European Economic Integration
V Core Policy 1 Common Trade Policy
The 14th EU-China summit in
Beijing enabled the two to deepen
their partnership.
EU and India advance negotiations
on economic cooperation
and future free-trade pact, and agree
on further energy and research collaboration.
Prof. Dr. Günter S. Heiduk
1
Common trade policy = "Common Commercial Policy":
 Trade policy was always a core competence of the EU
 Where trade, including WTO matters, are concerned, the EU acts as one single
actor, where the European Commission negotiates trade agreements and
represents the European interests on behalf of the Union's 27 Member States.
 Formal procedure: “Article 133 Committee” (representatives of the 27 MS + EC)
coordinates EU trade policy. The major formal decisions (for example agreement
to launch or conclude trade negotiations) are then confirmed by the Council of
Ministers.
 The Lisbon Treaty (ToL) gives a stronger role to the European Parliament in EU
trade policy. The ordinary legislative procedure requires parliamentary consent
for all trade agreements (joint power with the Council). The Commission shall also
keep the Parliament informed of trade negotiations.
Furthermore, the scope of EU trade power has been broadened to services and
IPR. The ToL has also established an exclusive competence on FDI as part of the
common commercial policy. This is complemented by an implied competence on
portfolio investments derived from the internal market chapter on free movement
of capital.
Karel de Grucht, European Commissioner for Trade
2
European Integration V Core Policy 1 Common Trade Policy
The ToL will help toward a more consistent EU external action by connecting more
effectively the various strands of EU external policy, such as diplomacy, security,
trade, development, humanitarian aid, and international negotiations.
The attributes of the EU as an actor in the international
trading system:
 MARKET POWER
 RECOGNITION
 CAPABILITY
 NORMATIVE POWER
 LEGITIMACY/PARLIAMENTARY ACCOUNTABILITY
R. Leal-Arcas, 2010. The European Union’s Trade and Investment Policy after the Lisbon Treaty. Legal
Studies Research Paper 64/2010. Queen Mary Univeristy of London.
3
European Integration V Core Policy 1 Common Trade Policy
Market Power:
Central topic in WTO’s trade policy has been the negotiation of
reciprocal concessions on market access. The larger the domestic
market, the greater the negotiator’s power. EU’s deepening and
widening policy is boosting its absolute market power. In terms of
relative market power, EU’s slow growth in the last decades as well
as the emergence of the BRIC countries reduced EU’s relative
market power. The tariff reductions of the Uruguay Round reduced
the market power of all industrialized countries. The main leverage
that remained was in terms of access to the EC agricultural market.
EU interest in trade has increasingly become one of persuading its
trading partners to adopt rules and standards that address nontariff and regulatory barriers. The EU largely failed in its attempt to
shape the multilateral trade agenda during the late 1990s and early
2000s, as either the emerging markets (in investment and
government procurement) or the U.S. (in competition) opposed or
failed to support the EU’s proposals. After 2006 the EU shifted
back to a more active use of bilateral free-trade negotiations.
4
European Integration V Core Policy 1 Common Trade Policy
Recognition:
The EC has been a member of the WTO since its creation in 1995, and
thus has legal personality in the field of trade.
Whereas in the OECD, the EC has the status of an observer in
groups that discuss trade.
Besides EC’s exclusive competence for common commercial policy (de
jure recognition), Member States are authorizing the EC to negotiate
trade-related issues such as services, IPR, investment (de facto
recognition).
Capability:
Even when the EC is recognized as being a major actor in trade
negotiations, there is still the question of how the EC uses its power and
influence. Capability can be assessed by autonomy, cohesion, and
effectiveness.
As EU Member States are involved in decisions concerning negotiating
strategies as well as the adoption of what has been negotiated by the EC,
one can conclude that it has less autonomy than its counterpart in the
U.S. On the other the progress in replacing national laws by EU law
leads to widen the scope of the EC in trade and trade-related policies.
In over 50 years of decision-making in trade policy the EC has
established a set of rules and procedures that facilitate to define common
interest. This can be seen as a measure of cohesion. It is widely
accepted that the EC has been able to defend effectively its interests, e.g
in agriculture.
5
European Integration V Core Policy 1 Common Trade Policy
Normative power:
It has been argued that the EU is a normative power in that it
promotes certain common values and norms or provides a
model for other regions on how to regulate integrating markets.
Especially with the Single Market program the
acquis communautaire has codified more and more shared
norms and standards. The acquis provided a broad basis for
common EU external policies in trade and trade-related topics.
Furthermore, the EU has provided a model for regional
integration. Thus integration efforts in Latin America, Africa, and
Asia were to some extent modeled on the EU.
Legitimacy and Accountability: For decades the European Parliament as well as the
parliaments of the Member States had been kept out of EC’s
trade policy. In recent times globalization has resulted in more
interest groups/NGOs becoming, or aware of shaping trade
and investment policies. The EC responded with organizing
a Consultation Forum with NGOs. But the basically technocratic
character of EU trade policy making has not changed. The
attribute of legitimacy — or perhaps more accurately,
parliamentary control of policy—was not very well established
in the EU before the ToL.
