New Developments in EU's External Trade Policy and Implications for Asia-Europe Relations

Asia-Europe relations have long been overshadowed by the predominance of the United States in the Asian region. The New Asia Strategy and the "Global Europe" strategy of the EU, which are adopted in 1994 and 2006 respectively, however, have changed the posture of the EU towards East Asia. The EU, which was extremely cautious in concluding a full-fledged FTA with non-European countries, has since then been negotiating a number of FTAs with Asian countries. This opens up a series of new opportunities for East Asia to enhance its relationship with the EU. The paper recommends the East Asian countries to pursue a two-track approach in order to fully materialize the potential for strengthening the bilateral relationship.


I. Introduction
The Asia-Europe relationship has undergone a series of ups and downs over the past several centuries since Marco Polo discovered Asia late 13 th century.
More recent bilateral relationship had been influenced by both the dominance of the United States as a hegemonial power and Asia's strong orientation to the United States as the primary destination of its export products. 1) Since the beginning of 1990s, however, there have been a number of positive developments.
The European Union has become more proactive in approaching Asia as a potential partner for discussing global issues, and published a series of concept papers on its strategic approaches to Korea (1993), Asia (1994) and China and Japan (1995), as well as ASEAN (1996). Asia also has responded more progressively to this new initiative of the EU during the 1990s. The 1994 New Asia Strategy paper of the EU, indeed, has marked a meaningful turning point in EU's strategic partnership with Asian countries, culminating to the launch of Asia-Europe Meeting (ASEM) in 1996.
The "Global Europe" strategy of 2006, which is regarded as a new commercial policy concept of the EU, has been the vehicle of EU's most recent external trade policy. Together with newly adopted trade policy instruments, the Global Europe strategy has been put to the centre of EU's renewed interests in global market opening, and more specifically in the Asian region. With the free trade agreement (FTA) being the key instrument, the EU has been attempting to open the markets of Asian countries with stronger vigor than shown in the past. This new EU initiative may be attributed to the fact that Asia since mid-1990s has been regarded as the most dynamic economic region with the potential of becoming the engine of world economic growth, as manifested in the recent publication of the ADB (2011).
This article is an attempt to scrutinize the new developments in EU's common commercial policy (CCP), and draw some meaningful implications for 1) For details, see Park (2004).
Asia. After this introduction, major changes in EU's common policies and especially in its Common Commercial Policy will be overviewed in the context of EU's New Asia Strategy and Global Europe strategy. The article will conclude with an analysis of implications for Asia. In doing so, a main focus is given to the FTA as a main policy instrument of EU's Global Europe strategy.

Evolving Characteristics of the EU' s Common Policies
Today, the EU is considered to be the most advanced economic integration that moves further into a stage of full economic union with common policies covering a comprehensive range of socio-economic areas. True, such integration did not yet bring about a Common Foreign and Security Policy (CFSP) and a Common Justice and Home Affairs (CJHA) stipulated in the Maastricht Treaty that introduced the name "EU" with its entry into force in 1993. These two policies were built on firm political agreement among the member states, but still languish at the level of simple "cooperation" or "concertation".
Meanwhile, the EU made it clear from the beginning that "economic integration" is basically different from "economic cooperation". The key to such distinction lies in lifting "market distortions" as much as possible beyond simply granting national treatment and most favored nation treatment between the member countries. The reasoning behind rectifying market distortions stems from the assumption that a common market -one large, single market-as targeted by the EU, requires member countries to create the same conditions for competition in the intra-EU market. Market distortions reflect differences in institutions or policies between member countries. Consequently, the introduction of "common policy" at the level of the EU is considered inevitable in order to correct possible market distortions.
Concerning the adoption of common policies at the EU level, the following two issues deserve some attention. First, the allocation of competences between the EU and its member countries in economic policies changes with time.
Depending on their characteristics, both national policies and the pattern of policy cooperation between the EU and its member states are subject to change, which makes the EU a "moving target". Second, even under the title of a "common policy" the degree of EU's competence and its role varies by sector.
For instance, agriculture, trade, and monetary policies are the three main fields, over which the EU exercises an exclusive competence representing member states. As far as those three sectors are concerned, economic sovereignty of member countries has been fully transferred to the EU. In other socio-economic fields, the member states still retain their responsibilities when conducting policies, and are supposed to cooperate not only with other member countries but also with the EU as a whole. In terms of EU's competence, trade, agricultural and monetary sectors are considered to be the most advanced for pursuing common policy, whereas diplomacy and security are the fields where policies are least integrated. Thus, the more integration is advanced and the competence of the EU enlarges, the less autonomy member states can exercise in national policies. Such zero-sum relations between the EU and its member states remain a constant source of potential conflict. Considering this, J. Delors, the former President of the European Commission, once argued that more than 80% of economic policies conducted by the individual member states would fall into the realm of EU's common policy. 2) The actual state of economic integration of the EU can therefore be described as "partial economic federation".

