EU should balance open trade and economic security, Spain says

The European Union should balance its bets for open trade while pushing for its economic security agenda, Spanish Economy minister Carlos Cuerpo said on Friday when asked about the upcoming US election.

“We’re taking note of this geopolitical context outside of the EU, this race for competitiveness, and we’re getting ready for it,” Cuerpo said in an interview with Bloomberg Television.

The EU is facing tensions in relations with the US and China, its two largest trading partners, as it seeks to build momentum in the economy after the shocks of the inflation spike and the war in Ukraine. 

The European Commission, the EU’s executive arm, is bracing for the possible return of Donald Trump to the White House after failing to resolve an ongoing dispute over steel and aluminum during President Joe Biden’s term.

The bloc has also unleashed a series of cases against China following accusations of unfair trade practices. The commission is preparing to publish in June the conclusions of an anti-subsidies investigation into Chinese electric vehicles that is expected to lead to the imposition of tariffs. 

Cuerpo said that Spain was treading the line between attracting investment while protecting strategic companies within key industries, like electric vehicles.

“There are big competitors outside which are also somehow providing us with key inputs into the value chains of those very important industries,” Cuerpo said. 

Spain, the fourth-largest economy in the euro area, is preparing for a crucial handover as soon as next month when Bank of Spain Governor Pablo Hernandez de Cos’s mandate ends. 

De Cos has been involved in discussions at the European Central Bank over how fast to ease monetary policy after an unprecedented tightening cycle pushed its deposit rate to 4%. 

The Spanish government is considering waiting until after the European elections on June 9 before pick a successor for de Cos and could potentially leaving the job vacant for weeks or even months.

Cuerpo said de Cos would be replaced “in due time” and added June 10 was not a hard deadline. He declined to give any clues as to who the new governor could be.

“For sure I think the person who will come after Pablo, who has been an excellent governor, will keep up to the standards,” he added.

In that scenario, de Cos’ deputy, Margarita Delgado, would be able to stand in to represent Spain. Her mandate finishes in September.