6
European Integration V Core Policy 1 Common Trade Policy
Post-ToL Common Commercial Policy:
EC’s exclusive power in trade policy means
that the Member States will no longer participate in the
WTO forum, at least theoretically. But most likely
Member States will not disappear from the international
trade scene, since the EC is not fully aware of the
Member States’ needs when acting on their behalf.
Anyhow, EC’s exlusive competence in investment
may require Member States to amend or modify bilateral
investment agreements. It will need some time for
the EC to develop a common investment policy.
7
EU’s priorities in Common Commercial Policy based on the Lisbon Treaty
The EU shall have exclusive competence in the area of the common commercial policy.
The EU may conclude international agreements ”where the conclusion of an agreement is necessary in order
to achieve, within the framework of the Union's policies, one of the objectives referred to in the Treaties
(Article 216(1) TFEU). This external competence is complemented by the internal competence of
implementing these agreements.
Council should decide by qualified majority voting regarding the negotiation and conclusion of international
agreements. Unanimity is required in fields such as agreements in the field of trade in cultural and
audiovisual services and trade in social, education and health services.
The CTP shall be conducted ‘in the context of the principles and objectives of the Union’s external actions
(”politisation” of trade policy).
EU should contribute to the gradual trade liberalization (”free and fair trade”)
Harmonious development of world trade, the progressive abolition of
restrictions on international trade and lowering of customs and other barriers (on goods and
services)
The scope of the CTP concerning intellectual property rights remains restricted to the ‘commercial aspects’ of
these rights.
Abolition of restrictions on foreign direct investment (but the Member States remain competent concerning
portfolio investments).
The function of the European Parliament is extended to a co-legislator with regard to the implementation of
agreements and the adoption of internal autonomous trade policy measures.
Markus Krajewski (2010). The Reform of the Common Commercial Policy. In: A. Biondi and P. Eeckhout (eds), European Union Law after the Treaty of Lisbon
8
EU’s Credo in Trade Policy: “Creating Opportunities“
European competitiveness
Export credits
Intellectual property
Investment
Trade and competitiveness
Regulating trade finance
Trade policy for European
Competitiveness
Principles and regulations
governing export credits in the EU.
Trade policy on Intellectual
property
Trade Policy on Investment
Protection and enforcement of intellectual
property are crucial for the EU’s ability to
compete in the global economy
Opening doors for
foreign direct investment
Market access
Public procurement
Raw materials
Dual use
Promoting market access
Trade Policy on Public
Procurement
Open markets for the
building blocks of industry
Maintaining export controls
for dual use goods
Open international rules for public
authorities buying goods and
services
Sustainable, secure and affordable
access to raw materials is vital for
industrial competitiveness in the EU.
Dual use goods are products and technologies
normally used for civilian purposes but which
may have military applications.
Creating new opportunities for EU
exporters in markets abroad and in
the EU markets for developing
countries' exporters is a key part
of the European Commission's work.
Source: http://ec.europa.eu/trade/creating-opportunities/trade-topics/index_en.htm
Duty-free Imports by Selected Product Groups, China, EU-27, Japan, U.S.A. (in %)
100
90
80
China
EU-27
Japan
U.S.A.
70
60
50
40
30
20
10
0
y
s
ts
a
er y
co
ent
ile
um
ner
n
c
Te
t
lan
i
i
e
m
a
l
,
x
h
h
P
p
b
o
e
i
,
ac
ac
Te
To
qu
etr
ffe
M
ble
M
,
o
P
E
s
a
l
l
t
t
C
a
a
r
age
ric
ric
ege
po
r
t
t
s
e
c
c
V
n
v
le
it,
Ele
Be
Tra
n-e
Fru
o
N
The EU and the WTO
The EU is the world's largest trading block, which makes it one of the key players in
the WTO.
The EU supports the work of the WTO on multilateral rule-making, trade liberalisation
and, sustainable development.
Through the WTO, the EU seeks to:
Ensure new markets for European companies
Observe the rules and make sure others also play by the rules
Promote sustainable development in trade.
Respecting the rules:
The main benefit of the WTO system is that it is rule-based. Rule-making is the only
way to guarantee that all members will adopt the same basic standards for global
trade. The rules defined by WTO build on the general acknowledgement that certain
types of action are unfair (such as dumping, for example). In case a Member of the
WTO infringes these regulations, the injured country can seek justice by taking the
case to the WTO dispute settlement system: the dispute settlement mechanism
ensures respect of the rules for all - big and small.
The EU trade policy instruments and legislation are in line with WTO and other
international agreements on unfair trading practices. The EU takes care that
European business and industries are not disadvantaged by unfair and injurious
practices from other trading partners.
