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Institutions and Politics of the European Union

Institutions and Politics of the European Union. The Common Commercial Policy. R e ading. Artis, Mike & Nixson, Frederick (eds.) (2004): The European Economics o f t he European Union McDonald & Dearden (1999): European Economic Integration (available in my office)

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Institutions and Politics of the European Union

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  1. Institutions and Politics of the European Union The Common Commercial Policy

  2. Reading • Artis, Mike & Nixson, Frederick (eds.) (2004): The European Economics of the European Union • McDonald & Dearden (1999): European Economic Integration (available in my office) • Pelkmans, Jacques (2001):European Integration – Methods and Economic Analysis • http://europa.eu.int/comm/trade/index_en.htm - Commission’s website on external trade

  3. Structure • The CCP – origins & goals • Functioning and instruments of the CCP • Impact of the CCP (trade diversion/deflection) • Some particular cases (Bananas, CAP, Airbus, Chinese shoes) • Questions for consideration

  4. Origins of the CCP • Treaty of Rome Art. 110-116 (today 131-134) • CCP cornerstone of external trade relations, based on: • Common External Tariff (CET) • Trade agreements with the rest of the world • Uniform trade policy instruments

  5. The goals of the CCP • Goals in the Treaty: • To contribute to the harmonious development of world trade, abolition of restrictions on international trade and the lowering of customs barriers • To support development of competitive strength of undertakings in the EC • ARE THESE GOALS RELEVANT AND REAL?

  6. The goals of the CCP (2) • The bottom-line goals of the CCP: • Market protection (‘Protection’ vs. ‘Protectionism’) • Export support for EU producers

  7. Functioning of the CCP • Decision-making: • The Commission proposes and negotiates • The Council must approve of the course of action • The EP must “assent” to the conclusion of major trade agreements

  8. Instruments of the CCP • Tariffs – the CET • Since 1957 the average CET decreased from 40% to 5% (GATT, WTO) • ‘peek tariffs’ – 10 to 20% - exceptional, only the most sensitive goods. • No tariff on books for instance • Less tariffs = freer trade?

  9. Instruments of the CCP (2) • Non-tariff barriers (NTBs) • Forbidden within the EU, problematic under the WTO • Have tended to increase greatly since 1970s • Quotas – applied to ‘sensitive’ products (bananas, steel, sardines) • VERs (voluntary export restraints) – on bilateral bases agreed quotas, illegal under the WTO, but used commonly • Anti-dumping measures – yesterday Japan, today China • Other measures – export promotion, minimum EU content, counterfeit goods…  The rationale of these measures? Who makes the profit?

  10. Impact of the CCP • EU the biggest trade entity • Increase in intra-EU trade (61% of trade conducted between MS) • Trade diversion at expense of Africa and North America • Trade deflection – measures taken to deflect trade from tough rivals (yesterday Japan, today China) • Success of the CCP measures to support EU industries? • The EU leadership as a world trade partner has eroded, especially in high-tech • BUT what would happen without CCP?

  11. Some particular cases • Bananas – Chicquita in tears? • CAP – attracts the bulk of criticism from the US and LDCs, blocking the way to light for the LDCs? • Airbus – unfair commercial practices? • Chinese shoes – who wants to wear Chinese shoes? • For more information see http://www.europa.eu.int/comm/trade/issues/sectoral/index_en.htm

  12. Questions for consideration • Has the CCP promoted free trade? • Has the CCP promoted fair trade? • Does it provide for ‘protection’ or ‘protectionism’?

  13. Reading for the next week • http://europa.eu.int/comm/agriculture/index_en.htm - Commissions web on agriculture • Artis, Mike & Nixson, Frederick (eds.) (2004): The European Economics of the European Union • McDonald & Dearden (1999): European Economic Integration (available in my office) • Pelkmans, Jacques (2001):European Integration – Methods and Economic Analysis

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