20 October 2023
Erika Szyszczak is a Professor Emerita and a Fellow of the UKTPO. She was the Special Adviser to the House of Lords Internal Market Sub-Committee in respect of its inquiry into Brexit: competition and state aid, and has previously acted as a consultant to the European Commission. She specialises in EU economic law. She is currently working with the European Judicial Training Network on developing training courses for national judges in EU competition law.
On 3 October 2023 the Council and the European Parliament reached provisional political agreement on an Anti-Coercion Instrument (ACI).[1] It is the latest legal trade measure contributing to the developing economic statecraft of the EU as part of the Open Strategic Autonomy. The tipping point for the EU to consider an extra method to address trade distortion occurred when China imposed trade restrictions on Lithuania after Lithuania improved trade relations with Taiwan. Lithuanian companies found that they could not renew or conclude contracts with Chinese firms, shipments were not being cleared and customs paperwork was held up. The ACI is portrayed as a deterrent device, discouraging third states from targeting the EU and its Member States with economic coercion through measures affecting trade or investment. It is another example of how the EU is forging a leadership role in developing new economic trade rules in a fragmented global trading world, by stealing a lead in the narrative on what is, and what is not, acceptable trade policy.
The European Commission proposed the ACI in the form of a Regulation on 8 December 2021 at the request of the Council and the European Parliament. The European Parliament Committee on International Trade adopted amendments to the proposal on 10 October 2022, and in the plenary session confirmed the Parliament’s negotiating mandate on 19 October 2022. The Council agreed its negotiating position on 16 November 2022.
The tipping point for the EU to consider an extra method to address trade distortion occurred when China imposed trade restrictions on Lithuania after Lithuania improved trade relations with Taiwan. Lithuanian companies found that they could not renew or conclude contracts with Chinese firms, shipments were not being cleared and customs paperwork was held up.
The Legal Base for the ACI is Article 207(2) TFEU:
“The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy.”
This is trade legal base for a measure designed to enhance EU economic and political resilience. The European Parliament Committee on International Trade adopted amendments to the proposal on 10 October 2022, and in the plenary session confirmed the Parliament’s negotiating mandate on 19 October 2022. The Council agreed its negotiating position on 16 November 2022.
The ACI defines economic coercion as when a non-EU country attempts to pressure the EU or a Member State into making a specific choice by applying, or threatening to apply, trade or investment measures. In the European Parliament Briefing ‘Proposed anti-coercion instrument’ different types of economic coercion are identified:
Once notified of an alleged act of economic coercion the European Commission must investigate within 4 months. The European Commission report will be sent to the Council which then has between 8 to 10 weeks to decide, by a qualified majority vote, whether the complaint of economic coercion exists. The first response will be to engage in dialogue to persuade the authorities of the non-EU country to stop the acts of economic coercion. If diplomacy fails, the EU has a range of countermeasures it can apply with the consent of its Member States. These include restrictions in trade of goods and services, intellectual property rights and foreign direct investment, imposing constraints on access to the EU public procurement market, capital market, and authorisation of products under chemical and sanitary rules. The European Commission has 6 months to set out the appropriate responses, whilst keeping the European Parliament and the Council informed at all stages.
The ACI is a new legal development in international trade law. It has been developed in response to activities deployed by China and the US which threaten EU security. The ACI is another example of how the UK, post-Brexit, may be the target of EU trade defence instruments.
Why does the EU need the ACI? The European Commission justifies the measure by arguing that new forms of economic coercion are not addressed by the existing conventional trade defence measures of the EU (for e.g. anti-dumping).
The concept of economic coercion set out in the ACI is not caught by current WTO rules. Even if the threatening behaviour could be brought within the existing WTO agreement, the stymied appellate process makes enforcement difficult.
However, the ACI is not a rapid defence trade mechanism. In fact, an EU firm or sector could suffer irreparable damage in the time it takes to activate and use the ACI. It may also encourage third countries to develop their own trade defence tools which are more effective than the ACI in responding to escalating situations.
