The Trade Barriers Regulation: The European Union as a Player in the Globalisation Game

The Trade Barriers Regulation:The European Union as a

Player in the Globalisation Game

Candido Garcia Molyneux*

Abstract: The Trade Barriers Regulation can be seen as an example of the EuropeanUnion’s role in the international trading system. A neoliberal wave of thoughtnotwithstanding, countries continue to be characterised by the existence of differentmarket economy models. From an external point of view, this implies a need for theEU to influence strongly the developments of the international trading legalframework. Unfair trade instruments such as the Trade Barriers Regulation, can beone way of doing this. From a domestic point of view, market diversity within the EUimplies a constant conflict during the definition of EU trade interests. The shiftingbalance between domestic diversity and the need for external efficiency has lead to aCommon Commercial Policy characterised by an ambiguous system of multilevelgovernance and second-best outcomes as reflected in the Trade Barriers Regulation.

I Introduction

This paper tries to make the following points. First, despite globalisation, individualcountries continue to have market economies embedded in different domestic socio-economic structures. These diverse domestic structures exist at a world, as well as at aregional, level, such as the European Union. Neoliberalism, as reflected in the WTOor the Single Market Initiative, fails to create a uniform worldwide market. Thus,coping with globalisation requires dealing with this diversity. Second, globalisation isnot simply an economic, technological or neutral phenomenon but is instead, to acertain extent, also the result of political will and law. Globalisation impliesestablishing the rules under which international trade can take place. Unfair tradeinstruments such as market access instruments, such as the United States’ Section 301of the 1974 Trade Act,1 or the European Union’s Trade Barriers Regulation,2 can playan important role in defining the rules of the system. Third, the different domestic

European Law Journal, Vol. 5, No. 4, December 1999, pp. 375–418© Blackwell Publishers Ltd. 1999, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA

* Research Fellow, Department of Law, European University Institute. I would like to thank ProfessorFrancis Snyder and Petros Sourmelis for their helpful comments.

1 Section 301 of the Trade Act of 1974, Pub. L. No. 93–618, S 301, 88 Stat. 144 (1974), as amended by theTrade Act of 1979 Pub. L. 96–39, the Trade and Tariff Act of 1984, Pub L. 98–573, the Omnibus Tradeand Competitiveness Act of 1988, Pub. L. 100–418, 102 Stat. 1107 (1988), and the Uruguay RoundAgreements Act, Pub. L. 103–465, 108 Stat. 4809 (1994); 19 U.S.C. 2411 (1996)

2 Council Regulation (EC) No 3286/94, O.J. 31.12.94 L 349/71, as amended for technical reasons byCouncil Regulation (EC) No 356/95, O.J. 23.2.95 L41/3.

structures, and not just the trading partner’s comparative economic power, affect theability to influence the international system. In this sense, the persistence of a varietyof market economies within the European Union, counterbalanced with the need toact efficiently in international trade, lead to a Common Commercial Policy character-ised by an ambiguous system of multilevel governance and second-best outcomes.

With the purpose of arguing the previous points, the paper is divided into two mainparts. I start with a theoretical section where I argue (a) the existence of differentmarket economies both at world and at European Union level, (b) the use of tradeinstruments to attempt to win the globalisation game by imposing domestic standardson foreign countries and (c) the Common Commercial Policy as a shifting balancebetween domestic diversity and the need for external efficiency. Thereafter, I analysethe Community’s Trade Barrier Regulation and its practice as an example of theCommon Commercial Policy in world trade. In Part IV, I draw some conclusions.

II Theoretical Framework

A Globalisation and Diversity

Despite globalisation, the world is divided into a variety of market economiesembedded in different domestic structures.3 The concept of structure referred to in thisessay describes the stress in the relations between business and the state as well as thecontradiction between organised capital and organised labour.4 This approachanalyses not only the strengths and weaknesses of the different governments but alsothe organisation or plurality of their markets. It focuses, first, on how the market isorganised. It takes into account how industry is organised in a specific country, therelationship between export-led and domestic industry, the relationship betweenindustry and finance and the relation between business and labour. Hence, it looks atwhether the market is characterised by the existence of strong trade unions, strong orweak industrial trade associations, the capacity of banks to control the system, thecapacity of the economic actors to reach a consensus, etc.. Secondly, it looks at theinteraction between the state and the market. Thus, it looks at the state and its abilityto interfere with business. It analyses whether a given state has a ‘governmentintervention’ or a ‘hands off’ tradition, whether it has a strong government capable ofinfluencing the market or not, etc.. States differ in terms of the reigning politicalbeliefs that render particular types of state involvement in the market legitimate.5 Allstates intervene in the market, but they do so in very different ways. Indeed, states mayinfluence, regulate, mediate, distribute, redistribute, produce and plan the market.6

Furthermore, some countries will have stronger states than others and, thus,

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376 © Blackwell Publishers Ltd. 1999

3 Cf, S. Berger, ‘Introduction’, in S. Berger and R. Dore (eds.), National Diversity and Global Capitalism,(Cornell University P 1996), 1–25; R. Boyer, ‘The Convergence Hypothesis Revisited: Globalisation butStill the Century of Nations?’, in S. Berger and R. Dore (eds.), National Diversity and Global Capitalism,(Cornell University Press 1996), 29–59; Fligstein/Freeland, ‘Theoretical and Comparative Perspectives onCorporate Organisation’, (1995) 21 Annual Review of Sociology 21–43.

4 P J. Katzenstein, ‘Conclusion: Domestic Structures and Strategies of Foreign Economic Policy’, in P.J.Katzenstein (ed.), Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States, (The University of Wisconsin P 1978), 295–336, 333.

5 Ikenberry, ‘Conclusion: An Institutional Approach to American Foreign Economic Policy’, (1988) 42: 1International Organzation 219–242, 228.

6 Biersteker, ‘Reducing the Role of the State in the Economy: A Conceptual Exploration of IMF andWorld Bank Prescriptions’, (1990) 34 International Studies Quarterly 477–492, 480.

government intervention will be both more likely and easier. This will depend both onthe market and the state.7

A structuralist point of view implies a critical approach to the normative idea offree trade by rejecting a-historical and structure-blind assumptions and asserting theprimacy of social, economic and political structures.8

Free trade is an extension of the regime of free markets to the international sector.It proscribes that all countries will gain economically if each first specialises in theproduction of the goods and materials in which it has a comparative or absoluteadvantage.9 In the absence of distorting constraints, individuals will engage ineconomic exchange only if it brings them benefit. Under the theory of free trade, themarket is considered to be a device through which individuals voluntarily interact intheir capacities as producers and consumers to exchange goods and services. Price isthe mechanism which transmits information to both consumers and producers,enabling them, through supply and demand, to determine exactly what is producedand in what quantity. Thus, without central direction, millions of individual economicdecisions are co-ordinated to utilise resources in the most efficient manner possible todetermine optimum production.10

Hence, the idea of free trade requires the separation of economics from politics. Nopolitics should interfere in the market process. However, the extent to which suchclassical economic theory is really apolitical is doubtful.11 The free market economytries to subject everything to the rule of profit and considers labour, land and moneyas nothing more than a commodity. What distinguishes the self-regulating marketfrom any other economic system is that it subjects the whole society to its own rules.The economy does not adapt to the society but rather, the society must adapt to therule of the market.12

Yet, in fact, markets are neither neutral nor exist in isolation. First, markets are asource of political power, and thus affect political life. Political life is entangled withthe workings of markets and market institutions.13 Second, markets are embedded inpolitical and social institutions. Thus, a global market does not result from theelimination of barriers. The systematic elimination of tariffs and non-tariff tradebarriers, known as negative integration, ruled by the neoliberal ideology, does notcreate a unified economic space because it fails to address the importance of thepolitical and social peculiarities in which market exchange takes place.14

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7 A good example of the different ways through which a government can influence the market is thepractice of administrative guidelines as used in Japan. Such guidelines are not considered to be law inforce and are not legally binding. This practice has been examined under different GATT disputesettlement panels. Cf, Japan- Restrictions on Imports of Certain Agricultural Products, L/6253, 22 March1988, BISD 35 S/163; Japan, Trade in Semi-Conductors, L/6309, 24 March 1988, BISD 35 S/116.

8 Hix, ‘The Study of the European Community: The Challenge of Comparative Politics’, (1994) 17 WestEuropean Politics 1–30, 9.

9 D. Ricardo, The Principles of Political Economy and Taxation, (I. M. Dent & Sons 1973), 77–93.10 R. D. McKinlay and R. Little, Global Problems and World Order, (Frances Printer 1986), 29.11 Cf, G. Myrdal, The Political Element in the Development of Economic Theory, (Routledge & Kegan Paul 2nd

1955); C. B. Macpherson, The Political Theory of Possessive Individualism: Hobbes to Locke, (OUP 1964).12 K. Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, (Beacon P 1957).

On the different visions of market society, see A. O. Hirshman, Rival Views of Market Society, in RivalViews of Market Society and Other Recent Essays, (Viking 1986), 105–141.

13 J. Zysman, Government, Markets and Growth: Financial Systems and the Politics of Industrial Change,(Cornell University P 1983), 17.

14 Grahl/Teague, ‘The Cost of Neo-Liberal Europe’, (1989) 174 New Left Review 33–50, 41.

Capitalism may be defined by the existence of free markets and private propertyrights. However, economic action is shaped not just by markets and private property butalso by a wide range of institutions. The market is just one institutional device amongothers which co-ordinate the governance of a society.15 There is no single or uniquemethod of organising capitalist economies. Markets and property rights are always partof, and modified by, local institutional contexts which are not economic. These socialand political institutions surrounding markets and property rights are the sources of thedifferences between capitalist economies.16 Thus, it is not clear that the globalisationprocess brings uniformity among nations.17 Production methods, industrial relations,technology processes, taxation and economic policy styles remain very specific to eachstate.18 In fact, increased interdependence implies the growing significance of domesticstructural differences.19 The reduction of barriers, in the form of tariffs or differentgovernment interventions in the market, has highlighted the importance of the differentsocio-economic structures in which national markets are rooted.

