Select Committee on European Union Sixteenth Report

CHAPTER 4: FormUlation of EU Trade Policy

The EU's negotiating mandate

111.  Under the EC Treaty[12] the European Commission initiates proposals for new international agreements and negotiates those agreements on behalf of the Member States, on the basis of a mandate agreed by them. While the Treaty gives the Commission a strong hand in EU trade policy, safeguards are provided in the relationship with the Council of Ministers and Parliament. The Commission needs to consult with the Council and to seek its authority for the launch of formal negotiations, and for any legislative decisions in the trade field.

112.  During our inquiry, we heard a range of views about the way EU trade policy is formulated. Some witnesses saw the present EU trade policy system as closed and unaccountable. Others believed the Commission must have some freedom of manoeuvre if it is to negotiate effectively.

113.  The International Chamber of Commerce United Kingdom supported greater European Parliament and NGO access to the trade policy process (p115). This was echoed by the RSPB, who thought that both the European Parliament and the Council should authorise the opening of trade negotiations, the adoption of negotiating mandates and the conclusion of agreements (p119). CAFOD saw the EU's internal processes on trade policy as opaque, arguing that the agenda and minutes of the trade specialists' committee (the so-called "Article 133" Committee[13]) should be published, and that sufficient time be given for consultations between directorates within the Commission as well as within Member State governments and civil society (p50).

114.  On the other hand, Clifford Chance said that while transparency and accountability are important, full disclosure during negotiations would hamper the bargaining position of the EU's negotiators (p104). Giles Chichester MEP took a similar line, saying that:

"The EU's trade negotiators are in a very difficult position - with 15, and soon 25, member states to satisfy it is much harder to ascertain what can be sold as a good deal on their return and so their flexibility is restrained. Politics is the art of the possible and we do not see any easy way to give negotiators more room for manoeuvre than they already have". (p100)

115.  There is a clear sense of dissatisfaction with the lack of information on trade policy provided to civil society by the Commission and others. But there are many who see something like the present arrangements as inevitable, given that international trade negotiations are necessarily conducted in confidence, and the participants do not want their positions disclosed in advance.

116.  We do not believe radical changes are required in the way EU trade policy is formulated and executed. However, the Commission should maintain and if possible increase the flow of information and consultation on trade policy.

The Role of the European Parliament

117.  The European Parliament had no role in trade policy formulation in the original Treaty of Rome. This has been altered to some extent in successive Treaty revisions and the European Parliament's assent is now required for the conclusion of the most important trade agreements[14]. However, the Parliament's approval is not required for the adoption of negotiating mandates nor the routine conclusion of all trade agreements. A number of MEPs would like to change this through further Treaty change.

118.  Nick Clegg MEP explained that the aim of MEPs like himself, who had been active in the debate on the EU's negotiating mandate, was to obtain the right to ratify any major WTO deal entered into by the European Union (Q190).

BOX 11 Fast Track Trade Promotion Authority

The US Constitution gives Congress the primary power over trade policy: Article 1 empowers Congress "to regulate commerce with foreign nations" and "to lay and collect taxes, duties, imports, and excises".

Under the Fast Track Trade Promotion Authority Congress delegates to the President the authority to negotiate trade agreements and impose tariffs. Congress has to vote to accept or reject the final outcome of any trade negotiation, but can only exercise that vote on the package as a whole rather than individual elements.

119.  Such a power would parallel the US Congress's current "Fast Track" authority, under which Congress has a 'yes' or 'no' vote on the outcome of trade Rounds. The European Parliament did enjoy such powers on the outcome of the Uruguay Round, due to a provision in the EC Treaty which stipulates that any international agreement entered into by the EU which has important budgetary implications, amends certain types of internal EU legislation or creates a specific institutional framework, must be subject to a vote of assent in the European Parliament[15]. Because the Uruguay Round reduced tariffs, created the WTO and amended internal EU legislation, the Parliament was entitled to use the assent procedure.

120.  Nick Clegg would like to see this practice enshrined in the new Treaty for all significant trade deals entered into by the EU. While it was conceded that the European Parliament was extremely unlikely to use its veto to reject a trade round once all WTO members had agreed it, he believed that the threat of such a veto, however unlikely, would be a sufficient spur to re-organise relationships between institutions. (Q191)

121.  We do not see a compelling argument for increasing the formal powers of the European Parliament. Doing so would risk slowing down and politicising what is already a difficult negotiating process within the Doha Round. Furthermore, comparisons with the Fast Track authority in the United States highlight the potential danger for the European Parliament to become a lobby for protectionist interests, and thus for anti-liberalisation voices. We agree with the CBI's view that:

"democratic oversight of the EU's trade policy is already provided by the Council, and…the greater involvement or power of the European Parliament may inhibit its effective operation" (p44).

122.  We recommend that there should be strong continuing dialogue between the Council, Commission and Parliament on trade policy, but that the formal powers of the European Parliament should not be increased.

The Role of EU Member States

123.  Member States have their own contacts with third countries, both politically and at senior official level. These relationships can be used positively to reinforce the Commission's own negotiating stance, but sometimes mixed messages are projected to those third countries.

124.  We believe that Member States need to support the trade Commissioner in order for negotiations to work effectively. There would be real dangers if Member States undermined the Commission by taking positions with third countries which contradicted those agreed within the EU. However, there is a possible role for Member State governments to help the negotiations process by taking advantage of particular bilateral links.

125.  We looked at the role played by the United Kingdom within the European trade policy context. We were keen to determine whether the United Kingdom was being proactive enough. Patricia Hewitt told us:

"We also have, as the United Kingdom, by virtue of our unique history and set of relationships, the capacity to influence around the world. We clearly influence the stance taken by the European Commission on behalf of the whole European Union, but we also have our transatlantic relationship and we have our Commonwealth focused relationships and our relationships, partly overlapping with the Commonwealth, with developing countries […] we have a very strong position here in terms of knowing how other countries are feeling about the negotiations, making sure that is fed back into the Commission, or indeed into the United States, trying to respond to that and so on". (Q242)

126.  There is scope for the United Kingdom to use its influence within the EU to make the case for agricultural reform. The Government should also use its strong links with the US to encourage them to look seriously at reforms to their own agricultural sector in order to get the Doha Round re-launched. The Government should continue to use its connections with individual Commonwealth countries in order to encourage progress on Doha.

127.  We urge the United Kingdom Government to use its connections with the US, Commonwealth countries and others to press for progress within the Doha Round.

12   Article 300 (3)  Back

13   Under Article 133 of the EC Treaty the Commission is required to consult "a special committee appointed by the Council" on its trade negotiations. The Committee is made up of senior officials from the Member States, and known as the Article 133 Committee.  Back

14   Article 300 (3) EC Back

15   Article 300 (3) EC Back

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