Session 4: The Different Forms of Regional Integration PDF

***Session 4 :*** **The different forms of regional integration :** The institutional framework of the European Union : Regional integration can take diverse forms, through different kinds of international agreements. In the table below you can find the main distinguishing features of three types...

***Session 4 :*** **The different forms of regional integration :** The institutional framework of the European Union : Regional integration can take diverse forms, through different kinds of international agreements. In the table below you can find the main distinguishing features of three types of associations among countries. --------------------- -------------------------- ------------------------------------- ------------------------------------- Type of Association Removal of Inner Tariffs Institution of Common Outer Tariffs Free Movement of People and Capital Free Trade Area Yes No No Customs Union Yes Yes No Economic Union Yes Yes Yes --------------------- -------------------------- ------------------------------------- ------------------------------------- Example of other Free Trade Area : - The **NAFTA** North American Free Trade Agreement (Mexico, USA, Canada) became the **USMCA** (United-States -- Mexico -- Canada Agreement, since 2020, after Trump' will) -- **30% of the global economy** - **SACU** : South Africa Union Customs, since 1910 (4 countries) : Botswana, Lesotho, Namibia, South Africa, and Swaziland. Each kind of agreement allows to achieve a deeper level of integration : *NB* : The European Economic Community (EEC) was a [regional organisation](https://en.wikipedia.org/wiki/Regional_organisation "Regional organisation") created by the [Treaty of Rome](https://en.wikipedia.org/wiki/Treaty_of_Rome "Treaty of Rome") of 1957, aiming to foster [economic integration](https://en.wikipedia.org/wiki/Economic_integration "Economic integration") among its member states. It was only an economic market at first. It was subsequently renamed the European Community (EC) upon becoming integrated into the [first pillar](https://en.wikipedia.org/wiki/Three_pillars_of_the_European_Union "Three pillars of the European Union") of the newly formed [European Union](https://en.wikipedia.org/wiki/European_Union "European Union") (EU) in 1993. The Community\'s initial aim was to bring about economic integration, including a [common market](https://en.wikipedia.org/wiki/Single_market "Single market") and [customs union](https://en.wikipedia.org/wiki/Customs_union "Customs union"), among its [six founding members](https://en.wikipedia.org/wiki/Inner_Six "Inner Six") : [Belgium](https://en.wikipedia.org/wiki/Belgium "Belgium"), [France](https://en.wikipedia.org/wiki/France "France"), [Italy](https://en.wikipedia.org/wiki/Italy "Italy"), [Luxembourg](https://en.wikipedia.org/wiki/Luxembourg "Luxembourg"), the [Netherlands](https://en.wikipedia.org/wiki/Netherlands "Netherlands") and [West Germany](https://en.wikipedia.org/wiki/West_Germany "West Germany"). Then, they became 12 members for a long time (*thus, the 12 stars in the flag*) : Belgium, France, Germany, Italy, Luxembourg, the Netherlands, then Denmark, Ireland and the UK in 1973 ; Greece in 1981 and Portugal and Spain in 1986. Now, we have reached the maximum level of integration, the next step is a political integration. It however remains certain issues to be solved. How does a customs union work ? Start by *remove inner tariff*, then implementation of *common outer tariffs* =\> free movement of people and capital (1992 -- Maastricht -- Eurozone : Same currency for everyone) - Comes from the Schengen Agreement : - - NOT Cyprus cause half of Cyprus is Turkish - NOT Ireland : we don't to hurt boarder btw Northern Ireland and Ireland) Far more difficult, each country inside the zone have to agree on how much the tariff is going to be. This is going to impact their public GDP. Reading : Article « Impact of International Law on the EU Customs Union » : The year 2018 marked the fiftieth (50°) anniversary of the establishment of the EU Customs Union, a milestone in European integration. However, the absence of celebrations for this significant event was due to the United Kingdom\'s decision to leave the Customs Union, raising questions about its future role. The **EU Customs Union**, established in **1968**, has played a crucial role in the European integration process : - *Article 28 of the Treaty on the Functioning of the European Union (TFEU)* mandates the **Union to comprise a customs union covering all trade in goods**. - The **Union Customs Code (UCC),** enacted in **2013**, manages the Customs Union, demonstrating its central role. The Customs Union remains a work in progress, adapting to changing global trade challenges : - The UCC aimed to modernize its legal framework, but the *need for independent customs administrations* in Member States to act as a single entity persists. - *Proposals* for harmonized sanctions are *pending*, highlighting the Union\'s incompleteness. While the *TFEU* designates **customs** as an **exclusive competence of the EU**, it *lacks a specific competence* for customs law. - The EU fills this gap with the UCC, incorporating *customs