EU and the world economy

1
EU and the world economy

• Anamaria Dutceac Segesten
• IPES, December 3, 2007

2
International Relations

• Two traditions realism and liberalism
• Realism classical IR, assumes that the only
  actors are states, competing with one another to
  promote own national interest
• Liberalism Not only states but non-state actors
  in IR (e.g. multi-national companies -MNCs, intl
  organizations -IOs, intl non-governmental orgs
  -INGOs), who are interested in mutually
  benefiting, collaborative actions

3
EU as intl actor

• Difficulty EU is not a state, not a classic IO
  hard to place
• In practice, the European Commission can make
  decisions binding for all EU members in those
  areas where it has exclusive competence (e.g.
  agriculture, fisheries, trade, air transport,
  development)
• National prerogative areas (education, taxation,
  criminal justice) the EU cannot speak
  internationally for its members
• Shared policy areas - mixed agreements, signed by
  each member state and by the EU

4
EU external policy

• Even if EU does not always act as a unitary
  actor, its presence has an influence over world
  politics
• When it does exert its capability to make foreign
  policy, there are three major areas of active
  interest trade, aid, security
• Common Commercial Policy (Treaty of Rome),
  European Political Cooperation (Hague, 1969),
  Common Foreign and Security Policy (Maastricht
  Treaty), European Security and Defense Policy
  (1999)

5
EU external policy making

• External policies in areas of exclusive
  competence
• European Commission (via one or several of its
  Directorates General for Trade, External
  Relations, Enlargement, Development, the
  Humanitarian Office, EuropeAid Cooperation
  Office) drafts treaties, agreements or policies
• The Council of the EU (via COREPER) examines the
  proposed text
• If Council approves the draft, the European
  Parliament must gives its assent before EC
  implements the policy

6
Problems

• Confusion, overlapping of responsibilities and
  even competition among various DGs
• Lack of international legal status for the
  European Union
• Tension between the inter-governmental and
  supra-national logics, with the CFSP remaining
  solidly on inter-governmental ground
• Failure of the Constitutional Treaty, which would
  have streamlined and strengthened the EU intl
  voice.

7
EU an economic power

• The intl area where the EU is at its most
  powerful trade
• Primary competitor USA
• EU accounts for about 7 of world population (454
  million people, 2004) but for 28 of worlds GDP
• Largest capitalist single market in the world
  (sought after by MNCs to sell their products)
• Largest mergers and acquisitions market in the
  world
• Expansion of FDI (e.g. 67 of all FDI to the US
  is European)
• Euro currency in 12 member states 74 of EUs
  GDP, and 67 of EUs population
• 40 of worlds foreign exchange is done in Euros

8
Common Commercial Policy

• Stipulated in the Treaty of Rome
• Impact on the external role of the EU single
  market, single voice
• Eur. Commission acted on behalf of the EU since
  1961, during the GATT negotiations
• (GATT, precursor to WTO, world agreement on
  promotion of free trade)
• European Community is a member of WTO, together
  with EU member states

9
Common Commercial Policy

• Trade policy the exclusive competence of the EU
  (no nation state initiative)
• Role
• - to establish and/or reject tariffs and
  non-tariff barriers to flows (esp. of goods) to
  and from the EU
• - to impose trade defense measures
• - to combat dumping and monopolies
• - to impose sanctions (with UN agreement)
• - to grant preferential treatment
• The Commission represents the EU in intl talks
• Commission initiates, Council of the EU decides
  with QMV, no consultation of the EP (but informal
  consultation of parliam. committees).
• There is no meeting of trade ministers of member
  states they can take part in the meetings of the
  General Affairs and External Relations Council or
  meet during WTO rounds
• Tension Commission Council now more of a
  collaboration via Article 133 Committee

10
Trade Issues

• Trade in services - the Commission does not have
  full competence in this area, it shares authority
  w/ member states
• This makes negotiations very difficult first
  negotiations within EU, then negotiations with
  third parties (two-level negotiations)
• Inflexible negotiation attitude in the Commission
  it imposes rather than compromises
• Financial markets Euro zone is not overlapping
  with the EU as such, leading to fragmentation,
  and lack of coordination
• Euro is stronger (e.g. reserve currency), but the
  EU does not want to intervene in financial crises
• Largest problem agriculture (protectionism,
  special subsidies, special tariffs, leading to
  conflicts both with the US and with Southern
  hemisphere states)
• Problematic relationship with former colonies
• Third parties have a hard time to understand the
  structure of the EU and the distribution of
  responsibilities within