EU Trade Policy
Common Trade Policy of the EU
Greece, as an EU member state, promotes its interests within the framework of the trade policy of the EU. Acting collectively and with a unified voice on the global stage instead of pursuing multiple separate trade strategies, the EU has emerged as a strong player in global trade.
The Common Trade Policy covers the trade of goods and services, as well as issues such as the trade aspects of intellectual property, public procurement and foreign direct investment. It also promotes environmental and social sustainable development, while assisting developing countries in participating in trade through lower tariffs and support programs. Additionally, it establishes legislative measures for trade defense and market access, primarily aimed at protecting EU businesses from unfair practices.
Trade policy constitutes one of the most powerful tools of the EU to ensure economic prosperity and Union competitiveness, as it supports and strengthens both the internal market and the Union's external action. Through its trade policy, the Union aims to play a leadership role in the global economic and trade landscape, promoting its priorities for digital and climate transition while protecting its values and interests.
Mid-term EU Trade Policy Strategy
In February 2021, the European Commission presented its revised trade strategy, placing the concept of open strategic autonomy at the core. It takes into account new internal and external challenges, particularly the new, more sustainable model of development, as defined by the European Green Deal and the European Digital Strategy. It acknowledges the need for a new trade policy that supports the achievement of its internal and external policy goals and promotes greater sustainability in line with its commitment to fully implement the UN Sustainable Development Goals.
Three mid-term objectives are identified for trade policy:
a) Supporting the recovery and the green and digital transition of the EU economy,
b) Shaping global rules for a more sustainable and fairer globalization,
c) Increasing the EU's capacity to pursue its interests and enforce its rights, combating unfair practices autonomously when necessary.
At the same time, it highlights the importance of the multilateral trading system and the need for reform of the World Trade Organization.
More information is available following the link below:
https://ec.europa.eu/commission/presscorner/detail/en/ip_21_644
Framework of the Common Trade Policy
The Common Trade Policy is defined on the:
a) multilateral level/World Trade Organization
The World Trade Organization (WTO) is the only global international organization that regulates trade rules among its members. Both the EU and its member states are WTO members. As part of exercising the common trade policy, the European Commission negotiates and speaks on behalf of the member states at the WTO.
The primary objective of the organization is to provide stable, predictable, and free trade flows among its members. It relies on WTO agreements, which were negotiated, signed, and ratified by the majority of world countries. WTO rules constitute the guiding framework for the formulation and implementation of trade legislation.
The main activities of the WTO include:
• Serving as a forum for international trade negotiations and setting legal rules for international trade conduct
• Resolving trade disputes when the rules are breached
• Monitoring the trade policies of its members
The establishment of the WTO on January 1, 1995, marked the most significant reform of international trade since the end of World War II. While the General Agreement on Tariffs and Trade (GATT) (1948) primarily concerned goods trade, the WTO and its agreements also cover services and intellectual property trade, introducing new procedures for dispute resolution.
The highest decision-making body of the WTO is the Ministerial Conference, which typically convenes every two years and gathers all WTO members. The 13th Ministerial Conference is scheduled to take place on February 26-29, 2024, in Abu Dhabi.
More about the WTO at: https://www.wto.org/index.htm
Additionally, trade policy is also shaped through other multilateral fora (e.g. OECD, G7, G20, etc.).
b) the bilateral level (EU-Third Countries)
Trade & Investment Agreements of the EU
The EU manages its trade relations with third countries through various trade and investment agreements that are in line with and complement the commitments within the framework of the WTO. They aim to create better trade opportunities and overcome trade barriers, while simultaneously acting as a means to promote European principles and values, such as democracy and human rights, protection of the environment and social rights.
Trade agreements vary in their content:
• Customs Unions (Turkey, Andorra, San Marino)
• Preferential trade agreements:
- the provisions regarding trade, included in Association Agreements, which constitute broader policy agreements, such as those with South Mediterranean countries, Chile, among others.
- Free Trade Agreements, allowing mutual market opening with developed and emerging economies, providing preferential access to markets (e.g., with Japan, Singapore, Vietnam, among others).
- Deep and Comprehensive Free Trade Agreements, often part of broader political agreements with neighboring countries that include commitments for harmonization with the acquis communautaire, such as with Eastern Neighborhood countries.
- Economic Partnership Agreements, supporting the development of trade partners from African, Caribbean, and Pacific countries.
• Investment Protection Agreements (e.g., with Singapore, Vietnam) as well as Investment Facilitation Agreements (e.g., with Angola).
• Various sectoral trade agreements (e.g., Agreement for the Protection of Geographical Indications EU-China) or alternative forms of cooperation (e.g., EU-U.S. Trade and Technology Council).
