EU TRADE POLICY AND DEVELOPING COUNTRIES

1. EU TRADE POLICY AND DEVELOPING COUNTRIES • Overview -- Global trade-and-development scenarios; general priorities for EU trade policy -- EU in the WTO -- EU and bilaterals -- EU and low-income/least-developed countries -- Managing EU trade policy

2. EU TRADE POLICY AND DEVELOPING COUNTRIES • Global trade-and-development scenarios -- Crisis aftermath: anaemic West; bullish emerging markets; shift to the East

3. GDP Growth and Growth Estimates

4. World Trade Goods and Services

5. Trade Volumes

6. Growth in Industrial Production (2005-2009)

7. Growth in Merchandise Exports (2005-2009)

8. FDI inflows, global and by groups of economies, 1980-2008 (billions of dollars)

9. EU TRADE POLICY AND DEVELOPING COUNTRIES • Three scenarios for the world economy -- Reglobalisation -- Deglobalisation -- Anaemic recovery

10. EU TRADE POLICY AND DEVELOPING COUNTRIES • Reglobalisation Strong and adaptive economic systems – and efficient stimulus packages – shortened the crisis and speeded up recovery -- Recovery cycle; then strong globalisation -- Similarities with the late 1990s rather than the noughties -- Geographical equalisation of trade and growth -- Horizontal and vertical integration -- Trade and FDI expansion drivers of growth -- Technological development and policy liberalisation

11. EU TRADE POLICY AND DEVELOPING COUNTRIES • Deglobalisation Cyclical deglobalisation succeeded by structural deglobalisation through policy interventions. -- Stimulus activities not effective; inflation; end to deflationary effect of globalisation -- Creeping protectionism enforced by new wave of factor market interventions at home; 1930s style fragmentation -- Short recovery cycle that ends when stimulus packages are phased out; new dip in 2012-2014 -- Trade and FDI never rebound fully; supply-chain collapse -- Spiralling protectionism -- Positive growth in China; Eursclerosis; US inflation cycle; negative growth in commodity countries

12. EU TRADE POLICY AND DEVELOPING COUNTRIES • Anaemic recovery -- A lost decade for trade and growth; creeping protectionism and structural problems keep the world economy at low growth rates -- Similarities with the 1970s and early 1980s -- Creeping protectionism and domestic market interventions -- Slow trade and FDI growth -- Globalisation angst -- The return of industrial policy -- China’s and India’s growth slows down (6%), OECD and ACP very low growth (+/- 1%)

13. Annual average growth of trade as part of GDP

14. Annual average growth of trade as part of GDP

15. EU TRADE POLICY AND DEVELOPING COUNTRIES • Anaemic recovery (cont.) -- Domestic crisis interventions (bailouts, fiscal stimulus): macroeconomic consequences cloud horizon for developing countries -- Return to Big Government: new interventions in product and factor markets distort competition -- Spillover to regulatory protectionism

16. Scenarios for the global economy and trade policy

17. Scenarios for the global economy and trade policy (cont.)

18. EU TRADE POLICY AND DEVELOPING COUNTRIES • Emerging protectionism: v. little up-front protectionism; rather creeping regulatory protectionism - Tariffs - Import licensing - Financial mercantilism - Subsidies - “Buy national” measures - Foreign-investment restrictions - Migrant labour - Anti-dumping duties - Standards protectionism, including climate change - China-bashing • Domestic economic policy and trade policy are linked: lessons from previous eras

19. EU TRADE POLICY AND DEVELOPING COUNTRIES • EU trade policy -- Link between Single Market and external trade policy -- Crisis aftermath: Single Market under stress; defensiveness abroad

20. EU TRADE POLICY AND DEVELOPING COUNTRIES • EU trade-policy priorities -- Must prioritise -- First priority: EU commercial interests -- Equal priority: Single Market – contain internal protectionism and further liberalisation/structural reforms

21. EU TRADE POLICY AND DEVELOPING COUNTRIES • EU in the WTO -- EU should lead initiative to conclude a v. modest Doha Round -- EU should lead strategic thinking on post-Doha priorities (market access, rules, flexible decision-making) -- Emphasise market access, rules and plurilateral agreements where economic gains are largest -- Development dimension is market access and rules, not exemptions, old-style S&D and aid (as in DDA)

22. EU TRADE POLICY AND DEVELOPING COUNTRIES • EU and bilaterals -- Prioritise key commercial partners -- Rhetoric but only half-reality of Global Europe -- USA, Japan and China -- Deep-integration FTAs; liberalisation and structural reform at both ends; open regionalism

23. EU (27) Trade Partners Goods, Excluding the EU

24. EU (27) Trade Partners Services, Excluding the EU Source: World Trade Organization, International Trade Statistics, 2009.

25. Stocks of foreign direct investment abroad, EU-27, 2006

26. Stocks of foreign direct investment in the EU-27, 2006

27. EU TRADE POLICY AND DEVELOPING COUNTRIES • EU and China -- Trade and investment patterns -- Tension and conflict; more so since the crisis -- EU priorities: contain China bashing (exchange rate and trade deficit); “micro” market-access priorities; more effective prioritising of the latter; limit zero-sum competition among member-states; limit intrusion of non-trade standards; strengthen dialogue (esp. HLD)

28. EU TRADE POLICY AND DEVELOPING COUNTRIES • EU and FTAs -- Deep-integration FTAs beyond ROK, Canada and Singapore?? -- Drop negotiations if only prospect is shallow, trade-light FTAs (e.g. India, ASEAN countries) -- Pursue non-FTA frameworks on selected issues, e.g. with Russia

29. EU TRADE POLICY AND DEVELOPING COUNTRIES • EU and low-income/least-developed countries -- Trade and investment patterns (e.g. EU-ACP): marginal for EU; very important for others -- Preferences (GSP, GSP+, EBA) and trade-related aid: limited tools for development; long record of mixed results and failure -- Limit linkage of non-trade conditions in trade agreements (including climate change) -- EPAs: cannot achieve regional-integration objectives; nor deep-integration FTAs; focus on border barriers; limit non-trade conditions

30. EU TRADE POLICY AND DEVELOPING COUNTRIES • Conclusion -- EU trade-and-development priorities: summary -- EU trade policy and the Lisbon Treaty: Commission and EP -- Challenge: prevent populist, protectionist slide in EU trade-policy making; prevent using trade as foreign-policy tool to export EU “values”