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The EU Trade Policy The EU Trade Policy

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ContentsContents1. General background of the EU’s trade policy:

how is the EU trading bloc structured?

The institutional setting

Statistics: the EU in world trade

2. Going into depth: the EU’s approach to multilaterlism, regionalism and unilateralism

3. At a glance: the advantages of belonging to the EU trading bloc

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The EU in world trade: The EU in world trade:

The EU is a major trading powerThe EU is a major trading power European manufacturing industry has broadly maintained its European manufacturing industry has broadly maintained its share of GDP in volume in the face of globalization share of GDP in volume in the face of globalization Expensive top-of-the-range products Expensive top-of-the-range products Highly innovative economy Highly innovative economy Services account for 77% of GDP Services account for 77% of GDP The EFTA economy has similar strengths and weaknesses The EFTA economy has similar strengths and weaknesses

… EFTA countries are the second most important region for EU … EFTA countries are the second most important region for EU exportsexports… EFTA is the third largest importing region… EFTA is the third largest importing region

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1b- The EU in world trade1b- The EU in world trade

19% of world trade, 17.1% world trade in goods (2006), 26% world trade in services

First exporterSecond largest

importer

Foreign direct investment: EU-25

a major source of the world’s FDI

(€171.8 billion) and host of the

world’s FDI (€ 94.1 billion) in 2005

A MAJORA MAJOR

TRADING POWERTRADING POWER

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The EU in world tradeThe EU in world trade

30,028,1

10,2

5,0

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

EU25 United States Japan China

Share of GDP in world GDP (2005)share = GDPi / GDPw%

Source: World Bank

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The institutional settingThe institutional setting

Article 133 of the EC Treaty provides in more detail for the

common commercial policy

The Treaty of Rome did not

define “commercial policy”

new issues (e.g. services):

shared competences

vs. exclusive competencies

for the Commission

How it works NOW

Article 133 Committee

constant scrutiny of the

member states

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The institutional settingThe institutional setting

The negotiating process The Commission is the negotiator

• On behalf of the 27 Member States

The Council is the decision maker • Mandate = determined by the Council on the basis of a

Commission proposal• The Commission negotiates on the basis of this mandate• The Council approves the result of the negotiation (generally by

qualified majority)

The European Parliament • Is informed by the Commission of trade policy developments• Gives “assent” on major treaty ratifications (covering more than

trade)

How it works NOW

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2. EU Trade policy - basic features2. EU Trade policy - basic features

MultilateralMultilateral Bilateral/Bilateral/RegionalRegional

UnilateralUnilateral

3 3 DIMENSIONSDIMENSIONS

The three dimensions do not conflict

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The EU’s first priority: multilateralismThe EU’s first priority: multilateralism

• The WTO is the most effective means of managing trade (e.g. it covers 95% of world trade) = effective global governance

• The EU wishes to maintain the WTO at the centre of the international trading system

• The WTO’s rules enforcement mechanism is the most important feature (dispute settlement body)

• The EU has a strong interest in open markets and a clear regulatory framework

• A failure of multilateralism would present a wider risk of increased protectionism and economic nationalism around the world

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The EU’s position on DDAThe EU’s position on DDA

DDA remains the first priority for the EU• The EU seeks a real new multilateral

agreement: to improve existing rules (e.g. on anti-dumping - subsidies) and to create new rules (e.g. trade facilitation)

• to achieve an ambitious and balanced agreement to liberalise world trade – emerging developing countries will also have to contribute

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RegionalismRegionalism

The negotiation of Bilateral and Regional Trade Agreements are not an alternative to our

multilateral commitment but a complement

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A new generation of FTAsA new generation of FTAs

• Our new FTAs are designed to be stepping stones for the widest possible openness in the global trading system

• DDA commitments are the baseline and add further liberalization while also covering issues which are not yet ready for multilateral discussion, such as investment or government procurement

• Our new FTA parties have been targeted responding to economic criteria, such as market potential and the level of protection against the EU export interests

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““Global Europe” FTAs: WTO +Global Europe” FTAs: WTO +

• Korea: launched in May 2007; possibility to conclude talks by the end of 2007

• India: launched by the end of June 2007; likely to be concluded by the end of 2008

• ASEAN: launched in May 2007; willingness to end talks by the end of 2009

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The advantages of being in the EU(I):The advantages of being in the EU(I):

• The EU is based on common values (e.g. sustainable development, labour standards, intellectual property rights) the trading bloc structure enables the EU to uphold these values internationally (behind-the-border issues, notion of fair trade)

• The EU can influence the forces driving change – although the global economy is rapidly changing, the EU trading bloc can pursue a forward-looking external trade policy in a world of change stability

• Openness on the outside proved to be a catalyst for jobs on the inside – given that internal and external politics are linked, the EU as trading bloc can pursue an integrated, coherent approach that ensures prosperity

• The trading bloc equips Europeans for globalization and enables the EU to seize the opportunities of globalization

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The advantages of being in the EU (II):The advantages of being in the EU (II):

• As a trading bloc, the EU can defend its values also internally: member states could sustain their social systems and could respond to issues of social justice – there is no race to the bottom

• As a trading bloc, the EU can ensure access to raw material and energy

• The trading bloc structure also fosters innovation on the inside – allows for economies of scale

• Within the EU, there is rather trade creation than trade diversion

• The EU Market Access Strategy and the EU Market Access Database provide information about market access conditions in non-EU countries