Transcript Baldwin & Wyplosz The Economics of Euroepan Integration

Chapter 12: Trade Policy
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Pattern of Trade: Facts
EFTA
4%
CIS Turkey
2%
1%
Other Europe
1%
North America
9%
Asia
7%
Other
24%
EU25
67%
EFTA
4%
CIS
3%
EU25
67%
EU25 Imports, 2003
Latin America
2%
RoW
1%
EU25 exports, 2003
Turkey Other Europe
1%
1%
Other
25%
Africa
3%
Middle East
3%
North
America
6%
Asia
12%
Africa
3%
Latin America
2%
Middle East
1%
• 2/3rds EU25 exports are to other
EU25 nations.
– More than 90% of this is actually
among the EU15 trade (10 new
Member States are fairly small
economically).
• Add all other European nations, 3/4th
of Europe’s trade is within Europe..
• North America and Asia are the
EU25’s main markets outside Europe,
each accounts less than 1/10th EU
exports.
• Africa, Latin America and the Middle
East are not very important.
• The pattern on the import side is very
similar
• Rounding off, 3/4ths of EU imports
are from Europe, with the fourth
quarter split into two more or less even
groups of nations – Asia, and all other
nations.
Source: Eurostat. The latest data can be downloaded from Eurostat’s new user-friendly service
europa.eu.int/comm/eurostat/
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Differences among Member States
Africa
N. Amer.
NonEU Europe
Asia
Latin Amer.
RoW
Luxembour
Ireland
Malta
Belgium
UK
Netherlands
Spain
Cyprus
Portugal
France
EU25-Avg
Greece
Italy
Hungary
Czech Rep.
Germany
Denmark
Sweden
Poland
Slovenia
Estonia
Finland
Austria
Slovakia
Lithuania
Latvia
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Composition imports & exports, aggregate trade
Machinery, transport
equipment
Other manufactured
Manufactured
Goods, 69%
Manufactured
Goods, 87%
Chemical products
Fuel products
Other raw materials
Food & live animals
Exports, 2004
Imports, 2004
Machinery, transport equipment
45%
34%
Other manufactured
26%
26%
Chemical products
16%
9%
Fuel products
3%
18%
Other raw materials
2%
5%
Food & live animals
5%
6%
Misc.
2%
3%
• Manufactured
gds 90% (half of
all exports being
machinery and
transport
equipment).
• Import side,
2/3rds on
manufactured
goods.
• EU25 is a big
importer of fuel.
• Other types of
goods play a
relatively minor
part in the EU’s
trade.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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What with whom?
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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EU’s MFN tariff structure (the CET)
Textiles and clothing
Transport equipment
Leather, rubber, shoes & travel gds
Chemicals and photographic supplies
Electric machinery
Non-agricultural articles n.e.s.
Mineral products, precious stones
Metals
Non-electric machinery
Wood, pulp, paper and furniture
12
22
17
23
14
14
12
10
10
10
Dairy products
Grains
Live animals and products thereof
Tobacco
Coffee and tea, cocoa, sugar, etc.
Fruit and vegetables
Beverages and spirits
Fish and fishery products
Oil seeds, fats, oils and their products
Other agricultural products
Cut flowers and plants
Average
High
210
101
192
75
114
150
71
26
76
76
19
0
50
100
150
200
Source: WTO’s Treade Policy Review, EU© Baldwin
2004.& Wyplosz 2006. The Economics of European Integration, 2
250
nd
Edition
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Institutions
• Trade policy is an exclusive competency of EU.
– Customs Union requires agreement.
• Trade in goods: Commission has responsibility for
negotiating, Council of Ministers sets “Directives
for Negotiation.”
– Peter Mandelson (Trade Commissioner).
– Council accepts/rejects final deal by QMV.
• Commission in charge of surveillance and
enforcement of 3rd nation commitments to EU.
– Trade disputes with US, China, etc.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Services, IPR, etc.
• World trade negotiations involve far more than trade in
goods.