11
The EU and the WTO
Dispute settlement
The Agreement on Dispute Settlement Understanding sets up procedures for solving disputes
which may arise among WTO members in the implementation of the different WTO Agreements.
Trade Barriers Regulation
The TBR gives industry the opportunity to lodge a complaint with the Commission when there is
reason to believe that companies are encountering trade barriers that restrict their access to third
country markets.
Anti-dumping
Anti-dumping measures were created to counter dumping practices, the most frequently
encountered trade-distorting practices. Dumping occurs when manufacturers from a non-EU
country sell goods in the EU below the sales price in their domestic market, or below the cost of
production.
Anti-subsidy
Anti-subsidy measures were designed to combat subsidies, which are made available to
manufacturers by public authorities and which can also distort trade when they help to reduce
production costs or cut the prices of exports to the EU unfairly.
Safeguards
A WTO member may restrict imports of a product temporarily if its domestic industry is
seriously injured or threatened with injury caused by a surge in imports.
12
WTO Dispute Settlement cases involving the EU - Selection
Ref. Number and title
Complaints against EC
Complainant
WT/DS349 - EC - Measures affecting the tariff quota for fresh or chilled garlic
Argentina
WT/DS293 - Measures affecting the approval and marketing of biotech products
(GMOs)
Argentina
WT/DS263 - Measures affecting imports of wine
Argentina
WT/DS290 - Protection of trademarks and geographical indications for agricultural
products and foodstuffs
Australia
WT/DS265 - Export subsidies on sugar
Australia
WT/DS219 - Anti-dumping duties on malleable cast iron tube or pipe fittings from
Brazil
Brazil
WT/DS269 - Customs classification of frozen boneless chicken cuts
Brazil
WT/DS266 - Export subsidies on sugar
Brazil
WT/DS135 - Measures affecting the prohibition of asbestos and asbestos products
Canada
WT/DS292 - Measures affecting the approval and marketing of biotech products
(GMOs)
Canada
WT/DS 369 - EC - Certain Measures Prohibiting the Importation and Marketing of
Seal Products
WT/DS375 - Tariff Treatment of Certain Information Technology Products
Canada
WT/DS315 - European Communities - Selected Customs Matters
United States
WT/DS223 - Tariff-rate quota on corn gluten feed from the United States
United States
WT/DS27 -
United States
Import regime for bananas
United States
WT/DS316 - Measures Affecting Trade in Large Civil Aircraft
United States
WT/DS260 - Provisional safeguards measures on imports of certain steel products
United States
WT/DS174 - Protection of trademarks and geographical indications for
agriculturalproducts and foodstuffs
United States
WT/DS26 -
United States
Measures affecting meat and meat products (Hormones)
WT/DS291 - Measures affecting the approval and marketing of biotech product
( GMOs)
United States
13
Ref. Number and title
Cases launched by the EC
Defendant
WT/DS330 - Countervailing Duties on Olive Oil, Wheat Gluten and Peaches
Argentina
WT/DS121 - Safeguard measures on footwear
Argentina
WT/DS189 - Definitive anti-dumping measures on imports of ceramic floor tiles from Italy
Argentina
WT/DS155 - Measures on the export of bovine hides and the import of finished leather
Argentina
WT/DS332 - Measures affecting imports of retreaded tyres
Brazil
WT/DS354 - Canada - Tax exemptions and reductions for wine and beer
Canada
WT/DS142 - Certain measures affecting the automotive industry
Canada
WT/DS114 - Patent protection of pharmaceutical product
Canada
WT/DS321 - Continued Suspension of Obligations in the EC-Hormones Dispute.
Canada
WT/DS339 - Measures affecting imports of automobile parts
WT/DS166 - Definitive safeguard measures on imports of wheat gluten from EC
China
United States
WT/DS165 - Import measures on certain products from the EC
United States
WT/DS152 - Sections 301-310 of the Trade Act of 1974
United States
United States
WT/DS138 - Imposition of countervailing duties on certain hot-rolled lead and bismuth
carbon steel products originating in the UK
WT/DS294 - Laws, regulations and methodology for calculating dumping margins ('zeroing') United States
WT/DS262 - Anti-dumping and countervailing measures on certain steel products
United States
WT/DS248 - Definitive safeguard measures on imports of certain steel products
United States
WT/DS217 - Continued dumping and subsidy offset Act of 2000
United States
WT/DS213 - Countervailing duties on certain corrosion-resistant carbon steel flat products
from Germany
WT/DS212 - Countervailing measures concerning certain products from the EC
United States
WT/DS200 - Section 306 of the Trade Act of 1974 and amendments thereto ("carousel"
United States
WT/DS186 - Section 337 of the Tariff Act of 1930 and amendments thereto
United States
WT/DS176 - Section 211 Omnibus Appropriations Act
United States
WT/DS160 - Section 110(5) of US Copyright Act
WT/DS136 - Anti-dumping Act of 1916
WT/DS108 - Tax treatment for "Foreign Sales Corporations"
United States
United States
United States
WT/DS320 - Continued Suspension of Obligations in the EC-Hormones Disput
United States
WT/DS319 - Section 776 of the Tariff Act of 1930
WT/DS317 - Measures Affecting Trade in Large Civil Aircraft
United States
United States
WT/DS353 - Measures Affecting Trade in Large Civil Aircraft (second complaint)
United States
WT/DS350 - Continued Existence and Application of zeroing methodology
United States
United States
14
EU’s commitment for global trade
Trade and development
The European Union is committed to supporting developing countries' efforts
to integrate into the trading system to help them reap the benefits of market opening.
