Institutional power andconstraintt i t forf leadershipl d hiThe EU in global tradegnegotiations
Yukari AKEDA
Keio University
akeda@law.keio.ac.jp

Introduction•“Economic giant/ Political dwarf” proposition

1. How can the EU transform its market power into political influence inthe global trade regime? → flourishing research agenda– A comparative look at the case of Japan (future agenda)• An approach from leadership theory• The EU has recently acquired an advantageous position in
exercising leadership in global trade negotiations relative to
traditional sovereign states because:– Peculiar institutional feature of the EU• A trading bloc with 27 member-states (MS) but not a state• An institution in the making• The Common Commercial Policy (CCP)– Parallel developments in the EU and the WTO• From traditional trade agenda to a deep trade agenda (deepening)• Expansion of membership and agenda (enlargement)

2. How will global trade governance evolve under the EU’s leadership?

Nontradevalues

EUTradevaluesGlobal trade
regimeglobalization
Traditional tradeagendaDeepp tradeagenda

Global economicgovernanceWhata iss leadership?
eade s p• Leadership in multilateral trade negotiations– The actions by actors to solve or circumvent collective
action problems in the process of institutional bargaining– No agreement without leadership in the institutional
bargaining process• Three categories of leadership (by Young, O. R.)– Structural– Entrepreneurial– Ideational (intellectual)• Not one mode of leadership is enough by itself
p is exercised byy agentsg((individual/collective))• leadershipin trade negotiations– The case of the EU = the Commission

StructuralStuctu a leadershipeade s p• Translates material power resources intobargaining leverage to pressure others to reachan agreement in trade negotiations• Rests not only on the absolute terms of power
but also on the assessment of the relative
circumstances of participants• Two strategies according to the relative
positional strength of the actor (Kindleberger,(Kindleberger Odell)– High BATNA point – ‘arm twisting’
tied hand strategy(Shelling, Meunier)– Low BATNA point – ‘bribery’ (side payments)• BATNA (Odell, Woolcock, Elsig)– Best Alternative to Negotiated Agreement– High BATNA point → low cost of no-agreement– Low BATNA point → high cost of no-agreement

EU case for structural L.
• The base is the single market (GNP, population, tradeand investment)• Relative
R l i ddecline
li off iits BATNA pointi– After the completion of the single market programme, the EUindustries became more dependent on the world
market/multilateralk t/ ltil t l negotiations
ti ti– Moratorium suspension of the bilateral/regional FTA
negotiations (eliminated in 2006 by Global Europe)– Developing
Dl i countriest i (th(the DCDCs)) havehbeenbraising
i i ththeiri BATNA
point after the UR• The EU strategy– Relying less on ‘arm twisting’, more ‘bribery’– Bribery strategy – increasing pressure from the DCs to open EU
agriculture market– Tied hand strategy – less useful• Increasing need for flexibility of the Commission andotherot
e modes
odes oof leadershipeade s p

Entrepreneurial
ep e eu a leadershipeade s p• Based on the ability of agents to shape thepresentation of the issues and the framework ofdeals in ways that promote agreement• Crucial mode for reaching an agreement innegotiations such as the DDA with multiple
participants and agenda under the consensus
decision-making rule
• Pivotal in combining other modes of leadership
EU case• Depending on the Commission’s
Commission s negotiatingskills and flexibility = the CCPThe CCP• Art. 133 and 300 of the EC Treaty• The Council delegatesg
its negotiationg
authority
y to theCommission who negotiates as a sole representative ofthe EC (EU) in multilateral trade negotiations• Typical “dede jurejure” Principal-Agent structure (Pollack,(Pollack etet. alal.))– The preference of the Commission• Maximization of its/EU’s competencep(p(possibilityy ofagency slack)– Member States as a (collective) principal have strong
incentive to control the Commission• Three stages of control in the CCP (Kerremans)– Ex ante: adopting negotiating mandate/directives– At locum: monitoring– Ex post: no ratification

• The P/A structure of the CCP with parallel developmentsof the WTO and the EU offers the Commission both anopportunity and a motivation for entrepreneurial
leadership– Parallel developments → opportunity– The CCP → motivation• Opportunity – greater uncertainty in negotiations withmany participants and a broad agenda– Issue-linkage/diffuse reciprocity/coalition building– EU case = two-level• Motivation – pre-emptive actions such as agenda settingand framing to exploit opportunity– AlsoAl ttwo-levelll

