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The European Union as a Global Economic Actor

The European Union as a Global Economic Actor. James A. Piazza EU Workshop: “Globalization, Democratization and the European Union” University of North Carolina at Chapel Hill May 11, 2002. Methods of Teaching. • Use of Political Science Theory • Use of Descriptive Statistics

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The European Union as a Global Economic Actor

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  1. The European Union as a Global Economic Actor James A. Piazza EU Workshop: “Globalization, Democratization and the European Union” University of North Carolina at Chapel Hill May 11, 2002

  2. Methods of Teaching • Use of Political Science Theory • Use of Descriptive Statistics • Use of Cases

  3. Features of the European Union • “Deepness” of Integration • Strength of Institutions • Integration has been Incremental • National Sovereignty Preserved • National-Level Politics Is Still Important

  4. Questions • How “deeply” integrated is the EU? • “Deep” compared to what? • How do we measure “deepness” of integration? • How does “deepness” affect international politics?

  5. Original Framework Neo-Functionalism = Supranational policy coordination in one area “spills over” into other areas, creating demand for more supranational policymaking, creating supranational political actors and driving further integration. Haas (1958), Lindberg (1963)

  6. Rejoinder Framework Neo-Realist Intergovernmentalism = Primary motivator for further integration remains national governments. European Union institutions still dominated by national governments. Power remains with European Commission. Millward (1994); Moravcsik (1995)

  7. Synthesis Framework Multi-Level Governance = Supranational collective decision-making undermines state sovereignty by fragmenting and spreading decision-making across levels and actors. Transnational actors are free to “shop” for policies they prefer at multiple levels Marks, Scharpf, Schmitter and Streeck (1996)

  8. “Deep” Compared to What? :Comparing International Trade Regimes European Union (EU) = 15 signatories of Maastricht Treaty NAFTA = 3 signatories of North American Free Trade Agreement APEC = 21 members of Asia-Pacific Economic Cooperation Mercosur = 6 members of customs union of South America

  9. EU NAFTA APEC Mercosur Austria Canada Australia Argentina Belgium Mexico Brunei Bolivia Denmark U.S. Canada Brazil Finland Chile Chile France China Paraguay Germany Hong Kong Uruguay Greece Indonesia Ireland Japan Italy S. Korea Netherlands Malaysia Portugal Mexico Spain New Zealand Sweden Papua New Guinea U.K. Peru Philippines Russia Singapore Thailand U.S. Vietnam

  10. Characteristics of Trade Regimes EU = Multilateral Free Trade Area for 15 States in 1993 Common Currency, Monetary Policy for 12 states Free Movement of People Within Area 5 Institutions NAFTA = Multilateral Free Trade Area by 2008 Side Agreements on Labor, Environment, IPR No common external tariff policy APEC = Voluntary Unilateral Sectoral Liberalization with Promises of Multilateral Free Trade Area by 2020 Discussion of Harmonization of Standards Mercosur = Multilateral Lowering of Trade Barriers in 1995 Average Tariff Levels Dropped from 26% to 12% No Common External Tariff Policy

  11. Basic Indicators, 1999 __________________________________________________ RegimePopulationGDP Per CapWorld GDP (millions) ($ US) % EU 379 22,176 27.8 NAFTA 401 24,426 32.4 APEC 2,123 8,284 58.2 Mercosur 236 4,872 3.8 __________________________________________________ Source: World Bank (2000) World Development Report

  12. Economic Performance and Social (In)equality ______________________________________________________ GDP Growth Unemployment GINI Index 1990-99 (%) 2000 (%) 2000 EU 2.5 8.3 29.9 NAFTA 2.8 4.3 42.0 APEC 4.9 5.7 41.9 Mercosur 4.2 10.4 52.0 ______________________________________________________ Sources: World Bank (2000) World Development Report; International Labor Organization (2001) Yearbook of Labour Statistics.

  13. Trade and Trade Dependency, 1999 ___________________________________________________ Trade as % % of Import of GDP World Trade Dependency EU 63.7 39.8 -1.88 NAFTA 28.5 20.7 1.70 APEC 28.9 37.8 1.77 (-1.48†) Mercosur 22.9 2.0 2.37 ____________________________________________________ † = excluding U.S. Sources: World Bank (2000) World Development Report; APEC Website

  14. Intra-Regime Trade, 2000 _______________________________________________ Internal TradeInternal Trade as ($US, bn) % of Total Trade EU 448.8 60.6 NAFTA 2,790.2 32.2 APEC 4,192.2 68.6 Mercosur 37.4 17.9 _______________________________________________ Sources: Eurostat (2001) External and Intra-European Trade; OECD (2001) Monthly Statistics on Trade; World Bank (2002) Data.