Access to essential medicines
The EU is deeply committed to insure access to cheap medicines in poor countries.
Trade and environment
The respect of the environment is a vital condition for a sustainable trade growth
and long-term development.
Sustainability Impact Assessment (SIA)
The European Commission has commissioned an independent assessment of the
impact that trade negotiations may have on sustainable development.
Trade and social welfare
In an integrated global economy, the impact of trade on social welfare and rights
has to be carefully managed.
15
EU’s hottest trade issues
The DOHA –Round, the EU, trade preferences for development, and strategic
partnerships
EU-USA disputes create a climate where ”even the procedural
framework of the WTO dispute settlement process seems incapable of
ensuring wholly amicable US-EU trade relations.” (N. Kuehler, European Policy Centre)
Each new Regional Trade Agreement is reducing preferential market
access for less developed countries.
EU’s CAP is a major obstacle for progress in the DOHA Round.
EU-China strategic partnership (e.g. in climate change)
Continuing with preparatory discussions on launching formal free trade
negotiations between EU and Japan
EU’s leadership role in a multipolar world economy
16
EU’s Trade Negotiations
Trade agreements are designed to create better trading opportunities
by:
• Opening new markets for goods and services
• Increasing investment opportunities and protection of investments
• Making trade cheaper - by eliminating substantially all customs duties
and cutting red tape
• Making trade faster - by facilitating transit through customs and setting
common rules on technical and sanitary standards
• Making the policy environment more predictable - by taking joint
commitments on areas that affect trade such as intellectual property
rights, competition rules and the framework for public purchasing
decisions
• Supporting sustainable development – by fostering
cooperation,transparency and dialogue with our partners on social and
environmental issues.
Source: European Commission, Factsheet, Trade Negotiations Step by Step
Procedure of Trade Negotiations
Source: European Commission, Factsheet, Trade Negotiations Step by Step
The EU has successfully concluded a number of
important trade agreements with trading partners
Latest developments
USA – TTIP, first round of negotiations, 8-12 July 2013
China – Agreement in Investment, negotiations launched on 21 Nov. 2013
Canada – Comprehensive Economic and Trade Agreement, key elements
agreed on 18 Oct. 2013
Japan – Free Trade Agreement, negotiations launched in April 2013
Singapore – Free Trade Agreement, in force on 20 Sept. 2013, expected
to become effective by lagte 2014.
Malaysia, Thailand, Vietnam – Bilateral Free Trade Agreements, ongoing
negotiations
Morocco – Deep and Comprehensive Free Trade Agreement, ongoing
negotiations
Free Trade Agreements finsihed but not yet applied
Eastern Neighbourhood – The EU has recently concluded negotiations for a Deep
and Comprehensive Free Trade Area (DCFTA) with Moldova, Armenia and Georgia. The
DCFTAs are part of the Association Agreements with these three countries. The official
initialing of the Association Agreements with Moldova and Georgia took place during the
Eastern Partnership Summit on 29 November 2013 in Vilnius.
Ukraine – The EU and Ukraine concluded the negotiations for a deep and
comprehensive Free Trade Agreement (DCFTA) in December 2011. On 15 May 2013, the
Commission adopted the proposals for Council decisions on the signing and provisional
application of the EU-Ukraine Association Agreement, including its trade part (IP/13/436).
Ukraine decided to suspend temporarily the preparations for signing but the EU offer is still
on the table (Presidents’ statement).
There are also five interim Economic Partnership Agreements with African, Caribbean
and Pacific States that have been negotiated but have not yet entered into force.
These are with Cote d'Ivoire, Central Africa (Cameroon), the Southern African
Development Community, Ghana and the East African Community.
In total, the EU has finished negotiating ten trade agreements that have yet to
enter into force.
Source: European Commission, Memo, 3 Dec 2013, The EU‘S Bilateral Trade and Investment Agreements
EU‘s Regional Trade Agreements (1)
The EU has already in place bilateral trade agreements with some 50 partners.
