As Open as Possible, as Autonomous as Necessary – Understanding the Rise of Open Strategic Autonomy

JCMS |

By Luuk Schmitz and Timo Seidl

 

The liberal international order on which Europe’s trade policies were built is increasingly contested. Even before the pandemic and Russia’s invasion of Ukraine, there were signs that Europe’s ‘geopolitical holiday’ was over, from growing concerns around technological and economic dependence on rival powers to trade becoming an essential tool in great power politics.

As a result, the European trade discourse – and increasingly policy – have shifted from their focus on multilateralism and open(ing) markets to the language and practice of strategic autonomy and sovereignty. Charles Michel sees strategic autonomy as ‘Europe’s number one goal’, Emmanuel Macron noted that the idea of a sovereign Europe is no longer seen as French fantasy but as a European necessity, and Olaf Scholz has recently called for a ‘stronger, more sovereign, more geopolitical Europe’.

In 2021, the European Commission made things official by making ‘open strategic autonomy’ (OSA) the conceptual cornerstone of its new trade strategy. This reflects a growing consensus among European policymakers that, as Annalena Baerbock recently put it, interdependence ‘also involves risks’ and economic gains should be balanced against geopolitical costs.

In our recent JCMS article, we try to understand the EU’s pivot away from multilateralism and market-making towards OSA. Our starting point is the changing nature of Europe’s global context, and how this created an opening to challenge Europe’s embedded neoliberal compromise. The discursive success story of OSA is both a reflection of and a discursive tool – a ‘coalition magnet’ – to organise a challenge to Europe’s embedded neoliberal consensus.

 

Trade as a site of (geo)political contestation

The history of globalisation protests provides ample evidence that trade has always been politicised, including in the EU. But throughout these contestations, the EU’s trade policy remained principally concerned with open(ing) markets, some concessions to socially-oriented actors notwithstanding. What is different this time around, however, is that trade is not just politicised, but geopoliticised.

Interdependence is no longer seen as a tool of pacification as in the German doctrine of Wandel durch Handel (change through trade). Instead, it is increasingly seen as a tool to be weaponised in geopolitical conflicts, or even as a source of strife given that adversaries and rivals like Russia or China might seek to strategically capitalise on the fact that democracies are economically dependent on them. Meanwhile, the WTO’s abilities to keep an orderly multilateral trading system remain in tatters, and the Biden administration has largely doubled-down on the neo-mercantilist course set under former President Trump.

Belatedly, but increasingly forcefully, the Commission has woken up to this changed reality. ‘For a long time’, as former Trade Commissioner Phil Hogan remarked at the launch of the latest EU trade policy review, ‘there was something close to a global consensus about market forces and trade. Now, the world is changing, and we must change too’.

The rise of OSA reflects both a rethinking by the Commission of its own role and interests in a world that is less and less rule-based and more and more power-based; and its reaction to a rift within the business community, which is increasingly split between neoliberal firms remaining committed to free trade and neo-mercantilist firms that increasingly call for protective measures.

 

Europe as an evolving compromise

This brings us to the second part of our argument. We propose to understand European integration as an evolving compromise between a neoliberal, a neo-mercantilist, and a socially-oriented faction, with each faction having a different vision of Europe. Neoliberals seek to encase markets in supranational institutions, neo-mercantilists are comfortable with intervening in markets to help European companies, and the socially-oriented faction wants to regulate markets to advance social, human, and environmental causes.

Figure 1

 

The changing global context has created an opening for both neo-mercantilist and socially-oriented actors to challenge Europe’s embedded neoliberal consensus. This leaves us with a situation where a still powerful but post-hegemonic neoliberal coalition is challenged by both neo-mercantilist and socially-oriented actors that push for a more assertive and interventionist trade policy. These two coalitions can be seen in Figure 1, which is based on a discourse network analysis of the contributions to the Commission’s trade policy review.

 

OSA as a coalition magnet

During this coalitional realignment, the often-decried vagueness and oxymoronic nature of OSA is not a bug, but a feature. It allows OSA to appeal to a variety of different actors and thus build a broad coalition for a renewed trade policy that centers around the doctrine of qualified openness: remaining as open as possible while becoming as autonomous as necessary, including the acquisition and use new ‘autonomous tools’ by the Commission to more assertively protect and promote European interests and values in a changing world.

Neo-mercantilists will be happy that the EU’s no longer naively believes in openness and is willing to qualify openness if it undermines autonomy, for example by protecting European companies through industrial policy or investment screening. Socially-oriented actors will like the EU’s willingness to more assertively promote European standards and the values baked into them, as well as the willingness to more explicitly connect trade policy with the EU’s climate, digital or industrial policies. But neoliberals, too, will find themselves reassured by the qualification ‘open’ and the concomitant idea that the EU will continue to protect and promote international rules and cooperation, albeit more selectively. It comes as no surprise then that actors diverse as asset managers to trade unions have embraced OSA.

 

Open Strategic Autonomy in practice

Coalition magnets allow actors from across the political spectrum to find a common language to express common concerns, and the fact that they mean somewhat different things to different people makes it possible to paper over specific disagreements in favor of a shared direction of travel. The prefix open allows the Commission to avoid rhetorical entrapment and give it more leeway to justify more autonomous policies if necessary – all while continuing its commitment to openness when possible. We can see this tendency towards qualifying but not abandoning openness in Olaf Scholz’s call for both intensified trade with partner countries – what the Czech Council Presidency calls ‘the deepening of free trade with democratic nations’ – and the reduction of ‘one-sided dependencies’ and an industrial policy ‘game plan’.

In this spirit, the Commission has, on the one hand, adopted mechanisms to screen foreign direct investment, to keep out state-backed foreign companies from public procurement tenders, to counter economic coercion, and to compete more directly with China in the race to set global standards in innovative and green technologies; and, on the other hand, its renewed push for (bilateral) trade agreements and even attempts to gain new powers to fast-track such trade deals.

 

Outlook

As trade and geopolitics increasingly intersect, Europe’s embedded neoliberalism seems to have come to an end. It is not that neoliberalism is gone. It has, however, lost its hegemony. Open(ing) markets remains the default, but it increasingly needs to be justified in terms of its contribution to autonomy – and rolled back if it threatens this autonomy. But while many in the EU recognize – perhaps reluctantly – that reflexive multilateralism and openness are hard to sustain in a geopoliticising world, achieving strategic autonomy will be no walk in the park. Firms in rich EU member states, for example generate around half their revenue from outside of Europe. By contrast, American firms generate 70 percent of their revenue at home. Europe also remains highly dependent on other countries for both energy and raw materials.

Germany’s recent decision to allow Chinese state-owned Cosco to take a 25-percent stake in a Hamburg port terminal raises questions as to Europe’s ability to put geo-strategic considerations above the economic interests of individual firms, sectors, or countries. Annalena Baerbock recently reprimanded business leaders for ‘following a “business first” mantra alone, without taking due account of the long-term risks and dependencies’. Will European policymakers will do a better job at balancing short-term economic gains with the long-term goals of steering Europe to a greener and more autonomous future?

 


 

Authors:

Luuk Schmitz is a doctoral student at the European University Institute. He researches the emergence of a European industrial policy. He focuses on how the turn from market-making to interventionism is justified discursively, and how market-making institutions are reshaped to become tools for industrial policy in areas such as competition policy, digitalization and green energy initiatives.

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Timo Seidl is a post-doc (Universitätsassistent) at the University of Vienna’s Centre for European Integration Research (EIF). In his research, he looks at how ideas and institutions as well as politics and power shape the digital transformation of economies and societies, with a particular focus on the role of the European Union.

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