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Perspectives on the Soft Power of EU Trade Policy Are Generating Uncertainty for Businesses and Undermining the Rules- Based Global Trading System

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Perspectives on the Soft Power of EU Trade Policy Are Generating Uncertainty for Businesses and Undermining the Rules- Based Global Trading System The international trade scene is in turmoil: trade conflicts and tensions Perspectives on the Soft Power of EU Trade Policy are generating uncertainty for businesses and undermining the rules- based global trading system. Trade and trade policy have long been Perspectives on the Soft central elements of EU external policy. Trade policy is used to pursue multiple objectives, including economic interests as well as political, developmental, environmental and values-based objectives. EU trade Power of EU Trade Policy agreements not only aim at reducing foreign market access barriers but condition the terms of preferential access to the European single market on non-trade regulation in partner countries in areas such as social and labour standards. Is this an effective strategy? Does it come at the cost of attaining economic objectives? Has the emphasis on bilateral and preferential trade arrangements come at the expense of multilateral cooperation? This collection of essays brings together different perspectives on some Edited by San Bilal and Bernard Hoekman of these questions. The diversity of approaches and views illustrate the complexity of the EU trade-related policy agenda and suggest that trade-offs might not always be properly assessed, and the balance struck could be improved. Centre for Economic Policy Research 33 Great Sutton Street A VoxEU.org Book London EC1V 0DX CEPR Press Tel: +44 (0)20 7183 8801 Email: [email protected] www.cepr.org CEPR Press Perspectives on the Soft Power of EU Trade Policy CEPR Press Centre for Economic Policy Research 33 Great Sutton Street London, EC1V 0DX UK Tel: +44 (0)20 7183 8801 Email: [email protected] Web: www.cepr.org ISBN: 978-1-912179-24-4 Copyright © CEPR Press, 2019. Perspectives on the Soft Power of EU Trade Policy Edited by San Bilal and Bernard Hoekman A VoxEU.org eBook CEPR Press This project has received funding from the European Union’s Horizon 2020 research and innovation Programme under the grant agreement number 770680. Centre for Economic Policy Research (CEPR) The Centre for Economic Policy Research (CEPR) is a network of over 1,200 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision-makers. CEPR’s guiding principle is ‘Research excellence with policy relevance’. A registered charity since it was founded in 1983, CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society. CEPR research may include views on policy, but the Trustees of the Centre do not give prior review to its publications. The opinions expressed in this report are those of the authors and not those of CEPR. Chair of the Board Sir Charlie Bean Founder and Honorary President Richard Portes President Beatrice Weder di Mauro Vice Presidents Maristella Botticini Ugo Panizza Hélène Rey VoxEU Editor-in-Chief Richard Baldwin Chief Executive Officer Tessa Ogden Contents Foreword vii Introduction: EU trade and external policy in troubled waters 9 San Bilal and Bernard Hoekman 1 EU trade policy and non-trade objectives: The RESPECT survey 17 Matteo Fiorini, Bernard Hoekman, Naïs Ralaison and Aydin Yildirim Part 1: Reflections on EU trade policy 2 Trade policy: Is there a way back to global governance? A European view 31 Karl Falkenberg 3 The EU and world regions: Multilateralism, bilateralism, and commercial realism 37 Katharina L. Meissner 4 What future for EU trade policy and free trade agreements? 47 Patricia Wruuck 5 EU economic diplomacy: Enhancing the impact and coherence of the EU’s external actions in the economic sphere 55 Angelos Pangratis 6 A personal history of EU trade policy 61 Roderick Abbott Part 2: Specific dimensions of EU trade policy 7 EU trade policy and services: The perspective from the private sector 71 Pascal Kerneis 8 Differentiation and soft power as a means of promoting a balanced rules-based trading system: The case of public procurement 79 Steve Woolcock 9 The EU trade policy on geographical indications and the missing link with development 85 Stefano Inama and Pramila Crivelli 10 Science and innovation and EU trade policy: Bridging a conceptual and policy gap 93 Riccardo Trobbiani Part 3: Relations with African, Caribbean and Pacific countries and Economic Partnership Agreements 11 The EU as a trade and development partner to the ACP: Some initial reflections 105 Junior Lodge 12 Regional integration in Africa: Need for a paradigm shift? 