Investing.com - The European Union has aligned itself with a trade policy based on doing business in a manner that respects human rights, protects high labor standards, and promotes social justice.
Yet, despite these lofty pledges, the bloc has become increasingly dependent on trade with countries run by autocrats and dictators, according to research analysts at the European Central Bank.
In a blog post, the ECB's Claudia Marchini and Alexander Popov noted that, in the fifteen members of the EU which were part of the bloc before its major eastward enlargement in 2004, the democratic profile of the region's trading partners has dropped over roughly the past 25 years.
Citing their own calculations as well as data on bilateral trade from the United Nations and Varieties of Democracy project, the analysts suggested that the numbers point to a gradual reallocation of imports "in favor of less democratic countries" since 1999.
Trading with autocratic regimes can also generate profits for governments that have an "explicit expansionary and militaristic agenda," placing geopolitical stability at risk and potentially posing "an existential challenge to the EU," they argued.
The researchers added that rare earth materials used in low-carbon technologies are also often found in these regimes, presenting the EU with another dilemma: "inadvertently" worsening alleged human rights abuses around the extraction of these minerals in order to underpin the region's green energy targets.
Meanwhile, "[t]he quality of democratic governance" has declined in these nations during that period, they argued -- adding that, when fixing trade share over time and considering the value of each country in an index scoring liberal democracies, the fall is especially pronounced after 2012.
Such figures may cast doubt over Europe's reputation as a "values-based economic and political union," the researchers said.
"The decline in the quality of democratic governance of its average trading partner since 1999 can be perceived as inconsistent with the EU's sustainable trade policy goals of respecting democratic, human, and social rights," they wrote. "This, as for the last 25 years it has increasingly traded with autocrats and dictators, the EU can't successfully claim."
However, they noted that the democratic profile of EU trade improved "significantly" after the bloc moved to place sanctions on Russia following the outbreak of the war in Ukraine in 2022.
"The world is currently rife with geopolitical risk. Europe is facing an unprecedented challenge to secure its supply chains. Paying more attention to whom we trade with would be simultaneously consistent with the principles we have tied ourselves to and good economic policy,"
the researchers said.