More at the link: https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/negotiations-and-agreements_en
c) the unilateral level/EU trade legislation
Trade with Developing Countries
The EU has developed an autonomous trade arrangement, the Generalized System of Preferences (GSP), through which it provides non-reciprocal preferential access to the EU market for 176 developing countries and territories. This access is in the form of reduced tariffs on their goods upon entry into the EU market. The goal is to contribute to poverty reduction, promote sustainable development, and ensure good governance. The GSP encompasses three distinct preference schemes: (i) the standard GSP, offering preferences to 176 developing countries and territories across more than 6300 tariff lines, (ii) the special incentive scheme for sustainable development and good governance, known as GSP+, providing additional tariff reductions to support vulnerable developing countries in ratifying and implementing relevant international conventions, and (iii) the "Everything But Arms" (EBA) arrangement, granting duty-free and quota-free access for the 50 Least Developed Countries (LDCs).
Legislative Instruments for EU Protection Against Unfair Trade Practices (trade defense measures, enforcement regulations, etc.)
The European Union aims to ensure fair and equitable trade with third countries and protect its industries and producers from unfair trade practices. To achieve this, in recent years, the EU has initiated a comprehensive reform of the fundamental rules related to trade. Notable among these are:
- Modernization of trade defense instruments: The modernization of the EU's core anti-dumping and countervailing regulations (2017) enhanced transparency and predictability in related investigations, as well as the effectiveness of trade defense measures. These measures are of significant importance in protecting European producers from related unfair practices.
- Investment Screening: The Regulation (2020) established a framework for EU cooperation aimed at coordinating member states' actions concerning third-country direct investments in the EU to protect strategically important sectors.
- Export Controls: The revised regulation on export control rules for dual-use goods (2021) includes cyber security and surveillance technology, enhancing the EU's ability to adapt to evolving security risks and rapid technological advancements, thereby mitigating their impacts.
- International Procurement Instrument (IPI): With this Regulation (2022), the EU's influence on negotiating the opening of third-country markets increases, creating new opportunities for EU businesses. While the EU has an open procurement market, the world's largest, EU companies often face difficulties accessing public contracts in third countries, especially in sectors where the EU is particularly competitive (e.g., transportation equipment, telecommunications, energy production, medical equipment, and construction services).
- Addressing the distorting effects of third-country subsidies in the EU market: thanks to the new set of rules provided by the aforementioned Regulation (2022), the EU, while remaining open to trade and investments, ensures a level playing field for all companies operating in the single market. In recent years, foreign subsidies seem to have distorted the single market, among other things, by providing their recipients with unfair advantages in acquiring companies or securing public contracts in the EU.
- Anti-coercion Instrument: the EU member states have come to a political agreement on a legislative tool aiming to prevent and counteract (through taking countermeasures) coercive measures taken by third countries against the EU and/or its member-states.
The decision-making process of the EU trade policy
Unlike other aspects of the EU's external policy, such as its common foreign and security policy, trade policy falls almost entirely within the exclusive competence of the Union. This means that the European Commission takes initiatives and puts forth proposals regarding common trade policy and negotiates trade agreements with third countries, based on WTO rules, on behalf of the member states. Articles 206 and 207 of the TFEU (Treaty on the Functioning of the European Union) establish the objectives and rules of the EU's trade policy. Article 218 of the TFEU sets out the procedure for negotiating and concluding trade agreements. Articles 290, 291, and 294 outline the process for the issuing of legislative acts regarding trade.
The work of the European Commission is guided by the member states. The Council of the EU, composed of representatives of the governments of the member states, decides, for example, on negotiation mandates, international agreements, and various trade policy measures after consultations in relevant preparatory bodies. Additionally, when decisions are made in trade negotiations concerning areas falling within the competence of the member-states (e.g. investment protection), approval from the Hellenic Parliament is required.
Since the entry into force of the Lisbon Treaty in 2009, the European Parliament has been more involved in trade policy. For instance, Free Trade Agreements and legislative measures related to trade policy require approval not only from the Council of Ministers but also from the European Parliament.
Promotion of Greek positions
As an EU member state, Greece promotes its interests in trade policy through the EU. The European Commission is obligated to regularly consult with member states participating in shaping trade policy through the Council's Committees and Working Groups and the European Commission.
According to the provisions of the TFEU, negotiations with third countries are conducted by the European Commission, in consultation with the member states within the framework of the Trade Policy Committee, appointed by the Council to assist it in this work and under any directives the Council may address to it. The European Commission regularly reports to the Trade Policy Committee and the European Parliament on the progress of negotiations.
Therefore, member states, including Greece, play an active role in various stages of preparation, whether in negotiations with third countries in trade and investment or in related legislative measures. The Ministry of Foreign Affairs (B6 Directorate for Multilateral Economic Relations and Trade Policy) is responsible for preparing and coordinating EU trade policy issues. To shape Greece's positions, the B6 Directorate collaborates with other Directorates of the Ministry of Foreign Affairs, relevant Ministries, and various interest groups.
Greece's main priorities within the framework of trade policy include, among others, services, notably maritime services, promoting the system of Geographical Indications protection in third countries, opening markets for competitive agricultural products (e.g., olive oil, olives, canned peaches, etc.), protecting sensitive agricultural products in the EU market.