EU TRADE POLICY AND DEVELOPING
COUNTRIES
• Overview
-- Global trade-and-development scenarios; general
priorities for EU trade policy
-- EU in the WTO
-- EU and bilaterals
-- EU and low-income/least-developed countries
-- Managing EU trade policy
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• Global trade-and-development scenarios
-- Crisis aftermath: anaemic West; bullish emerging
markets; shift to the East
GDP Growth and Growth
Estimates
2008
2009
2010
Advanced
economies
0.556
-3.432
1.323
Africa
5.183
1.694
4.028
Developing
Asia
7.585
6.205
7.347
Western
Hemisphere
4.172
-2.534
2.901
International Monetary Fund, World Economic Outlook Database, October 2009
World Trade Goods and
Services
Trade Volumes
2008
2009
2010
Import
Export
Import
Export
Import
Export
0.5
1.9
-13.7
-13.6
1.2
2.0
11.2
-0.5
-1.7
-4.9
5.0
4.2
Developing
Asia
6.9
6.5
-7.0
-8.1
5.3
3.3
Western
Hemisphere
7.4
3.1
-11.2
-6.7
3.6
2.7
Advanced
economies
Africa
International Monetary Fund, World Economic Outlook Database, October 2009
Growth in Industrial Production
(2005-2009)
Growth in Merchandise Exports
(2005-2009)
FDI inflows, global and by groups of
economies, 1980-2008 (billions of dollars)
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• Three scenarios for the world economy
-- Reglobalisation
-- Deglobalisation
-- Anaemic recovery
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• Reglobalisation
Strong and adaptive economic systems – and efficient
stimulus packages – shortened the crisis and speeded up
recovery
-- Recovery cycle; then strong globalisation
-- Similarities with the late 1990s rather than the noughties
-- Geographical equalisation of trade and growth
-- Horizontal and vertical integration
-- Trade and FDI expansion drivers of growth
-- Technological development and policy liberalisation
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• Deglobalisation
Cyclical deglobalisation succeeded by structural deglobalisation
through policy interventions.
-- Stimulus activities not effective; inflation; end to deflationary effect
of globalisation
-- Creeping protectionism enforced by new wave of factor market
interventions at home; 1930s style fragmentation
-- Short recovery cycle that ends when stimulus packages are
phased out; new dip in 2012-2014
-- Trade and FDI never rebound fully; supply-chain collapse
-- Spiralling protectionism
-- Positive growth in China; Eursclerosis; US inflation cycle;
negative growth in commodity countries
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• Anaemic recovery
-- A lost decade for trade and growth; creeping protectionism and
structural problems keep the world economy at low growth rates
-- Similarities with the 1970s and early 1980s
-- Creeping protectionism and domestic market interventions
-- Slow trade and FDI growth
-- Globalisation angst
-- The return of industrial policy
-- China’s and India’s growth slows down (6%), OECD and ACP
very low growth (+/- 1%)
Annual average growth of trade as
part of GDP
Annual average growth of trade as
part of GDP
Source: UNCTAD Statistical Handbook
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• Anaemic recovery (cont.)
-- Domestic crisis interventions (bailouts, fiscal stimulus):
macroeconomic consequences cloud horizon for
developing countries
-- Return to Big Government: new interventions in product
and factor markets distort competition
-- Spillover to regulatory protectionism
Scenarios for the global economy and trade policy
Reglobalisation
Economy. Buoyant global economy driven by globalisation. Strong horizontal
integration, especially through emerging markets. Strong cross-border vertical
integration through supply-chain production networks. New wave of policy
liberalisation drives globalisation and growth.
Trade policy. Benign conditions for trade liberalisation. The Doha Round finishes
soon in the new decade, followed by an ambitious post-Doha agenda of liberalisation
and
rule-strengthening.
Regionalisation
and
plurilateralisation
of
PTAs.
Harmonisation and simplification of ROOs. Revived unilateral liberalisation of trade
and investments, freeing up trade in services in particular. Trade-related structural
reforms in OECD and emerging markets.
Deglobalisation
Economy. Global economic
contraction. Short
periods
of
small
growth.
Regionalisation and relocalisation of production as global supply chains unravel.
Trade policy. Malign conditions for trade policy. Doha Round dead and buried and no
post-Doha agenda. Huge strains on WTO dispute settlement. Marginalisation of
WTO. Big-power driven PTAs. PTAs are inward-looking and trade-restrictive.
Formation of clashing regional blocs. Escalating unilateral protectionism.
Scenarios for the global economy and trade policy (cont.)
Anaemic
Economy. Economic growth patchy and uneven. A decade of volatility, also for
trade and FDI. Expansion initially in Asia, but at a slower pace. Eurosclerosis.
Recovery
American and UK quagmire. Japanese malaise..
Trade policy. Trade policy generally defensive and closely related to the business
cycle and overall macro conditions. Continued drift and decline of the WTO.
Proliferation of weak, trade-light PTAs. More trade/investment diversion and
spaghetti/noodle bowls. More domestic interventions in capital, labour and
product markets. Creeping regulatory protectionism increases, e.g. green
protectionism.
