Written by Jana Titievskaia,
© 9dreamstudio / Fotolia
The EU’s common commercial policy (CCP), or trade policy, has evolved gradually over the years to encompass a range of trade-related areas under the remit of European Union (EU) exclusive competence. The Treaty of Rome established the common market and the customs union with a focus on goods. Later treaties expanded the CCP to services and commercial aspects of intellectual property rights. Trade policy falls under the EU’s exclusive competence, meaning that the EU manages trade policy and trade negotiations on behalf of the Member States. The determination of competence is critical for the procedures needed to conclude trade agreements, as in areas falling under shared competence these need to be ratified by both the EU and Member States. This has led to trade and investment agreements being split into two parts to speed up the ratification process for the trade parts, following European Court of Justice (ECJ) Opinion 2/15 (Singapore).
Whereas trade liberalisation is generally accepted to lead to economic growth, the impact on jobs varies both between and within countries. According to the European Commission, in 2018 trade supported 36 million export-related jobs. Trade can also lead to more inequality, however, in particular by widening the gap between skilled and unskilled workers or in causing the unequal relationship between developed and developing countries to become more entrenched.
Trade liberalisation in its most basic form involves the removal of tariffs, which are taxes or duties to be paid for an import. Tariff rate quotas charge lower rates within a certain quota, jumping to a higher tariff rate after the quota is exhausted. Tariffs are cut under World Trade Organization (WTO) agreements, with the most-favoured nation tariff representing the highest possible tariffs that WTO members can charge each other. In contrast, preferential tariffs are agreed to in trade agreements or customs union arrangements. Rules of origin have been developed in order to determine where goods originate from (or the ‘economic nationality’ of products). These rules are all the more important in the era of global value chains, where a significant proportion of European products’ value comes from foreign sub-components or services.
Trade liberalisation also seeks to remove non-tariff barriers (NTB) to trade, these include protectionist measures to help domestic producers, subsidies, technical barriers to trade, or stringent sanitary and phytosanitary requirements. Lower NTBs can facilitate cross-border trade in services, which play a huge role in overall EU trade. However, data collection and measurement issues complicate efforts to understand the services trade. Trade defence instruments, meanwhile, enable the EU to react, for instance, to dumping or WTO-incompatible subsidies in partner trading countries, and form the protective front of EU trade policy.
The CCP focuses on fostering fair and free trade, furthering market access and supporting the multilateral, rules-based trading system. To achieve these objectives, the EU employs a range of legislative tools and negotiates trade agreements with trade partners. More specifically, over recent decades the EU has aimed to spread open and free trade based on mandates from Member States. After the breakdown of the WTO Doha Round, the EU initiated a period of concentrated focus on free trade agreements, which tackle both tariff liberalisation and NTBs, with a wide range of partner countries from America to Asia.
The EU has concluded trade agreements on multilateral, plurilateral and bilateral bases. EU trade agreements are adopted through a lengthy procedure, which involves distinct stages, namely preparation, a mandate to open talks, negotiations, textual agreement, initialling, signature, provisional application and, finally, entry into force. The EU also offers different types of trade relationship, ranging from deep integration on both regulatory and trade fronts, to simple partnership and cooperation agreements that do not offer preferential treatment. Trade agreements are enforceable through a dedicated dispute settlement mechanism that allows parties to adopt economic remedies in the event of non-compliance. However, certain provisions in trade agreements, such as trade and sustainable development (TSD) clauses, have a different mechanism for settling disagreements that involves government consultations and recommendations issued by a panel of experts. Efforts to make trade policy ‘greener’ include TSD chapters, but also provisions to support sustainable use of natural resources, biodiversity, forestry and fisheries. Trade agreements also include human rights clauses that aim to incentivise trade partners to improve internal governance.
EU trade legislation is adopted under the ordinary legislative procedure, and provides the framework for trade policy. Since the Lisbon Treaty, the European Parliament has played an important role in the CCP. Parliament must give its consent to trade agreements or trade-related legislation, while it also monitors trade policy developments through resolutions, hearings and workshops. The European Commission proposes and negotiates, while the Council authorises the opening of negotiations and decides on the conclusion of trade agreements. Civil society and stakeholders are encouraged to feed into this process on a regular basis.
