BRUSSELS — Denmark is holding the line and pressing ahead with plans to schedule a crucial vote of EU ambassadors on the EU-Mercosur trade deal next week, in a tug-of-war splitting countries across the bloc. “In the planning of the Danish presidency, the intention is to have the vote on the Mercosur agreement next week to enable the Commission President to sign the agreement in Brazil on Dec. 20,” an official with the Danish presidency of the Council of the EU told POLITICO. This is the first official confirmation from Copenhagen that it will go ahead with scheduling the vote over the deal with the Latin American countries in the coming days, despite warnings from France, Poland and Italy that the texts as they stand would not garner their support.  This risks leaving the Danish presidency of the Council short of the supermajority needed to get the deal over the line. Under EU rules, this would require the support of a “qualified” majority of EU member countries — meaning 15 of the bloc’s 27 members representing 65 percent of its population. The outcome of the vote will determine whether European Commission President Ursula von der Leyen can fly, as is now planned, to Brazil on Dec. 20 for a signing ceremony with her Mercosur counterparts. France however has been playing for time in an effort to delay its approval of the accord, which has been more than 25 years in the making — a strategy several diplomats warn could ultimately kill the trade deal.  They cite fears that further stalling could embolden opposition in the European Parliament or complicate the next steps when Paraguay, which is more skeptical of the agreement, takes over the presidency of the Mercosur bloc. “If we can’t agree on Mercosur, we don’t need to talk about European sovereignty anymore. We will make ourselves geopolitically irrelevant,” said a senior EU diplomat. European leaders, including French President Emmanuel Macron, are expected to descend on Brussels on Thursday for a high-stakes EU summit. While not formally on the agenda, the trade deal with Brazil, Argentina, Paraguay and Uruguay is expected to loom large. A farmers demonstration is also expected in Brussels on the same day.  Countries backing the deal, including Germany and Sweden, argue that France has already been accommodated, pointing to proposed additional safeguards designed to protect European farmers in the event of a surge in Latin American beef or poultry imports. The instrument, which still requires validation by EU institutions, was a proposal from the Commission to placate Poland and France, whose influential farming constituencies worry they would be undercut by Latin American beef or poultry.  The texts submitted for the upcoming vote were published last week and include a temporary strengthened safeguard, committing to closely monitor market disruptions — one of the key conditions for Paris to back the deal.

BRUSSELS — The international world order is beyond repair and Europe should adapt to the law of the jungle — or else come up with new rules. That’s the bleak message the European Commission is set to give on Tuesday in a text detailing major challenges ahead. “We are witnessing the erosion of the international rules-based order,” several drafts of its annual Strategic Foresight Report, seen by POLITICO, say. Since taking office, U.S. President Donald Trump has consistently shown contempt for institutions like the United Nations by withdrawing funding or pulling out of key U.N. bodies like the UNHCR, its refugee agency, and UNESCO, which works in education and science. Trump’s global tariff threats have further undermined the authority of the World Trade Organization. The European Union’s executive will acknowledge that these institutions likely won’t recover from the breakdown of the global order. In fact, Europe should prepare for it not to come back. “A return to the previous status quo seems increasingly unlikely,” the draft warns. The EU could be particularly affected by this development. Key features of the bloc, such as its internal market, trade flows, international partnerships, and technical standards, all depend on a functioning multilateral system. “The instability and partial disfunction of the international order and the partial fracturing of global economies have a destabilising effect on the EU’s ability to act in the interest of its economy and the well-being of its people,” it adds. The final text of the report presented on Tuesday could still differ significantly from the drafts. EMBRACING CHANGE The Commission report aims to steer broader EU policies ranging from trade to technology, climate and other areas. It will call for Europe to be ready for the advent of artificial intelligence that matches human thinking; for regulation of technologies to dim the power of the sun; and to consider mining outer space and the deep sea for critical minerals. Instead of clinging to the old rules-based order, Europe should lead an international effort to reform it, the document will say. “The EU should actively and with a coherent approach shape the discussion about a new rule-based global order and a reform of multilateralism,” the draft reads, singling out the U.N. and the WTO, the Geneva-based trade club, as key institutions of focus. The bloc also shouldn’t shy away from forming “new alliances based on common interests,” it advises.

