European Union: Foreign trade policy

FOREIGN AND FOREIGN TRADE

A C Ramana Reddy

M Siddhardha

FOREIGN POLICY-CFSP

• Organised and agreed foreign policy of EU

• EU’s defence agreed as responsibility of NATO

according to CFSP

• CFSP deals with international issues of political or

diplomatic nature, including issues with a security or

military orientation

CFSP-GENERAL STRUCTURE

Common Foreign And Security Policy

• Institutions involved and acting bodies

• Common Security and Defence Policy(CSDP)

• Common Commercial Policy

• Humanitarian aid and Development assistance

• Neighbourhood policy

• Relations with US, NATO etc.

DEVELOPMENT THROUGH

TREATIES

• 1970 European Political Cooperation

• 1992 Maastricht Treaty

• Common Foreign and Security Policy

• 1997 Amsterdam Treaty

• High Representative for CFSP

• 2000 Nice Treaty

• 2009 Lisbon Treaty

EUROPEAN POLITICAL

CO-OPERATION(EPC)• Established in 1970 through Luxembourg Report

• Intergovernmental forum, outside European community

• Copenhagen Summit in 1973, London report in 1981 strengthened the EPC

• The Single European Act (SEA) of February 1986

institutionalised the EPC and established a small

permanent secretariat in Brussels to assist the Presidency

MAASTRICHT TREATY

• Maastricht Treaty replaced EPC with the Common

Foreign and Security Policy.

• The Treaty introduced the ‘three-pillar system’, with

the CFSP as the second pillar which involves an

intergovernmental decision-making process which

largely relies on unanimity.

• The Council of foreign ministers will decide Common

Positions and Joint Actions, and QMV can be used

to implement the latter.

• The Commission can initiate proposals and the

Court of Justice has no say in this area.

AMSTERDAM TREATY

• A security and defence policy dimension was added to the “second pillar”.

• A new foreign policy instrument namely common strategies was added to the existing ones.

• “Petersburg tasks” of the WEU were integrated into the Treaty on European Union .

• The position of a High Representative for CFSP and Secretary General of the Council was established; to contribute to the formulation, preparation, and implementation of foreign policy decisions as well as to act on behalf of the Council in the international affairs.

• The High Representative also heads a new Policy Planning and Early Warning Unit.

TREATY OF NICE

• security and defence policy provisions were transformed into an independent policy, the so-called “European Security and Defence Policy” (ESDP).

• The EU thus fulfilled the institutional prerequisites to execute the “Petersburg tasks” on its own and conduct both civil and military crisis management.

• Political and Security Committee (PSC), the Military Committee (EUMC) and the Military Staff (EUMS), and the Politico-Military Group (PMG), the Committee for Civilian Aspects of Crisis Management (CIVCOM).

• introduced the possibility of establishing enhanced cooperation

LISBON TREATY

• Two major innovations:

• the creation of the High Representative of the Union

for Foreign Affairs and Security Policy and the

European External Action Service;

• the development of the Common Security and

Defence Policy.

• Abolition of the 2nd pillar of the old EU Structure

• Instruments of the CFSP replaced

• Role of the court of justice

• Financing the CFSP

CFSP-CURRENT SCENARIO

CFSP CURRENT OBJECTIVES

• Safeguard the common values, fundamental interests, independence

and integrity of the EU in conformity with the principles of the Charter of

UN

• Strengthen the security of the Union in all ways

• Preserve peace and strengthen international security, in accordance

with the principles of the Charter of UN, as well as the principles of

the Helsinki Final Act and the objectives of the Paris Charter including

those on external borders

• Promote international co-operation

• Develop and consolidate Democracy and Nomocracy and respect for

human rights and fundamental freedoms

CFSP-MAIN ELEMENTS

• High Representative

• European External Affairs Service(EEAS)

• Common Security and Defence policy(CSDP)

• Policies like ENP, EuropeAid etc.

• Other entities like FAC,PSC,EUMC etc.

CFSP-POLICY TYPES

• Principles, general guidelines and common strategies of CFSP defined by the European Council

• Joint actions and Common positions taken by Council of Ministers

• Joint actions are situation specific and address circumstances where EU actions are obligatory

• Common positions define the approach of EU in matters of thematic nature and define general guidelines to which national policies ought to comply with in the abstract of CFSP

HIGH REPRESENTATIVE

• Authority additional to the President of European

Council

• Made distinct from the Secretary General of COM

from Lisbon Treaty

• Addresses on behalf of EU in agreed foreign policy

matters of EU with other countries

HIGH REPRESENTATIVE

• Holds various responsibilities within EU

- Head of EEAS and delegations

- President of FAC and EDA

- Responsible for European Union

Special Representatives

- Chairperson of board of EUISS

• Reporting authority of bodies related to CFSP and also

articulates ambiguous policy positions created by

disagreements among member states

EUROPEAN EXTERNAL ACTION

SERVICE(EEAS)

