All the time as an finish, by no means as a way? The EU’s dedication to free commerce and its limits – European Legislation Weblog

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Introduction

This short piece puts forward some critical remarks towards the EU’s commitment to global liberalisation of trade in the form of a constitutional objective (Article 3(5) and 21(2)(e) TEU). It is submitted that this objective is in current circumstances far less urgent and relevant than other constitutional objectives of EU external action, especially in the light of possible conflicts between trade liberalisation and sustainable development. Equally importantly, this commitment limits the room for political decision-making within the EU and hinders the development of a more strategic foreign policy based on a clear definition of the EU’s interests. These claims can be illustrated by the insistence of EU institutions to conclude, despite well-founded concerns, trade or investment deals with the Mercosur countries and China. In this context, trade-related objectives should sometimes give way to other priorities, preferably defined by political means.

The normative force of constitutional objectives

The European Treaties described by the Court of Justice of the EU (CJEU) as a ‘basic constitutional charter’ enshrine a number of general objectives. One can find a separate catalogue of constitutional objectives applicable to the EU’s external action specifically (Article 21 TEU).

Such objectives have been aptly described as having ‘the manifesto function’ with respect to a constitution. They can be viewed as an expression of desired policy outcomes pursued by a polity. In the EU context, as pointed out by Joris Larik, these objectives do not establish a self-standing competence, nor do they create rights or obligations for individuals. Thus, the degree of their justiciability is low, and they should be always interpreted in connection with more specific provisions conferring competences on the Union. That being said, they could also have empowering character inasmuch as they could justify interpreting EU competences in a broad, flexible, and strategic manner. A well-known example of such an approach can be found in the reasoning of the CJEU outlined in paragraphs 139-167 of Opinion 2/15 where the Court underlined that the general objective of sustainable development should form an integral part of the Union’s Common Commercial Policy (CCP). This allowed the Court to declare that trade-related commitments to sustainable development fall squarely within the scope of the CCP as long as they do not have explicitly regulatory character (cf. para. 166 of the Opinion).

Free trade as a self-standing objective in the EU external action

The EU’s commitment to global liberalisation of trade (see Article 3(5) and 21(e) TEU) is a notable objective, arguably setting the EU apart from other constitutional orders – it has been pointed out that hardly any other constitutional document contains a similar commitment. It is also an objective that has been consistently enshrined in the founding Treaties since the beginning of European integration in the 1950s.

Why should free trade be treated, as Immanuel Kant would put it, as an end in itself, and not as a means towards other ends? Free trade, it has been argued, is “in the Union’s DNA”. A simplified historical narrative would suggest that Europe successfully pursued economic integration through the establishment of an internal market and a customs union, which later paved the way for a deepened political integration. As pointed out by Marise Cremona, enshrining such a commitment was also meant to pre-empt any doubts as to the compatibility of the European model of economic integration with obligations outlined in the GATT, notably Article XXIV thereof. More generally, a common trade policy should be viewed as an external dimension of the Union’s internal market. In this connection, the Union’s commitment to global free trade can be seen to reflect a desire to export the Union’s model elsewhere in the world, at least with respect to regional economic integration. This could also suggest a more profound belief in trade as a vehicle of political change, ultimately bringing peace and liberty. The latter idea is fairly old and can be traced back to Voltaire’s ‘Letter on the English’ (the idea of doux-commerce), subsequently reappearing in Immanuel Kant’s teleological vision of history. This vision invokes cosmopolitan ideals that can be seen to be epitomised by the EU.

There have been few instances when the CJEU addressed the objective at hand in an explicit manner. In Opinion 1/78 the Court emphasised that the objective of trade liberalisation should not be understood narrowly and that it was compatible with measures aimed at a more comprehensive regulation of global markets for certain products (para. 44). In  UK v Council, the Court underlined that the Union’s commitment to free trade cannot preclude it from adopting restrictive measures affecting trade with third countries. In this vein, EU institutions cannot be compelled to pursue the liberalisation of trade with third countries in a manner that would be contrary to Union’s interests (para. 67). Relying on similar rhetoric, in Polo/Lauren, AG Colomer underlined that the goal of trade liberalisation should be balanced and reconciled with objectives related to other policies of the Community (para. 26). The case law thus suggests that the commitment to the liberalisation of free trade should not be understood as an absolute goal.

