GSOHLCC Session 1: The Common Commercial Policy PDF

Session 1: The Common Commercial Policy What this course is about EU plans trade tariffs on countries that block return of failed asylum seekers basically, to better understand such headlines − trade is an interdisciplinary affair 7 sessions (building on the r...

Session 1: The Common Commercial Policy What this course is about EU plans trade tariffs on countries that block return of failed asylum seekers basically, to better understand such headlines − trade is an interdisciplinary affair 7 sessions (building on the required readings): ✓ Common Commercial Policy ✓ Analytical approach ✓ WTO ✓ EU trade strategy ✓ Trade-development nexus: GSP, guest speaker (tbc) ✓ Trade-development nexus: ACP ✓ Trade/aid-human rights/environment nexus Assessment: ✓ class paper (40%) ✓ written, closed-book exam of 2h (60%)  Session objectives Learn about the the EU’s position in world trade objectives instruments actors and decision-making processes of the Common Commercial Policy  EU-27 IN WORLD TRADE third biggest population third largest share of global GDP largest trader of goods & services largest foreign investor Euro is second most important currency largest donor of development & humanitarian aid ➔ EU is indeed a trade power (despite Brexit)  Relative global shares (2022, resp. 2021 for FDI) Global shares (in %) UK EU-27 US China Exports of goods 2.6% 13.4% 10.2% 17.8% Imports of goods 3.9% 15.1% 15.5% 13.0% Exports of services 8.5% 23.8% 15.9% 7.3% Imports of services 5.9% 22.8% 12.9% 8.6% FDI inward stocks 5.8% 25.5% 30.0% 4.5% FDI outward stocks 5.2% 31.7% 23.5% 6.2% Source: based on European Commission, DG Trade Statistical Guide, August 2023 (intra-EU trade excluded; China without Hongkong) Main EU partners: trade in goods (2022) Ranking according to EU exports to EU imports from total goods trade USA 19.8% 12.0% China 9.0% 20.9% United Kingdom 12.8% 7.2% Switzerland 7.3% 4.8% Russia 2.1% 6.8% Norway 2.6% 5.3% Türkiye 3.9% 3.3% Japan 2.8% 2.3% South Korea 2.3% 2.4% India 1.9% 2.3% Source: European Commission, DG Trade, Overview of top trading partners, June 2023.  Trade in goods: first partner (2022) Source: European Commission, DG Trade Statistical Guide, August 2023. Main EU partners: trade in services (2022) Ranking according to EU exports to EU imports from total services trade USA 22.3% 34.5% United Kingdom 19.2% 18.5% Switzerland 10.8% 6.9% China 5.5% 4.1% Singapore 2.4% 3.4% Japan 2.9% 1.6% India 1.8% 2.2% Norway 2.1% 1.4% Russia 2.4% 1.1% Hong Kong 2.0% 1.4% Source: European Commission, DG Trade, DG Trade Statistical Guide, August 2023.  Shares of trade in goods & services Source: European Commission, DG Trade Statistical Guide, August 2023. Main EU partners: shares FDI stocks (2022) Ranking EU FDI in... FDI in the EU from... USA 28.3% 31.8% United Kingdom 18.3% 18.2% Offshore financial centres (without 7.9% 16.0% Singapore, Hong Kong) Switzerland 9.7% 8.9% Canada 3.4% 4.0% Singapore 3.1% 2.7% Russia 2.2% 1.7% China 2.6% 0.7% Hong Kong 1.0% 2.5% Japan 1.0% 2.7% Source: Eurostat, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Foreign_direct_investment_- _stocks#EU.27s_inward_and_outward_investment_by_partner In a nutshell, the most important trade relations for the EU are those with the US, China and the UK largely tripolar structure of today’s world economy  OBJECTIVES Art. 206 TFEU [ trade ] "By establishing a customs union in accordance with Articles 28 to 32, the Union shall contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers." ➔ Lisbon Treaty made the Common Commercial Policy an exclusive competence, added FDI, and placed it under the TFEU part "External Action by the Union", to which the goals of Art. 21 TEU apply Art. 207 TFEU [ trade ] "1. … The common commercial policy shall be conducted in the context of the principles and objectives of the Union's external action.  Art. 21 TEU 2. The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy."  Art. 294 TEU ➔Lisbon Treaty introduced co-decision powers for the European Parliament in implementing trade policy Art. 21 TEU [ external action ] 2. The Union shall define and pursue common policies and actions, and shall work for a high degree of cooperation in all fields of international relations, in order to: a)safeguard its values, fundamental interests, security, independence and integrity; b)consolidate and support democracy, the rule of law, human rights and the principles of international law; c) preserve peace, prevent conflicts and strengthen international security (…); d)foster the sustainable economic, social and environmental development of developing countries, with the primary aim of eradicating poverty; e)encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade; f) help develop international measures to preserve and improve the quality of the environment and the sustainable management of global natural resources, in order to ensure sustainable development; g)assist populations, countries and regions confronting natural or man-made disasters; and h)promote an international system based on stronger multilateral cooperation and good global governance. 3. (…) The Union shall ensure consistency between the different areas of its external action and between these and its other policies. (…) ➔ no prioritization among goals In a nutshell, the common commercial policy, over time shaped by various (f)actors, is now an exclusive competence the goals of EU trade policy are generally liberal, but not merely economic (non-trade concerns)  Foreign direct investment post-Lisbon Treaty transitional arrangements for bilateral investment treaties between EU member states and third countries investment protection rules as part of trade agree- ments (e.g. Canada), in addition to them (e.g. Japan) or as stand-alone investment agreement (e.g. China) 2015 proposal to replace Investor-State Dispute Settlement (ISDS) by a bilateral investment court system (to be developed into a Multilateral Investment Court) 2017 CJEU Singapore Opinion 2/2015: FDI is exclusive competence, BUT ISDS & portfolio investment are shared competence INSTRUMENTS & PROCESSES Autonomous trade policy Contractual trade policy adoption of unilateral negotiation of bi- & multi- measures lateral trade and invest- common external tariff, etc. ment agreements unilateral trade preferences trade defence instruments (TDI, only goods) offensive trade instruments ensuring a level playing field ➔ all must be in conformity with WTO