Chapter 7 The trade policy of the European Union

This chapter reviews the main challenges that the EU's trade policy currently faces.
Key issues include:
- Rise of emerging economies.
- Stagnation of negotiations within the WTO.
These factors led to a reorientation of the EU's trade policy towards more bilateral free trade agreements (FTAs).
The FTAs have become deeper and more comprehensive, reflecting a degree of externalization of the EU's internal market.
Trade policy is increasingly linked with other EU policies like human rights, competition, and environmental policy, leading to institutional and political challenges.

The EU's global network of trade agreements is characterized by a hierarchy of preferential market access.
Key components of the trade agreements:
- European Economic Area (EEA): Established in 1992, it allows free movement of goods, services, capital, and persons.
- Customs Union: Example with Turkey, allowing for free circulation of certain goods complying with EU norms.
- Partnership and Cooperation Agreements (PCAs): Initially established with transition countries, these aimed for preferential treatment without free trade.
- Deep and Comprehensive Free Trade Areas (DCFTAs): Replacing some PCAs to enhance market access and integration.

The 'globalization management' policy shifted focus after early 2000s due to:
- Stalled Doha Development Round.
- Emergence of assertive economies engaging in competitive liberalization.
This led the EU to prioritize bilateral agreements, targeting countries like:
- India, Japan, Canada, and the United States: FTAs are based on symmetric reciprocity.
- Emerging economies and developing countries: Asymmetric reciprocity is applied, with the EU liberalizing more rapidly.

Internal Market Association: Example: EEA (Norway, Iceland, Liechtenstein)
Customs Union: Turkey, Andorra, San Marino
Free Trade Agreements (FTAs):
- Symmetric Reciprocity: South Korea, Singapore, Canada, Japan.
- Asymmetric Reciprocity: Mexico, Chile, South Africa.
Partnership and Cooperation Agreements: Example: Russia, Armenia, Azerbaijan.

Intensifying Global Competition: Demands for more competitiveness among economies.
WTO Negotiations Stalemate: Major issues like public procurement and investment protection remained unaddressed.
Regulatory Divergence: Differences in regulatory standards create challenges in negotiations and implementation.
Political and Institutional Challenges: EU's complex decision-making framework might slow down responses to changing global trade conditions.

Expanding trade agreements integrated with EU policies on labor rights and environmental standards.
Increasing scrutiny of the impacts of trade agreements on local economies and environments.
Competition Policy: EU’s approach to ensure fair competition domestically and globally through cooperation agreements.

The EU promotes human rights through trade agreements:
- Non-execution clauses linked to violations of human rights.
- The inclusion of human rights clauses in major agreements, like the Cotonou Agreement.
- Seeking coherence across various EU policies remains challenging due to varying interests of member states.

The EU's trade policy must navigate a complex landscape influenced by global dynamics and internal demands.
Future challenges include the impact of international developments, such as:
- US trade policy under President Trump.
- The ongoing implications of Brexit on trade agreements.
Effective communication and transparency in trade negotiations are crucial for public trust and support.
The chapter emphasizes the delicate balance between economic interests and the EU's normative values in trade relations.