The Pursuit of Non-Trade Policy Objectives in EU Trade Policy

Ingo Borchert,Cristina Herghelegiu,Mattia Di Ubaldo,Paola Conconi

doi:10.1017/s1474745621000070

Abstract

AbstractThe European Union (EU) often conditions preferential access to its market on compliance with Non-Trade Policy Objectives (NTPOs), including human rights and labor and environmental standards. In this paper, we first systematically document the coverage of NTPOs across the main tools of EU trade policy: its (association and non-association) trade agreements and Generalized System of Preferences (GSP) programs. We then discuss the extent to which the EU can use these tools as a ‘carrot-and-stick’ mechanism to promote NTPOs in trading partners. We argue that, within trade agreements, the EU has limited scope to extend or restrict tariff preferences to ‘reward good behavior’ or ‘punish bad behavior’ on NTPOs, partly because multilateral rules require members to eliminate tariffs on substantially all trade. By contrast, GSP preferences are granted on a unilateral basis, and can thus more easily be extended or limited, depending on compliance with NTPOs. Our analysis also suggests that the commercial interests of the EU inhibit the full pursuit of NTPOs in its trade agreements and GSP programs.

Highlights

The European Union (EU) is one of the biggest players in world trade and often exploits its commercial power as a diplomatic tool.1 It has been argued that preferential access to the EU market, sometimes combined with financial aid and economic cooperation, is “the principal instrument of foreign policy for the EU” (Sapir, 1998, p. 726).The EU conducts its external relations, including trade relations, with the stated purpose of promoting its values
We show that political Non-Trade Policy Objectives (NTPOs) related to human rights and security are more prevalent in association than non-association agreements and their coverage decreases with the size of the trading partner
We have documented the coverage of NTPOs in the principal tools of EU trade policy: its trade agreements and Generalized System of Preferences (GSP) programs

Summary

Introduction

The European Union (EU) is one of the biggest players in world trade and often exploits its commercial power as a diplomatic tool. It has been argued that preferential access to the EU market, sometimes combined with financial aid and economic cooperation, is “the principal instrument of foreign policy for the EU” (Sapir, 1998, p. 726). In the case of non-association agreements, the high overall legalization scores are mainly driven by economic NTPOs (economic and social rights and environmental protection) As discussed below, this systematic difference reflects different motives to negotiate trade agreements: the desire for close political co-operation (possibly towards future membership) is a key motive in association agreements, while market access is the primary rationale in non-association agreements. This can be seen from Figure ??, in which we correlate the legalization scores of economic and social rights (left panel) and environmental protection (right panel) with the market size of the agreement partner These results suggest that commercial motives are behind the inclusion of economic NTPOs in trade agreements: when negotiating with.

EU GSP schemes

NTPOs in EU GSP Schemes

Conditionality in EU Trade Agreements

Conditionality in the EU GSP schemes

Findings

Conclusion