A EU-CPTPP agreement will not emerge overnight. Negotiating issues like data, agriculture, energy, and finance are politically sensitive for both sides. But there is a real incentive for these countries to work towards a deal. Such partnership would be a major force in trade and investment, an incubator for innovation in trade policy, and a catalyst for growth in mature economies – and would send a sobering message to Beijing and Washington.
At a 26 June dinner of heads of state and government of the European Union, EU Commission President Ursula Von der Leyen suggested linking the EU with 12-nation Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) to draw up new trade rules and iron out trade conflicts that may arise.
“We can think about this as a beginning of redesigning the WTO,” Von der Leyen said, referring to the World Trade Organization. An EU-CPTPP alignment, she said, would “show to the world that free trade with a large number of countries is possible on a rules-based foundation.”
Von der Leyen’s support for closer links with the CPTPP is not new. In April, she had phone calls with both Singapore Prime Minister Lawrence Wong and New Zealand Prime Minister Christopher Luxon in which the leaders discussed broader efforts at economic cooperation. Both countries are members of the CPTPP and the EU has trade agreements – including digital trade agreements – with both.
But it touched off consternation at the WTO. Already beleaguered by the US retreat from the multilateral trade body, news of the comments coming out of Brussels set off alarm bells at the WTO’s headquarters in Geneva. Frantic calls to EU Commission officials requesting an explanation led EU Commission for Trade and Economic Security, Maroš Šefčovič, to issue a 27 June press statement highlighting a “very good” telephone call he made that day to WTO Director General Ngozi Okonjo-Iweala in which, he said, the two expressed a “shared ambition to preserve a rules-based trading system and to work together on ways to revitalize and strengthen it.”
But support at the highest levels of the EU for an EU-CPTPP collaboration would inevitably siphon off resources and energy devoted to reforming the WTO and further diminish prospects for any breakthrough toward that mission in Geneva.
The outburst in Brussels reveals growing European exasperation over the floundering efforts to reform the organization. Many European leaders now believe it will be years before the WTO is reformed and that serious negotiations to establish new global trade rules will be impossible while President Donald Trump remains in the White House.
Trump’s big tariff hikes and his threat to raise them further have alarmed Europeans. Regardless of the outcome of Washington’s ongoing trade negotiations with 18 governments – and most expect the agreements, if any, will be shallow and limited – European and Asian officials believe US tariffs will be higher for the foreseeable future and certainly higher than the tariff ceilings to which Washington committed in the WTO.
Given this scenario, the idea of joining forces with the countries of the CPTPP holds appeal for many Europeans. Support for such a trade and investment agreement is rising in the Pacific region as well. Australia, New Zealand, Singapore, Canada, Japan, and others have turned their sights toward setting new rules for trade, if necessary, in smaller groupings without the US.
EU impatience with the Geneva bubble in which WTO operates has been building for years. Sabine Weyand, the EU’s top trade civil servant, is a longtime skeptic of the WTO’s ability to reform and produce meaningful results. Others in the Commission’s Directorate-General for Trade and Economic Security harbor the same doubts.
“The organization is not working. We can’t negotiate new rules, and we can’t ensure that existing rules are followed because the dispute settlement system is broken,” one Commission official said.
Europe’s growing disinclination to fully invest in the WTO led Okonjo-Iweala to seek out a meeting with Von der Leyen in July at the United Nations International Conference on Financing for Development in Seville. During this meeting, the Commission President conceded that the communications coming out of Brussels might have been handled better.
But she also made clear that while Brussels was committed to the WTO, Europe’s patience with the slow progress in Geneva over WTO reform has reached its limit. Fresh ideas were needed, one commission official said, and an EU-CPTPP partnership could be “an engine” for accelerating reform.
Commission officials say any EU-CPTPP framework agreement – which might eventually also include the five South American countries that make up Mercosur – would start with a commitment to refrain from imposing any new barriers to trade.
Halfway There Already
Although no new trade EU-CPTPP framework is imminent and no parallel WTO will emerge anytime soon, a deal between the two blocs is certainly achievable. Brussels already has bilateral economic cooperation agreements with 10 of the 12 CPTPP members – Australia and Brunei being the two countries without an EU deal – so most CPTPP countries are already mostly aligned with the EU on trade and investment matters.4
Members of both groupings are united in their view that the WTO will not deliver in the near term and that Trump’s erratic trade policies constitute a threat to their economies. Agreements reached between Brussels and the Pacific countries are broader, more comprehensive, and more innovative than anything agreed in the WTO and include detailed accords on digital trade and the environment. Striking a broad overarching deal would not be easy but the outlines for a deal are evident and stitching together a pact can certainly be done.
