International Trade

The European Community's Common External Tariff (CET) necessitates a Common Commercial Policy, the keystone of its common market identity. Therefore, since the finalisation of the CET in 1968,the EC has had exclusive competence in international trade and commercial policy, and it alone can speak on behalf of the EC member states on these issues. The EC's Common Agricultural Policy (CAP) necessitates unified representation of the Community's agricultural trading interests at the international level, this domain also falling under the jurisdiction of the Commission's negotiating mandate in international discussions.

Based upon Article 229 of the Rome Treaty, the Commission is charged with negotiating and ensuring the maintenance of 'appropriate relations' with the GATT, and is also given the legal authority to 'maintain such relations as are appropriate with all international organisations'. Hence, it is the Commission which speaks on behalf of the EC's constituent states at the Western Economic Summit on matters of international trade. The legitimacy of the EC in this area has not been questioned in the context of summitry,and the Commission has been admitted to all discussions pertaining to international trade at the summits since 1977. It can be said that sufficient institutional and political evolution had already transpired by 1977 within the EC system to allow "unified"representation of the collective EC trading interests at the summit,and the EC has consistently built upon this institutional foundation to ensure that the Community's voice is heard in commercial negotiations at summits.

Because EC member states have the right to impose sanctions or safeguard measures in a trading situation which they believe is detrimental to sensitive national industries or activities (Article 115, Treaty of Rome), it is important for the Commission to respect and balance their delicate interests when negotiating in international fora. The Commission's stance on international trade issues loses credibility if it is not backed by the member states. Such arrangements-- which include bilateral accords with other nations -- obviously undermine the ability of the Commission to regulate international trade in completely unified and powerful fashion representing the overall Community interest.

A testimony to the fact that the Commission is the exclusive competent authority for EC trade matters is manifest in its participation in the "Trade Minister's Quadrilateral", an associated forum of the Economic Summits which was given its mandate at the 1981 Ottawa Summit. Similar to the Group of Seven Finance Ministers in the macroeconomic and monetary sphere, in the "Quad",trade ministers from the U.S., Canada, Japan, and the EC Commission discuss overall developments in international trade, monitor progress,and attempt to strike bargains which will facilitate the functioning of the international commercial system. The Trade Minister's Quadrilateral is one of the most powerful and influential ministerial fora in existence, and the Commission is the EC spokesperson. Naturally, similar to EC custom in GATT negotiations, the Commission is 'advised' by and responsible to a committee composed of delegates from the member states in its operations at the Trade Minister's Quadrilateral. (This Committee is referred to as the "113 Committee" as it is provided for in Article 113 of the Rome Treaty).

Most recently, the Community's firm commitment to remove all internal barriers and progress to a single market by the targeted date of 1992 has evoked fear and concern on the part of the EC's major trading partners in the summit club. Specifically, they are worried that the West European entity will be transformed into a formidable 'Fortress Europe' which will undermine the functioning of the open global commercial trading system through rampant protectionism.Indeed, as one journalist has noted:

The 1992 project...has become shorthand for a moment of decision for the Atlantic Community,in which more than 40 years of economic and military cooperation could be diluted by bruising trade competition...101

Within the frameworks of the GATT, the OECD, and the international economic summitry process, the Commission has embarked upon an assertive and extensive campaign to inform Japan, the United States, and Canada about the ramifications of '1992' upon the external commercial and economic activities of the EC.102 The argument which the Commission focuses upon is that it would be self-defeating for the Community to become more protectionist toward its major trading partners while trying to eradicate protectionism internally. Indeed, the conditions of access for goods and services abroad should be improved for the EC's trading partners, as harmonisation and mutual recognition of technical and legal requirements progresses among the member states of the Community. The Commission also emphasises that the EC's experiences and accomplishments in the domain of 'internal' trade liberalisation (such as intra-EC trade in services, information technology, financial and capital flows) can serve as a model for adoption by the wider international Community through the frameworks of the GATT and the OECD.

Nevertheless, the EC's summit colleagues are anxious to secure reassurances from the Commission that the European internal market of 1992 will not be a monolithic protectionist trading bloc. They have ample reason to be cautious, as the EC has not always demonstrated its willingness to participate in open commercial multilateralism. It cannot be denied that the EC, backed stalwartly by the French in the early and mid 1980s, was a leading force in resisting U.S. and other attempts to establish a starting date for the new GATT Uruguay Round of MTN, and to bring the issue of agricultural trade subsidies onto the summit agenda. This was primarily due to fear that the CAP and other EC trading mechanisms would come under damaging international scrutiny.

At recent summit encounters of the political leaders of the western industrialised nations, commercial debates have been heated and highly contentious. As the main multilateral forum for the monitoring and management of global commercial relations is the GATT, the summiteers usually prefer to utilise their annual conference to discuss and endorse progress achieved under its auspices, currently in the Uruguay Round of MTN. In addition to catalyzation of the GATT process in specific areas, the summits always endorse the principles of multilateralism and reciprocity advocated by the General Agreement. Indeed, the issues of international commerce and protectionism is among the top ranked subjects on the summit agenda, and most final communiques have contained references to the MTN and have emphasised the commitment of all summit participants to the maintenance of the open multilateral trading system since the inauguration of economic summitry in 1975. The ongoing involvement of the North Americans, the Japanese and the EC in the summit process (including the meetings of the Trade Ministers Quadrilateral) has supplemented the GATT endeavour in keeping all three components of the trilateralist triangle from being as closed and protectionist as they otherwise would have been. Still, the development of increasingly powerful trading blocs with increasingly complex mechanisms to shield their own trading interests may cloud the future of the international trade system. The fate of multilateralism still hangs in the balance, and the economic summit will be one of the chief battle grounds for the resolution of this crucial situation.

The European Commission is eager to gain endorsement for the 1992 initiative from its summit colleagues. The U.S., Canada and Japan are anxious to secure guarantees that the European market of the 1990's will respect the parameters and conventions delineated by the GATT. At the 1988 Toronto Summit, the final communiqué contained a direct reference to the EC's 1992 objective, stressing that it must occur in the context of the maintenance of an open and liberalised global trading system, and that it would abide by the GATT regulations. At this summit, the Europeans also stressed the role they were playing in the reduction of current account imbalances through increasing its growth rate and providing stimulus to its economy through structural and microeconomic adjustments which are part of the 1992 package. These anxieties and reassurances were repeated at the 1989 Paris Summit.

Community solidarity in the trade sphere has been enhanced recently,in the move toward internal market completion and has not always evolved in a manner consistent with multilateral trade liberalisation. In the realm of agriculture, in particular, reform of the CAP -- including budgetary restraints and new set-aside incentives -- has produced a strong and unified Community voice at the summit negotiating table. The ratification of the "Delors Package" at the Brussels European Council meeting in February 1988 provided the Community and its member states with a consensus. Their united approach on the issue of agricultural trade subsidies at the Toronto Summit gave the Community bargaining leverage against its fellow summitteers, and allowed the EC position to have a strong impact on the outcome of the Summit, to the detriment of overall international commercial openness.