When it comes to concluding a trade defence proceeding in the European Union (EU), the regulations allow for three alternative outcomes: (1) a termination without measures, (2) the imposition of a protective duty or (3) the acceptance of a price undertaking. Price undertakings are voluntary offers by foreign exporters to revise their prices so that the Commission is satisfied that the subsidization or dumping margin and their injurious effects are removed.
Some welfare economists have concluded that 'a rational policy maker will always prefer duties' (Pauwels and Springael, 2002, 135). Thus, there is no rationale for price undertakings from an income maximization perspective. However, others have highlighted the role of price undertakings as a diplomatic tool in the EU's neighbourhood policy, which is powerfully evidenced by a sharp decline in the frequency of price undertakings after the EU's Eastern enlargement in 2004 (Appendix 1). Yet, a paradox persists: Out of fourteen price undertakings accepted between 2006 and 2015, only four accounted for countries in the EU's immediate neighbourhood. In contrast, price undertakings were accepted by ten countries that fell outside of Europe, with the BRIC countries accounting for nine, and China alone for five (Appendix 2).
In response to this paradox, the paper reviews the following question: What are the political economic determinants of accepting price undertakings in the EU? I find the acceptance of price undertakings arises from an institutional conflict that can be foreign induced. In contrast to judicialized systems, an incomplete delegation of trade defence in the EU has led to a politicization of the trade defence proceeding. This is characterized through the empowerment of three veto-players: Community industry, Commission, and Council. Powerful foreign parties actively capitalize on the engagement of political actors and - in an effort to achieve a less harmful outcome than duties - influence the three veto-players. Eventually, price undertakings are accepted by the Commission, if only the Council signals to exert its veto-rights.
Inhaltsverzeichnis (Table of Contents)
- Introduction: Friend or Foe?
- Related Literature on the Determinants of Price Undertakings
- Economic Approaches
- Political Economic Approaches
- The Argument in Brief
- The Incomplete Delegation of EU Trade Defence and Three Veto-Players
- The Optimal Delegation of Trade Defence
- Veto-Players at Different Stages of the Trade Defence Procedure
- Initiation
- Investigation
- Provisional Measures
- Undertakings
- Definitive Measures
- EU Trade Defence in the Case of Solar Panels from China
- Foreign Pressures on the Community Industry
- Foreign Pressures on the Commission
- Foreign Pressures on the Member States
- Conclusion: The Need for Further Reform
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper investigates the political economic determinants of accepting price undertakings in the EU. It argues that the acceptance of price undertakings arises from an institutional conflict that can be foreign induced. The EU's incomplete delegation of trade defence has led to a politicization of the trade defence proceeding, empowering three veto-players: Community industry, Commission, and Council.
- The role of foreign actors in influencing the EU's trade defence policies.
- The impact of incomplete delegation on the decision-making process in trade defence.
- The influence of veto-players on the acceptance of price undertakings.
- The use of price undertakings as a diplomatic tool in the EU's neighborhood policy.
- The need for reform in the EU's trade defence framework.
Zusammenfassung der Kapitel (Chapter Summaries)
The introduction sets the context for the study by examining the different outcomes of trade defence proceedings in the EU, particularly focusing on price undertakings and their implications. The chapter also highlights the paradox of the EU's use of price undertakings, demonstrating that while they are seemingly a diplomatic tool for the EU's neighborhood policy, they are also accepted in cases involving countries beyond the immediate neighborhood, notably the BRIC countries.
Chapter 2 reviews the relevant literature on the determinants of price undertakings, analyzing both economic and political economic perspectives. The economic approaches focus on the macroeconomic and microeconomic effects of different trade defence instruments, highlighting the divergent effects of duties and price undertakings on income distribution, competition, and business strategy. The political economic approaches provide explanations for the acceptance of price undertakings based on interest representation, ideological, and diplomatic considerations.
Chapter 3 briefly outlines the central argument of the paper, emphasizing that the acceptance of price undertakings arises from foreign-induced institutional conflicts within the EU's trade defence framework. This chapter lays the groundwork for the following sections, which delve into the incomplete delegation of trade defence and the role of veto-players in the decision-making process.
Chapter 4 delves deeper into the incomplete delegation of trade defence in the EU, reviewing the current trade defence procedure and highlighting the existence of three veto-players at different stages. This chapter provides a detailed analysis of the roles and influence of these veto-players, setting the stage for the empirical analysis in Chapter 5.
Chapter 5 explores the specific case of solar panels from China, showcasing how foreign actors targeted and pressured the three veto-players, ultimately leading to the acceptance of a price undertaking. This chapter provides empirical evidence supporting the paper's central argument.
Schlüsselwörter (Keywords)
The key terms and focus topics of this paper include trade defence, price undertakings, EU trade policy, institutional conflict, veto-players, incomplete delegation, political economy, neighborhood policy, foreign pressure, and the case of solar panels from China.
- Quote paper
- Dominik Kümmerle (Author), 2015, 'Amicable Solutions' in Trade Defence. What are the Political Economic Determinants of Accepting Price Undertakings in the EU?, Munich, GRIN Verlag, https://www.grin.com/document/311804
