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Policy making

What is trade policy?

What is trade policy

EU Trade policy explained in three minutes.

The EU manages trade and investment relations with non-EU countries through the EU's trade and investment policy.

Trade policy is an exclusive power of the EU – so only the EU, and not individual member states, can legislate on trade matters and conclude international trade agreements.

The scope of EU's exclusive powers covers not just trade in goods, but also:

  • services
  • commercial aspects ofintellectual property
  • foreign direct investment

The EU has exclusive powers in some other areas which may also be relevant for trade policy, such as transport, capital movements, etc.

Trade policy is set down in Article 207 of the Treaty on the Functioning of the European Union (TFEU).

How EU trade policy is made

How EU trade policy is implemented

Sometimes the legislation setting out trade rules need to be updated or adjusted or on other occasions the legislation asks the Commission to implement certain aspects.

The Lisbon Treaty introduces clearer categories of legal acts. Besides the framework legislation adopted through co-decision, the explicit categories of 'delegated' and 'implementing' acts are instituted.

Implementing acts

The Commission, or the Council in duly specified cases, acquires the necessary implementing powers, in instances where uniform conditions for implementing legally binding Union acts are needed.

The Commission's exercise of implementing powers is controlled by the Member States.

The rules are set out in Regulation 182/2011 on the control by the Member States of the Commission's exercise of implementing powers.

The European Parliament decides jointly with the Council on the framework of EU trade policy – through the ordinary legislative procedure.

While the Commission maintains the right of initiative, for its proposals to be formally adopted, agreement has to be reached between the co-legislators.

International agreements are adopted by the Council, after the Parliament has given its consent.

Delegated acts

The Commission obtains from the legislator the power to adopt non-legislative acts of general application, in order to supplement or amend certain non-essential elements of the legislative act. The objective of the delegation, along with the content, the scope and its duration must be explicitly provided in the delegating act. The delegation can be subject to specific conditions, including that it can be revoked or that its exercise in specific circumstances can be objected to by the Parliament or Council. The possibility to adopt such delegated acts is to be included in the relevant framework legislation.

The three institutions have agreed on Common Understanding on Delegated Acts.

How trade agreements are negotiated

The Commission negotiates with the trading partner on behalf of the EU. It does this, working closely with the Member States in the Council and keeping the European Parliament fully informed.

The Commission must request an authorisation to negotiate a trade agreement with a trading partner from the Council, which sets out the general objectives to be achieved. While the negotiations are going on the Commission reports regularly to Council and the European Parliament.

Once the Commission has completed the negotiations, it presents the deal to the Council and the European Parliament. They are the ones to formally agree the outcome and prepare the way for signature and ratification of the deal with the trading partner.

The trade agreement enters into force once it is fully ratified but parts of the agreement can be provisionally applied if the Member States agree to do so.

For more information on bilateral deals, see Agreements.

Supporting information