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Journal of European Public Policy
ISSN: 1350-1763 (Print) 1466-4429 (Online) Journal homepage: https://www.tandfonline.com/loi/rjpp20
EU trade policy in the twenty-first century: change,
continuity and challenges
Patrick Leblond & Crina Viju-Miljusevic
To cite this article: Patrick Leblond & Crina Viju-Miljusevic (2019) EU trade policy in the twentyfirst
century: change, continuity and challenges, Journal of European Public Policy, 26:12,
1836-1846, DOI: 10.1080/13501763.2019.1678059
To link to this article: https://doi.org/10.1080/13501763.2019.1678059
Published online: 28 Oct 2019.
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INTRODUCTION
EU trade policy in the twenty-first century: change,
continuity and challenges
Patrick Leblonda
and Crina Viju-Miljusevicb
a
Graduate School of Public and International Affairs, University of Ottawa, Ottawa, Canada;
b
Institute of European, Russian and Eurasian Studies, Carleton University, Ottawa, Canada
ABSTRACT
This is the introduction to a special collection of contributions that analyse key
features of the European Union’s (EU) trade policy in the twenty-first century,
notably its politicization. As such, it examines the degree to which EU trade
policy and its environment have changed over the last 20 years. More
specifically, it begins with a brief review of the main changes to the structure
of international trade and the resulting impacts on trade agreements. Second,
it describes the institutional changes (notably the Lisbon Treaty) that have
affected the EU’s trade policy-making. Third, it discusses how the abovementioned
changes have affected the EU’s trade policy. Finally, it summarizes
the special collection’s key contributions to our improved understanding of
EU trade policy in the twenty-first century as well as pinpoints new issues that
scholars of EU trade policy should pay close attention to in their future
research agendas.
ARTICLE HISTORY Received 4 October 2019; Accepted 4 October 2019
KEYWORDS European Union; international trade; politicization; trade policy
Introduction
Over the last 20 years, the European Union (EU) has conducted an active trade
policy, negotiating a multitude of bilateral trade agreements and being
strongly involved in negotiations at the World Trade Organization (WTO)
(e.g., Doha Round, Agreement on Trade Facilitation, Trade in Services Agreement).
It has also expanded the scope of the trade agreements that it negotiates,
with regulatory cooperation, labour and environmental standards,
investment, government procurement and competition policy now core
features of such agreements. The comprehensive nature of the EU’s trade
agreements has raised concerns among politicians, non-governmental organizations
(NGOs) and the general public about the state’s ability to regulate
© 2019 Informa UK Limited, trading as Taylor & Francis Group
CONTACT Patrick Leblond patrick.leblond@uottawa.ca
This article has been republished with minor changes. These changes do not impact the academic content
of the article.
JOURNAL OF EUROPEAN PUBLIC POLICY
2019, VOL. 26, NO. 12, 1836–1846
https://doi.org/10.1080/13501763.2019.1678059
economy and society according to democratic principles and process: they
fear that such agreements provide even more privileges to business than
before, thereby exacerbating the costs associated with globalization.
As a result, the EU’s trade policy, like other areas of EU policy-making (Costa
2019; Hutter et al. 2016; Schmidt 2019), has become more politicized. This was
certainly best exemplified by the high-profile cases of the Comprehensive
Economic and Trade Agreement (CETA) with Canada and the Transatlantic
Trade and Investment Partnership (TTIP) with the United States. In response,
the EU has attempted to make trade agreements and negotiations more
transparent. It has also been looking at ways in which it can make such agreements
more ‘progressive’ by finding the appropriate balance between
obstacle-free trade and the so-called ‘right to regulate’, in order to address
people’s concerns and make ‘free trade’ more legitimate and acceptable
politically.
In this introductory contribution, we describe the main changes to the
structure of international trade and the resulting impacts on trade agreements.
We also describe the institutional changes (notably the Lisbon
Treaty) that have affected the EU’s trade policy-making. In turn, we discuss
how the above-mentioned changes have affected the EU’s trade policy.
Finally, we summarize the special collection’s key contributions to our
improved understanding of EU trade policy in the twenty-first century as
well as pinpoint new issues that scholars of EU trade policy should pay
close attention to in their future research agendas (e.g., great power relations
and international security as well as the implementation of trade agreements).
