The EU in action?

1. The EU’s use of soft power: trade and developmentManfred ElsigWorld Trade Institute, BernGraduate Institute, GenevaHEID, 3 July 2008

2. The EU in action?

3. Outline • The EU: what type of power? • The EU in trade politics • The EU in (trade-related) development policy • Venues to negotiate and regulate trade • Bringing Brussels back in: who are the actors and what are the preferences? A case-study on the venue-mix • What future role for the EU in a multi-polar trade world?

4. The EU: what type of power? • The EU as a civilian power(Duchene) • Military power Europe (Bull) • Normative power Europe (Manning) • Joseph Nye’s concept of soft and hard power • go-it-alone power (Gruber)

5. The EU: what type of power? • The EU’s foreign policy (CFSP) • Little hard power, lots of soft power? • Influence through enlargement and ENP • The soft power of EU trade and EU development policies at work!

6. The EU: what type of power? • The EU as conflicted trade power? ….the EU’s own experience as “a system of market liberalization”. This has made its foreign trade policy resemble “replication” more than “domination” (Meunier and Nicolaïdis 2006:912).

7. Power: a relational concept • Power: difficult to measure! • Most work relates to the Kantian /Dahlian tradition • Dahl: A has power over B to the extent he can can get B to do something that B would not otherwise do

8. Power in (trade) negotiations • Market access, asymmetry of power, hard power (realist concept) • Saliency, BATNA, (liberal concept) • Ideas, discourse (constructivist concept) • Negotiation process (negotiators‘ strategies, expertise, coalition-building etc..) (procedural power) • Schelling‘s Paradox!

9. A MAJOR TRADING POWER SHARE IN WORLD TRADE IN SERVICES (2005) EU major trading power Source: Eurostat

10. Market shares trends in world trade(%) Source: Eurostat, IMF, all products in value, excluding intra-EU trade

11. The EU in international trade Source: EU Commission

12. Source: EU Commission

13. Source: EU Commission

14. The EU in trade politics • 1957 Rome Treaty (Art. 113/new 133): • …1. The CCP shall be based on uniform principles, particularly in regard to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies. • 2. The Commission shall submit proposals to the Council for implementing the common commercial policy. • 3. (…) The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council (…) • 4. In exercising the powers conferred upon it by this Article, the Council shall act by a qualified majority.

15. The EU in trade politics • Customs Union: Common Commercial Policy • Representation, Delegation and Control (Art.113/133) • From 6 to 27 members • EC vs. EFTA (Economic Union vs. FTA) • 4 key enlargements: • UK joins (bandwagoning starts) • Democratization processes (Southern Europe) • Semi-EFTA enlargement • Eastern Enlargement

16. The last wave of enlargement: Balance of interests affected? • The liberal north (Sweden, UK, Netherlands, Denmark, Germany) • The club med (France, Spain, Italy, Greece) • New members: • liberal: Czech Republic, Estonia, Latvia, (Slovenia) • protectionist: Poland, Hungary, Slovak Republic, Lithuania

17. The EU in (trade-related) development policy • Treaty of Rome: • Coordination function / most aid still bilateral • Trade-related aid focus • 6 members and their relations to the colonies / relationship with few countries in Africa • Debates between regionalists (Fra, Be, Ita) and globalists (NL, Ger) • UK: Commonwealth • Spain/Portugal: Mediterranean/ Latin America

18. The EU in (trade-related) development policy • Yaoundé Conventions (1963-1975) • Trade privileges for West African Countries • Lomé Conventions (1975-2000) • Accommodate British Colonies (ACP) • Non-reciprocal trade agreements • Contractual right to aid • Stabilization programmes for exports

19. The EU in (trade-related) development policy • Mid 1980s-1990s: • PHARE: Poland-Hungary Aid for Restructuring of the Economies Programme • TACIS: Technical Assistance for the Commonwealth of Independent States (1991) • Association agreements (including trade) • Cotonou Agreement (2000-) • Aid performance (less needs-based) • Stabilization programmes eliminated • Economic Partnership Agreements (EPAs) • New issues: security, arm trade, migration (new security)

20. The EU in (trade-related) development policy • DDA (2001) • Implementation-related issues • New rules (S&DT) • Market Access • Trade Facilitation • Aid 4 Trade (Financing for Development)

21. Other development-related trade instruments • EU Generalized System of Preferences (GSP) • GSP+ (more tariff lines) • sustainable development, good governance, more vulnerable countries • Integrated Framework for trade-related technical assistance to LDCs • coordinated by IMF, ITC, UNCTAD, UNDP, WB, WTO. • Everything but arms initiative (EBA) for LDCs