EU TRADE POLICY AND DEVELOPING
COUNTRIES
 Emerging protectionism: v. little up-front protectionism;
rather creeping regulatory protectionism
-
Tariffs
-
Import licensing
Financial mercantilism
Subsidies
“Buy national” measures
Foreign-investment restrictions
Migrant labour
Anti-dumping duties
Standards protectionism, including climate change
China-bashing
• Domestic economic policy and trade policy are linked: lessons from
previous eras
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• EU trade policy
-- Link between Single Market and external trade policy
-- Crisis aftermath: Single Market under stress;
defensiveness abroad
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• EU trade-policy priorities
-- Must prioritise
-- First priority: EU commercial interests
-- Equal priority: Single Market – contain internal
protectionism and further liberalisation/structural reforms
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• EU in the WTO
-- EU should lead initiative to conclude a v. modest Doha
Round
-- EU should lead strategic thinking on post-Doha priorities
(market access, rules, flexible decision-making)
-- Emphasise market access, rules and plurilateral
agreements where economic gains are largest
-- Development dimension is market access and rules, not
exemptions, old-style S&D and aid (as in DDA)
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• EU and bilaterals
-- Prioritise key commercial partners
-- Rhetoric but only half-reality of Global Europe
-- USA, Japan and China
-- Deep-integration FTAs; liberalisation and structural
reform at both ends; open regionalism
EU (27) Trade Partners Goods, Excluding
the EU
Exports
Destination
Imports
Annual percentage
Origin
change
Value
Share
2008
2008
2007
2008
World
1924.9
100.0
16
10
1. US
362.7
18.8
6
2. Russia
153.2
8.0
3. Switzerland
143.7
4. China
Annual percentage
change
Value
Share
2008
2008
2007
2008
World
2282.2
100.0
16
12
2
1. China
363.7
15.9
30
15
34
27
2. US
268.3
11.8
13
8
7.5
15
13
3. Russia
254.0
11.1
11
28
113.7
5.9
23
17
4. Norway
135.3
5.9
6
29
5. Turkey
79.8
4.1
15
11
5. Switzerland
117.8
5.2
17
12
6. Norway
64.3
3.3
24
8
6. Japan
109.9
4.8
11
2
7. Japan
60.4
3.1
6
3
7. Turkey
67.5
3.0
23
5
8. UAE
46.6
2.4
16
27
8. Korea
57.9
2.5
11
2
9. India
45.6
2.4
32
15
9. Brazil
52.1
2.3
31
16
10. Canada
38.4
2.0
6
8
10. Libya
50.3
2.2
15
34
Source: World Trade Organization, International Trade Statistics, 2009.
EU (27) Trade Partners Services, Excluding the
EU
Exports
Imports
Value
Share
Annual percentage change
Value
Share
Annual percentage change
2007
2007
2004-07
2006
2007
Origin
2007
2007
2004-07
2006
2007
World
668280
100.0
14
13
21
World
548024
100.0
12
10
19
1. US
186557
27.9
10
11
14
1. US
168917
30.8
9
5
14
2. Switzerland 83728
12.5
14
8
26
2. Switzerland
58615
10.7
13
4
26
3. Japan
26376
3.9
5
-4
14
3. Japan
18427
3.4
13
11
14
4. Russia
25930
3.9
32
20
43
4. China
18386
3.4
27
28
26
5. Norway
25875
3.9
16
13
27
5. Russia
16020
2.9
18
11
19
6. China
24001
3.6
30
9
45
6. Norway
15977
2.9
11
11
22
7. Canada
15768
2.4
16
18
23
7. Turkey
15897
2.9
9
-4
21
8. Singapore
15491
2.3
19
24
19
8. Canada
12762
2.3
15
16
24
9. Australia
14617
2.2
19
10
28
9. Hong Kong
10919
2.0
20
18
34
10. India
12754
1.9
42
38
45
10. Singapore
9548
1.7
16
10
29
Destination
Source: World Trade Organization, International Trade Statistics, 2009.
Stocks of foreign direct investment abroad,
EU-27, 2006
Source: Eurostat Handbook, 2009
Stocks of foreign direct
investment in the EU-27, 2006
Source: Eurostat Handbook, 2009
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• EU and China
-- Trade and investment patterns
-- Tension and conflict; more so since the crisis
-- EU priorities: contain China bashing (exchange rate and
trade deficit); “micro” market-access priorities; more
effective prioritising of the latter; limit zero-sum
competition among member-states; limit intrusion of nontrade standards; strengthen dialogue (esp. HLD)
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• EU and FTAs
-- Deep-integration FTAs beyond ROK, Canada and
Singapore??
-- Drop negotiations if only prospect is shallow, trade-light
FTAs (e.g. India, ASEAN countries)
-- Pursue non-FTA frameworks on selected issues, e.g. with
Russia
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• EU and low-income/least-developed countries
-- Trade and investment patterns (e.g. EU-ACP): marginal
for EU; very important for others
-- Preferences (GSP, GSP+, EBA) and trade-related aid:
limited tools for development; long record of mixed
results and failure
-- Limit linkage of non-trade conditions in trade agreements
(including climate change)
-- EPAs: cannot achieve regional-integration objectives; nor
deep-integration FTAs; focus on border barriers; limit
non-trade conditions
EU TRADE POLICY AND DEVELOPING
COUNTRIES
• Conclusion
-- EU trade-and-development priorities: summary
-- EU trade policy and the Lisbon Treaty: Commission and
EP
-- Challenge: prevent populist, protectionist slide in EU
trade-policy making; prevent using trade as foreignpolicy tool to export EU “values”