European Union Trade Policy

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European UnionTrade Policy
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Contents

• 1. A few facts about World Trade
• 2. The EU in world trade
• 3. EU Trade Policy - basic features
• 4. EU Trade Policy - how it works
• 5. EU Trade Policy - WTO context
• 6. Enlargement the implications
• 7. Conclusion

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1. A few facts about world trade
GLOBALISATION TECHNOLOGICAL TRADE
DEVELOPMENTS OPENING

• IMPLICATIONS
• Opportunities for growth, but disruptive effects
• Need for global governance -gt multilateral rules
  and institutions
• To ensure level playing field and better
  distribution of benefits

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1. A few facts about world trade
GLOBALISATION TECHNOLOGICAL TRADE
DEVELOPMENTS OPENING

• REACTIONS
• 63 of EU citizens in favour globalisation and
  over half believe that can become more
  advantageous for them
• 62 of EU citizens believe the process of
  globalisation can be effectively controlled and
  regulated, with 58 positive about the European
  Commission negotiating on behalf of all Member
  States on trade matters
• 1 in 2 EU citizens foresee an optimistic future
  for themselves and their families should
  globalisation intensify - 56 of the respondents
  view the opening-up of markets as a good
  opportunity for domestic industry and 57 of EU
  citizens believe globalisation is positive for
  economic growth.
• See more Flash Eurobarometer on Globalisation,
  October 2003 available at http//europa.eu.int/com
  m/trade/issues/newround/pr171103_en.htm

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1. A few facts about world trade
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2. The EU in world trade
20 of world trade 19 world trade in goods, 24
world trade in services
Second largest importer
A MAJOR TRADING POWER
First exporter
Foreign direct investment (FDI) EU-15 source of
46 of the worlds FDI (235 billion) and hosts
20 of the worlds FDI (119 billion)
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2. The EU in world trade
A MAJOR TRADING POWER
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2. The EU in world trade
EU-25 Trade in goods Exports by region (2002,
million euro)
EFTA 97 598
CIS 46 688
NAFTA277 186
JapanKorea 58 560
China 52 893
MED9 73 670
SAARC 16 412
GCC6 35 722
ASEAN39 814
ACP 39 734
Andean 7 335
MERCOSUR 19 105
AustraliaN.Zealand18 792
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2. The EU in world trade
EU-25 Trade in goods Imports by region (2002,
million euro)
EFTA 107 259
CIS 75 058
NAFTA207 015
JapanKorea 96 844
China 98 595
MED9 65 777
SAARC 21 287
GCC6 18 333
ASEAN68 578
ACP 45 785
Andean 7 907
MERCOSUR 25 851
AustraliaN.Zealand11 283
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2. The EU in world trade
EU Foreign Direct Investments by region (2002,
million euro)
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2. The EU in world trade
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2. The EU in world trade
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2. The EU in world trade
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2. The EU in world trade
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3. EU Trade policy - basic features
Being the leading trade bloc

• Strong interest in
• open markets
• clear regulatory frameworks

• Responsibility to
• EU citizens
• rest of the World

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3. EU Trade policy - basic features
Promote European interests and defend European
values On democracy, rule of law, environment,
social rights, public services, cultural
diversity, food security...
Open world trade markets, through the
progressive abolition of obstacles to
international trade and the lowering of customs
barriers
Harness globalisation by agreeing on a set of
rules to regulate markets, and ensuring
compatibility of trade opening with other
societal values
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3. EU Trade policy - basic features
3 dimensions

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3. EU Trade policy - basic features

• Mostly implemented in the framework of the WTO
  with the aim of promoting market access with
  rules, in the context of effective global
  governance.
• For example -
• for trade in goods policies such as tariff
  reduction and technical barriers to trade.

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3. EU Trade policy - basic features
In addition to the WTO's multilateral
negotiations, the EU concludes bilateral
agreements and devises specific trading policies
with third countries and regional areas. 121
countries are potentially linked to the EU by
regional trade agreements, many negotiated in the
1990s.

