External Relations of the European Union – Literature Notes Week 4: EU Trade Policy
J. Larik in Wessel and Larik, Chapter 7 (pp. 209-244)
I Introduction
The CCP is not just a key external relations policy but, in substantive terms, it is at the heart of the European
integration project and a logical consequence of the interaction between internal and external developments,
in particular between the EU’s customs union ant the rules on free trade.
II Development of the CCP: The Internal Market and International Trade
The development of the CCP can only be properly understood when taking into account that, from the outset,
it was shaped by, on the one hand, the evolution of the internal trade regime and, on the other, by the process
of economic integration in Europe.
A. The Internal Market and GATT/WTO
The establishment and further evolution of the CCP reflects the strong relationship between internal
and external aspects of economic integration. This was explicitly acknowledged in Opinion 1/75, which
stated that “[C]oncerning the [CCP], the Community is empowered (…) not only to adopt internal rules
of Community law, but also to conclude agreements with third countries pursuant to [Articles 206 and
207 TFEU]”. Gradually, the scope of the CCP has expanded to trade in services and trade-related
aspects of intellectual property rights, though competences in this latter area are shared with the
Member States.
B. The Scope of the CCP
The scope of the CCP has been drastically expanded over time by amendments to the EU Treaties as
well as through interpretations of the Court of Justice. The emphasis of the CCP, as reflected by the
preamble to the TFEU and by Article 21(2)(e) TEU, is on the liberalisation of trade internationally, as
opposed to just trade between the Member States. This is why the CCP needed to be based on an
exclusive competence, as Member State discretion might otherwise harm the foundations of the
internal market and the customs union. The underlying principles and the scope of the CCP are set out
in Article 207 TFEU (the only other provision specifically on the CCP). Lisbon furthermore extended this
scope, as Article 207(1) TFEU now underlines that the CCP covers all trade aspects, eliminating
uncertainties beyond trade in goods, and it now also covers the GATS and TRIPS next to the GATT.
Moreover, Article 207 underlines that Foreign Direct Investment (FDI) falls within the scope of the
CCP. The CCP also serves as an instrument of foreign policy through which a wider normative agenda
and interests can be pursued by the EU. Article 207(2), then, provides the legal basis for the adoption
of “measures for the implementation” of the CCP, which empowers the EU institutions “by means of
regulations” to adopt measures for the implementation of the CCP. Finally, despite the Union having
an exclusive competence in the CCP, two safeguards have been introduced in Article 207(6) TFEU. The
first merely states that the CCP shall not affect the delimitation of competences between the Union
and the Member States, in line with the principle of conferral. The second aims to make sure that
trade agreements in services do not lead to a harmonisation ‘through the backdoor’, as the need to
allow the Union to implement agreements internally might lead to an extension of its internal
competences.
III Instruments and Tools of the Common Commercial Policy
A. Common Custom Tariff
The Common Customs Tariff (CCT) dates back to 1968 and follows the logic of the internal market:
once internal tariffs are removed one needs to agree on a common external tariff to prevent goods
from entering the internal market through the Member State with the lowest import tariff.
B. Trade Barriers and Market Access
Rules concerning market access and trade liberalisation find their basis in a number of regulations, the
most general one being Regulation 2015/478, which lays down the basic rules on imports from third
countries; while general rules on exports are specified in Regulation 2015/479 establishing common
, rules for exports. Next to this, separate regulations deal with specific (groups of) countries or specific
products (e.g. textiles).
C. Trade Defence Instruments
Perhaps ironically, in order to reach the objective of free trade adequate regulation and protection are
needed. The EU’s three principle trade defence instruments are the following. First, anti-dumping
measures have the purpose of preventing the domestic market from being distorted by products that
are sold below their so-called ‘normal value’ by imposing special duties. In this regard, the EU has
adopted Regulation 2016/1036 on protection against dumped imports from countries not members of
the EU. In addition, Regulation 2016/1037 (as opposed to/1036) aims to protect the internal market
and its industries from subsidised imports from third states. Third, safeguards are intended for
situations in which an EU industry is affected by an unforeseen, sharp and sudden increase of imports
from third countries. The objective is to give the industry a temporary breathing space to make
necessary adjustments and they always come with an obligation to restructure.
D. Trade Agreements
Trade agreements serve as a tool for acquiring access to foreign markets and for promoting the EU’s
values and interests. Moreover, they go further in terms of collaboration than the multilateral
framework of the WTO with specific partners, e.g. by providing a framework for closer regulatory
cooperation. However, widening the substance of trade agreements brings back the question of
‘mixity’, meaning that if issues are included in an FTA that exceed the scope of the exclusive CCP
competence, then the participation of the Member States may become necessary. A way to avoid
mixity is the ‘split’ the comprehensive agreement into two separate parts, one of which can be
concluded as an EU-only agreement.
E. Trade Dispute Settlement
Unlike most other international dispute settlement mechanisms, dispute settlement at the WTO is
quasi-compulsory thanks to the so-called ‘reverse consensus principle’. This means that unless there is
a consensus not to establish a panel, it will be established. Even though the EU and the Member States
are both represented at the WTO, only the EU brings cases against other WTO members. Moreover,
the EU takes up the defence, even in cases against individual Member States. When the EU is
authorised to adopt ‘suspension of concessions’ against WTO members who have violated their
obligations towards it, it can use the entire weight of its internal market to make them effective.
IV The Role of the Institutions and Decision-making
In the CCP, there are a number of important deviations from the general rules and procedures.
A. The Commission
International agreements concluded in the area of the CCP follow the single procedure laid down in
Article 218 TFEU, though Article 207(3) TFEU adds a few particularities, which point to a somewhat
different position of the institutions. It is explicitly mentioned that the Council and the Commission
need to make sure that agreements are compatible with internal policies. There is no choice in the
selection of the ‘Union negotiation’, as trade negotiations are, by definition, in the hands of the
Commission, though it must act in consultation with the ‘Trade Policy Committee’ through which the
Council can maintain its influence on the negotiations. Finally, the Commission’s general competence
to initiate an infringement procedure against a Member State is also applicable under the CCP.
B. The Council
Together with the EP, the Council is the main decision-making institution (in the ‘Trade Council’
configuration). Article 207(2) TFEU refers to the OLP for the adoption of “measures defining the
framework for implementing the common commercial policy”. However, under Article 207(4) TFEU,
the Council acts unanimously in the negotiation and conclusion of agreements in the areas of trade in
services, commercial aspects of intellectual property, and FDI, “where such agreements include
provisions for which unanimity is required for the adoption of internal rules”. In the areas mentioned in
paragraphs 4(a) and (b), the Council always decides by unanimity because of the sensitivity of those
areas. Finally, paragraph 6 excludes the conclusion of agreements if they would lead to internal
harmonisation in areas where this was not meant to happen, e.g. the areas mentioned in Article 6
TFEU, even in the area of the CCP.
