Sofia Maragkidou

Phd student

Department of International and European Studies,

University of Macedonia, Greece

sofia.maragkidou@gmail.com

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Methodology (Stages)

A. Constructing the subject under research

Starting point: the phenomenon of the proliferation

of Regional Trade Agreements (RTAs), particularly

of Free Trade Agreements (FTAs) and its links with

the phenomenon of globalization in the context of

the US and EU trade policies

Research on the objectives of the US and EU

trade policies focusing on the dynamic region of

East Asia

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Methodology (Stages)

B. Formulating the research question and the problematic

Research question: To what extent and how the EU and US “deep” FTAs strategies reinforce EU and US actorness in the world trade scene and particularly in the region of East Asia?

Problematic: The EU and the US are trying to shape/influence the international trade rules by promoting their objectives, norms and standards in their external relations.

Principal argument: the use of “deep” FTAs as an alternative means for “managing globalization” exporting values, norms and standards on the basis of their respective interests.

C. Developing the theoretical framework: Regionalism

multidisciplinary approach: IPE and IR perspectives

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Reasons for the proliferation of FTAs

RTAs/PTAs

are concluded among a group of states or state-like actors which may

or may not be geographically close and which involve

intergovernmental cooperation

mechanisms of economic integration (FTAs looser form)

External factors:

Securing markets and providing export opportunities for domestic

companies

Increasing costs of being excluded from FTAs due to trade diversion-

domino effects

Non-conclusion of the Doha Round

Internal factors

Economic growth

Lock-in mechanisms for domestic reforms

More flexible-linked to the laboratory rationale

'Non economic' foreign policy and national security objectives

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Old vs New Regionalism

2 or 3 waves/generations of regionalism: 1st wave end of the WWII-1950s:

Customs Union+CAP by 6 european states (old regionalism)

2nd wave 1980s-today: US shift to the use of FTAs-NAFTA, EU, MERCOSUR, AFTA, SAFTA (new regionalism)

New “deep” FTAs: Are increasingly cross-regional

Focus on deep integration issues

Include foreign direct investment

Promote harmonization of domestic tax, and macro-economic policies and legal regulation

Provide for the establishment of institutions to facilitate integration

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WTO Working Document n°12 “Multilateral Trade Agreements: A changing landscape, 2006”

Regionalism and the WTO

FTAs are exempted from the Most Favored Nation (MFN) principle under certain conditions: elimination of tariffs and other trade

restrictions to be applied to “substantially all trade”- “substantially all sectors” (art. 24 of the GATT+ art. 5 of GATS) imprecise wording, unclear scope

FTAs may promote trade diversion, reduce welfare and deprive resources from the WTO

FTAs may prompt non-PTA countries to pursue multilateral trade liberalization, may serve as laboratories for international cooperation (WTO+ provisions) and increase competitiveness and welfare.

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EU’s trade policy: A tool for enhancing its

global actorness

The EU constitutes the largest trading block in the world and it is

becoming a power through trade:

uses the incentive of market access as a bargaining chip to

promote its values, objectives and geo-economic interests.

most WTO members seek deals with the EU and increasingly adapt

to its standards the EU has become the world's largest

regulatory power across a range of sectors (e.g. food, chemicals)

Lisbon Treaty: greater consistency and coherence between the

EU’s commercial and foreign policies.

Overall, the EU seeks to :

write the rules of the game

develop the institutional architecture to monitor those rules

build the capacity of international organizations to enforce them

expand its territorial reach by negotiating FTAs that establish

advantageous rules of trade.

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Rationale of the EU’s new FTAs strategy

Until 1999 :

de facto moratorium on the negotiation

of EU FTAs

prevalence of the doctrine of managed

globalization in the EU’s external trade

policy

focus on multilateral trade liberalization

2006 onwards: Shift to an ultra liberal policy (Communication Global Europe)

and use of deep FTAs due to:

Increasing geo-economic competition with its main competitors (US, Japan, China,

India) -“race for markets”

The US competitive liberalization strategy-

increasing focus on the area of Asia Pacific

Doha Round dead-end need to put

forward its deep integration agenda with its trading partners

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Aims of the EU’s new FTAs strategy

The 2006 Global Europe Communication aimed at promoting:

Reciprocal market opening

The improvement of global standards

The deepening of strategic cooperation with the EU’s international partners

Increasing EU competitiveness and influence at global level

FTA priority partners: ASEAN, South Korea, MERCOSUR, India, Russia and Gulf Cooperation Council Criteria:

Market potential (economic size and growth)

Level of protection of protection against EU exports

Potential partners’ negotiations with EU competitors

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US Trade Policy

The US was the champion of multilateralism for the first decades of the

GATT

It entered late the regionalism game (1st “shallow “FTA” with Israel in

1983)

Breakthrough: NAFTA (1994)-model for future FTAs

After failed multilateral trade negotiations in Doha the US progressively

turned to bilateral and regional routes

Clinton administration:

Trade policy with strong mercantilistic flavor

“Economic security” was the main focus of US diplomatic initiatives

Focus on increasing US competitiveness

Asia emerged as the most important priority for new trade initiatives

(APEC, FTAA, Big Emerging Markets initiative)

George W. Bush administration:

Explicit linkage between trade and foreign and security policies of the

US (FTAs in Middle East and East Asia)

Doctrine of competitive liberalization

Increase of the number of FTAs under negotiation 12

US Trade Policy

Obama administration aims at reinvigorating US economy and global economic leadership Emphasis on the TTP and TTIP : Follows the strategy of competitive liberalization Aims at influencing the formulation of standards and the

establishment of norms in the Asia Pacific, while deepening shared US-EU norms create benchmarks for future multilateral liberalization

In particular, The TPP aims at a “rebalance” of the US in Asia The TTIP aims at generating regulatory coherence,

repositioning the US-EU relationship vis-à-vis third countries and strengthening the ground rules of the international order

Overall, both agreements are expected to have WTO+ provisions

However the Trade Promotion Authority has not been renewed yet, the EU leadership will change and Senate elections will take place in the US

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Comparing US and EU FTAs approaches

US approach FTAs are an evolving version of NAFTA Scope is structurally standardized Content of provisions fairly uniform Symmetry and reciprocity

EU approach Differentiation of provisions and partner

commitments Flexibility Relatively modest ambition in terms of open

marketing

Bruegel study (2009): differences in coverage (services, investment and enforceability of provisions)

EU FTAs exclude relatively more agricultural lines and are less ambitious on services and IPR

However, after the KOREU FTA, EU FTAs try to match the US FTAs template and scope

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Conclusions

Regionalism is likely to be the only game in town for at least the next few years

Competition dynamics between the EU and the US FTAs strategies: race for market access, expansion of their territorial

sphere of influence shaping the rules of global trade

Cooperation dynamics: TTIP create a modern “gold standard”

FTA for future FTAs on the basis of regulatory convergence

strengthening the EU-US leadership in the WTO

rebalancing their influence vis-à-vis the emerging economies

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THANK YOU FOR YOUR

ATTENTION!

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