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[PDF] The World Trade System: Trends and Challenges | Semantic Scholar
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Your current browser may not support copying via this button. Show Summary Details. The European Union's trade policy owes its efficacy to its federal structure and to a common policy concept shared by the 28 Member States. The EU is a major player in world trade and the leading world exporter of services.
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It pursues an ambitious, strategy of market openness governed by rules. The most recent free-trade agreement with Japan entered into force on 1st February last. But the world trade context has changed due to harsh competition by the emerging countries and mistrust on the part of public opinion in the developed economies that suffer from the negative effects of globalisation, However the latter, has pulled over one billion people out of poverty.
The collapse of multilateralism affects the EU especially, since it is committed to a rules-based approach to international relations. Although the EU proved successful in terms of its trade policy, this will not be enough to convince its citizens in the upcoming European elections in May next. A social policy will have to be added to this to balance trade openness, together with an industrial policy to help the EU retain its place on the markets. A federal European policy The EU's trade policy is one of the most elaborate elements of European integration.
It owes its efficacy to its federal structure: a single negotiator for the 28 Member States and million economic actors [1]. Its strength also lies in the fact that the concept is shared. This position lies within a triangle, the components of which are: openness, rules and competition.
Breadcrumb
We might note the distinction from the simple idea of free-trade: the Union is not driven by an ideological vision of free-trade. It seeks reasoned opening of markets to the benefit of Europe's economies, together with rules that are deemed vital to sustainable trade. The rationale that aims to harness globalisation was new, when we recall that globalisation was then often considered a political option open to questioning, rather than a reality to be addressed; moreover, most economists and decision makers ignored the social downsides of globalisation, except, indeed, for a few famous names such as Krugman [2] , Stiglitz, Rodrik and Summers in the USA.
They are just a means to achieve an end" [3]. This policy includes a notable commitment towards the multilateral framework and concern to support developing countries in their opening to trade. As the years have passed, via these trade agreements, effective commitments to the implementation of the EU's values have been added: human rights, environment, consumer protection, food safety etc Since the trade policy is one of the Union's main levers of "hard power" it is quite normal for trade to have become an instrument used to promote goals in other areas, notably in external relations.
It is the spirit of the Lisbon Treaty that lays down that "the common trade policy shall be conducted in the context of the principles and objectives of the Union's external action. The EU the trade policy' performance The European Union is an open economy [4] , which cannot do without world trade. It is also a major player in world trade [5] : it is the leading trade region covering The latter achievement is vital, given the place of services in the overall industrial output and the sector's potential.
However, Britain's secession is likely to cause a setback to this bright attainment, which is already declining; the European Union has lost 2. This trend shows the harsh nature of competition in hyper-globalisation, notably marked by a rise in new emerging players, mainly China. This reassuring situation should however not hide the strategy of a rapid upmarket move adopted by our emerging and emerged competitors. Another reassuring - although rarely mentioned - fact: the effect of external trade in terms of job creation in Europe represents around 36 million jobs, i.
One should acknowledge though that trade also destroys jobs, although few exact figures are available; the opening up to Chinese imports caused a major economic shock on developed economies notably in Europe and the USA, even though the Chinese market is a source of trade opportunities, and therefore of growth for developed economies.
Since , the European Union has developed an offensive approach to globalisation via bilateral trade agreement negotiations with its main partners. These agreements have a dual goal: the opening of markets, notably via the removal of customs duties and non-tariff barriers, to the benefit of European companies; the second goal is the adoption of rules designed to render trade secure and protect economic operators, for example the rules governing intellectual property or consumer protection.
To these goals we might add a normative agenda that becomes manifest in each agreement in the shape of a "sustainable development chapter" notably comprising common commitments regarding workers' rights and the environment. A great many agreements have been concluded with some countries and territories. These are so-called "deep and comprehensive" free-trade agreements, that aim to achieve a high degree of trade opening, including in the area of services, as well as an in-depth regulatory rapprochement with European legislation in areas linked to trade.
The main consequence of this development in trade negotiations towards sophisticated rules and commitments has been an increasingly intrusive trade policy in the economy and domestic issues, and even in our societal choices [9]. Hence trade issues, which did not really interest many people in the 's, have become an integral part of domestic political debates, arousing high interest in public opinion. This invasive aspect of trade policy is not due to Europe, but to hyper-globalisation, as emphasized by Dani Rodrik in several works [10] : with hyper-globalisation since the 's blurring the limits between domestic and world economies, "Domestic economic management was to become subservient to international trade and finance rather than the other way round".
Lack of understanding and democratic deficit Little explanation is required to understand that this spectacular development, which also entails States losing control, is the cause of multiple, and sometimes robust contestation. How should we manage economic globalisation, as the economic and political borders no longer match? Europe's experience in this regard is of interest on two counts: its preference for the multilateral approach and its experience of regional integration. Very early on the EU trade policy gave preference to the multilateral approach, the latter involving the establishment of rules via international organisations, based on the fundamental principle of non-discrimination between the participants.