New Features of EU' s Common Commercial Policy
Among EU's common policies, the common commercial policy exercises 2) Jacques Delors(1988), Debates of the European Parliament (6 July). direct influences on economic relations between Asia and Europe. The EU itself is the product of regionalism, and does implement a common commercial policy towards third countries. In other words, the EU has, as stated before, an exclusive competence in establishing and carrying out common commercial policy, representing its member states.
Traditionally, the EU has applied differentiated trade policies to different trade partners, 3) which stemmed mainly from the necessity for the EU member states to transform relations with their former colonies into a trade partnership after the latter have attained independence. The EU member states wanted to maintain preferential relations with the newly independent countries, and at the same time needed to comply with GATT/WTO requirements. Such complicated preferential trade agreements have made the EU a target of frequent criticism by the international trading community. To be more specific, the EU, for example, has long maintained an FTA policy containing "aid-cum-trade" with the ACP (African, Caribbean and Pacific) states. Additionally, with the neighboring regions including the Mediterranean region and the Middle East, the EU has concluded or extended many non-reciprocal trade agreements, such as free trade areas and customs unions. Such preferential trade agreements of the EU with developing countries resulted in a complicated multilevel (pyramidal) structure.
On the other hand, trade relations of the EU with developed countries, including the United States and Japan, have been based strictly on the principle of non-discrimination in compliance with WTO rules. Since the Kennedy Round, the 6 th multilateral trade negotiation under GATT, the EU has been playing a leading role in multilateral negotiations along with the United States.
This is attributable to the fact that the EU is one of the largest trade markets in the world and has the European Commission as a single representing body.
Since the beginning of 1990s, although FTAs spread exponentially around the globe, the EU adhered to multilateralism right up to the creation of the WTO.
New Developments in EU's External Trade Policy and Implications for Asia-Europe Relations 9 From the perspective of the EU, FTAs were much too burdensome, given its entanglement in a tense network of preferential arrangements committed already with its traditional trading partners in ACP and Mediterranean region. It was not before the mid 2000s when the EU would turn its strategy around, 4) and started a more proactive FTA policy. As noted before, the "Global Europe" strategy adopted by The New Asia Strategy (NAS), which was adopted in 1994 and upgraded in 2) European Commission (1994).
3) European Commission(1995a). (1996). In this context, the timing of the series of EU's strategy papers towards the new relationship with Asia deserves some attention. Until the beginning of the 1990s, the EU did not have sufficient energy and resources to design and implement a new-generation external economic strategy due to their strong involvement in internal integration and external trade policy programs.

5) European Commission
Internally, the EU finally completed the 1992 Program to officially launch Single European Market, allowing goods, services and various factors of production to move freely within the EU territory. And externally, the EU had been in clinch with the US to complete the UR negotiations under the auspices of GATT, which took place during the period 1986-1993. With these programs completed in the beginning of the 1990s, the EU started taking a proactive stance in its external economic relations, leading eventually to a strongerthan-ever focus on the Asian region.
In reality, East Asia had been attracting growing interest from the In summary, the East Asian region had been regarded as "miracle economies", as the World Bank noted in its study of growth potential of the East Asian countries. 9) All these developments have prompted major trading nations to take a more proactive approach in their bilateral and inter-regional relations with East Asia as a whole, on the one hand, and individual countries in the region, on the other. The adoption of the NAS by the EU was one example of this new development in the 1990s. It is also noteworthy that the EU in its NAS strategy paper acknowledges the unique and predominant role of the US in the field of regional security in East Asia. Thus, the EU's new approach towards East Asia can be interpreted as a balanced pursuit of strengthened political and economic cooperation with this region. 10)

