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The European Union Trade Policy

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Page 1: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

The European

Union

Trade Policy

Page 2: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

Content

1. The EU in world trade

2. EU trade policy – Basic features

3. EU trade policy – How it works

4. EU trade policy –Competing in the world

5. A renewed strategy for Europe

Page 3: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

EU IN WORLD TRADE

Page 4: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. A few facts about world

trade

GLOBALISATIONTECHNOLOGICAL TRADE

DEVELOPMENTS OPENING

IMPLICATIONS

• Opportunities for growth, but sometimes adjustment costs

• Need for global governance -> multilateral rules and institutions to

ensure level playing field and better distribution of benefits

• Need to reinforce the competitive position of the EU economy

Page 5: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. A few facts about world

trade Evolution of Word* Trade: 1999-2009

Exports (billions of euro)

6 758

3 259

1 097

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

World (excl. Intra-EU27 trade) Developing Countries EU27 (excl. Intra-EU27 trade)

1999 2004 2009

Imports (billions of euro)

6 965

3 138

1 205

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

World (excl. Intra-EU27 trade) Developing Countries EU27 (excl. Intra-EU27 trade)

1999 2004 2009

Source: Eurostat (Comext, Statistical regime 4), IMF, WTO; * World exports (imports) except Intra-EU27 Trade

Page 6: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeA major trading power…

2008 2009 2008 2009 2008 2009 2008 2009

1. Trade in Goods

Exports 1 309,9 1 097,1 8 241,3 6 757,9 15,9% 16,2% First First

Imports 1 565,0 1 205,3 8 584,4 6 964,9 18,2% 17,3% First First

Balance -255,1 -108,1 - - - - - -

Sources: Eurostat (Comext, Statistical Regime 4), WTO updated: 22.02.2011

2. Trade in Commercial Services (Total Services excluding Government services n.i.e.)

Exports 521,4 470,6 1 899,7 1 771,7 27,4% 26,6% First First

Imports 446,2 407,0 1 782,6 1 668,2 25,0% 24,4% First First

Balance 75,2 63,5 - - - - - -

Sources: Eurostat (NewCronos), WTO updated: 22.02.2011

3. Foreign Direct Investment - Flows

Outflows 378,3 273,8 1 067,0 784,6 35,5% 34,9% First First

Inflows 165,7 218,7 1 004,7 758,0 16,5% 28,8% Second First

Sources: Eurostat (NewCronos), UNCTAD updated: 22.02.2011

4. Foreign Direct Investment - Stocks

Outwards 3 319,8 3 665,6 9 167,8 10 590,2 36,2% 34,6% First First

Inwards 2 522,3 2 707,2 8 860,7 9 853,8 28,5% 27,5% First First

Sources: Eurostat (NewCronos), UNCTAD updated: 22.02.2011

EU27

share / World

(excl. Intra-EU27, %)

C = A / B

Position

(in the World)

D

EU27

(billions of euro)

A

World Trade

(excl. Intra-EU27,

billions of euro)

B

Page 7: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world trade

27,5% 22,0% 3,3% 45,8%

34,6% 28,2% 4,9% 30,8%

28,8% 12,3% 1,1% 9,0% 48,8%

34,9% 22,7% 6,8% 4,4% 31,2%

24,4% 14,2% 6,3% 6,8% 48,3%

26,6% 19,2% 5,1% 5,2% 44,0%

17,3% 16,5% 5,7% 10,4% 50,1%

16,2% 11,2% 6,2% 12,7% 53,7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Exports in Goods (2009)

Imports in Goods (2009)

Exports in Commercial Services (2009)

Imports in Commercial Services (2009)

FDI - Outflow s (2009)

FDI - Inflow s (2009)

FDI - Outw ards Stocks (2009)

FDI - Inw ards Stocks (2009)

EU27 United States Japan China Others

A major trading power (2009)

