The European Union (EU) is a unique economic and political union of 28 member states that create a common market and act as a single entity on the world stage. As such, the EU has a cohesive trade policy that seeks to promote fair, balanced, and mutually beneficial trade relationships between the participating countries and the rest of the world (European Union, 2022). This policy includes a customs union, the Common Commercial Policy, and the Generalised System of Preferences, among other measures. The EU’s customs union ensures that goods imported into any member state are subject to the same tariffs and cannot be discriminated against by the other member states. This helps to create a level playing field and encourages fair competition (European Union, 2022). The Common Commercial Policy is the framework for the EU’s external trade relations and outlines the principles and objectives of the EU’s trade policy.
The EU’s trade policy is designed to promote economic growth, create jobs and reduce poverty in the EU and abroad. It helps to make the EU an attractive destination for foreign investment and encourages economic integration between the member states. The trade policy also seeks to protect the environment and promote sustainable development (Titievskaia, 2019). EU’s trade policy is a complex and constantly evolving framework that seeks to promote the interests of the EU and its member states in a globalized economy. (European Union, 2022) The EU’s trade policy is based on the principles of reciprocity and non-discrimination and is managed by the European Commission. The World Trade Organization (WTO) rules and agreements also inform the policy. This study seeks to examine European Union Trade policy. This study aims to examine how the European Union’s trade policy has impacted the international economy and its implications for global trade.
European Union Trade Policies
The primary objective of EU trade policy is to promote open, free, and fair trade between its members and the rest of the world. To this end, the EU has adopted several policy instruments, including tariffs, quotas, subsidies, and non-tariff barriers. Tariffs are taxes imposed on imports from outside the union, while quotas limit the amount of a certain good that can be imported (Titievskaia, 2019). Subsidies are financial contributions from the government to domestic producers to help them compete with imports. At the same time, non-tariff barriers are regulatory, technical, or legal measures that limit the ability of imports to enter the market (European Union, 2022b).
The EU has developed many trade policies over the years, including the Common Market, the European Economic Area (EEA), and the Customs Union. The Common Market was established in 1957 and allowed for the free movement of goods, services, and capital between the EU member states (Kenton, 2019). The EEA was established in 1994 and allowed the free movement of people, goods, services, and capital between the EU and the countries in the European Free Trade Association (EFTA). The Customs Union was established in 1995 and ensures that goods entering the EU are subject to the same tariffs and taxes regardless of origin (Kenton, 2019).
The EU also has several trade agreements with other countries and regions. These agreements, known as Free Trade Agreements (FTAs), eliminate tariffs and other barriers to trade between the parties, allowing for a more open and efficient exchange of goods and services. The EU is currently party to more than 20 FTAs and is negotiating several additional agreements (World Trade Organization, 2019). The EU has several programs and initiatives to promote fair and sustainable trade. These include the European Market Access Strategy (EMAS), which provides assistance to EU companies in accessing foreign markets, and the European Development Fund (EDF), which helps to reduce poverty and promote economic development in developing countries (World Trade Organization, 2019).
The EU has adopted several measures to protect its domestic industries from unfair competition. These include anti-dumping measures, which prevent goods from entering the EU market at below-market prices and safeguard measures, which protect domestic industries from a sudden surge of imports. In addition, the EU works to promote free trade on a global level (Trade Defence Instruments, 2020). The EU is a signatory to the WTO and works with other countries to ensure that its trading partners respect the rules of the WTO. The EU also works with the African, Caribbean, and Pacific countries (ACP) to ensure that they benefit from the free trade rules of the EU. The EU also has several trade agreements with countries outside of the EU, such as the Trans-Pacific Partnership (TPP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (Trade Defence Instruments, 2020).
The Purpose of European Union Trade Policy
The purpose of EU trade policy is to create a single market in the EU with no internal barriers to the free movement of goods and services, capital, and people. The policy also seeks to promote the growth of the EU economy and to reduce poverty worldwide. The EU also seeks to promote global trade by negotiating trade agreements with other countries and regions (European Union, 2022b). Additionally, the EU’s trade policy is based on the four freedoms of the single market: the free movement of goods, capital, services, and people. All four freedoms are essential for the EU’s internal market functioning. The Common Commercial Policy (CCP) and the Common Agricultural Policy (CAP) implement the four freedoms.
The CCP is the cornerstone of the EU’s trade policy. It is designed to ensure that trade between the EU and the rest of the world is fair and open. The CCP establishes the rules and regulations that govern the EU’s trade relations with other countries and regions. The CCP sets out the EU’s trade preferences, such as tariff reductions, and helps to ensure that all EU countries abide by the same rules. The CAP is the second part of the EU’s trade policy. It is designed to ensure that the agricultural sector in the EU is competitive and provides secure markets for EU farmers (European Union, 2022b). The CAP sets out the rules and regulations governing agricultural products’ production, processing, and marketing. It also sets out the EU’s obligations under the WTO’s Agreement on Agriculture.
