The Workings of EU Trade Policy

It is a known fact that the economy is becoming ever more globalised, and thus economic globalisation has surely been characterised by an increase in international trade and an evergrowing interdependence of economies at a global level. The EU trade policy is a crucial factor in such a globalised economy because it may be used as a tool to respond to challenges that have been posed by globalisation and to turn potential into something that can eventually reap benefits.

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The fact that EU trade policy takes place at EU level rather than the national level would give more teeth when it comes to negotiating on a bilateral level and with multinational bodies such as the World Trade Organisation (WTO). One of the main principal goals of the EU trade policy is to ensure that there is an exponential increase in opportunities for trade by removing trade barriers, tariffs and quotas by guaranteeing fair competition.
Trade policy is surely essential for the European economy because it has an impact on growth and employment. In the EU, more than 36 million jobs are heavily dependent on exports which originate from non – EU member states. In terms of average, every €1 billion worth of exports to non-EU states in retrospect supports more than 13,000 EU jobs. The EU’s trade policy protects European citizens by ensuring that imports abide by consumer protection regulations.
It must also be added that trade policy has also brought about with it the promotion of social and safety standards, human rights, respect for the environment and sustainable development.
Shedding light on the main elements which cover the working aspects of the EU’s trade policy, it can be duly noted that this secures a good cover when it comes to the trade of goods and services, foreign investment, commercial aspects of intellectual property, such as patents, and public procurement.
EU Trade Policy is made up of three main elements being; Trade agreements take place with nonEU-counties to see the opening of new markets and secure increases in trading opportunities for EU businesses. Also, when it comes to protecting EU producers from levels of unfair competition, regulation is very crucial. Finally, EU membership of the World Trade Organisation, which proposes the implementation of international trade rules. Countries of the EU are also members, however, the European Commission negotiates on their behalf.
Looking further into the areas of Trade agreements which are the next step in EU trade policy, they are negotiated with non-EU countries to ensure effective opportunities to trade. These vary in the form of having economic partnership agreements, with countries from the likes of the Caribbean, Pacific, and Africa to name a few. If we were to look at developed countries, seemingly free trade agreements take place and also larger political agreements were strengthened via association agreements such as the Union for the Mediterranean with Tunisia. In all of this, the main focus of all the agreements is to ensure that barriers to trade are reduced whilst ensuring investment.
When it comes to EU trade regulation, the European Union has also provided a set of rules to ensure the protection of European enterprises/businesses from trade practices which are rather unfair. A perfect example of such practices is, for example, having subsidies which in turn would make prices artificially low in comparison to European products and goods. Hence it must be said that European products could also find at their helm customs barriers or quotas. It is important to reach agreements to trade to ensure that trade wars are avoided.
In the EU foreign direct investment is also regulated. February 2019, has seen several MEPs take a vote to approve a new screening mechanism that seeks to give assurance that foreign investment in strategic sectors does not pose a threat to Europe’s security together with its interests.
Another important facet is the collaboration of the European Union and the World Trade Organisation. The World Trade Organisation has more than 160 members under its help, of which they represent at least 98% of world trade. One of its aims is to keep a predictable and fair world trading system through agreement and monitoring of common rules to trade among nations in question. The EU has been a strong supporter of the World Trade Organisation and it has played a key role in the development and creation of an international trading system.
The EU has been involved with the World Trade Organisation through several multilateral trade talks. The European Parliament has been following closely such negotiations and has adopted reports which assess the state of affairs. The current leg of World Trade Organisation negotiations – the Doha cycle (2001) – has been stalled because there was a lack of agreement on certain key policies for example agriculture. The European Union uses the WTO’s ruling and enforcement powers at times where there are disputes in the areas of trade.
In terms of how the EU trade policy is decided, it is clear that this is exclusively an EU competence, which means that the EU collectively, and not just individual member states, has the key powers when it comes to legislating on matters of trade and conclusions of international trade agreements as found in article 207 of the Treaty on the Functioning of the European Union – TFEU).
The Treaty of Lisbon also brought with it some changes and it has made the European Parliament a co-legislator with focus on trade and investment together with the Council, whilst representing the member states. If the Parliament votes in favour of them, traditional trade agreements will officially enter into force.
Furthermore with the EU being the largest trading power has accounted for at least 16.7% of the global trade when it comes to goods and services. 35% of the EU’s GDP accounts for external trade in goods and services. Certain jobs in the European Union are also dependant on exports. EU firms are provided with access to inputs via exports, these help them to be more competitive on the market through improvements in productivity and reduction of overall production costs thus giving EU consumers the ability to purchase a wide array of goods and services which in turn satisfies their personal preferences.
