Common commercial policy

Origins and Development of the Common Commercial Policy

The origins and development of the common commercial policy are intrinsically linked to the birth and evolution of the European Union itself. Born with the signing of the Treaty of Rome in 1957, the policy initially functioned as a tool for the establishment of a common market among the six founding member nations.

Over time, however, the scope of the common commercial policy expanded, evolving into a powerful policy instrument contributing significantly to the consolidation of the European Union's collective market power.

What is the Purpose of the Common Commercial Policy?

The purpose of the common commercial policy is to manage trade relations for countries within a particular group effectively. For the European Union, this means managing trade between its member nations and non-member countries.

The policy aims to establish a balanced and fair trading system, protecting the economic interests of the region while providing a platform for engaging with the world economy.

The Role of Common Commercial Policy in the EU

The common commercial policy plays a vital role in shaping the EU's external trade relations. This policy is responsible for implementing tariffs at the external borders of the EU, negotiating bilateral and multilateral trade agreements, and establishing protective measures in cases of unfair trading practices.

Additionally, the common commercial policy helps to flesh out the European Union's commitments at the World Trade Organization and other international forums.

Relationship between Common Commercial Policy and Article 133

Article 133 of the Treaty on the Functioning of the European Union (TFEU) provides the legal basis for the common commercial policy. This article stipulates that the Union conducts its trade relations with other countries and international organizations in line with the principles and objectives of the external actions of the Union.

Furthermore, it grants the European Commission the exclusive competence to negotiate trade agreements with non-EU countries.

Common Commercial Policy: Advantages and Disadvantages

Like any policy instrument, the common commercial policy brings to the table both advantages and drawbacks. Understanding these is crucial in making informed decisions about trade policy orientations and ambitions.

Benefits of the Common Commercial Policy

There are numerous advantages to the common commercial policy. Foremost among these is the ability to promote the European Union's values globally. With the collective bargaining power of 27 member states, the EU can leverage its common commercial policy to advance standards in areas such as human rights, labour conditions, and environmental protection on the international stage.

Other perks include:

• Strengthening the EU's economy by opening up new markets for European businesses.
• Supporting the development of third countries by providing them with preferential market access.
• Uniformity and consistency in external trade relations, leading to predictability and stability.
• The ability to take collective action to protect EU's interests in cases of unfair trade practices.

Challenges and Limitations of the Common Commercial Policy

In spite of its many merits, the common commercial policy is not without its challenges and limitations. One of the primary issues stems from its one-size-fits-all nature. Given the diversity of the European Union's member nations, it's nearly impossible for a single policy framework to address the unique needs of each member.

Key strains include:

• Its scope may sometimes collide with national interests, causing tension between member states and the European Commission.
• Implementing a common commercial policy is a complex administrative process, and the resulting bureaucracy can slow decision making and action.
• There are concerns that the policy might, in some scenarios, encourage protectionism, hampering the free flow of international trade.
• Many consider the common commercial policy to be too Eurocentric, focusing primarily on the EU's interests without considering effects on third countries, especially developing nations.

Criticisms and Responses to the Common Commercial Policy

Despite the pivotal role the common commercial policy plays in shaping the EU's external trade relations, it has been subject to criticism. A key critique is that the policy does not adequately reflect the interests of developing countries. Critics argue that trade barriers erected by the common commercial policy can inhibit the ability of these countries to access EU markets.

Responding to these concerns, the EU claims that its common commercial policy includes provisions for preferential access to EU markets for developing countries. Known as the 'Generalised Scheme of Preferences,' this program aims to foster development in these countries through trade.

Still, such responses have not quelled all criticisms, and debates over the fairness and effectiveness of the common commercial policy continue. Ultimately, the common commercial policy, like any policy framework, is a balancing act and work-in-progress, affected by global dynamics and internal pressures.

Common Commercial Policy's Exclusive Competence

Notably, the common commercial policy is one of the few areas of the European Union's external actions that falls within its 'exclusive competence'. This terminology of exclusive competence has significant implications, meaning that only the EU, and not individual member states, can legislate and adopt legally binding acts in these areas.

Definition and Understanding of Exclusive Competence

In the framework of the European Union, exclusive competence refers to areas where the EU alone is authorised to act and create laws. The individual member states can only intervene in such areas if they are empowered by the EU to implement these laws.

This mechanism of exclusive competence originates from the principles of the Treaty on the Functioning of the European Union (TFEU), which outlines areas of shared, supporting, and exclusive competence. It ensures a unified approach and prohibits member states from setting conflicting or divergent regulations.

The use of exclusive competence in the EU is both strategic and practical. By centralising decision-making in certain areas, the EU ensures a unified approach and precludes the member states from setting contradictory or diverging regulations.

How is Exclusive Competence Applied in the Common Commercial Policy?

