EUROPA - Gateway to the European Union
The European Union is the world’s biggest trader, accounting for 20% of global imports and exports. Free trade among its members underpinned the launch of the EU 50 years ago. The Union is therefore keen to liberalise world trade for the benefit of rich and poor countries alike.
Europe exports to every corner of the globe.
Trade boosts world growth to everybody’s advantage. It brings consumers a wider range of products to choose from. Competition between imports and local products lowers prices and raises quality. Liberalised trade enables the most efficient EU firms to compete fairly with rivals in other countries. To help developing countries, the EU is ready to open its market to their exports even if they cannot reciprocate.
The disappearance of trade barriers within the EU made a significant contribution to its prosperity and has reinforced its commitment to global liberalisation. As EU countries removed tariffs on trade between them, they also unified their tariffs on goods imported from outside. This means that products pay the same tariff whether they enter the EU via the ports of Genoa or Hamburg. As a result, a car from Japan which pays import duty on arrival in Germany can be shipped to Belgium or Poland and sold there in the same way as a German car. No further duty is charged.
The EU has been a key player in international trade liberalisation negotiations. The latest of these is the so-called Doha Development Round which began in 2001. The aim of these negotiations, held in the framework of the World Trade Organisation (WTO), is to reduce tariffs and remove other barriers to world trade. Following earlier rounds, the EU’s average tariff on industrial imports has now fallen to 4%, one of the lowest in the world.
Progress in the Doha Round has been slow. Wide and persistent differences have opened up between the rich and poor countries on issues concerning access to each other’s markets and the long-running question of agricultural subsidies. Negotiations have lurched from crisis to crisis. The WTO hopes the Doha Round can be successfully concluded by the end of 2008.
The European Union has invested heavily in trying to make Doha a success. It is also a firm believer in the WTO’s rules-based system which provides a degree of legal certainty and transparency in the conduct of international trade. The WTO sets rules whereby its members can defend themselves against unfair practices like dumping – selling at below cost – by which exporters compete against local rivals. It also provides a dispute settlements procedure.
Trade rules are multilateral, but trade itself is bilateral – between buyers and sellers, exporters and importers. This is why the EU, in addition to its participation in Doha and previous WTO rounds, has also developed a network of bilateral trade agreements with individual countries and regions across the world.
It has partnership and cooperation agreements with its neighbours in the Mediterranean basin and with Russia and the other republics of the former Soviet Union.
The EU’s trade policy is closely linked to its development policy. The Union has granted duty-free or cut-rate access to its market for most of the imports from developing countries under its generalised system of preferences (GSP). It goes even further for the world’s 49 poorest countries, all of whose exports – with the sole exception of arms – enter the EU duty-free.
The EU has developed a new trade and development strategy with its 78 partners in the Africa-Pacific-Caribbean (ACP) group aimed at integrating them into the world economy. It also has a trade agreement with South Africa that will lead to free trade, and it is negotiating a free trade deal with the six members of the Gulf Cooperation Council (GCC) – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The EU has agreements with Mexico and Chile and has been trying to negotiate a deal to liberalise trade with the Mercosur group – Argentina, Brazil, Paraguay and Uruguay.
It does not, however, have specific trade agreements with its major trading partners among the developed countries like the United States and Japan. Trade is handled through the WTO mechanisms, although the EU has many agreements in individual sectors with both countries.
The WTO framework also applies to trade between the EU and China which joined the world trade body in 2001. China is now the Union’s second biggest trading partner after the United States.
