Project #Finance, Policy Paper §10: The Evolution of EU Trade

Project #Governance, Policy Paper §10: The Evolution of EU Trade

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The EU agreements have been a widely used model for increasing the prosperity of its counterparts, esp. those that have been suffering from severe internal disturbances. There are essentially three regimes that are meant to uphold the chances for smallholders to move up the ladder: the everything but arms regime, used for least developed countries with limited statehood, the generalized system of preferences, whereby graduation after certain volumes is applied for middle and high income countries, as well as the GSP+ regime, which requires that certain non-state auditing of multilateral commitments is kept. The GSP+ is also a way for the EU to embed sustainability requirements into trade with low-to-middle income countries, which has been hindered by the most favoured nation principle of GATT.

The Doha liberalisation rounds made much to overcome structural imbalances and systemic preferences related to post-colonial setups, with the EU-ACP regime, governed by the revised Cotonou Agreement, being the most substantial achievement and possibly a predecessor of (the limited) cross-continental liberalization put forward by the African Union. The biggest generation of expert knowledge and lessons related to the hybrid externalization of market and normative governance has its roots in the evolution of the neighbourhood regime. In its most advanced form, the liberalized trade took the form of deep and comprehensive trade agreements, which include chapters for sustainability and labour standards overseen by translocal governance mechanisms such as a common pool of experts. The DCFTAs themselves seem to have become a pattern for engagement, whereby non-state actors are used for auditing the ingenuity of submitted information, the integrity of certifications and standards, as well as for whistleblowing on implementation deficiencies. Within its Free Trade Regime network, the EU uses two instruments for the integration of Environmental principles – an ex-ante Sustainability Impact Assessment and ex-post compliance checks through, as proposed by the EP, a complaints procedure and dispute settlement mechanisms. Thus, the trade agreements incorporate already a trichotomy of institutionalization: commitment to multilateral agreements, alignment with EU’s non-tariff standards, as well as revitalization of the non-state ecology that improves transactions in knowledge on governance.

Nevertheless, the GSP+, resp. the signing of conventions would not result in limited or „facade“ results, hence it is expected that it will be gradually abolished with the advancement of FTAs. This being said, many parallels – from consultations to joint civil society fora, science-policy requirements and autonomous regulatory power that does not inhibit the partner’s – can be observed in both the deep and comprehensive agreements with the Eastern Partners Georgia, Moldova and Ukraine, but also in the FTAs with Korea, partially Singapore and Japan. It can be therefore claimed that the advancement of the expertise in the trade domain is a natural process, whose elaboration is reaching a level of maturity that will be tested by the Brexit negotiations. Bearing in mind the geopolitical aspirations, which can be translated as an interdisciplinary mix of circular business missions, scientific diplomacy – only EU trade partners with strong regulatory and governance alignment have access to research networking, multilateral environmental diplomacy, as well as unexpected adoption of legal patterns (e.g. GDPR), which ease both day-to-day transactions of MNCs and their ability to parry the competition policy scalpel, one could expect that the connectivity of EU would be based on the legal infrastructure of trade treaties. Additionally, the parallelism between the internal and external dimension would probably evolve further, as the external dimension as a composite of adaptive socio-economic systems could potentially serve to improve the internal resilience to shocks.

A framework to investigate the externalities of the mechanisms deployed in lieu of solving sustainability issues is included below:


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