cooperation*, *approximations of laws* for the single market, and *CCP provisions*. EU Member States\' customs legislation must align with EU law. The Customs Union is foundational to the EU\'s integration projects, essential for the functioning of the **single market**. =\> It eliminates customs duties within the Union and establishes the Common Customs Tariff for trade with third countries, preventing trade distortions. EU customs and foreign trade law are influenced by *international instruments* : - Primarily the **World Trade Organization** (WTO), particularly the **General Agreement on Tariffs and Trade** (GATT) **1994**. - The **Trade Facilitation Agreement** (TFA) is also crucial in trade facilitation. - The **World Customs Organization** (WCO) and its **Revised Kyoto Convention** (RKC) and **SAFE Framework** further shape customs law (international set of guidelines developed by the **World Customs Organization (WCO) in 2005** to enhance the security and efficiency of global trade while promoting economic growth and collaboration =\> strengthen global chain security) To overcome language barriers, the EU and international trade community adopt **codes**, such as **tariff classification** **codes and INCOTERMS**, reflecting efforts to *standardize* trade-related procedures and documents. To conclude, the EU Customs Union\'s evolution over five decades has been profoundly influenced by **international law**. It remains a *vital component* of European integration, **harmonizing trade rules**, and **facilitating global commerce** through adherence to *international standards*. Reading : Article « The EU Customs Union » The EU Customs Union ensures that member countries apply uniform tariffs to goods imported from the rest of the world while eliminating internal tariffs among its members. The EU Customs Union\'s Functions : - **Facilitating Internal Trade** : free movement of goods within member states. - **Ensuring Safety and Security** : enhances the safety of imported goods such as toys, food, and medicines. - **Supporting International Trade** : collects import duties, contributing significantly to the EU budget, accounting for about 13% in 2018 (over €20.2 billion). - **Enhancing Global Trade Position** : intl trade negotiations, surpassing the influence of individual member states. From an historical pov : - The idea of a broader customs union within the European Community was realized with the **1957 Treaty of Rome**. - The EU Customs Union **officially began on July 1, 1968**, abolishing remaining customs duties on intra-Community trade. - **Customs controls at internal borders** between EU Member States were **abolished in 1993**, further facilitating trade. *Budget* : - Despite the fact that around *70 % of imports entered the EU at zero tariff*, nearly €25.4 billion in customs duties was raised in **2018**. - Member States retain 25 % to cover costs of collection, but **€20.2 billion** was passed on to the EU, **nearly 13 % of the overall EU budget,** forming a significant part of the EU's 'traditional' own resources, alongside agricultural and sugar production levies. - The **Union Customs Code** (UCC) underpins rules and procedures, ensuring integrated and modern management of the customs union. Difference between hard and soft law : **Hard Law : WTO** -- the GATT must be followed by Member States. - Legally binding rules or agreements. - Enforceable by courts or international bodies. - Examples: Treaties, regulations, and statutes. **Soft Law : WCO** -- the SAFE Framework which provide recommendations and best practices but do not carry legal obligations. - Non-binding guidelines, principles, or agreements. - No direct legal enforcement but may influence behavior or evolve into hard law. - Examples: Declarations, recommendations, or voluntary codes of conduct. Complementary information : - The EU is **one of the largest trading blocs in the world**, alongside the United States and China. - The EU has concluded a **customs union agreement with Turkey**. This customs union, which covers industrial goods and processed agricultural products, has been in place since **1995**. It allows for the free movement of goods between the EU and Turkey and **aligns Turkey\'s customs rules with those of the EU** for the covered sectors. - The **common external tariff** (or common customs tariff) interests trade with third countries. - The EU Customs Union is an **exclusive competence of the EU** = means that the EU alone has the authority to legislate and make decisions in a particular area without Member States having the ability to do so independently. - Customs union is managed **on the local level** soil **by national customs services of Member States** acting as if they were one. - The establishment of a common external tariff was very difficult because the previous external tariff of each country represent a different proportion in each country previous budget, so for some countries, it would mean losing a big part of some country budget *Question* : **Write a synthesis of all the documents provided above. Try to create links between the different concepts and information. Your work must not be just a sequence of summaries.