For instance, this special collection finds that the politicization in EU trade
negotiations is not consistent and, in fact, has been quite limited. It also concludes
that the EU’s policy response to the perceived politicization of its trade
policy is not a major shift from previous trade strategies.
Trade in the twenty-first century
International trade has experienced three major structural changes since the
1990s. The first change is the ‘servicification’ of trade. In other words, services
are increasingly being traded across borders. The second key phenomenon
affecting trade has been the globalization of firms’ value (or production)
chains, whereby intermediate rather than final goods (and services) are also
traded internationally. Finally, with the economy’s digitization, goods and services
are increasingly traded in digital rather than physical form. As a result,
international trade agreements have evolved to reflect these changes,
which is why we now talk of third-generation free trade agreements (FTAs).
According to the WTO, ‘[o]ver the past 20 years, trade in services has
become the most dynamic segment of world trade, growing more quickly
than trade in goods’ (WTO 2015). Between 1995 and 2014, exports of services
JOURNAL OF EUROPEAN PUBLIC POLICY 1837
increased from just over one trillion US dollars to close to five trillion US dollars
(WTO 2015). As a result, services now represent around 20 per cent of global
trade. In value-added terms, however, services account for 40 per cent of
world trade (Lanz and Maurer 2015). Services are also embedded in goods
that are traded internationally (Cernat 2015): they include, for example, logistics,
design, engineering or accounting that are necessary inputs in the manufacturing
process. This type of trade is referred to as the ‘servicification of
manufacturing’ (Lanz and Maurer 2015; Lodefalk 2017). In Europe, it is estimated
to be worth over €300 billion and accounts for about one third of
total EU goods exports (Cernat 2015).
Along with the rise of trade in services, firms have also globalized their socalled
value chains: ‘[t]hrough outsourcing and offshoring, they have sliced up
their production processes and dispersed their production activities across
multiple countries, leading to global value chains (GVCs)’ (Van Assche forthcoming).
As a result, trade in intermediate goods and services now dominate
trade in final goods and services. It also means that exports now rely on
imported inputs (Van Assche forthcoming). GVCs have also been
accompanied by a rise in foreign direct investment, whereby firms invest
abroad not only to seek new markets but also to increase the efficiency of
their operations (Van Assche forthcoming).
A third structural change to international trade in the last 20 years is the
economy’s increasing digitization and the associated rise in electronic commerce
and data flows across borders. The McKinsey Global Institute has estimated
that around 50 per cent of the world’s traded services are now in digital
form while electronic commerce accounts for approximately 12 per cent of all
goods traded across borders (Manyika et al. 2016). Trade policy has been slow
to recognize how the regulation of cross-border data flows can have an
impact on trade in both physical and digital goods and services (Aaronson
and Leblond 2018). Although trade agreements negotiated in the last
decade have provisions on electronic commerce, these provisions tend to
be very limited in nature, mostly prohibiting tariffs on electronic transmissions
(Aaronson and Leblond 2018).1
In addition to tariffs generally becoming low as a result of successive GATT
(General Agreement on Tariffs and Trade) negotiation rounds, the three
above-mentioned structural changes to the nature of international trade
have pushed trade policy to focus increasingly on reducing regulatory barriers
to trade and investment. Over the last two decades, trade negotiations –
whether bilateral, plurilateral or multilateral – have increasingly focused on
‘beyond-the-border’ barriers to trade.2
This has raised public concerns
about how trade agreements may limit governments’ ability to regulate
society and economy as they see fit. It also makes implementation a much
more important issue. With agreements focused mainly on tariffs, implementation
is easy: customs administrations just have to publish new tariff
1838 P. LEBLOND AND C. VIJU-MILJUSEVIC
schedules on the day the agreement comes into effect. As a result, once such
agreements were signed, politicians, bureaucrats and businesses moved on.
This can no longer be the case. Agreements with provisions on regulatory
and administrative matters require significant and sustained cooperation
between the parties to the agreement if the latter’s benefits are to be realized
(see Leblond 2016). Agreements must, therefore, plan for such cooperation to
take place once the agreement has come into force. Institutional mechanisms
have to be devised to ensure that cooperation and coordination occurs.
