A new trade policy for the European Union

Rafael Leal-Arcas on the European Union’s (EU) existing law and policy in the field of international trade.

My new book on EU trade law analyzes the evolution of the EU’s external trade relations, as well as its common commercial policy competence through the years, starting with the Treaty of Rome up until the Treaty of Lisbon, as a background for understanding the EU’s present role in the World Trade Organization (WTO) framework. Thus, a legal analysis of EU trade policy after the Treaty of Rome, after the conclusion of the WTO Agreement, at the Treaty of Amsterdam, at the Treaty of Nice, and at the Treaty of Lisbon is provided, taking into account the most recent constitutional developments by the Lisbon Treaty on division of competences between the EU and its Member States.

The EU has become an important actor on the international scene, and since the 1970s, its external relations have been growing both in the number of agreements signed and in domains of participation. The European Union has participated in an important number of multilateral conventions within the framework of international or regional organizations, and are increasingly present in world affairs. In legal terms, however, the European Union has a growing role. The EU’s progression has not been steady, but was achieved in small steps, as we will see in the analysis of this book.

Trade is no longer just about negotiations on tariffs on goods between industrialized economies. Trade policy has become complicated on both sides of the matrix –new actors and new issues. Trade policy, as well as WTO rules and policies, need to change to become more efficient and more accountable. At the same time, it is important to address the issue of the lack of transparency and legitimacy in the current system of governance, denounced by the Laeken European Council, including trade policy matters handled in the WTO, in order to be closer to the citizens’ needs. Thus, more leadership is needed.

The new forms of governance on the European level continue to limit the sovereignty of the nation-state, and the ongoing transfer of competences from the national to the supranational levels, which has the symptoms of a federation in the case of trade policy, may lead to an accountability deficit.

With regard to transparency, it means ensuring that a given organization is more internally accountable to its members. The well-known formula that “more transparency implies less efficiency” is rather simplistic and, thus, does not suffice to answer these questions.

As for efficiency and accountability, the world has moved on, and so must the Treaty of Rome. It is necessary to ensure that negotiations on trade in services, intellectual property rights, and investment are handled in the same way as negotiations on trade in goods by qualified majority voting in the framework of the EU Council of Ministers. Unanimity, especially in an enlarged EU of over 30 Member States, makes no sense, and is unrealistic in policy-making. In sum, the EU can no longer afford the luxury of finding a common position in trade matters by consensus or Qualified Majority Voting (QMV) in such a politically diverse EU. Political compromises and social sacrifices must be met and found in the name of efficiency and Realpolitik if the EU wants to move forward its position in the world trading system.

That said, the Commission’s compromise proposal allows for an EU Member State to call for unanimity on a point of real national sensitivity. It also calls for the European Parliament to be fully involved in EU trade policy-making. Also, there needs to be a change in the EU’s negotiating methods. On the other hand, having the Commission as the trade negotiator on behalf of the EU Member States implies a more efficient but less democratic system of EU trade policy-making. This democratic deficit is further corroborated by the fact that the Lisbon Treaty does not establish full parliamentary accountability of the Commission. So with the Lisbon Treaty, trade policy is more efficient–since it becomes more federal–but not yet fully accountable or democratic. Despite that, one can argue that the overall balance is positive, even taking into account the price Europeans pay for loss of sovereignty.

Rafael Leal-Arcas, is Jean Monnet Chaired Professor of EU International Economic Law, Professor of European and International Economic Law and Director of Research, Queen Mary University of London, UK.

His book EU Trade Law is out now.

Read chapter 1 free on Elgaronline.