However, in such a context it cannot be ruled out that EU trade policy is currently facing major challenges, of an internal and external nature. Successfully addressing these issues is indeed very critical, one side we have the importance of trade for growth which also secures jobs in the European Union and secondly because trade has a role to play when it comes to raising real incomes and revitalising Sustainable development of neighboring countries, Europe’s African allies, and other developing countries. The most urgent issue is to prevent a full-scale trade war, which would be very expensive. The problems go beyond the need to respond to the change in the current US administration toward protectionism and the competitive pressures resulting from China’s rapid growth. It is equally important to ensure that trade policy fits in with a European economy that is increasingly focused on services, as opposed to agriculture and manufacturing, and to answer many voters ‘ fears about the effects of globalization. European trade leadership is urgently needed to reverse global trends towards protectionism, and also to avoid the breakdown of the multilateral trade system and support working when it comes to developing a set of rules which address the causes of current trade conflicts.
When it comes to focusing on Internal challenges, according to the Eurobarometer certain data has indicated that over 70 percent of European citizens appreciate free trade to be positive and in retrospect also support the CCP. European citizens are taking into account that the rise in globalization is to be considered as a threat to employment since it can create several inequalities. This has helped explain the increase in trade policy prominence in the areas of domestic and political debate. Such instances cover the negative results of the Dutch advisory referendum concerning the ratification of the EU – Ukraine Association Agreement, and also because we have seen large demonstrations taking place in certain member states such as Germany against the Transatlantic Trade and Investment Agreement with the United States, there has also been opposition to the Comprehensive Economic Trade Agreement (CETA) with the Canadian state.
Another distinct feature in the form of strong opposition was present when it came down to doing business lobbying with Canada, thus the United States was rather prominent in the area of regulation is concerned as it strongly was against fears with regards to jobs being lost. Another challenge relates to the concern based on the implications of trade agreements for regulatory powers, there are fears that saliency in addressing non – economic concerns such as environmental protection add impetus to trade agreements as a possible step towards EU accession. Many of these concerns seem to have deeply reflected a sense of misinterpretation of what a trade agreement can do. Others – particularly with regards to investor protection – have resulted in the acquisition of a new method to arbitrate investment-related disputes. Thus the management and addressing of EU citizen’s concerns regarding the likely consequences of trade agreements are significant for the EU. Trade policy agreements are a major external policy tool and they provide a key mechanism that is crucial to answering to greater alternatives to protectionism by the United States and any large economies as a backstop in case such efforts to reinvigorate the World Trade Organisation falter.
The next part of this assignment sheds focuses on the External challenges in the context of the US and China. The pursuing of ‘America first’ policies has incorporated US cerebral lesions as protectionist measures, including a safeguard to global actions against imports which are national security motivated. Hence a prime example of this can be seen in having restrictions on steel and aluminum.
A rather wide range of imports from China has been subjected to additional tariffs in retribution for alleged uneven Chinese trade practices. Such measures have indeed led to retaliatory measures against United States exports for a wide range of products such as tobacco, juices, cereals, apparel, iron, and steel to name a few. The EU in this regard has also launched a safeguard action to prevent the diversion of Steel from the United States to the European Union, and looking at this from a legal point of view has challenged the US’s protectionist measure before the World Trade Organisation (WTO).
In a reaction to these countermeasures, the US had undergone by initiating a national security investigation with regards to automobile imports. It also set out to increase tariffs on imports of automotive goods which in turn had a substantially negative effect on European Union producers. An escalating trade war can have detrimental consequences on the world economy if such measures are sustained.
The US is still actively negotiating to this day the very existing agreements to trade and it has made it very clear that it wants to steer clear from multilateral cooperation, this sentiment was reflected in the decision to pull out from the Trans-Pacific Partnership. The European Union today is also in a position where it is actively negotiating with the United States and it has included talks on bilateral agreements of industrial goods whilst revising the possibility to include sector-specific cooperation and trilateral efforts with Japan and the United States whilst addressing a putting focus on the main common concerns with regards to China’s trade-related policies. Concurrently the EU is trying to engage with the US over the WTO reform and in parallel to this the EU has also stepped up its efforts to conclude such trade agreements were major economies are involved and to be used as a means to improve the governance of trade relations and expansion of cooperation towards policy areas that affects the firms ability to compete equally for markets. Nonetheless, the United States remains a strong EU trading partner and it is a fact that emerging economies have become ever more important.