Europe
•Norway - 01 July 1973
•Iceland - 01 April 1973
•Switzerland - 01 January 1973
•Faroe Islands - 01 January 1997
•The former Yugoslav Republic of Macedonia - Stabilisation and Association Agreement, 01 May 2004
•Albania - Stabilisation and Association Agreement, 01 April 2009
•Montenegro - Stabilisation and Association Agreement, 01 May 2010
•Bosnia and Herzegovina - Interim Agreement on trade and trade related matters, 01 July 2008
•Serbia - Interim Agreement on trade and trade related matters, 01 February 2010
Mediterranean
•Palestinian Authority - Association Agreement, 01 July 1997
•Syria - Co-operation Agreement, 01 July 1977
•Tunisia - Association Agreement, 01 March 1998
•Morocco - Association Agreement, 01 March 2000
•Israel - Association Agreement, 01 June 2000
•Jordan - Association Agreement, 01 May 2002
•Lebanon - Interim Agreement, 01 March 2003
•Egypt - Association Agreement, 01 June 2004
•Algeria - Association Agreement, 01 September 2005
21
EU‘s Regional Trade Agreements (2)
Other countries
•Mexico - Economic Partnership, Political Coordination and Cooperation Agreement, 01 July 2000
•South Africa - Trade, Development and Co-operation Agreement, 01 January 2000
•CARIFORUM States - Economic Partnership Agreement, Provisionally applied
•Chile - Association Agreement and Additional Protocol, 01 February 2003 (trade) / 01 March 2005
(full agreement)
•Madagascar, Mauritius, the Seychelles, and Zimbabwe Interim Partnership Agreement signed in
August 2009
•Korea - New Generation Free Trade Agreement, signed 06 October 2010
•Papua New Guinea and Fiji - Interim Partnership Agreement ratified by Papua New Guinea in May
2011
•EU-Iraq - Partnership and Cooperation Agreement, signed on 11 May 2012
•Colombia and Peru - Trade Agreement, signed 26 July 2012
•Central America - Association Agreement with a strong trade component, signed 29 June 2012
Customs unions
•Andorra - 01 July 1991
•San Marino - 01 December 1992
•Turkey - 31 December 1995
Updated information available at:
http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf
22
EU‘s Regional Trade Agreements (3)
Transatlantic Trade and Investment Partnership – TTIP
-Interaction between the US and EU account
for $4 trillion in trade, investment, and commercial sales.
-Trade between the 2 regions already accounts for
between 40% and 50% of Global GDP .
-Currently secures 15 million job
-US investments in France and Belgium alone in 2010
were as high as in India and China combined.
-A study by Sweden’s National Board of Trade said trade between the two sides
could jump 20% - upwards of $200 billion annually- if an aggressive trade deal
were enacted.
-Eliminating existing tariffs would boost two-way trade by $120 billion within five
years and and $180 billion the U.S. and E.U combined GDP.
-Would add 1.5 percent to 2 percent combined to U.S. and European output.
23
EU‘s Regional Trade Agreements (4)
Transatlantic Trade and Investment Partnership – TTIP
Overall economic gains

An ambitious and comprehensive trans-Atlantic trade and investment partnership could
bring significant economic gains as a whole for the EU (€119 billion a year) and the US (€95
billion a year) once the agreement is fully implemented. This translates on average to an
extra €545 in disposable income each year for a family of four in the EU.

The benefits for the EU and the US would not be at the expense of the rest of the world. On
the contrary, liberalising trade between the EU and the US would have a positive impact on
worldwide trade and income, increasing GDP in the rest of the world by almost €100 billion.
To the extent that the EU and the US can work together towards better trade rules and less
regulatory divergence in the future, some of the reductions achieved in the cost of doing
trade will also benefit other partners. The economic importance of the EU and the US will
mean that their partners will also have an incentive to move towards the new transatlantic
standards. This has the potential to spread gains across the global economy, which is
increasingly interdependent especially given the ever greater complexity of global value
chains.

Income gains are a result of increased trade. EU exports to the US would go up by 28%,
equivalent to an additional €187 billion worth of exports of EU goods and services. EU and
US trade with the rest of the world would also increase by over €33 billion. Overall, the extra
bilateral trade between the two blocs, together with their increased trade with other
partners, would represent a rise in total EU exports of 6% and of 8% in US exports. This
would mean an additional €220 billion and €240 billion worth of sales of goods and services
for EU and US based producers, respectively.
24London
Source: Francois, J (2013), Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment, Centre for Economic Policy Research,
http://europa.eu/rapid/press-release_MEMO-13-211_en.htm; http://trade.ec.europa.eu/doclib/docs/2013/march/tradoc_150737.pdf
EU‘s Regional Trade Agreements (5)
Sectoral benefits
 EU exports would increase in almost all sectors, but the boost in sales to the rest of the world
would be particularly significant in metal products (+12%), processed foods (+9%), chemicals
(+9%), other manufactured goods (+6 %), and other transport equipment (+6%).
But, by far the biggest relative increase in trade would take place in the motor vehicles
sector. In this sector, EU exports to the rest of the world are expected to go up by nearly 42%
and imports to expand by 43%. The growth in bilateral trade is even more impressive: EU
exports of motor vehicles to the US are expected to increase by 149%. This partly reflects
the importance of two-way trade in parts and components and the further integration of the
two industries across the Atlantic. This increase in trade in motor vehicles is also accompanied
by an expansion in the sector's output (+1.5%) in the EU.

