Common commercial policy

INTRODUCTION

As part of the European Community, the Member States have established a customs union with common arrangements for imports from other countries. The Community's common commercial policy is therefore based on a common external tariff uniformly applied to all Member States.

When the EEC Treaty was signed, the Community's economy and external trade were geared mainly to production and trade in industrial products. This no longer applies, because the services sector is now the main source of jobs within the European Union and accounts for a substantial proportion of its international trade. This change is due partly to very stiff competition from newly industrialised countries in traditional sectors and partly to the economic changes brought about by the new information and communication technologies.

Following the Uruguay Round negotiations under the GATT, the setting-up of the World Trade Organisation (WTO) clearly reflected this trend. In order to cope with the changing nature of trade, the WTO embraces within the same structure trade negotiations on products (GATT), services (GATS) and intellectual property (TRIPS).

In the face of the new pattern of international trade, the European Union must be able to develop its trade mechanisms rapidly if it wishes to maintain its leading role in world trade relations. The scope of Article 113 (renumbered Article 133) is still rather vague and until it takes account of the globalisation of trade negotiations, the EU will continue to create difficulties for itself vis-à-vis its trading partners.

The Amsterdam Treaty is intended to clarify the situation by providing the Union with the means of extending the common commercial policy, where applicable, to services and intellectual property rights.

BACKGROUND

The objective of the EEC Treaty was to establish a common market between the Member States of the Community in which goods, people, services and capital could move freely. In order to achieve this, a twelve-year transitional period up to 31 December 1969 was introduced. For the sake of cohesion, liberalisation at internal level had to be in tune with that at external level and the Community therefore has had sole competence for common commercial policy since the transitional period ended.

Up to 1970, it was for Member States to coordinate their trade relations with non-Community countries. This did not, however, prevent the Community from concluding bilateral agreements (e.g. with Israel in 1964) or from taking part, in its own right, in the Kennedy Round of negotiations between 1963 and 1967.

Gradually, the expansion of international trade made common commercial policy into one of the Community's most important policies. At the same time, the successive enlargements of the Community and the consolidation of the common market strengthened the Community's position as a pole of attraction and influence for trade negotiations, conducted bilaterally with other countries and multilaterally in the GATT. The EU therefore gradually developed a close network of trade relations worldwide, and as a result the EU is now at the top of the international trade league, ahead of the United States and Japan.

Since 1 January 1970, decisions under common commercial policy have been taken by qualified majoritywithin the Council. The scope of Article 113 has been given a wide interpretation by the Court of Justice, which in 1978 stated that the list in the Article 113(1) was not restrictive (it refers to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade). The Court also felt that commercial policy would gradually lose its importance if it was not allowed to go beyond the traditional machinery of external trade. The Court added to its interpretation in 1994, however, by stating that trade negotiations on services and intellectual property could not be based on Article 113 and so did not come under the Community's sole powers. The Court nevertheless stressed the need for close cooperation between the Commission and the Member States and recommended that a code of conduct be adopted.

THE NEW ARTICLE 133 OF THE EC TREATY

A new paragraph has been added to Article 133 (ex Article 113). It allows the Council, after consulting Parliament, to extend the scope of Article 133 to international negotiations and agreements on services and intellectual property rights where they are not already covered by common commercial policy.

The addition of this paragraph means that it will not be necessary to amend the Treaty (which would require an intergovernmental conference and ratification by all the Member States) if it is decided to extend the scope of the traditional trade negotiation procedure.

In concrete terms, a decision to extend the Community's powers in trade matters can now be taken by the members of the Council acting unanimously.