Institutional changes affecting the EU’s trade policy-making
The Lisbon Treaty brought important changes to the EU’s trade policy process.
Firstly, the EU trade policy was brought under the EU’s external action. This
implies that external trade must be conducted in accordance with the principles
specified by Chapter 1 of Title V of the Treaty on the Functioning of
the European Union (TFEU): democracy, rule of law and human rights and
natural resources sustainability. This means that EU trade agreements are
more than just about economic liberalization. They also help ‘export
Europe’s high standards for food safety, workers’ rights, the environment
and consumer rights far beyond our borders’ (European Commission 2018).
Secondly, according to Article 207(1) TFEU all aspects of external trade –
including services, commercial aspects of intellectual property and foreign
direct investment3
– are under exclusive EU competence. These areas
require qualified majority voting4
in the EU’s Council of Ministers for the negotiation
and conclusion of international trade agreements. Thirdly, the Lisbon
Treaty enhanced the European Parliament’s (EP) role in the EU’s external
policy-making. The EP now shares responsibility with the Council for developing
regulations for implementing the common external policy. This means
that the Lisbon Treaty extended the EP’s power over the conventional bilateral
trade agreements and to unilateral EU trade policy (Woolcock 2010).
Some of the EU’s recent trade agreements are considered mixed agreements:
CETA (Canada–EU Comprehensive Economic and Trade Agreement) and the
EU–Singapore trade agreement. In the latter case, the Court of Justice of the
EU (CJEU) concluded that it is a mixed agreement, whereby the EU has exclusive
competence except for two areas: portfolio investment and investor-state
dispute settlement, which are under shared competence (Court of Justice of
the EU 2017). Provisions under exclusive competence require ratification
only by the Council and the EP. Under shared competences, ratification is
done by individual EU member states (i.e., national parliaments and, in
some cases, regional ones [e.g., Belgium]). Trade agreements can be
implemented provisionally after the ratification process at the EU level,
while the issues that are under shared competence are implemented only
once all the member states have ratified them (e.g., CETA).
JOURNAL OF EUROPEAN PUBLIC POLICY 1839
The EU has become one of the most important advocates of a deep trade
agenda at the multilateral and regional levels.5
The EU’s inability to advance a
deep trade agenda at the multilateral level in the early 2000s, as a result of the
failed Doha Round at the WTO, resulted in a shift in its trade strategy in favour
of bilateral agreements with key partners and a more assertive policy towards
countries that protect their goods and services, especially through non-tariff
barriers (Kerr and Viju-Miljusevic 2019). The Europe 2020 and Trade for All
trade strategies have strengthened this approach (European Commission
2010, 2015). The shift in the EU’s trade agenda can be explained by two
reasons (Young and Peterson 2014): all forms of international exchanges
have expanded at a fast pace and international exchanges have become
more diversified, as explained in the previous section. Thus, one of the EU
goals in its trade negotiations has been regulatory coordination, which
implies a change in domestic policy (Meunier and Nicolaïdis 2006). Whether
the EU is putting effort into achieving this goal is still debated in the literature
(Young 2015). Schmidt-Felzmann (2019) in her analysis of the EU’s trade and
energy relations with Russia over the last two decades, demonstrates that the
EU’s ability to influence the standards and practices of an important economic
partner remains limited, against what Dür et al. (2019) call the ‘conventional
wisdom’.6
As such, the EU’s trade relations with Russia highlights more continuity
than change, although Russia’s accession to the WTO has provided the
EU with some new leverage to influence Russian market regulations. Schmidt–
Felzmann’s analysis also underlines that seeking deep and comprehensive
trade agreements with some countries (e.g., Ukraine, Moldova and Georgia)
can upset its relations with other partners (i.e., Russia).
Consequences for EU trade policy in the twenty-first century
As a result of structural and institutional changes outlined above, the EU’s
trade policy has become increasingly politicized,7
even if it remains resilient
(De Bièvre 2018). However, as Meunier and Czesana (2019) point out, the politicization
of trade deals in Europe varies over time, across negotiations and
across member states (see also Young 2019). This raises the important question
as to why trade policy is much more contested in some cases than in
others. For instance, trade relations with the United States have been much
more contested by the public than relations with China and Russia. One
could think that the scope of the agreement being negotiated would determine
the degree of politicization but, as the EU’s recent trade agreements
with Japan and Mexico show, such is not the case. Other factors are at play:
values, identity, culture, institutions, economic competition and new technologies.