**  The European Union Customs Union, established in 1968, has been a crucial element in the European integration process, significantly impacting trade, legislation, and international relations. This synthesis explores the historical evolution, functions, and international implications of the EU Customs Union. The EU Customs Union\'s inception (*création*) marked a milestone in European integration, reflecting the commitment of Member States to create a unified economic entity. Belgium, Luxembourg, and the Netherlands initially formed the Benelux customs union in 1944, inspiring further integration efforts. The 1957 Treaty of Rome laid the foundation for the EU Customs Union, with the official launch occurring on July 1, 1968, when remaining customs duties on intra-Community trade were abolished. This step was followed by the abolition of customs controls at internal borders among EU Member States in 1993, facilitating seamless trade within the union. One of the functions of the EU Customs Union are facilitating internal trade, ensuring safety and security, supporting international trade and enhancing global trade position. The EU Customs Union is deeply influenced by international law and agreements. Key international instruments, including those from the World Trade Organization (WTO), such as the General Agreement on Tariffs and Trade (GATT) 1994 and the Trade Facilitation Agreement (TFA), shape EU customs and foreign trade law. These international standards help standardize trade-related procedures and documents, promoting global commerce. Conclusion : The EU Customs Union\'s five-decade evolution showcases its integral role in European integration, harmonizing trade rules, and facilitating international trade while adhering to international standards. Despite recent challenges, such as the UK\'s departure from the customs union, its significance remains undiminished. The customs union serves as a model for regional economic integration worldwide, demonstrating the benefits of a unified approach to trade and customs management. Quiz : 1\. The common external tariff (or common customs tariff)\... a. interests trade with third countries b. is not mandatory for the EU Member States c. regards the intra-communitary trade d. is related to both the intra-communitary trade and the international trade (It concerns international trade, ie trade with third countries) 2\. Which of the following usually is not part of the customs services\' tasks? a. cooperating with relevant authorities to ensure the protection of citizens and the environment b. controlling trade in rare species of animals c. checking passengers for illegal or dangerous goods like drugs or guns d. controlling the movements of people or checking their passports 3\. Which of the following statements is true? a. Each EU Member States must conclude a customs union agreement with Benelux b. The EU cannot conclude a customs union agreement with third countries c. The EU is on negotiations on a customs union agreement with the WTO d. The EU has concluded a customs union agreement with Turkey 4\. The EU Customs Union is\... a. an exclusive competence of the EU b. a shared competence of the EU c. a competence of the EU to support the action of its Member States d. a special competence of the EU 5\. The EU Customs Union\... a. is now completed b. is a fundamental pillar of the EU c. is a very recent development of the European integration d. is related to the free movement of persons 6\. Which of the following statements is appropriate? a. The EU is one of the largest trading blocs in the world, alongside the United States and China b. The EU is not a big importer or exporter, compared to China and the United States c. In international trade the EU Member States constitute separate customs territories d. The EU is a free trade area, not a customs union 7\. Which of the following international rules has not influenced the EU Customs Union? a. The provisions of the International Labour Organisation (ILO) b. The provisions of the World Customs Organization (WCO) c. The provisions of the General Agreement on Trade and Tariffs (GATT) d. The provisions of the World Trade Organisation (WTO) 8\. Which of the following regional agreements provide the common external tariff? a. Any trade agreement b. The economic union and the free trade area c. The economic union and the customs union d. The free trade area and the customs union (Not the free trade area) 9\. Which of the following is the correct order for increasing regional integration? a. Free trade area, common market, customs union, economic union, political union b. Free trade area, customs union, common market, economic union, political union c. Common market, Free trade area, customs union, political union, economic union d. Political union, Free trade area, customs union, common market, economic union 10\. Customs union is managed on the local level soil\... a. by the European Commission b. by the European army c. by national customs services of Member States acting as if they were one d. by national customs services of Member States independently Questions : 1. Why do we need the Custom Union ? The Customs Union is essential for several reasons : 1. *Facilitating Internal Trade* : It ensures the free movement of goods within the EU by removing internal tariffs and customs checks. This creates a seamless internal market, which is the backbone of the EU's economy. 