eu4journalists

External relations - Trade - Development

3. Trade

Trade, which is the largest foreign policy area in the EU, falls under the exclusive competence of the European Community. With its large internal market of almost 500 million inhabitants the EU has a strong voice when negotiating as a single entity. In practice, the Commission represents European interests on behalf of member states at bilateral and multilateral levels, including at the World Trade Organization (WTO).

A significant focus of EU trade policy is the United States, with wide-ranging discussions and frequent disagreements, and with both often adopting tit-for-tat sanctions in the form of import tariffs on specific goods. In recent years, both sides have taken a number of disputes before the WTO's resolution panels. In the Doha Round of WTO negotiations, major disagreements surfaced between the EU and the US over agricultural subsidies. Each blamed the other for sabotaging the ultimate goal of the negotiations: the opening up of Western economies to products from developing countries, especially from the African, Caribbean and Pacific region. The talks were put on hold in 2006.

Friction has also been caused by subsidies to the aircraft industry, provided to Airbus by certain EU member states and to Boeing by the US government.

Many of these disputes relate to the different ways European and American governments perceive globalisation. In the United States, the economic possibilities brought by globalisation have, for the most part, been embraced. In many EU member states, however, globalisation has caused scepticism and fear of losing jobs and businesses to the developing world.

The EU has been attempting to develop trade policy with several regions of the world. There have been frequent talks between the EU and the Americas over a “Transatlantic Free Trade Area” (TAFTA), which would encompass the EU and NAFTA. Thus far, serious negotiations have not been launched. The EU is also talking with other regional blocks, such as Mercosur and ASEAN, in the hopes of establishing free trade agreements. Considering the tremendous economic growth of both China and India, a trade relations framework with either Asian economy would be very beneficial for the EU.

Conversely, cheap imports from Asian countries, especially from China and Vietnam, have caused concern in some EU member states. During the “bra war” in 2005, Chinese textiles were blocked for several weeks in European ports after European textile companies accused the Chinese of illegal price-dumping. In 2006, sport shoes produced in Vietnam were thought to have undermined the European sport shoes industry. The EU brought both cases to WTO’s dispute resolution panels.