EUROCHAMBRES ACADEMY EU Trade Policy

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EUROCHAMBRES ACADEMYEU Trade Policy

• Ain Soukhna June 2004
• Christophe Rames
• European Commission
• DG Trade

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EU TRADE POLICY

• Intro Trade policy in a global context
• 1. EU as an economic and trade power
• 2. EU trade policy
• 3. Multilateralism and bilateralism
• 4. EU trade policy in the Mediterranean region
• 5. Trade relations with Egypt

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INTRODUCTION TRADE POLICY IN A GLOBAL CONTEXT

• International division of labour
• Globalisation

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INTERNATIONAL DIVISION OF LABOUR

• Geography (resources, climate, communications)
• History
• Market economy (competition, concentration)
• Global governance aims to promote a new
  international division of labour through
  international cooperation.

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GLOBALISATION

• Internationalisation of world economy
• Growth of international trade flows
• Concentration of trade exchanges
• Goods Services - FDI

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INTERNATIONALISATION OF WORLD ECONOMY

• Since 1950
• Trade multiplies 18-fold
• FDI multiplied 25-fold
• World production quadrupled
• Real GDP per capita doubled

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FACTORS OF DYNAMISM

• Reduction of barriers to trade
• Foreign direct investments

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1. THE EU AS AN ECONOMIC AND TRADE POWER

• EU as a world economic power
• EU as a trade power
• EU trade characteristics

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THE EU AS AN ECONOMIC POWER
EU US JAPAN
Share in world GDP 19,8 21,3 7,3
Share in world trade - goods - services 19,1 24,3 19,7 20,2 7,6 7,7
Share in FDI 32,2 29,1 3
Rate of growth (average 1992-2002) 2,0 3,2 0,9
Level of GDP/head 100 139 106
Degree of openess (MX/GDP) 22,8 18,6 17,4
Statistics 2002
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THE EU AS A TRADE POWER
1960 1973 1981 1986 1995 2004 (forecast)
Number MS 6 9 10 12 15 25
Intra EU Trade (Mio ) 20409 35 181043 52 552374 50 911597 58 1930798 63 4030691 65
Extra EU Trade (Mio ) 38001 65 164308 48 560029 50 671424 42 1118529 37 2168909 35
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2. EU TRADE POLICY

• Customs Union Internal market
• Legal Framework
• Institutional Features
• Instruments

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CUSTOMS UNION / INTERNAL MARKET

• Treaty of Rome (1957)
• - Elimination of internal tariffs
• - Common external tariff (MFN/Pref)
• Internal Market
• - Free circulation of goods, services, capital
  and persons
• Regulatory Convergence (harmonisation,
  approximation or mutual recognition)

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TRADE POLICY Political Constraint and Legal
Framework

• Art. 131   By establishing a customs union
  between them, MS aim to contribute to the
  harmonious development of world trade, the
  progressive abolition of restrictions on
  international trade and the lowering of customs
  barriers .
• Parallelism between
• - Internal integration
• - External liberalisation

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LEGAL FRAMEWORK

• Common Commercial Policy art. 133 of Treaty
•  The common commercial policy shall be based on
  uniform principles, particularly in regard to
  changes in tariff rates, the conclusion of tariff
  and trade agreements, the achievement of
  uniformity in measures of liberalisation, export
  policy and measures to protect trade such as
  those to be taken in the event of dumping or
  subsidies. 
• Exclusive EC Competence goods, most services,
  intellectual property
• Shared Competence with MS export credit,
  investment, public services (health, education).

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INSTITUTIONAL FEATURES

• Commission ? proposes to Council ? negotiate
  s trade agreements
• ? implements (treaties, trade defense,
  dispute settlement)
• Council ? authorizes Commission to negotiate
  (mandate)
• (133 Committee) to negotiate (mandate)
• ? decides
• - qualified majority voting as
• general rule
• - unanimity on services and IPR
• European ? consultative power
• Parliament
• ? ratification on treaties covering more
  than trade
• informal consultation (with civil society,
  business and social partners)

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INSTRUMENTS

• Goods
• - Tariffs
• - QR (including safeguards)
• Goods and services
• - Market access strategy (info, TBR, )
• - TRTA
• - Regulatory convergence
• - Trade defense

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3. MULTILATERALISM AND BILATERALISM

• Multilateralism and regionalism are mutually
  supportive
• EU approach to the DDA
• ? WTO as the ground rules for international
  trade
• Bilateral initiatives EU and its preferential
  partners
• ? Regional partnership can go further and
  faster

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EU APPROACH TO DDA NEGOTIATIONS

• Further liberalising international trade, to
  boost economic growth.
• Strengthening the rules (e.g. on investment,
  competition, trade facilitation, public
  procurement .)
• Putting development at the heart of negotiations
• Responding to the expectations of civil society
  (e.g. transparency, sustainable development,
  fight against poverty).

