Trade and industrial policy will be under the spotlight in 2023, as EU institutions are scrambling to come up with new legislative and financial tools to support the development of the green tech industry across the EU, also in response to the initiatives in the United States. The final shape of the new framework will affect a large number of industrial sectors and re-shape the EU’s economy for the coming years. 

For this reason, it is important for stakeholders not to be caught unprepared, as the decisions on the most contentious issues are likely to be decided by very small majorities in the European Parliament. This brief outlines key points of contention on trade and industrial policy based on our observations of the latest political developments within EU institutions.

Trade agreements with friendly countries from Latin America and the Asia-Pacific region are one of the pillars of the Green Deal industrial strategy outlined by Commission President Ursula von der Leyen. However, the EU trade liberalisation agenda is likely to face significant obstacles, as shown by recent votes in the European Parliament. In January, an amendment opposing the association agreements with Chile, Mexico and Mercosur received 40% of support by MEPs.

Criticism is not only coming from the groups that usually oppose trade liberalisation (the Greens/EFA, The Left and ID groups), but also from among the ECR group and several delegations within EPP, Renew and S&D. This is a key signal of rising protectionist sentiment in the EP, which could further increase after the EU elections next year (in particular due to the projected gains by The Left and ECR).

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Even within the EPP, governing parties from Austria and Ireland are against trade liberalisation efforts with the Latin American bloc. Notably, every French MEP opposes the ratification of these association agreements (even when taking into account the possible adoption of an additional EU-Mercosur instrument for the meaningful pre-ratification of commitments). This points to a very difficult ratification process in the Member States, which is likely to be further complicated by rising protectionist mood and volatile political situations in many countries.

Check out our interactive platform to find out more about the positions of MEPs, political groups and nationalities on the trade agreements negotiated by the EU Commission.

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Another key element of the current debate on industrial policy concerns access to needed raw materials for the green transition,as the Commission will unveil its legislative proposal on raw materials in March. Yet, critical raw materials (CRM) sourcing and its environmental impact remain a highly contentious issue. Previous votes on the matter have been decided by very small margins and we expect a tense EP debate on environmental and human rights trade-offs of raw materials sourcing.

Proposals to introduce strict sustainability criteria for investments in the mining sector and for a stronger focus on the “do-no-harm principle” are drawing support across different political groups, including a significant part of the Renew Europe group (especially the French). Overall, 46% of MEPs would support stricter environmental conditions, while 53% believe that mining should not be burdened by additional requirements.

As S&D, Renew and EPP do not always see eye-to-eye with regards to the sustainability of raw materials sourcing, the most moderate factions within these groups are likely to play a key role in determining future majorities on the upcoming Raw Materials Act.

On our analytical platform, you will be able to find out who are the key MEPs that can help you swing key votes in the European Parliament when it comes to requirements for raw materials. 

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