals a fragment of its personality. It is essential to know how to protect itself, but also to promote reforms that generate the economic dynamism necessary to continue playing and remain an attractive and relevant region on the global economic chessboard. Óscar Guinea is an economist at the European Centre for International Political Economy, on Twitter @osguinea. Isabel Pérez del Puerto is a journalist.

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