EUROPEAN TRADE POLICY

SUBMITTED TO:

KUNWAR MILIND SINGH

(PROFESSOR GHS-IMR)

SUBMITTED BY:

ANAND PANDEY
UTTAM UPADHYAY
AJIT TRIVEDI

XV BATCH (FULL TIME)

(2009 – 2011, Vth TRIMESTER)

DR. GAUR HARI SINGHANIA INSTITUTE OF MANAGEMENT AND RESEARCH

EU Trade Politics: an offensive strategy
 The context:

o EU’s Lisbon Strategy, adopted in March 2000 at the European

Council in Lisbon, strives to transform the European Union into the
“most competitive economic region by 2010”.

 EU trade policy certainly aims at increasing its net export, but

 Import restrictions are applied more selectively.

 The most protected sector is agriculture with a mean tariff of 30%:

o Protection has been focused on meat, sugar, milk and grains.

 Tariff protection substantially decreased after World War II. With an

average rate of 3,5%, tariff protection for manufactured goods is very
modest.

 Eu trade policy is rather offensive than defensive = neo - mercantilism

Global Europe –
the EU‘s new external competitiveness strategy
 Components and targets:

1. Conclusion of the WTO’s Doha negotiation

2. The “Global Europe Strategy” (adopted 4 October 2006)

 Initiatives linked to the “Global Europe Strategy”

• Forum shifting to bilateral trade negotiations with other trading blocks

and individual states.

• Green Paper and public consultation on trade defence instruments

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The EU and the WTO
 The EU Commission and the US have been at the forefront in
agenda-setting during the Doha round.

 The EU tried to set a particular broad agenda at the Singapore

ministerial in 1996 introducing new topics like investment and
government procurement, though largely not successfully.

 The EU strongly insists to come to a conclusion in the ongoing Doha

round by the end of 2007

The EU and the Doha Round: Agriculture and NAMA

 In Agriculture the figures are moving towards a 54% reduction in EU
tariffs.

 With regard to industrial goods, the EU holds its demand of a more

substantial tariff reduction for developing countries. In NAMA
developing countries are being pressured to agree to a coefficient that
will result in an average of 60-70% tariff cuts.

IG Metall fully endorses

the ITUC General Council resolution (20-22 June 2007)
 IG Metall is concerned that the conclusion of the Doha Round on its
current basis will not achieve the WTO’s objectives of increasing living
standards, raising employment and achieving sustainable growth and
development, but instead stand to worsen poverty and inequalities and
exacerbate abuses of fundamental workers’ rights.

 IG Metall supports NAMA-11 trade unions and demands that developing

countries not be pressured to trade off NAMA for agriculture and to
make tariff reductions that will negatively affect their economies,
employment and future industrial development.

 They should be able to retain a sufficiently high coefficient in line with

each country’s level of development.
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The Global Europe Strategy
 The European Commission on 4 October 2006, adopted a
Communication “Global Europe: competing in the world” on a new
trade strategy for the European Union.

 Opinion: The Global Europe Strategy includes very doubtful elements

and is not in the interest of workers, neither in Europe nor world wide.
The Global Europe strategy comprises a purely market driven vision of a
Global Europe.

The EU‘s new external competitivesness strategy

- background and core content
 Internally: the new corporate-driven trade strategy will dictate domestic
market reform, undermining the European social model, by breaking down
the regulatory environment of labour law and social protection. Example: the
“flexicurity” strategy

 Externally: WTO+ approach:

o the EU plans to use free trade agreements to force concessions on

issues that developing countries have repeatedly rejected at the WTO.
This will undermine multilateralism and increase poverty and
inequality.

The EU‘s new external competitiveness strategy-labour

rights
 Labour rights: The communication pays some verbal attention to social
justice recommending that “we should seek to promote our values,
including social and environmental standards and cultural diversity,
around the world”;

 But there is no strong and unequivocal commitment to explicitly include

the ILO core labour standards in all European bilateral and regional trade
agreements.

