In general terms, both the European Union (EU) and the World Trade Organization (WTO)
can be described as governance systems:
“Governance is about the structured ways and means in which the divergent preferences of
interdependent actors are translated into policy choices to allocate values, so that the
plurality of interests is transformed into co-ordinated action and the compliance of actors is
achieved.”1
This essay cannot reflect all aspects of the two governance systems, but is limited to a
selection of their differences, similarities and mutual influences. After the opening remark
alludes to a similarity, the differences will be touched upon next.
The individual characteristics of the EU and the WTO become particularly obvious in the
institutional set-ups of the two organisations: In the case of the EU one deals with a
supranational organisation, what means that the current 15 member states partly transfer
sovereign rights to the organisation, thus rendering the EU a partly independent and
powerful policy actor.
In comparison, the WTO is an intergovernmental organisation, in which its 146 members
negotiate without transferring any sovereignity to the organisation, thus depriving the WTO
of any independence in policy decisions 2.
The WTO is a broad international organisation, its members accounting for over 90 % of all
trade in the world, whereas the EU, being a member of the WTO, is a geographically
limited and closely integrated organisation. Even though the EU represents just 6 % of the
world’s population, it accounts for more than a fifth of global imports and exports3.
Concerning the relationship between the two organisations, their origins had an important
influence: The WTO was founded in 1995 as a successor of the General Agreement on
Tariffs and Trade (GATT) from 1947. [...]
1 Beate Kohler-Koch/ Rainer Eising (eds.): The Transformation of Governance in the European Union.
London, New York: Routledge, 1999, p. 5.
2 Mary Farrell (ed.): EU and WTO regulatory frameworks. Complementarity or competition? London: Kogan
Page, 1999, p. 44.
3 European Union: Making globalisation work for everyone.The European Union and world trade.
Luxembourg: Office for Official Publications of the European Communities, 2003, p. 4.
Table of Contents
1. Institutional set-up of the EU and the WTO
2. Common aims of the EU and the WTO
3. Designing EU trade Policy related to the WTO
4. WTO principles affecting EU trade policy
5. Differences in the legal authorities of the WTO and the EU
6. Positive and negative integration: views of trade policy in the EU and the WTO
7. Conclusion
Objectives and Key Themes
This academic paper examines the relationship between the European Union and the World Trade Organization, focusing on their respective roles as governance systems in international trade policy. The study aims to highlight the structural, institutional, and legal differences between the two entities while exploring how their common objectives, such as trade liberalization and economic stability, lead to mutual influence and necessary cooperation.
- Institutional comparison between supranational EU governance and intergovernmental WTO structures.
- Analysis of shared trade policy objectives and the reconciliation of free trade with domestic regulations.
- Investigation of core WTO principles and their impact on EU external trade policy.
- Evaluation of dispute settlement mechanisms and legal authority enforcement differences.
- Application of positive and negative integration theories to understand governance logics.
Excerpt from the Book
4. WTO principles affecting EU trade policy
EU trade policy consists of two complementary levels: On the one hand there is the ‘bilateral and regional’ level, signifying the trade between the EU and individual trading partners or with groups of countries. On the other hand there is the ‘multilateral’ level which refers to the system of legally binding trading rules agreed by the EU as a WTO member country; that builds the framework for EU’s bilateral agreements with individual trading partners or regional groups of countries. Besides the common aims this legal framework represents the second level on which the two governance systems are intertwined.
WTO member states, thus including the EU, agree to conduct their international trade on the basis of four essential principles: non-discrimination, reciprocity, market access, and fair competition.
Firstly, the principle of non-discrimination, also called Most-favoured-nation (MFN) rule, basically means that an importing country treats foreign goods no less favourably within the national market than domestically produced goods, once the foreign producer has paid the relevant tariffs (if there exist any). If for instance, country A has an import tariff of 2% on goods from trading partner B, this represents the most favourable level of tariff available on the specific product. Then this favourable treatment should be extended unconditionally to all trading partners supplying the product.
Obviously the European Union contravenes the principle of non-discrimination, by the imposition of a common external tariff on non-members of the community, while abolishing tariffs on intra-community trade. For this particular case the GATT rules provided an exception to the MFN rule (Art.14), permitting the pocedure of the EC, with the restriction that all regional agreements must be notified to the WTO. Additionally other WTO members can avail themselves of the dispute settlement procedures to secure compensation if it is proved that a regional agreement will adversely affect interests secured through previous multilateral trade negotiations.
Summary of Chapters
1. Institutional set-up of the EU and the WTO: This chapter introduces both organizations as governance systems, contrasting the EU’s supranational structure with the WTO’s intergovernmental nature.
2. Common aims of the EU and the WTO: This section explores shared objectives such as promoting multilateral trade, reducing trade barriers, and fostering economic growth.
3. Designing EU trade Policy related to the WTO: This chapter outlines how the European Commission manages trade policy and negotiates on behalf of EU member states.
4. WTO principles affecting EU trade policy: This chapter details the four core WTO principles—non-discrimination, reciprocity, market access, and fair competition—and their application to the EU.
5. Differences in the legal authorities of the WTO and the EU: This section analyzes the procedural differences in dispute settlement and the enforcement powers of each organization.
6. Positive and negative integration: views of trade policy in the EU and the WTO: This chapter applies theoretical frameworks to distinguish the EU's positive integration strategy from the WTO’s negative integration approach.
7. Conclusion: The concluding chapter summarizes the importance of mutual tolerance and cooperation between the two distinct governance systems.
Keywords
European Union, World Trade Organization, Governance, Trade Policy, Multilateralism, Supranationalism, Intergovernmentalism, Non-discrimination, Dispute Settlement, Positive Integration, Negative Integration, GATT, Common Commercial Policy, Economic Policy, Trade Liberalization
Frequently Asked Questions
What is the primary focus of this work?
The paper explores the comparative governance structures of the EU and the WTO in the context of global trade, identifying how these two systems interact, differ, and influence one another.
What are the central thematic fields covered?
The key themes include institutional architecture, trade policy design, the legal enforcement of international rules, and the theoretical distinction between positive and negative economic integration.
What is the ultimate research objective?
The objective is to understand how the EU and WTO co-exist as distinct governance systems and to analyze the necessity of their cooperation in solving complex international trade problems.
Which methodology is applied?
The research employs a comparative analytical approach, utilizing theories of economic policy and governance to contrast the organizational and legal frameworks of the EU and the WTO.
What topics are discussed in the main body of the paper?
The main body covers the institutional setups, shared trade goals, specific trade policy instruments, WTO principles, and a detailed analysis of legal authority, concluding with a theoretical evaluation of integration strategies.
Which keywords best characterize the study?
Key terms include Governance, Trade Policy, Multilateralism, WTO principles, Dispute Settlement, and Positive/Negative Integration.
How does the WTO's governance differ from the EU's?
The WTO is described as an intergovernmental organization with no transferred sovereignty, whereas the EU acts as a supranational organization where member states transfer specific sovereign rights to the central authority.
What theoretical framework is used to contrast the organizations?
The author uses the theory of "negative and positive integration," classifying the WTO primarily as a model of negative integration (removing barriers) and the EU as a model of positive integration (reconstructing regulatory systems).
- Citar trabajo
- Joanna Mastalerek (Autor), 2004, The European Union and the World Trade Organisation - Two governance systems in trade policy: A selection of their differences, similarities and mutual influences, Múnich, GRIN Verlag, https://www.grin.com/document/23845