Following Katzenstein, it is possible to divide countries into four types with regardto their socio-economic structures, as in Figure 1.20



15 J. R. Hollingsworth and R. Boyer, ‘Coordination of Economic Actors and Social Systems of Production’,in J. R. Hollingsworth and R. Boyer (eds.), Contemporary Capitalism: The Embeddeness of Institutions,(Cambridge University P. 1997), 1–48.

16 J. R Hollingsworth, P. Schmitter amd W. Streeck, ‘Capitalism, Sectors, Institutions and Performance’, inJ. R. Hollingsworth, P. Schmitter and W. Streeck (eds.), Governing Capitalist Economies: Performance &Control of Economic Sectors, (Oxford University P 1994).3–17, 5.

17 R. Boyer and D. Drache, ‘Introduction’, in R. Boyer and D. Drache (eds.), States Against Markets: TheLimits of Globalisation, (Routledge 1996), 1–26.

18 In this sense, the existence of different economic models and the controversy of which one should befollowed was strongly highlighted by the press that reported on the G8 Economic Summit held in Denverin June 1997. Cf, E. Todd, ‘The French Exception’, Newsweek, 23 June, 1997, at 26; M. Hirsh, ‘LookingUpward’, Newsweek, June 23, 1997, at 12; C. Dickey, ‘Sun and Synapses’, Newsweek, June 23, 1997, at24; L. Uchitelle, ‘America’s Economy: Could a Model for the World Be Oversold?’, International HeraldTribune, Monday, June 23 1997.

19 Ruggie, ‘Trade, Protectionism and the Future of Welfare Capitalism’, (1994) 48 Journal of InternationalAffairs 1–11, 7.

20 P. Katzenstein, op cit n 4, at 324; cf, A. Shonfield, Modern Capitalism: The Changing Balance of Publicand Private Power, (Oxford University P 2nd 1970). Huelshoff uses a similar classification though fordifferent methodological purposes. Huelshoff, ‘Domestic Politics and Dynamic Issue Linkage: AReformulation of Integration Theory’, (1994) 38 International Studies Quarterly 255–279, 262–266; W.

Figure 1.

This model is very abstract one as countries cannot simply be placed in one category.However, for the sake of clarity, it is useful to classify countries in four categories.

Types 1 and 2 are countries which tend towards a corporativist system characterisedby the existence of a highly organised market. These countries are likely to have strongand highly organised trade unions, strong trade and industrial associations, a verystrong banking system, itself capable of financing and controlling industry, a strongtendency towards consensus within industrial relations, the reliance on technicallycorrect solutions, a strong and fluid dialogue between government and industry, etc..Types 1 and 2 differ from each other with regard to the strength of their governments.While under Type 1, the government will be strongly interventionist, countries fallingunder Type 2 classification will be characterised by governments with a traditional‘hands off’ approach to the economy.

An example of Type 1 would be Japan.21 The Japanese market illustrates the extentto which international trade is based not only on exchange rates set by capital marketsand legal barriers set by governments, but also by concrete relationships among thedifferent market actors who actually make the buying and selling decisions.22 Thepattern of Japan as a cohesive market based on consensual ordering has been reflectedin the existence of complex networks of long term contractual relationships and thepersuasive reliance on relational contracting, the keiretsu.23 The relevance of thesesocial and economic networks is highlighted by the fact that they take place in asystem where the Japanese government delegates most of its regulation power toprivate market actors.24



Streeck and P. Schmitter, Community, Market, State- and Associations: The Prospective Contribution ofInterest Governance to Social Order, (EUI Working Paper No 94 1984). Another way of understandingmarket diversity is by focusing on the three elements which are necessary for the existence of a marketeconomy: property rights, governance structures and rules of exchange. Property rights refer to the legaldefinitions of ownership. They define the limits between the public and the private. Governance structuresrefer to laws and informal practices that set the boundaries of competition and co-operation between thedifferent market actors. Finally, rules of exchange facilitate trade by establishing the rules under whichtransactions are undertaken. In this sense, uniformity has only taken place at the level of rules ofexchange and slightly at that of property rights but not at the level of governance. Fligstein/Drita, ‘Howto Make a Market: Reflections on the Attempt to Create a Single Market in the European Union’, (1996)102:1 American Journal of Sociology 1–33.

21 P. J. Katzenstein, ‘Japan, Switzerland of the Far East?’, in Inoguchi and Okimoto (eds.), The PoliticalEconomy of Japan. Volume II: The Changing International Context, 275–304 (Stanford University P1988), 275–304.

22 M. Gerlach, ‘Keiretsu Organisation in the Japanese Economy Analysis and Trade Implications’, in L.Tyson and J. Zysman (eds.), Politics and Productivity: How Japan’s Development Strategy Works, (HarperBusiness 1989), 141–176, 141.

23 Haley, ‘Luck, Law, Culture and Trade: The Intractability of United States-Japan Trade Conflict’, (1989) 22Cornell Int’l L. J. 403–423, 416; cf, J. McMillan, ‘Why Does Japan Resist Foreign Market-OpeningPressure?’, in J. N. Bhagwati and R. E. Hudec (eds.), Fair Trade and Harmonization: Prerequisites for FreeTrade?, (The MIT P 1996) (Volume I), 515–541; Myerson, ‘Barriers to Trade in Japan: The KeiretsuSystem-Problems and Prospects’, (1992) 24 Int’l L. & Politics 1107–1113; Bader, ‘The Keiretsu System ofJapan: Its Steadfast Existence Despite Heightened Foreign and Domestic Pressure for Dissolution’, (1994)27 Cornell Int’ L. J. 365–386. As to the historical roots of the keiretsu see, K. Miyashita and D. Russell,Keiretsu: Inside the Hidden Japanese Conglomerates, (McGraw-Hill 1994), 21–33; J Fallows, Looking at theSun: The Rise of the New East Asian Economic and Political System, (Pantheon Books 1994), 72–116.

24 Upham, ‘Privatized Regulation: Japanese Regulatory Style in Comparative and International Perspective’,(1996) 20:2 Fordham Int’l L. J. 396–511. The great difference between Japan and the Europeancorporativist systems is that while in the latter the role of market actors has a public sanction in Japanregulation is privatised and many times secret. Idem, at 495.

A good example of Type 2 would be Germany. The German market economy ischaracterised by the strategic interrelationship between a non-interventionistgovernment and a strong organised market.25 In Germany, the government seeks toplay a limited role within a market embedded in a framework of corporateinstitutions which provide for the participation of major social groups.26 While itseconomic ideology emphasises a government ‘hands off ’ approach to the market,German officials and business people take for granted a degree of industrial andinter-firm co-operation which cannot be found in other Western capitalist coun-tries.27 Generally, examples of countries falling under Types 1 and 2 are smallEuropean countries, such as the Netherlands, Denmark, Sweden, Finland, Austriaand Belgium.28

Countries falling under Type 3 classification are characterised by the paternalisticrelationship between a strong state and its plural and disorganised market. Thesecountries, such as France, Spain or Italy, are countries with a strong governmentinterventionist tradition, which have a market characterised by the existence of weaktrade unions, or trade unions which are not taken into account, by a weak bankingsystem, by weak trade associations and by the incapacity of industrial actors to reachsolutions through consensus.29 The distinguishing feature of this model is theintervention of the central government; exercising a permanent function with theobject of guiding a modernisation programme which rarely reflects a compromiseactually achieved between its private market actors.30

Pluralist Anglo-Saxon countries like the United Kingdom and the United States fallunder Type 4. These countries are characterised by the weakness of their governmentsand by a plural, unorganised market. Trade unions tend to be very weak, there is aconstant lack of strong trade associations, because of the weakness of the bankingsystem, industry tends to finance itself through the stock market, there are difficult



25 On the domestic structures of Germany, see K. Dyson, ‘The State, Banks and Industry: The WestGerman Case’, in A. Cox (ed.), The State, Finance and Industry, (Wheatsheaf 1986), 118–141; W. Streeck,‘German Capitalism: Does it Exist? Can it Survive?’, in C. Crouch and W. Streeck (eds.), The PoliticalEconomy of Modern Capitalism: Mapping Convergence and Diversity, (Sage Publications 1997), 33–54; P.Kurzer and C. S. Allen, ‘United Europe and Social Democracy: The EC, West Germany and its ThreeSmall Neighbours’, in C. F. Lankovski (ed.), Germany and the European Community: Beyond Hegemonyand Containment?, (St. Martin Press 1993), 102–123; R. Deeg, German Banks and Industrial Finance inthe 1990s, (Wissenschaftszentrum Berlin Fur Sozialforschung FS I 96–323 1996).

26 B. Dankbaar, ‘Sectoral Governance in the Automobile Industries of Germany, Great Britain and France’,in op cit n 16, at 156–182, 177; cf, S. Broyer, The Social Market Economy: Birth of an Economic Style,(Wissenschaftszentrum Berlin Fur Sozialforschung, FS I 96–318 (1996), 14.

27 T. R. Howell and G. I. Hume, ‘Germany’, in T. Howell, A. Wolff, B. Bartlett and M. Gadbaw (eds.),Conflict Among Nations: Trade Policies in the 1990s, (Westview Press 1992), 145–203, 150.

28 P. J. Katzenstein, Small States in World Markets: Industrial Policy in Europe, (Cornell University P 1985).29 On the domestic structures of France, see P. d’Iribarne, ‘A Check to Enlightened Capitalism’, in op cit n

16, at 161–173; J. Hayward, The State and the Market Economy: Industrial Patriotism and EconomicIntervention in France, (Wheatsheaf 1986); C. Howell, ‘French Socialism and the Transformation ofIndustrial Relations since 1981’, in A. daley (ed.), The Miterrand Era: Policy Alternatives and PoliticalMobilization in France, (New York University P 1996)141–160; V. A. Schmidt, ‘An End to FrenchEconomic Exceptionalism? The Transformation of Business Under Mitterrand’, in idem, at 117–140; W.J. Adams, Restructuring the French Economy: Government and the Rise of Market Competition since WorldWar II, (The Brookings Institution 1989); J. Zysman, Political Strategies of Industrial Order: State,Market and Industry in France, (University of California P 1977).