EU' s Global Europe Strategy
The EU has upgraded its Asia Strategy by revising its strategic concepts that are stipulated in the new version of NAS published in 2001. 11) Seeking for 9) World Bank(1993). 10) European Commission(2001), for example, identifies "… strengthening the EU's political and economic presence across the region, and raising this to a level commensurate with the growing global weight of an enlarged EU" as core objectives in its relationship with Asia. 11) European Commission(2001). more aggressive market opening in Asia and elsewhere, the EU adopted the Global Europe Strategy in 2006. European Commission (2006) regards economic growth and job creation, as well as the opportunities offered by these recent changes in international economic circumstances as most important motivation for the EU to launch this Global Europe initiative. With the expectation that this will contribute to the "economic prosperity, social justice and sustainable development," the European Commission adopted this strategy to address the "need to ensure open markets around the world." In fact, the latter is considered as the external policy counterpart of the Lisbon Treaty, which is adopted as an internal instrument to enhance the economic growth and job creation.
Thus the Global Europe Strategy is targeting at progressive market opening as a policy instrument ensuring productivity gains, growth and job creation.
Given the level of liberalization of the world economy as whole heightened through a series of multilateral trade negotiation, the EU has shown stronger interest in (i) reducing non-tariff barriers (NTBs), (ii) securing access to resources, and (iii) properly addressing new areas of growth, such as intellectual property rights, services, investment, public procurement and competition.
The intention of the EU is to promote high-level FTAs, and is especially keen to remove non-tariff barriers still maintained in markets of the new FTA partners. In contrast to the development of tariffs that had been reduced to a great extent through a series of international trade negotiations in the past, many NTBs are still frequently used to protect domestic markets. In reality,

East Asia in EU' s Global Europe Strategy
Based on the concepts stipulated in the "Global Europe" strategy, the EU An FTA among Korea, Japan, and China has long been discussed and feasibility-studied through the process of government-business-academia forums.

Furthermore, two major bilateral FTAs are under serious elaboration between
Korea and China on the one side, and between Korea and Japan on the other.
Considering these new developments in East Asia, an ASEAN(countries)-EU FTA would have, if successfully concluded, the potential to pave the fundament for establishing a "Grand East Asia-Europe Free Trade Area" from a long-term perspective. In this prospective evolution of regionalism in Asia and Europe, the EU is expected to function as a bridge between the Southeast and Northeast Asian region.

IV. Remaining Issues
The European Union, which started its regional integration with six founding members in the 1950s, has grown to a 27-member economic integration body.
Over the process of the past more than fifty years, the policy areas falling into the competence of the Community have continuously expanded, with the commercial, agricultural and monetary policies being the most integrated policy areas. These remarkable achievements notwithstanding, a variety of policies are still in the hands of member states. Notably, the EU so far has not been successful in adopting security and diplomacy, as well as fiscal policy area as common policies. When approaching the European Union, therefore, East Asian countries are well advised to adopt a dual approach. They have to devise policy concepts both towards the EU itself and to individual member countries, depending on the characteristics of the involved policies.
It is observed also that promoting exchanges of young people, and especially of university students is instrumental in shaping, enhancing and deepening Asia-Europe relations in the long run. In order to do so, it would be a highest priority to facilitate active interactions between research institutes in East Asia and Europe, thereby promoting the development of joint projects. European embassies, chambers of commerce and other public organizations residing in East Asian countries and their Asian counterparts residing in Europe could play an instrumental role in stimulating such mutual cooperation.
It will also be an excellent way for strengthening Asia-Europe relations that East Asian governments and public corporations intensify their efforts to cooperate with their European counterparts in EU's common policies. In fact, such common policies of the EU as SMEs policies, R&D sectors, government procurement, environment and energy and so forth are more or less open for third-countries' participation. An increasing R&D cooperation of Asian universities and firms with their European partners within the framework of EU's 7 th Framework Program (FP 7) is a good example of this kind.
All in all, East Asia needs to make a full use of new opportunities opened up by both the new developments of EU's commercial policy and EU's more progressive approach towards East Asia.
New Developments in EU's External Trade Policy and Implications for Asia-Europe Relations 17