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Paper - EU External Relation Governance

A paper with Benoît Coeuré on the governance of the external economic relations of the EU

In the ‘legacy’ paper he posted at the end of his mandate as a trade commissioner, Pascal Lamy gives a sanguine view on the ability of the European Union (EU) to play a leading role on the world economic stage : “The lesson to be taken from the experience of the past five years, he writes, is that, when it chooses to pursue a truly federal policy, the EU can play a decisive role on the world stage. Together, we have a far greater ‘weight’ than the sum of the member states. We have the ability, not only to resist initiatives that we do not support [..], but also to set the international agenda”.

However another senior European policymaker gives an unequivocally less upbeat view. In a controversial paper entitled ‘Powerless Europe : Why is the Euro Area Still a Political Dwarf ?’, Lorenzo Bini-Smaghi, the European Central Bank board member in charge of external relations, writes that Europe “has much less influence over international policy issues than would be expected on the basis of its relative economic weight. This is particularly the case in international institutions like the IMF where, as compared to the WTO, Europe is much less influential than the United States”.

Depending on the issues and the fora, the EU is indeed sometimes a leader and sometimes a follower, sometimes a vocal player and sometimes a silent one. While the US exercises leadership over the entire scope of international economic relations, Europe can be characterised as an ‘accidental player’ whose international behaviour lacks consistency.

As a remedy to this situation, a consistent school of thought - illustrated by the quotation of Bini-Smaghi - emphasises the fragmentation of European external representation or the weakness of the governance arrangements in place for coordinating the member states’ positions and advocates a further federalisation of external economic policies. Yet other explanations can be offered to account for a high degree of variance in the external economic role of the EU. To start with, the EU may have more to gain in developing an external economic policy in certain fields than in others. Also, the desirability of a common policy depends on the degree to which the member states agree with each other. It is by no means obvious that more centralisation would systematically result in improving the Europeans’ welfare.

Against this background, our paper is intended to serve several purposes.
  First, to provide a broad-brush overview of the governance arrangements in place, their legal basis and their evolution over time ;
  Second, to offer an analytical framework for organising sector-specific evidence on the governance of external economic relations and to provide normative criteria for choosing among alternatives for governing external governance models ;
  Third, to evaluate the extent of preference heterogeneity across policy domains ;
  Fourth, to assess whether the diversity of existing arrangements can be accounted for within our framework and whether the corresponding choices can be deemed optimal ;
  Fifth, to provide some policy recommendations for improving the effectiveness of the external economic relations of the EU.

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