30 R. Boyer, ‘French Statism at a Crossroads’, in op cit n 16, at 71–101,78.

relations between industry and government and, in general, industrial actors areunlikely to reach a consensus.31

These different socio-economic structures, of which national markets are a part,result from different historical experiences. Societies’ economic organisations andarrangements are path dependent. The way in which the state and society are actuallylinked is historically conditioned.32 The capacity of the state in a capitalist economy tomobilise and use resources effectively is conditioned by ideologies and institutions, andat a deeper level, by the historical and structural factors that have shaped thedevelopment of these ideologies and institutions.33 The way market actors interacteven without the intervention of the state, depends on their expectations. Suchexpectations, however, are rooted in their past experiences. Thus, although identicaltechnologies and market conditions make for similarities in both the industrialorganisation and the governance of sectors across countries, there are still significantdifferences due to different past experiences.34

It is important to distinguish between governmental policies and socio-economicstructures. While, to a certain extent, it will be possible to change and control thedifferent policies of a state from the external sphere, it will be much more difficult tochange the structures of such a country that are firmly and historically rooted. Thestructures which rule the organisation of the market and strongly condition the role ofthe state in the market will have to undergo a much slower erosion process. Although itis possible that some types will be better off than others, countries will not be able toadapt themselves smoothly to different domestic structures.35 Thus, globalisation ischaracterised both by homogeneity and diversity. Globalisation does not create acompletely homogenous, world-wide market-place but instead, while enforcing a thinAnglo-Saxon market uniformity, puts different market frameworks together.36



31 On the domestic structures of the United States, cf, J. Fallows, More Like Us: Making America GreatAgain, (Houghton Mifflin Company 1989); J. A. Hart, Rival Capitalists: International Competitiveness inthe United States, Japan and Western Europe, (Cornell University Press 1992); S.M. Lipset, AmericanExceptionalism: A Double-Edge Sword, (W.W. Norton & Company 1996); R.V. Denenberg, UnderstandingAmerican Politics, (Fontana Press 1992); Hansen, ‘Industrial Policy and Corporativism in the AmericanStates’, (1989) 2:2 Governance 172–197; A. Wolf, ‘The Failure of American Trade Policy’, in op cit n 27,469–526.

32 L Hancher and M. Moran, ‘Organising Regulatory Space’, in L. Hancher and M. Moran (eds.),Capitalism, Culture and Economic Regulation, (Clarendon Press 1989) 271–299, 280.

33 Cf, K Dyson, The State Tradition in Western Europe, (Martin Robertson 1980); J. Zysman, HowInstitutions Create Historically Rooted Trajectories of Growth, (1994) 3(1) Industrial & Corporate Change243–283, 245.

34 C. Crouch, ‘Sharing Public Space: States and Organised Interests in Western Europe’, in J. Hall, (ed.),States in History, (Basil Blackwell 1986), 177–210; cf, L. Hartz, The Liberal Tradition in America,(Harcourt, Brace & World 1955)(where the author analyzes the U.S.’ liberal economic system as a resultof its historical process of development).

35 Cf, M Albert, Capitalism versus Capitalism: How America’s Obsession with Individual Achievement andShort Term Profit Had Led it to the Brink of Collapse, (Four Wall Eight Windows 1993); Hodges/Woolcock, ‘Atlantic Capitalism versus Rhine Capitalism in the European Community’, (1993) 16 WesternEuropean Politics 329–344, (arguing the existence of a competition between different capitalist models inwhich one model will finally impose itself).

36 Thin globalisation refers to the idea of a superficial uniformity underneath which different nationalcharacteristics subsist. Professor D. Trubeck, ‘Social Justice After Globalisation: The Case of SocialEurope’, Paper presented in the Seminar Globalisation and the Law, European University Institute(November 1996); Jones, ‘Capitalism, Globalisation and Rule of Law: An Alternative Trajectory of LegalChange in China’, (1994) 3 Social & Legal Studies 195–221, 202–203. Thin Anglo-Saxon uniformity

Globalisation makes the interaction between different systems possible.37

During the last years, as a result of the increasing impact of globalisation and theSingle Market Initiative (SMI), at a regional level on the different domestic spheres ofthe European Member States, there have been discussions on whether the future ofEurope may be characterised by the convergence or divergence of the Member States’political economies.38 Indeed, the SMI was intended to attain a unified economic spacesimilar to that of the United States, by means of tackling trade barriers.39

Recognising that there might be some convergence should not prevent us fromacknowledging the coexistence of different economic cultures within the EuropeanCommunity.40 The assault on trade barriers without taking into account the social andeconomic structures within which markets are embedded was simply not enough toconstruct a uniform European market. While countries which have traditionally put anemphasis on government intervention may have attempted to copy the corporativistmarket economies in order to cope with globalisation and the SMI,41 it is doubtfulwhether such strategies may succeed as economic performance is not the only standardand industrial organisation is nothing more than a reflection of society.42 Instead, it ismore likely that, as a result of the liberalisation wave, all Member States will maintaincertain differences while adopting a certain number of elements from the Anglo-Saxonmarket economies.43



prevails for two reasons. First, in building an international trade regime, negative integration, thereduction of trade barriers, is always easier than positive integration, the adoption of common marketstructures. The Anglo-Saxon model, characterised by government decentralisation and market pluralismis the minimum common denominator of all market systems. Second, the United States has been the onlytrading partner with both the economic muscle and the ability to act efficiently in the internationaltrading system so as to impose the rules of the game. Though, even for the United States, this has onlybeen to a limited extent.

37 Cerny, ‘Globalisation and Other Stories: The Search for a New Paradigm for International Relations’,(1996) International Journal 617–635, 625; R. Boyer, ‘The Convergence Hypothesis Revisited:Globalisation but Still the Century of Nations?’, in op cit n 3, at 29–59, 51. In this sense, multinationalcorporations, considered to be by many authors as main actors in the globalisation process, continue tohave their patterns of internal governance and financing determined by their background nationalities.Pauly/Reich, ‘National Structures and Multinational Corporate Behaviour: Enduring Differences in theAge of Globalisation’, (1997) 51(1) International Organisation 1–30, 4.

38 C. Crouch and W. Streeck, ‘Introduction: The Future of Capitalist Diversity’, in op cit n 25, at 1–18;Political Economy of Modern Capitalism: Mapping Convergence and Diversity, 1–18 (Colin Crouch &Wolfgang Streeck Eds., Sage Publications 1997); J. R. Hollingsworth and R. Boyer, ‘Coordination ofEconomic Actors and Social Systems of Production’, in J. R. Hollingsworth & R. Boyer (eds.),Contemporary Capitalism: The Embeddeness of Institutions, (Cambridge University P 1997) 1–48.

39 Cf, Grahl/Teague, loc cit n 14, at 34; Fligstein/Drita, loc cit n 20.40 Dyson, ‘Cultural Issues and the European Single Market: Barriers to Trade and Shifting Attitudes’,

(1993) 64 Political Quarterly 84–98; Wilks, ‘Regulatory Compliance and Capitalist Diversity in Europe’,(1996) 3(4) J. European Public Policy 536–559, 549; R. Deeg and S. Perez, ‘International Capital Mobilityand Domestic Institutions: Corporate Finance and Governance in Four European Cases’, PaperPresented at the Conference on The Political Economy of Corporate Governance in Japan and Europe,Robert Schuman Centre, European University Institute 10–11 June 1999.

41 C. Crouch, Industrial Relations and European State Tradition, (Clarendon Press 1993), 345.42 A. Boltho, ‘Has France Converged on Germany? Policies and Institutions since 1958’, in op cit n 3, at

89–104; Boyer, op cit n 30, at 92.43 Cf, Rhodes/van Apeldoorn, ‘Capital Unbound? The Transformation of European Corporate

Governance’, (1998) 5(3) J. European Public Policy 406–427.

B Unfair trade instruments in the global diversity

The persistence of different domestic socio-economic structures within the globalis-ation process results in a constant exchange of goods, services and capital betweendifferent market frameworks. As the flow of trade and investment has a great impacton the domestic life of each trading partner and yet, domestic socio-economic struc-tures are not easily subject to change, states try to protect their domestic spheres bymeans of participating in bilateral and multilateral negotiations and by usingunilateral unfair trade instruments in order to influence the rules of the global market.Globalisation becomes a cut-throat struggle in which the trading partners try toprotect themselves by imposing on others policies which accord with their domesticstructures.44 Thus, to a certain extent, unfair trade instruments, in their conceptions offairness, reflect the different socio-economic frameworks in which markets areembedded.

Unfair trade instruments, such as market access instruments, are rationalised ongrounds of fairness. The trading system in place since the end of World War II is notbased on the idea of unilateral free trade but rather on a cosmopolitan free tradeidea.45 Free trade must be reciprocal and under certain rules. Free trade is argued notto mean free for all but rather free and fair trade.46 Fair trade is supposed to beconcerned with the equitable treatment of all participants in international trade.47 Alltrade participants should be treated in the same way. Thus, it is related to the notion ofa level playing field. Competition in international trade should be played according toa set of rules which all participants must share.

However, societies and their economic systems differ so much that what seems to beunfair for one state may seem perfectly reasonable to another.48 Hence, it is difficult toagree to a uniform set of market rules. This interdependence between different economicsystems may cause harm and economic dislocations to some. Unfair trade instrumentscan thus be seen as buffer mechanisms, as interface instruments to share the burden ofthe adjusting costs between different systems.49 States will use unfair trade instrumentsin order to limit the dislocation costs caused by goods and services coming fromdifferent economic systems. They will impose their own domestic socio-economicstandards as their fairness benchmarks. The fair trade notion will extend to any foreigngovernment policy or institution that is different from their own.50 In this sense,globalisation, instead of a process of tolerance and mutual acceptance, is simply one oflocalism. The relationship between the state and its own private industry and thatbetween its market actors will be the model used to evaluate the trade practices of other



44 In this sense, De Sousa Santos considers that one of the processes of globalism is globalised localismwhereby a local phenomenon is successfully globalised. Globalised localism is paralleled by localisedglobalisation which is the restructuring and adjustment of the local sphere as a result of globalisation. B.de Sousa Santos, ‘Globalisation, Nation-States and the Legal Field: From Legal Diaspora to LegalEcumenism?’, in Toward a New Common Sense: Law, Science and Politics in the Paradigmatic Transition,(Routledge 1995), 250–377, 263.

