The EU and Trade

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The EU and Trade

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Introduction

Coffee growing Trade isn’t just big business, it’s everybody’s business. It allows us to buy everything from our morning coffee to the homes we live in, and hundreds of thousands of Irish citizens work in jobs related to the trade of goods and services.

That makes Ireland’s trade policy crucial to creating employment and improving living standards, but as an island nation with a population of just over four million it’s difficult for us to compete with bigger countries on international trade markets.

However, as part of the European Union Ireland can trade on a level playing field and get a fair deal on our imports and exports.

The EU has developed around the central philosophy of free, fair trade – something that will be a cornerstone of Ireland’s economic growth on the road to financial recovery.

At the heart of that philosophy is the Internal Market, one of the EU’s most important achievements. The Internal Market has removed import duties and other barriers to free trade between EU member states.

It’s helped create a more competitive market place that’s been good for business by reducing costs, and good for consumers by lowering the price of goods and services and providing more choice in the marketplace.

Being part of the European Union also makes it easier for Ireland to trade effectively on world markets. Much of our trade policy is made in agreement with the other 26 Member States, and we all negotiate as one on the international scene through the European Commission.

The EU's trade policy not only ensures member states get the best possible deal when trading with countries outside Europe, it’s also designed to help developing nations benefit from fair access to both European markets and the global economy.

History

For the years after World War II and before Ireland joined the European Union our overseas exports mainly consisted of agricultural produce, and most of it went to UK markets where there was little profit for Irish farmers.

Ireland also had an old fashioned economic policy of protectionism that restrained trade between countries by way of tariffs, but many nations were engaging in international trade co-operation which was beginning to transform global markets.

This co-operation was best exemplified in Europe where the six nations that made up the European Economic Community had agreed a Common Agricultural Policy that gave countries joint control over food production.

The EEC also removed customs duties on goods imported from member states, allowing free, cross-border trade in Europe for the first time and creating what was to become the world’s biggest trading group.

When Ireland joined the EEC in 1973, the Common Agricultural Policy provided Irish farmers with a single price level for selling goods that was fixed at a better rate than what was available in the only market open to them at the time –the UK.

As our economy developed, Ireland started to attract foreign investment which created jobs in manufacturing sectors like pharmaceuticals, metals and machinery.

The country began to at last shake off its traditional dependency on agriculture and become a modern European state that could trade in a variety of goods.

Our development wasn’t only down to being an EU Member State, but most experts agree that it greatly facilitated our move from an agricultural based economy to the one we have today that’s driven by hi-tech industry and global exports.

And while Ireland has suffered greatly from the global economic crisis, we are not alone and have the opportunity to emerge stronger than before through co-operation with our European partners in international trade of both our traditional and 21st century industries.

Trade Profile

Ireland’s trade patterns have changed dramatically over the past four decades. As a small, open economy we’ve always relied heavily on exports but we’ve moved a long way from largely depending on exporting agricultural produce to UK markets.

Britain is still an important export destination for Ireland but today Irish businesses trade globally in a range of modern goods and services. Our main trading partners now include the USA, Belgium, Germany and France and Ireland’s top export products are now medical and pharmaceutical goods along with organic chemicals and computers.

Irish based firms are also exporting their expertise in computer services, trade related business services and financial services generating billions of euro for Ireland’s economy.

Being part of the European Union has brought huge benefits to Irish consumers too. Competition based on equality has brought prices down and increased choice in the marketplace while goods and services bought in any of the 27 member states are protected by powerful legislation.

But of course Irish goods and services also have to imported and exported outside EU borders. In order to trade effectively and responsibly the EU has a Common Trade Policy under which the European Commission negotiates trade agreements and represents the Europe’s interests on behalf of all member states. The Commission consults with member states through expert advisory committees that discuss trade policy issues affecting the EU as a whole.

Good trade policies create employment and it’s estimated that over 36 million EU citizens work in jobs that depend on Europe’s ability to trade efficiently with the rest of the world. Together, the EU’s member states make Europe the world's largest exporter of manufactured goods and services and the biggest export market for over 100 countries.

By continuing to promote and negotiate for an open and fair international trading system the European Union can maintain its position as the biggest global player in international trade and investment.

The challenge for the future is to fuel growth in Europe so we can trade our way out of the current global economic crisis. However, the EU believes that this must be done with a trade policy that not only boosts economic growth and creates jobs in Europe, but which actively helps people around the world trade their way out of poverty.

Europe has opened its markets to imports from the world's poorest countries, and the Commission works actively to help developing countries build their capacity to take advantage of trade.

Europe also uses its trade policy to reinforce other important international goals like supporting the fight to protect our environment and reverse global warming. The policy also strives to improve working conditions for workers in poorer countries and ensure the products we buy and sell around the world are traded under the highest standards of health and safety.

Fair Trade

In order for businesses and trade to grow Europe’s market must be open to cheap supplies of the raw materials needed to manufacture products. Tariffs, unfair taxes and other barriers can hinder the flow of important goods into Europe and increases the cost of products.

The Internal Market has removed these obstacles for trade in goods and services between EU member states, and the European Commission is constantly working to encourage Europe’s main trading partners to follow suit.

It does this by representing the trade interests of Europe at the World Trade Organisation (WTO) which is a forum for over 150 international governments to negotiate trade agreements and settle disputes.

The WTO aims to help global trade flow smoothly, freely, fairly and predictably which in turn can help break down barriers that divide peoples and nations.

It was established in 1995 and it sets the rules for trade between nations. Trade disputes between nations or regions can also be settled at the WTO.

All EU member states, including Ireland, are individual members of the WTO but the EU is also represented as a single body. All members of the WTO are currently striving to take world trade agreements into a new era through negotiations that began in Doha, Qatar, way back in November 2001.

The Doha Development Agenda is specifically targeted at addressing the needs of developing countries. Initially, a deal was expected to be agreed by January 2005 but this deadline was missed.

Subsequent deadlines also passed but leaders of the G20 rich and emerging economies, which includes the EU, have called for a deal to be reached in 2011 and WTO Director General Pascal Namy also wants a deal to be signed before the end of the year.

As well as taking part in WTO multilateral negotiations aimed at creating rules for all countries, the EU also makes separate bilateral agreements with individual countries and regional areas. The promotion of open and fair trade is central to all EU trade talks and it uses this policy approach to support measures to protect the global environment such as cutting greenhouse gas emissions.

It does this through a mechanism called the Generalised System of Preferences agreement, under which developing countries that implement global environmental agreements get special tariff rate cuts when they export to the EU. The agreement gives preferential access to EU markets to 176 developing countries and territories and as well as cleaning up the environment it also helps them to develop industries, create jobs and reduce poverty.