Kristen Hopewell is a professor and Canada research chair in global policy at the University of British Columbia. She is the author of “Clash of Powers” and “Breaking the WTO.” With U.S. President Donald Trump threatening to jack up tariffs to massive heights starting July 9 — including 50 percent tariffs on nearly all goods from the EU — the global economy hangs on a cliff edge. Last week, the bloc floated the idea of creating an alternative to the World Trade Organization (WTO), cooperating with like-minded countries to maintain the rule of law in trade. But there is a better option: Keep the WTO, but kick out the U.S. Since his reelection, Trump has essentially launched a full-scale assault on the global trading system, terrorizing countries around the world with a seemingly endless barrage of tariffs and threats. The U.S. leader isn’t even pretending to abide by WTO rules anymore. Moreover, his tariffs threaten to send the world back to the 1930s, when the spread of trade protectionism and beggar-thy-neighbor policies — spurred by America’s Smoot-Hawley Tariff Act — exacerbated the Great Depression. Under these circumstances, allowing the U.S. to remain a member makes a mockery of the institution and its principles. And countries committed to preserving a rules-based trading order need to fight back and defend the system, punishing his blatant violation of WTO rules. Today, the U.S. accounts for only about one-tenth of world trade. The global trade regime can survive without it — but only if the rest of the world continues to follow the rules. | Olivier Hoslet/EFE VIA EPA The international legal order governing trade can only be sustained if countries face penalties for noncompliance. But by disabling the WTO Appellate Body, the U.S. has made it impossible to enforce global trade rules. Now, any country that loses a WTO dispute can block the ruling by simply filing an appeal to the defunct body. And by doing this in repeated disputes challenging its WTO-illegal policies, the U.S. has been able to break the rules with impunity. In addition to the substantial harm caused by Trump’s policies, the broader danger here is that rule violation will spread, leading to the collapse of global trade. If his brazen rule-breaking goes unpunished, why should other countries abide by the rules? Today, the U.S. accounts for only about one-tenth of world trade. The global trade regime can survive without it — but only if the rest of the world continues to follow the rules. It won’t, however, survive other countries imitating Trump’s rule-breaking, tariffs and other protectionist measures. This risk of contagion represents a grave threat to global economic security. This is why WTO members must come together in a clear rejection of Trump’s trade aggression and show that it won’t be tolerated. What once would have been inconceivable has now become a necessity: The only way to preserve the rules-based system is to expel or suspend the U.S. The mechanism to do this exists. Although the WTO has no specific procedures for expelling a member, it is possible under Article X, which sets out procedures for amending the WTO agreement. The U.S. could be expelled from the organization by a two-thirds majority vote to alter the agreement. If it refuses to accept the changes, then a three-fourths majority would be required. The U.S. shouldn’t be allowed to continue enjoying the benefits of membership without any responsibility to uphold its obligations. And denying it the rights of WTO membership could finally create the necessary leverage and force Trump to abandon his destructive tariffs. The U.S. president has repeatedly threatened to withdraw from the WTO — it’s time to call his bluff.  The economic harm would be considerable: The U.S. would lose its access to global markets at favorable WTO tariff rates and could be subject to tariffs without limit. It would also lose market access for its services exports and protections for its intellectual property, which are the foundation of America’s contemporary economic success and its dominance in leading high-tech sectors. It would lose the WTO’s protections against trade discrimination too, which would allow other countries to impose export restrictions that could cut off its supply of vital goods. Trump has made the U.S. a rogue state on trade, showing a total disregard for international law — and even the notion that trade should be governed by the rule of law. Casting the U.S. out would make clear its status as an international pariah. It’s true, no country has been expelled from the WTO before. But the magnitude of Trump’s rule violation is entirely without precedent, and thus demands an unprecedented response. Without a functional Appellate Body, there’s now no other way to enforce WTO rules against the U.S. Supporters of the rules-based trading order should come together and seek broad support for an amendment to suspend or revoke the U.S.’s membership. If the U.S. comes to its senses and abandons Trump’s tariffs, showing that it’s willing to abide by the rules, the rest of the world would happily welcome it back to the rules-based trading system with open arms. Until then, the WTO must take steps to counter and contain the disastrous effects of his misguided policies. To combat Trump, we must be prepared to construct a WTO without the U.S.

