Europe and the World

1. Europe and the World

2. Topics • External Trade Relations • Foreign Policy • Preferential Relations • Special Matters

3. External Trade Relations • The concept of “civilian power” • The record of external trade • Focal points • Common external tariff (CET) • Other measures for liberalization of commerce • Negotiations in international trade organizations (GATT, WTO since 1995)

4. External Trade Relations (cont’d-1) • The special issue of agriculture • Institutional aspects

5. External Trade – RecordEU Trade by Trading Partners

6. External Trade – Record (1) • As % of GDP, EC/EU external trade has not changed much (about 10%) • Strong regional concentration • EFTA trade largest component before accession of former EFTA members • ¾ of total trade of average EU member consists of intra-European trade

7. External Trade – Record (2) • Trade with Developing Countries • Big decline since early 1970’s oil crisis • Biggest decline for ACP countries • Noteworthy increase for Asian NIC’s and China • Import penetration into EC/EU • Machinery and transport equipment • Dynamic high technology sectors (telecommunications, data processing, etc.)

8. External Trade – Record (3) • Strong EU export presence in: • Chemicals and steel • High-end textiles and clothing • Self-sufficiency in food – role of CAP • Growth areas • Services • Financial markets • Internationalized production (intra-industry and intra-firm trade)

9. External Trade – CET and Other Measures • Foundation for EC/EU commercial policy and “international actor” role • The central role of the Commission as the “one voice” in external commercial activity • Limited to trade in goods • Other measures: quotas, export policy, anti-dumping, anti-subsidies

10. External Trade – International Organizations and Forums (1) • GATT and its “Rounds” (eg Kennedy, Tokyo, Uruguay- 1986-94) • The Commission as single voice for EC/EU countries • Items of GATT trade liberalization • % reduction in tariffs: 6% CET for manufactured goods in Tokyo Round • Elimination of quantitative restrictions (QR)

11. External Trade – International Organizations and Forums (2) • Growing attention to NTB’s (Tokyo, Uruguay) • The thorny problem of agriculture • Left outside of original GATT framework at USA insistence • Bone of contention between USA and EU in the 1990’s

12. External Trade – International Organizations and Forums (3) • World Trade Organization (WTO) • Successor to GATT, founded in 1995 as a result of the Uruguay Round • Strong EU commitment to WTO agenda and methods • Strong multilateral emphasis • Ongoing negotiating forum • Code of conduct • Strengthened dispute-settlement and surveillance mechanisms

13. External Trade - Agriculture • CAP as centerpiece of both internal market integration and external trade policy • The technical components of CAP • 3 core elements: levy, price, financing • “Guarantee” (price support) and “Guidance” (structural funds) • Politically expedient high price (for wheat especially) caused huge surpluses and very expensive price support

14. External Trade–Agriculture (2) • External implications of CAP • Heavily subsidized agricultural exports from EC/EU countries • 1975-1984 exports grow 256%, imports only 14% • Developing countries plus: USA, Canada, Australia, New Zealand hit hardest • Need for reform of CAP – both internal and external imperative

15. External Trade–Agriculture (3) • “The 1992 reform of the CAP, leading to a substantial reduction in intervention prices, opened the way for an EU-US agreement which in turn eliminated one of the main stumbling blocks of the Uruguay Round.” (Tsoukalis, p. 235)

16. External Trade - Institutions • DG’s

17. European Foreign Policy (1) • Historical Precedents • The failed initiative of the European Defense Community (EDC) 1952-54 • A French initiative (Pleven Plan) motivated by the issue of West German re-armament • Military integration: common army, budget, and institutions • Idealized as a rapid move towards political union (European Political Community) • Dramatic rejection by French National Assembly

18. European Foreign Policy (2) • West European Union (WEU) 1955 • Weak (loose intergovernmental) structure • Includes Britain • Redundant with NATO, which overshadows it • Nonetheless serves to coordinate or synchronize European cooperation within NATO • A way for France to “stay connected” after withdrawing from NATO military command • Over time, especially in the 1990’s, emerges as a new possibility for coordinated defense

19. European Foreign Policy (3) • European Political Cooperation (EPC) • Cooperation among Member States on foreign policy through increasing mutual consultation and selective identification of common positions • Operates outside of EC structure • Intergovernmental and voluntary • A “club” of foreign policy experts in EC governments who readily achieve a union of views and perspectives where crucial national interests do not clash

20. European Foreign Policy (4) • Highlights of common positions • Soviet invasion of Afghanistan 1979 • Polish Solidarity movement in 1981 • Falklands War and Argentina 1982 • South Africa in 1986 • “Clout” in two major global contexts • Middle East • Conference on Security and Cooperation in Europe (CSCE) – Helsinki 1975 (includes USSR) • Assessment: not insignificant, but uneven and with limited results

21. European Foreign Policy (5) • The Big Innovation: Common Foreign and Security Policy (CFSP) • An outgrowth of concern for “consistency” in external policy actions of EC and EPC • First steps towards institutional congruence taken in SEA • CFSP as “within the framework” - an outgrowth of IGC on Political Union in 1990

22. European Foreign Policy (6) • CFSP (cont’d) • CFSP as a “late addition” to Political Union (focus of latter is institutional reform, especially the role of Parliament) • CFSP as an outcome of Mitterrand-Kohl collaboration: global vision of European foreign policy, without clear details • CFSP as shaped by the Gulf War, with a priority on security and defense

23. European Foreign Policy (7) • Maastricht creates CFSP, as CFSP shapes the EU • The “pillar idea” as a result of CFSP • CFSP becomes “part of” (integral to, within the framework of) EU • CFSP structure • European Council as the key body – determines foreign and security policy and general guidelines

24. European Foreign Policy (8) • CFSP structure (cont’d) • Council of European Union (Council of Ministers) takes necessary decisions to implement common policy and guidelines • Political Committee, Political and Security Committee, Military Committee • Secretary General of the Council = High Representative for the CFSP assists Council and acts on its behalf • European Union Military Staff (military experts) attached to High Representative • Presidency of the EU: represents EU in CFSP externally

25. European Foreign Policy (9) • CFSP Procedure • Initiative belongs to: Presidency, Member State, High Representative • Policy instruments: common position, joint action, decision, conclusion of international agreements, declaration • Example: joint action on Union Monitoring Mission in the Federal Republic of Yugoslavia (adopted 2000) • Decision-making • Unanimity as norm, and obligatory for military or defense matters • “Constructive abstention” allowed • Qualified majority voting (with a higher majority threshold than in EC decisions) for implementation by Council of Ministers

26. European Foreign Policy (10) • Relationship to EC (“economic” pillar of EU) • Commission participates as integral member of CFSP bodies, but without special powers as in the EC. However, like any Member State, it can submit initiatives to CFSP • Directorate-General for External Relations of the Commission has specialized role in preparing work of the Council, in follow-up to its actions, and especially in coordinating relationship to international organizations

27. European Foreign Policy • CFSP