In this regard, China is the first ranking when it comes to EU imports and second as a destination for EU exports. Asian countries find that the EU is one of their largest markets when dealing with exports. Trade Exchange wars between the US and China offers an open door for the EU to help out China. There are long-standing chats on a Comprehensive Investment Agreement. This stretches out to cover exchange and addresses concerns that EU business has with regards to rivalry contorting arrangements in China while giving more certainty with regards to the capacity of Chinese firms and to send out their merchandise and to put resources into the EU, which would be useful to both sides.
Considering the significance of EU-China exchange streams, a reciprocal exchange understanding could help counterbalance the expenses to both the EU and China should exchange clashes with the US continue to prevail. This could also allow the negotiation of provisions that handle the various issues that the EU has with China, for example, as for open obtainment, the treatment of EU financial specialists and the exercises of state-possessed endeavors. A particular territory where EU-China participation in exchange and venture could be beneficial to the two sides is China’s Belt and Road Initiative (BRI). Propelled in 2013, the BRI is a program set to put over $1 trillion in infrastructure connecting China with Asia, Africa, and Europe. The BRI presents a significant chance to improve availability and lessen exchange costs. Given that Europe is at the opposite finish of the ‘silk road’ to China, the EU has a lot to pick up from the compelling usage of the activity. While in certain nations the BRI ventures have seen progress, in different nations modest subsidization has brought about financial related manageability issues and administration issues. Improving administration and access to and maintainability of the fund are key goals of the new Commission methodology on Connecting Europe and Asia.
Another region of potential focus is the acquisition of BRI ventures. Borrowing nations would profit by the appropriation of increasingly serious acquisition practices that would open agreements to offers by European organizations. This is something that China can choose to do singularly and could be a piece of a more extensive two-sided financial advancement participation motivation.
In conclusion, it is of a popular belief that The European Union profits from an open foreign policy stance and a successful multilateral trading system based on rules. The increase in protectionism in major trading nations (notably the United States and several large emerging economies) can only benefit the EU economy. Internal and external factors question the EU’s willingness to use the CCP while at the same time increasing foreign policy’s importance as an instrument of external policy. Given the depth of mistrust between China and the US, the Union’s comprehensive ties with many developing countries, the many dialogs and linkages that have been formed with China, and the leadership of the EU in negotiating trade and investment deals ensure to cover non-trade interests and values, thus in other terms, it is defined as having a key role to play. The EU has both a unique opportunity and a responsibility to play by being a bridging role in the WTO reforms between the global trade interests of developing countries and those of the OECD Member States. And the subsequent updating of multilateral rules on issues that drive current trade conflicts – especially subsidies.
Realism implies that the Union should draw up a ‘ plan B ‘ in parallel, that minimizes trade policy uncertainty for EU companies operating abroad. Such a plan B should concentrate on the AsiaPacific region and Africa and should include: Bilateral engagement with China, Europe’s secondlargest export destination, to improve trade conditions likely to face EU businesses, it should also address China’s concerns with access to the EU and explore potential areas of cooperation and areas of common interest, such as the Belt and Road Initiative. This is to take place when one considers the scope to deepen economic relations with CPTPP countries, including possible accession; and renewal efforts to conclude deeper trade consensus with African partners to adjunct economic development aid and investment flows. Greater transparency and more efficient oversight of EU trade agreements ‘ implementation and their effects on EU stakeholders is crucial to promoting EU trade policy. In this regard, the position of the European Parliament should be enhanced through monitoring the implementation of EU trade agreements. In this regard, the position of the European Parliament should be strengthened when it comes to monitoring the implementation of EU trade agreements.
These monitoring and related research practices would apply to the distributional effects of trade and domestic policy scope and effectiveness to tackle the economic transition costs of an open EU trade policy and to ensure that trade benefits are spread more widely across the economy. While this is primarily a matter for national governments, the EU will play a greater role in providing transition aid to businesses, staff, and regions adversely affected by globalization. Following the Trump administration, trade has become a high – profile policy area for the European Union after Trump’s decision to engulf further in a more protectionist trade policy and US questioning of multilateral cooperation and the WTO, and the EU’s growing concern about the competitive implications of China’s industrial policies, thus that is why the designing of appropriate responses to trade tensions will be one of the challenges which will be confronting the new Commission run by Commission president Ursula Von Der Leyen.
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