45 Cf, J. Bhagwati, The World Trading System at Risk, (Harvester Wheatsheaf 1991), 50–51.46 Cf, Tondson, ‘Beating Back Predatory Trade’, (1994) 73(4) Foreign Affairs 123.47 Cf, Nicolaides, ‘How Fair is Fair Trade?’, (1987) 21 Journal of World Trade L. 147–162.48 J. H. Jackson, The World Trading System: Law and Policy of International Economic Relations, (The MIT

Press 1989), 218.49 Idem, at 249; cf, R. Dore, ‘Convergence in Whose Interest?’ in op cit n 3, at 336–374, 271.50 J. Bhagwati, ‘Fair Trade, Reciprocity and Harmonization: The New Challenge to the Theory and Policy

of Free Trade’, in Bhagwati and Hudec, op cit n 23, at 547–593, 584.

nations.51 No country may assist its home industry or interfere with consumer marketpreferences to a greater extent than is done in the targeting country. Likewise, foreignmarket actors may not organise to a greater extent than is done in the targeting country.

Furthermore, unfair trade instruments can be a means in the competing strugglebetween different market economies. Because the elimination of tariff and non-tariffbarriers does not lead per se to a neutral and global market economy but rather to theinteraction between a variety of market systems each with its own peculiarities, stateswill compete in the establishment of an international trade legal system which reflectstheir own domestic sphere. Thus, trade instruments can be understood not only asbuffer mechanisms between markets with different socio-economic frameworks butalso as the means of states to protect their own structures by trying to change thepolicies and structures of others. This is especially the case because, as internationaltrade rules establish loose constitutional frameworks for the interaction betweendifferent market economies, they are not always clear.

In the world of globalisation, all states are sensitive to interdependence. However,some states are more vulnerable than others.52 States may have bigger export or importmarkets or they may be more import, or export, dependent than others. This creates anasymmetrical relationship which will imply the existence of power of one state overanother. Power can be defined as the ability of one actor to get others do somethingthey otherwise would not do.53 In this sense, trade instruments may be seen as examplesof both relational and structural power. Relational power would be the power of state Ato get state B to do something it would not otherwise do. Structural power is the powerto shape and determine structures of the global economy within which other states,their political institutions and their economic enterprises, have to operate.54

By using unfair trade instruments, a state may use its power to intervene in a foreigncountry’s domestic structure in order to undo the latter’s institutional advantages or toimpose the same socio-economic framework that it has itself.55 By simply using thepower of its import market, a state may impose the conditions of trade and thus alterthe policies and structures of a foreign country.56 Trade instruments are nothing morethan the old strategy of ‘the carrot and the stick’.57 Reverse convergence—the



51 Goldstein, ‘Ideas, Institutions and America’s Trade Policy’, (1988) 42 International Organisation 179, 198; cf,Tarullo, ‘Beyond Normalcy in the Regulation of International Trade’, (1987) 100 Harvard L. Rev. 547–628.

52 R O. Keohane and J. S. Nye, Power and Interdependence, (Little Brown and Co. 4th 1977), 11–13.Sensitivity implies degrees of responsiveness within a policy framework. It assumes that the frameworkremains unchanged. Vulnerability, however, defines the relative availability and costliness of thealternatives that various actors face.

53 Id., at 11.54 S. Strange, States and Markets, (Pinter Publishers 1988), 24.55 J. R. Hollingsworth and W. Streeck, ‘Countries and Sectors: Concluding Remarks on Performance,

Convergence and Competitiveness’, in Hollingsworth, Schmitter and Streeck, op cit n 16, at 270–300,282–83.

56 Cf, Jackson, ‘Perspectives on Countervailing Duties’, (1989) 21 L. & Policy Int’l Business 739–761.57 A way of understanding this is through game theory. Cf, Rieger, ‘Game Theory and the Analysis of

Protectionist Trends’, (1986) 9 World Economy 171–192; Mock, ‘Game Theory, Signalling and InternationalLegal Relations’, (1992) 26 George Washington J. Int’l L.& Economics 33–60 ; Abbot, ‘Modern InternationalRelations Theory: A Prospectus for International Lawyers’, (1989) Yale J. Int’l L. 335–411;Axelrod/Keohane, ‘Achieving Co-operation under Anarchy: Strategies and Institutions’, (1985) 38 WorldPolitics 226–254 (1985); Conybear, ‘Trade Wars: A Comparative Study of Anglo-Hanse, Franco-Italian andHawley-Smoot Conflicts’ (1985) 38 World Politics 147–152; Oye, ‘Explaining Co-operation UnderAnarchy’, (1985) 38 World Politics 1–24; R. Axelrod, The Evolution of Co-operation, (Basic Books 1984);Keohane, ‘Reciprocity in International Relations’, (1986) 40(1) International Organisation 1–27.

adaptation to its own domestic structures—may be demanded as a condition for freetrade when access to the market of a larger country is made conditional on the smallercountry accepting foreign intervention in its domestic structures.58 However, reverseconvergence will be much more successful when addressing government policies thanwhen dealing with those practices affecting trade which are deeply embedded in amarket’s industrial organisation and society.59

Unfair trade instruments may also be used to build up an international trade regimewhich is compatible with a state’s own domestic structures.60 By using trade instrumentsagainst foreign countries, states may create a precedent and establish the standards of thefuture international regime. An international regime may be defined as a set of explicitor implicit principles, norms, rules and decision-making procedures around which actorexpectations converge in a given area of international relations.61 International regimesare not simply neutral, but reflect the underlying power and interests of the dominanthegemonic states. International trade regimes should thus be seen as institutions thatestablish the standards for the socio-economic world market framework. Powerful stateswill try to impose regimes which reflect their own market economy’s framework. Theconstruction of international economic regimes is thus exactly analogous to the buildingof domestic regimes in that both, by defining the cultural, social and political rules underwhich economic transactions may take place, determine which firms’ strategies andcapacities will have competitive advantage over others.62

One way of understanding this is to focus on services. A state can use its marketaccess instrument to push for the market liberalisation of the services sector and thusinfluence the future agenda of negotiations in this area. By using the threat of closingits market to the exports of a foreign country, it can demand changes in the servicesector of that country.63 However, despite the possible economic rationale, liberalising



58 G. R. Saxonhouse, ‘A Short Summary of the Long History of Unfair Trade Allegations against Japan’, inBhagwati and Hudec, op cit 23, at 472–513, 401, (analyzing the U.S. Super 301 and the StructuralImpediments Initiative against Japan. But the author considers that the U.S. initiative was successfulbecause in Japan there were some domestic calls, such as the Maekawa Commission Report, for suchchanges); cf, N. Zuberi, ‘Disregard for EU Laws Would Mean Ouster from World Market’, BusinessRecorder, March 12 1997, at 8.

59 Cf, J. McMillan, op cit n 23.60 David W. Leebron, ‘Lying Down with Procrustes: An Analysis of Harmonization Claims’, in Bhagwati

and Hudec, op cit n 23, at 41–117, (arguing that instruments such as Section 301 could be attempts ofunilateral harmonisation. The author considers, however, that such efforts are only partially successfuland are, for the most part, aimed at bilateral harmonisation rather than multilateral harmonisation.)

61 Finlayson/Zacher, ‘The GATT and the Regulation of Trade Barriers: Regime Dynamics and Functions’,(1981) 35 International Organisation 561–602, 563; cf, B. Hoekman, ‘Multilateral Trade Negotiations andCoordination of Commercial Policies’, in R. Stern (ed.), The Multilateral Trading System -Analysis andOptions for Change, (Harvester Wheatsheaf 1993), 29–61.

62 Hollingsworth & Streeck, op cit n 55, at 282.63 The United States’ practice under its Section 301 of the 1974 Trade Act could be an example of this. The

United States used its instrument to demand changes in foreign countries and to establish the agenda ofthe Uruguay Round. Canadian Communications Practices, 60 Fed.Reg. 8101 (1995); Korean Insurance, 51Fed.Reg. 29443 (1986); Argentinean Air Couriers, 48 Fed.Reg. 45733 (1984); India Investment, 55Fed.Reg. 25765 (1990); Indian Insurance, 55 Fed.Reg. 25766 (1990). A similar practice took place in thearea of intellectual property rights. Brazil Pharmaceuticals, 55 Fed.Reg. 27324 (1990); ArgentineanPharmaceuticals, 53 Fed. Reg. 37668 (1988); Thailand Copyright Enforcement, 56 Fed.Reg. 67114 (1991);Thailand Pharmaceuticals, 57 Fed.Reg. 5030 (1992); India Intellectual Property, 56 Fed.Reg. 61447(1992); PRC Intellectual Property Protection, 56 Fed.Reg. 61447 (1992); Taiwan Intellectual Property, 57Fed.Reg. 25091 (1992); Brazil Intellectual Property Rights, 58 Fed.Reg. 64351 (1994); PRC IntellectualProperty Rights, 61 Fed.Reg. 33147 (1996).

services is not necessarily neutral. Such liberalisation implies limiting one way ofgovernment intervention in the economy as well as constraining co-operation betweenmarket actors. These limitations benefit countries which have traditionally had a weakstate and a plural market and, thus, it is these countries that benefit most from aninternational regime which enshrines deregulation.

C The Common Commercial Policy: Between Domestic Diversity and the Need for External Efficiency

For unfair trade instruments, such as market access laws, to enjoy a certain rate ofsuccess in imposing the rules of the international trade game, either multilaterally orbilaterally, they must meet three basic requirements. First, market access laws must bebacked by a strong market power. The targeting country must be able to threaten thetargeted country with a loss of market access to which it will be vulnerable. Second,the instrument, while committed to international law standards, must provide a certainmargin of discretion so that it will be possible to build the international trade regime.This implies understanding the latter not as a frozen bloc but rather as a system inconstant evolution and change. Influencing these changes may imply going sometimesbeyond what it is considered as strictly legal.64 Third, the trade instrument must haveadequate procedures so that the threat can really be credible.65 As the key element ofmarket access instruments is not the imposition of retaliatory measures but theirthreat, the decision-making procedure must ensure that, if considered necessary,retaliation measures will be taken. 66

Thus, to influence the rules of the game, states must act rationally and as monoliths.States are required to act efficiently and with one voice, as if there were no internaldomestic differences. But globalisation itself creates the paradox. Due to the increasingeffects of globalisation in the internal sphere, trade relations can no longer beconsidered to be an issue for a reduced number of experts. Rather, all differentconstitutional units of power within a state will want to have a voice.67 Thus, stateswill need to develop constitutional procedures which will provide the necessarydomestic legitimacy to act effectively in a global system characterised by diversity.Through constitutional procedures, states will try to solve the paradox by creatingmechanisms for co-operation which allow a voice to the different powers, while at thesame time, permitting the state to have a uniform voice in the external sphere.