  15. Trade Conflict Between the EU and the U.S. • Doha Meeting of the WTO (November 2001) • Bush-EU Steel Tariff Row (March-May 2002)

  16. Doha 2001 Background: • Failures of the WTO Meeting in Seattle • Past Trade Conflict Between U.S. and EU Over Agriculture Subsidy and Anti-Dumping Curbs James Wolfensohn (World Bank): UK gives $50 billion in aid to Developing World; gives $350 billion in subsidies to British farmers • Developing World Resistance to Environmental and Labor Standards

  17. Agreements Made at Doha • Agreement of New Trade Round to be Completed in 2005 • EU Agreed to Relax Agricultural Subsidies (No Strong Language) • EU Insisted Investment, Competition and Environmental Rules be on the Table in Next Round • U.S. Agreed to Relax Anti-Dumping Curbs • India, Speaking for Developing World, Retained Veto Power Over Protectionism in the Guise of Environmental Standards • Developing World Obtained Right to Subsidize Pharmaceuticals During Healthcare Emergencies

  18. Political Results of Doha • EU Emerged as Preeminent Actor Promoting World Trade • U.S. Overshadowed • EU’s Pascal Lamy Visited Greenpeace Ship (Rainbow Warrior) • Trade Unions Excluded from Meetings • ICFTU Fails to Extract Agreement for WTO to Work More Closely with ILO • AFL-CIO “Threatened” By EU’s Offer of Textile Concessions to Developing Countries • Jose Bove, “[Doha Meeting] is a victor of rich over poor.”

  19. Steel Conflict, 2002 Background • WTO Ruling in Favor of U.S. over EU Trade Barriers for Bananas and Beef • Conflict Over U.S. Use of Antidumping Investigations 2001: 348 2000: 251 1990’s: 232 per year on average China and EU are 1st and 2nd Most Frequent Targets • Crisis in the Steel Industry

  20. Job Losses in the Steel Industry, 1975-2000 _______________________________________________ Jobs Lost% (Thousands) Germany 926 74.5 France 197 69.9 United Kingdom 379 69.2 Italy 167 67.5 Belgium 491 57.9 United States 431 55.4 _______________________________________________ Source: International Labor Organization (2001) Yearbook of Labour Statistics

  21. Timeline of Steel Conflict June: President Bush orders probe of steel industry March 6: U.S. Trade Representative Robert Zoellick announces steel tariffs of up to 30% March 7: EU, Japan, Korea, China, Switzerland and Norway charge that tariffs violate WTO rules • arbitrarily applied to all steel products • not in response to sharp increase of imports • U.S. fails to demonstrate job loss is due to imports • goes beyond remedy of injury caused by imports

  22. Timeline cont. March 27: European Commission retaliates • Authorizes 14.9 to 26% tariffs on U.S. steel • Demands U.S. $2 billion per year in compensation • Renews objections to U.S. withdrawal of Kyoto • Announces plans to implement U.S. $3 billion satellite navigation system opposed by U.S. Le Monde: “[Bush] defines good and evil in accordance with his own interests” La Libre Belgique headline: “How Dare He” March 27: Reaction of Zoellick • Announces plans to complain to WTO • Commission has reacted before evidence of import surge

  23. Timeline cont. April 12: Paul O’Neill (U.S. Secretary of Treasury) announces that tariffs may be lifted for some EU companies Rumor that Tony Blair may cut a separate deal with U.S. Dept. of Commerce raises ire of Lamy General Union of Britain (GMT) begins to lobby Blair’s Trade and Industry Secretary, Patricia Hewitt April 20: Grant Adonas (U.S. Undersecretary of Commerce offers at Paris OECD meeting to lift tariffs against producers that “discipline” production. EU counteroffer: U.S. must discipline anti-dumping

  24. Timeline cont. May 7: EU member states unanimously approve sanctions • Immediate tariffs against U.S. steel • 100% tariffs against “strategic” non-steel products: Citrus fruits Textiles Rice Steel (under 30%) = Florida = North and South Carolina = South Carolina = Pennsylvania, Ohio, West Virginia Will be implemented by mid-June Germany and Sweden express concern that “tit-for-tat” will spark trade war

  25. States and Domestic Actors Division of EU Member States: • France, Italy, Spain, Portugal and Greece support sanctions • Germany, UK and Sweden have reservations • Many British companies may be exempted Confederation of British Industry (CBI) and Bundesverband der Deutschen Industrie (BDI) issue statement: • “An escalation of the dispute in in nobody’s interest • Urge Commission to refrain from overt retaliation, but support compensation

  26. Bibliography Haas, Ernst (1958) The Uniting of Europe: Political, Social and Economic Forces 1950-1957. Stanford University Press. Lindberg, Leon (1963) The Political Dynamics of European Integration. Stanford University Press. Marks, Gary, Fritz Scharpf, Philippe Schmitter and Wolfgang Streeck (1996) Governance in the European Union. Sage. Millward, Alan (1992) The European Rescue of the Nation-State. Routledge. Moravcsik, Andrew (1995) “Liberal Intergovernmentalism and Integration.” Journal of Common Market Studies. 33:611-28.

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