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Institutional Responses to the Politicization of EU Trade Policy

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Institutional Responses to the Politicization of EU Trade Policy Reacting to Uncertainty: Institutional Responses to the Politicization of EU Trade Policy By Péter Márton Submitted to The Doctoral School of Political Science, Public Policy, and International Relations Central European University In Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy Supervisor: Professor Nick Sitter Budapest, Hungary 2020 CEU eTD Collection Word Count: 70,664 i We are all apprentices in a craft where no one ever becomes a master - Ernest Hemingway CEU eTD Collection ii Declaration I, the undersigned Péter Márton, candidate for the degree of Doctor of Philosophy at Central European University Doctoral School of Political Science, Public Policy and International Relations, declare herewith that the present thesis is exclusively my own work, based on my research and only such external information as properly credited in notes and bibliography. I declare that no unidentified and illegitimate use was made of work of others, and no part the thesis infringes on any person’s or institution’s copyright. I also declare that no part the thesis has been submitted in this form to any other institution of higher education for an academic degree. Budapest 04.15 2020 Signature CEU eTD Collection iii Abstract The EU’s Common Commercial Policy (CCP) has long served as one of the primary justifications for European Integration. A vehicle for delivering welfare-enhancing public goods to Europeans, the CCP has evolved along a logic of gradual trade liberalization and a shift towards regulatory cooperation since the creation of the WTO. This agenda had gone largely uncontested in Europe. It wasn’t until the EU moved to agree a deep and comprehensive free trade and investment agreement with the United States that this changed. The Transatlantic Trade and Investment Partnership (TTIP) embodied a newfound politicization of trade which swept over the CCP as a force majeure, questioning the objectives and underlying standards of legitimacy of the CCP. I set out to answer the question of whether this phenomenon of politicization triggered EU institutions within the CCP to pursue changes in policy goals, institutional arrangements, and modes of operation. While it seems obvious that EU institutions have to respond to politicization in a meaningful way, I demonstrate that the core policy objectives of the CCP have proved to be quite resilient. The EU trade élite’s commitment to upholding the post-WTO liberal consensus has in fact translated into a preference for circle-fencing the CCP’s core objectives and de- politicizing trade. This has meant that institutional changes in anticipation of and in response to politicization have followed a logic of incremental change, whereby the EU trade élite has tried to reconcile its institutionalized trade preferences with public resistance to these. Bizarrely, the CCP is arguably more throughput legitimate as a result while there has been little change in substantive policy preferences. I set out to make this argument with the help of a theoretical framework derived from different strands of new institutionalisms used in combination with each other for better analytical purchase. My expectations are developed with the help of a process-tracing research design. I trace the evolution of the CCP from the Constitutional Convention on the Future of CEU eTD Collection Europe taking place between 2001 and 2003 to the European Court of Justice’s landmark 2/15 Ruling in 2017 on trade competences. I rely on primary source documents and a set of (N44) élite interviews conducted with a wide range of EU decision-makers from the institutions. The exercise in process tracing reveals that while anticipation of increasing public interest did play a part in iv shaping the CCP’s post-Lisbon ruleset (as the European Parliament was empowered as a veto- player to make trade more legitimate) once the floodgates broke open, the Lisbon ruleset proved inadequate to de-politicize trade. The struggle to save the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada – which had become first test case for comprehensive New Generation Trade Agreements – drove a series of institutional changes which not only rebalanced the power relationship between the institutions, but also led to a more streamlined institutional structure for the CCP. One which is better equipped to side-step politicization should it flare back up in the future. CEU eTD Collection v Acknowledgements I’d like to thank the entire CEU community for being so awesome. Doing this PhD at CEU was a truly inspiring experience. I’ve learned so much and have met so many amazing people along the way. I’d like to acknowledge the dedicated work of my supervisor, Nick Sitter and that of my panel members Marie- Pierre Granger and Uwe Puetter whose tough but constructive comments and support helped me grow as a researcher and a person. The amazing library at CEU, the great administrative and support staff (thanks Kriszta!) and the top-notch facilities so generously provided by the University. I’d also like to thank my mother, father and sister and good friends and comrades in arms András Gál, Ákos Máté and Popeye whose company and wise words of support helped me get through some of the most mentally challenging periods I faced while writing this dissertation. CEU eTD Collection vi Table of Contents Introduction ...............................................................................................................................1 Chapter I: Conflicting views on legitimacy and what they mean for institutional change ............. 11 1. Conceptualizing legitimacy ..................................................................................................... 15 1.1 Politicization: crystallizing different perceptions of legitimacy ............................................ 21 2. Institutional change ................................................................................................................ 25 2.1 The changing focus of New Institutionalisms ....................................................................... 27 2.2. Expectations of change ........................................................................................................ 32 Chapter II: Process-tracing and interview sampling .................................................................... 40 1. Process-tracing methodology ................................................................................................. 40 2. Mechanisms & Bayesian inference ......................................................................................... 42 2.1 Theory building process-tracing ............................................................................................ 45 2.2 Testing mechanisms .............................................................................................................. 48 3. Data collection, sampling, triangulation and reporting .......................................................... 52 3.1 Interview sampling & design ................................................................................................. 53 Chapter III: Reaching a liberal consensus in the CCP ................................................................... 70 1. Customs Union – the birth of the CCP ........................................................................................ 73 2. From Uruguay to Nice ................................................................................................................. 76 3. Why the new trading agenda is so contentious .......................................................................... 84 4. Causal mechanism: responding to the public contestation of trade .......................................... 89 Chapter IV: Revisiting the European Convention: the promise of input legitimizing trade ........... 92 CEU eTD Collection 1. A causal mechanism for the Convention venue .......................................................................... 94 1.2 Agenda setting and a mixed bag of tools: unpacking steps 1 and 2 of the mechanism ..... 101 2. Complex agency through obfuscation and an appeal to appropriateness ............................... 103 vii 2.1 Working Group III on the legal personality: where shared ideas become apparent .......... 103 2.2 Working Groups VII on External Relations and IX on Simplification: a use of distinct tools .......................................................................................................................................................... 105 2.3 Plenary sessions .................................................................................................................. 107 3. IGCs and the Member States .................................................................................................... 110 4. A new burden for the EP ........................................................................................................... 112 Chapter V: Testing the post-Lisbon arrangement; the public contestation of CETA through ISDS118 1. Setting the scene: the quiet before the storm ..................................................................... 121 1.1 Understanding investor – state – dispute settlement ........................................................ 123 2. Establishing politicization ...................................................................................................... 127 3. Amplifying the debate: putting the EP to the test ...................................................................
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