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EU  IN  THE  GLOBAL  ARENA  
 
 
1957  :  Treaty  of  Rome  w  the  6  !  EEC  (conferral)  
 
far-­‐reaching  document  that  lays  out  every  aspect  of  economic  integration  up  to  ‘92  
Maastricht  
 
 
Objectives  :    
 
 
•  Promote  peace  &  values  of  well-­‐being  
 
 
•  Eco  growth,  price  stability  
 
 
•  Economic,  social  &  territorial  cohesion  
 
 
 
 
 
Tools  :  
 
 
•  Freedom,  security  &  justice  without  internal  frontiers  
 
 
•  Internal  market  
 
 
•  Economic  &  monetary  Union  
 
!  
 
 
•  Undistorted  competition……………………………………   No  State  aid,  Commission  
monitoring,  harmonization  of  
 
laws  
 
 
!  Intention:  create  Economic  unified  area:    
equal  consumer  opportunity  to  buy/sell,  and  for  owners  of  L&K  to  employ  t  heir  resources  in  eco  
activities  throughout  area    
o 4  Fundamental  freedoms:  free  flow  of  g  ,  s  ,  workers  &  K    
◊  Fair  &  Free  Trade…………………………………………………
...
services  
   removal  of  tariffs,  quotas  &  barriers  to  trade  
(ongoing,  hard  to  implement  cuz  qualitative  regulations)  
◊  L&K  market  integration:  Schengen  Agreement  ………
...
5  year  term  
o he  rpz  EU  internationally  &  reports  to  Parliament  after  meetings  
o provides  guidance  to  EU  &  Commission  
o decision  by  consensus:  implicit  backing  of  all  EU  leaders  
•  Court  of  Justice  of  EU  
o ensures  coherence  of  national  &  European  laws  with  terms  of  EU  Treaties  
o equal  &  fair  application  of  laws  in  member  states  
o made  up  of  1  judge  for  each  member  state,  serve  for  6  years  
o located  in  Luxembourg    
 
 
 
PRE  –  LISBON  
Supranationality  created  2  problems:  
federalists  (vanguards)  vs  governmentalists  (doubters)  
integration  outside  EU,  tensions  
So  Maastricht  3-­‐pillar  structure  (doubters  more  chil):  
i
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Intergov  policies:  Foreign  &  Defense  Matters  
iii
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ii
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Political  Stability  guaranteeing  democracy  &  human  rights  protection  
2
...

Acceptance  of  Community  Acquis:  EU  laws  &  ability  to  take  on  obligations  
Also  discussed,  financial  (budget  contribution)  &  transitional  arrangements  (time  to  adapt)  
 
EN  GROS:  political  goals  for  integration  but  economic  means  

  
TRADE  POLICY,  PYRAMID  &  GLOBAL  VALUE  CHAINS  
 
EU  trades  most  within  Europe,  then  EFTA,  then  Asia  &  N
...
 America  &  Asia)  
o IM  composition  varies  a  lot  
-­‐ Primary  goods  from  natural  resource  abundant  countries    
(Africa,  CIS,  Middle-­‐East,  Latin  America)  
taxed  at  much  higher  rate  than  manufactured  goods  
-­‐ food  never  dominant  but  ½  of  IM  from  Latin  America  
-­‐ a  lot  of  fuel  as  energy  poor  
 
Agricultural  trade:  massively  distorted  by  subsidies  to  EU  farmers,  high  barriers  against  IM  
!  if  CAP  fully  liberalized,  no  distortions,  EU  would  be  net  IM  of  food  
 
 
Treaty  of  Rome  gave    
Custom  Unions  –  first  big  step  towards  economic  integration  
more  power  to  institutions  
!  required  political  coordination  as  it  defines  external  dimension  
in  terms  of  trade  
 
 
◊  Common  External  Tariffs:  
•            EU  tariffs  very  low  after  a  lot  of  cuts  in  GATT/WTO  rounds  
•            Agricultural  tariffs  not  included  in  these  rounds,  so  much  tighter  tariffs  
 