– TRIPs, TRIMs, Services, TBTs, trade facilitation, etc.
• Treaty of Rome only gave Commission power over trade in
goods.
• Treaty of Nice (& Amsterdam) extended Commission’s
authority to some aspects of Services trade and TRIPs, &
made QMV the rule in Council on such matters.
• “Parallelism” -> if the issue would be subject to QMV in
Single Market considerations, it’s subject to QMV on trade
matters, and same for unanimity voting.
• Constitutional Treaty expanded Commission authority to
include FDI & more role of Parliament.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Contingent Protection
• WTO allows members to raise tariffs to:
• Counter ‘unfair’ trade practices, e.g.
– Antidumping
– Countervailing duties
• Provide temporary protection “safeguards.”
• The various WTO articles on these require a
procedure; in EU the Commission is in charge of
these procedures, but the final decision is subject to
QMV approval of the Council.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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EU External Trade Policy
• EU has special deals with 139 nations; often more
than one per partner. Each can be very complex.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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EU External Trade Policy
• European-Mediterranean area:
– West, Central and East Europe = Single market in industrial goods;
• EU + EEA + Swiss bilateral agreements
– Euro-Med Association Agreements:
• Morocco, Algeria, Tunisia, Egypt, Israel, the Palestinian Authority, Lebanon,
Jordon, Syria and Turkey.
• Asymmetric (EU cuts its tariffs faster) FTAs in manufactures, by 2010.
• Turkey unilaterally in Customs Union in manufactures.
– Asymmetric dependence (e.g. 70% of Morocco’s exports to EU,
but <1% of EU to Morocco)
– EFTA’s “FTA union” with EU; EFTAns mimic EU to avoid
discrimination against EFTA-based exporters.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Former Soviet republics & Western Balkans
• Partnership and Cooperation Agreements (PCAs).
– These are GSP+ (GSP=Generalised System of
Preference).
– Russia, Ukraine, Georgia, Belarus, Armenia, Azerbaijan,
Kazakhstan, Kyrgyzstan, Moldova and Uzbekistan.
• Stabilisation and Association Agreements (SAAs).
– Former Yugoslavian states.
– Croatia has started membership; others likely to follow.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Preferential arrangements with former colonies
• Colonial preferences conflicted with Common External
Tariff.
– EU made exception for these nations to avoid imposing new
tariffs; signed “unilateral PTAs”
• Yaoundé Convention and Arusha Agreement
– When UK joined 1974 extended to many Commonwealth nations.
• “ACP nations” (Africa, Caribbean & Pacific); the new agreement = Lomé
Convention.
• Duty-free but subject to quota for sensitive items (sugar, banana, etc.).
• These didn’t help the ACP nations (c.f. Asian success w/o
preferences).
• When Lomé Convention renewed in 2000, the EU and the
ACP nations agreed to modernise the deal.
• Cotonou Agreement; eventually reciprocal free trade.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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GSP
•
•
•
•
•
•
1971 GATT provision.
EU grants GSP to almost all poor nations.
General GSP.
“Super-GSP” more generous on market access.
‘Everything but Arms’ for least developed nations.
On paper, EBA grants zero-tariff access all goods, except
arms and munitions.
– Goods in which these nations’ are most competitive are in fact
excluded from the deal.
– Tariffs on bananas, rice and sugar – products where these poor
nations could easily expand their EU sales – are to come down
only in the future.
– Moreover, even though all tariffs on these items will be gone by
2009, the exports quantities are limited by bilateral quotas.
• 49 nations qualify for EBA in principle in 2005.
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Non-regional FTAs
• Mexico, Chile, and South Africa, done.
• Ongoing with Mercosur, & the Gulf Cooperation
Council (Bahrain, Kuwait, Oman, Qatar, Saudi
Arabia and United Arab Emirates).
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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Non-preferential trade
• About 1/3 EU imports are not granted some sort of
preferential treatment (US, Japan, etc.).
© Baldwin & Wyplosz 2006. The Economics of European Integration, 2 nd Edition
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