External Trade Flashcards
EU is one of the main trade actors in the world (we trade a fkn lot). But discourse in the EU + other big traders
EU trades a lot, but it is important to remember that it is a discourse that EU wants to uphold
The other two competitors (US and China) are catching up
○ But remember that it is also important how the numbers are chosen
Ex. Remember to factor out Covid (choose data that is a fair amount after covid) - ex. China has been trading less since 2020, but overall they are increasing trades
what is the Draghi Report? (name, research area)
and who is Draghi?
Mario Draghi: former Italian Prime minister; former president of the European Central Bank (ECB)
Big, powerful guy
Report: ”The future of European competitiveness”
- The report is very critical voice - a wake-up call?
- The report looks at the challenges faced by the industry and companies in the Single Market
The report identifies 3 priorities: innovation, decarbonisation and security
The very purpose and the reason the EU is a union: economical security - and we now don’t nescessarily have that
The commission has been inspired by this report
when was the trade policy introduced to the union?
One of the first policies (Treaty of Rome (1957); in the EEC)
How is the economical inequality in the EU compared to other contintinents?
EU has less economically inequality than other continents
EU’s opinion to tariffs:
The EU hates tariffs and is one of the most open economies in the world.
About 70% of imports enter the EU without tariffs or with reduced tariffs
Why is trade important for the EU?
more jobs for the people!
Is it mostly large or smaller entreprises who exports the majority of goods?
93% of all exporters are SMEs (small/(medium entreprises)
Which kind of goods does the EU earn the most on?
(And what do we buy a lot of)
Chemicals and machinery
Buy mostly energy
What fragilities does the EU have in terms of trade?
The EU has a strategy of an open economy and strong dependence and it is backfiring
- High trade (Trade-to- GDP ratio is more than 50% in the EU, and it is lower in US and China)
- Too dependent (open)
- Low defense
- Few supplies of raw material
- High energy prices
- (almost) only imported technology (80% is imported)
Describe the innovation gap between the EU and USA
- a slowing down of producitivity
- EU companies spend much less on R&D (research and development) than their US counterparts
- Human factor not the root cause (academically highly skilled and dynamic entrepreneurship)
- Too many obstacles cause loss of talents (brain drain) (and of innovative companies - European Unicorn companies are leaving the EU)
How can the innovation gap be solved?
- legislative work: create a new European company statute (new legislative work)
- Investment: More and more focused investing in innovation
- ai: ‘tame’ and incorporate ai instated of fearing it
How can the decarbonisation (from the Draghi report) priority be solved? (situation described + solution)
- The EU is a world leader in green technology and clean energy
- The EU’s decarbonisation goals are higher than other countries
- Strong competition from China (public subsidies, innovation) - especially in solar photovoltaic (solceller)
- So, the EU should invest and push infant-industries (ex. in low-carbon fuels)
- and not go for protectionism but instead push for compliance with WTO to push the companies
what is protectionism?
protecting internal firms with tariffs, subsidies, import quoates or other restrictions on the imports of foreign competitors
what does the TEU say about trade?
It shall contribute to […] free and fair trade […]
Trade became a part of the EU’s external action since Treaty of Lisbon (2007)
“encourage the integration of all countries into the world economy, including no restrictions on international trade; “
Decision making procedure for international trade agreements - the 4 phases
You never have one EU institution that decides something, it is always multiple
4 phases: Negotiation mandate, negotiations, ratification, implementation
Theories in accordance to trade policy
Integration theories can only explain internal aspects of trade policy, other theories of international business are needed for international trade
phase 1 in Decision making procedure for international trade agreements (Negotiation mandate)
Commission drafts a proposal for initiating and for the content of trade negotiations
Drafted by DG Trade staff
Amended after discussion
Transmitted to Council of Ministers (CM)
Council authorizes opening of negotiations
CM drafts the negotiation mandate & “bargaining position” (normally using QMV - consensus in most normal)
handed back to the Commission
The parliament is consulted and informed (limited role, but formalized since Lisbon Treaty)
phase 2 in decision making procedure for international trade agreements (Negotiations)
Carried out by the Commission, under the authority of the Trade commissioner.
MS are present during WTO negotiations as observers -> take part informally in negotiations
Council adopts negotiating directives (the “mandate”)
TPC (“special committee”) also involved. EP is informed.
When questions arise beyond the mandate, the Commission needs to refer back to MS.
Commission is under ”supervision” of MS during the negotiations
phase 3 in Decision making procedure for international trade agreements (Ratification) (confirmation ex. through vote)
Final deal is presented to EP and Council by the Commission.
If deal accepted by both, the deal can be accepted by the EU.
- Since Lisbon Treaty: Council (QMV) ratifies trade agreements - In practice: MS can still need ratification procedures domestically
phase 4 in Decision making procedure for international trade agreements (implementation)
implementing measures are adopted by EP and Council
(Ordinary Legislative Procedure)