rules  Trade defence instruments 1. anti-dumping (dumping occurs when manufacturers from a third country sell goods in the EU below the sales price in their domestic market or below the cost of production)  restore market conditions by raising price of specific imports 2. anti-subsidy (to combat subsidies from public authorities to manufacturers which distort trade by unfairly reducing production costs or cutting the prices of exports to the EU)  neutralise subsidy by imposing specific countervailing duties  concerns 'unfair' country-specific imports Anti-dumping/anti-subsidy procedure (simplified) the Commission is now the central player in trade defence 3. safeguards (if sudden surge in imports threatens to cause serious injury to domestic industry; initiative of member state or Commission)  temporarily restrict imports  concerns 'fair' imports from all third countries Conditions for all three TDIs: establish dumping / subsidy / import surge injury to EU producers of like products causality link Union interest to act  Contractual trade policy Art. 207 TFEU [ trade-specific ] 3. Where agreements with one or more third countries or international organisations need to be negotiated and concluded, Article 218 shall apply, subject to the special provisions of this Article. The Commission shall make recommendations to the Council, which shall authorise it to open the necessary negotiations. ➔ 'mandate' The Council and the Commission shall be responsible for ensuring that the agreements negotiated are compatible with internal Union policies and rules.  The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council to assist the Commission in this task and within the frame- work of such directives as the Council may issue to it. The Commission shall report regularly to the special committee and to the European Parliament on the progress of negotiations. ➔ Trade Policy Committee (TPC) & European Parliament Committee on Intl Trade (INTA) TPC is composed of member states and Commission, chaired by presidency  4. For the negotiation and conclusion of the agreements referred to in paragraph 3, the Council shall act by a qualified majority. ➔ Foreign Affairs Council, chaired by presidency For the negotiation and conclusion of agreements in the fields of trade in services and the commercial aspects of intellectual property, as well as foreign direct investment, the Council shall act unanimously where such agreements include provisions for which unani- mity is required for the adoption of internal rules. The Council shall also act unanimously for the negotiation and conclusion of agreements: (a) in the field of trade in cultural and audio- visual services, where these agreements risk prejudicing the Union's cultural and linguistic diversity; (b) in the field of trade in social, education and health services, where these agreements risk seriously disturbing the national organisation of such services and prejudicing the responsibility of Member States to deliver them. ➔ trade is exclusive competence (but QMV / unanimity varies) 5. The negotiation and conclusion of international agreements in the field of transport shall be subject to Title VI of Part Three and to Article 218. (…) ➔ transport is still shared competence ➔ legal provisions reflect path depencency and member states’ political preferences  Art. 218 TFEU [ general ] 1.Without prejudice to the specific provisions laid down in Article 207 [specific to trade], agreements between the Union and third countries or internatio- nal organisations shall be negotiated and concluded in accordance with the following procedure. 2. The Council shall authorise the opening of negotiations, adopt negotiating directives, authorise the signing of agreements and conclude them. 3. The Commission (…) shall submit recommenda- tions to the Council, which shall adopt a decision authorising the opening of negotiations and, depen- ding on the subject of the agreement envisaged, nominating the Union negotiator [in trade the Commission]. 4. The Council may address directives to the negotiator and designate a special committee [in trade the TPC] in consultation with which the negotiations must be conducted. 5. The Council, on a proposal of the negotiator [in trade the Commission], shall adopt a decision authorising the signing of the agreement and, if possible, its provisional application, before entry into force. 6. The Council, on a proposal by the negotiator [in trade the Commission], shall adopt a decision concluding the agreement (…) (a) after obtaining the consent of the European Parliament in the following cases: (i) association agreements; … (iii) agreements establishing a specific institutional framework by organising cooperation procedures; … (v) agreements covering fields to which either the ordinary legislative procedure applies, or the special legislative procedure where consent by the European Parliament is required. … 8. The Council shall act by a qualified majority throughout the procedure. However, it shall act unanimously when the agreement covers a field for which unanimity is required for the adoption of a Union act as well as for association agreements … ➔ all post-Lisbon trade agreements need to be ratified by the European Parliament as well Art. 217 TFEU [ association agreements ] The Union may conclude with one or more third countries or international organisations agreements establishing an association involving reciprocal rights and obligations, common action and special procedure. ➔ Treaty does not mention so-called ‘mixed agreements’! Source: Conconi, P., C. Herghelegiu & L. Puccio, “EU Trade Agreements: To Mix or Not to Mix, That Is the Question”, Journal of World Trade 55, no. 2 (2021): 239. In a nutshell, the decision-making processes and relevant actors vary between auto- nomous and contractual trade policy (& partly within the latter too) the Commission is the 'agent' for the member states ('principals') (1) Agenda setting (2) Negotiation (3) Ratification (4) Implementation (as necessary) In a nutshell, EU trade negotiations with a third country go through various phases they also span different levels  two-level games  CONCLUSION the EU is a big player in international trade the common commercial policy is a key pillar of EU external action whose scope has grown over time EU trade policy comprises economic, legal and political aspects; uni-, bi- and multilateral instruments; internal and external negotiations; and it intersects with many other policies