Source: Eurostat (Comext, Statistical regime 4)

Page 8: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeEU27 Trade in goods: Exports by region (2010)

1. NAFTA

€ 290.1 billion

13. Andean

Community

€ 7.9 billion

11. MERCOSUR

€ 40.1 billion

2. EFTA

€ 150.0 billion

7. ACP

€ 68.7 billion

5. CIS

€ 123.7 billion

4. China & Hong Kong

€ 140.0 billion

6. Japan & Korea

€ 71.7billion

9. ASEAN

€ 60.6 billion

12. Australia & New

Zealand

€ 29.5 billion

8. GCC (6)

€ 64.7 billion

3. MED (10)

€ 141.9 billion

10. SAARC

€ 42.0 billion

Source: Eurostat (Comext, Statistical regime 4)

Page 9: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeEU27 Trade in goods: Imports by region (2010)

2. NAFTA

€ 202.5 billion

13. Andean Community

€ 12.2 billion

10. MERCOSUR

€ 43.9 billion

4. EFTA

€ 166.9 billion

8. ACP

€ 64.7

billion

3. CIS

€ 195.9 billion

1. China & Hong Kong

€ 292.9 billion

5. Japan & Korea

€ 103.4 billion

7. ASEAN

€ 86.2 billion

12. Australia & New Zealand

€ 12.6 billion

11. GCC (6)

€ 33.5 billion

6. MED (10)

€ 102.4 billion

9. SAARC

€ 45.7 billion

Source: Eurostat (NewCronos) – provisional value

Page 10: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeEU27 Foreign Direct Investment: Outflows by main partners(2009)

Switzerland

€ 39.6 billion

Russia

€ 0.0 billion

Canada

€ -0.8 billion

United-States

€ 75.1 billion

Brazil

€ 7.6 billion

China & Hong Kong

€ 8.2 billion

Japan

€ -0.0 billion

India

€ 3.1 billion

Source: Eurostat (NewCronos) - provisional value

Page 11: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeEU27 Foreign Direct Investment: Inflows by main partners (2009)

Switzerland

€ 26.2 billion

Russia

€ 3.3 billion

Canada

€ 11.5 billion

United-States

€ 97.8 billion

Brazil

€ 0.3 billion

China & Hong Kong

€ 1.7 billion

Japan

€ -1.2 billion

India

€ 0.8 billion

Source: Eurostat (NewCronos) - provisional value

Page 12: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeShare of (current) GDP in World GDP (2009)

28,2%

24,3%

8,7%

8,6%

0% 5% 10% 15% 20% 25% 30% 35%

EU27

United States

Japan

China

%

Source: UN (National Accounts Main Aggregates Database); Share = GDPi / GDPw

Page 13: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeTrade dependence (2009)

16,5%

34,5%

16,5%

19,1%

41,4%

0% 10% 20% 30% 40% 50%

Extra EU27

Intra EU27

United States

Japan

China

%

Sources: Eurostat (Comext, Statistical regime 4), WTO, UN nama Database; Ratio = (Imports+Exports, excluding Energy) / GDP

Page 14: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeEU27 Imports from Developing Countries…

0

200

400

600

800

1 000

Bill

ion

s o

f eu

ro

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Agricultural products Fuels and mining products Manufactures Other products

… and Least Developed Countries

0

5

10

15

20

25

30

Billio

ns o

f e

uro

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Agricultural products Fuels and mining products Manufactures Other products

Source: Eurostat (Comext, Statistical regime 4)

Page 15: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. The EU in world tradeEU27 Exports to Developing Countries…

0

100

200

300

400

500

600

700

Bill

ion

s o

f eu

ro

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Agricultural products Fuels and mining products Manufactures Other products

… and Least Developed Countries

0

5

10

15

20

25

Billio

ns o

f e

uro

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Agricultural products Fuels and mining products Manufactures Other products

Source: Eurostat (Comext, Statistical regime 4)

