THIS WEBSITE IS AN ONLINE ARCHIVE OF THE DANISH EU PRESIDENCY 2012 AND WILL NO LONGER BE UPDATED

Trade Policy in the EU

The EU is the world's largest trading bloc. Together, the 27 EU Member States account for 19 per cent of the world’s imports and exports. The EU Member States negotiate collectively and are represented by the EU Trade Commissioner, Karel de Gucht.

During the Danish Presidency of the Council of the EU, a number of dossiers on the area of trade will dominate the work of the Council. Below you can read more about these matters and the EU’s trade policy.

EU/Japan Free Trade Agreement

During the past years, Japan has requested stronger economic relations with the EU consisting of a free trade agreement. The request has become stronger since the EU signed a free trade agreement with South Korea in 2011.

At the 2011 EU/Japan Summit, the EU and Japan decided to launch preliminary examinations for the negotiations of a free trade agreement. The opening of negotiations on a free trade agreement with Japan depends not least on Japan delivering specific progress regarding selected non-tariff measures. During the Danish EU Presidency it seems possible to reach agreement on the launch of negotiations on a free trade agreement with Japan.

EU/India Free Trade Agreement

Negotiations between the EU and India on a free trade agreement were launched in June 2007. The negotiations are part of the EU’s strategy of signing free trade agreements with the EU’s largest trading partners to secure EU external competitiveness, and hereby contribute to increased growth and employment.

Among the Members States there seems to be general agreement on the overall advantages and importance of the agreement in regard to the EU’s strategic partnership with India. The European Parliament has expressed special interest in particularly the political aspects of a future agreement, which according to the EU is to include sustainable development and political clauses on human rights among other things.

Review of the GSP Regulation

In May 2011, Commissioner for Trade Karel De Gucht submitted a proposal for a review of the GSP (Generalised System of Preferences) regulation regarding a new scheme for developing countries on market access. The proposal consists of a major differentiation amongst developing countries, which is a result of the rapid economic growth in and competition from a number of developing countries.

In general the Council has received the proposal positively, although some Members States have requested that the GSP regulation should be more development-friendly, whilst others prefer that the GSP regulation should be less comprehensive.

The Danish EU Presidency will make an extraordinary effort to conclude the negotiations on a new GSP regulation. Furthermore, it is important to strengthen the GSP regulation as a political tool in trade regulation for the purpose of promoting the integration of developing countries in the international trade system and contributing to growth and employment in the respective countries.

Grandfathering Regulation

With the Lisbon Treaty the EU has exclusive competence within the area of foreign direct investments (FDI), including bilateral investment protection treaties (BIT), as part of the common trade policy. Until now, Member States have signed BITs with third countries; henceforth this will only be possible to the extent that the EU does not wish to sign an agreement with the country in question.

Furthermore, the Commission wants easy access to assess whether an existing BIT signed by the Member States is in accordance with EU legal rights, and declare those which are not invalid. COREPER has empowered the Presidency to enter into an informal trialogue with the European Parliament and the Commission to find a compromise regarding the regulation, for which the Commission has put forward a proposal.

One of the difficult issues regards the field of application of the regulation. Within the Council there is general consensus on a limited interpretation of the scope of the EU’s new exclusive competence in the area of investments, while the interpretation of the Commission and the European Parliament is much broader when it comes to exclusive competence.

Why liberalise trade?
The overall objective of EU trade policy is, through free trade, to generate economic growth and European jobs as well as consumer benefits like cheaper and better products.

Through trade agreements that reduce tariffs and other barriers to trade, it is possible to open up new markets for European exporters, which benefits both European businesses and citizens. Furthermore, increased global free trade can also have a positive impact on economic growth in developing countries.

The Doha Development Round and bilateral negotiations
Traditionally, trade negotiations have been conducted in terms of “rounds” of negotiations and with considerable success, for example through the reduction of tariffs.

The latest round of negotiations, The Doha Development Round, was launched in 2001. As the name indicates, an overarching aim of this round of trade talks is to reach an agreement that in particular benefits the developing countries.

Negotiations started out ambitiously and have shown significant progress. However, there has not yet been any political will to conclude a global agreement. Because of the slow progress, the EU decided to make a strategic shift in its trade policy in 2006. In addition to the multilateral negotiations, the EU has also begun to negotiate bilateral free trade agreements (FTA’s) with select countries.

The first major FTA was concluded with South Korea and came into force on 1 July 2011. FTAs with Colombia, Peru, and with Central America are expected to be the next agreements to be ready for political consideration and adoption.

The role of the EU institutions
The European Parliament is fully involved in trade policy as a co-legislator in accordance with the ordinary legislative procedure, just as the European Parliament also approves all final agreements.

The decision to let the European Community negotiate on behalf of all the Member States has over the years meant that the European countries have achieved far greater impact and better results in the negotiations.

Here you can find more information about the EU’s trade policy

EU strategy on trade policy “Trade, Growth and World Affairs”