The increase in exports and output that would be found (in different degrees) in almost
all sectors reflects the big liberalisation effort that the agreement would imply. Unsurprisingly,
the car sector, being characterised by an initial combination of high tariffs and high non-tariff
barriers, such as different safety standards, is one that would benefit the most.
Reducing non-tariff barriers
 Reducing non-tariff barriers, so-called "behind-the-border" barriers, will have to be the key
part of trans-Atlantic trade liberalisation. As much as 80% of the total potential gains come
from cutting costs imposed by bureaucracy and regulations, as well as from liberalising trade
in services and public procurement.
Labour market
 The increased level of economic activity and productivity gains created by the agreement
will benefit the EU and US labour markets, both in terms of overall wages and new job
opportunities for high- and low-skilled workers.
Sustainable development
 The agreement would have negligible effects on CO2 emissions and on the sustainable use
of natural resources.
25
Countries with which the EU has concluded or is negotiating FTAs
26
EU-Korea Free Trade Agreement
“On 1 July 2011, the EU-Korea Free Trade Agreement (FTA) entered into force, marking
the beginning of a new era in EU-Korea trade relations. This brought to an end a process
that began five years ago with the Commission’s Communication on ‘Global Europe in a
Competing World’ which called for the EU to renew its engagement in Asia. The EU-Korea
FTA is only the first agreement in a series we are negotiating with Asian partner countries,
but it is an example of how two partners can work together to achieve a deal that brings
significant benefits to the economies of both sides.
The EU-Korea FTA is the most ambitious trade agreement ever negotiated by the EU; it is
also the EU’s first trade deal with an Asian country. The Agreement is expected not only to
boost bilateral trade and economic growth in both the EU and Korea, but also to have a
wider impact in Asia and elsewhere by signalling the EU’s openness to doing business with
third countries and its commitment to free trade.
The Agreement is unprecedented both in its scope and in the speed at which trade barriers
are to be removed. By the end of the transitional periods, virtually all import duties between
the two economies will have been removed. Exporters and importers of all industrial
products and almost all agricultural products will be able to trade without having to pay
duties. Additionally, the FTA breaks new ground in tackling significant non-tariff barriers
to trade, with a specific focus on the automotive, pharmaceuticals, medical devices and
electronics sectors. The Agreement will also create new opportunities for market access in
services and investments, and lead to major advances in areas such as intellectual
property, government procurement and competition policy.”
Karel De Gucht, European Commissioner for Trade,
http://trade.ec.europa.eu/doclib/docs/2011/october/tradoc_148303.pdf
27
EU-Korea Free Trade Agreement
Tariff elemination for industrial and agricultural goods
http://trade.ec.europa.eu/doclib/docs/2011/october/tradoc_148303.pdf
28
EU-Korea Free Trade Agreement
Rules of Origin
29
http://trade.ec.europa.eu/doclib/docs/2011/october/tradoc_148303.pdf
EU-Korea Free Trade Agreement
Tackling Barriers to Trade
http://trade.ec.europa.eu/doclib/docs/2011/october/tradoc_148303.pdf
30
EU-Korea Free Trade Agreement
Further Example: Protection for Geographical Indications
http://trade.ec.europa.eu/doclib/docs/2011/october/tradoc_148303.pdf
31
EU-Japan Free Trade Agreement Negotiations
29 November 2012: Council decided to give the Commission 'the green light'
to start trade negotiations with Japan.
The mandate sets out a strict and clear parallelism between the elimination of
our duties and non-Tariff Barriers in Japan. 'Like for like' if you will.
There's a safeguard clause to protect sensitive European sectors.
We explicitly reserve ourselves the right 'to pull the plug' on the negotiations
after one year if Japan does not live up to its commitments on removing
non-tariff barriers.
Potential benefits of EU-Japan Free Trade Agreement (FTA)
 A free trade deal with Japan would boost Europe's economy by 0.8% of its
GDP
 EU exports to Japan could increase by 32.7%, while Japanese exports to the
EU would increase by 23.5%
 420,000 additional jobs in the EU are expected as a result of this agreement
http://trade.ec.europa.eu/doclib/press/index.cfm?id=847
32
The Controversy on ACTA – Anti-counterfeiting Trade Agreement
ACTA is an international trade agreement aimed at ensuring that the EU's already
high standard of protection for intellectual property rights can be enforced globally.
•The EU's national customs authorities have registered that counterfeit goods entering
the EU have tripled between 2005 and 2010.
• Statistics published by the EC in July 2011 show a tremendous upward trend in the
number of shipments suspected of violating IPR. Customs in 2010 registered around
80,000 cases, a figure that has almost doubled since 2009. More than 103 million fake
products were detained at the EU external border.
•As Europe is losing billions of Euros annually through counterfeit goods flooding our
markets, protecting Intellectual Property Rights means protecting jobs in the EU. It
also means consumer safety and secure products.
