Institutions and Institutions and Politics of the Politics of the

European UnionEuropean Union

The Common Commercial The Common Commercial PolicyPolicy

RReeadingading

► Artis, Mike Artis, Mike && Nixson, Frederick Nixson, Frederick (eds.) (2004): (eds.) (2004): The European Economics The European Economics oof f tthe European he European UnionUnion

►McDonald & Dearden (1999): McDonald & Dearden (1999): European European Economic Integration Economic Integration (available in my office)(available in my office)

► Pelkmans, Jacques (2001)Pelkmans, Jacques (2001):: European European Integration – Methods Integration – Methods aand Economic nd Economic AnalysisAnalysis

► http://europa.eu.int/comm/trade/index_en.hthttp://europa.eu.int/comm/trade/index_en.htmm - Commission’s website on external trade - Commission’s website on external trade

StructureStructure

►The CCP – origins & goalsThe CCP – origins & goals►Functioning and instruments of the Functioning and instruments of the

CCPCCP► Impact of the CCP (trade Impact of the CCP (trade

diversion/deflection)diversion/deflection)►Some Some particular particular casecasess (Bananas, CAP, (Bananas, CAP,

Airbus, Chinese shoes)Airbus, Chinese shoes)►Questions for considerationQuestions for consideration

Origins of the CCPOrigins of the CCP

►Treaty of Rome Art. 110-116 (today Treaty of Rome Art. 110-116 (today 131-134)131-134)

►CCPCCP cornerstone of external trade cornerstone of external trade relations, based on:relations, based on:

- Common External Tariff (CET)Common External Tariff (CET)- Trade agreements with the rest of the Trade agreements with the rest of the

worldworld- Uniform trade policy instruments Uniform trade policy instruments

The goals of the CCPThe goals of the CCP

►Goals in the Treaty:Goals in the Treaty:- To contribute to the harmonious To contribute to the harmonious

development of world trade, abolition of development of world trade, abolition of restrictions on international trade and restrictions on international trade and the lowering of customs barriersthe lowering of customs barriers

- To support development of competitive To support development of competitive strength of undertakings in the ECstrength of undertakings in the EC

►ARE THESE GOALS RELEVANTARE THESE GOALS RELEVANT AND AND REALREAL??

The goals of the CCP (2)The goals of the CCP (2)

►The bottom-line goals of the CCP:The bottom-line goals of the CCP:- Market protection (‘Protection’ vs. Market protection (‘Protection’ vs.

‘Protectionism’)‘Protectionism’)- Export support for EU producersExport support for EU producers

Functioning of the CCPFunctioning of the CCP

►Decision-making:Decision-making:The Commission proposes and The Commission proposes and

negotiatesnegotiatesThe Council must approve of the The Council must approve of the

course of actioncourse of actionThe EP must “assent” to the The EP must “assent” to the

conclusion of major trade agreementsconclusion of major trade agreements

Instruments of the CCPInstruments of the CCP

►TariffsTariffs – the CET – the CETSince 1957 the average CET decreased Since 1957 the average CET decreased

from 40% to 5% (GATT, WTO)from 40% to 5% (GATT, WTO) ‘‘peek tariffs’ – 10 to 20% - exceptional, peek tariffs’ – 10 to 20% - exceptional,

only the most sensitive goods.only the most sensitive goods.No tariff on books for instanceNo tariff on books for instanceLess tariffs = freer trade?Less tariffs = freer trade?

Instruments of the CCP (2)Instruments of the CCP (2)► Non-tariff barriers (NTBs)Non-tariff barriers (NTBs) Forbidden within the EU, problematic under the WTOForbidden within the EU, problematic under the WTO Have tended to increase greatly since 1970sHave tended to increase greatly since 1970s1)1) Quotas Quotas – applied to ‘sensitive’ products (bananas, – applied to ‘sensitive’ products (bananas,

steel, sardines)steel, sardines)2)2) VERs VERs (voluntary export restraints) – on bilateral (voluntary export restraints) – on bilateral

bases agreed quotas, illegal under the WTObases agreed quotas, illegal under the WTO, but , but used commonlyused commonly

3)3) Anti-dumping measures Anti-dumping measures – yesterday Japan, today – yesterday Japan, today ChinaChina

4)4) Other measures – export promotion, minimum EU Other measures – export promotion, minimum EU content, counterfeit goods…content, counterfeit goods…

The rationale of these measures? Who makes the The rationale of these measures? Who makes the profit?profit?

Impact of the CCPImpact of the CCP

► EU the biggest trade entityEU the biggest trade entity► Increase in intra-EU trade (61% of trade Increase in intra-EU trade (61% of trade

conducted between MS)conducted between MS) Trade diversion Trade diversion at expense of Africa and North at expense of Africa and North

AmericaAmerica Trade deflectionTrade deflection – measures taken to deflect trade – measures taken to deflect trade

from tough rivals (yesterday Japan, today China)from tough rivals (yesterday Japan, today China)► Success of the CCP measures to support EU Success of the CCP measures to support EU

industries?industries? The EU leadership as a world trade partner has The EU leadership as a world trade partner has

eroded, especially in high-techeroded, especially in high-tech BUT what would happen without CCP? BUT what would happen without CCP?

Some particular casesSome particular cases

► Bananas – Chicquita in tears?Bananas – Chicquita in tears?► CAP – attracts the bulk of criticism from the CAP – attracts the bulk of criticism from the

US and LDCs, blocking the way to light for the US and LDCs, blocking the way to light for the LDCs?LDCs?

► Airbus – unfair commercial practices?Airbus – unfair commercial practices?► Chinese shoes – who wants to wear Chinese Chinese shoes – who wants to wear Chinese

shoes?shoes? For more information seeFor more information see

http://www.europa.eu.int/comm/trade/issues/sehttp://www.europa.eu.int/comm/trade/issues/sectoral/index_en.htmctoral/index_en.htm

Questions for considerationQuestions for consideration

►Has the CCP promoted free trade?Has the CCP promoted free trade?►Has the CCP promoted fair trade?Has the CCP promoted fair trade?►Does it provide for ‘protection’ or Does it provide for ‘protection’ or

‘protectionism’?‘protectionism’?

Reading for the next weekReading for the next week

► http://europa.eu.int/comm/agriculture/indexhttp://europa.eu.int/comm/agriculture/index_en.htm_en.htm - Commissions web on agriculture - Commissions web on agriculture

► Artis, Mike Artis, Mike && Nixson, Frederick Nixson, Frederick (eds.) (2004): (eds.) (2004): The European Economics The European Economics oof f tthe European he European UnionUnion

►McDonald & Dearden (1999): McDonald & Dearden (1999): European European Economic Integration Economic Integration (available in my office)(available in my office)

► Pelkmans, Jacques (2001)Pelkmans, Jacques (2001):: European European Integration – Methods Integration – Methods aand Economic nd Economic AnalysisAnalysis