Coherence for Governance:The European Parliament &

EU Trade and Investment Policy

Christopher A. HartwellPresident, CASE

September 23, 2014

Overview

• Policy Coherence in trade and investment policy is a difficult goal for any government• EU has been no exception, with unclear

objectives in external policies (especially in regards to trade)• This paper suggests a way to create policy

coherence around a specific theme: “coherence for governance”• European Parliament has a dedicated role to

play in ensuring coherence at the beginning and end of the coherence process

Opportunities and Obstacles in Policy Coherence

• Policy coherence is a difficult concept to measure• Refers to both process (institutional coordination)

and outcomes (policies that result are harmonized)

• Coherence falls along several axes:• Horizontal: coordination between target policy (say,

aid) and non-target policies• Vertical: coordination across actors or groups (i.e.

the EU)• Internal: consistency across modalities (grants, aid,

technical assistance)• Multilateral: consistency across international

financial institutions

EU Experience with Policy Coherence: PCD• Policy coherence for development: a first attempt

to coordinate EU external policies• Original conception was EU member states

coordinating national development policies with each other (vertical coherence)• With OECD prodding and UN guidance (MDGs),

shift towards horizontal coherence• Inclusion in Lisbon Treaty

• With legal basis for PCD established, problem has shifted to implementation/administration• EU’s double role as implementer of its own

development policies and as the coordinator of member states’ policies complicates implementation

Coherence in Trade and Investment Policy: An Added Challenge• Trade policy is always difficult for coherence, because little

sense of what it is for:• Liberalization in a pure sense?• Enabling market access for specific export sectors?• Protecting domestic industries?• Ease access to the single market for developing countries?

• Benefits of trade dispersed, costs concentrated• Political lobbying rife in the trade arena

• Also several modalities for undertaking trade policy:• Multilateral• Regional• Bilateral• Unilateral

• Investment policy in EU less fragmented in concept but more in practice• Idea of shared competence

EU Trade/Investment Policy: Intended Incoherence?• From liberalization

(1950s/60s) to protectionism (1970s/80s) to staunch multilateralism (1990s) to bilateral focus (2000s)

• Common Agricultural Policy an example of the difficulties in defining a goal/coherence for trade policy• Acknowledged that

removing CAP would immensely benefit developing countries

• Is policy coherence with CAP maintaining it rather than working around it?

Introducing Governance:A Nucleus for Coherence

• Overwhelming economic evidence of the importance of governance – “institutions matter”• Consensus within the EU on the need for

governance improvements• “Trade in itself is not sufficient to secure

development. Good governance and sound domestic policies are needed to maximize the benefits of trade-induced growth and make it work for inclusive and sustainable growth” (EC 2013).

• Governance is not exclusively democracy promotion

Benefits of CFG

• All member states behind at least the concept already• No one is arguing that poorer

governance/less investor protection will lead to growth

• CFG will help maximize trade liberalization gains in a shorter time-frame…

• …and ensure EU monies are spent in a more cost-effective way

• Perhaps most importantly, governance conditionality already tried out with the EU• Economic Partnership Agreements

(EPAs)• CEE accession to the EU

Difficulties with CFG

• EU’s own complicated institutional framework • “Do as I say, not as I do.”

Difficulties with CFG (II)• Even with EU policy coherence, there might not be the

results needed• Many variables take over after coherence is even achieved• Coherence in the EU doesn’t mean coherence in the partner

country• How can one realistically sanction or encourage when things

go off track?• However, empirical evidence that results are better with

coherence than without it

• Partner countries may not accept conditionality• Singapore issues and EPAs were already a target for anti-

globalization activists• Self-selection of countries can alleviate this issue somewhat

The Role of the European Parliament in CFG

Elevation of EP in trade policy in recent years means it can:• Support political

commitment and issuing policy statements• Ensure coherency in trade

and investment negotiations• Oversee and monitor end

products for CFG

1. Political commitment

and policy statements

2. Policy coordination mechanisms

3. Systems for monitoring, analysis and

reporting

The Role of the European Parliament in CFG (II)

• Already a shift in political commitment towards governance and support of PCD• Singapore issues and EPAs need more operational guidance for

coherency, which EP can provide

• EP can verify that governance is a part of any trade negotiation or draft treaty• While politics could manifest itself for MEPs on trade or

investment issues, governance should be relatively more insulated

• Less of a sanctioning than a refusal

• Once CFG is adopted, EP can play a role in monitoring governance changes from the partner country side

Conclusions

• Coherence for Governance is a way to bring policy coherence to EU trade and investment policies…• …and attempt to improve utilization of trade and

investment agreements in partner countries.• The European Parliament has a large role to play

as overseer and guarantor of this consistency• Implemented correctly, this form of coherence

can have great rewards for both the EU and partner countries

Thank you for your attention!

Dziękuję!

Merci!