Trade

The European Union is the world’s biggest trader, accounting for nearly 20 % of global exports and imports. The United States is the EU’s largest trading partner, followed by China and Russia. Two way trade in goods and services across the Atlantic is worth more than €700 billion annually.

The single European market gives freedom of movement for people, goods, services and capital. The European Commission represents all the member states at meetings of the World Trade Organization. The EU strives to promote global trade liberalisation to benefit rich and poor countries alike.

The most visible way to encourage free trade is to reduce, or remove, import duties or quotas on the movement of goods. Domestic or foreign suppliers can then compete openly on price and quality. But there are also hidden or ‘technical’ barriers to trade that governments and companies can use to get an unfair advantage. These unfair trade practices include:
 

• selling goods on foreign markets below cost or domestic price to force producers in these countries out of their home market — so called ‘dumping’,
• paying subsidies from the state budget to companies to give them an unfair advantage in foreign or home markets,
• reserving public contracts for local firms, even though foreign bidders submit better offers,
• disregarding intellectual property rights (trade marks and copyrights) by selling counterfeit goods to undercut the original manufacturer.

While trade is commercially important, the EU believes that trade agreements should not just be based around commercial interests. Trade sanctions can be used as tools of foreign policy when the Union finds itself dealing with a partner who is in breach of human rights or other international standards of behaviour.

The EU is particularly sensitive to the needs and interests of developing countries and has long believed that trade can boost their economic growth and their productivity. Accordingly developing countries enjoy duty-free access or cut-rate tariffs on exports to the EU market for the 7,200 products covered by the EU's generalised system of preferences (GSP). This is a one-way concession which does not require any return from the beneficiary countries. Under the programme informally called “Everything But Arms” the world’s fifty least developed countries have virtually totally free access to the EU market for all their products, except exports of weapons and ammunition.