22. Source: EU Commission

23. Source: EU Commission

24. Source: EU Commission

25. Source: EU Commission

26. Source: EU Commission

27. The venues to negotiate and regulate trade

28. 1) DDA: still alive and kicking? • The prospects for the DDA: a European view • The EU in a dilemma: The in-build agenda • Leon Brittan pro-actively engages (the Millennium Round) • The important role of the Singapore Issues • TF, Competition, Public Procurement, Investment

29. How did we get here? • The Seattle Debacle • 9/11 and the Doha Ministerial • The Agenda is set (Christmas Tree Effects) • The DDA in crises: Cancun, Hong Kong, suspension… • G2 leadership rarely visible and not sufficient • Another mini-ministerial is approaching • The crises over agriculture and the French Presidency

30. State of Play

31. Why the EU can’t act as a leader? • The political-economy of trade liberalization • The single package approach • Concessions by negotiation partners (NAMA, services, etc.) • Export business support? • Transatlantic leadership? • A multipolar trade world (G4+Japan+China)

32. 2) New preferential trade agreements:short term relief? • The new wave of EU PTAs? • Global Europe Communication 2006 • End of Lamy moratorium • A market-access based approach and protection of exporter interests

33. Source: WTO, Crawford and Fiorentino, 2005

34. Political and Economic Motivations for New Regionalism Old and New Security Agenda (e.g. EuroMed) Bargaining tool (vis-a-vis trading partners) • Constant struggle for having a strong BATNA (EU-US) Satisfy export industries (export discrimination argument) • India, Korea, China, Mexico, Chile Bandwagoning (not to be left out by the demandeurs) • Signalling and FDI (Domino-effect) Elitist idea (exporting the EU model, geostrategic reasons) • Mercosur, EPAs, GCC, etc Ease of negotiating and implementing agreements • Fewer actors decrease transaction costs (negotiations and compliance) / asymmetry of power / bureaucratic capacities

35. 3. Autonomous Trade Policy • Offensive: Unilateral Trade Liberalization (in respect to some DCs); Trade Barrier Regulation • Defensive: Trade defensive instruments: the other face of Europe? • Level-field or protectionist?

36. TDI • Anti-dumping • Anti-subsidy • Safeguards

37. Bringing Brussels back in: Actor Constellation • The power of the member states • The role of pressure groups • The role of the EP, ECJ • The role of the European Commission? • Collusion hypothesis (powerful agent) vs. Rent-seeking (pressure group) hypothesis

38. Who governs? • The strong role of the Commission (agenda-setting, negotiating on behalf of the EU, signing) • Member States control through a specialized advisory Committee (Com Art. 133): • Interests: long-time liberal north vs. Club-med (now new members) • EP: still marginal (but see new Constitution!) • ECJ: has been supportive of the Commission until ruling 1/1994 on competency (exclusive vs. shared) • Various intergovernmental conferences that led to increase exclusive competence of the Community (Amsterdam, Nice, Constitution)

39. Who governs? • The multi-level system (various access points) • Institutional access for private actors • Different logics of lobbying • At the national level • At the European level • Commission engages in “coalition-building” • The growing role of consultancy and lobbying firms in Brussels

40. PA: Bringing Brussels back in • Principals and Agents • Member States and EU Commission • Delegation • Agenda setting, Commission is negotiator • Control • Ex ante, on-site, ex post • Mandate, Art. 133 Committee, Ratification • Autonomy • The Commission is powerful when setting the agenda • Institutional rules help from easy sanctioning • The multi-level system allows for strategic partnerships

41. Institutional set-up

42. Decision-making process Council &Member States Commission European Parliament Initiation Art. 133 Com Commission COREPER 1 1b EP GAERC 2 3 Negotiation Art. 133 Com Commission 4 3a 5 EP Commission GAERC 6 7 9 8a/8b Ratification GAERC EP 8c MS t The EU in trade negotiations Adapted from Elsig 2002

44. Explaining the old approach (1997-2005) • Pascal Lamy’s Moratorium (starting 1999) • Hierarchy in using regulatory venues • Multilateralism (first): Commission-driven Enthusiasm • Inter-regionalism (second best) • Bilateralism (on hold) • Pressure from principals increases, yet policy remains • Autonomy by design (agenda setting, multi-level system (access), interest divergence among principals), active use of autonomy by DG Trade

45. Explaining the new approach • European Commission Communication “Global Europe” (2006) • New Commission shifts position (a new market access approach): • Not principals sanctioning • Adaptation • the discovery of Asian markets • the competitiveness paradigm (Lisbon Agenda)

46. Quo vadis? EU trade policy in a multipolar trade world • Perceptions of the European Union in the world? • What future role of the EU? • Constitutional issues (the role of the EP) • The New Trade Policies (behind the border)