• Also established following the Lisbon Treaty and

formally launched after one year(2010)

• Serves as foreign ministry and ‘corps diplomatique’

for EU aiding to implement CFSP and EU’s external

representation

• Under the authority of HR for assistance

EEAS-STRUCTURE

• Functionally autonomous from other EU bodies but is

responsible for consistency of its policies with those

of other EU bodies in merging areas

• Staff include members from Council and

Commission and diplomatic services of member

states taken directly by the HR

FLOW CHART-EEAS

COMMON SECURITY AND

DEFENCE POLICY(CSDP)• Major element of CFSP

• Domain of EU’s policies covering defence and

military aspects and civilian crisis management

• Formed and developed by the European Council

formally

• Currently handled by the High Representative and

EEAS with inputs from others

CSDP-ACTIONS

• Operations carried out by organisations such as

EDA, PSC,EUMS and CMPD etc.

• Several ongoing civilian missions and military

operations in various parts of world curbing threat to

EU and its interests.

CURRENT MISSIONS AND

OPERATIONS

EUROPEAN SECURITY

STRATERGY

• Provides conceptual framework for enaction of

CSDP

• Titled ‘A secure Europe in a better world’, ESS was

adopted to enunciate five key challenges faced by

EU viz. Terrorism, Proliferation of Weapons of Mass

Destruction, Regional conflicts, State failure and

organised crime

• Several strategies formed and adopted for taking

measures against the challenges

OTHER BODIES INVOLVED• The Foreign Affairs Council(FAC)

Advisive body for policy proposal for enaction by the

HR and EEAS

• The Political and Security Committee(PSC)

Monitory of international situation in the areas covered

by the CFSP and implementation of agreed policies

Also contributes in delivering opinions to the COM, either

at its request or its own initiative

• European Defence Agency(EDA)

Takes care of military research, international market

for military and weapons technology and encourages

the defence capabilities

OTHER BODIES INVOLVED• European Union Military Service(EUMC)

Highest military body within the council comprising

of Chiefs of Defence of each member state acting

as advisory on all military matters within the EU

• Crisis Management & Planning Directorate(CMPD)

Political-strategic planner of CSDP civilian missions

and military operations

OTHER BODIES INVOLVED

• European Union Institute of Security Studies(EUISS)

and European Union Satellite Centre(EUSC) are

institutions of research and development with a

mission to find common security culture of EU

• The former researches security issues of relevance to

EU and provides a form of debate and the latter

provides input in the form of satellite imagery and

collateral data

ADDITIONAL POLICIES AND

INTERNATIONAL ACTIONS• European Neighbourhood Policy(ENP)

• Development and Co-operation-EuropeAid

• Human Rights and Humanitarian Aid

• Conflict Prevention, Peace building and Mediation

• Non-proliferation, disarmament and export control

• Global Challenges

EuropeAid

• Directorate-General in the Commission, unified in

2011, aimed for extending development and co-

operation to countries in need

• Thematic classification of areas to offer support

using several financial and assistive instruments

INTERNATIONAL ACTIONS

• Human rights are treated universal and indivisible.

Efforts are made to promote and defend them both

internally as well as while engaging in treaties

• Conflict prevention and mediation by the efforts of

EEAS and following the ideology of promoting

peace

INVOLVEMENT IN GLOBAL

CHALLENGES

• Increasing efforts are made

in tackling the global challenges

such as Sustainable energy, Global

warming, Environment conservation etc.

FOREIGN TRADE

INTRODUCTION

EU in World Trade

• EU constitutes the largest trading bloc in the world

accounting for more than a fifth of global imports

and exports.

• World largest exporter and the second largest

importer of goods.

• The EU is the largest economy in the world with a

GDP per head of €25 000 for its 500 million

consumers.

• The EU ranks first in both inbound and outbound

international investments.

• The EU is the top trading partner for 80 countries.

10 major EU export partners

(2012)

10 major EU import partners

(2012)

EU's investments in the

world

Sources: Eurostat, converted from US$ / 2011

EU Trade Policy

• The EU manages trade and investment relations with

non-EU countries through the EU's trade and

investment policy.

• Trade policy is an exclusive power of the EU

• Trade policy is set down in Article 207 of the Treaty

on the Functioning of the European Union

The Common commercial

policy Part V (Title II) TFEU

• Art.206 TFEU:

• ”By establishing a customs union in accordance with Articles 28 to

32, the Union shall contribute, in the common interest, to the

harmonious development of world trade, the progressive abolition of

restrictions on international trade and on foreign direct investment,

and the lowering of customs and other barriers.”

• Art.207 TFEU:

• “The common commercial policy shall be based on uniform

principles, particularly with regard to changes in tariff rates, the

conclusion of tariff and trade agreements relating to trade in goods

and services, and the commercial aspects of intellectual property,

foreign direct investment, 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. The common

commercial policy shall be conducted in the context of the

principles and objectives of the Union's external action.

