Within the wider framework of European Union External Relations, trade policy makes a decisive contribution to achieving priority external action objectives and is one of their principal instruments. As a result of their capacity to eliminate trade barriers, they contribute both to strengthening bilateral economic and political relations between the EU and third countries/regional organisations as well as to fostering economic growth and employment within the EU.
The expansion and consolidation of the internal European market (currently 500 million consumers) has strengthened the European Union’s international standing as a hub for bilateral and multilateral trade negotiations. Although it remains solidly anchored to the principles of the World Trade Organization system, the European Union seeks – through bilateral free trade and investment protection agreements – to promote the greater liberalisation of commercial trade and investment flows. It does so for the purpose of countering protectionist tendencies and to ensure real competition in keeping with international law in a manner often corresponding with the interests of all international operators, including developing countries. In that regard, an important aspect of European trade policy lies precisely in both general and specific preferential measures aimed at facilitating market access by weaker economies.
The European Commission has recently launched numerous negotiations on extending its dense network of free trade agreements both with third countries as well as with regional organisations that have included the United States of America, MERCOSUR; Japan, China, India, Morocco, Malaysia, Vietnam and Thailand.
Among those we would cite:
- EU-Canada Comprehensive Economic Trade Agreement (CETA);
- Association and Cooperation Agreements with Chile and Mexico, the countries of Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama), a Multi-Party Trade Agreement (MTA) between the EU and the Andean Community (Colombia, Peru and Ecuador);
- EU-South Korea and EU-Singapore Free Trade Agreements;
- Association Agreements inclusive of Deep and Comprehensive Free Trade Areas with Ukraine, Moldova and Georgia;
- Partnership and Cooperation Agreements with Russia and Iraq;
- Free Trade Agreement with Switzerland;
- Stabilisation and Association Agreements with the Western Balkans countries (Former Yugoslav Republic of Macedonia, Albania, Montenegro, Serbia, Bosnia-Herzegovina and Kosovo);
- Customs Unions with Turkey, Andorra and San Marino;
- European Economic Area (28 EU members + Norway, Iceland and Liechtenstein);
- Euro-Mediterranean Association Agreements with Egypt, Tunisia, Algeria, Morocco, Israel, Lebanon and Jordan;
- Economic Partnership Agreements (EPA) with African regional organisations: EU – ECOWAS for Western Africa, UE- SADC for Southern Africa and EU - EAC for Eastern Africa.
Trade policy in the Treaty of Lisbon
The official inclusion of a common trade policy into the broader framework of EU external relations was endorsed by the Treaty of Lisbon, in effect as of December 1st 2009, which expands matters of exclusive authority to the trade aspects of intellectual property and the protection of direct foreign investments (Treaty on the Workings of the European Union, Title II, art. 206 and 207).
Regarding the latter two, only the EU can adopt binding laws and conclude international agreements, with the consequent reduction of national authority and restrictions on accords of a joint nature.
Decision-making within the framework of common trade and investments policy positions, the European Council and Parliament act as co-decision makers and the Commission as negotiator. Negotiations are conducted by the Commission in keeping with the mandates approved by the Council and taking into account the sensibilities and interests of individual Member States.
The European Parliament requires regular updating from the Commission on its negotiations. In subsequent pursuance of the new Treaty, and indeed before the Council formally concludes negotiations, the European Parliament must grant its “full approval” of the trade agreement. In this regard, the Council generally decides by qualified majority vote. However, the Council can vote on a unanimous basis on the sectors of exchange of services, commercial aspects of intellectual property and direct foreign investments when those agreements contain provisions for which unanimity is required for the adoption of internal regulations. Likewise, the Council must also decide unanimously in regard to sectors involving the exchange of cultural or audio-visual services (when such agreements are susceptible to prejudicing EU cultural and linguistic diversity), and in the sectors of social services, educational and healthcare exchanges (when such agreements threaten to seriously disrupt the national organisation of such services and prejudice Member State authority regarding provision of them).
Nevertheless, the European Parliament is given powers analogous to those of the Council as regards the adoption of regulations concerning: anti-dumping, trade protections, rules of origin, recognition of market economy status, preferential autonomous measures (such as the Generalised System of Preferences) and fair trade instruments (such as the Trade Barriers Regulation).
At the level of internal European Union law, implementation of the common trade policy calls for the Commission’s preparation of specific regulatory proposals for the purpose of outlining common norms on significant questions such as market oversight, consumer health protection, financial responsibility in trade disputes, modernisation of trade defence instruments and market access regulation.