EU as a regional integration organisation (“REIO”) HEI, Geneva July 22, 2008

1. EU as a regional integration organisation (“REIO”)HEI, GenevaJuly 22, 2008 Stefan D. Amarasinha European Commission Directorate-General for Trade

2. Menu for today’s lecture • The long and winding road towards the EU – the milestones, main developments and major setbacks • The EU as an actor in international trade and economic relations • “Global Europe” and the Economic Partnership Agreements (“EPAs”) • Concluding thoughts

3. The long and winding road • May 13, 1945 - Victory in Europe - WWII • May 9, 1950 - Schuman Declaration • March 19, 1951 - ECSC established • June 1-2, 1955 - Messina meeting • March 25, 1957 - EEC and EURATOM • 1960 - EFTA etablished • 1961 - UK applies to join EEC • 1962 - Negotiations on political union abandoned

4. The long and winding road • 1962 - CAP operational • 1963 - De Gaulle rejects UK membership • 1965 - Merger Treaty bringing together EEC, ECSC, and EURATOM • 1966 - Luxemburg Compromise • 1967 - New UK (and Irish) application - new De Gaulle veto • 1968 - abolition of EEC customs duties - common external tariff. Beatles’ “White Album”

5. The long and winding road • 1970 - start of accession negotiations with Denmark, Ireland and UK • 1972 - accession treaties signed • 1973 - an EC of 9 members - EC granted exclusive responsibility for trade matters • 1985 - Frenchman Jacques Delors becomes Commission President • 1987 - Single European Act into force • 1990 - Stage one of EMU

6. The long and winding road • 1991-92 - Maastricht Treaty on political union • 1992 - Danes vote “No” (“Nej”), France and Ireland vote “Yes”. GBP forced out of the ERM. Edinburg compromise to allow Denmark four opt-outs. Denmark wins EURO 1992. • 1993 - Danes vote “Yes” (“Ja”) - Maastricht enters into force • 1994 - Stage two of EMU • 1998 - Treaty of Amsterdam • 2001 - Treaty of Nice signed

7. The long and winding road • 2004 - Constitutional Treaty signed • 2005 - France and Netherlands vote “No” • 2007 - Revised Lisbon Treaty • 2008 - Ireland votes “No” • 2008 - What now?

8. Different perspectives • Russell Bretherton - predicting what was yet to follow and has happened? • Alan Clark - clearly not the biggest fan! • Chales Wyplosz - game plan after the Irish “No”? Dream a new dream?

9. EU as a regional integrator • Gradual strengthening of powers for the EU, transfer of sovereignty from EU MS • Trade and agriculture the obvious areas • CFSP still an issue - schizophrenia even • EU MS calling for EU to do more on global stage, but how? And by what means?

10. EU - trade • Art. 133 - “common commercial policy” = exclusive EU competence • 133 Committee - “consultative body” • Gradual strengthening of competence - see also opinion 1/94 • Now also services, investment and IPR • Commission acts on behalf of EU and EU MS, based on mandate and reporting

11. EU - international trade • EU is a main player in (and supporter of) the WTO (both the EC and all EU MS are WTO Members) • Now active not only multilaterally (WTO), but also regionally (e.g. Mercosur and GCC) and bilaterally (e.g. India and Korea) • Pursuing similar or different agendas depending on setting? Domestic political sensitivities. NGOs, etc. E.g. EPAs.

12. “Global Europe” • Global Europe strategy is part of the renewed Lisbon Strategy for Growth and Jobs - key contribution to its external dimension. • Making the Single Market more responsive to the global context is one of the main priorities of the Single Market Review. • Expand the “competitive space” of the Single Market beyond the EU borders, open and expand the “regulatory space” of the EU to the outside world.

13. “Global Europe” • “There are two critical and linked requirements for European competitiveness. Fist, having the right internal policies, which reflect the external competitive challenge and maintain our openness to trade and investment. Second, ensuring greater openness and fair rules in other markets, in particular in our future trading partners. Both must be underpinned by transparent and effective rules, domestic, bilateral and multilateral.” (Global Europe, p. 4)

14. “Global Europe” • When launched in October 2006 EU was • Primary exporter of merchandise globally • Second importer of merchandise globally • Source of EUR 152.2 billion FDI • Host to EUR 69.8 billion FDI • = what is does and any change in policies internally and externally will matter to the outside world.

