Sofia Maragkidou Phd student Department of International and European Studies, University of Macedonia, Greece sofia.maragkidou@gmail.com 1
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 2
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 3
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 diversiondomino 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 4
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Old vs New Regionalism 2 or 3 waves/generations of regionalism: 1 st wave end of the WWII-1950s: Customs Union+CAP by 6 european states (old regionalism) 2 nd 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 6
WTO Working Document n 12 Multilateral Trade Agreements: A changing landscape, 2006 7
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. 8
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. 9
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 strategyincreasing focus on the area of Asia Pacific Doha Round dead-end need to put forward its deep integration agenda with its trading partners 10
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 11
US Trade Policy The US was the champion of multilateralism for the first decades of the GATT It entered late the regionalism game (1 st 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 13
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 14
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-àvis the emerging economies 15
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