Page 16: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

1. EU exports - crisis and

recovery

Extra EU Exports (millions of euro)

2005

2008

2009

2010

2011

60 000

70 000

80 000

90 000

100 000

110 000

120 000

130 000

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Source: Eurostat (Comext, Statistical regime 4)

Page 17: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

EU TRADE POLICY

BASIC FEATURES

Page 18: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

features

Being the leading trade region

Strong interest in:

Open markets

Clear regulatory frameworks

Responsibility to:

EU citizens

Rest of the World

Need to reinforce EU

competitiveness on world

markets

Page 19: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic features

Policy concept

A competitive European economy in an open world

trade system organised by multilateral rules

Ensure that the European

economy is open to the world

and competitive in foreign

markets

Secure real market access in

foreign countries

Support a strong multilateral

trading system

Most effective means of

managing trade and enforcing

rules

Promote European values

on democracy, rule of law,

environment, social rights...

Enforce sustainable

development

Page 20: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

featuresHistoric development

From tariffs and

quotas...

… to “behind the

border” issuesThe new shape of trade policy

Developed from trade liberalisation in goods…

… to services and rules on investment, intellectual

property, public procurement

Evolution reflected in the EU Treaties

Extended the EU trade competence to services and

commercial aspects of intellectual property rights with qualified

majority voting

Page 21: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

features

Multilateral Bilateral/Regional

Unilateral

3

DIMENSIONS

Page 22: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

features

Multilateral

Mostly implemented in the framework of the WTO (= the most

effective means of managing trade) aiming at promoting market

access with rules, in the context of effective global governance.

Including the promotion of EU values :

• Environmental concerns

• Food safety

• Cultural diversity

• … and how to promote core labour standards ?

Page 23: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

features

The core of the multilateral rule-based

system

Unique forum for trade negotiations, rule setting, resolution of disagreements

Objectives

– To boost international

economic growth

– To ensure business

confidence

Functioning

Consensus = each

country on an equal

footing

Core principles

– No country may apply quantitative restrictions

or similar measures

– Non-discrimination - ‘Most Favoured Nation’

principle

– National Treatment - no country may discriminate

between its own products and imported products

– Transparency - all rules affecting trade must be

transparent; publication, notification, discussion,

trade policy reviews

Page 24: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

features

Enforcement controlled by Dispute

Settlement Mechanism

– All WTO members can seek redress

– Dispute Settlement Body (DSB) rulings

are binding

– DSB may authorise retaliation

Membership

– Quasi universal: 153

member countries

– Covers 95% of world

trade

Regulatory framework

– Trade pillar of global

governance

– Rounds and agreements

Page 25: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

features The Doha Development Agenda

A round of trade negotiations launched in 2001

– To pursue market opening

– To strengthen rules, improve global governance

– To integrate developing countries in world trade

Development - a key

component of the WTO

round

A development round

– Special and Differential Treatment

– Addressing developing countries’ concerns

– Aid for Trade

– Special measures for LDCs

Page 26: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

features The 3 legs of the DDA

Regulatory framework

Improving existing rules (e.g. anti-dumping,

geographical indications) and creating new rules (e.g.

“trade facilitation”)

Opening markets

– Agricultural goods

– Industrial goods

– Services

EU seeks real new MA

Development

Sustainable development (to respond to concerns of developing countries and civil society)

Page 27: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU trade policy - basic

featuresThe Cancún setback (September 2003)

Meant as a half-way point of the Round, the Ministerial broke up

without decision.

Serious divergences on agriculture and Singapore issues.