The EU’s trade policy also seeks to promote sustainable development. This includes commitments to reduce poverty, promote human rights, and protect the environment. The EU also seeks to promote good governance and the rule of law in countries with trade agreements. The EU’s trade policy constantly evolves to reflect changing global economic and political conditions (European Union, 2022b). The policy is regularly reviewed and updated to remain effective and relevant. The EU is committed to promoting free and fair trade and creating a level playing field for all its member countries and their citizens.
How does European Union Trade Policy Promote Between Member States
The European Union (EU) has long promoted successful trade between its member nations. Through its trade policy, the EU has helped to create a strong and unified market that has facilitated the growth of inter-state commerce. The EU’s trade policy has promoted successful trade between France, Spain, and Germany, three of the union’s largest and most influential members.
The EU has implemented various measures to ensure free and fair trade between member states. The most important is the Single Market, which enables goods, services, capital, and people to move freely between countries. This has allowed for the growth of export-led economic activity and has helped to create strong commercial links between member nations (European Parliament, 2019). By removing trade barriers and tariffs, the Single Market has also facilitated more efficient production and distribution of goods and services, leading to increased economic growth and prosperity across the EU, particularly Spain, France, and Germany.
The EU has also sought to promote competition between member nations. This has been achieved through competition laws, prohibiting anti-competitive practices and protecting consumers from unfair market practices (European Parliament, 2019). Furthermore, the EU has worked to create a level playing field for all member states by ensuring they can access the same markets and benefit from the same trading opportunities (European Union, 2022c). This has helped to reduce the risk of protectionist policies and has enabled member countries to benefit from greater competition and more efficient markets.
In addition, the EU has worked to foster greater cooperation between member states through its trade policy. This includes the development of the European Free Trade Association (EFTA), which allows for the free movement of goods and services between member states. This has enabled businesses to take advantage of economies of scale and has allowed for the growth of a strong and integrated European market (European Union, 2022c). Moreover, the EU has sought to promote greater economic integration through initiatives such as the European Economic Area (EEA), which has enabled member states to benefit from a single set of regulations and has enabled the free movement of people, goods, and services.
Additionally, the EU has worked to protect its member states from unfair trade practices by other countries. This has been achieved by implementing various measures, such as the Common Trade Policy (CTP). This has enabled the EU to negotiate preferential agreements with other countries and to impose tariffs and other trade restrictions to protect its markets (Press Corner, 2020). This has helped to ensure that the EU’s trade policies remain fair and consistent and has enabled member countries to benefit from the same trading opportunities.
Outcomes of EU Trade Policy
The outcomes of the EU’s trade policy, specifically by comparing the economic outcomes of intra-EU trade and outer-EU trade, are interesting. The EU’s trade policy is largely focused on fostering an open and liberalized trading environment, both within the EU and with its trading partners. Intra-EU trade has grown significantly over the past two decades and accounts for about one-third of all EU trade. This growth has been driven by eliminating most tariffs, eliminating quantitative restrictions on trade, and harmonizing technical standards and regulations (European Union, 2022c). This increased intra-EU trade has benefited the EU as a whole, as it has improved efficiency and competitiveness and increased the variety and quality of goods and services available to consumers. On the other hand, the EU’s trade policies towards non-EU countries are generally more restrictive. The EU has tariffs on imports from non-EU countries and has also implemented various non-tariff measures, such as quotas and anti-dumping duties. Furthermore, the EU has negotiated free trade agreements with many of its trading partners, which have improved market access for EU exporters and increased competition (European Union, 2022c).
The outcomes of the EU’s trade policy can be measured in terms of the economic gains made by the EU and its trading partners. The EU has seen significant gains from increased intra-EU trade, with the value of intra-EU trade increasing from €1.6 trillion in 2010 to €2.2 trillion in 2017. Furthermore, the EU’s exports to non-EU countries have also experienced strong growth, reaching €1.6 trillion in value in 2017. This growth has been largely driven by the EU’s free trade agreements, which have increased market access and improved the competitiveness of EU exporters. The outcomes are more mixed in terms of economic gains for the EU’s trading partners (WTO Annual Report 2021). On the one hand, the EU’s free trade agreements have opened up new markets and improved the competitiveness of non-EU exporters. However, the EU’s tariffs and non-tariff measures can also harm the competitiveness of non-EU exporters by reducing their access to the EU’s internal market (WTO Annual Report 2021). As a result, it is not easy to assess the overall economic gains made by non-EU countries as a result of the EU’s trade policy.
The outcomes of the EU’s trade policy have benefited the EU and its trading partners, although the economic gains have been greater for intra-EU trade than for outer-EU trade. The EU’s trade policy has helped to open up markets, increase competition, and improve the efficiency and competitiveness of both EU and non-EU exporters (WTO Annual Report 2021). However, the economic gains made by non-EU countries have been limited by the EU’s tariffs and non-tariff measures, which have reduced their access to the EU’s internal market.