Where technocratic negotiations were once sufficient, trade policy has undergone intense politicisation in recent years. Where trade policy used to be characterised by material arguments based on numerical simplicity, now it features normative disagreements and regulatory politics. This makes knowledge and understanding of the complex concepts and themes of EU trade policy all the more important.
Read this ‘in-depth analysis’ on ‘EU trade policy: Frequently asked questions‘ in the Think Tank pages of the European Parliament.
Written by Marie Lecerf,
Over recent decades, there has been marked progress in reducing poverty worldwide. The research conducted by this year’s Nobel Prize in Economic Sciences laureates, Abhijit Banerjee, Esther Duflo and Michael Kremer, has considerably improved the ability to fight global poverty. Nevertheless, despite this progress, the number of people living in extreme poverty remains too high, even in Europe and, in particular, amongst children.
As 2019 also marks the 30th anniversary of the adoption of the United Nations Convention on the Rights of the Child (UNCRC, 20 November 1989), celebration of the International Day for the Eradication of Poverty on 17 October is a great opportunity to take stock of what the European Union is doing to fight against child poverty in its own Member States.
Child poverty in the European UnionIn 2017, 112.8 million people in the EU-28 lived in households at risk of poverty or social exclusion (i.e. 22.4 % EU-28, Eurostat, latest data available). With an at-risk-of-poverty or social exclusion rate of 24.9 % in the EU-28, children were at greater risk in 2017 than the total population: almost one in four children in the European Union is at risk of poverty or social exclusion. This situation was mirrored in 19 EU Member States.
Source: Eurostat, 2019
EU contribution to the fight against child povertyAs child poverty in the European Union remains a reality, especially for certain groups (children in single parent, large or migrant families), child poverty has become a major policy concern for the European Union. Precarious living conditions during childhood have a detrimental effect, not only on attainment in school but also on health and on the ability to integrate socially during adolescence and early adulthood. The consequences of poverty experienced in childhood or adolescence can continue into later life and may be passed on from one generation to the next.
EU Charter of Fundamental RightsThe European Union and its Member States are bound to comply with the EU Charter of Fundamental Rights, Article 24 of which is entirely dedicated to the rights of the child: ‘1. Children shall have the right to such protection and care as is necessary for their well-being. They may express their views freely. Such views shall be taken into consideration on matters which concern them in accordance with their age and maturity. 2. In all actions relating to children, whether taken by public authorities or private institutions, the child’s best interests must be a primary consideration.’
EU policy responses to child povertyFighting child poverty in the EU is primarily the responsibility of the Member States. Nevertheless, at EU level, there is broad consensus that action is needed to lift children out of poverty and to promote children’s wellbeing.
One of the targets of the European 2020 strategy is to reduce the number of people living in poverty by 20 million (compared with 2008). In 2013, the European Commission adopted, and the European Council endorsed, a Recommendation ‘Investing in children – breaking the cycle of disadvantage’. Considering child poverty from a comprehensive perspective, it sets a three pillar structure: employment and adequate income, access to quality services and children’s participation.
In November 2015, Parliament adopted a resolution on reducing inequalities with a specific focus on the most vulnerable children. In 2017, Parliament went a step further, requesting that the Commission implement a preparatory action on establishing a possible child guarantee scheme. This guarantee should ensure that every child in poverty receives free access to quality early childhood education and care, education, healthcare, and access to decent housing and adequate nutrition.
The proclamation of the European Pillar of Social Rights in November 2017 demonstrates an increased willingness to tackle child poverty in the European Union. Article 11 explicitly reflects that the fight against child poverty is a priority under the social Europe approach, while referring to children’s right to be protected from poverty.
EU funds are key in tackling child povertyNumerous financial instruments provide a framework for Member States to implement measures to address child poverty with the support of the European Union.
Despite all the actions and policies undertaken, the task ahead to eradicate child poverty in the European Union will be a daunting challenge for the next decade. Hopefully, as Esther Duflo recently said, their research could also provide a source of inspiration for the European Union.