Mathias Döpfner is chairman and CEO of Axel Springer, POLITICO’s parent company. The following excerpt is taken from his new book “Dealings with Dictators.” It was originally published in German by Handelsblatt in 2024. We are standing on the precipice of a trade war that has Europe in its crosshairs. The World Trade Organization (WTO) had barely made it through U.S. President Donald Trump’s first term unscathed. Now, amid a looming wave of “reciprocal” tariffs and threats of retaliation, the world is once again confronted with grave geopolitical uncertainty and a faltering multilateral trading system. So, as we head into this year’s Munich Security Conference, it’s time to reevaluate an institution that is no longer fit for purpose. Freedom and economic success are closely intertwined. One is usually a precondition of the other. As a general rule, the less free an economic system, the less successful it will be. The one big exception here is China because what we’re dealing with is state-controlled turbo-capitalism — which has, for years, taken advantage of the WTO. Under the cover of “free trade,” China has used its membership to continue expanding its power by unfair means. It turns out that the WTO isn’t the solution but a fundamental part of the problem. By accelerating the weakening of truly free economies, it has fostered the rise of unfree and nondemocratic actors. It promotes dependencies and has become a Trojan horse of unfree trade. The WTO was founded in Marrakesh in 1994. Its establishment led to rules being introduced for services and intellectual property. Previously, international trade rules for goods had been laid down by the General Agreement on Tariffs and Trade (GATT). The GATT treaty came into being in 1947 with the support of 23 nations. By 1994, 128 countries had joined. GATT was created following World War II to prevent a replay of the tariff wars of the 1920s. However, what began as a lean and effective collaboration between Western nations grew into the larger, ineffectual WTO we know today. And it now needs a complete conceptual rethink. WTO members pledge to observe three basic principles when forging international trade relations: trade without discrimination, reciprocity as a basis for negotiation, and the elimination of tariffs and trade barriers. Member states must extend the same advantages to one another. Nondiscrimination further stipulates that the benefits and support granted to one country must automatically be granted to all member states. However, the WTO grants special provisions to countries that define themselves as “developing” — a classification for which the organization does not provide a formal definition. Members self-declare as “developing,” as China did when joining the trade alliance. The advantages include longer deadlines for implementing commitments or easier market access, among others. But the most important concession is the obligation of other WTO members to safeguard the interests of developing countries when imposing certain national or international measures — all benefits to which China has been holding on tight since the day of its accession. Additionally, China has repeatedly violated WTO rules for years. The list is long: forced technology transfer; massive, often undisclosed subsidies; distortion of competition by state-owned enterprises. In order to gain access to the Chinese market, many foreign companies have had to disclose valuable technological information. The resulting cost to international businesses runs into the billions. Meanwhile, Chinese competitors in some sectors have quickly caught up with industry innovators and become market leaders themselves. Chinese competitors in some sectors have quickly caught up with industry innovators and become market leaders themselves. | AFP via Getty Images An almost traumatic example — especially for Germany — is that of photovoltaic or solar power systems. Until 2005, this industry did not exist in China. By 2022, China’s share in all manufacturing stages had topped 80 percent, based on copied innovation and driven by heavy state subsidies. China views Europe as a self-service shop. With great finesse, it buys into cutting-edge technology, often via “hidden champions” that are less publicly visible than companies such as Daimler, Volkswagen or Volvo. Chinese antitrust laws — and especially its Anti-Monopoly Law — also have some remarkable features. China likes to penalize foreign companies for being innovative. Anyone who owns a patent and charges licensing royalties for its use can be classified as a monopolist. Smartphone manufacturer Qualcomm was affected among others: It had to pay a fine of almost $1 billion for allegedly demanding excessive royalties from a Chinese competitor. Last but not least, China hasn’t opened up its markets nearly as much as is often claimed. International companies were unable to fully access its financial sector until 2021. And a lack of transparent rules means that hardly any business can be done. There have been no successful joint ventures between Chinese and foreign companies in the telecommunications sector. Facebook and Twitter have been banned since 2009. These examples would be scarcely imaginable the other way around. Chinese companies get to do business largely unhindered in Western markets, while the People’s Republic continues to write its own rules in ways that primarily further its expansion of power. The WTO’s rules and those who enforce them are either unable or unwilling to prevent this. Its principle of reciprocity thus remains a pious hope. In reality, the WTO is breaking down, tolerating double standards and allowing members to play by different sets of rules. Asymmetry reigns instead of reciprocity. Carbon emissions are another variable that has dramatically grown for China since its accession to the WTO: They’ve increased by over 200 percent. And this increase offsets the rest of the world’s decrease by far. China accounted for nearly a third of global carbon emissions in 2021. That’s more than the United States, India, Russia, Japan and Iran — the subsequent five largest polluters — combined. Bottom line, the global climate crisis reinforces the need to take a stand against autocratic systems like China. The real problem with climate change is not the holiday flight to Florida or Mallorca. The problem is that we have little to no influence over the world’s largest carbon polluter. That it pursues a completely different political agenda. And last, but not least, that we, ourselves, contribute to it by outsourcing the climate sins we don’t want in our own backyards to China or elsewhere. Viewed from today’s perspective, China’s admission as a full member of the WTO was a fundamental error in a trade policy led by wishful thinking. Motivated, as is so often the case, by good intentions, it created an imbalance that has worsened down the years, much to the detriment of democratic market economies. The main mistake was giving entry to an economically weighty, nondemocratic state, which, due to its own outlook, was unable to adhere to free trade rules. The most ridiculous mistake was to grant China developing country status — which it still has today despite being the second largest economy in the world — with all the exceptions and exemptions that come with it. It’s like granting privileges to the most ruthless kid on the block. Competition couldn’t be more unfair or masochistic. The result of this experiment was predictable: In the short term, it brought growth and economic success to all participants, but in the long term, it shifted the balance in ways that allowed dependencies and one-sided advantages to emerge. The masochism of the United States and Europe, in particular, led not only to a weakening of their own relative economic power but also, in the end, to an erosion of the entire WTO. And speaking of the end, the WTO has reached the end of the line. What we see before us now is a dysfunctional and paralyzed colossus — a shadow of its former self. All of which leads to the unsparing conclusion: The WTO should be dissolved. “Dealings with Dictators: A Ceo’s Guide to Defending Democracy” was published by Simon & Schuster in January 2025.