117 Mark Pearson 13 Africa–EU Post-2020 trade regimes: Welcome to the past and back to the future 129 Dominique Njinkeu 14 Towards rethinking the Economic Partnership Agreements 143 David Luke and Heini Suominen 15 Strengthening EU soft power by better engaging with Africa 151 Rob Floyd 16 Economic Partnership Agreements as central pillar of a Comprehensive Africa-Europe Alliance 157 Luisa Santos 17 Limits to soft power in the Economic Partnership Agreements 163 Peg Murray-Evans Part 4: Trade and non-trade policy objectives 18 Lessons from TTIP Toxicity for EU-US Trade Talks 173 Christian Bluth 19 Improving the enforcement of labour standards in the EU’s free trade agreements 183 Marco Bronckers and Giovanni Gruni 20 EU trade and development policies: How has Fair Trade been used as a tool to achieve sustainability for people and planet? 193 Alice Sinigaglia and Sergi Corbalán 21 EU trade and development policy in Asia: Promoting core EU values 203 Marc Bungenberg and Angshuman Hazarika Foreword The global trade system is experiencing a period of concentrated uncertainty and turbulence, exacerbated by emerging trade conflicts, the rise of nationalistic and populist sentiments and the inability so far of the global trading system to adapt to the rise of emerging economies, all of which serves to undermine the rules-based global trading system. In this rapidly evolving and unpredictable context, the European Union must reposition itself, adapting trade and external policies in order to better pursue its economic interests, while also maintaining political, geostrategic, developmental, environmental and principles-based objectives. In 2018, the RESPECT (Realising Europe’s Soft Power in External Cooperation and Trade) project was launched. Consisting of 10 ten partner institutions, including CEPR, and funded by the EU under its Horizon 2020 framework programme for research and innovation, the project aims to better understand and inform future EU strategy on the optimum use of available trade policy instruments and the alignment of EU and member state trade strategies to develop practical and operationally feasible recommendations as to how better to achieve EU external policy objectives. This eBook contributes to the initiative with a collection of 20 essays that serve to complement the results of an anonymous survey which solicited views from trade practitioners in the EU and partner countries on the design and implementation of EU trade and external policies. Trade and trade policy have long been a central element of EU external policy, used to pursue multiple non-trade policy objectives (NTPOs). The survey asked whether this was an effective strategy? Does it come at the cost of attaining economic objectives? Has the emphasis on bilateral and preferential trade arrangements come at the expense of multilateral cooperation? The diversity of approaches and views that it presents illustrate the complexity of the EU trade-related policy agenda and suggest that trade-offs might not always be properly assessed, and the balance struck could be improved. Overall, the message of the essays is that the EU should be more ambitious and should use its soft power more assertively, in particular to open up its partners’ markets (including in key services sectors) and defending core principles, while promoting economic development outcomes based on its partners’ priorities rather than its own. vii The essays in this publication will ultimately contribute to the discussion and analysis of the factors that support or inhibit the realization of EU NTPOs, and better inform policymakers on implementing a coherent and comprehensive strategy for the future. CEPR thanks San Bilal and Bernard Hoekman for their editorship of this eBook and Anil Shamdasani and Alex Southworth for their excellent and swift handling of its production. The contributions in this eBook reflect the views of their authors and not necessarily those of any bodies or institutions that the authors may be affiliated with. CEPR, which takes no institutional positions on economic policy matters, is glad to provide a platform for an exchange of views on this topic. Dr Tessa Ogden July 30th 2019 Introduction: EU trade and external policy in troubled waters San Bilal and Bernard Hoekman1 ECDPM; European University Institute and CEPR The international trade scene is in turmoil, with the emergence of trade conflicts among major economies stirred by the US (Evenett and Fritz 2018, Bown and Zhang 2018) and resulting uncertainty for businesses, the weakening of multilateralism, and the inability so far of the global trading system to adapt to the rise of emerging economies. Increasing inequalities within countries and the rise of populism and nationalism have further contributed to put the international trade order into question. Societies confront major challenges in adjusting to rapid technological changes and the growth of the digital economy, responding to global problems such as climate change, and addressing universal values on human rights (including labour, social and gender issues) and attaining a universally shared 2030 Agenda on sustainable development. In this rapidly evolving and uncertain context, the EU has to reposition itself, adapting its trade and external policies to better pursue its economic interests, but also to achieve its political, geostrategic, developmental, environmental and principles-based objectives.
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