EU Makes Latvia’s Dombrovskis Trade Chief to Deal With U.S.

(Bloomberg) --

Valdis Dombrovskis, one of the European Union’s top economic policy makers, will become EU trade chief in a leadership reshuffle prompted by the resignation last month of Phil Hogan.

The appointment of Dombrovskis as European trade commissioner on Tuesday highlights the EU’s determination to scale back transatlantic tariff wars, curb market-distorting Chinese practices and uphold the global commercial order amid stronger protectionist trends.

Dombrovskis, 49, is an executive vice-president in charge of the euro at the European Commission, the EU’s executive arm in Brussels, and a former Latvian prime minister. Commission President Ursula von der Leyen named him to succeed Irish native Hogan as part of changes to her team that also include giving Ireland’s new appointee -- Mairead McGuinness -- responsibility for financial services.

“We are currently in turbulent waters as regards global trade, relations with the U.S., relations with China,” Dombrovskis said at a conference after von der Leyen’s announcement. “We remain committed to the multilateral rules-based international system.”

Dombrovskis’s new role will help cement political unity and policy continuity in the world’s most lucrative single market when it comes to international commercial matters.

With Dombrovskis as the 27-nation EU’s trade czar, the post stays in the hands of Europe’s biggest political family, the Christian Democrats. Until Hogan took up the post last December, they hadn’t held the job (except on a caretaker basis) for 20 years.

The EU Christian Democrats generally support free trade and fall on the policy spectrum between the two other main political families in Europe: the pro-business Liberals and the more protectionist Socialists.

Irish Portfolios

Dombrovskis, serving in his second five-year term as a European commissioner, is widely viewed in EU circles as a safe pair of hands. He is known both for his experience helping manage some of Europe’s toughest economic challenges, including this year’s pandemic-induced recession and the earlier euro-area debt crisis, and for his mastery of policy details.

Von der Leyen’s appointment of McGuinness, currently a European Parliament vice-president, to succeed Dombrovskis as EU financial-services commissioner will give her a key role as the bloc negotiates its post-Brexit relations with the U.K. The move also bolsters Ireland’s voice in EU financial matters because Irish nationals are already in the jobs of head of the group of euro-area finance ministers and of European Central Bank chief economist.

Dombrovskis will take over a packed portfolio that Hogan was still getting to grips with when he resigned on Aug. 26 over an Irish coronavirus controversy. The policy challenges include:

• a possible escalated tariff fight with the U.S. over aircraft subsidies
• the risk of a transatlantic trade war over digital taxes in Europe
• controversial American duties on EU steel and aluminum
• post-Brexit commercial ties with the U.K.
• a long-sought deal with China to open its market more to foreign investment
• defense of the World Trade Organization’s ability to settle disputes
• the hunt for an EU consensus on the next WTO leader
• ratification of a landmark free-trade deal with Mercosur
• a trade policy review to account for the coronavirus pandemic

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