However, political action prescribed by formal constitutions is part of a much widersocio-economic context.68 Because countries have diverse market frameworks, theyrespond to globalisation differently and thus not all trading partners can solve theparadox of globalisation to the same extent. In this sense, the European Union is an



64 Cf, R. E. Hudec, ‘Thinking About the New Section 301: Beyond Good and Evil’, in J. Bhagwati & H.Patrick (eds.), Aggressive Unilateralism: America’s 301 Trade Policy and the World Trading System,(Harvester Wheatsheaf 1991) 113–159.

65 Cf, Diamond, ‘Changes in the Game: Understanding the Relationship Between Section 301 and U.S.Trade Strategies’, (1990) 8(2) Boston Univ. Int’l L. J. 351–361.

66 Cf, Coffield, ‘Using Section 301 of the Trade Act as a Response to Foreign Government Trade Actions:When, Why and How’, (1981) 6 North Carolina J. Int’l Law & Commerce Regulation 381–405.

67 Cf, Winham, ‘Robert Strauss, the MTN, and the Control of Faction’, (1980) 14 Journal of World TradeLaw 377–397.

68 Prosser, ‘The State, Constitutions and Implementing Economic Policy: Privatisation and the U.K.,France and the U.S.A’, (1995) 4 Social & Legal Studies 507–516.

economic super-power which cannot meet its expectations and be assertive in theinternational trading system.69 It is characterised by a soft approach and the inabilityto threaten and use its economic muscle to force changes in foreign countries orestablish the rules of the global economic order.70

While most of the literature has analysed the limits of the Common CommercialPolicy as the result of inefficient intergovernmental procedures which should bechanged,71 the performance of the European Union in world trade results from anambiguous system of governance characterised by a dilution of intergovernmental andsupranational forces, reflecting a balance between the lack of a common marketframework and the need to deal with globalisation.72

The persistence of different market cultures within the European Union leads toopposing trade interests between the Member States. Following Keohane, states maybe classified with regard to the relationship between their domestic and their externalsphere as shown in Figure 2:73

The international economic order established in the aftermath of World War II, andon which the European Community was based, was characterised by the embeddedliberalism of Category C.74 The essence of this order was to devise a form of multi-lateralism compatible with the requirements of domestic stability. Embeddedliberalism was a compromise based on a balance between the external sphere whichwould be open and the domestic arena which would be protected; allowing states,without distinction as to their market frameworks, to pursue their domestic policies.



69 Cf, L. Tsoukalis, The New European Community: The Politics and Economics of Integration, (OxfordUniversity P 1991); O’Donnell/Murphy, ‘The Relevance of the European Union and EuropeanIntegration to the World Trade Regime’, (1994) 49 International Journal 536–567, 538.

70 ‘Red Carpet for Sir Leon, the Man Japan Likes to do Business With’, The Independent, Saturday 11 May,1996, at page 9.

71 Cf, in particular, H. Paemen and A. Bensch, From the GATT to the WTO: The European Community inthe Uruguay Round, (Leuven University Press 1995), 94.

72 The lack of a common market framework as the cause of a limited Common Commercial Policy washighlighted years ago by different authors. Cf, in particular, Everling, ‘Possibilities and Limits ofEuropean Integration’, (1980) 18 Journal of Common Market Studies 217–228; W. Hager, ‘Germany as anExtraordinary Trader’, in Kohl and Basevi (eds.), West Germany: A European and Global Power,(Lexington Books, 1980),3–19.

73 R. O. Keohane, ‘The World Political Economy and the Crisis of Embedded Liberalism’, in J. H.Goldthorpe (ed.), Order and Conflict in Contemporary Capitalism: Studies in the Political Economy ofWestern European Nations, (Clarendon P 1984), 15–38.

74 Cf, Ruggie, ‘International Regimes, Transactions, and Change: Embedded Liberalism in the PostwarEconomic Order’ (1982) 36(2) International Organisation 379–415.

Figure 2.

The international economic order would be multilateral in character but, unlike thelaissez faire system of the XIX century, its multilateralism would be predicated upondomestic intervention.75

However, the very success of embedded liberalism led to the disruption of thebalance between the domestic and the external sphere. The reduction of trade barriersthrough the successive GATT rounds implied the emergence and development ofphenomena such as interdependence and globalisation. Under these new conditions,states started to experience a widening of a power gap between political authority andthe forces of the market and thus they began to react differently on the basis of theirdiverse domestic market frameworks.76

Liberal countries falling into Category A, characterised by an external openness, abasic commitment towards the free trade system, and a domestic laissez faire system,reflect a domestic structures system characterised by a weak government and a pluraland unorganised market. The weakness of the government and the plurality of itsmarket will favour a ‘hands off’ policy in which the government will refuse to intervenein the economy and generally, as matter of principle, refuse to grant protection.However, in times of economic crisis such countries would adopt certain features ofCategory B and thus the inability of the state to pursue domestic policies and theincapacity of its market to organise itself would result in strong calls for protectionism.77

Countries with strong states and plural markets would tend to adopt policiessimilar to those of Category D, characterised by government intervention both athome and abroad, in the form of protectionism. But as the SMI and the developmentsin the international trade legal system imply the limitation of government interventionin the domestic sphere, they would hopelessly tend to move towards Category B bycalling for protectionism in the external sphere.78

Only countries with strong corporativist structures, like Germany, the Netherlands,Denmark and Sweden, where the external threat could be dealt with in the form ofprivatised protectionism, would be able to remain open to the international tradingsystem while maintaining their ability to develop their own domestic policies.

In a situation of economic stability and when there is protection from the influenceof external forces, integration is possible, even with divergent national economiccultures. However, when national economies are facing instability, and may have tomake economic choices, different economic cultures will tend to establish differentpriorities and, consequently, prefer divergent trade policies.79 In this sense, as Member



75 Ruggie, ‘Trade, Protectionism and the Future of Welfare Capitalism’, (1994) 48 Journal Int’l Affairs 1–11,3 (1994).

76 On the power gap between political authority and the forces of the market in Europe, see S. Strange, ‘ThePower Gap: Member States and the World Economy’, in Brouwer, Lintner and Newman (eds.), EconomicPolicy Making and the European Union, (The Federal Trust 1994), 19–26; cf, Hanson, ‘What Happened toFortress Europe? External Trade Policy Liberalization in the European Union’, (1998) 52:1 InternationalOrganisation 55–85, 67.

77 Cf, J. Bhagwati, Protectionism, (MIT P 1988).78 This would be the case of the traditionally protectionist countries of the European Community, France,

Spain, Greece, Portugal and Italy. And this shows why these countries tend to have trade reactionssimilar to those of the United States.

79 H. Plaschke, ‘National Economic Cultures and Economic Integration’, in S. Zetterholm (ed.), NationalCultures and European Integration: Exploratory Essays on Cultural Diversity and Common Policies, (Berg1994), 113–143, 141. As to the divergent interests regarding anti-dumping policy, cf, Engering/DeBrabander/Vermulst, EC Antidumping Policy in a Globalized World: A Dutch Perspective, (1998) 32:6 J.World Trade 115–126.

States lose the capacity to control their national economies, they will increasinglyassert their influence in external matters.80 Thus, such divergence in trade policypreferences in order to cope with globalisation will result in a lack of trust bothbetween the Member States and towards integration as a whole. Member States willdistrust the central powers of the European Union as long as they perceive their ownnational economic systems to be sufficiently different.81 As a result, Member Stateswill try to keep control of trade policy both against the Community central powersand within the latter’s institutional system.82

From the existence of different, and sometimes opposing, trade interests will followthe impossibility of any changes in the Common Commercial Policy towards a moreefficient action in the trading system without raising serious questions of its legitimacy.83

A more efficient trade action, in the form of qualified majority, federal democracy or atechnocratic decision-making process, would be impossible when there is no consensusbetween the parties on the basic principles and interests of the trade policy.84 In thissense, behind the concepts of legal basis, competence and procedure lies the fundamentalquestion of the legitimacy of decision-making procedures to act efficiently in the externalsphere when, domestically, the notion of common goods and common interests islacking. But, as the outcome depends, to a very large extent, on the procedure to befollowed, the price to pay will be a second-best trade policy.

However, this lack of trust does not imply that the Common Commercial Policy isnecessarily intergovernmental as it must be counterbalanced with the challenges ofglobalisation which demand Member States to work together in order to reap thebenefits of unity. This balance between the lack of trust on the one hand, and the needto cope with globalisation on the other, results in both constant dialogue and conflictbetween intergovernmental and supranational forces which aim to solve the problemswhich the external dimensions put forward.85 Thus, the Community trade decision-making process involves layers of internal negotiations within the Commission,between the Commission and the Member States, and between the Member Statesthemselves, supplemented by the influences of the European Parliament and thebusiness and the labour communities.86

This constant tension between intergovernmental and supranational forces impliestheir dilution.87 It implies a system where all the trade policy actors are in a constant



80 Cf, W. Streeck, ‘Public Power Beyond the Nation State: The Case of the European Community’, in Boyerand Drache, op cit n 17, at 293–315.

81 S. Zetterholm, ‘Why Is Cultural Diversity a Political Problem? A Discussion of Cultural Barriers toPolitical Integration’, in S. Zetterholm, op cit n 79, at 65–82. 81.

82 On the argument of Member States trying to keep control of trade policy within the scope of Communitycompetence, see J. P. Hayes, Making Trade Policy in the European Community, (St. Martin Press 1993), 122.

83 Scharpf, ‘Economic Integration, Democracy and the Welfare State’, (1997) 4 (1) J. European Public Policy18–36, 25.

84 Horeth, ‘No Way Out for the Beast? The Unsolved Legitimacy Problem of European Governance’,(1999) 6:2 J. European Public Policy 249–268.

85 Smith, ‘The European Union, Foreign Economic Policy and the Changing World Arena’, (1994) 1:2 J.European Public Policy 283–302, 289.