• EU policy rationale for bilateral agreements
• trade expansion and rules-making (WTO)
• fostering development and...
• promoting regional development
• new ideas for Neighbourhood policy/ Wider
  Europe

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3. EU Trade policy - basic features
The EU also implements unilateral measures as an
additional trade policy instrument in the
interests of development and/or political
stability in line with the Unions key political
priorities
Everything But Arms initiative (EBA) - EBA is a
special GSP arrangement for the least developed
countries. EBA grants duty-free access to imports
of all products from LDCs without any
quantitative restrictions, except to arms and
munitions.
General System of Preferences (GSP) - the
classical instrument for fostering development is
by granting tariff preferences. The EU's GSP
grants products imported from GSP beneficiary
countries either duty-free access or a tariff
reduction depending on the sensitivity of the
product and the GSP arrangement enjoyed by the
country concerned.

Asymmetrical preferences e.g. for the Balkans and
Moldova, with the aim of ensuring peace,
stability, freedom and economic prosperity in the
region (cf. Wider Europe).
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3. EU Trade policy - basic features
178 developing countries and territories are
beneficiaries of the EUs GSP. The EU is, by far,
the principal donor of preferences of all OECD
members.
In 2002, EU imports benefiting from GSP
preferences amounted to 52 billion. China was
the leading beneficiary country followed by
India, Indonesia, Viet Nam, Brazil and Thailand.
The extension of the current GSP to the end of
2005 provides stability to traders and economic
operators.

Special arrangements exist for the 49 Least
Developed Countries (EBA - "Everything But Arms")
as classified by the UN. They benefit from
duty-free and quotafree access for practically
all exports of originating products to the EU for
an unlimited period of time.
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3. EU Trade policy - basic features
The reduced rate provisions of the GSP

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4. EU Trade policy - How it works
From tariffs and quotas...
The new shape of trade policy Developed from
trade liberalisation in goods to services and
rules on investment, intellectual property,
public procurement
Evolution reflected in the Treaty of Nice (2001)
Extended the EU trade competence to services and
commercial aspects of intellectual property
rights with qualified majority voting
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4. EU Trade policy - How it works

• The EC Treaty establishes the overall aims and
  objectives of EU trade policy

Article 2 sets the general aims including to
promote the development of economic activities,
high employment and competitiveness, and
environmental protection.
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4. EU Trade policy - How it works

• Article 133 of the EC Treaty provides in more
  detail for the common commercial policy

• Rests on
• Shared, uniform concept of policy
• A decision-making process based on a mixture of
  exclusive and shared competences

• Comprises
• Trade in goods, services and trade-related
  aspects of intellectual property rights
• special provisions for specific fields (e.g.
  audiovisual, cultural, educational, social and
  health services)

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4. EU Trade policy - How it works
The negotiating process
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4. EU Trade policy - How it works

• The 133 Committee
• a special committee provided for by Art. 133 of
  the EC Treaty appointed by the Council to assist
  the Commission
• a permanent dialogue and sounding board between
  the Commission and the EU Member States on trade
  policy

• Civil Society dialogue
• regular consultation with business, trades
  unions and civil society

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4. EU Trade policy - How it works
Note that the exclusive Community competence
covers trade policy for now, the rest is left to
the EU Member States.
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4. EU Trade policy - How it works
How it might change in the EU
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4. EU Trade policy - How it works
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4. EU Trade policy - How it works
Defensive instruments to ensure fair trade and
defend the interests of European companies ...
have been designed in line with specific WTO
agreements recognising the right of members to
counter unfair practices
Anti-dumping measures were created to counter
dumping practices, the most frequently
encountered trade-distorting practices. Dumping
occurs when manufacturers from a non-EU country
sell goods in the EU below the sales price in
their domestic market, or below the cost of
production.
Anti-subsidy measures were designed to combat
subsidies, which are made available to
manufacturers by public authorities and which can
also distort trade when they help to reduce
production costs or cut the prices of exports to
the EU unfairly.
Safeguards A WTO member may restrict imports of
a product temporarily if its domestic industry is
seriously injured or threatened with injury
caused by a surge in imports.
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4. EU Trade policy - How it works
2003 saw the lowest level of anti-dumping
activity since the WTO was created in 1995

• In 1999, the EU was the no.1 global initiator of
  AD investigations
• Now the EU is only 4th in the top-10 with 51
  investigations outstanding
• Top of the league is India (167 cases) then the
  US (130) and China (52).

