Presentation on the 12 Jun 2014 during the conference on "Market - PDF document

Presentation on the 12 Jun 2014 during the conference on "Market Power Europe" Dr. Katia ROCHEREUIL Today, the European Union (EU) is part of the small group of first commercial powers in the world, just after the United States but before China 1 . The distance covered from the European Coal and Steel Community established in 1952, within which trade was limited to coal and steel, to the European Community created in 1957, is important. It is a fact that market integration has been one of the factors allowing the European Union to take off. As Dr. Chad DAMRO underlined, "the common market and the common commercial policy served as original and essential building blocks of European integration" 2 . However, regarding the "Market Power Europe" theory developed by Dr. DAMRO, two others factors have contributed to the current commercial status of the European Union: institutional feature and interest contestation 3 . Among tools which have fostered the "Market Power Europe", there are, as underlined by Dr Chad DAMRO, bilateral agreements, which constitute a "positive tool" and the conditionality clause, "an additional tool". Bilateral agreements are considered as being a positive tool as far as they are the free expression of the two contracting parties to respect the agreement within which they have defined their respective rights and obligations in order to reach the aim defined by the parties. The conditionality clause is qualified by a generic term "additional tool" because it covers different meanings. Indeed, conditionality can be either positive or negative and can apply to the political field as well as the economic field. Positive conditionality can be loosely defined as promising the benefits to a state if it fulfils the conditions whereas negative conditionality involves reducing, suspending or terminating those benefits if the state in question violates the conditions. Political conditionality entails the linking of perceived benefits to another state such as aid, trade concessions or cooperation agreements to the fulfilment of conditions relating to the protection of human rights and the 1 http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ext_lt_introle&lang=fr 2 Chad DAMRO, "Market Power Europe", JEPP, 2012. 3 Ibid. 1

advancement of democratic principles 4 . Within the political conditionality clause, an economic conditionality has been added. It links obtaining benefits to the fulfilment of economic conditions usually involving the introduction of a market economy. The EU’s conditionality policy is the object of much controversy and criticism, particularly regarding the consistency and effectiveness of the political clauses. However, I will introduce a nuance in the terms being used. Indeed, I consider the term "vector" to better reflect the impact of those "tools"! Which is the externalisation of European norms. Hence, we will see how bilateral agreements form a positive vector of externalization of Market Power Europe theory (I) and how political conditionality clause is an additional vector of that externalization (II). 4 Political conditionality clause is usually drafted as follows: "Relations between the Parties, as well as all the provisions of the Agreement itself, shall be based on respect for human rights and democratic principles which guide their domestic and international policies and constitute an essential element of the Agreement". 2

I. Bilateral agreements as a positive vector of externalization of Market Power Europe theory The Market Power Europe theory is based on 3 axioms: market integration, institutional feature and interest contestations. Thanks to bilateral agreements, those are "transposed" into conventional relations established between the European Union and third countries. Today, the European Union is linked by about 60 bilateral agreements making market integration the core of the agreement. The degree of integration varies in relation to the legal basis. Those agreements are either based on Article 207 of the Treaty on the Functioning of the European Union (TFEU), also called "trade agreements" 5 and, since Maastricht Treaty, on Article 211 TFUE relating to development cooperation 6 or on Article 217 TFUE usually called "association agreements" 7 . 5 Article 207 TFEU (ex. Article 133 TEC) lays down: "1. The common commercial policy shall be based on uniform principles, particularly with regard to changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services, and the commercial aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies. The common commercial policy shall be conducted in the context of the principles and objectives of the Union's external action. [...]". For further developpements, see: Pierre Didier, Michael Hahn, Hervé Prince... [et al.], Politique commerciale commune, Bruxelles: Ed. de l'Université de Bruxelles, 2014, 255 p. 6 Article 211 TFEU (ex. Article 181 TEC) lays down: "Within their respective spheres of competence, the Union and the Member States shall cooperate with third countries and with the competent international organisations". For further developpements, see: Catherine Flaesch-Mougin, "Le traité de Maastricht et les compétences externes de la Communauté européenne: à la recherche d'une politique externe de l'Union", Cahier de droit européen, 1993, pp. 351-398; Christian Mestre, "Titre XVII - Coopération au développement", in Vlad Constantinesco, Robert Kovar, Denys Simon, Traité sur l'Union européenne- Commentaire article par article, Paris: Economica, 1995, pp.489-504. 7 The legal basis for concluding association agreements under EU law is Article 217 of the Treaty on the Functioning of the European Union (TFEU). It states that: "The Union may conclude with one or more third countries or international organisations agreements establishing an association involving reciprocal rights and obligations, common action and special procedure". The concept of association was written by the fathers of the Rome treaty in wide words leaving like this to the European Union a "freedom of association"! While the Treaty provision on the association agreement is unclear, it is nevertheless stipulated that the association agreement create: 1) reciprocal rights and obligations for the contracting party; 2) common action, and special procedure Furthermore, the Court in its Demirel judgment of 30 September 1987 (Case 12/86, EC reports 1987, p. 03719) came to explicit guidelines on the scope of an association in EU 3