2. *Security for Consumers*: By regulating the import and export of goods, the Customs Union helps protect European consumers from harmful products, ensuring safety and quality standards across the Union. 3. *Uniform Tariff System*: The Customs Union applies a common external tariff on goods entering the EU from outside, meaning all Member States apply the same customs duties, ensuring fairness and consistency in trade with non-EU countries. In essence, while the internal market forms the backbone of the EU's economy, the Customs Union acts as its protective skin, overseeing external trade and ensuring smooth internal commerce. 1. How is the Custom Union managed ? Managed on the ground by national customs services. Act as if they were one. Customs services supervise the aeroport... But approximately one good / sec is checked =\> that is not safe for the consumption within the EU. 1. What are the essential elements of Customs Union on the WTO law ? The EU is a member of the WTO, the EU provisions have to respect the WTO framework and its agreements. The WTO law provides the basics of the customs union, that the EU integrates into its legal framework. Internal market shapes in the WTO. 1. Who is responsible for the Custom Union ? The special competence of the European Union -- exclusive competence, but very close partnerships with the member states for the implementation. 1. What is the difference between the Custom Union and the Free Trade Area ? The Customs Union and the Free Trade Area differ primarily in their scope and the level of integration they offer : 1. *Customs Union* : In addition to **eliminating** **internal tariffs on goods between member states**, it also establishes a **common external tariff** for all goods entering from outside the union. This means that all members apply the same customs duties on imports from non-member countries, ensuring consistency in trade policy. 1. *Free Trade Area* : **Focuses** **solely on eliminating internal tariffs between member countries**, allowing for the free movement of goods. However, each member can set its own external tariffs on goods coming from outside the area, leading to potentially different trade policies. In summary, while a Free Trade Area only abolishes internal customs duties, a Customs Union goes further by creating a unified external tariff policy. 1. What does the Custom Union do for its citizens ? You remove the daily personal use products (cosmetic, medicine,...) that could be dangerous for the citizens, which represent approximately €3.4 billion in 2023. The estimated value of counterfeit goods detained by EU authorities in 2023 has significantly increased. The total value of counterfeit items seized was approximately €3.4 billion, which represents a 68% rise compared to the previous year. This surge reflects a substantial increase in both the volume of counterfeit items and their overall value​ 1. How does the Custom Union make it easier for businesses ? The Customs Union makes it easier for businesses in the EU by streamlining and harmonizing procedures across Member States. Here's how it benefits businesses : 1. **Simplified Procedures**: The Customs Union standardizes customs processes across the EU, meaning businesses no longer need to process goods at each border or state, reducing delays and costs. This makes it easier for businesses to manage imports and exports efficiently. 1. **Streamlined Communication** : Customs procedures are harmonized, so businesses only need to comply with one set of rules, rather than dealing with different national systems. This is particularly important for companies that operate across multiple EU countries. 1. **Faster Processing**: The Customs Union allows for quicker processing of goods, as administrative formalities (such as duties and checks) are centralized. This ensures that once goods clear customs in one Member State, they can move freely throughout the EU. 1. **Harmonization of Trade Policies**: The unified customs rules ensure consistency in how goods are handled across the EU, reducing complexity for businesses and allowing them to better plan and predict their operations. In essence, the Customs Union takes away the burden of dealing with different national customs regulations, allowing businesses to operate more smoothly and quickly across the entire EU market. 1. How does the Customs Union contribute to the budget ? 70% of all import entered at the EU are at the rate 0. But the taxes collected represent 13% of the budget of the EU. It's a big part of the EU budget, alongside sugar and agriculture budget. NB : Sugar levies were once a significant source of EU revenue, but they are no longer a major contributor. The EU abolished the sugar levies in 2017. Prior to this, sugar levies, along with customs duties and agricultural duties, were part of the \"traditional own resources\" of the EU budget. Today, customs duties on imports still play a role in funding the EU, however, sugar levies are no longer part of this funding structure, and the Gross National Income (GNI) contribution from member states has grown to be the dominant source of the EU budget.