EU AND THE WORLD TRADING SYSTEM

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EU AND THE WORLD TRADING SYSTEM

• Razeen Sally
• European Centre for International Political
  Economy/
• London School of Economics
• www.ecipe.org

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EU AND THE WORLD TRADING SYSTEM

• How EU trade policy works
• -- Highly centralised at heart of EU economic
  and foreign policy
• -- Customs union old issues new issues
• -- Commission Council of Ministers
  member-states Article 133 Committee

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EU AND THE WORLD TRADING SYSTEM

• EU in global trade and investment
• EU and WTO
• EU and FTAs
• EU internal market and external trade
• The new members in EU trade policy

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EU AND THE WORLD TRADING SYSTEM

• EU in global trade and investment
• -- Market size shares of trade and FDI
• -- EU trade and FDI relations with key partners
• -- Comparative trade barriers
• -- Pockets of EU protection agriculture
  industrial goods services trade remedies
  standards

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Figure 9 Share of Exports of World Trade in
Goods Services (excl. Intra-EU(25) trade, 2005
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Figure 10 Share of Imports of World Trade in
Goods Services (excl. Intra-EU(25) trade, 2005
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Figure 5 Share of Exports of World Merchandise
Trade (excl. Intra-EU(25) trade, 2005
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Figure 6 Share of Imports of World Merchandise
Trade (excl. Intra-EU(25) trade, 2005
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Figure 7 Share of Exports of World Services
Trade (excl. Intra-EU(25) trade, 2005
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Figure 8 Share of Imports of World Services
Trade (excl. Intra-EU(25) trade, 2005
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Figure 1 OFDI Stock Accumulated 1980-2005
(percentage of Global OFDI Stock)
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Figure 2 IFDI Stock Accumulated 1980-2005
(percentage of Global IFDI Stock)
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Figure 3 OFDI Flows Accumulated 2003-2005
(percentage of Global OFDI Flows)
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Figure 4 IFDI Flows Accumulated 2003-2005
(percentage of Global IFDI Flows)
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Figure 16 EU 25 OFDI and IFDI Stocks with
Partners (2005)
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Figure 13 EU 25 OFDI and IFDI Flows with
Partners (2005)
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EU AND THE WORLD TRADING SYSTEM

• The WTO
• -- Structural shifts from GATT to WTO
• -- Doha round evolution state of play
  prospects
• -- What future for the WTO?

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EU AND THE WORLD TRADING SYSTEM

• EU and the WTO
• -- Challenges of co-leadership in a multipolar
  system
• -- EU negotiating positions too defensive on
  agriculture too offensive on other issues
• -- EU needs to have more pragmatic positions be
  more effective in coalition building
• -- But constraints of internal EU politics

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EU AND THE WORLD TRADING SYSTEM

• FTAs
• -- Huge proliferation of FTAs
• -- Building blocs or stumbling blocs?
• -- Strong FTAs the exception most are trade
  light
• -- Consequences rampant discrimination the
  spaghetti bowl

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EU AND THE WORLD TRADING SYSTEM

• The new EU FTA policy
• -- Global Europe economic/commercial rationale
  WTO plus but also non-trade motives differences
  with EPAs/MENA
• -- Benchmarks for (relatively) strong, clean FTAs
• -- How serious is the economic/commercial logic?
• -- Exporting EU regulation and non-trade motives
  labour/environmental standards sustainable
  development climate change etc.
• -- Comparisons with US FTAs on WTO plus issues
• -- Arguments from the sceptics Why no FTAs with
  Japan and China? Narrow mercantilism trade
  diversion spaghetti/noodle bowls
• -- Very difficult to do serious FTAs with Asian
  and other partners

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The map shows FTAs signed or under negotiation in
January 2006. East Asia is defined here as the
10 ASEANs, China, Japan and Korea. Source Richard
Baldwin 2006
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Noodle bowl syndrome in Africa
Source World Bank
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Noodle bowl syndrome in America
Source Inter-American Development Bank.
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EU AND THE WORLD TRADING SYSTEM

• Unilateral liberalisation
• -- Diminishing returns to trade negotiations
  importance of unilateral measures Asia and China
• -- EU trade policy as foreign policy and
  internal-market policy link between internal and
  external liberalisation
• -- Internal-market reforms key trade-policy
  reinforcement

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EU AND THE WORLD TRADING SYSTEM

• New members trade-policy reforms pre-accession
• -- Post-socialist transition radical reformers
  (new EU members) gradual reformers
  (China/Vietnam) erratic reformers (CIS)
• -- New EU members general liberalising trend in
  90s, but variation among them
• -- Convergence of EU-10/12 with EU-15 trade
  policy, esp. from late 1990s
• -- Net liberalisation in trade in industrial
  goods and services, but not agriculture the
  Estonian exception
• -- Major reorientation of trade FDI effects
  trade creation/diversion

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EU AND THE WORLD TRADING SYSTEM

• New members in EU trade policy state of play and
  prospects
• -- Expectations somewhere between more liberal
  orientation and no change
• -- Reality virtually no change so far EU 10/12
  passive, reactive mixed positions danger of
  Our Market is Big Enough, restaurant bill
  syndromes
• -- EU-Russia Russian accession to WTO
• -- Variable internal implementation of common
  commercial policy

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EU AND THE WORLD TRADING SYSTEM

• Conclusion
• -- EU challenge of constructive engagement while
  containing domestic protectionism
• -- Multi-track trade policy and internal-market
  reforms
• -- What role for the new members?