11 What is trade policy?Trade policy (or commercial policy) is a set of rules and regulations that are intended to change international trade flows, particularly to restrict imports.The purpose of trade policy is to help a nation's international trade run more smoothly, by setting clear standards and goals which can be understood by potential trading partners.Multilateral and bilateral agreements
12 Trade Policy of the EUThe EU manages trade and investment relations with non-EU countries through the EU's trade and investment policy.Trade policy is executed by DG TradeEU's exclusive powers covers not just trade in goods, but also:servicescommercial aspects of intellectual propertyforeign direct investment
14 Trade Policy of the EUThe 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.
17 Trade Policy based on Regionalism Formation of the EEC in 1957 and EFTA in 1960: the first remarkable examples of regional trade agreements.EEC trade policy priority in the 1970s and 1980s was preferential trade agreements mainly with neighbouring countries (enlargement, EFTA, Turkey, Israel)
18 EU Trade Policy and WTOEstablishment of the WTO in 1995 flourished the expectations that a world trading system based on common rules and multilateral liberalization can be formed.EU turned its attention to multilateralismPascal Lamy appointed as the Commissioner for Trade in 1999.EU maintained an effective suspension on the opening of bilateral or regional negotiations to conclude FTAs, and championed the multilateral trading system.
19 Lamy explained this policy as one “pursuing all existing mandates for regional negotiations with vigour and fairness, but not to begin any new negotiations”.two reasons:it favored the multilateral approach of the Doha Development Agenda and the EU did not want to take any initiative that might detract from its completion;EU had a ‘deep integration’ approach in FTAs and these agreements were complex and time-consuming to negotiateIncreasing the number of bilateral agreements has been labeled as ‘spaghetti bowl’ of overlapping trade rules
20 Disturbances to EU’s Multilateral Position USA had started to pursue an activist FTA policy based on ‘competitive liberalization’, the Bush Administration had restored the Fast Track Negotiating Authority in 2002, which had expired and not been in effect since 1994.DDA, which was set to conclude in December 2006, started to show significant slowdown in progress towards multilateral liberalization.
21 Push for a New Trade Policy Expansion of Trade flowsIncreasing global trade in goods and servicesFragmentation of global value chain production in goods and servicesProduction through global value chains dominated by multinationals.2/3 of world imports concern intermediate inputsThe rise of the emerging economies
23 New Trade Policy of the EU DDA officially suspended in July 2006.Multilateralist position of the EU has lost its ground and the Commission has been forced to change its trade policy focus.New trade policy “Global Europe” revealed in October 2006
24 Global Europe“rejection of protectionism at home, accompanied by activism in creating open markets and fair conditions for trade abroad”focuses on the need to identify and remove tariff and non-tariff barriers (NTBs) to market access for goods and services that are important for the European exporters.influence the forces driving change, to seize the opportunities of globalization and to manage the risks and challenges posed by the emerging economies especially in Asia and South America.
25 Global Europe: Criteria for FTAs Economic criteria: market potential and the level of protection (tariffs and NTBs) against EU export interestsTarget countries:Prior FTA partners: ASEAN, Korea and MercosurCountries of direct interest: India, Russia and the Gulf Cooperation CouncilCountry of special attention: ChinaCoverage: the highest possible degree of trade, investment, and services liberalization, in addition to a ban on export taxes and quantitative import restrictions. regulatory convergence, non-tariff barriers and stronger provisions on intellectual property rights and competition
26 EU’s FTAsAgreements with neighbours: (EFTA, Turkey, Central and Western European countries and West Balkans - Association Agreements for potential future EU countries)Agreements designed primarily to foster stability around the EU borders: (Mediterranean countries, Gulf States, Ukraine)Agreements with a historical and development focus: (EPAs with African, Caribbean and Pacific (ACP) regions)FTAs with strategic partners: countries and regions where EU’s objective is to neutralise potential discrimination against EU exports and investments resulting from FTAs between third countries or to secure commercial benefits via increased market access (e.g Korea, Chile, South Africa, Singapore etc.)
27 EU’s FTAs Globally more than 200 FTAs Covering more than 35% of global tradeFTAs top up what can be done in WTO‘Extended’ regionalism
28 Trade Agreements in Europe Norway - 01 July 1973 (EEA)Iceland - 01 April 1973 (EEA)Switzerland - 01 January 1973Faroe Islands - 01 January 1997Macedonia - Stabilisation and Association Agreement, 01 May 2004Albania - Stabilisation and Association Agreement, 01 April 2009Montenegro - Stabilisation and Association Agreement, 01 May 2010Bosnia and Herzegovina - Interim Agreement on trade and trade related matters, 01 July 2008Serbia - Interim Agreement on trade and trade related matters, 01 February 2010
29 Trade Agreements in the Mediterranean Region Palestinian Authority - Association Agreement, 01 July 1997Syria - Co-operation Agreement, 01 July 1977Tunisia - Association Agreement, 01 March 1998Morocco - Association Agreement, 01 March 2000Israel - Association Agreement, 01 June 2000Jordan - Association Agreement, 01 May 2002Lebanon - Interim Agreement, 01 March 2003Egypt - Association Agreement, 01 June 2004Algeria - Association Agreement, 01 September 2005
30 Trade Agreements in Other Countries Mexico - Economic Partnership, Political Coordination and Cooperation Agreement, 01 July 2000South Africa - Trade, Development and Co-operation Agreement, 01 January 2000CARIFORUM States - Economic Partnership Agreement, Provisionally appliedChile - Association Agreement and Additional Protocol, 01 February 2003 (trade) / 01 March 2005 (full agreement)Madagascar, Mauritius, the Seychelles, and Zimbabwe Interim Partnership Agreement signed in August 2009Korea - New Generation Free Trade Agreement, signed 06 October 2010Papua New Guinea and Fiji - Interim Partnership Agreement ratified by Papua New Guinea in May 2011EU-Iraq - Partnership and Cooperation Agreement, signed on 11 May 2012Colombia and Peru - Trade Agreement, signed 26 July 2012Central America - Association Agreement with a strong trade component, signed 29 June 2012
31 Customs Unions Andorra - 01 July 1991 San Marino - 01 December 1992 Turkey - 31 December 1995
33 Generalised System of Preferences (GSP) allows exporters from developing countries and LDCs to pay lower duties on their exports to the EUStandard GSP scheme: tariff reductions to developing countries. partial or entire removal of tariffs on 2/3 of all product categories.GSP+: full removal of tariffs to countries which ratify and implement international conventions relating to human and labour rights, environment and good governanceEverything but Arms (EBA): scheme for LDCs, duty-free quota-free access to all products, except for arms and ammunitions