External Policies

1. External Policies Hiroaki Goto Takayuki Kato

2. External policies • Trade policies • Foreign and Defence policies • Development policies • The External Dimension of Internal policy • The Consistency and Representational problems

3. Tradepolicy • Economic and Trading strengths of the EU • Basic principle of trading policy • Three types of agreements • Policy processes and difficulties for CCP

4. Introduction for EU trade affairs • The member states act in common by CCT, CET, CCP for trading matters. • In trading forums the EU acts on most matters as a single bloc, which means that the EU is an extremely powerful world trading policy • CCT=Common Custom Tariffs • CET=Common External Tariff • CCP=Common Commercial Policy

5. Economic and trading strengths of the EU • 1, The combined GDP of the EU-27 in 2009 was about 13,000 billion euros, as compared with around 10,500 billion euros for the US. • 2, EU accounts for around one-fifth of world exports and imports (excluding internal EU trade), which is slightly more than the USA and much larger than Japan (which accounts for about 7 percent).

6. Economic and trading strengths of the EU • 3, The EU market, with almost 500 million people (about one –seventh of the world’s population), is much larger than both the US market , which numbers just over 290 million people, and the Japanese market, which numbers around 127 million. • 4, Many of the countries and groupings with which the EU negotiations on trade matters are heavily reliant on the EU market for their exports due to the geographical or historical linkage such as former colonies.

7. Basic Principle of Trading Policy Liberal trading policy =promoting the general liberalization of trade 1, the lowering of international customs duties 2, the removal of non-tariff barriers (非関税障壁） to trade.

8. Basic Principle of TradingPolicy • Case Study1: EPA negotiations between Japan and EU (Cited from　日経新聞） Japanese argument: wants EU to abolish 10% customs against cars from Japan or 14% customs against Televisions. In contrast, customs against Korean cars are being decreased gradually due to the FTA.( namely complaint against CET). EU argument:There are too many non-tariff barriers in Japan, which require European companies complicated procedures (namely Japan should deregulate its standard because the norms are much stricter than International ones.

9. Basic Principle of Trading Policy • However, opinions or profits relating with actions are not always consistent in EU • →another (behind liberal ideas) principle is ensuring that the consequences of this are not damaging for its member states. • Quiz1: Why is not the EU proactive for reducing the tariffs against Japanese cars despite the idea of liberal trading?

10. Basic Principle of Trading Policy • Case Study2:the battle between China and EU about anti-dumping duties. (Cited from Reuters 6/4, 2013) • Content:Solar Panels made in China is sold at radically cheap prices In the regions of EU. And EU decided to impose anti-dumping duties around 47% on Chinese Solar panels (It is as good as expeling this product from EU market). • Germany was against this decision→not all member states have same ideas on trading matters in many cases.

11. Three types of agreements • 1, Tradeagreements • 2, Trade and economic cooperation agreements • 3,Association agreements

12. Trade agreements • These are based on Article 207 TFEU (may be preferential or non-preferential in kind)which obliges the EU member states to operate a common commercial policy(CCP) • But, they are all subject to the framework of trading rules within WTO, which prohibits preferential agreements unless waivers(giving up rights) are negotiated. • Lisbon Treaty strengthened the EU’s position in respect of negotiating trade agreements by explicitly listing services, intellectual property and foreign direct investment in Article 207 and giving them treaty status as exclusive Union competences (Liberal side)

13. Trading Agreements • ~Reaction to trading agreements from member states From the early 1990s in particular the commission campaigned for the rapidly expanding trade areas of services and intellectual property to be located within the framework of Article 133. →But, due to the sensitivity of many matters in these areas , the member states preferred to interpret Article 133 narrowly and edged towards a broader approach only slowly.

14. Trading Agreements • ~As the result of this gap among the EU~ • ☆Lisbon Treaty (protection side) so as to provide a measure of continuing national protection, unanimity (rather than the normal Article 207 provision of QMV was retained in the Council for the taking of decisions in especially sensitive areas.

15. Trade and economic cooperation agreements • The Treaty base of these agreements depends on their precise nature, but there is usually some combination of Article 207 and at least one other article. • The number of trade and cooperation agreements has increased enormously over the years and their scope has steadily expanded. • At their core are trade preferences of various kinds and usually also assistance of some sort from the EU to the other signatories.

16. Trade and EconomicCooperation Agreements • In some cases, as with partnership agreements with states such as Georgia, Moldova and Ukraine free trade is an eventual objective • Political conditions (usually concerning human rights and democratic processes) have routinely been part of cooperation agreements.