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Forum shifting in the EU trade policy
The Global Europe Strategy in short:

 combines internal and external market driven reforms (internally the

Lisbon Strategy and externally the trade strategy);

 aims at extending the influence of European multinational companies

inside and outside Europe; and proposes a whole set of trade initiatives,
focused on a new generation of trade and investment agreements.

The WTO – Plus goals in bilaterals

 a stronger dismantling of so-called non-tariff barriers to trade (that is, all
conceivable barriers to trade beyond tariffs),

 securing unimpeded access to energy and raw materials,

 increased protection of companies’ intellectual property rights,

 accelerated opening of services markets,

 implementation of unimpeded freedom of establishment (liberalising

third countries’ investment regimes ),

 liberalisation of public procurement markets for EU exporters.

The Commissions new China strategy

 Especially China is becoming a stronger target for European trade policy
makers;

 On 24th October 2006, the Commission presented its ambitious working

programme for shaping future relationships between the EU and China;

 China is to meet its WTO commitments and further liberalise access

to its markets for goods, services, investment and procurement. The
EU wants to put a stop to “involuntary technology transfer”;

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  The EU hopes to achieve rules concerning trade matters in the new
partnership and cooperation agreement between the EU and China.
The negotiations on the new partnership and cooperation agreement
were officially opened on the occasion of the EU’s External Relations
Commissioner to Beijing in January 2007

New bilateral negotiations

 28 bilateral negotiation procedures and agreements, including 11 ongoing
procedures with single countries or regions

 New Free Trade Agreements: EU-India – EU-ASEAN – EU-South

Korea;

 Problem of secrecy: More detailed analyses are still owing – and are as
yet possible only due to ‘leaks’ in Europe’s trade policy structures - as
all documents are officially still kept secret from the critical public;

The EU – India negotiations

 The EU Commission has communicated its vision of a future negotiation
mandate to the Council of Ministers in December 2006 and strives to
achieve a negotiation period of up to 2 years.

 It writes that its “approach is in line with the ‘Global Europe’ strategy,
which underlines that new competitiveness-driven FTAs would need to be
comprehensive and ambitious in coverage, aiming at the highest possible
degree of trade liberalisation including far-reaching liberalisation of
services and investment.”

 India will press for EU concessions in the so-called ‘Mode 4’ of services

liberalisation, that is, temporary labour migration in the bilateral talks –
as it did in the GATS negotiations at the multilateral level –. According
to newspaper reports, India aims to negotiate special visa for independent
and contractual service suppliers (CSS) with Europe.

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The EU – Asia negotiations
 The simultaneously launched drafts for the EU-ASEAN and EU-South
Korea negotiations provide for almost identical negotiation guidelines.

 EU – South Korea negotiations are moving fast. The 3rd round of Free
Trade Agreement (FTA) negotiations between South Korea and the EU
taking took place from 17th till 21st September in Brussels .

 The EU has presented offers and drafts on Tariff reductions and 2

amendments on the automobile and electronics sectors.

 With regard to automobiles the target is the adoption of the UN ECE

standards by Korea.

 Target is full liberalisation of all tariff lines after 7 years

 NGOs from both parties are protesting.

Policy Structure and Objectives

 Average tariff rate is around 6.7% (range: 0% to 604.3%)
 Agricultural products have the highest rates and often are regulated
under quota systems
 Leading user of "contingency trade remedies" (anti-dumping,
subsidies, safeguards, etc."
 Harmonization of technical requirements among member states is
an ongoing process
 Services are essential for refining the internal market
 Manufacturing (6.7%) and agriculture (9.3%) both receive high
levels of support
 Largest importer of energy and second largest consumer (duty-
free!)

