EU Trade Policy

Finland and the other Member States promote their trade policy interests through the EU. EU trade policy (the common commercial policy of the EU) covers trade in goods and services, the commercial aspects of intellectual property, public procurement, and foreign direct investments.

 

The European Commission published a Communication on its Trade Policy ReviewLink to another website. in February 2021. The communication gives guidance and sets out objectives for EU trade policy in the coming years. Following debates on the communication among the Member States, Council Conclusions will be adopted in May 2021.

Decision-making process on EU trade policy

The direction of EU trade policy is defined in cooperation between the European Commission, the EU Member States (Council), and the European Parliament. 

There is a decisive difference between trade policy and, for example, the EU's common security and defence policy in that trade policy falls almost wholly under the exclusive competence of the Union.

Exclusive competence in trade policy means that the European Commission makes initiatives and proposals on the common commercial policy and negotiates trade agreements with third countries.

The European Commission has a strong and visible position in trade policy, but its work is guided by the Member States. The Council of the European UnionLink to another website. (Council of Ministers), which consists of representatives of the Member States’ governments, decides on negotiation mandates and international agreements as well on various trade policy measures.

After the entry into force of the Treaty of LisbonLink to another website. in 2009, the European Parliament has been more closely involved in trade policy. For example, free trade agreements and legislative measures related to trade policy require approval by not only the Council of Ministers but also by the European Parliament.

Questions concerning trade policy are dealt with in the Trade Policy Committee (TPC)Link to another website., in which all Member States are represented.

The TPC meets regularly also in various expert level configurations (e.g. Services and Investments).

The EU’s bilateral relations with such important trading partners as the United States, the Russian Federation, China, India, Brazil and Japan play a significant role in EU trade policy.

Finland protects its interest in the EU

As a Member State of the EU, Finland promotes its trade policy interests through EU trade policy.  The Ministry for Foreign Affairs is responsible for preparing and coordinating EU trade policy matters in Finland.

The European Commission is obligated to consult the Member States regularly. This means that when the content of EU trade policy is formulated, Member States, including Finland, play an active role at the different stages of preparation.

Finland’s positions for the Trade Policy Committee are prepared in the EU2 sub-committee under the Committee for EU AffairsLink to another website., which consists of representatives from various administrative branches. In addition to this restricted composition, the sub-committee meets in an extended composition, where various interest groups are also represented.

As required, Finland's positions are discussed in the Committee for EU Affairs, which consists of permanent secretaries or their representatives and, ultimately, in the Ministerial Committee on European Union Affairs. The Government is obligated to inform Parliament on significant trade policy issues, as Parliament ultimately confirms Finland's positions. Additionally, when decisions are made in trade negotiations involving sectors that fall under the competence of the Member States, approval by Parliament is required.

World Trade Organization WTO

Photo: WTO

The World Trade Organization (WTO) is an inter-governmental organization with 164 members, which was established in 1995. It is headquartered in Geneva. The WTO’s new Director-General, Nigerian Ngozi Okonjo-Iweala, assumed her functions in March 2021. Her term will last until the end of August 2025.

Multilateral trade negotiations conducted within the WTO play a central role in Finland's trade policy. The European Commission represents the EU Member States in the WTO. In Finland, the Ministry for Foreign Affairs has principal responsibility for WTO negotiations.

The WTO’s three main functions are to serve as a permanent forum for trade negotiations, to administer trade agreements, and to solve trade disputes. WTO members’ trade accounts for approximately 98 per cent of world trade. 

The Doha Development Agenda (DDA) was launched in 2001. It aims, for example, to facilitate market access in agriculture and services, to reduce trade barriers, and to modernise trade rules. A special objective has been to improve developing countries’ opportunities to take part in international trade. To date, progress has been almost non-existent.  In 2013, agreement was reached on the WTO Trade Facilitation Agreement. The Ministerial Conference in 2015 adopted an agreement on eliminating agricultural export subsidies. For now, these remain the only major results reached in WTO negotiations. The Doha Round is practically stalled.

The WTO has been in crisis for a long time. The majority of WTO rules date back to the 1980s and do not correspond to today's reality, the dispute settlement system does not function because the Appellate Body is paralysed, and there is room for improvement in the effectiveness of the WTO’s regular work in the committees and of the monitoring of the implementation of commitments.

WTO reform is among the EU's central goals

In the Communication on a Trade Policy Review, published by the European Commission in February 2021, much attention is paid to the multilateral trading system and the WTO. The first priority is to restore a fully functioning WTO dispute settlement system. Another central priority is to strengthen the WTO's role in negotiations by updating the rules to reflect current realities. It is also important to explore opportunities for integrating plurilateral negotiations into the WTO system.  

Due to the COVID-19 pandemic, the WTO also pays attention to trade and health, and sustainable development, as well as the organization's role in the post-pandemic economic recovery. 

Finland supports the maintenance and strengthening of the multilateral, rules-based trading system. Finland considers that the objectives regarding the WTO reform, presented in the Commission's communication, are steps in the right direction and worthy of support.

The next WTO Ministerial Conference (MC12) will be held in November 2021.  It would be important from the point of view of the credibility of the WTO and the multilateral trading system that the conference could make decisions on the WTO reform.