Deep integration in EU FTAs.
Why so difficult?
Peter Holmes with colleagues
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Why Deep Integration?
• Market access vs upgrading across whole
economy
• But losers as well as winners
• “internal market” was a public good for old &
new EU; standards always have public element
• Services can only be liberalised by DI
• Leaving it to the market?
– Free trade ensures competition?
– Proprietary standardisation will be enough?
• Deep institutional integration may be stimulated
by and further promote deep market integration
2
EU Aims
• Global Europe (2005) policy rejects use of
FTAs as mainly diplomatic tool
• market access in large important markets
– India not Pakistan as main goal for FTA
• include behind the border deep integration
issue, eg SPS/TBT, Competition GP etc –
based on EU’s own internal market
experience
• Harmonisation sought for close partners
3
Result: very little binding DI
• Most agreements disappointing in this area
(Sapir et al; Bourgeois et al; Houtman)
• EEA is exceptional case but required loss of
sovereignty
• Candidates approximation driven mainly by
accession process
• Even EU Chile just lays pathway to mutual
recognition
• EU Competition cooperation provisions fall well
short of US-Australia
• Only Cariforum accepted deep EPA.
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Competition
• Candidates & Euromed declare anti-competitive
practices that distort trade as in Arts 81 & 82 to
be “incompatible with” the agreements: did this
create binding legal obligations to amend
domestic law?
• EU rejects hard cooperation obligations even in
EU-US, eg exchange of confidential info.
• Competition is trade related issue but
cooperation can be done outside FTAs – even in
“MLATs”
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SPS & TBT: Market access vs
upgrading
• Distinguish: Standards, regulations, conformity assessment (CA)
and accreditation.
• Standards Regulations are not just NTBs: they are reflect market
demands, esp where private
• Mutual recognition esp of CA requires trust – and is slow cf EU US
(not FTA) and EU-Turkey
• Fundamental issue is EU rules, eg Food & Feed directive requiring
inspection and traceability etc. And private standards eg Eurepgap
• Partners must comply with EU rules if they wish to export.
• Egypt unwilling to force this on all domestic producers. Morocco
thinking about it.
• Some agreements provide for consultation and approximation and a
pathway to mutual recognition but no obligations, Eg Morocco Chile
- and EU India modelled on Chile
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IPRs, Animal welfare labour
standards etc
• EU less eager to press for stronger IPRs than
the US but India seems keen to have provisions
here, eg on GIs
• EU Chile and possibly EU India include
provisions for “consultation” on Animal welfare –
pressure from Greens in EP on this
• Cariforum EPA forbids lowering of labour (or
environmental) standards as investment
incentives
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Binding character?
• Sapir et al find few provisions that are subject to binding
wording eg “shall” and create meaningful obligations (e g
not just “shall consider”.
• What is the point of detailed but non-binding or binding
but ill-defined or non-constraining provisions?
• NB Garcia Bercero argues EU is gradually extending
binding DS in its FTAs, even tho’ new areas exlcuded
and little use made.
• Association Agreements provide for binding decisions by
councils
• US has less inflation but NB controversies over investorstate provisions
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Regions
• EEA required adoption of acquis and binding
acceptance, but tolerated by close small partners who
had to comply with norms of their biggest market
anyway. And EU rules are not NTBs top be negotiated
away
• Latin Americans etc: pointless to demand harmonisation
to EU rules but EU seeks to be “model”. NB S.Africa
chose EU water quality rules
• Cariforum is special case where EPA seen by partner as
a way to create intra-regional interal market
• Neighbours torn. Sh’d Egypt pay costs? How can
Ukraine totally pre-commit to EU norms so as to ensure
unconditional market access?
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EU norms as condition of free
access to Internal market
“Once satisfactory implementation of competition
and state aids policies (by the associated
countries) has been achieved, together with the
application of other parts of Community law
linked to the wider market, the Union could
decide to reduce progressively the application of
commercial defence instruments for industrial
products form the countries concerned, since it
would have a level of guarantee against unfair
competition comparable to that existing inside
the internal market.” Commission, 1994 and
1995
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What are the motives?
• EU is engaging in empty diplomacy because it
can do nothing else?
• It is seeking to use soft law to build up its
influence and support for its views at WTO.
• It is seeking to use soft law to build up hard law
• It is responding as in Cariforum to partner’s
wishes to use trade agreements as instruments
for reform as well as market opening
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Conclusions: what can EU do?
• There is a demand for DI: India is spending time on this. Mutual
recognition of CA is philosophers’ stone. Allows market access for
those who do comply. Does not need harmonisation but needs
accreditation of standards infrastructure
• Many developing countries want to use RTAs as instruments to
upgrade quality and legal norms, but wholesale adoption of acquis
unpalatable.
• Deep institutional integration can reflect and support but not create
the deeper market integration
• EEA model unappealing even for most of EEA!
• But Catch 22 EU will not give unconditional market access without
binding commitments and binding commitments onerous without
prospect of quasi accession
• Pathway process has merits beyond initial content: it may allow what
it does not oblige
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