EU Trade Policies from a Neoliberal or Liberal Perspective
The European Union (EU) has developed a range of trade policies driven by its core principles of liberalization and integration. From a neoliberal perspective, the EU’s trade policies are generally beneficial since they are geared towards furthering the economic interests of member states. The EU’s main objective is to create a single market for goods and services, where goods and services can move freely across member states, and the common external tariff is applied (José & Mariana, 2016). This brings down the cost of goods and services within the EU and provides greater access to markets.
The EU has also pushed for the liberalization of trade through the use of free trade agreements (FTAs). FTAs are designed to reduce tariffs and other barriers to trade between signatory countries, thus making it easier for firms to trade between countries(José & Mariana, 2016). This has the effect of increasing competition and reducing prices, which benefits both consumers and producers. In addition, the EU has advocated for removing non-tariff barriers to trade, such as regulatory and technical barriers. This helps reduce unnecessary costs associated with importing and exporting goods, ultimately benefiting both consumers and producers.
However, from a liberal perspective, the EU’s trade policies have been criticized for privileging the interests of large corporations over the interests of small businesses and consumers. For example, the FTAs that the EU has negotiated with other countries often contain clauses that give large multinational companies access to public procurement contracts and other forms of preferential treatment (José & Mariana, 2016). This can lead to an imbalance of power in the market, where large corporations have an advantage over smaller players, and consumers have less bargaining power. In addition, the EU has also been criticized for its lack of transparency and accountability in negotiating FTAs. This means that the public is often unaware of the details of the agreements, which can lead to policies that are out of step with the public interest(José & Mariana, 2016). Finally, the EU’s trade policies have been criticized for not considering the potential impact of trade on the environment. Removing tariffs and other trade barriers can increase the production of goods, which can have an environmental impact.
Limitations of EU Trade Policy
The EU comprises 28 distinct countries, each with its own set of rules and regulations. This means that the EU must balance the interests of its members when it comes to trade policy. As a result, the EU may be limited in its ability to make sweeping changes to its trade policy to benefit one member (Laroussilhe, 2019). This can create tension between members and lead to disagreements over handling certain issues. Also, the EU’s trade policy is limited because it is a regional bloc. This means that the EU’s trade policy is limited to the internal market of the member states. This can limit the EU’s ability to trade with non-EU countries. This can result in the EU’s trade policy being less effective than it could be (Laroussilhe, 2019).
Additionally, the EU’s trade policy is reliance on external trade agreements. The EU is a member of the World Trade Organization (WTO) and is a signatory to several bilateral and multilateral trade agreements. These agreements set the rules for international trade and are designed to promote free and fair trade. While these agreements provide a framework for trade, they can also limit the EU’s ability to negotiate more favorable terms for its members (Laroussilhe, 2019). This can be particularly true regarding trade disputes or disputes over tariffs or other trade barriers.
Further, the EU’s trade policy is limited because it operates within the framework of international law. This means that the EU must abide by the laws and regulations of its trading partners and comply with international trade agreements. This can limit the EU’s ability to make unilateral changes to its trade policy to benefit its members, as any changes must be negotiated with other countries. Also, the EU’s trade policy is based on the principle that free trade benefits everyone (Laroussilhe, 2019). This means that the EU is committed to eliminating tariffs and other barriers to trade. However, this can limit the EU’s ability to protect domestic industries and can lead to the EU’s trade policy being uncompetitive.
References
European Union. (2022). Aims and values. European-Union. Europe. eu. https://european-union.europa.eu/principles-countries-history/principles-and-values/aims-and-values_en
European Union. (2022b). Trade. European-Union. Europe. eu. https://european-union.europa.eu/priorities-and-actions/actions-topic/trade_en
Titievskaia, J. (2019). IN-DEPTH ANALYSIS. European Parliamentary Research Service. https://doi.org/10.2861/583720
Kenton, W. (2019). Economic Integration. Investopedia. https://www.investopedia.com/terms/e/economic-integration.asp
World Trade Organization. (2019). WTO | Understanding the WTO – Anti-dumping, subsidies, safeguards contingencies, etc. Wto.org. https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm
Trade defense instruments. (2020). Op.europa.eu. https://op.europa.eu/webpub/eca/special-reports/trade-defence-instruments-17-2020/en/
European Union. (2022b). Single market. European-Union. Europe. eu. https://european-union.europa.eu/priorities-and-actions/actions-topic/single-market_en
Press corner. (2020). European Commission – European Commission. https://ec.europa.eu/commission/presscorner/detail/en/IP_21_4481
TRADE POLICY REVIEW AN OPEN, SUSTAINABLE AND ASSERTIVE TRADE POLICY Trade. (2012). https://trade.ec.europa.eu/doclib/docs/2021/april/tradoc_159541.0270_EN_05.pdf
José Manuel Pureza, & Mariana Mortágua. (2016). The European Neoliberal Order and the Euro crisis: Blame it all on Germany? World Review of Political Economy, 7(3), 363. https://doi.org/10.13169/worlrevipoliecon.7.3.0363
Laroussilhe, O. de. (2019). New challenges for the European Union’s trade policy. Robert-Schuman. eu. https://www.robert-schuman.eu/en/european-issues/0502-the-eu-s-trade-policy-and-new-challenges
write