86 A. Murphy, The European Community and the International Trading System: The European Communityand the Uruguay Round, (Centre for European Policy Studies 1990), 118.

87 Sbragia, ‘The European Community: A Balancing Act’, (1993) 23 Publius 23–38, 25; Risse-Kappen,‘Exploring the Nature of the Beast: International Relations Theory and Comparative Policy AnalysisMeet the European Union’, (1996) 34(1) J.Common Market Studies 53–80, 55–57; Marks/Hooghe/Blank,‘European Integration from the 1980s: State-Centric v. Multi-level Governance’, (1996) 34:3 J. CommonMarket Studies 341–378.

struggle for power and thus concepts, such as legal basis, are fundamental as theydetermine the influence that each of the actors will have.88 It is a system where noinstitution is totally intergovernmental or supranational and where there is always anopportunity for both of the forces to influence the trade outcome.89 Furthermore, itimplies a system where there is a constant need to bargain and to reach compromisesby trade-offs and side-payments, and the postponing of decisions which will requirefuture bargaining.90 In turn, this need to bargain implies that the influence that eachactor may have depends on the level of policy, the sector of trade and the possibilitythat different procedures establishing varying degrees of influence for each actor maycoexist within the same trade instrument.91

III The Community’s Trade Barriers Regulation: An Example of the CommonCommercial Policy

A Introduction

On December 1994, the European Union adopted, as part of the Uruguay Roundimplementation package, Regulation (EC) No 3286/ 94,92 the new ‘Trade BarriersRegulation’ [TBR]. The TBR establishes procedures which are aimed at responding toobstacles to trade, which may have an effect on the market of the Community or in themarket of a third country.93



88 Cf, D Elles, ‘The Role of the E.U. Institutions in External Trade Policy’ , in N. Emiliou and O’Keeffe(eds.), The European Union and World Trade After the Uruguay Round, (John Wiley & Sons 1996), 19–30,24.

89 Cf, K Armstrong and S. Bulmer, The Governance of the Single European Market, (Manchester UniversityP 1998), 42–64.

90 Cf, J. Mortensen, ‘The Institutional Paradoxes of EU Governance in External Trade: Coping with theChallenges of the Post-Hegemonic Trading System and the Globalised World Economy’, in A. Cafrunyand P. Peters (eds.), The Union and the World: The Political Economy of a Common Foreign Policy,(Kluwer Law 1997), 211–232.

91 Hofhansel, ‘The Harmonisation of EU Export Control Policies’, (1999) 32:2 Comparative PoliticalStudies 229–256, 231; cf, Collinson, ‘Issue-Systems, Multi-Level Games and the Analysis of the EU’sExternal Commercial and Associated Policies: A Research Agenda’, (1999) 6:2 J. European Public Policy206–224, 220; Peterson, ‘Decision-Making in the European Union: Towards a Framework of Analysis’,(1995) 2(1) J. European Public Policy 69–93.

92 Council Regulation (EC) No 3286/94, O.J. 31.12.94 L 349/71, as amended for technical reasons byCouncil Regulation (EC) No 356/95, O.J. 23.2.95 L41/3. Bronckers, ‘Private Participation in theEnforcement of WTO Law: The New EC Trade Barriers Regulation’, (1996) 33(2) Common Market L.Rev. 299–318. This Regulation repeals Council Regulation (EC) No 2641/84, O.J. 20.9.84 L252/1, asamended by Council Regulation 522/94, O.J. 10.3.94 L66/10, the so-called ‘New Commercial PolicyInstrument’. Cases initiated under Regulation (EC) No 2641/84 were: Unauthorised Sound Recordings inIndonesia, O.J. 21.5.87 C136 /21; Exclusion from the U.S. Market of Certain Aramid Fibres, O.J. 5.2.86C25/2; Port Charges in Japan on Cargoes and Shipping Companies, O.J. 16.2.91 C40/18; Pirate SoundRecordings in Thailand, O.J. 20.7.91 C189/26; Fund Levy and Customs Duty in Turkey, O.J. 31.8.93C235/4. Known rejected complaints were Deprivation of Patent Protection by Jordan for a NewPolymorphus Substance, O.J. 1.2.89 L30/67; Case 70/87, FEDIOL v. Commission, [1989] ECR 1781.Already by 1964, the Commission had proposed a unilateral trade instrument similar to that of Section301. Proposition d’un reglament du Conseil etablissant des principes communes et une procedurecommunautaire au sujet de la defense commerciale de la CEE, contre des pratiques anormales de la part despays tier. Presentee par la Commission au Conseil le 26 novembre 1963, Supplement au Bulletin de laCommunaute Economique Europeenne No 1– 1964.

93 Article 1 of the TBR.

This part attempts to demonstrate how the TBR can be seen as an example of theCommon Commercial Policy by highlighting how the different trade interests of theMember States have led to the development of a second-best instrument. Thus, ithighlights how the persistence of different market systems within the Community,emphasised as a result of globalisation, have resulted in the limitation of theinstrument’s scope as well as strongly committing it to the strict standard ofinternational trade law. As a result of this, the Community will be unable to use thisstrategic instrument to influence effectively the future rules of new sectors ininternational trade, such as services, intellectual property rights or foreign directinvestment, or to target new emerging markets in the world, such as the People’sRepublic of China or Russia, or to push for new rules in important policy areas whichaffect trade, such as competition, labour standards or the protection of theenvironment. However, the TBR also shows how the Community’s trade policy is theresult of a conflict between different constitutional actors in which, despite theimportant role that the conflicting interests of the Member States play, there is stillimportant scope for the input, as well as their struggle for influence, of other differentplayers.

With this purpose, Section B analyses the bargaining process which led to theadoption of the TBR. Thereafter, Section C explains how the fundamental substantivefeature of the TBR is a strict commitment to international trade law and how thisaffects the possibilities of the instrument. Finally, Section D explains the institutionalfeatures and scope of the instrument and their implications for its use.

B The Intra Community Bargaining

Both the substantive and procedural features of the TBR were the result of internalbargaining between the different Community constitutional actors. As with itspredecessor, the adoption of the new TBR was the result of a highly complexideological and institutional bargaining process.94 The adoption of the new Regulationwas part of the negotiation and implementing process of the Uruguay Round wherebythe external negotiations were linked to internal developments as an integral part of aCommunity package.95 Furthermore, the process reminds us of how the CommonCommercial Policy is an open arena where a struggle for power between differentCommunity institutions, between the Community and the Member States, andbetween the Member States themselves takes place.96

On December 15, 1993, the General Affairs Council was able to approve the globalpackage of the Uruguay Round unanimously. As the Council considered that the



94 On the adoption of the New Commercial Policy Instrument, see Bronckers, ‘Private Response to ForeignUnfair Trade Practices: U.S. and E.E.C. Complaint Procedures’, in Safeguard Measures in MultilateralTrade Relations, (Kluwer Law and Taxation 1985) 157–250, 211–219; Steenbergen, ‘The NewCommercial Policy Instrument’, (1985) 22 Common Market L. Rev. 421–439.

95 On how external negotiations have been linked to internal developments in the Community, see Tsoukalis,op cit n 69. As to the conclusion of the Uruguay Round, see Y. Devuyst, ‘The European Community andthe Conclusion of the Uruguay Round’, in C. Rhodes and S. Mazey (eds), The State of the EuropeanUnion: Building a European Polity?, Volume III, Lynne Rienner 1995), 449–467; Kuipjer, ‘The Conclusionof the Uruguay Round Results by the European Community’, (1995) 6 European J. Int’ L. 222–244.

96 Cf, J. H. Bourgeois, ‘Trade Policy Institutions and Procedures in the European Community’, in M. Hilfand E. U. Petersmann (eds.), National Constitutions and International Economic Law, (8 Studies inTransnational Economic Law, Kluwer Law and Taxation Publishers 1993), 175–201, 190.

international agreement did not fall completely under the exclusive competence of theCommunity, viewing, instead, that it should be treated as a mixed agreement, itsacceptance required the Member States’ consensus.97 This unanimity was only possibleafter the Council had fulfilled two prior conditions set by some Member States. First,Portugal demanded the approval of Community support programmes for themodernising of its textile industry which, it alleged, would be severely damaged by theUruguay Round deal. Second, certain Member States, led by France, had established asa precondition, the strengthening of the Community’s instruments for trade policy.Thus, certain guidelines were agreed by qualified majority (the United Kingdom andthe Netherlands voting against) with regard to the ‘New Commercial Policy Instru-ment’ [NCPI] and anti-dumping and countervailing measures.98 With this decision,France and its supporting countries had partially obtained a long-standing request.

By June 1992, as part of the completion of the Common Commercial Policy and theinternal market, the Commission had already made a proposal to strengthen theCommunity’s trade instruments.99 This proposal increased the powers of theCommission and made it easier to adopt retaliatory measures. With regard to counter-vailing, anti-dumping and the NCPI, it proposed a drastic change in the decision-making procedure by suggesting that all definitive measures be no longer taken byqualified majority in the Council but by the Commission, following the managementcommittee procedure.100

The Commission’s proposal met very strong opposition from the five traditionalfree trade oriented Member States: the United Kingdom, the Netherlands, Germany,Luxembourg and Denmark. They rejected the increase in the Commission’s power,arguing that there was no need to alter the existing procedures. The controversyparalysed the Council for the whole year. The conflict was a clear example of theCommunity’s common commercial policy struggle. Once again, there was confront-ation between the Member States which where able to cope with globalisation, due tothe fact that they had social arrangements which controlled the market, and the



97 On mixity, see N. A. Neuwahl, ‘Shared Powers or Combined Incompetence? More on Mixity’, (1996)33(4) Common Market L. Rev. 667–686; J. Bourgeois, J. Dewost and A. Gaiffe, La CommunauteEuropeenne et les Accords Mixtes: Quelles Perspectives?, (Presses Interuniversitaires Europeennes 1997).

98 Cf, ‘EC/Uruguay Round: Following Agreement on the Instruments for Trade Policy and Action Plan forTextiles for Portugal, the Council Unanimously Approves the Results of Negotiations in Geneva’, AgenceEurope No 6130, December 16, 1993, at 7.