Arancha González is dean of the Paris School of International Affairs (Sciences Po) and former foreign minister of Spain. Europe has been down this road before: In 2017, the tariffs imposed by then-U.S. President Donald Trump took the bloc by surprise. Not that he hadn’t announced them — he had. Rather, the EU didn’t want to believe Trump would be ready to shoot himself in the foot. We overestimated his economic rationality. This time around, the EU runs the risk of underestimating the impact of Trump’s tariffs. The bloc is assuming it’ll be just like last time, when it managed to negotiate exclusions and limit the negative effects of Washington’s trade policies.  To begin with, the touted percentages are much higher this time: 60 percent tariffs on China, and between 10 to 20 percent on imports from all other sources. Needless to say, these will be inconsistent with U.S. obligations under the World Trade Organization (WTO) Agreements. Meanwhile, most of the appointments to Trump’s new administration so far seem to privilege loyalty. Thus, the only constraining factors will be the behavior of the stock market — the one signal Trump always pays attention to — and the old Wall Street hands he’s earmarked for the Department of Commerce and the Treasury. Europe, for its part, has just gone through an inflationary period, which has been incredibly costly both economically and politically, making the risks higher than before. Moreover, the EU isn’t just facing the impact of U.S. tariffs, it will also be dealing with the diversion of trade from other affected nations — China in particular. A Republican friend recently told me not to even bother arguing that tariffs are useless when it comes to reducing the U.S. deficit, to bringing jobs back to America or to re-industrialize the country. Trump will impose tariffs regardless. The EU would, of course, prefer this wasn’t the case, but that’s wishful thinking. And no matter what, the bloc needs to remain cool, calm and collected, and it must be ready to respond. To begin with, the touted percentages are much higher this time: 60 percent tariffs on China, and between 10 to 20 percent on imports from all other sources. | Stringer/Getty Images To that end, I advise following a four-pronged strategy: First, let’s try persuasion. The best course of action will be to negotiate in order avoid tariffs in the first place, and there are many possible ways to do this: It could be through the purchase of more LNG or defense equipment. The bloc could also find room to maneuver by reducing its “Most Favoured Nation” tariffs, nuisance tariffs on select products of interest or the regulatory burden on specific products. Both sides could work to facilitate bilateral trade, including building an alliance to support the transatlantic electric vehicle (EV) sector — after all, given the investments already made by auto producers on both sides of the Atlantic, changing course on the EV sector would be costlier than joining hands — and a big beneficiary of this would be Tesla. Obviously, not everything is up for a negotiation though. Just like the U.S. has Congress, which is sovereign to legislate, the EU has the European Parliament, which has the mandate to legislate with the interest of its citizens at heart. And to that end, it’s easy to see that tech regulation in Europe won’t be for sale. But there’s nothing better to focus a negotiation than dissuasion, and the EU should start preparing for retaliation now, should the negotiations fail. The products to be added to a possible sanctions list are already well-known from previous episodes and should be ready to use. Depending on the severity of the threat, dissuasion could also take the form of a negative list, i.e. all products except those where the EU has specific interests or dependencies. Then, if there’s no agreement, the bloc should move to retaliation, which has actually happened before. While we know that “an eye for an eye makes everyone blind,” Europe has to protect its interests. And it can choose to do this gradually, to maintain space for a possible negotiation; or it can do so in one go, depending on the U.S.’ attitude. Finally, the EU must prioritize alliances. It can coordinate all these measures with its trading partners around the world who will be facing the same difficulties. It should start with those highly integrated with the EU market, like the U.K., Switzerland and Turkey. And to avoid a global downward spiral, all countries affected by Trump’ tariffs, including China, could agree to abstain from applying tariffs on each other, thus avoiding beggar-they-neighbor policies — a powerful signal that these countries still care about the WTO’s rules and principles and repudiate unilateralism. Now that friendshoring is dead, long live good old international trade.