17. Association agreements • These are based on Article 217 TFEU, which states that “The Union may conclude with one or more third countries or international organizations agreements establishing an association involving reciprocal rights and obligations, common action and special procedure”. →typically, association agreements include highly preferential access to EU markets, the prospect of a free trade are eventually being formed between signatories, economic and technical cooperation of various sorts, financial aid from the EU, political dialogue (in some cases) the prospect of the associated countries eventually becoming the member of EU

18. Association agreements • There are currently three broad categories of negotiating association agreements with the EU. • 1, Countries that are seeking and have realistic prospects of EU membership. • 2, Mediterranean states that constitute part of the EU’s Mediterranean policy • 3, non-EU members of the European Economic Area(EEA)

19. Association agreements Countries seeking EU membership: Turkey ,Western Balkans such as Albania, Bosnia-Herzegovina, Croatia, Macedonia, Montenegro and Serbia. These western Balkan states are part of the EU’s Stability programme which includes association agreements for supporting internal reforms and development. The agreements explicitly hold out the prospect of future EU membership and very much part of a pre-accession strategy that is designed to assist economic liberalization, market adjustment and political democratization.

20. Congratulations • Croatia will be a 28th EU member from 7/1

21. Association agreements • Mediterranean States: • Mashreq and Maghreb countries are also included. These countries are part of the EU’s Mediterranean policy. The prospect of EU membership is not part of these association agreements

22. Association agreements • Non-EUmembers of EEA • Iceland, Norway and Liechtenstein • The EEA is the deepest of the EU’s trading agreements in that it involves not only free trade in goods but also extends the EU’s other so-called freedoms (of services, capital, and people) to the three EEA states . =the removal of non-tariff barriers (Liberalization)

23. Policy process and difficulties for CCP • Trade agreements used to be the responsibility of the Commission and the Council, but Lisbon Treaty brought the EP very much onto the decision making stage.t • 1, the adoption of legislative measures defining the framework for implementing the CCP were subject to the ordinary legislative procedure under which the EP is a co-decision maker with the Council. • 2,the EP was given significantly greater powers in respect of the negotiation and contraction of trade agreements , including needing to give its consent before agreements can be ratified

24. Policy process and difficulties for CCP • The powers of and the relations between and within the EU institutions in connection with the making of trade agreements are such that tensions of various sorts by no means uncommon. Four areas cause particular difficulties. • 1, the power balance between the Council and the Commission can be very delicate, with the Council trying to ensure that the commission remains under its control and the commission wanting and needing enough manoeuvrability to enable it to be an effective negotiator.

25. Policy process and difficulties for CCP • ２, the different national interests and preferences of the member states can create difficulties in the Council. →France, Italy, Spain and Greece tending to favour a measure of protectionism →Germany and the UK tending more towards trade liberalization

26. Policy process and difficulties for CCP • 3, problems can arise within the Commission with disputes between Commissioners and between DGs about where policy responsibilities lie and who has a legitimate interest in particular external trade policies and agreements. • 4, until the Lisbon Treaty MEPs were dissatisfied that the Parliament had no automatic right to be consulted, let alone to insist that its views be considered, in connection with trade agreements.

27. Policy process and difficulties for CCP • As for the making of cooperation and association agreements, there are three ways in which their decision-making processes differ from trade agreement decision-making processes. • 1, unanimity in the Council is more common, with it being a requirement for all association agreements and also for cooperation agreements that cover areas for which unanimity is required for the adoption of internal rules.

28. Policy process and difficulties for CCP • 2, Because cooperation and association agreements have a broader coverage than trade agreements, more policy actors(in the commission, Council and EP) are necessarily involved. • For example, if a CFSP element is in an agreement the High Representative and the Commission’s External Relations DG are amongst those with an involvement , as is the EP’s Foreign Affairs Committee.

29. Policy process and difficulties for CCP • 3, the wider range of policy issues included in cooperation and association agreements means there is more room for cross-policy ‘trading’ and haggling between EU actors • For example, the EP has long pressed the importance of the political dimensions of association and cooperation agreements and has often sought to pressurize the Commission and the Council to give these dimensions greater attention. (to be continued)

30. Policy process and difficulties for CCP • Where it has been available, the EP’s power to block agreements has sometimes been threatened, and occasionally has been imposed, as a protest against insufficient attention being given to lack of democracy and/or abuse of human rights in states with which agreements are proposed. • So, the EP withheld its assets from the proposed EU-Turkey customs union which was framed within the association agreement due to concerns about the human rights situation in Turkey

31. Summary of Trade policy • Trading policy is highly affected by the principle idea of liberalization (including political conditions such as democracy, human rights etc). • EU members take common actions for trade areas. • There are also conflicts between the EU institutions or member states because of differences of profits or values. (for example, liberalization vs protectionism) • Trade is a measure of exporting not only products but also EU’s ideal concepts.

32. Development Policies • Policy Content • Policy Process

33. Introduction for development Policy • The EU and its member states are major actors in international development policy. • Evidence1: the EU’s member states provide 45% of all international development aid while EU itself provides another 10%. • Evidence2: in the related area of international humanitarian aid, the EU’s member states provide about 25% of the total and the EU provides around 30%.