P/A structure in a comprehensive tradenegotiation• Negotiation proposal by the Commission: prepre-emptive
emptiveaction for leadership• Ex ante control: general mandate rather than strict
directives• At locum control: monitoring through the133 Committee– More important than before for the MS– However conditioned by;• The initial proposal of the Commission (framing)• Multiple principal tactics by the Commission– Civil society, business groups, European Parliament– Relying more on entrepreneurial leadership• Ex
E postt control:t l high
hi h costt off no-ratification
tifi ti– Decline of the BATNA point of the EU– Highestgin case of single
g under-taking
gpprocedure– Subject to pre-emptive action by the CommissionIdeationaldea o a leadershipeade s p• Based on the ability of agents to generate ideas to shape
the thinking of participants on the central issues of thebargaining process• No direct/immediate effect, and a time-consuming form ofl d hileadership• Important because:– It would change the guiding norms of the regime– The source of framing, innovational thinking in entrepreneurial
leadership as well
– Providing solutions to the fundamental challenges theglobal trade regime confronts• The balance between free trade norms and non trade norms• Democratic deficit of the WTO• Global Trade/Economic Governance after the global financial crisis

Sources of the EU Ideational L.
• Parallel developments, again– Move towards deep trade agenda in the global trade regime– Completion of the EU 1992 project• Single market as a model for globalization• EU approach to trade liberalization– The development of the EU social model• The balance between free movement norms and other socialnorms• Identity searching of the EU in the international arena– Alternative to:• Westphalian sovereign states• TheTh EuropeEoff theth pastt (war(andd colonialism)l i li )• The US as a hegemon– Norm-oriented
Norm oriented EU (Mannars,(Met.
t al.)l)

The ppurposes
pof EU leadership:pmaterial or not material?
•The DG Trade website– A competitive European Economy in an open world tradesystem organized by multilateral rules• Secure real market access in foreign countries• Promote European values• Support a strong multilateral trading system••

Observations by researchers– Preference for further trade liberalization (Hanson)– Promoting deep trade agenda (Young, A.)– Exporting
Eti EU approachh tto ttraded libliberalization
li ti (M(Meunier)i )– Projection of the EU social model (Tsoukalis)
Views from the DCs– Disguised protectionism– Imposition of European values

Structure of EU preferencesin the DDA• Is the EU really promoting values (postp ) or jjust using
g valuesmodern state)) ((Cooper)
strategically to secure its material(economic) interests (modern state)?
– Both aspects are true and they are
inseparable– EU model is supported by both the EU’smateriali l ((economic)i ) successes andd nonmaterial values

EconomicInterests(material)

EU ModelUniversal Values((postt material)t i l)

material

EU preferences

Contents

Economic interests

Foreigng market accessProtection of certain sectors
agriculture

EU ModelTrade Regulation Model

ServiceTRIPs
Singapore issues
Investment
Competition
Public procurement
Trade facilitation

EU ModelSocial Model

Consumer protection
Food safety

Environment
Precautionary principle

Core labor standard
CultureCivil society involvement
Agriculture (multi-functionality)
nonmaterial

Universal Values

Social justice Fairness
Human rights
Development

Rule of Law• Ideas and values are more important forg states
the EU than for traditional sovereign– The EU is still in the making, constantly
searching for its identity in the international
arena• Peculiar interpretation of general values• Exporting EU values, projecting the EU model: acrucial part of its identity building

Constraints for EU leadershipp••

Decline of structural leadership
Legitimacy and efficiency of the EU Model– Western model– A bad model for global trade regime (Jones)– Disguised protectionism– Strongg opposition
ppfrom the counterparts
pesp.
p the DCs•The limitat of the Commission’s entrepreneurial leadership– failure in building coalitions• With DCs: DDA, EBA initiative, Waver on TRIPs for HIV medicine• With Industrial Countries: Singapore issues, post material agenda– After concessions made by the EU (withdrawal of most of the EUModel), the DDA became a more traditional trade negotiation withsome new universal norms such as fairness
fairness, development…
development• Concessions in agriculture will be necessary• Specific reciprocity• Arm twisting strategy became more inappropriate = Normative trap•

Need for new source of ideational leadership– The EU Model → New Bretton Woods (?)•Need for new source of structural leadershipp– Global Europe → raising its BATNA point, Identity shift to a normal stateEconomicInterests

Universal Values

Conclusion• EU as an institution in the making (experimental arena ofglobalization + identity searching) and its strict P/Astructure in the CCP – source of the Commission’s
leadership in multilateral trade negotiations– Not always but under certain conditions– The DDA - a window of opportunity led by parallel developmentsin the EU and the WTO• Change in relative circumstances of the EU in the DDA→Normative trap→ expectation/capability gap in EUleadership• A search for new combination of three modes ofleadership is necessary and has already been started

The case of Japanp ((future agenda)g)• Structural leadership– Relative decline of its market power– Low BTANA point• Entrepreneurial
pleadershipp– No de jure P/A structure, no explicit de fact P/A structure– Diffused responsibility among ministries• Ideational leadership– Decline of legitimacy and efficiency of Japanese Model– Japan’sJ’ ididentitytit• Defined by relations against others• Others no.1= the US• Others no.2= Asian neighbor states→ Strong constraints for explicit leadership of JapanReference
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