EU Trade Policy -

Objectives• Create a global system for fair and open trade

• Open up markets with key partner countries

• Make sure others play by the rules

• Ensure trade is a force for sustainable development

Instruments

• Autonomous EU measures: e.g. Regulation

2603/69/EEC laying down common rules for exports

(import quotas), anti-dumping duties and other

protective measures…

• International agreements: art. 207(3) TFEU attributes

to the EU the competence to conclude treaties in

CCP field with third counties and IOs (art. 218).

EU Trade Policy Dimensions

• The multilateral dimension of EU trade policy centres

on the WTO and takes the form of multilateral

rounds of negotiation such as the Doha

Development Agenda.

• Bilateral dimension

• Globally more than 200 FTAs

• Unilateral dimension

• GSP, GSP + and Everything But Arms

• Trade Defense instruments

How EU trade policy is

made• The European Parliament decides jointly with the

Council on the framework of EU trade policy –

through the ordinary legislative procedure.

• While the Commission maintains the right of

initiative, for its proposals to be formally adopted,

agreement has to be reached between the co-

legislators.

• International agreements are adopted by the

Council, after the Parliament has given its consent.

How trade agreements are

negotiated• The Commission negotiates with the trading partner on behalf of

the EU, working closely with the Member States in the Council

and keeping the European Parliament fully informed.

Trade defence

• A way of protecting European production against international trade distortions (Unfair trade practices)

• Anti-dumping Policy• A company is dumping if it is exporting a product to the EU at

prices lower than the normal value of the product (the domestic prices of the product or the cost of production) on its own domestic market.

• The European Commission is responsible for investigating allegations of dumping by exporting producers in non-EU countries.

• It usually opens an investigation after receiving a complaint from the Community producers of the product concerned, but it can also do so on its own initiative.

• If the investigation finds that the conditions have been met, then anti dumping measures are imposed on imports of the product concerned

• The anti dumping duties are paid by the importer in the EU and collected by the national customs authorities of the EU countries concerned.

Anti-subsidy Policy

• A subsidy is a financial contribution from a government

or public body which, in the case of trade, affects the

pricing of goods imported into the EU.

• The EU may impose duties to neutralise the benefit of

such a subsidy on imported goods when the subsidy is

limited to a specific industry or group of industries.

Safeguard measures

• Safeguards are intended for situations in which an EU

industry is affected by an unforeseen, sharp and

sudden increase of imports.

• Unlike anti dumping and anti subsidy measures,

safeguards do not focus on whether trade is fair or not,

so the conditions for imposing them are more stringent.

European Neighbourhood

Policy• In 2004, the EU launched the European

Neighbourhood Policy (ENP) to develop deeper

political and economic ties with neighbouring

countries.

• This ENP framework is proposed to the 16 of EU's

closest neighbours – Algeria, Armenia, Azerbaijan,

Belarus, Egypt, Georgia, Israel, Jordan, Lebanon,

Libya, Moldova, Morocco, Palestine, Syria, Tunisia

and Ukraine. The ENP is not yet ‘activated’ for

Algeria, Belarus, Libya and Syria. An Action Plan with

Algeria is currently under negotiation. Remaining 12

are currently are already fully participating as

partners in the ENP.

How ENP works ?

• The program allows the EU to advocate for the

adoption of common political and economic

values.

• In return, ENP participants may receive enhanced

trade and economic ties with the EU, as well as aid

and technical assistance.

• ENP also encompasses three regional initiatives—the

Eastern Partnership, the Union for the

Mediterranean, and the Black Sea Synergy—

designed to complement the bilateral action plans.

• Central to the ENP are the bilateral Action Plans or Association

Agendas between the EU and each ENP partner.

• The ENP action plans (or Association Agendas for Eastern partner

countries)

• set out the partner country's agenda for political and economic

reforms, with short and medium-term priorities of 3 to 5 years

• reflect the country's needs and capacities, as well as its and the

EU’s interests.

Implementation &

monitoring• The ENP builds upon the legal agreements in place

between the EU and the partner in question: Partnership

and Cooperation Agreements (PCA) or Association

Agreements (AA).

• Implementation of the ENP is jointly promoted and monitored through the Committees and sub-Committees

established in the frame of these agreements.

• The European External Action Service and the European

Commission publish each year the ENP Progress Reports.

The assessments and recommendations contained in the Progress Reports form the basis for EU policy towards

each ENP partner under the "more for more" principle.

The Benefits of ENP

• Under the ENP, the EU works together with its partners to develop democratic, socially equitable and inclusive societies, and offers its neighbours economic integration, improved circulation of people across borders, financial assistance and technical cooperation toward approximation with EU standards.

• The EU supports the achievement of these objectives.

• financial support – grants worth €12 bn were given to ENP-related projects from 2007 to 2013

• economic integration and access to EU markets – in 2011 trade between the EU and its ENP partners totalled €230bn

• easier travel to the EU – 3.2 m Schengen visas were issued to citizens, and in particular to students from ENP countries in 2012

• technical and policy support