Checkmate the rules of the game | Business

The king is a fighting piece. “Use it!” said Austrian chess player Wilhelm Steinitz. In the current geopolitical chessboard, power and influence are king and, therefore, international trade moves from the rule of law to the rule of law of the strongest. It is not a minor 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 the logic of the market and generating costs for their economies. The most recent example is the European Union’s response to the Russian invasion of Ukraine, where social principles and values ​​have prevailed over merely economic interests.

In this context, where pre-existing regulations are left 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 item, 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 process. Some have a dissuasive nature 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 that 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 Franco-Polish chess player Savielly Tartakower, and therefore Europe should not castle at the beginning of the game, but occupy the center of the board. Trade agreements can be a fundamental piece. They not only offer access to foreign markets under favorable conditions, but also allow imports to be diversified and trade dependence to be reduced. It should be borne in mind that, despite the fact that the vast majority of countries voted in favor of the UN resolution condemning the Russian invasion of Ukraine, only 12, in addition to the EU, have imposed economic sanctions on Russia. Therefore, to achieve its geopolitical goals, the EU needs to deepen its economic, cultural and political relations with other countries. Concluding and ratifying trade agreements with Mercosur, Chile, Mexico, New Zealand or Australia, and thus increasing its network of suppliers and buyers, is a commercial priority, but also a political one.

In addition, 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 EU’s ability 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”. Currently, it is insisted that the size of the internal market is sufficient for foreign companies to adopt European policies as their own and export to their trading partners. The bad news is that the 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 this, 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 a balance between defensive and offensive policies. Chess is a test of wills, said Estonian chess player Paul Keres, and with every move, Europe shows a piece of its personality. It is essential to know how to protect yourself, but also to promote the reforms that generate the necessary economic dynamism to continue playing and remain an attractive and relevant region on the world economic board.

Oscar Guinea is an economist at the European Center for International Political Economy, on Twitter @osguinea. Isabel Perez del Puerto is a journalist.

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