Meunier and Czesana (2019) offer a list of complementary explanations,
including the comprehensive nature of trade agreements, globalization, transformation
of the media landscape, Lisbon institutional changes, the role of the
1840 P. LEBLOND AND C. VIJU-MILJUSEVIC
US and interference from third parties. Duina (2019), for his part, argues that
trade politicization relates to the fundamental values and identities associated
with particular EU trade agreements (e.g., food quality and traditions, consumer
health, the environment, or animal rights), depending on the scope of
their provisions.
Although the politicization of the EU’s trade policy is actually more limited
than it appeared in the CETA and TTIP contexts, the legitimacy of the EU trade
policy has nevertheless been questioned. In response, the EU has attempted
to make its trade agreements and negotiations more transparent. The European
Commission has implemented a series of changes such as publishing
explanatory documents, textual proposals and third-party correspondence
as well as making public results of meetings with stakeholders and policy
officials (Gheyle and De Ville 2017). Transparency has become one of the
three main pillars of the EU’s latest trade strategy, Trade for All, which is a
response to the intense debate on trade in the EU (European Commission
2015). Other direct responses to politicization of trade policy are the European
Commission’s Reflection Paper on Harnessing Globalisation (European Commission
2017a) and A Balanced and Progressive Trade Policy to Harness Globalisation
(European Commission 2017b), which highlight the positive effects as
well as the challenges of globalization, arguing that the latter is one of the
important triggers of populist parties’ rise. To address globalization’s challenges
and make ‘free trade’ more ‘balanced’ and acceptable politically, the
Commission wants to make the EU’s trade agreements more ‘progressive’
by finding the appropriate balance between obstacle-free trade and the socalled
‘right to regulate’ (e.g., to protect the environment or labour rights,
even if such regulation creates obstacles to trade).
As Young (2019) argues, the ‘balanced’ elements of the EU’s new trade
strategy are related to ensuring that trade partners respect their obligations
and unfair practices are addressed, while the ‘progressive’ elements are
focused on defending and exporting EU regulations and norms, increased
transparency of negotiations and implementing a new framework for screening
foreign direct investment. However, he also concludes that those changes
are not significantly different from the ones proposed by previous trade strategies
and, thus, they will ultimately have a limited impact on reducing politicization,
when and where it occurs.
Conclusion
The politicization of EU trade policy is a recent phenomenon that has received
little academic attention until now, which is why it is a key focus of this special
collection of articles on the EU’s trade policy in the twenty-first century. It is
not sufficient to analyse the contested nature of EU trade politics in particular
trade agreement negotiations (e.g., Hübner et al. 2017); the politicization
JOURNAL OF EUROPEAN PUBLIC POLICY 1841
process and its impact on EU trade policy require more systematic and deeper
analysis across all EU trade negotiations. As such, it is necessary to examine
the factors that give rise to politicized trade negotiations in some cases but
not others. As Dür et al. (2019) contend, it is also important to analyse how
politicization (or not) influences the EU’s bargaining power during trade
negotiations.
One of the main conclusions advanced by this special collection is that,
contrary to what the existing literature suggests, the politicization in EU
trade negotiations is not consistent and, in fact, has been quite limited. Moreover,
the authors have proposed various explanations for the varying degrees
of politicization (Duina 2019; Meunier and Czesana 2019). Another key take
away from this special collection is that the EU’s policy response to the perceived
politicization of trade policy does not actually represent a major shift
from previous trade strategies and, thus, it is limited in its effects on politicization
(Young 2019).