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TRADE PREFERENCES GRANTED BY THE EU

• EU initiatives in favour of developing countries
• - GSP (142 DC)
• - Cotonou (77 ACP)
• - EBA (LLDCs)
• Bilateral/regional Free Trade Agreements

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TRADE AND DEVELOPMENT

• EU imports from developing countries 41 of
  total imports (12 each year)
• Trade balance of developing countries with EU is
  positive EU ? first world importer of
  agricultural products from developing countries
• Technical assistance - EU ? first donor for
  LDCs
• - MEDA

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The EU and its Preferential Partners
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THE EU TRADE POLICY IN THE MEDITERRANEAN REGION

• At regional level EUROMED PROCESS
• - Conference of Barcelona (1995)
• - Establishment of a Free Trade Zone by 2010
• At bilateral level ASSOCIATION AGREEMENTS
• Morocco, Algeria, Tunisia, Egypt,
• Israel, Jordan, Palestinian Authority,
• Lebanon, Syria, Turkey (customs union)

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Euromed Association Agreements Situation
June 2004
PARTNER CONCLUSION OF NEGOTIATIONS SIGNATURE OF AGREEMENT ENTRY INTO FORCE
Tunisia June 1995 July 1995 March 1998
Israel September 1995 November 1995 June 2000
Morocco November 1995 February 1996 March 2000
PA December 1996 February 1997 July 1997 Only interim A.
Jordan April 1997 November 1997 May 2002
Egypt June 1999 June 2001 June 2004
Lebanon January 2002 June 2002 Interim agreement entered into force in March 2003
Algeria December 2001 April 2002 Ratification in progress
Syria Negotiations in progress
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CHARACTERISTICS OF THE TRADE EXCHANGES OF THE
MEDITERRANEAN COUNTRIES

• Structural trade deficit
• Exports insufficiently diversified
  (textile/clothing 35/52 of x)
• EU main trade partner (55 X 50M)
• South-south exchanges not yet liberalised
  (intra-med trade 8 of exchanges)

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1980 1990 2002
Imports 32,1 65,7 176,0
Exports 24,6 43,0 123,2
Balance -7,5 -22,7 -52,8
1980 1990 2002
Imports 14,7 27,7 66,8
Exports 20,9 34,7 80,2
Balance 6,3 7,0 13,3
Imports 3,0 3,3 3,3
Exports 2,4 2,3 2,5
EU MERCHANDISE TRADE WITH MED12 BY PRODUCT (2002)
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REGIONAL INTEGRATION

• Structural Weakness of South-South Commerce
• - absence of complementarity
• - insufficient diversification
• - trade barriers
• Deficit of Attractiveness of Foreign Direct
  Investment
• - size of market
• - openness
• - commercial integration
• - general environment

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5. TRADE RELATIONS WITH EGYPT

• Association Agreement
• - signature in June 2001
• - entry into force June 2004
• EU represents
• - 35 of imports of Egypt
• - 40 of exports of Egypt
• - Trade deficit vis-à-vis EU
• Sectoral distribution
• - EU imports from Egypt Energy (39), textile
  (16), agri 10)
• - EU exports to Egypt machinery (31),
  chemicals (19), other manufactured pdts (20)

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Egypt Trade with World and EU (Mio Euros)
World
EU
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MAIN FEATURES OF TRADE LIBERALISATION BETWEEN EU
AND EGYPT(In Regional and Bilateral context)

• Liberalisation of trade in goods
• Origin rules
• Services
• Trade Facilitation
• Standards, technical regulations, conformity
  assessment
• Technical assistance and cooperation

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LIBERALISATION OF TRADE IN GOODS

• Objective Free Trade Area by 2010
• Methodology
• - Elimination of tariff barriers
• Asymetric
• Progressive
• - Elimination of non-tariff barriers
• Prohitions
• QR
• Economic impact
• - Develop trade exchanges
• - Effect on Investment

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PAN-EURO-MED CUMULATION OF ORIGIN

• Objective
• ? strengthening regional economic integration
• ? responds to economic reality (international
  division of labour).
• Methodology
• ? identical rules of origin for the whole
  pan-euro-med area
• ? cumulation of processing
• Economic impact
• ? extend sourcing possibilities
• ? boost intra-regional exchanges
• ? effect on investment

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LIBERALISATION OF TRADE IN SERVICES

• Objective progressive liberalisation of trade
  in services, including right of establishment
• Methodology double step approach
• ? at regional level Framework Protocol
• ? at bilateral level bilateral negotiations
  (GATS Art. V)
• Economic impact
• - boost trade exchanges
• - effect on investment
• - stimulate economic reforms

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TRADE FACILITATION

• Objective simplification and modernisation of
  customs procedures
• Methodology Palermos recommendations
• - legislation and procedure
• - administrative cooperation
• - relations with economic operators
• Economic impact
• - simplify and accelerate customs clearance
• - improve transparency and predictability
• - impact on investment

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STANDARDS AND TECHNICAL REGULATIONS

• Objective
• - Approximation of legislation to EU system
• - Prevent technical obstacles to trade
• - Better access to EU market
• Methodology Palermos action plan
• 6 steps Priority sectors Gap analysis
  Legislation Infrastructure Certification
  Technical assistance
• Economic impact
• - stimulate economic reforms
• - increase level of standards/technical
  requirements
• - mutual recognition of certification procedures
• - extends benefit of EU internal market

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FUTURE STEPS

• Investment
• SPS
• Intellectual property (trade aspects)
• Capital movements
• Public procurement . . .

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NEW NEIGHBOURHOOD POLICY

• Context Wider Europe ? new neighbours
  (East/South)
• Objective
• - develop regional integration
• - strengthen cooperation
• - extend internal market
• Methodology
• - geographical scope
• - taylor made approach
• - convergence of legislation

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• THANK YOU FOR YOUR ATTENTION
• Ain Soukhna June 2004