New ECDPM publication: “Trade relevant provisions in the Treaty of Lisbon – Implications for Economic Partnership Agreements”

ECDPM website. The entry into force of the Treaty of Lisbon (ToL) on 1 December 2009 introduced significant changes in the functioning of the European Union (EU). One major evolution concerns the way the EU manages its relationship with the rest of the world. The enlarged objectives that are attributed to EU external action under the Lisbon Treaty correspond to a widening EU foreign policy agenda, which will be supported by new structures, such as the European External Action Service (EEAS) and executed with new roles.

The Treaty of Lisbon also modifies the EU rule-setting for the conduct of its trade policy. It notably elevates the objective of trade integration to the level of an overarching objective of the EU’s external action, it increases the competences of the European Union on services and investment and it increases the role of the European Parliament (EP).

Both within the area of trade policy and beyond, the ToL introduces new decision-making procedures, new EU competences and new institutions. To what extent will the internal transformation affect the conduct of the EU as an international actor, notably in the trade arena? What will ultimately be the implications for the negotiations and implementation of Economic Partnership Agreements (EPAs) with the African Caribbean and Pacific (ACP) countries? This paper addresses these questions by (i) highlighting the main changes introduced by the ToL and (ii) by considering the potential effects the reforms may have on EU trade and development policy and the EPA process more specifically.

The analysis conducted in the context of this study has revealed a number of implications deriving from the following changes:

Changes in EU trade policy

•    First, if the Council continues to authorize the Commission to open negotiations on the basis of Commission recommendations and the Commission continues to speak for the Union in international negotiations (unity in representation). But from now on the Council is acting by qualified majority when adopting both, the negotiating directives for the Commission and the final agreement. However, given the common practice in the Council to take decisions by consensus, these changes are unlikely to have a significant impact in the short term on decisions affecting the ACP and EPAs.

•    Second, the entire Common Commercial Policy (CCP), including trade in services, trade-related aspect of intellectual property rights (IPR) and Foreign Direct Investment (FDI), now falls under exclusive EU competence. Yet, the extent to which the ToL will make a difference for negotiations of international agreements in the short or medium term is either limited (services) or relatively uncertain (investment).

•    This being said, it will be critical for those highly services-oriented ACP countries, potentially interested in negotiating investment chapters within the context of a full-EPA, to closely monitor the crafting process of Europe’s international investment policy.

•    Third, the new role of the EP, which has gained legislative power in the CCP and is de facto likely to be more involved throughout the negotiation process for trade agreements, is therefore expected to be the main implication of the ToL for international trade partners in the medium and longer term.

•    The new role of the EP as co-legislator in the CCP is relevant in terms of impacting on the fall-back option for countries that do not sign an EPA, namely the Generalised System of Preferences (GSP), whose revision will be conducted under the new ToL rules; yet the procedures for amending the interim EPAs, for instance in case of adjustments to the liberalisation schedules, and for monitoring the implementation of the agreements are not affected by the ToL (the Joint EPA Council remains the relevant body, given that procedures are foreseen in the EPA provisions).

•    Finally, the EP has gained power of consent for the conclusion of international agreements and the right to regular information on the progress of negotiations from the Commission. In the case of EPA negotiations both innovations largely codify existing practice, as the EP has already been briefed on EPA negotiations on a monthly basis and has already had the right of ‘assent’ (identical to ‘consent’ under the ToL) for agreements that go beyond goods-only and/or established new joint institutions.

•    Yet, it is expected that the EP will try to expand its influence on the objectives of the negotiations and the negotiating directives for the Commission already before the start of the negotiations, as well as on the conduct of the negotiations. This shift in the balance of power could also increase tensions between the different actors, which constitutes both a challenge and an opportunity for ACP countries, as alliance-building might well become increasingly important and more frequent.

Changes beyond trade policy affecting EPA negotiations

•    New EU interlocutors, the High Representative and her EEAS, may open avenues for third countries to raise their concerns at a political level.

•    As a service mandated to coordinate EU policies and EU institutions and member states, the EEAS could potentially help to unify the EU support in terms of aid for trade.

•    A politicisation of EU trade policy including EPAs is unlikely. However, for countries that do not sign an EPA, the EU might use the GSP+ as a political incentive to motivate countries to make substantive improvements in the application of the Conventions.

•    The removal of formal obstacle to budgetization of the European Development Fund with the ToL, the integration of the geographic desks for the ACP in the EEAS, together with the tendency towards increasing regionalisation in the EU’s foreign relations could raise questions related to the future of the Cotonou Partnership Agreement (CPA) after 2020.

•    Increasing EU integration in the area of Justice and Home Affairs is expected to accelerate the creation of a common immigration and asylum policy and has the potential to impact on tXhe capacity of the Commission to negotiate agreements with third countries, including on Mode 4 of the General Agreement on Trade in Services (GATS) on the temporary movement of individual services suppliers in trade agreements.

While acknowledging the number of remaining uncertainties as to how the changes of the ToL in terms of vision, rules and structures will be implemented in the short term and play out in practice in the medium and long term, this paper argues that the outcome on the functioning of the EU will to a great extent depend on what the EU actors and their international partners, such as ACP countries in the context of the EPAs, make of the opportunities the Treaty offers.

Download the full version of the publication here.

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