[1] The European Commission proposed the ACI in the form of a Regulation on 8 December 2021 at the request of the Council and the European Parliament. EUR-Lex – 52021PC0775 – EN – EUR-Lex (europa.eu). The European Parliament Committee on International Trade adopted amendments to the proposal on 10 October 2022, and in the plenary session confirmed the Parliament’s negotiating mandate on 19 October 2022. Procedure File: 2021/0406(COD) | Legislative Observatory | European Parliament (europa.eu). The Council agreed its negotiating position on 16 November 2022. pdf (europa.eu). The Legal Base for the ACI is Article 207(2) TFEU: The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy.
Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.
Republishing guidelines:
The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.
Jessie Madrigal-Fletcher October 20th, 2023
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Michael Gasiorek is Director of the UK Trade Policy Observatory and Co-Director of the Centre for Inclusive Trade Policy. He is Professor of Economics at the University of Sussex Business School. Justyna A. Robinson is a Reader in English Language and Linguistics at the University of Sussex and a Director of Concept Analytics Lab.
In early 2023, the Labour Party launched a National Policy Forum. It comprised a series of public consultations across six core policy areas, with the stated aim of helping the Labour Party to ‘build their policy platform’. A key part of the consultation process was to invite written submissions on these policy areas. One of the six policy areas was entitled Britain in the World, (to which the UKTPO/CITP also responded), which posed a set of seven questions all of which related to trade and trade policy.
The consultations were due to lead to a set of policy documents to be agreed in July 2023. With any consultation exercise, including those undertaken by the UK Government on the UK’s Free Trade Agreements, it is hard to know how seriously the consultation is being taken and which if any of the diverse views and responses are being listened to, and how selectively. Consulting with stakeholders and members of the public in the formulation of policy are important if taken seriously, and so consultations such as this are, in principle, welcomed.
So, on the eve of the Labour Party conference, we have analysed all the submitted responses to identify the key issues raised. There were 310 responses submitted which varied considerably in length. Most submissions were less than 500 words, but some were as long as 10,000 words. It is important to note that the consultation was open to anybody: individuals as well as organisations and companies. The chart below shows that 35% of the submissions were submitted by non-Labour party members (labour guests).[1]
Analysing the data is a challenge because the responses vary enormously in length and scope – with some private individuals submitting short sentences on a couple of issues, to larger organisations and companies submitting lengthy responses. Fortunately, there are tried and tested methods (and smart) software which provide a means for using corpus and natural language processing techniques for the analysis of such textual responses and controlling for different lengths of responses, so that individual lengthy responses do not dominate the analysis.
A key aspect of the analysis is to identify the frequency with which submissions raise particular issues. This is done by comparing the frequency of given words or groups of words in the submissions, relative to the frequency with which those words would appear in ‘normal’ usage. Hence words that appear relatively more frequently are those that prima facie raise issues that the respondents care about. In the jargon, this is called the ‘keyness’ score. We also need to control for the fact that certain terms may appear more frequently in individual responses. So, we want to be able to identify how often an issue is raised but to adjust for those issues being raised frequently in a small number of responses. This is done by producing something called the ‘average reduced frequency’ (ARF).
Consider the chart below. This gives the ARF score for the top 10 identifiable trade issues raised in groups of up to three words[2]. We see that the issue of trade and human rights is the primary concern, on average across the responses. Care has to be taken in interpreting the height of the bars – just because a bar is twice as high does not mean that the issue was perceived as twice as important. Nevertheless, it is clear that human rights were perceived as considerably more important than supply chains and economic growth.
Relatedly, if one takes the importance of individual words, the word ‘promote’ has a high ARF score. On its own, it is not clear what the respondents want promoting, and so we look at the collocation of words. This identifies that the key objective here was to promote growth, followed by rights, values, trade, and development in order of importance. Another word with a high individual score was ensure which co-occurs most with security (of supply chains), rights, and access (markets, supply chains), suggesting that these are of high importance for trade policy.
