The Treaty of Lisbon and European Union Trade Policy: A Political-Economic Analysis

Abstract

This paper presents a game-theoretical analysis of European Union (EU) trade policy and the Lisbon Treaty’s impact on it. Specifically, it develops spatial models of the EU’s international trade negotiations process, and analyzes the European Parliament’s increased involvement in it as a result of the introduction of the Parliamentary consent requirement for international trade agreements. We find that the Council’s right to set a negotiating mandate in trade negotiations is equivalent to an amendment right, and that the Commission’s right to propose a negotiating mandate to the Council is comparable to a monopoly proposal right in the negotiation process with the trade partner. We further conclude that the Parliament’s enhanced role limits the Commission’s ability to set policy and conclude negotiations. Even though it represents a domestic constraint for the Commission, the Parliament’s involvement does not reinforce the Commission’s bargaining position in international negotiations. The Commission can use the negotiating mandate to improve its bargaining position instead.