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Imports of Goods & Services: US & EU

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Internal Issues
 The EU's Single Market makes internal trade at once both foreign
and domestic
 Data on internal movement of goods is only recorded when
transactions exceed a certain level - Eurostat extrapolates off of
this data
 Asymmetries in internal movement of goods may be responsible
for the Greek crisis 
 Some regulatory barriers to trade: geographical product names,
safety standardization
 Disparate levels of development among members frustrate full
exercise of negotiating power

Preferential Trade Agreements

o Preferential Trade Agreements 
 MERCOSUR, Gulf States, ASEAN, ACP, Euro-Med 
 Often require social and environmental concessions
o European Economic Area reconciling EC countries and EFTA
countries in 1994
o Accession concessions
o EC-MED and the Barcelona process
o Cotonou Agreement - ACP
 Imports: petroleum, cocoa and diamonds
 Exports: machinery, oil, vehicles, medicine

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Most Favored Nations (MFNs)
 The EU maintains a Generalized System of Preferences (GSP) that
grants duty-free access to 176 developing countries for industrial
products, fishing and agriculture.
 Though EU GSP policies tend to mirror those of the US, WTO and
UN, they differ on normative standards for labor, the environment,
drugs & arms.
 MFNs follow a strict set of rules & can graduate out of the system.
 Rules can be restrictive because they lock market share & pit
sectors & countries against each either to win EU attention.
 Under its GSP, the EU maintains an Everything but Arms program
promising duty- and tariff-free imports to Least Developed
Countries (Rules of Origin issues)

Trade with the US

 Trade between the US & EU represents 33% of global trade in
goods, 42% of services, & a combined EURO 1.89 trillion in FDI.
 In 2007, the US & EU formed the Transatlantic Economic Council
(TEC) an effort to oversee & facilitate trade programs, cargo
security & mutual recognition of accounting and finance standards.
 The most significant barriers remaining between the two pertain to
movement of people, though tensions exist in the arenas of energy
policies, competition & agriculture.
 Because a significant consensus is required in the EU before any
trade decisions are official, the EU loses leverage to the US despite
its market size.

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Trade with Asia
 The EU imports from Asia labor intensive goods & exports capital
& technology intensive goods & services.
 Starting in the 1950s, trade agreements with Asia followed the
general pattern of EU trade policy liberalization.
 Future challenges include income & population growth, anti-
dumping games (with China) & the desire for sector specific
policies.
 Future trade agreements, preferential or not, will need to focus on
FDI, cost reduction & sophistication of supply chains.

Protectionism: Fortress Europe

 National non-tariff barriers on automobiles, textiles &
electronics increased 500% in the 1970s because of economic
recession.
 States have an interest in blocking increased EU protection,
particularly for agriculture & the CAP.
 Income growth in developing countries, climate change, energy &
globalization leave many member states skeptical.
 The core of the trade policy was traditionally about EU (business
and industrial) access to world markets first.
 As the EU has moved away from the WTO as a governing body,
they have maintain rule-based policies, both to help potential new
member states & to protect the "origin" of products.

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Liberalization
o EU trade policy was formed under the spirit of liberalization in a
peaceful, global market.
o Liberalization was not as feasible during recessions, because of
unanimous voting requirements, & the absence of a common policy or
attitude toward unemployment.
o Since the Uruguay Round in the 1990s, however, the EU has removed
6,300 non-tariff barriers.
o The EU has followed a process of liberalization because of: 
 Increased international business competition
 Individual firms prefer free trade
 Increased power of openness interest groups
 Changing attitudes of policy makers (ideas)

Looking Forward: What's Next?

 Trade policy priorities change with enlargement, particularly those
pertaining to IP & financial markets. 
 Multilateral trading system v. preferential access
 If international trade becomes more multilateral & less bipolar,
how will the EU adopt its rule-compliance approach? How will its
value system shift?
 Could barriers become regional? Sector based?
 What role will corporate movements, i.e. global mergers &
acquisitions & private FDI, play?
 What happens after 'liberalization'?

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 BIBLIOGRAPHY

 www.wikipedeia.com (Search engine)

 www.Google.com

 www.europeanunion.com

 www.scribd.com

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