•ACTA does not contain any provision that provide for the cutting of internet access or
for monitoring of the internet. ACTA is not about checking private laptops or smart
phones at borders.
•ACTA is fighting against piracy; piracy should not be confused with sharing content.
Sharing content is only illegal when the content is illegal. ACTA does not define what is
legal or illegal content.
Source: http://ec.europa.eu/trade/tackling-unfair-trade/acta/
EU Trade Data (1)
Exports and Imports, EU-27, USA, Japan, China, 2001-2011 (% of World Ex, Im)
30,0
25,0
20,0
15,0
10,0
5,0
0,0
2001
EU-27 Ex
2002
USA Ex
2003
2004
Japan Ex
Source: Own calculation based on EUROSTAT.
2005
China Ex
2006
2007
EU-27 Im
2008
USA Im
2009
2010
Japan Im
2011
China Im
EU Trade Data (2)
Exports
4%
6%
3%
6%
16%
SITC 0-1
SITC 2,4
SITC 3
SITC 5
SITC 6,8
SITC 7
SITC 9
Share of EU-27 external trade
by products, 2011
42%
Imports
23%
3%
5%
5%
26%
SITC 0-1
SITC 2,4
SITC 3
SITC 5
SITC 6,8
SITC 7
SITC 9
SITC 7
SITC 9
29%
Mineral fuels, lubricants + related materials
Source: Own calculation based on EUROSTAT.
SITC 3
SITC 5
SITC 6,8
Food, drings and tobacco
Raw materials
Chemicals and related materials
Other manufactured goods
Machinery and transportation equipment
Commodities and transactions not
classified elsewhere in the SITC
SITC 0-1
SITC 2,4
23%
9%
EU Trade Data (3)
Share of top 5 EU-27 Member States on EU-27 external exports, 2011
30,0
25,0
20,0
15,0
10,0
5,0
0,0
Germany
UK
Source: Own calculation based on EUROSTAT.
France
Italy
Netherlands
EU Trade Data (4)
Source: EUROSTAT
EU – China Trade and Investment Relations (1)
Extra EU-27 Merchandise Trade with China 2000-2011 (EUR billion)
350
300
250
200
150
100
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Exports
Imports
Source: Own calculation based on EUROSTAT
38
EU – China Trade and Investment Relations (2)
EU-27 Bilateral Trade with China in Selected SITC Products Groups, 2000- 2011 (EUR billion)
S I TC 5
S I TC 6
S I TC 7
S I TC 8
S I TC 5
S I TC 6
SITC 5 = Chemicals and related articles; SITC 6 = Manufactured goods chiefly classified by materials;
SITC 7= Machinery and transport equipment; SITC 8 = Miscellaneous manufactured articles
Source: Own calculation based on EUROSTAT.
S I TC 7
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
155
150
145
140
135
130
125
120
115
110
105
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
105
0
2000
2011
2010
2009
2008
EU-27 Import from China
2007
2006
2005
2004
2003
2002
2001
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
2000
EU-27 Export to China
S I TC 8
39
EU – China Trade and Investment Relations (3)
Intra-Industry Trade Index Germany-China, Selected Products (HS 1999,
2-Digit, 4-Digit), 2000, 2011
6205 Men’s shirt
7318 Iron and Steel crews
7326 Articles of iron and steel
8471 Automatic data processing
machines, optical reader
9018 Electrical apparatus
84 Machinery
85 Electrical, electronic
equipment
90 Optical, photo, technical,
medical apparatus
1
0,95
0,9
0,85
0,8
0,75
0,7
0,65
0,6
0,55
0,5
0,45
0,4
0,35
0,3
0,25
0,2
0,15
0,1
0,05
0
6205
7318
7326
8471
2000
9018
84
85
90
2011
40
Source: Own calculation based on International Trade Center – Trade Map, International Trade Statistics
EU – China Trade and Investment Relations (4)
Poland‘s Exports to China by End-Use
Category, 2000-2010 (% of total exports
to China)
100
Poland‘s Imports from China by EndUse Category, 2000-2010 (% of total
imports from China)
50
45
40
35
30
25
20
15
10
5
0
90
80
70
60
50
40
30
20
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Intermediate Goods
Household Consumption
Capital Goods
Mixed Enduse
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Intermediate Goods
Household Consumption
Capital Goods
Mixed Enduse
41
.
Own calculation based on OECD, STAN Bilateral Trade Database by Industry and End-Use Category
EU – China Trade and Investment Relations (5)
Intra-Industry Trade Index Germany-China and Poland-China,
Selected Product Groups, HS 2006, 2 Digit, 2007, 2011
1
0,9
0,8
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
73
DE-CN 2007
84
DE-CN 2011
85
PL-CN 2007
90
PL-CN 2011
42
EU – China Trade and Investment Relations (6)
Poland’s Imports from China Classified by Technological Level, 2000-2009 (USD billion)
7
6
5
4
3
2
1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
High-Tech Manufactures
Medium-High-Tech Manufactures
Medium-Low-Tech Manufactures
Low-Tech Manufactures
2011
ICT Manufactures
43
Source: OECD, Structural Analysis Statistics, S TAN Bilateral Trade 2010
.