Of course, the frequency of some of these words will have been driven by the specific questions posed by the consultation exercise, as given above, which specifically asked about growth, supply chains and human rights for example. Even so, the rankings are significant as they indicate which of these issues appear of greater concern to respondents.
More depth in the analysis can be obtained by considering the nature of the responses to the individual questions posed. Hence, the responses pertaining to the role of international trade in promoting domestic economic growth, boosting jobs and driving up wages illustrate different perceptions of what trade policy is for. While some responses highlighted the role of trade in boosting productivity, innovation and access to supply chains, as well as emphasising trade with the EU; others focused on the role of trade (deals) in building relationships, soft power, and trust with third-party countries. Additionally, some demonstrated concern for objectives which are not focused on economic growth and economic efficiency such as the regional dimension, worker and human rights, or environmental protection.
With regards to the regional dimension, there is a clear message that international trade, especially services trade as well as ‘green’ trade, could and should be used to reduce regional disparities but that this also requires much more substantial investment in infrastructure and transport networks, as well as policies to mitigate negative impacts if it is to be successful. There was general acceptance of the importance of building more resilience in supply chains with a focus on the need to build trust with partner countries and reorienting supply chains to more trusted countries as well as protecting cyber-security. Interestingly, there was an overlap here with environmental and rights concerns with several respondents calling for more due diligence requirements in supply chains and moving to net-zero supply chains.
Environmental protection and cognate terms such as green technology, carbon emissions, energy, due diligence come up widely in the responses with widespread support for a better environment and net zero, even if it means renegotiating existing deals. Interestingly, the desire to use trade deals to lead to better outcomes in these regards does not pertain just to the UK, but that the trade deals should be used to influence and change practices in partner countries.
The responses highlight the importance of taking into account how trade may negatively impact a range of outcomes, be this with regard to the environment, regions, agriculture and animal welfare, older workers, disabled workers, or women. However, such concerns did not lead to opposition to trade deals, but rather to suggesting that (a) consideration of such impacts should form a (more) explicit element in the evaluation of proposed trade deals; and importantly (b) that there should be much more widespread inclusive consultation processes with affected groups, sectors, and regions in the formulation of trade policy and the negotiation of agreements.
Given the range of questions posed in the consultation exercise, it is perhaps not surprising that there is considerable heterogeneity in the answers. One clear message, however, which emerges is the recognition that trade is good for growth and an important element in raising productivity, but that at the same time, trade policy needs to be value driven. While these are not necessarily mutually exclusive there are trade-offs in trying to meet all the objectives. Hopefully publication of a trade strategy by the Labour Party may provide some insights on their approach to those trade-offs, and maybe the forthcoming conference may also shed some more light.
[1] Categories as defined by the Forum, see bottom of this page for all categories: https://www.policyforum.labour.org.uk/commissions/britain-in-the-world
[2] Note that we have excluded here terms that came up but do not, of themselves, shed meaningful light on trade issues, such as ‘UK government’ or ‘Labour Party’
Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.
Republishing guidelines:
The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.
Charlotte Humma October 6th, 2023
Posted In: Uncategorised
22 September 2023.
L. Alan Winters is Co-Director of the Centre for Inclusive Trade Policy (CITP), Professor of Economics at University of Sussex Business School and Fellow of the UK Trade Policy Observatory.
When UK Prime Minister, Rishi Sunak, spoke on climate policy on 20th September and talked the following day to the BBC’s Today programme, he did much more than delay the UK’s policies for achieving net zero. He said he was changing the terms of political debate. He spoke of honesty, pragmatism, transparency, and ‘getting opinions and advice from anybody’. Nothing could be more welcome to anybody who has engaged with UK policy over the last eight years, during which the greatest failing has been the lack of these characteristics at the highest political levels.
I would like to celebrate the change in practice immediately, so let me pose a few straightforward questions to Mr Sunak to which a pragmatic government must surely have answers already.
Let me start with the climate policy announcements themselves:
What are the estimates of how much his new climate policies will increase the UK’s total carbon dioxide emissions between now and 2050?
