ABSTRACT

Although practice has not always matched the rhetoric, the thrust of trade policy within multilateral negotiations since the end of the Second World War has been to free up the trading system. Successive rounds of tariff reductions have isolated and highlighted other obstacles to trade and have given rise to moves to extend the liberalisation of trade in goods to services, agriculture and a range of non-tariff barriers. In turn, this opening up of cross-border exchange is in the process of spilling over into a range of new issues demanding attention at an international level, such as the link between trade and the environment and the difficulty of regulating competition when companies are increasingly operating across the boundaries of both national and European competition authorities. The European Union continues to be one of the prime movers behind freer trade and more open economies, a tendency which is completely in line with the currently dominant neo-liberal economic philosophy, and which also parallels developments in the EU’s domestic market and is fuelling the trend towards greater interdependence of global markets (see Chapter 1). This chapter addresses these issues by first highlighting the main features of the EU’s strategy for improving the access of European business to third country markets, a strategy which was first explicitly articulated in 1996 and which is having a marked effect on the direction and focus of EU external economic policy, both bilaterally and multilaterally. The following section outlines the EU’s position as an economic actor in global terms and the changing structure of its external economic ties. This analysis provides both an explanatory framework for subsequent discussion of EU external economic policy and a snapshot of the external environment in which European business must develop its strategy. The next section highlights the

main external policy instruments at the EU’s disposal. A central plank of EU policy is the complex range of bilateral arrangements it maintains with third parties. These arrangements and their implications are examined in general terms, followed by a more in-depth discussion of one set of preferential arrangementsthe evolving partnership between the European Union and twelve Mediterranean countries. This is followed by an example of a key non-preferential link-that with the United States, one of the EU’s most important external economic partners and one with which there is a history of disputes. The chapter then examines the EU’s role within the multilateral framework provided first by the General Agreement on Tariffs and Trade (GATT) and later by its successor body, the World Trade Organisation (WTO) and how the latter’s agenda is evolving. The chapter concludes by drawing together these separate strands and by assessing their impact on European business.