Notwithstanding these considerations, the EU institutions, notably the European Commission, have embraced the commitment to free trade quite enthusiastically. Sincee failure of the Doha Development Agenda, the EU has pursued bilateral engagement with third countries, delivering significant results (see the Report on the Implementation of EU Trade Agreements). Rhetorically, EU representatives have been more than eager to boast free trade credentials and underline its commitment to liberalisation of trade in a global dimension (at least when it comes to bilateral, if not multilateral engagement – see the preamble to the EU-Japan Economic Partnership Agreement or the preamble to the Free Trade Agreement between the EU and Singapore). It thus seems that a political rejection of an opportunity to engage in trade liberalisation is hardly imaginable. EU officials, being aware of the power of the exclusive trade competence conferred on the EU, might find it difficult to reject opportunities to utilise trade-related instruments extensively, perhaps overlooking their inherent limits. ‘If all you have is a hammer, everything looks like a nail.’

Admittedly, the EU institutions, notably the Commission, have also taken a number of measures to update EU trade policy and put it within the framework of more assertive and strategically autonomous external action (see here). This does not change the fact that the institutions have been consistently willing to pursue objectives related to trade liberalisation in an aggressive manner, arguably treating them as an end in themselves, even though the Commission has put a lot of effort to demonstrate that it takes seriously commitments related to non-trade values (e.g. sustainability or labour standards). In this context, some have raised criticism as to the Commission’s true intentions, pointing out that legal commitments behind non-trade values in bilateral agreements have been oversold whereas sensitive commercial interests tend to be downplayed (see here for a rather passionate exchange on the EU-China investment deal between Sabine Weyand, Director-General at the DG Trade and Reinhard Bütikofer, Chair of the European Parliament’s Delegation for relations with China).

The constitutional commitment to free trade does not predetermine the direction of EU external action, but should not be dismissed as mere rhetoric either. Law can carry an expressive function, the latter point being particularly important with respect to constitutional provisions. More importantly, internalised ideas can shape behaviour and influence policymaking. In the context of trade, some scholars have forcefully argued that the normalisation of some (neo)liberal economic propositions has led to the ideological capture of EU trade policy. In this context, the discourse of policymakers suggests that some ideological beliefs are no longer seen as normative choices, but incontestable tenets. Arguably, the faith in the pursuit of global liberalisation of trade can be counted among them.

Normative criticism

The normative premise for the criticism of the EU’s commitment to liberalisation of trade as a self-standing objective is twofold.

First, it is submitted that this objective is not as urgent and relevant as it might have been in the first decades of European integration. The global rate of tariffs is relatively low, except for agricultural products (see here, from page 14 onwards). Traditional barriers to trade have been largely abolished thanks to consecutive rounds of negotiations within the GATT and the WTO (see here). Wide-ranging supply chains have been forged in various product markets, effectively establishing a global division of labour.

At the same time, other general objectives of the EU external action have acquired prominence over time and could be currently considered as more urgent than trade liberalisation. For instance, the objective of sustainable development, especially with respect to the climate crisis, could be seen as immediately more urgent insofar as its importance, according to virtually all scientific assessments, is truly existential and universal. There are risks that the pursuit of free trade can easily come into conflict with the objective of sustainable development, as has been noted with respect to the EU-Mercosur trade deal (see here and here). Furthermore, Trade and Sustainable Development (‘TSD’) chapters in trade deals are ancillary to trade-related commitments. As such, they are usually limited to monitoring obligations and upholding existing international standards, without creating country-specific regulatory commitments; thus, their impact seems to be inevitably limited (see here). In this sense, TSD chapters might allow EU officials to claim green credentials without sacrificing too much in terms of the benefits of trade liberalisation. The outlined concerns have been voiced prominently with respect to the EU-Mercosur trade deal, especially when it comes to weak enforcement mechanisms and the exclusion of the TSD chapter from the ordinary dispute settlement provisions (see Articles 15-17 of the TSD chapter of the Mercosur trade deal and the analysis by Guillaume van der Loo).