What are the estimates of how much the new measures will reduce the expenditure by the average household over the period 2023 to 2035?
Nearly all experts believe that the more rapid a country’s adjustment towards net zero, the greater the costs it faces. Does Mr Sunak agree? What estimates does he have of the increased adjustment costs of reaching net zero in 2050 arising from the new delays?
Will the new policy on energy infrastructure be fully costed and have a timescale that the people who have to deliver it on the ground believe is credible? When is it due and when it is announced will My Sunak commit that his government(s) will never change it?
Next, let me turn to Brexit and international trade policy – the focus of both The Centre for Inclusive Trade Policy and the UK Trade Policy Observatory. We are particularly pleased to see Mr Sunak speaking about imposing ‘costs on working people, especially those who are already struggling to make ends meet and to interfere so much in people’s way of life without a properly informed national debate’, which has been of particular concern to us.
Is Brexit working for the British economy? And, as we say in university exams, explain your reasoning.
Does Mr Sunak really believe that the additional bureaucratic costs of importing food into the UK (nearly all of which comes from the European Union) has had no effect on food prices?
Is the UK actually going to introduce customs formalities on imports from the EU or is it just going to give up controlling that border? Given that we have had multiple postponements of the introduction, a simple ‘yes’ will not suffice.
How many UK firms have stopped exporting to the EU since 2020? And how many of them have started exporting elsewhere?
What is the cause of UK business investment more or less flatlining since 2016?
What is the main reason given by British business for its lack of enthusiasm about UK regulations diverging from those of the EU?
How much will it cost the UK chemicals industry to obtain regulatory approval under UK REACH?
With the World Trade Organization’s dispute settlement system broken, why will the UK not join 26 other WTO members in the temporary alternative mechanism for resolving trade disputes – the Multi-Party Interim Appeal Arbitration Arrangement (MPIA)?
Does Mr Sunak really want independent advice on trade policy? His government proposed in March to neuter the independent Trade Remedies Authority. No action has been taken since. May we give him credit for changing his mind?
Big changes in political practice are hard to engineer, so perhaps Mr Sunak can underpin his revolution by committing that pigs will not fly between now and the next general election.
This blog was first published on the CITP website on September 22, 2023.
Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.
Republishing guidelines:
The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.
Jessie Madrigal-Fletcher September 22nd, 2023
Posted In: Uncategorised
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17 March 2023
Chloe Anthony is a Doctoral Researcher and Tutor at the University of Sussex Law School and Legal Researcher for the UK Environmental Law Association, Governance and Devolution Group.
The UK Government and devolved administrations have committed to improving environmental protection post-Brexit. But how do the UK’s new trade agreements impact domestic environmental ambition? And are there legal safeguards against lowering levels of environmental protection? (more…)
Cosmo Rana-Iozzi March 17th, 2023
Posted In: Uncategorised
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13 March 2023
Emily Lydgate is Reader (Senior Associate Professor) in Environmental Law at University of Sussex School of Law, Politics and Sociology and Deputy Director of the UK Trade Policy Observatory
The UKTPO is pleased to re-publish this TaPP Network Workshop Summary, an output of a TaPP workshop in January with speakers Geraldo Vidigal (University of Amsterdam), Emily Lydgate (UKTPO/CITP), Ilaria Espa (USI/WTI), and Greg Messenger (TaPP/University of Bristol). Rather than a blog, this note summarises views of panel participants and the authors. It provides useful insights on the latest developments in this area and policy recommendations for the UK in navigating the new subsidies race between the US and the EU. (more…)
Cosmo Rana-Iozzi March 13th, 2023
Posted In: Uncategorised
Tags: Climate policy, Emissions, Emissions Trading System, Environment, EU, European Union, trade, Trade agreements, trade dispute, trade negotiations, trade policy, UK economy, UK Government, USA, WTO, WTO rules
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24 February 2023
Erika Szyszczak is a Fellow of the UK Trade Policy Observatory and Professor Emerita of Law at the University of Sussex.
