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EU BILATERAL AGENDA WITH STRATEGIC TRADE PARTNERS

Razeen Sally European Centre for International Political Economy/ London School of Economics. EU BILATERAL AGENDA WITH STRATEGIC TRADE PARTNERS. EU BILATERALS. Trade and FDI patterns EU bilateral trade policy: Global Europe; Trade, Growth, World Affairs FTAs in Asia

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EU BILATERAL AGENDA WITH STRATEGIC TRADE PARTNERS

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  1. Razeen Sally European Centre for International Political Economy/ London School of Economics EU BILATERAL AGENDA WITH STRATEGIC TRADE PARTNERS

  2. EU BILATERALS • Trade and FDI patterns • EU bilateral trade policy: Global Europe; Trade, Growth, World Affairs • FTAs in Asia • EU bilaterals: policy issues

  3. EU BILATERALS • EUand strategic trade partners -- Bilateral trade and FDI -- Comparative trade barriers

  4. Leading EU27 Import & Export Countries Merchandise trade - Excluding intra-EU trade (2010)

  5. Leading EU27 Import & Export Countries Services trade - excluding intra-EU trade (2009) * Services figures taken from 2006 and based on 2008 for % world figures.

  6. EU 27 OFDI and IFDI Stockswith Main World Partners(2009) in billion of euros

  7. EU 27 OFDI and IFDI Flowswith Main World Partners (2009) in billion of euros

  8. Average MFN Applied Tariffs and Bound Rates by Major Sector (2009)

  9. World Ranking Ease of Doing Business (2011)

  10. Indicators for Trading Across Borders(2011)

  11. The Enabling Trade Index (2008)

  12. EU BILATERALS • EU bilateral trade policy - Global Europe: economic/commercial rationale; WTO plus; but also non-trade motives; differences with EPAs/MENA - Trade, Growth, World Affairs: Update and fleshing out; more emphasis on big trading partners, stronger provisions on regulatory market access in bilateral agreements and stronger trade enforcement - Benchmarks for (relatively) strong, clean FTAs and non-FTA frameworks with other strategic trade partners - How serious is the economic/commercial logic? - Market access and non-trade motives (labour/environmental standards; “sustainable development”; climate change etc.) - Comparisons with US FTAs on WTO plus issues; implications for EU trade policy after the Lisbon Treaty - Overall context: no substitute for intra-EU reforms and multilateral progress; otherwise narrow mercantilism, trade diversion, spaghetti/ noodle bowls

  13. Status of EU FTAs and their share of EU trade (%)

  14. Cont. Status of EU FTAs and their share of EU trade (%)

  15. FTAs IN ASIA • FTAs - Context: stalled liberalisation; creeping regulatory protectionism (partly crisis-related); from non- discriminatory liberalisation to discriminatory FTAs -Proliferation in Asia; catch up with other regions - Motives: foreign policy; WTO stalled; building blocks to regional and global economic integration? - Trade-lite FTAs (except with USA and EU?): focus on tariff liberalisation/elimination – but neglect of non-tariff and regulatory barriers; risks of trade distortions but limits to trade/investment creation and dynamic gains

  16. FTAs IN ASIA • Asian FTA players -- China: trade-lite (eg., China-ASEAN to partial-scope agreements) -- Japan: also trade lite; unambitious on market access and big carve outs -- South Korea: more serious, e.g. US and EU FTAs -- ASEAN: Singapore the exception, otherwise weak FTAs; bilaterals take priority over ASEAN+1 FTAs -- India: v. weak FTAs; part of overall defensive trade policy

  17. REGIONAL ECONOMIC INTEGRATION IN ASIA • Regional economic integration - APEC: diverse, unwieldy, diffuse agenda; FTAAP unlikely - ASEAN: Visions galore, but where’s the beef? CEPT progress; AFAS, AIA weak; little progress on regulatory barriers; AEC and ASEAN Charter: paper tigers? - SAFTA: v. trade-light (excludes over half of trade); risks trade diversion; throttled Indo-Pak trade - TPP: Building bloc to wider Asia-Pacific FTA?; odds against a deep-integration FTA; US demands on labour and environmental standards; excludes China – divisive economically and geopolitically?

  18. REGIONAL ECONOMIC INTEGRATION IN ASIA • Regional economic integration (cont.) - Wider regional integration initiatives: Northeast Asian FTA; ASEAN plus 3; ASEAN plus 6 - The case for a region-wide FTA: specialisation; economies of scale and dynamic gains; reduce trade diversion from noodle bowl; all depends on a comprehensive, WTO-plus FTA - But it could compromise global integration, esp. processing trade and extension of global supply chains - Huge economic and political differences in Asia make clean, strong FTAs very unlikely; rather trade-light FTAs adding to noodle bowl - Conclusion: FTAs unlikely to contribute much to regional economic integration; reliance on bilateral FTAs; disintegration dangers

  19. EU BILATERALS • EU bilaterals: policy issues -- USA: tariffs and NTBs -- Canada: FTA -- Mercosur and other FTAs in Latin America -- GCC -- Russia and Ukraine -- Low-income countries and LDCs (EPAs, GSP, GSP+, EBA)

  20. EU-ASIA FTAs • EU-Korea -- Estimated effects: tackling NTBs -- Comprehensive tariff elimination; short transition periods -- Ban on export restraints -- Sector-specific agreements to tackle NTBs -- FDI, GATS-plus, govt. procurement, IPR enforcement, competition (state aids), dispute settlement -- Trade and Sustainable Development -- Regulatory transparency

  21. EU-ASIA FTAs • EU-ASEAN - Estimated FTA effects: crucial to tackle NTBs and have major services liberalisation - Existing bilateral cooperation framework: TREATI and PCAs - From TREATI to FTA - EU-ASEAN talks failed: v. low ASEAN common denominator and lack of common negotiating machinery - EU-Singapore FTA: strong FTA likely - EU-Malaysia/Vietnam/Indonesia/Philippines/Thailand: big challenge to negotiate strong FTAs - Limited gains from such bilateral FTAs; risks of trade distortions

  22. EU-ASIA FTAs • EU-India - Estimated effects - Extreme difficulty of negotiating strong FTA with India, esp. on NTBs and regulatory issues - Issues: agriculture; NAMA; services; investment, other WTO plus issues, NTBs - Indian concerns on labour and environmental standards

  23. EU-ASIA FTAs • EU-Japan -- Tariffs and NTBs: views from both sides -- Lack of Japanese ambition -- Moving towards an FTA negotiation?

  24. EU BILATERALS • EU-China - FTA not on the cards - Existing bilateral cooperation framework (PCA, regulatory dialogues up to HLD): too soft; how to strengthen? - Avoid non-trade linkages; don’t exaggerate macroeconomic issues (bilateral deficit and exchange rate) - Focus on market access, esp. regulatory issues - Both EU and China have legitimate market-access issues

  25. EU BILATERALS • EU-China (cont.): issues -- Raw materials and export restraints -- Services -- Investment (both ways) -- IPR -- Government Procurement -- Norms and standards (both ways) -- Subsidies -- MES and trade remedies -- Better prioritising and constructing quid pro quos

  26. EU BILATERALS • EU-China: Conclusion -- Better prioritising and constructing quid pro quos -- Constructive reciprocity vs. destructive reciprocity (threatening punitive measures) -- Better bilateral relations if stalled domestic reforms are revived

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