The second normative premise relates to the political philosophy of EU decision-making. It is submitted that a broad catalogue of constitutional goals in the EU Treaties contributes to the malaise of the abundance of constitutional law and the ‘hypertrophy of values’. In this connection, every objective enshrined as a non-negotiable value potentially limits the discretion for political decision-making. In other words, the constitutionalisation of various policy objectives translates into a substantive democratic deficit where “the scarce politicisation of EU objectives has over time given rise to an increasing number of ‘assumptions’ in its policy making, which take the place of a real political debate”.

The latter point should not be understood as advocating for a protectionist trade policy or a weakening of the instruments available to the EU within the CCP framework. Trade competence is a powerful tool and as such should be used wisely. However, it would be unreasonable to constitutionally predetermine the direction of the EU trade policy. Instead, deconstitutionalising and repoliticising the commitment to trade liberalisation could contribute to the development of a more holistic and cohesive EU foreign policy. In this connection, trade would serve as a tool for attaining broader foreign policy objectives outlined at the political level, taking greater account of urgent geopolitical challenges. This could also allow getting away with a compartmentalised approach to EU foreign policy which, as has been pointed out, undermines its credibility (cf. remarks on Europe’s Geopolitical Awakening by Luuk van Middelaar). Even if abandoning the constitutional commitment to free trade is politically infeasible, the EU should nonetheless take other measures to downgrade the priority of trade liberalisation and better integrate trade-related objectives with other instruments of external action, including the Common Foreign and Security Policy (CFSP) and development.

The EU arguably pays the price for not having a comprehensive foreign policy strategy. Van Middelaar has convincingly argued that the compartmentalised approach to foreign policy puts the EU at a disadvantage towards actors such as the US or China who define their strategic goals more holistically. The frozen Comprehensive Agreement on Investment between the EU and China can be seen as evidence of the weakness of such a strategy. In this context, EU officials seemed to believe that it was possible to pursue aggressively economic interests and, at the same time, protect domestic businesses against unfair competition and condemn brutal policies of China in Xinjiang and Hong Kong. Such a belief turned out to be rather naïve. When the EU adopted targeted sanctions on Chinese officials linked to the persecution of Uyghurs in Xinjiang, China retaliated by sanctioning prominent Members of the European Parliament as well as the European Council’s Political and Security Committee. This has led to the adoption of a strongly-worded resolution by the Parliament declaring that the process of debating and potentially ratifying the EU-China investment deal had been effectively frozen. Thus, to the detriment of the EU, it turned out that separating commercial interests from human rights and geopolitics might not be possible in practice.

Conclusion

This short piece offered a cautious criticism of the EU’s commitment to global trade liberalisation as a self-standing constitutional objective. Bearing in mind the interpretive and symbolic value of such constitutional objectives, it is submitted that the EU should rethink its commitment to free trade treated as a non-negotiable value and abandon any universalist or cosmopolitan pretence that might be hidden behind it.

The commitment to free trade is arguably not as relevant as it used to be and could easily come into conflict with other, more urgent objectives of the EU external action. Furthermore, deconstitutionalising the commitment to free trade might allow the EU to assume a more assertive and holistic approach to foreign policy, moving away from a currently somewhat fragmented, and often inconsistent strategy in its external action. The latter move would also strengthen the democratic credentials of EU external action, abolishing the pretence of naïve universalism expressed in the belief in the neutral, apolitical nature of trade.

That being said, amending the Treaties in order to remove the constitutional commitment to global liberalisation of trade might not be politically feasible. In the alternative, the EU should do its best to better integrate trade with other objectives of external action, acknowledging explicitly that potential benefits of trade liberalisation might be outweighed by more urgent objectives related to sustainable development or geopolitical priorities.

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