The economy of Romania, as well as the economies of the European Union Member States in general, are evolving within a global environment marked by volatility and an ever-increasing pace of change. Any analysis aiming to determine future trends and establish directions can only be built on few certainties and many uncertainties. It is certain that security has become the most important topic for a European Union that, for more than half a century, has mostly delegated its own security guarantees to the United States of America. The same applies to Romania which, being also geographically adjacent to Ukraine, lacks any clear perspective as to when and how the armed conflict in the neighbouring country will end.

For more than a decade now, we have witnessed the increasingly close nexus between security and trade. Therefore, any action aimed at strengthening European security must also be conceived through the lens of trade policy. For decades, global trade was governed by international agreements and by the rules of the World Trade Organization, which also managed to maintain an international framework for trade disputes settlement. Today, these rules are no longer observed precisely by the United States, the very country that played a crucial role in establishing the entire post-World War II system of global institutions.

For over a decade now, a clear majority of the American citizens believe that the main beneficiaries of global trade are others rather than themselves. This opinion has consistently been held by over 60% of respondents. The Democratic administration of President Joe Biden responded to this sentiment by removing trade issues from the public agenda and by downplaying the growing tensions in relations both with China and with the European Union. In contrast, President Donald Trump, once back in the White House, launched a loud and spectacular campaign aimed at reordering the United States’ trade relations with all its global partners. This reordering is already producing tangible effects, reshaping the global order and restructuring global supply chains. This is a policy decision supported by many American citizens, and therefore it clearly represents the new course of U.S. foreign and trade policy.

During the same period, China, the other giant of global trade, has responded to the successive shocks of the trade war with the United States by increasing its own resilience and by adopting decisive measures to fortify its domestic market, to continue massive subsidies for energy prices, and to assert unequivocally its no-limits partnership with Russia led by Vladimir Putin.

The scale of the Chinese economy enables its authoritarian political leadership to pursue two seemingly contradictory policies simultaneously. On one hand, China has become a champion of the green economy, maintaining excess capacity through industrial policies in the fields of solar panels, wind turbines, batteries, and electric vehicles, while on the other hand, China remains the world’s largest user and importer of thermal coal, continuously granting new authorizations for the construction of coal-fired power plants.

These are the circumstances under which the European Union, still standing on the podium of the world’s leading economic and trading powers, must make bold decisions to preserve its place and to lay the foundations for economic recovery, the restoration of competitiveness, and the preservation of our European model: the social market economy. We need to maintain and even strengthen the EU’s role in global trade. The recent crises we have faced, the COVID-19 pandemic and the war in Ukraine, have highlighted the transformation of European economic interdependencies into vulnerabilities.

Driven by its economic locomotive, Germany, the EU has long enjoyed the advantages of two seemingly happy marriages. The first was the marriage between German (and European) technology and Russia’s cheap energy resources, which until recently were the engine of our competitiveness, and the second was the marriage between European technology and China’s vast emerging market, which had become at the time the manufacturing workshop of the global economy. Recent events have revealed the naivety of Europeans who lost both partners within just a few years. We have been left only with the costs and dependencies created over the past two decades, without continuing to reap the benefits of those arrangements.

Nevertheless, during these years of crisis, global trade has continued to bring benefits to Europeans in at least three directions. The EU’s trade agreements with numerous global partners have helped us absorb the shocks of the crises. Secondly, we have successfully advanced along the path of trade diversification while maintaining our position as a leader in global trade. We now have over 70 free trade agreements with other countries and are in the process of further expanding this number. The third direction concerns the consolidation of our trade defence instruments. The EU is the most open actor in global trade and must remain a leader of open economies, but we must also respond to the growing pressure of protectionism coming from our partners.

Therefore, Europe faces the greatest challenges of the past three decades. Despite the unprecedented difficulty of formulating adequate responses to these challenges, I remain optimistic about the future trajectory of both the European Union and Romania as part of the European project. Realism, however, is essential. The EU is becoming more realistic by the day, implementing trade defence measures, launching initiatives to restore European competitiveness, and negotiating new trade agreements that will ensure that rules-based global trade does not disappear and is not replaced by power politics in interstate relations.

Through the size of its economy, the scale of its energy sector, its geostrategic position, and many other factors, Romania is an important member of the European Union. It must strengthen its voice and influence amid these turbulent developments, and it can achieve this by recalibrating the diplomatic and commercial presence of Romania in the world’s major capitals. The economic diplomacy and trade representation of Romania must be urgently reassessed. They need more resources and better-qualified personnel, but above all, they need clear objectives at both European and regional levels. In other words, now more than at any time in the past twenty-five years, Romania is in need of a national project with clearly defined components in the areas of security and trade, the two elements that will define power relations by the middle of the 21st Century.

Article published in the yearbook ”European Movers & Shakers 2025” – https://impreuna-protejam-romania.ro/3d-flip-book/european-movers-shakers-2025-1/