EU FTA policy

1
EU FTA policy

• Stephen Woolcock
• London School of Economics

2
A shift in EU policy?

• Motivations for past FTAs
• Factors influencing the current policy
• Content of EU FTAs
• Towards a coherent EU policy

3
Motivations behind FTAs

• Foreign policy/security
• Europe agreements post 1989
• Euro-Med Association Agreements
• Stability Association Agreements with Balkan
  states
• Development policy
• Lome, Cotonou and EPAs

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Motivations behind FTAs

• Commercial
• Neutralizing trade diversionary and other effects
  of other FTAs
• EU Mexico (NAFTA)
• EU MERCOSUR and EU Chile (FTAA)
• Also motivates EU-Central America (CAFTA) EU
  ASEAN (US FTAs with ASEAN states) and EU - Korea
  discussions (US Korea negotiations)
• Strategic links with emerging markets
• MERCOSUR, India and ASEAN
• Enforcing international rules
• Intellectual property rights

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Motivations

• Exporting regional integration
• Regional integration not the acquis communautaire
• Region-to-region agreements
• EU- Mercosur EPAs EU Central America EU
  ASEAN
• Shaping the regulatory framework for trade and
  investment
• Singapore issues, technical barriers to trade,
  ect.
• Cf the US approach

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Combination of factors shaping EU policy

• US interpretation of competitive liberalisation
  post 2001
• US FTAs less pathfinder role for multilateral and
  more an alternative (competitive liberalisation
• Difficulties with the multilateral level
• Modest commitments on services
• Absence of a comprehensive agenda
• Develoments in Asia
• Growth prospects in emerging markets
• Increase in FTAs within the region and with US
  and Japan
• Domestic developments
• New Commission

7
Content of FTAs

• Tariffs
• Rules of origin
• Services
• Investment
• Government procurement
• Competition
• Intellectual property
• Other rules

8
Tariffs

• EU policy is 90 coverage
• Leaves scope for exclusion of sensitive sectors
• EU practice near 100 on industrial products but
  24 to 68 tariff elimination on agricultural
  products
• Benefits
• ASEAN bound industrial tariff rates between 35
  (Indonesia) and 4 (Singapore) Brazil 30 India
  37 but applied rates much lower

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Rules of origin

• PanEuro(Med) rules of origin
• facilitates cummulation
• must apply same rules
• PanEuro system is still complex/costly especially
  for developing countries
• EU reviewing preferential RoO
• simplification based on value added criteria
• need for reform and flexibility in application to
  DCs
• before benefits of cummulation can be achieved
• Still a long way from internationally agreed
  pref. RoO
• US uses NAFTA RoO equally complex and based on
  CTH
• Benefits
• Reform and harmonisation of RoO required if
  benefits in terms of cummulation and promotion of
  regional integration are to be achieved

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Sevices

• Services would be a key component of EU FTAs
• Commitments in FTAs well ahead of those in GATS
• Comitments in DDA have been disappointing
• US FTAs have considerably more coverage
• First mover advantages in some sectors, i.e.
  establish network of branches
• Benefits
• Greater commitments but
• Can EU match the level of US FTAs? EU practice
  has been flexibility and positive list approach

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Investment

• New EU FTAs could include more on investment
• No EC competence in the past
• Only EU Chile included more comprehensive
  provisions
• Debate on minumum platform for investment in FTAs
  (pre and post establishment national treatment,
  investor-state dispute settlement?)
• Benefits
• More predictable climate for (smaller and medium
  sized) investors
• But can the EU avoid a re-run of the MAI affair?

12
Government procurement

• Another Singapore issue
• EU FTAs
• equivalent to 1994 GPA (e.g EU Chile) or
• softer/weaker provisions on transparency
• US applies GPA to the letter
• FTAs can effectively extend number of countries
  complying with GPA provisions
• Benefits
• Mostly for EUs FTA partner economies
• Procurement rules enhance transparency but little
  increase in market access for foreign exports

13
Competition

• Another Singapore issue
• EU FTAs have included
• Cooperation on enforcement incl. positive comity
  (EU Chile and even in TDCA with South Africa)
• Prohibitions on state subsidies but with wide
  exceptions (Euro-Med, TDCA)
• Agricultural subsidies excluded
• Increasing coverage of competition in FTAs, some
  envisage replacing anti-dumping with competition
  (Chile and Singapore pushing this)
• Benefits
• Long run improvement in actions against
  international RBPs
• But does it add much to what is being done
  elsewhere?
• More transparency on state subsidies

14
Intellectual property

• EU policy
• TRIPS conform rather than TRIPs plus (as US FTAs)
• Use of existing standards of protection in TRIPs
  and other existing conventions
• Except for objectives on geographic indicators
• Lack of effective IP highlighted in current EU
  strategy
• Benefits
• A focus on more effective enforcement could bring
  benefits for EU owners of intellectual property
  rights
• TRIPs plus rules likely to controvertial

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Technical Barriers to Trade

• TBT
• TBT provisions not much WTO plus
• With near neighbours aim of approximation to
  European standards and regulations but long term
• Some reference to MRA in TDCA and EU-Chile but EU
  sets high hurdle in terms of conformance
  assessment
• Technical assistance and promotion of agreed
  international standards
• Joint Committee to promote cooperation and
  provide technical assistance
• Benefits
• Barriers in Korea and could grow in other Asian
  economies as they develop

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SPS

• Reaffirm WTO commitments but push for WTO-plus
  procedural meausres(e.g. EU Chile)
• More extensive provisions on equivalence,
  regionalisation and verification procedures
• How to reconcile ease access for DC food products
  and preference for the PP in the EU
• Joint Committee
• Benefits
• Important barriers in Korea and in the future
  there is scope for TBTs and SPS barriers to grow
  in other markets

17
Commercial defence

• Commercial defence
• GATT rights on anti-dumping and safeguards
  retained
• Transitionary safeguards likely esp. for DC
  partners

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Towards a coherent policy

• EU committed to multilateralism but negotiating
  FTAs and region-to-region agreements
• Key is to ensure positive interaction between the
  initiatives
• Not through WTO rules alone
• Need to be assessed issue by issue

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Policy aims

• Substantially all trade
• Simplification of EU prerential rules of origin
• More binding on tariffs and services
  liberalisation
• Promote enhanced transparency and best practice
  in regulatory policies
• and enhanced compliance with existing
  international norms and standards