Trade is one of the most significant means through which continental Europe establishes contact with the outside world. Europe exports the largest amount of manufactured goods and services to the outside world. It is also the biggest importer of both raw materials and finished goods. As such, trade is the engine that drives the economies of countries within the European Union. This implies that the European Union is also one of the biggest single markets in terms of international trade. Due to this, a single trade policy seems relevant. Having a single trade policy has a number of advantages. For instance, a single trade policy gives the European Union better bargaining power with its trade partners. Additionally, the European Union, through the European trade policy is able to set grounds for fairer trade practices within member countries as well as gaining advantage while negotiating with the World Trade Organization (European Union 2009). Regardless of these benefits, several issues dominate debate amongst policy makers and partners. These include the future of the European Trade Policy as well as the environmental matters which directly influence international trade.
It is imperative to state that, presently, the European Trade Policy accrues many benefits for the 27 EU member countries. However a few issues continue to dominate debate with regards to trade. To begin with, despite the fact that the European Union is the largest single market, China, as an alternative market, is rising at a very fast rate. It is expected that in the next 20 years, China will be amongst the largest trade markets in the world (Messerlin and Wang 2008). This poses a big challenge to the European Union. Additionally, the European market is experiencing decline in terms of relevance to world trade as well as in volume of trade. These two factors are amongst many issues that dominate the debate on the future of trade policy. Currently, the general feeling amongst policy makers is that the trade policy needs to be modified to address new realities. Since European trade is undergoing a transformation, policy makers are also evaluating the usefulness and effectiveness of tariff based trade policies. Some of the alternatives under consideration include a trade policy that emphasizes on services rather than manufactured products as well as having “tariff free trade policies” (Baldwin 2010).
Related to the future of the European trade policy is the issue concerning sustainable management of the natural environment. This issue directly affects European trade since there are a number of factories within the European Union whose operations are directly affected by the Kyoto Protocol. The Kyoto Protocol requires industrialized nations to significantly reduce the amount of greenhouse gasses emitted. Following the requirement of the Kyoto protocol, the European Union established the Emissions Trading Scheme, a systems which covers about 11,500 production facilities and factories within European Union. Under the Emissions Trading Scheme, manufacturers are required to significantly minimize the amount of carbon dioxide emitted into the atmosphere. This adds to the cost of doing business and negatively affects profitability. As such, policy makers are constantly debating on the best methods of sustaining both profitable business and environmental management business practices (Johnson 2011).
Implementing the policy objectives involves numerous partners. As such, The European Commission, the World Trade Organization as well as trade partners become key partners. The European Commission’s main role is to develop fair trade agreements between member countries and its trading partners. By doing this, the European Commission enables all member states access to new markets by reducing tariffs and other trade barriers that would have otherwise made trade impossible for individual member states. In addition the European Commission helps member states counter illegal trade practices such as counterfeiting as well as piracy of good and services. Furthermore, the European Commission protects manufacturers within the region by imposing price caps on imports. Most importantly, the Commission represents and defends the interests of member states at the World Trade Organization. To avoid unfair trade practices between the EU and other trade partners, the World Trade Organization play vital role by providing a platform on which fair trade practices are established. This is attained through enforcing a set of trade rules and regulations. Even though trade partners are major participants, their roles and influence varies considerably. For instance, through the “Aid for Trade” policy developing countries, the World Trade Organization and the European Commission have structured a 7 billion Euro trade agreement aimed at helping developing countries grow economically (European Union 2009). Other powerful trade partners such as China play vital roles in the policy making process as well as reformulation of the Trade agreements. China’s expanding trading influence combined with worsening of commercial trade between the EU and China necessitates reformulation of the European Trade Policy to allow for bilateralism (Messerlin and Wang 2008).
The European Trade Policy is the most powerful tool through which the European Union establishes fair trade practices. A number of benefits are accrued. However, to ensure that the European Union continues to benefit from international trade, policy makers have to keep reformulating the trade policy to address emerging issues.
List of References
Baldwin, R., 2010. The future of EU trade policy: A Vox EU debate. Web.
European Union., 2009.What is Europe’s trade policy? Web.
Johnson, J., 2011. The debate over greenhouse gas cap-and-trade. Web.
Messerlin, P., and Wang, J., 2008. Redesigning the European Union’s trade policy strategy towards China. Web.