New balance of power in the WTO:

• Emergence of vocal developing country groupings (G20,

G90)

• Rise of Brazil and India as key members of the WTO

=> New negotiating dynamics: different G progressively to

replace “old” Quad

Page 28: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU Trade policy - basic

features

EU remains committed to a successful and reasonably

ambitious outcome to:

Create business opportunities and market access,

Improve multilateral trade rules,

Contribute to development

All key Members confirmed their commitment to the DDA

No real alternative to the WTO

Objectives: narrow the gaps between Members on

agricultural tariffs, agricultural subsidies and industrial tariffs

In the short-term: to seek agreement on package of

development initiatives and resume technical work in

Geneva

After the suspension (July 2006): relaunching the Round

Page 29: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU Trade policy - basic

featuresBilateral/regional

In addition to the WTO's multilateral negotiations, the EU concludes bilateral

agreements with third countries and regional areas. Many of the World’s

countries potentially linked to the EU by regional trade agreements.

EU policy rationale for bilateral agreements

• Trade expansion and

rules-making (WTO+)

• Fostering development

and...

• … promoting regional

development

Key EU bilateral agreements include:

• Economic Partnership Agreement with the Caribbean and in negotiation with other ACP countries

• Free Trade Agreements with some Balkan countries, the EFTA countries, the Mediterranean countries, Korea (not yet ratified), Chile, Mexico, South Africa...

• Customs Unions with Turkey, Andorra and San Marino

• On-going negotiations with India, Mercosur, Ukraine…

Page 30: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU Trade policy - basic

featuresUnilateral

The EU implements unilateral measures as an additional trade policy

instrument in the interests of development and/or political stability in line with

the Union’s key political priorities:

General System of Preferences

(GSP): the classic instrument for

fostering development is by

granting tariff preferences.

Products imported from GSP

beneficiary countries enter the EU

either duty-free access or with

tariff reduction.

“Everything But Arms” initiative

(EBA): a special GSP arrangement

for the least developed countries.

Grants duty-free access to imports

of all products from LDCs without

any quantitative restrictions (except

to arms and munitions).

Asymmetrical preferences e.g. for

some Balkan countries and

Moldova, with the aim of ensuring

peace, stability, freedom and

economic prosperity in the region.

Page 31: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU Trade policy - basic

featuresThe EU is the most open market for poor

countries

176 developing countries and territories are beneficiaries of the EU’s GSP.

In 2008, EU imports benefiting from GSP preferences amounted to €68 billion. Bangladesh leading beneficiary country followed by China, Pakistan, Brazil, Malaysia and India.

The 49 Least Developed Countries (EBA -"Everything But Arms") benefit from duty-free and quota–free access for practically all exports of originating products to the EU for an unlimited period of time.

GSP guidelines for 2006-2015 in place providing stability to traders and economic operators. The scheme is implemented following cycles of 3 years.

Key Facts on the General

System of Preferences (GSP)

Page 32: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU Trade Policy – basic

featuresThe GSP system 2006-2015 : simplifies graduation

mechanism and reduces the system to 3 schemes

• General scheme: increase of product coverage from 6900 to 7200

(mainly agriculture and fishery sector of interest for developing

countries).

• Special scheme for Least Developed Countries: Everything But Arms.

• New special GSP+ for vulnerable countries = duty free on 7200

products if the country meets criteria :

• Ratification and implementation of 27 key international conventions

• “Vulnerable”

• A poorly diversified economy.

Page 33: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

2. EU Trade policy - basic

features

The reduced rate

provisions of the GSP

Special incentive arrangement (GSP+) honour beneficiary countries’efforts to comply with certain internationally agreed environmental and labour standards. Meant to foster sustainable development by providing additional trade preferences. Duty free access for the products covered by the scheme.

The GSP provides tariff reductions without quantitative limitations. Reductions are modulated according to the sensitivity of products. While non-sensitive products enter the EU market duty free, the MFN rate for sensitive products, with some exceptions, is reduced by 3.5 percentage points.

Page 34: The European Union Trade Policy - uniag.sk€¦ · development initiatives and resume technical work in Geneva After the suspension (July 2006): relaunching the Round. 2. EU Trade

Thank you for

your attention