EU – China Trade and Investment Relations (7)
FDI inflows to China from the EU, Japan, the U.S.A., 2000-2010 (USD billion)
7
6
5
4
3
2
1
0
2000
2001
2002
2003
2004
EU
2005
U.S.A.
2006
2007
2008
2009
2010
Japan
44
Source: Own calculation based on MOFCOM, Invest in China.
EU – China Trade and Investment Relations (8)
Motives of German Companies to Invest in EU-15, CEEC, China
100%
80%
Distribution and Service
60%
Market Development
40%
Saving Costs
20%
0%
EU-15 CEEC China
Source: DIHT, 2011
45
EU – China Trade and Investment Relations (9)
China’s OFDI Stock in EU-27, Top 4 EU-15, Top CEEC, 2007-2010 (USD million)
2007
2008
2009
Poland
U.K.
Sweden
Germany
Luxemburg
2010
EU-27
13000
12000
11000
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
46
Source: Own calculation based on MOFCOM, 2010.
EU – China Trade and Investment Relations (10)
China’s OFDI Flows by Selected Countries/Regions, 2010 (in %)
6
21
17
6
16
13
4
11
Argentina
Brazil
Canada
Cuba
EU
HongKong
USA
Others
Source: Own calculation based on European Commission, DG Trade.
47
EU – China Trade and Investment Relations (11)
Chinese Outward Direct Investment Stock, 2003-2011 (USD billion, %)
8
1
0.9
7
0.8
6
0.7
5
0.6
4
0.5
0.4
3
0.3
2
0.2
1
Chinese OFDI stock in Europe (Billion EUR)
Chinese OFDI stock in Europe as % of total
0.1
0
0
2004
2005
2006
2007
2008
2009
2010
Source: Own calculation based on UNCTAD, World Investment Reports.
EU – China Trade and Investment Relations (12)
Greater China Outbound M&A Activity into Germany, 2005-Q2 2013
(Volume and Value)
EU – China Trade and Investment Relations (13)
Greater China Outbound M&A Activity into Germany, Sector Deals, 2005-Q2 2013
Greater China Outbound M&A Activity into Germany, Deal Size Volumes, 2005-Q2 2013
Recent Chinese M&As in Germany
2012
Chinese Company
German Company
Industry
Sollbro
Hanergy Holding
Solar
Schwing
XCMG
Machinery
Wumang Texroll
Fudi
Machinery
Preh
Joyson Electronic
Automobile Supplier
Drossbach
Dalian Sunlight
Machinery
Kiekert
Hebel
Automobile Supplier
Putzmeister
Sany
Machinery
Saunalux
Anhui Saunaking
Sauna Equipment
Sunways
LDK Solar
Solar
Sellner
Ningbo Huaxiang
Automobile Supplier
Fluitronics
XCMG
Hydraulic Systems
KSM Casting
CITIC Dicastal
Metal
Medion
Lenovo
Computer
Saargummi
Chongging Light Industry
Automobile Supplier
Source: Frankfurter Allgemeine Zeitung, 25 August, 2012, p. 13.
Recent Chinese M&As in Germany
2012 – H1 2013, ranked by deal value
Target Company
Target Industry
Bidder Company
Seller Company
Deal Value
(USD mio)
Linde Hydraulics; Kion
Group
Manufacturing
Weicha Power
Oerlikon Sauer; Oerlikon
Schlafhorst;
Oerlikon Textile
Components
Manufacturing
The Jiangsu Jingsheng
Group
OC Oerlikon Corporation
702
Putzmeister Holding
Manufacturing
Sany Heavy Industry;
CITIC
Karl Schlecht Stiftung
661
Preh
Manufacturing
Liaoyuan Joyson Electronic
Deutsche Beteiligungs
AG; Joyson Holding
364
ThyssenKrupp Tailored Blanks
Manufacturing
Wuhan Iron and Steel
Company
ThyssenKrupp AG
334
Grohe AG (undisclosed stake)
Manufacturing
Jianshe Cai; Jilin Cai
A. Monforts Textilmaschinen
Manufacturing
Fong‘s Industries
(HongKong)
L. Possehl & Co.MbH
63
HIB-Trim Part Solutions
Bruchsal
Manufacturing
Ningbo Huaxiang Electronic
Mutares AG
45
AWECO Appliance Systems
Consumer Business
Sanhua Appliances Systems
28
Golden Tulip Hotel Frankfurt
Consumer Business
New Century Tourism
Group
14
928
119
Source: Deloitte (2013): Graduating Up the Value Chain – Chiina‘s Overseas Revivals – 2013 Greater China Outbound M&A Spotlight.