99 Commission Proposal for a Council Regulation (EEC) on the harmonisation and streamlining of decision-making procedures for Community instruments of commercial defence and modification of the relevantCouncil regulations, O.J. 17.7.92 C181/9; Interview at the Commission, Brussels, March 1997.

100 The Commission would be assisted by a committee composed of representatives of the Member Statesand chaired by a representative of the Commission. The Commission would inform the committee of themeasure to be taken. The latter would then deliver an opinion, on the basis of a qualified majority asestablished under Article 148 (2) of the Treaty. The Commission would adopt its proposed measures andsuch decision would apply immediately. However, if the Commission’s decision was not in accordancewith the Committee’s opinion, the Council would be communicated and the measures would besuspended for a maximum period of twenty days. Within such period, the Council would have tooverturn the Commission’s decision by qualified majority. Otherwise, the Commission’s decision wouldstand. Articles 1 and 3 of the Proposed Regulation. The procedure was based on the ‘managementcommittee procedure’ as laid down in Council Decision 87/373, laying down the procedures for theexercise of implementing powers conferred on the Commission, O.J. 18.7.87 L 197/33. This Decision hasbeen replaced by Council Decision 99/468, O.J. 17.7.99 L184/23. Article 4 Ibid. On the differentcommittee procedures, see Vos, ‘The Rise of Committees’, (1997) 3(3) European Law Journal 210–229,217–228.

Member States, led by France, whose only means to control globalisation and themarket were the types of government intervention that both the Single MarketInitiative and the Uruguay Round had strongly limited.

As with other issues regarding unfair trade instruments, there seemed to be analliance between the Commission and the more protectionist Member States. Therewere two reasons for this. First, the Commission, as a broker between the MemberStates, was conscious of the need to grant a certain amount of protection in order tocounterbalance the opening of the European market. In the back of the minds of theCommission officials was not only the fact that the Community would further openitself to foreign trade, and thus limit government intervention policies thanks to theUruguay Round deals and the completion of the internal market, but also theincreasing likelihood that the new Scandinavian countries with a strong free trade biaswould enter the Community.101 The Commission officials and the protectionist stateswere increasingly irritated by the difficulties of adopting retaliatory measures even inwhat they considered to be well-justified cases. The entrance of the Scandinavian statesand Austria, traditionally corporativist countries and mostly in favour of free trade,would make things worse.102 Second, the use of unfair trade instruments results in anincrease in the powers of the Commission. In implementing such instruments, theCommission will have a certain degree of flexibility which will allow it to follow certain



101 Interview at the Commission, Brussels, October 17 1996.102 Before the enlargement the Council was divided in a group of protectionist states composed of France,

Spain, Italy, Greece, Portugal and Belgium and a group of free traders composed of Denmark, Ireland,United Kingdom and The Netherlands. Germany and Luxembourg would vote in favour or against themeasures depending on the case. After the enlargement, the forces changed dramatically. TheNetherlands, Denmark, United Kingdom and Ireland have been joined by Finland, Sweden and Austriatogether with Germany and Luxembourg, who seem to have changed their approach radically. Interviewwith an Official of a Member State’s Permanent Representation to the European Union, Brussels, July1997. Cf, Vermulst/Driessen, ‘Commercial Defence Actions and Other International Trade Developmentsin the European Communities IX: 1 July 1994– 31 December 1994’, (1995) 6 European J. Int’ L. 287–316;cf, Maclean/Eccles, ‘A Change of Style Not Substance: The Community’s New Approach Towards theCommunity Interest Test in Anti-Dumping and Anti-Subsidy Law’, (1999) 36 Common Market L. Rev.123–148, 129. In fact, some of the new Member States systematically oppose the imposition of anti-dumping and countervailing duties. Interview at the Commission, Brussels, October 1996. Thus, theCouncil has dramatically changed its pattern of behaviour; now rejecting or approving the imposition ofanti-dumping and countervailing duties by a very small margin. ‘Anti-Dumping: Bed Linen ImportsSlapped with Duties Up to 27%’, European Reports No 2233, June 19, 1997, at 2; ‘EU/Anti-Dumping:Council Decides by Small Majority to Introduce Definitive Anti-Dumping Duties on Certain OutdoorShoes in Textiles Originating from China and Indonesia (With Some Exceptions)’, Agence Europe No7041, October 31, 1997, at 6–7; ‘Commission Losses Controversial Vote on Duties’, Financial Times,Thursday, 17 September 1998, at 3; ‘EU Ministers Reject Cotton Duties Again’, Financial Times,Tuesday, 6 October 1998, at 4; N. Buckley, ‘Business Baulks at Dumping Duties’ Financial Times,Monday 17 July 1997, at 2; E. Tucker, ‘French Fury at Cotton Duties Threat’, Financial Times Monday19 May 1997, at 3; J. Luesby, ‘EU Split on Cotton Dumping Action’, Financial Times, Friday 21 March1997, at 5; Guy Jonquieres, French Clash with Brittan on Dumping, Financial Times, 30 January 1997 at7; ‘EU Refines Dumping Regulations’, Financial Times, Tuesday 1 October 1996, at 5; E. Tucker, ‘EUSplit Over Dumping Duties’, Financial Times, Friday 15 September 1995, at 5; ‘EU/Anti-Dumping:Contradictory Declarations by Member States Over Anti-Dumping Duties on Unbleached CottonFabrics’, Agence Europe No 7263, July 15, 1998, at 1; ‘EU/India: Council Refuses to Impose DefinitiveAnti-Dumping Duties on Steel bars from in India in Addition to Anti-Subsidy Duties –Enquiry intoPolyethylene’, Agence Europe No 7351, November 27, 1998, at 3; ‘Council Does Not Introduce DefinitiveDuties on Unbleached Cotton Fabrics, Noting Lack of Majority’, Agence Europe No 7316, October 7,1998, at 1; ‘EU/Anti-Dumping: Council Rejects Definitive Duties on Electrolytic Aluminium CapacitorsOriginating in the United States and Thailand’, Agence Europe No 7422, March 11, 1999, at 3.

policies. Indeed, such instruments are a way of opening a space for common Europeanaction and a way of reinforcing the links between the Commission, as the champion ofEuropean integration, and European industry.103

As a result of the compromise of December 1993, the Commission and the pro-tectionist Member States did not wait until the final Uruguay Round implementationpackage to strengthen the Community’s trade instruments and thus the Councilenacted Council Regulation (EC) No 522/94 on March 1994.104 However, thecompromise was very different from the Commission’s proposal. With regard to anti-dumping and countervailing duties, the Regulation only reduced the Council’squalified majority vote to that of a simple majority requirement.105 Concerning theNCPI, the Regulation simply made it compatible with the WTO dispute settlementprocedure and timidly enhanced the powers of the Commission.106 In order tocompensate the protectionist countries led by France, the Regulation conceded thatcommercial measures could be taken without a prior investigation when the factualand legal situation did not require such. The Regulation made it clear that MemberStates could ask the Commission to go to the WTO without a prior investigation if thecase was clear. This was counterbalanced, however, by introducing the duty for theCommission to keep the 113 Committee informed of its investigations. Thus, althoughthe Regulation enhanced the possibilities of taking measures under the anti-dumpingand countervailing procedures and slightly increased the effectiveness of the newpolicy instrument, it did not meet the expectations of either the Commission or themore protectionist Member States.

Within this confrontation between free trade and protectionist Member States onOctober 10, 1994, the Commission made a proposal for the final amendment of theNCPI as part of the Uruguay Round implementation package.107 The proposed newtrade instrument was part of the masterminded new Market Access Strategy[MAS].108 This policy is a brilliant bet that tries to broker between different MemberStates, institutions and interests. First, the MAS tries to find a solution to the constantconfrontation between the protectionist and the free trade Member States. In order tosolve the dichotomy of whether or not to adopt a defensive protectionist policythrough the use of anti-dumping and countervailing measures, the Commissionproposes to adopt a third way which consists of helping European business in foreignmarkets. Instead of protecting domestic industries against imports, the Community, bytaking advantage of the new possibilities of the trading system and the procedure ofArticle 113 of the Treaty,109 would support European firms in exporting to foreign



103 On the Commission as an actor which attempts to open windows for Community action, see Cram, ‘TheEuropean Commission as a Multi-Organisation: Social Policy and IT Policy in the European Union’,(1994) 1:2 J. European Public Policy 195–217, 199.

104 O.J. 10.3.94 L66/10. The Council Regulation was preceded by the European Parliament’s approval.European Parliament Session Documents: Second Report of the Committee on External EconomicRelations, 18 January 1994. Commission of the European Community, ‘Commission Welcomes CouncilAgreement in the EU Import Regime’, Informacion a la Prensa, 8 February 1994.

105 Article 1 of Council Regulation 522/94.106 Article 2 of the Council Regulation (EC) No 522/94.107 Commission of the European Community, Uruguay Round Implementing Legislation, COM (94) 414 final

(1994).108 Commission of the European Communities, The Global Challenge of International Trade: A Market

Access Strategy for the European Union. Communication to the Council, the European Parliament, theEconomic and Social Committee and the Committee of Regions, COM (96) 53 final (1996).

109 The Treaty of Amsterdam has renumbered Article 113 as Article 133.

markets.110 Such a proposal is difficult to reject for both the free trade and pro-tectionist Member States. For the protectionist states, it is a sort of aggressive tradepolicy which helps their industries. In a sense, such a policy is nothing more than amore modern form of government intervention. Indeed, behind these policies is theinability of some states to cope with globalisation domestically, and without recourseto foreign trade measures.111 Furthermore, for the free trade Member States, it isdifficult to reject such a proposal because it is based on the idea of market openness.Second, the new MAS also brokers between the Member States and the Community.By adopting a proposal whereby the Commission would investigate and try toeliminate foreign trade barriers, the Community would be able to play a strong role inthe trading system. Again, the proposal was intended to open a new window forCommunity action in the external sphere as the policy is nothing more than the basicsof European integration—working together with the purpose of confronting theproblems of globalisation.112 Third, the proposal is an attempt to promote its freetrade political commitment by showing the European constituency, and especially itsbusiness community, that the Community’s liberalisation efforts could pay off throughpursing an active policy in the international trading system.113

Following Article 113 of the Treaty, the MAS consists of a co-operation procedurebetween the Commission and the Member States. The Market Access Unit [MAU] ofthe Commission114 must keep a database of all the foreign trade obstacles that mayaffect Community enterprises. The MAU is to be advised by the Market Access ActionGroup [MAAG], a Commission inter-service group where more than fifty officialsfrom DGI, DG IA, DG IB and other Directorate Generals concerned meet twice amonth with the purpose of analysing the different trade barriers encountered and howto tackle them. The MAU has established a database of foreign trade barriers indifferent countries and their trade obstacles which affect most of the Community’sforeign trade.115 For each foreign obstacle to trade, the MAU, together with theMAAG, will make a report and decide whether or not it would be appropriate to takeaction against it. Once the Commission has decided that action is appropriate, itinforms the Article 113 Deputies’ Committee for approval to act. The programme, infact, works in the same way as the negotiation and conclusion of an internationalagreement. The Commission may not start any action at international level, whetheror not within the framework of the WTO, unless the Member States, through Article113, give their consent under the rule of qualified majority. Thus, although the MASincreases the Community’s action, especially that of the Commission, in theinternational trading system, the possibilities of quick and effective action by the



110 On the mercantilist rationale of market access instruments, see M. Hirsh, ‘Toying with Trade Wars’,Newsweek , July 1996, at 34.

