W3: International Trade: WTO en EU's Single Market

Question 1

WTO

Answer 1

‘organisation for trade opening,
forum for governments to negotiate trade agreements,
place to settle trade disputes,
operates a system of trade rules’
–> WTO is ‘ place where member governments try to sort out the trade problems, they face with each other’

Question 2

Single Market of EU

Answer 2

ensures free movements of goods, services, capital and persons in a single EU internal market, by removing technical, legal and bureaucratic barriers –> EU allows citizens to trade and do business freely

Question 3

MAKING SENSE OF COMMERCIAL LIBERALIZATION – WHY FREE TRADE?

Classical trade theories

Smith, Ricardo

Answer 3

• division of labor –> specialise and benefit from trade
• export goods for which you have advantage, import where less of an advantage

Question 4

MAKING SENSE OF COMMERCIAL LIBERALIZATION – WHY FREE TRADE?

for an economy as a whole free trade is almost always …

Answer 4

beneficial

remains underlying idea of many trade theories

Question 5

what happens to incentives not to engage in free trade

Answer 5

there are losers - pressure for potection instead of free trade

Question 6

need some sort of institution to enhance broader socio-economic development rather than sticking to narrow ‘advantage’; giving up sovereignty; need IO why?

***

Answer 6

• create shared rules, monitoring and enforcement mechanisms
• create perspective of continuing cooperation, enhance predictability, build trust
• ensure collective gain against individual incentives to defect

Question 7

international trade

Answer 7

buying and selling goods & services across national borders

Question 8

HOW TO FREE TRADE?

agreement to eliminate/reduce barriers to trade in goods and services

3 points

Answer 8

• barriers at borders, in particular tariffs and quantitative restrictions
• non-tariff barriers (NTB) - licensing, regulations/standards
• may take shape of IO, e.g. with secretariat, court-like body, etc.

Question 9

Typical forms of regional or bilateral agreement

Free trade agreement (FTA)

Answer 9

• no tariffs or quantitative restrictions among members
• serperate management of relations with non-members

Question 10

Typical forms of regional or bilateral agreement

Customs union

Answer 10

• no tariffs or quantitative restrictions among members
• common external trade policy

Question 11

Typical forms of regional or bilateral agreement

Common market = customs union PLUS

Answer 11

• free movement of factors of production (labor, capital)
• work towards overcoming differences in regulation (required characteristics to be lawfully marketed)

Question 12

“bicycle theory”

Answer 12

• if the bicylce stops moving, it falls over
• need to keep negotiating towards further liberalisation

C. Fred Bergsten

Question 13

GLOBAL FREE TRADE: WTO

Great Depression and WW2: Years of …

Answer 13

Protectionism

Question 14

GLOBAL FREE TRADE: WTO

Created 1 jan 19??, 164 members, secretariat in ??????

Answer 14

‘95, Geneva

Question 15

WTO as IGO

decision-making by consensus

Answer 15

• progress based on intergovernmental negotiation rounds
• WTO structure: all members in all councils, comittees and other bodies equal

Question 16

WTO as IGO

Basic principles (from orginal GATT)

Answer 16

• non-discrimination
• Most favored nation: advantage granted to one shall be granted to all contradicting parties
• national treatment: after entering the territory, imports must be treated like domestic products
• principles of reciprocity, transparency, tariff reduction through negotiation

Question 16

WTO as IGO

not really all equal

Answer 16

• leverage (thourgh market size e.g.) and resources
• institutional power: ability to use institutional settings and mechanisms to one’s advantage

Question 17

WTO as legalised institution

Main agreements

Answer 17

• General Agreement on Tariffs and Trade (GATT) (on trade in goods)
• General Agreement on Trade in Services (GATS)
• Trade-related Aspects of Intellectual Property Rights (TRIPs)

Question 18

WTO as legalized institution

legalisation

Answer 18

“obligation, precision and delegation”

Question 19

WTO as legalised institution

Other ‘less important’ agreements

Answer 19

• agreements on specific product groups (agriculture, textiles, sanitary, etc.)
• agreements on legitimate barriers to trade (anto-dumbing, anti-subsidies)
• trade related investment Measure Agreement (TRIM)
• “pluri-laterals” (not all WTO members; dairy products, civil aircraft, etc)

Question 20

WTO: dispute settlement

Under old GATT:

Answer 20

postitive consensus (including parties to dispute) required –> slow, highly politicized

Question 21

WTO: dispute settlement

Under WTO:

Answer 21

negative consensus at all stages:
1. consultatoins between parties to dispute
2. panel stage - panel of experts
3. appeal - Permanent Appellate Body
–> faster legalised to significant extent

Question 21

EU in the WTO

In which way members of WTO?