34. Policy Content • EU development Policyhas ‘as its primary objective the reduction and, in the long term, the eradication of poverty’ (Article 208 TFEU). →please check the blue part of p394 • Goals and principles underlying EU development policy should be based on respect for human rights, fundamental freedoms, democracy, and the rule of law.

35. Policy Content • Why is the EU proactive for assisting undeveloped countries? • Reason 1: historical in that some EU countries, notably France and UK, have long established ties with parts of the developing world as a result of their colonial past. • Reason2: moral in that EU governments believe something should be done about world poverty and hunger. • Reason3: economic in that developing countries account for 30 % of EU exports, and the EU is highly dependent on the developing world for products such as rubber, copper and uranium.

36. Policy Content • How does the EU assist developing countries? 1, Generalized Preferences: 176 developing and vulnerable countries are given preferential trading access to the EU market in the form of the reduction and removal of tariffs. 2, Food aid: Foodstuffs are sent to countries with serious food shortage. 3, Emergency aid: Aid of an appropriate sort is made available to countries stricken by natural disasters and other crises. 4, Aid to non-governmental organizations: The EU makes available aid to projects sponsored by non-governmental organizations in a number of developing world countries.

37. Policy Content • In addition to four general forms, EU provide assistance and aid to countries with which it has special relationships by contracting economic, trading, technical and financial cooperation agreements. • Cotonou Partnership Agreement , which links the EU with 79 African, Caribbean and Pacific(ACP) countries (most of which are countries with which at least one member state has historical links, most commonly as colonial power).

38. Policy Content The Cotonou Agreement coutries with many of Lome’s core features , including: duty-free access to the market for virtually all ACP export; schemes to stabilize export earnings ; and the European Development Fund(EDF),which provides financial assistance for development projects in ACP countries. So, do you prize the activity of the EU?

39. Policy Content • The issue of the change the Cotonon agreement involved: (the main changes are referred p395) 1, many ACP states have not improved their economic independence and are not becoming properly integrated into the world economy. 2, WTO pressures arising from the fact that the non-reciprocal and preferential nature of the trade aspects of Lome/Cotonou are incompatible with WTO rules.

40. Policy Content • Where is the Development aid financed from? 1, EDF is financed by the EU budget (around 4% of budget). Half of this aid is used to provide financial assistance to non-ACP countries and about half is used for food aid purposes. 2, EDF is funded by special contributions from the member states. What do you think about the financial source and the capacity of EU for Development Policy?

41. Policy Content • The issue of Development Policy: 1, Strains have sometimes arisen between member states and between member states and EU institutions because there are different priorities and interests between the states. →French: neo-colonial. Italy: more commercial approach. UK: stresses good governance Nordic states: focus principally on the alleviation of poverty.

42. Policy processes • The most important players are the Foreign Affairs Council, the Commissioner for Development ,the Development DG, the EP Committee on Development . • Decision-making procedures→depends on the type of decision(so complicated). 1, When the Council simply intending to issue a declaration or a resolution on a matter, it is not obliged to consult EP and can move at its own pace 2, If a trade-only agreement is expected, Article 207 applies=QMV can be used in the Council and the EP has the power of consent. (There are much more cases)

43. Summary of Development Policies • The EU contributes to the matter of development (though there are many issues to improve). • EU development policy is conducted alongside national policies (Unlike with trade policy, EU does not have exclusive competence in the area of development policy)=the states are much more prominent in respect of financial assistance. • Development Policy is based on liberal principle of EU

44. Foreign and Defence Policies • Objections According to the Treaty on EU (TEU), “The Member States”shall ・support the Union‘s external and security policy actively ・work together to enhance and develop their mutual solidarity

45. Foreign and Defence Policies • Resources ・The EU has 27 member states, including major powers (the U.K., France, Germany and Italy) ・The U.K. and France have nuclear weapons ・Two of the five permanent members of the UNSC (UK and France)

46. Foreign and Defence Policies • Military Expenditures in 2010

47. Foreign and Defence Policies • Problems 1. EU ≠ a state 2. Unwillingness to lose power 3. Different views on Foreign issues

48. Foreign and Defence Policies • Foreign Policy ・the EU was not so much influencial on political and security matters. →Unlike other policy areas, the member states were reluctant to adopt the normal decision-making process on foreign policy. ・However, this situation has been changing since the early 1990s.

49. Foreign and Defence Policies • Foreign Policy 1. The end of the Cold War International relations became highly fluid (not simply divided into two powers, East or West). →Increase of the significance of the EU to manage issues on European countries

50. Foreign and Defence Policies • Foreign Policy 2. German Unification Increased the significance of Germany and other East European countries →Not only economic but also foreign policy became needed