◊  ‘Hub-­‐And-­‐Spoke’  Bilateralism  trade  arrangements:    
!  Exporters  depend  a  lot  on  EU  but  EU  don’t  really  give  af  
2  circles  around  which  network  of  bilateral  arrangements  with  almost  every  nation  in  
Europe  &  Mediterranean    
           •  ‘      Neighbourhood’  aka  Proximity  Policy:  ring  of  geographically  close  friends  
through  Association  Agreements  
-­‐ bilateral  relations  allowing  progressive  liberalisation  of  trade  
-­‐ may  prepare  EU  membership:  proves  intentions  of  further  cooperation  
-­‐ i
...
 Euro-­‐Med,  ACP  
-­‐ Former  Colonies:  African  Caribbean  Pacific    
-­‐ Started  with  asymmetric  trades,  EU  tariff  =  0  but  nations  had  theirs  
-­‐ Renegotiated  a  lot,  modernization  in  2000  
-­‐ Cotonou  Agreement:  ACP  take  of  tariffs  too  (in  progress)  
!  opening  competition  super  important  for  development,  not  only  for  EU  !  
-­‐  
•    Global  Partner  through  Cooperation  Agreements:  
-­‐ multilateral    
-­‐ i
...
 General  Agreement  on  Tariffs  &  Trade  (later  on  WTO)  
-­‐ goods  &  services  &  general  trade  issues  
-­‐ has  4  key  principles:  
i
...
Consensus  –  all  decisions  require  unanimity  
iii
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Non-­‐discriminatory  –  foreign  goods  treated  same  within  
borders  +  ‘Most-­‐Favoured  Nation’  treats  countries  same  as  best  
partner,  uniformity  

THEORY  OF  FTA  &  CUs  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

SINGLE  MARKET  POLICIES  
 
 
1957  -­‐  Treaty  of  Rome  –  start  of  process  of  forming  a  single/common  market  
!  p  difference  b/w  nations  should  not  be  more  than  transportation  +  transaction  costs    
 
Maximizing  market  integration,  eliminate:  
o Market  fragmentation  (NTBs,  lack  of  regulatory  framework)  
o Negative  macroeconomic  spillovers  (competitive  devaluations)  
!  1979:  Cassis  de  Dijon:  Principle  of  Mutual  Recognition  !  uniform  legislation,  no  more  NTBs  
But  it’s  not  enough,  the  unanimity  rule  has  to  be  replaced  by  approximation  of  national  legislation  
 
!  1985:  Cecchini  Report:  White  Paper  on  internal  market  finalization  through  legislatures  to  
remove  obstacles  to  trade  (such  as  cost-­‐increasing  barriers  &  market  entry  restrictions)  
                 “              Milan  European  Council:  political  agreement  on  the  SEA  of  ’87    
 
 
 
 
 
unanimity  only  for  fiscal  stuff  &  movement  of  workers  (QMV)  
 

 
!  1992:  Completion  of  European  Single  Market  (need  for  political  will  too)  
 
 
%    Is  single  market  delivering  ?    
Community  in  charge  of  single  m  in  form  of  directives  
•            require  adaptation  of  national  legislation  through  transposition  measures  !  DELAY  !  
•            most  controversial  stuff  in  form  of  regulations,  directly  enforceable  when  published  on  
the  Official  Journal  of  EU  
 
“Incompleteness  rate”:  %  of  directives  1  or  more  member  states  failed  to  transpose  compared  to  
total  number  of  single  market  directives  
“Transposition  deficit”:  gap  b/w  number  of  directives  adopted  at  EU  level  &  those  transposed  by  
member  states  
“Compliance  deficit”:  nb  of  incorrectly  transposed  directives  as  %  of  single  market  directives      

...
e
...
   ANTITRUST  POLICIES  
 
“EU  competition  policy  applies  to  undertakings  with  a  certain  amount  of  m  power  in  relevant  m”  
•  ‘undertaking’:  subject  of  competition  law  (companies,  firms,  businesses…)  
•  ‘relevant  m’:  2  dimension  for  boundaries:  
-­‐ Product:  D  substitution  (Small  But  Significant  Non-­‐Transitory  Increase  in  P)    
-­‐ Geographic:  in  general,  size  of  m  in  inverse  proportion  to  product’s  
transportation  costs  relative  to  its  value    
-­‐  
Dominant  position  per  se  not  a  problem,  but  only  if  no  abuse  !  
 
Monopoly  usually  leads  to  higher  prices
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Control  on  facility  by  monopolist  
2
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Denial  of  facility  use  to  competitor  
4
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 CONCEPT  OF  CONCENTRATION  
 
2  or  more  previously  independent  undertakings  replaced  by  1  (i
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 M&A)  
!  horizontal,  vertical,  conglomerate  
it  is  a  natural  consequence  of  European  integration  
 
BUT  anticompetitive  effects:  
-­‐ Unilateral:  loss  of  competition  b/w  merging  firms  
Price-­‐fixing  economically  
-­‐ Coordinated:  coordinate  behavior  to  #  profits  
harmful  &  illegal  
Deeper  EU  integration  generally  accompanied  by  LT  "  in  nb  of  firms  
!  Remedies:  Negotiations  with  Commission  
 
III
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i
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 Recapitalization  of  banks  in  Germany  reallowed  if:  
i
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have  to  obtain  shareholders  +  subordinated  debt-­‐holders’  contribution  before  resorting  to      
public  recapitalization  



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