European and Asian officials won’t admit this publicly but there is another attraction to an EU-CPTPP linkage – the absence of the overtly obstructionist countries that have crippled the WTO, including not just the US and China, but also India, Indonesia, South Africa, and Brazil.
The Big Problems
Actions taken by China, India, and the United States lie at the heart of the WTO’s difficulties. These hugely influential members have habitually thrown sand in the WTO gears, hampering progress and blocking agreements. The immense clout wielded by these three countries makes it impossible to shift them significantly in a multilateral forum.
China heralds itself as a stout defender of the WTO. In public pronouncements, Beijing is quick to cite the benefits of multilateralism and China is an active participant in all areas of WTO activity. But China’s brand of state-driven capitalism has contributed to vast trade imbalances with its trading partners as its state-backed manufacturers push foreign companies out of global markets. Moreover, current WTO rules do not fully encompass the distortions created by China’s vast state-driven economy. WTO members complain that China does not even acknowledge the distortion its system has wrought.
Beijing would like to join the CPTPP but the group’s members are wary of admitting the influence of Chinese industrial policy. The anxiety created by these policies means few if any Pacific countries want to cozy up to China just yet.
In the past, the United States could be counted on to assume the mantle of leadership at the WTO. But those days are long gone. Since the first Trump administration, Washington has pursued mostly outright hostility toward the WTO. Today, there is virtually no support for the WTO in the United States. While the country is unlikely to leave the organization, Washington has no real interest in seeing the WTO succeed. Such is the frustration with Washington’s obstructionism that some prominent European commentators are floating an idea once considered unthinkable: having the United States exit the WTO.5
India has a long history of blocking WTO agreements – trade facilitation, harmful fisheries subsidies, e-commerce – and refuses even to discuss environment or investment in the WTO. New Delhi’s view is that India only benefits from WTO rules when it is shielded from them through the “special and differential treatment” provisions accorded to developing countries.
The attractiveness of India’s huge market is offset by New Delhi’s well-earned reputation as an unreliable trade partner. Few members of a joint EU-CPTPP alliance would welcome a country which so consistently rejects discussions on trade concessions, let alone negotiations.
Indonesia, South Africa, and Brazil also are regular obstructionists at the WTO. Their economies would do well to take note of a report done for the International Chamber of Commerce by Oxford Economics argues that, were the WTO to be abandoned, rising trade costs, trade restrictions, and declining foreign direct investment would severely impact growth in developing countries. Brazil would see its exports plummet by nearly 45% compared to the current multilateral baseline. For India and China, non-fuel exports would decline by nearly 40% while growth would be depressed by close to 6%. Similar outcomes would await South Africa, Türkiye, and Indonesia.6
But other officials, wary of angering Beijing and Washington, play down the idea that any future EU-CPTPP framework would be based on excluding others.
“I don’t think the idea is to create something which is exclusive. But the idea is to enhance cooperation so that trade and investment flow more freely. Those that support this would likely be candidates to join later,” said one senior official from an Asia-Pacific country.
Conclusion
For both European and Pacific countries, the goal of closer and broader economic cooperation is not only sensible but viable. Such an agreement will not emerge overnight. Negotiating issues like data management, agriculture, energy, and finance are politically sensitive for both sides. Trade negotiations among 39 countries would be complex.
But there is a real incentive for these countries to work towards a deal. Such a partnership would be a major force in trade and investment, an incubator for innovation in trade policy, and a catalyst for growth in mature economies.
The creation of such a powerhouse should be sobering to Beijing, Washington, and New Delhi, but probably isn’t – at least for the moment. That may change if these great powers find their companies operating at a competitive disadvantage in some of the world’s most lucrative markets.
It should also send a message to the WTO. Yet there seems little urgency among the membership to unite behind real reform. Perhaps that will change as the organization approaches its 14 Ministerial Conference to be held in late March 2026 in Cameroon. But the turmoil surrounding global trade today has left many delegations pessimistic that the ongoing institutional inertia will be surmounted.
It is any wonder that countries which genuinely believe in the mutual benefits of trade are searching for alternatives?
To read the article as it was originally published by The Hinrich Foundation, click here.