But EU trade policy’s varying degree of politicization is not the only consequence
of the structural changes to international trade in the twenty-first
century described herein. As Dür et al. (2019) note, GVCs also affect trade
and non-trade preferences in the EU, which in turn influence the latter’s bargaining
power in international trade negotiations. The EU’s relative trade bargaining
power is particularly relevant at a time when the WTO is facing an
existential crisis as a result of the United States blocking the appointment
of new members to the Appellate Body and invoking national security as a
reason for adopting protectionist measures. The EU sees itself as a pivotal
actor in ensuring that international trade rules are respected and improved
so that borders remain open to goods, services, capital, ideas and data/information
(Malmström 2018). One could argue that the EU’s position reflects the
importance of GVCs for its economy. However, as in the Russian case analysed
by Schmidt-Felzmann (2019), GVCs may not matter much for the EU’s bargaining
power when dealing with major economic partners such as China and the
USA, whose governments are currently challenging existing trade rules to
promote GVC network domination by their country’s firms – on a regional
(if not global) basis, most especially in high-tech sectors associated with the
digital economy (Ciuriak 2019). This means that, in addition to GVCs and politicization,
great power relations and international security are key twenty-first
century issues that scholars of EU trade policy should pay particular attention
to in their future research agenda.
Finally, in an era of ‘third-generation’ trade agreements, focusing scholarly
analysis on preferences and bargaining power in the context of trade negotiations
is no longer sufficient (e.g., Dür et al. 2019). Trade politics and
policy do not end when an agreement has been reached. With new trade
agreements being increasingly about regulatory cooperation, it is crucial to
understand how such agreements are implemented once they have come
1842 P. LEBLOND AND C. VIJU-MILJUSEVIC
into force. If there are differences in the degree (or quality) of implementation
between agreements and/or between the EU and its trade partners, it is
important to know why that is the case. In other words, there is a need to
understand the factors that influence the implementation of deep and comprehensive
trade agreements. The study of trade agreement implementation
should thus also be added to the EU trade policy in the twenty-first century
research agenda (e.g., Leblond 2016).
Notes
1. The Comprehensive and Progressive Agreement on Trans-Pacific Partnership
(CPTPP) and the United States-Mexico-Canada Agreement (USMCA) are exceptions,
as they have extensive provisions on digital trade.
2. Recent trade agreements such as CETA, TTIP, CPTPP and USMCA are referred to
as ‘third-generation’ agreements. In comparison, the GATT and its successive
negotiations rounds is a ‘first generation’ agreement, limited to reducing
tariffs and quotas, while the North American Free Trade Agreement (NAFTA) is
a ‘second generation’ agreement because it also includes provisions to
address beyond-the-border barriers to trade and investment, but more limited
in scope than today’s agreements.
3. With the exception of portfolio investment and dispute settlement.
4. With certain exceptions: audio-visual, health, educational and social services (see
Article 207[4] TFEU).
5. The deep trade agenda includes so-called WTO-plus commitments (e.g., the
administration of a country’s trade regime in terms of transparency and judicial
review or the application of market economy principles) and ‘WTO-extra’ obligations
(competition policy, data protection, the environment, labour and
human rights, investment).
6. According to the ‘conventional wisdom’, the EU is a powerful actor in international
trade that influences the global trade agenda according to its trade
and non-trade interests.
7. Politicization is defined as ‘increasing polarization of opinions and public salience’
whereas public salience concerns the significance or urgency that the
general public gives to a given policy issue Meunier and Czesana (2019).
Acknowledgements
We would like to express our deep gratitude to Jeremy Richardson and Berthold Rittberger
for their valuable support, advice and comments with respect to this special collection.
We would also like to thank the contributors, including those who did not
make it through the review process, for their diligent collaboration in bringing
about this special collection. The authors wish to acknowledge the CN-Paul
M. Tellier Chair on Business and Public Policy at the University of Ottawa for the organization
of a workshop on EU trade policy in the twenty-first century in March 2018 that
led to this special collection.
Disclosure statement
No potential conflict of interest was reported by the authors.
JOURNAL OF EUROPEAN PUBLIC POLICY 1843
Funding
The authors wish to acknowledge the financial and logistical support received from the
Erasmus+ Programme of the European Union, the Jean Monnet Centre of Excellence
and the Faculty of Public Affairs at Carleton University.
Notes on contributors
Patrick Leblond is an Associate Professor in the Graduate School of Public and International
Affairs at the University of Ottawa.
Crina Viju-Miljusevic is an Associate Professor in the Institute of European, Russian and
Eurasian Studies at Carleton University.
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