Only 0.3 of total imports of goods into the EU
are covered by AD and anti-subsidy measures.
Most AD cases in 2003 were in the chemicals, food
and agricultural products sectors. The number of
cases in the steel sector has been declining over
the last 3 years.
In terms of the principal users by measures in
force, the EU ranks 3rd behind the US and India.
The biggest target of AD cases is China. The EU
is ranked in 2nd place.
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4. EU Trade policy - How it works
Offensive instruments to open markets and
eliminate obstacles to trade... across the
multilateral, bilateral and unilateral fronts
The Trade Barriers Regulation (TBR) gives
industry the opportunity to lodge a complaint
with the Commission when there is reason to
believe that companies are encountering trade
barriers that restrict their access to third
country markets. The TBR can also be used to
evaluate whether there is evidence of violation
of international trade rules, resulting in
adverse trade effects - this could lead to the
initiation of the WTO dispute settlement
mechanism (see later)
Market Access Strategy of which the EUs Market
Access Database provides information about
market access conditions in non-EU countries a
systematic way for the Commission to follow up
complaints from businesses about barriers to
trade in non-EU countries and, is a means of
ensuring that our trading partners are abiding by
their international commitments.
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4. EU Trade policy - How it works

• opening markets for trade in goods
• investments, services, rule-making, standards,
  non tariff measures
• gtgt EU-Chile an example

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5. EU Trade policy - WTO context DDA

• Global governance the role of the EU

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5. EU Trade policy - WTO context DDA
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5. EU Trade policy - WTO context DDA
PS a very biased 'pro-WTO' vision of its work.
DR
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5. EU Trade policy - WTO context DDA
Key Facts on use of the WTO Dispute Settlement
System
N.B. Cases settled are considered as "won" by the
complainant when a mutually agreed solution is
notified or the complainant otherwise
acknowledges that it considers the issue solved.
Cases that go through litigation are considered
as "won" when the complainant prevails in at
least one of the claims.
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5. EU Trade policy - WTO context DDA
The Doha Development Agenda
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5. EU Trade policy - WTO context DDA
The Doha Development Agenda
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5. EU Trade policy - WTO context DDA
The WTO Ministerial Meeting in Cancún
Following the failure of the September 2003
Cancún conference and after intense consultations
with with EU Member States, the European
Parliament and all European stakeholders
(business, trade unions and civil society), in
November 2003 the European Commission adopted a
strategy paper aimed at contributing to the
re-launch of the Doha talks. The Commission
concluded that the fundamental objectives of the
EU in this negotiation remain valid

• a clear preference for a multilateral trade
  system
• a strong rule-making component alongside market
  access
• the need to ensure that the negotiations do
  deliver a development round

Available at http//europa.eu.int/comm/trade/is
sues/newround/pr261103_en.htm
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5. EU Trade policy - WTO context DDA
The WTO Ministerial Meeting in Cancún
But to take into account what happened in Cancun
and since, the Commission recommended a revised
strategy to achieve EU objectives, in the form of
a refreshed and updated negotiating position in
several areas
areas where there is room for flexibility in the
EUs position - for example, on the so-called
Singapore Issues, trade and environment,
Geographical Indications and commodities
areas where the EU has already put forward ideas
for movement - for example on agriculture and
cotton and where more movement is necessary from
others- for example on industrial tariffs and
trade in services
ideas for limited reforms of the organisational
and procedural aspects of the WTO - for example
the management of future WTO Ministerials, and
the participation of smaller Members in the
negotiations
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6. Enlargement the implications
Some introductory facts
EU enlargement will secure political stability,
democracy and respect of human rights on the
European continent as a whole
Objective to welcome Bulgaria and Romania as EU
members on 2007
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6. Enlargement the implications
Trade-related issues
The new members apply the EUs Common Commercial
Policy all EU bilateral agreements, the Common
external tariff and EU trade defense measures
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Conclusion
Globalisation has put trade issues at the centre
of citizens concerns
Opening markets can provide opportunities
if harnessed by collective rules
Well others see globalisation as a system that
is 'fair' if you're rich, and 'unfair' if you're
the exploited poor people! DR