Coherence for Governance: The European Parliament & EU Trade and Investment Policy Christopher A. Hartwell President, 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!