EU Trade Policy
Pattern of trade: facts
EU exports to
EU imports from
United
States
China
United
States
China
6%
5%
9%
31%
6%
14%
13%
16%
Russia
Switzerla
nd
Norway
Turkey
Japan
India
5%
Russia
7%
4%
18%
9%
9%
29%
19%
Switzerla
nd
Norway
Turkey
Japan
India
Pattern of trade: facts
Share in world total exports
7%
84%
9%
Agricultural
products
Fuels and mining
products
Manufactures
Share in world total imports
8%
31%
61%
Agricultural
products
Fuels and
mining products
Manufactures
The role of EU in international trade
More than 20% of
the overall trade
flows done by it.
EU
First exporter
Second importer
The institutional framework of
international economic agreements
 1947 – GATT formed by 23 coutries including USA.
 WTO – 1995
WTO – International organization
WTO – 159 member states that run aproximatively
94% of global trade flows.
HQ at Geneva, has legal personality and a staff of
over 600 employees.
Main principles of the commercial
system developed by the WTO
The main principles
of operating the
commercial
relationships between
the 159 members
• Non- discrimination in
trade
•The gradual liberalization of
trade through negotiation
•Promote free competition
•Encouraging development
and economic reforms
•Predictability and
transparency
•Openness
WTO
Members
Members, dually
represented by the
European Union
Observes
NonMembers
Issues addressed in the GATT negotiations
and the results towards trade liberalization
Time period
Place
Issues
addressed
Number of
participing
countries
Results
1960-1961
Geneva (Dillon
Round)
Tariffs
26
4,400 tariff
concessions
1964-1967
Geneva
(KennedyRound)
Tariffs
Anti-dumping
procedures
62
Reducing tariffs of
over 6300 headings
by more than 35%.
1973-1979
Geneva(Tokyo
Round)
Tariffs
Non-tariff barriers
Framework
agreements
102
Tariff concession.
Reducing tarifs by
an average of 35%.
1986-1994
Geneva(Uruguay
Round)
Tariffs
Non-tariff barriers
Services
Intellectual
property rights
Creating WTO
123
Reducing tariffs by
40%.
Reducing export
subsidies by more
than 36%.
Arguments in favor of a Common
Trade Policy
 Increasing the negotiating power of the
Community on the International market.
 Reducing diffusion effects.
 Maintaining internal market integrity
through
common
trade
policy
instruments.
Common Trade Policy
• Established by the Treaty of Rome
(1957).
• The current framework established by the
Maastricht Treaty (1992), amended by
the Treaty of Amsterdam (1997).
Common Trade Policy
Long term
Short and
medium term
•Promoting foreign trade
•Protecting national
economies from EU
• Improving trade
structure
•Enforcing protection
fore some sectors of the
economy
• Maintaining the overall
balance of trade
Common Trade Policy
The main areas
covered by CTP
Changes in the
tariffs levels
Trade agreements
Harmonization of
the liberalization
policies
Export policies
Measures for
protecting trade
Common Trade Policy Instruments
•Tariff instruments
• Non – tariff instruments
Aim to restrict
imports
•Stimulating instruments
Aim to boost
exports
Tariff instruments
• Indirect taxes imposed by a state on goods
when they are crossing the custom borders of
that country.
• Classification:
– Considering taxation purpose: Fiscal tariffs ( low),
protectionist tariffs (high).
– Considering the taxation object: import, export and
transit tariffs.
Non - tariff instruments
• Quantitative restrictions (import licenses, export
limitations)
• Limiting imports through the price mechanism (price
limits).
• Customs and administrative formalities
• State participation in commercial activities: state
trading, the state monopoly upon foreign trade
• Technical standards applied to imported products.
Stimulating instruments
• Stimulating measures:
• Negotiating some trade and navigation treaties;
• Direct or indirect support of the companies in
participating at international exhibitions;
• Commercial representation abroad;
• Providing information services and external clients
orientation.
Measures of stimulating exports
• Budgetary measures : direct subsidies to
exports.
• Fiscal measures : certain tax incentives
that are granted directly to companies
involved in export
• Banking measures: buyer credit, credit
lines
The Common External Tariff (CET)
• The main pillar of the Common Trade Policy
of EU.
• Entered into force in 1968.
• Established upon the average tariffs of the
founding states of EU.
• Initially CET was higher that the one of Japan
or USA.
• Currently, CET is set around 3%.
Preferential arrangements
• With European Mediterranean Trade Area –
Euro-Med Association Agreements (Med 10).
• With ACP – The Cotonou Agreement –
Economic and trade cooperation aimed at
fostering development in the ACP nations.
• With European Economic Area (Norway,
Iceland, Liechtenstein).
Preferential arrangements
• Former Soviet republics and the Western
Balkans – GSP treatment plus
• PCAs (Partnership and Cooperation Agreements) – The
EU has lowered its tariffs on most exports from these
nations without requiring that the PCA partners lower
theirs.
• GSP – allows rich countries to voluntarily charge lower
tariffs on imports from poor countries.
• SAAs – GSP + financial assistance, trade in services.
Preferential arrangements
EU uses SGP with more than 178
countries.
Offers stability to
the main trading
partners.
GSP
Main beneficiares of
this system. China,
India, Brazil. (2002)
EU is the main user of this system
from all OECD countries.
Preferential arrangements
• Preferences for poor countries:
• General GSP: which is available to
all developing nations;
• Super GSP: which involves extra EU
unilateral preferences for nations that
the EU wishes to encourage.
Anti-dumping procedures
• Dumping – selling of exports below some normal prices.
• The most important commercial instruments.
• Introduced in 1968 along with CET, but they were first applied in
1976.
• The European Commission is in charge of investigating dumping
complains.
• If the Commission finds that:
• Dumping has occurred;
• That material injury to EU producers has or might happen
Impose a provisional duty
Trade policy instruments
Measures
2008
2009
2010
2011
Anti dumping
91
93
88
94
Anti subsidy
10
6
4
10
Institutions involved in the management
of the Common Trade Policy of EU
• The European Commission;
• The Council of Ministers;
• Consultative Committees.
Trade policy in perspective
Successes under GATT
Goals of WTO
•Policy coordination
between GATT members
•Reducing by 90% the
average tariffs
•Facilitate the access of
developing countries in
tradeing manufactured
goods
•Expansion of trade in
services
1950
•Gradual liberalization of
FDI flows;
•Better management of
disputes between countries;
• Policies coordination in
what concerns trade with
agricultural goods.
1955
2009
2050