The EU as a global player

1
Introduction

• The EU as a global player

The EU as a single trade actor
2
Importance of EU as an international actor

• EU as political stabilizer support for
  democratisation and Human Rights Yugoslavia
• EU as political mediator Palestine, North Korea,
  Iran
• EU as political anchor CEE
• EU as political partner Russia, China
• EU with one political voice WTO, UN

3
EU as an economic giant

• Worlds biggest market 497 mio people (Japan
  127, US 303, NAFTA 445, AFTA 566)
• EURO World currency (repl. DM/Yen)
• EU GDP 14953 b (USA 13543 b, PPP, IMF 2007)
• EU GDP/head 28.213 (USA 43444)

4
The World market
Excluding internal trade
5
Features of EU trade

• Common External Tariff/ Common Commercial Policy
  (80 of external trade competence on EU level)
• Third countries USA, Japan, China
• Regional groupings EFTA/EEA, ASEAN, NAFTA
• Intl. frameworks WTO

6
Structure of EU Trade

• US accounted for 20 of EU-15 trade in 2003
• Next were CH, Japan, China, Russia (about 5
  each)
• EFTA 10, Hong Kong, South Korea etc. 8, OPEC
  7, ACP 4
• Subregional patterns
• UK, Ireland USA
• Germany, Austria CEE
• France, UK, Spain developing world
• Products
• Germany 30 of exported manufactured goods
• UK main exporter of financial services

7
EU and WTO

• Hong Kong agreement, 18 Dec. 2005
• EU agrees to eliminate agricultural subsidies
  until 2013 (cheap, since they are almost gone
  since late 90s)
• Poorest countries get duty-free, quota-free
  access for 97 of their exports from 2008
• Rich countries will phase out export subsidies
  for cotton by 2006
• But negotiations suspended from summer 2006
• Latest (Feb 2008) compromise draft does not
  amount to total liberalisation
• Talks suspended since July 2008
• What happens next?

8
EEA Imports (red) Exports
9
North America

• Always difficult trading relationship
• Growth in trade favoured EU
• increasingly fractious relationship between EU
  US (GATT)
• Getting worse with WTO
• Repeated clashes over protectionism (CAP, steel,
  bananas) and dumping

10
The banana dispute

• US control of South American banana production
  (United Fruit Company)
• Majority of EU members favour smaller and more
  expensive bananas from the Caribbean
• Apart from Germany and Belgium, who favour
  liberal trade
• WTO solution restricted access of Dollar-bananas
  on SEM

11
Japan

• Balance of trade always in favour of Japan
• Disputes over breaking of GATT
• Japanese direct investment
• import restraints on Japanese goods

12
EFTA/EEA states

• 1960 EFTA outer 7 (A, DK,UK, N, CH, P, S) plus
  Fin (1961) and Iceland (1970)
• 1973 EEC/EFTA Free trade area
• 1990 negotiations on creation of EEA (EFTA
  members joining SEM)
• EEA 1994 Enter into force (153-1)

DK, UK leave

• EFTA

N, ICE, (CH), LIE
13
Former Communist states

• 1988 opening of trade relationships
• Association (Europe) Agreements
• Difficulties in implementation

14
The Common Commercial Policy

• Treaty of Rome gave responsibility for commercial
  policy to EC
• in practice, competence shared between EC and
  member states
• Services, investment, product safety and
  intellectual products gradually included
  (non-trade issues) but contested
• trade negotiations three-level game

15
Legal Basis and Policy making Instruments

• Trade agreements (Art. 133) trade in goods,
  services and intellectual products (Nice Treaty)
• Trade and economic cooperation agreements former
  communist countries (Georgia, Moldova, Ukraine)

16
Legal Basis and Policy making Instruments

• Associations - Three categories
• Association agreements - CEE (Europe Agreements)
  Cyprus, Malta pre-accession aid (economic
  liberalisation, market adjustment, political
  democratisation), Turkey, Western Balkans
• Mashreq and Maghreb EU Mediterranean Policy
  (Education)
• EEA Iceland, Norway, Liechtenstein (non-EU)
  four freedoms, special for Switzerland

17
Managing EC trade relationships

• Aim liberal trade policy, reduction of trade
  barriers and opening of the markets
• Problems - Member states different interests on
• global level (WTO/GATT/Uruguay Round 86-93), now
  Millennium or Doha Round (2001-)
• national level protectionism (CAP)
• Bilateral agreements
• Former colonies

18
Policy-making

• There is no Trade Council
• Article 133 committee
• Appointed by Council to assist Commission
• Provides links between Commission as negotiator
  in GATT/WTO and Council as representative of
  member states

19
Policy-making

• Commission competence somewhat unclear, but
  agenda setter
• Commission often kept on a very tight lead by the
  Council of Ministers and member states
• EP not much influence

20
ACP policy

• Distribute costs for former French colonies on EC
• Extended to other countries when Britain joined
  EU
• Did not alter the donor-recipient relationship
• Did not alter massive debt problem
• Environmental, human rights, democracy issues
  linked

21
Relations with the ACP States

• Yaoundé Conventions (1963 and 1969).
• new agreements needed following British accession
  
• first Lomé Convention (1975) Trade preference
  for ACP states
• Lomé II (1980 85)
• Lomé III (1985 90)
• Lomé IV (1990 2000)

22
Relations with the ACP States

• Cotonou agreement (2000-2020)
• 13.5 bn (9.9 bn unexpended balances from
  previous EDF) euro for 2000-2007, revised in 2005
• 22.7 bn for 2008-13
• Some ACP states open markets for EU products from
  2008
• European Development Fund (EDF) not part of the
  budget, not under EP control

23
ACP
24
Overseas Countries Territories
25
Terms of Lomé

• Allows ACP states to export to EU on tariff free
  basis (except some agricultural products)
• Provide a stabilisation fund (STABEX) to assure
  constant prices
• aid for industrialization
• joint institutions to oversee implementation

26
Effects of price support

• Given EU constant supply
• Sometimes Community paying twice for produce it
  does not want - Sugar
• Did not aid diversification as intended
• STABEX/SYSMIN covered too narrow a range of
  products

27
ACP concerns

• Effects on ACP states of Euro introduction not
  very clear
• ACP/CEE states will be competing in only some
  areas.
• ACP states fear CEE will become a higher priority
  for EU
• Increasing competition between ACP states with
  others - China/India who have preferential trade
  agreements with EC - so ACP states might lose out

28
Conclusions

• although easy to criticise the EU for development
  delivery of aid programme no other group done
  so much
• In absolute terms EC greatest provider of foreign
  aid. Half of all international aid

29
Class questions

• In which areas do national interests undermine
  the EUs capacity to speak with one voice?
• How successfully has the EU managed its role as
  an economic super-power on world stage?
• Will the EU eventually sacrifice the CAP in the
  WTO negotiations? Can the theories of integration
  help you in making a prediction?