24 February 2022: a date that shook the world as Russian aggression in Ukraine escalated.
The fragility of a strategic democratic state was challenged, alongside exposing the vulnerability of interdependent global supply chains. Thus, it was not surprising that the early response to Russian aggression was in the form of economic sanctions led by the US, the UK and the EU. [1] (more…)
Cosmo Rana-Iozzi February 24th, 2023
Posted In: Uncategorised
Tags: Emissions, EU, European Court of Justice, European Union, Financial Services, international economic law, law, Legal Issues, Russia, Sanctions, trade, UK economy, UK Government, Ukraine, USA
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14 December 2022
Ruby Acquah and Mattia Di Ubaldo are Fellows of the UK Trade Policy Observatory and Research Fellows in Economics at the University of Sussex Business School. This blog was originally published by Trade 4 Sustainable Development.
The Role of Non-trade Provisions in PTA’s in Attaining the SDGs.
Preferential Trade Agreements (PTAs) are being increasingly used as a tool to pursue various non-trade policy objectives such as the protection of human rights and labour rights, the promotion of environmental sustainability, and combating climate change. (more…)
Cosmo Rana-Iozzi December 14th, 2022
Posted In: Uncategorised
Tags: Climate policy, developing countries, Emissions, Environment, fisheries, Sustainability, Trade agreements
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7 December 2022
Emily Lydgate, Reader in Environmental Law at University of Sussex and Deputy Director of the UKTPO [1]
Figures from the World Trade Organization suggest that the negotiation of new Free Trade Agreements (FTAs) peaked in 2008, and has since declined.[2] Meanwhile, the Biden Administration has disavowed FTAs. The UK emerged post-Brexit as an enthusiastic advocate, responsible for much of the 2020 outlying peak in WTO FTA notifications. However, even in the UK, the Trade Secretary recently said: ‘I would like us to move away from the DIT being seen as the Department for Free Trade Agreements and back to the Department for International Trade.’
Having created a so-called spaghetti bowl of FTAs, are the wealthy countries that have driven most FTA negotiations[3] finally running out of noodles? (more…)
Charlotte Humma December 7th, 2022
Posted In: Uncategorised
Tags: Free Trade Agreement, FTAs, trade policy
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14 October 2022
Maria Savona is Professor of Economics of Innovation at the Science Policy Research Unit (SPRU) at the University of Sussex Business School and Full Professor at the Department of Finance and Economics at LUISS Business School in Rome. Filippo Bontadini is Assistant Professor in Applied Economics at LUISS and Associate Fellow at SPRU, University of Sussex. Valentina Meliciani is Professor of Applied Economics and Dean of the School of European Political Economy at LUISS. Ariel L. Wirkierman is Lecturer in Economics at Goldsmiths, University of London.
After the great recession of 2008-2009, the world economy seemed to enter a phase of de-globalisation or deceleration in globalisation. But, is this really the case? Are we actually just experiencing a reorganisation and regionalization of production and value chains? Are these trends similarly affecting Europe, Asia-Pacific and the Americas, or are there regionally distinctive trends? (more…)
Cosmo Rana-Iozzi October 14th, 2022
Posted In: Uncategorised
Tags: international trade, Protectionism, supply chains, trade, trade data, trade dispute, trade policy, trade remedies, trade wars
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16 September 2022
Erika Szyszczak is a Fellow of the UK Trade Policy Observatory and Professor Emerita of Law at the University of Sussex.
On 23 February 2022, in a Communication on decent work worldwide, the EU announced a new legislative initiative tackling issues of sustainability and working conditions in global trade. [1] On the same day, the European Commission published a proposal for a Directive on corporate sustainability due diligence. (more…)
Cosmo Rana-Iozzi September 16th, 2022
Posted In: Uncategorised
Tags: China, digital trade, Enforcement, ethical trade, European Commission, European Union, international economic law, international trade, labour rules, labour standards, Protectionism, supply chains, trade, Trade agreements, trade data, trade policy, Treaty on the Functioning of the European Union, USA