The European Union has been at the forefront in devising approaches to enlarged governance, which materialized in its preferential commitment to the WTO. It was only in , after the WTO stalemate that the EU turned to bilateral negotiations, without however forsaking the multilateral approach [11].
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It should be recalled that the European Treaties express a preference for collaborative and collective governance: article 21 TEU, notably suggests that the Union "promote multilateral solutions to common problems. Pascal Lamy provided a convincing explanation: "The EU is the most innovative approach to governance that we can find in today's world. It is in fact a laboratory of global governance: It combines market opening with the necessary regulation in the economic, social and environmental field, it seeks to establish a balance between competition and co-operation and it has the necessary institutional arrangements to allow for the development, adoption, implementation and control of rules".
One has to admit the well-known limits of this integration model: the incomplete internal market insufficient harmonisation of services, a lack of industrial, political and social coordination , weaknesses in the design of the euro and the incomplete European Monetary Union, the absence of a common energy policy, the lack of any external policy and the lack of a migration policy. This leads us to the growing mistrust of citizens regarding the European institutions, notably to the recurrent complaint about a "democratic deficit". Some specific causes can be attributed to the trade policy: the negative impact of trade openness on those losing out on globalisation is certainly a critical aspect, as the negative impact of open trade in developed economies has not been compensated for adequately by social policies.
We might also note the feeling that the trade policies lack "legitimacy", since they affect regulatory issues, for which public opinion does not recognise the necessary legitimacy of the trade negotiators, and concerns linked to the protection of European standards and public services. But this contestation goes beyond trade policy in that the negative effects of globalisation and the related identity crisis have barely been addressed. A relatively well-known process is leading to increasing scepticism regarding the ability of democracies to rise to these challenges and a mistrust of political leaders and experts, especially if they work for supranational bodies.
Withdrawal is often the ultimate response by citizens confronted with a world they perceive as a threat, because they no longer feel protected either economically or culturally. Paradoxically for the European Union: its credibility to manage globalisation is under challenge, though it seemed well placed to harness it. Its failings notably relate to its perceived inability to provide a clear identity in a globalised world, the uncertainty associated with its approach to world affairs, its perceived inability to protect its citizens against the negative impact of globalisation and to manage the migratory crisis a by-product of globalisation.
New challenges Beyond the contestation of economic globalisation, the EU trade policy faces a series of challenges to which it will have to adapt. The multilateral order in crisis Let us look at the weakening of the multilateral order, which has been the foundation of world governance since the Second World War. Beyond the harsh reaction to globalisation, opposition to the multilateral approach has emerged, including within the Union. This development affects Europe in particular, since it has been built on the rule of law and has always supported rules-based international relations.
In response to this development the EU has reasserted its commitment to a multilateral approach. America First and the trade war The "America First" approach adopted by the current American administration is a crucial challenge especially as the USA was a founding member of the post-war world governance system. The Trump administration's approach rests on a preference for bilateral action, in which it hopes to achieve the best results by exercising pressure on its partners.
In Trump's eyes rules and principles are irrelevant; what counts are results or at least good marks. The ends always justify the means The American President's decision to implement a protectionist policy and to engage in trade wars challenges open trade, as well as multilateralism.
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Europe's approach consists in a firm yet measured response to defend its interests, in view of containing protectionist initiatives. It is committed to reject any kind of confrontation and to avoid a trade war with unpredictable consequences. In this conflict the EU sticks to the rule of law and responding pragmatically, whilst strengthening its trade defence mechanisms, within the WTO's rules.
Europe's response is threefold: launch judicial procedures against the USA at the WTO; target a list of US products with additional customs duties; launch an investigation into the possible implementation of safeguard measures to support European steel and aluminium markets from the damage caused by additional imports that now enter the Union following the closing of the American market.
Forgoing stronghanded measures is not as spectacular and possibly less effective in the short-term, but remaining within the rules is a guarantee of longer-term security. However, Economic operators are depending on a short-term agenda, Therefore this situation calls for a reform of the WTO, to address the lack of emergency litigation procedures. The opening of China in the 's, of the former USSR and India to international trade in the 90's added around one billion players to the world's economy. This opening dramatically changed the context of world trade.
China, Brazil, India now feature amongst the 25 biggest world export countries and the "following 11" started to emerge: Mexico, Indonesia, Vietnam, Nigeria, Bangladesh, Pakistan [12]. Emerging countries are increasingly making their voice heard in world affairs, although they hardly have a common strategy and show no desire to assume multilateral responsibilities beyond the defence of their own interests.
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One of the challenges to the EU's bilateral agenda is to define its relations with the advanced emerging economies, the main source of world growth. Their economic rise has intensified competition in terms of price and quality, as well as access to energy and raw materials.