The application of exclusive competence to the common commercial policy implies that it is the EU, and not the member states, that has the power to formulate and implement trade policy. This means that the European Union can negotiate international trade agreements, enforce trade rules and resolve trade disputes on behalf of all its member nations.

The table below provides a summary of EU's areas of exclusive competence, including the common commercial policy:

The application of exclusive competence to the common commercial policy has benefits, for instance, enabling the EU to represent its economic weight in the global trade arena. Nevertheless, it also implies a loss of sovereignty for member states in the realm of trade policy.

Instruments of the Common Commercial Policy

There are various instruments at the disposal of the European Union to implement its common commercial policy effectively. These instruments range from tariffs and trade agreements to protective measures which guard against unfair trade practices and other disruptions to the smooth functioning of international trade.

Key Instruments of the Common Commercial Policy

The European Union applies a strategic mix of multiple instruments to make the common commercial policy a reality. These tools offer a comprehensive approach to managing and administering the complex and diverse landscapes of international trade.

Below we'll delve deep into a few key instruments of the common commercial policy:

• Tariffs and Quotas: The EU sets external tariffs and quotas for trade with non-member nations. This unified approach, also known as the EU Customs Union, ensures consistency in the treatment of goods entering the EU from outside its borders.
• Trade Agreements: The EU negotiates various types of trade agreements with third countries. These can range from comprehensive free trade agreements (FTAs) to association agreements that cover diverse areas beyond trade, such as political dialogue and mutual commitments in other policy fields.
• Trade Defence Instruments: The EU uses various trade defence instruments (TDIs) to protect its economy from unfair trading practices, such as dumping or state-subsidised imports from non-EU countries that cause material injury to EU industries.
• Export Control: The EU controls exports of certain sensitive goods and technologies, both to uphold commitments under international agreements and for reasons related to public safety, human rights or environmental protection.

How are the Instruments Used in the Common Commercial Policy?

Each instrument of the common commercial policy is used with precision and strategy, catering for a variety of trade scenarios while balancing the economic, social and environmental interests of the EU's member nations.

Trade agreements, another significant instrument, are pursued and negotiated with the intention of fostering trade relations, promoting EU values and supporting the member states' economies. These agreements can take years to negotiate as they must satisfy the objectives of both the EU and its partner, ensuring a balance of benefits.

While the EU is open to free trade, it is not a policy of free-for-all. With its trade defence instruments (TDIs), the EU seeks to ensure a level playing field. These instruments are invoked to protect EU industries from economic harm caused by unfair trade practices from abroad.

Lastly, over its export control, the EU uses a dual-use control list to regulate the export of goods and technologies that can potentially have both civil and military applications. This list is reviewed and updated regularly to account for technological advances and changes in international security.

Principles of the Common Commercial Policy

The foundation of the common commercial policy rests upon a set of principles, each encapsulating the goals and ideals of the European Union. These principles guide the actions and decisions of the European Union in the arena of external trade, shaping how the EU interacts with its trading partners and the wider global economy.

Core Principles Governing the Common Commercial Policy

The common commercial policy is shaped by a series of guiding principles. These principles embody the EU's aspirations for a fair, open, and sustainable global trading system.

Crucial among these principles are:

• Uniformity: The common commercial policy advocates for uniform trade rules and practices across the EU's 27 member states. This protocol ensures consistency, reducing complexity for partners trading with the EU and helping all member states to benefit from international trade.
• Transparency: The EU promotes transparency in all its trade dealings. Trade agreements are negotiated openly, decisions are taken democratically, and stakeholder consultations are routine.
• Openness: The common commercial policy supports open trade, based on rules and multilateral cooperation. The EU seeks to remove barriers to trade and to open up new opportunities for European businesses in markets around the world.
• Sustainability: The EU seeks to ensure that its trade policy aligns with its commitments to environmental sustainability and social welfare, both internally and globally.
• Trade Defence: The EU is committed to defending its trade interests, using trade defence instruments to protect European industries against unfair trade practices.

Collectively, these principles embody the EU's approach to world trade, setting the tone for its common commercial policy, whilst reflecting the bloc's broader values and strategic interests.

Effects and Impact of the Principles on the Common Commercial Policy

Each principle governing the common commercial policy exerts influence on the policy's direction and operations, inherently shaping the EU's approach to world trade.

The transparency principle strengthens the democratic legitimacy of the common commercial policy. It includes involvement of the European Parliament in shaping the policy and open consultations with civil society, ensuring that decisions in the area of trade policy reflect a broad spectrum of perspectives and interests.

Certainly, the openness principle promotes an inclusive global trading system, while the sustainability principle ensures that this system is environmentally friendly and socially just.

Finally, the trade defence principle allows the European Union to respond decisively to unfair trade practices. This sends a clear message that while the EU is committed to open and fair trade, it would not hesitate to take actions to protect its economic interests.

All in all, these principles, underpinning the common commercial policy, not only shape the EU's trade policy but also cement the bloc's role as a formidable actor in global trade.