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The European Union and the World Trade Organisation - Two governance systems in trade policy: A selection of their differences, similarities and mutual influences

Term Paper 2004 11 Pages

Politics - International Politics - Topic: European Union

Excerpt

CONTENTS

1. Institutional set-up of the EU and the WTO

2. Common aims of the EU and the WTO

3. Designing EU trade Policy related to the WTO

4. WTOrinciples affecting EU tradeolicy

5. Differences in the legal authorities of the WTO and the EU

6. Positive and negative integration:

views of tradeolicy in the EU and the WTO

7. Conclusion

References

1. Institutional set-up of the EU and the WTO

In general terms, both the European Union (EU) and the World Trade Organization (WTO) can be described as governance systems:

“Governance is about the structured ways and means in which the divergent preferences of interdependent actors are translated into policy choices to allocate values, so that the plurality of interests is transformed into co-ordinated action and the compliance of actors is achieved.”[1]

This essay cannot reflect all aspects of the two governance systems, but is limited to a selection of their differences, similarities and mutual influences. After the opening remark alludes to a similarity, the differences will be touched upon next.

The individual characteristics of the EU and the WTO become particularly obvious in the institutional set-ups of the two organisations: In the case of the EU one deals with a supranational organisation, what means that the current 15 member states partly transfer sovereign rights to the organisation, thus rendering the EU a partly independent and powerful policy actor.

In comparison, the WTO is an intergovernmental organisation, in which its 146 members negotiate without transferring any sovereignity to the organisation, thus depriving the WTO of any independence in policy decisions[2].

The WTO is a broad international organisation, its members accounting for over 90 % of all trade in the world, whereas the EU, being a member of the WTO, is a geographically limited and closely integrated organisation. Even though the EU represents just 6 % of the world’s population, it accounts for more than a fifth of global imports and exports[3].

Concerning the relationship between the two organisations, their origins had an important influence: The WTO was founded in 1995 as a successor of the General Agreement on Tariffs and Trade (GATT) from 1947. The GATT being a provisional organisation, as the 23 founding members were not able to find a compromise upon the scope and rules of an International Trade Organization, but ready to boost trade liberalization and tariff con- cessions after the protectionist period of the Second World War[4]. The GATT remained the only multilateral instrument governing international trade until the foundation of the WTO. Today the WTO is the only international body policing trade in goods, services and intellectual property rights.

The roots of the EU lie in political integration, that was supported and finally dominated by the economic integration. The European Economic Community (EEC), as one of the building blocks of the EU, was established in 1958 . The EEC created a common market and a customs union between its member countries, meaning that every EU country could trade any quantity of goods with any other EU country without having to pay customs duties and tariffs. Moreover a ‘single external tariff’ was introduced, so that any non-EU countries exporting products to the EU were charged the same tariff regardless of which EU country was importing the goods[5].

Many of the EEC Treaty provisions were directly (Art. 30, 90) or indirectly (Art. 23, 28) modelled on GATT-rules. Europe also had an early impact on the WTO, the Italian Renato Ruggiero being elected as the WTO´s First Secretary General[6].

2. Common aims of the EU and the WTO

Despite the outlined differences between the EU and the WTO in its institutional structure, the two organisations share a number of common aims, which intertwine the two governance systems: Both seek to promote multilateral trade, remove trade barriers and other regulatory restrictions to trade and by thus secure economic growth and stability as well as raise the standard of living[7]. The overall goal of both organisations as governance systems in trade policy is to reconcile free trade by legitimate regulations[8].

These principles of EU Trade Policy are enshrined in Article 133 of the EC Treaty, stating that the Union shall

“contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade, and the lowering of customs barriers”.

As the world’s leading trade power, the EU has a strong interest in creating conditions in which trade can prosper. Liberal trading relations are especially important for the individual member states, among which six member (Germany, France, Italy, UK, the Netherlands, Belgium) states are ranked among the top ten leaders in exports and imports worldwide[9].

[...]


[1] Beate Kohler-Koch/ Rainer Eising (eds.): The Transformation of Governance in the European Union. London, New York: Routledge, 1999, p. 5.

[2] Mary Farrell (ed.): EU and WTO regulatory frameworks. Complementarity or competition? London: Kogan Page, 1999, p. 44.

[3] European Union: Making globalisation work for everyone.The European Union and world trade. Luxembourg: Office for Official Publications of the European Communities, 2003, p. 4.

[4] WTO: Understanding the WTO. The GATT years: from Havana to Marrakesh. http://www.wto.org/english/thewto_e/whatis_e/tif_e/tif_e.htm

[5] European Union 2003, p. 6.

[6] Peter-Christian Müller-Graff (ed.): Die Europäische Gemeinschaft in der Welthandelsorganisation. Baden-Baden: Nomos, 2000, p. 55, 82.

[7] European Commission: EU-WTO: European Commission proposes to put Doha Round of trade talks back on track. http://europa.eu.int/comm/press_room/presspacks/cancun/pp_cancun_en.html

[8] de Burca, Grainne/ Scott, Joanne: The impact of the WTO on EU Decision-making.

http://www.jeanmonnetprogram.org/papers/00/000601.html#TopOfPage

[9] Farrell 1999, p. 65.

Details

Pages
11
Year
2004
ISBN (eBook)
9783638268752
File size
470 KB
Language
English
Catalog Number
v23845
Institution / College
Hamburg University of Ecomomy and Policy – Political Science
Grade
1,0 (A)
Tags
European Union World Trade Organisation Globalisation Governance

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Title: The European Union and the World Trade Organisation - Two governance systems in trade policy: A selection of their differences, similarities and mutual influences