15. “Global Europe” • Rapidly changing business environment - increased competition from BRICs, EURO-USD exchange rate, high oil price, etc. • Markets outside of Europe growing much faster than OECD markets – OECD estimates European GDP will grow at around 1.7% this year, US GDP at less than that. • China and India could both grow at 8-10%, the rest of the emerging economies at around 6%. • BRICS currently represent about 15% of global GDP: by the middle of the 2020s they could represent half. Obviously no guarantees, but…

16. “Global Europe” • Global supply chains - less trade in finished products - more trade in intermediate products which then form part of finished products • Scarcity of raw materials, e.g. iron ore • Outsourcing and domestic backlash • Rising protectionism - recent Economist Intelligence Unit survey showed that more than 50% of senior executives thought that protectionism was increasing in developed markets, with only 16% believing that it was decreasing. • = need for global vision and approach

17. “Global Europe” • Main EU priority is to increase international trade to ensure sustained economic growth and jobs - reject protectionism at home and create (and ensure observance of) opportunities abroad: • Continued commitment to DDA • Bilateral and regional initiatives • Use of various instruments to ensure that obligations are duly observed • Continued importance of the “development dimension” of trade for the DCs and LDCs, both in the DDA, bilaterals and the EPAs

18. “Global Europe” • WTO - Main priority remains boosting the international trading system and supporting development through the successful conclusion of the DDA. • No EU retreat from multilateralism. WTO remains the most effective way of opening markets globally. EU helped build it. EU benefits from it. EU will assume its responsibility. • EU staunch defender of multilateralism, e.g. climate change, human rights and use of force.

19. “Global Europe” • Bilateral and regional initiatives also play an important complementary role, e.g. with China. Tremendous market opportunities, but also need to ensure respect for rules! WTO +. • Better IPR protection - innovation major part of EU’s competitiveness - Lisbon Agenda • Market access strategy and implementation of same on the ground. Team-work.

20. “Global Europe” • Focus more closely on trade barriers (including NTBs) of key trading partners, including the BRICs • Closer cooperation between Commission, EU MS and industry on the ground • Better use of existing instruments (TDI and TBR) and possible new ones (mediation mechanism)

21. “Global Europe” • Trade liberalisation, especially among developing countries, yields benefits in terms of poverty reduction and development • EU still largest contributor to “aid for trade”, and of development assistance globally, and still has its EBA (duty/quota free access system) in place • FTAs initiated with e.g. Central America and the Andean Community, as well as EPAs. India also a developing country.

22. “Global Europe” Old wine in new bottles, or truly novel? A 1996 Communication issued under Commissioner Leon Brittan already mentioned • “Relocation” of business (=outsourcing) • Also mentioned the rise of Asian nations • Also made the link between opening foreign markets in order to allow EU firms to exploit their competitiveness abroad

23. “Global Europe” 2003 report tabled by Commissioner Pascal Lamy (now WTO DG): • Integrate trade policy with other goals of the EU • “Opening of markets is not an end in itself, but is a way of making progress” • Ensure that majority of EU citizens support open trade policies (open markets not sufficient) • Trade-policy making more difficult than previously • “Harness globalisation”

24. “Global Europe Professor Simon Evenett’s assessment: • “[…] 4 October 2006 Communication […] an evolution rather than a revolution …” • Greater emphasis on market opening, NTBs, and other economic considerations closer to 1996 than 2003 positions • But are rules now “an end in itself” or will it require that industry and citizens see and feel benefits from open markets? And, if so, how to ensure that?

25. EPAs • EPAs = building sustainable trading relationships with the ACPs (primarily former colonies of EU MS) for the future • Further the ACP countries’ integration into the global trading system • “Stepping-stones” - WTO compatible! • Build on WTO rules, but go beyond WTO in some important respects, e.g. investment and competition, corruption, etc. “Priority lists”. • Several dimensions: political, developmental, regional integration

26. EPAs • Heavily criticized by NGOs, e.g. the SGPs • Also criticized by e.g. South Africa (which already enjoys benefits of an EU-SA FTA) as well as some LDCs (which benefit from the EBA scheme) • Alternatives? BRICs and other WTO members were simply not willing to grant the necessary waivers for other preferential arrangements • Lots of asymmetry built into the EPAs • Problem of 1 January 2008 deadline

27. Concluding thoughts • EU still moving ahead. EU of 27 - more (hoping) to join • Expansion of policy areas - competence (and “loss” of sovereignty) - institutional make-over • Legitimacy? Civil society? EP? Ironically, Lisbon Treaty meant greater EP role, e.g. in trade • Fear of “globalisation”, cf. also Wyplosz? If so, is more - not less - EU the answer? • Lack of debate about (role of) EU? Whose fault?