 |
|
Trade helps growth
The
European Union is the world’s biggest trader, accounting for nearly 20%
of global exports and imports. The United States is the EU’s largest
trading partner, followed by China and Russia. Two-way trade flows across
the Atlantic are worth close to €400 billion a year.
Open trade among members of the EU has led to the single European market
with freedom of movement for people, goods, services and capital. The
Union therefore takes a lead in pushing for further trade liberalisation
at world level for the benefit of rich and poor countries alike. Trade
sanctions — e.g. removing trade preferences or limiting or freezing trade
with a partner in breach of human rights or other international standards
of behaviour — are also a tool of European foreign policy.
The rules of the game
To benefit all players, trade has to be free and fair, with the same
transparent and mutually-agreed rules applied to everyone. The EU firmly
supports the World Trade Organisation which lays down a set of rules to
help open up global trade and ensure fair treatment for all participants.
The system, although imperfect, offers a degree of transparency and legal
certainty in the conduct of international trade.
Free and fair
The most visible way to make trade free is to reduce, or remove
altogether, import duties or quotas which countries apply to products.
Suppliers, whether domestic or foreign, can then compete openly on price
and quality. But there are also hidden or ‘technical’ barriers to trade
whereby governments and companies try to gain an unfair advantage over
others. These unfair trade practices include the following: selling goods on foreign markets below cost or domestic price in order,
for example, to force producers in these countries out of their home
market — so called "dumping," paying subsidies from the state budget to companies, including to
"national champions," to give them an unfair advantage in export or
domestic markets, reserving public contracts for local firms, even though foreign bidders
submit better offers, disregarding intellectual property rights (trade marks and copyrights)
by producing pirated or counterfeit goods which are sold cheaply to
undercut the original manufacturer.
The WTO also provides a dispute settlement procedure when direct disputes
arise between two or more trading partners. While the EU sometimes takes
action in the WTO against its trade partners, the EU has also been on the
receiving end of WTO disputes in cases involving notably its agricultural
sector.
In parallel with its WTO membership, the EU has developed a network of
bilateral trade agreements with individual countries and regions across
the world. These agreements complement moves at the WTO to remove barriers
to trade internationally and help us move more quickly to secure mutual
advantage with key commercial partners. There are clear WTO rules
establishing conditions for these agreements to prevent them being used to
discriminate against other trade partners, and all EU agreements are
compatible with these rules.
Spreading the benefits
But trade agreements are not just based around commercial interests. The
EU is particularly sensitive to the interests of developing countries and
has long recognised that trade can boost their economic growth and their
productive capacity.
Developing countries enjoy duty-free access or cut-rate tariffs on exports
to the EU market for the 7 200 products covered by the EU's generalized
system of preferences (GSP). Vulnerable countries with special development
needs enjoy duty free treatment for all products covered by the GSP. This
is a one-way concession which does not require reciprocal action on the
part of beneficiaries. The world’s 50 least developed countries have
totally free access to the EU market for all their products, except
exports of arms and ammunition.
The special trade and aid relationship between the EU and the 79 countries
of the African-Caribbean-Pacific (ACP) group dates from the Lomé
Agreements of 1975. This relationship is being further developed through
so-called ‘economic partnership agreements’ (EPA). These agreements will
combine EU trade and aid in a new way. The ACP countries are encouraged to
foster economic integration with regional neighbours as a step towards
their global integration, while more aid is focused on
institution-building and good governance. Under the EPA the development
dimension becomes the cornerstone of the EU-ACP relationship.