Answer 21

EU countries members of WTO, but EU itself is also seperate member.

Question 22

EU in the WTO

the highly integrated Common Commercial Policy

4 points

Answer 22

• exclusive competence of EU, including foreign direct investment since Lisbon Treaty (2009)
• the Commission as sole negotiator for trade deals, on the basis of ‘mandate’ by MSs
• single set of rules on imports into EU
• MS decide at qualified majority vote (55% of MS representing 65% of population)

Question 22

# EU in the WTO internal division and contestation | 2 points

Answer 22

- free traders vs. more protectionsist-minded MSs - intra-EU politics: distrust of commission

Question 23

# single-market in EU Treaty of Rome (1957)

Answer 23

"common market"

Question 24

# single-market in EU Treaty of Lisbon (2007)

Answer 24

"internal market" (TFEU, art. 3(3))

Question 25

# single-market in EU 1960s: impressive progress - ... 1970s: stagnation over ...

Answer 25

... customs union completed by 1968 ... non-tariff barriers

Question 25

# HOW HAS EVOLUTION of European Common Market BEEN EXPLAINED? Intergovernmental perspective

Answer 25

- MS retain great influence, in particular in treaty revisions, but also informally and through coalitions - business lobbies also continue to target national governments

Question 25

# HOW HAS EVOLUTION of European Common Market BEEN EXPLAINED? supranational dynamics - neo-functionalist perspective

Answer 25

- supranational decision-making provided for from the very beginnings - e.g., central role of the european Commission, qualified majority voting amongst MS --> gives much more importance to MS than concensus - But also: transnational business coalitions and their lobbying efforts

Question 26

# single-market in EU 1985: the relaunch of integration process * Dooge report * Commission paper "Completing the internal market"

Answer 26

- more supranational mechanisms, complete common market - 300 proposals to complete common market by '92, fiscal, physical, technical barriers to trade, most progress on technical barriers

Question 27

# HOW HAS EVOLUTION BEEN EXPLAINED? Negative to postivie integration

Answer 27

- negative integration - eliminate barriers to cooperation -> eliminate tariffs amongst participating states - positive integration - develop common policies -> common policies on trade, competition, transport, agriculture, fisheries, as well as "approximation of laws"

Question 28

# MUTUAL RECOGNITION Cassis de Dijon case (1979)

Answer 28

"there is therefore no valid reason why, provided that they have been lawfully produced and merketed in one of the MS, alcoholic beverages should bot be introduced into any other MS; the sale of such products may not be subject to a legal prohibition on the marketing of beverages with an alcohol content lower than the limit set by the national rules."

Question 29

# MUTUAL RECOGNITION Mutual recognition as a tool of integration:

Answer 29

- if a good respects all relevant regulations in one MS, all others recognise this as a valid and sufficient for sale on their markets - integrated in SEA

Question 30

# competing forces in practice REACH Regulations

Answer 30

(on Registration, Evaluation and Authorisation of Chemicals) - extensive lobbying effort by industry coalitions - European Parliament as main target - Crucial impact of 'leader states' via seconded national (expert) officials as the Commission

Question 31

# competing forces in practice Services (Blokestein) Directive

Answer 31

- which regulations of service providers have to respect when abroad: those of home country or those of host country? - fierce competition between old and new EU members - transnational industry coalitions internally fragmented

Question 31

# common market today Goods: ... Capital: ... Services: - ... -... Persons: - ... - ...

Answer 31

**Goods** Impressive progress of ' 1992' program **Capital** limited until 1990, since then almost complete **Services** - comparatively slow, despite many efforts and Services Directive - Financial services, fairly advanced, based on series of directives since 2004 **Persons** - mutual recognition of professional qualifications, non-discrimination. Freedom of establihsment since Rome Treaty - implementation: role of ECJ, role of Schengen