111 J. Bhagwati, ‘Aggressive Unilateralism: An Overview’, in Bhagwati and Patrick, op cit n 64, at 14; J.Bhagwati, The World Trading System at Risk, (Harvester Wheatsheaf 1991), 48–58. This highlights thefact that there is a link between the free trade agenda and mercantilism. Furthermore, it illustrates thebias of the international trading system which allows some forms of government intervention whileprohibiting others.

112 ‘EU/TRADE: Suggestions by 113 Committee to Guarantee Coherence of European Strategy for Accessto Third Country Markets’, Agence Europe No 7047, 30 August 1997, at 5.

113 On the free trade position of the Commission, see T. Howell, R. Gwyn and M. Gadbow, ‘EuropeanCommunity, in Howell, Wolff, Bartlet and Gadbow, op cit n 27, at 384–467, 391.

114 The Market Access Unit of the Commission is DG I-D4 was created in June 1996.115 The website of the market access database is available at http://mkaccdb.eu.int.

Community are partly diluted as the entire procedure is under the strict control of theMember States.116

The Commission’s new trade instrument proposal was an attempt to enhance theMAS under Article 113. It tried to strengthen the role of the Community in theinternational trading system by increasing both the availability of the instrument toEuropean business and the possibility of retaliation. With its proposal, the Com-mission was thus trying to respond to the demands of the protectionist Member Statesand some Community industry associations for a tougher trade policy, while at thesame time avoiding the opposition of the free trade Member States. 117 Furthermore,the Commission attempted to bypass the strict control of the MAS by the Article 113Committee by means of enhancing the powers of the Commission in the instrument’sdecision-making procedures.

Basically, the Commission’s proposal introduced a three track approach with theaim of protecting the interests of the Community in the international trading system.First, as in the NCPI, it allowed complaints on behalf of Community industry.118 Suchcomplaints should contain sufficient evidence of the existence of both an illicitcommercial practice and injury. Second, as in the NCPI, it permitted the referral by aMember State.119 Any Member State would be able to ask the Commission to initiatethe procedure referred to in Article 1 with the purpose of:

(1) responding to any illicit commercial practices with a view to removing theinjury resulting therefrom;

(2) responding to any commercial practice whether illicit or not with a view toremoving the adverse trade effects resulting therefrom. Adverse trade effectswere defined as those which were felt in respect of a product or service on themarket of any non-member country and which could give rise to actions underrelevant international rules (not only international trade rules), whether as aresult of an illicit commercial practice or otherwise, and which had a materialimpact, actual or potential, in the economy of the Community, in a region ofthe Community, or on a sector of economic activity therein.120 Adverse tradeeffects would include cases where the trade flows of products or services wereprevented or there was the threat of such. Thus, it could include the threat ofmeasures.

(3) Ensuring the full exercise of the Community rights with regard to thecommercial practices of third countries. Community rights would be thoseinternational trade rights of which it could avail itself; either underinternational or under generally accepted rules.121



116 Schuren/Luff, ‘The Trade Barriers Regulation and the Community’s Market Access Policy’, (1996)European Foreign Affairs Rev. 211–230, 222.

117 France with the support of Spain, Belgium, Greece, Italy, Portugal and Ireland continued to push for amore assertive E.U. trade policy as part of the Uruguay Round implementing legislation. ‘WTO LaunchCelebrations Overshadowed by Outstanding Problems’, European Reports No 2000, December 10, 1994at V 5–6; X. Vidal-Foch, ‘La CE y los Doce Buscan Mecanismos de Cooperacion ante el GATT’, El Pais,28 November 1994, at 6.

118 Article 3 of the Commission proposal.119 Article 4 of the Commission Proposal.120 Article 2(5) Ibid.121 Article 2(2) Ibid.

However, the greatest improvement of the Commission’s proposal was the inclusionof a third track which allowed Community enterprises, and not only the Communityindustry, to present a complaint which contained sufficient evidence of the existence ofcommercial practices, whether illicit or not, and of the adverse trade effects resultingtherefrom.122 This provision had been a long-standing claim of both the protectionistMember States and European business.123 Under the old Regulation, it had been verydifficult for Community business to prove the existence of injury to a domesticindustry as a result of a third state’s practice which had its effects outside theCommunity. Due to this problem, the Commission, in at least one case, had tointerpret the concept of Community industry in a very broad way.124

An illicit commercial practice was defined as any international trade practiceattributable to a third country which was incompatible with international law and withgenerally-accepted rules.125 Likewise, a right of action against non illicit practicescould result from relevant international rules or generally accepted rules. Hence, theCommission proposed the same broad and ambiguous standards as the previousNCPI. Despite the EC’s general commitment to its international obligations,126 it hadbeen argued that the NCPI’s standard gave the Community a very similar right ofunilateral action to that of the United States Section 301 of the 1974 Trade Act.127

First, the scope of the term ‘international law’ was unclear. It was no doubt intendedto include at least the GATT and GATT side agreements.128 However, in Un-authorised Recordings in Indonesia,129 the Commission made it clear that the conceptof international law could also refer to other bilateral and multilateral agreements towhich the Community was a party. International law could even include customaryinternational law. Second, the term ‘generally accepted rules’ was considered to be themost controversial. It seemed to be as ambiguous as the concept of unreasonablenessin Section 301, a provision which extended the scope of action beyond internationallaw.130 It was argued that the term referred to objectively predetermined criteria whichcould include soft law and the rules of international trade law that were generallyaccepted.131 However, although the term implied legal qualities, it entailed thepossibility of the Community imposing standards included in agreements to which thetargeted country was not a party.132It was argued that this was all a faux debat, aswhat was important was the requirement that all Community measures be inaccordance with international law.133 However, this argument failed to take two



122 Article 3 Ibid.123 Arnold/Bronkers, ‘The EEC New Trade Policy Instrument: Some Comments on its Application’, (1988)

22(6) J. World Trade 19–38, 21.124 Port Charges in Japan on Cargoes and Shipping Companies, O.J. 16.2.91 C40/18.125 Article 2(1) of the Commission Proposal.126 Article 2(2) Council Regulation 2641/84.127 Zoller, ‘Remedies for Unfair Trade: European and U.S. Views’, (1985) 18 Cornell Int’l L. J. 227–245.128 Castillo de la Torre, ‘The EEC New Instrument of Trade Policy: Some Comments in the Light of the

Latest Developments’, (1993) 30(4) Common Market L. Rev. 687–719, 697.129 Unauthorised Sound Recordings in Indonesia, O.J. 21.5.87 C136/21.130 Schonoveld, ‘The European Community Reaction to the Illicit Commercial Trade Practices of Other

Countries’, (1992) 26(2) J. World Trade 17–34, 21.131J. H. Bourgeois, ‘EC Rules Against ‘Illicit Trade Practices’ –Policy Cosmetics or International Law

Enforcement?’, (1988) Annual Proceedings of the Fordham Corporate Law Institute: Europe/AmericaAntitrust and Trade Law, Chapter 6, at 12–13.

132 This is what in fact happened in Unauthorised Recordings in Indonesia, O.J. 21.5.87 C136/21.133 Cf, J. H. Bourgeois, op cit n 131, at 14–15.

important issues into account. First, the scope of the measures allowed by inter-national law is extremely broad. Second, the strategic value of unfair trade instrumentsis based on the threat, and not on the actual imposition of the measures. Thus, theCommunity would be able to obtain unilateral trade concessions from third countrieswithout violating international law.134

Thus, the Commission’s proposal, though intended to limit the possibilities of anyaggressive unilateral action, left some important loopholes which could allow for amore flexible trade policy instrument. As expected, the proposal faced the strongopposition of Germany, the Netherlands, Luxembourg, Denmark and the UnitedKingdom. Their main concern was with the Commission’s proposal to introduce thethird track for Community enterprises. They considered that such a proposal wouldallow the Commission to pursue indiscriminate attacks on trade policy practices,making the instrument dangerously similar to Section 301 whilst only coming underlimited control of the Member States. 135

The Commission tried to convince both the protectionists and the free traders thatits proposal was adequate. It promised that, in the future, its trade policy wouldrespond to the demands of European industry while, at the same time, it insisted thatEurope would not take the law in into its own hands.136

The adoption of the new trade instrument as part of the Uruguay Round imple-mentation package was further complicated by the European Court of Justice’sOpinion on the scope of Article 113 of the Treaty and the division of powers inexternal economic relations between the Community and the Member States.137 As theConference of Maastricht did not provide for the enlargement of the scope of Article113, and the Member States refused to drop their opposition against exclusiveCommunity action in external trade, notwithstanding the success of the UruguayRound negotiations, the Commission tried to achieve judicially what it had not



134 An example of this could have been Port Charges in Japan Cargoes and Shipping Companies, O.J. 16.2.91C40/18 (where the case referred to services which at that time were not under the rule of GATT law). Inanother case, Bulgaria refrained from exporting whisky with the Scotch Whisky label when theCommunity producers threatened to file a complaint under the instrument.

135 ‘Definition of Community Legislation Implementing Marrakech Accords Still Poses Difficulties BetweenMember States -Reservations in Principle on New Commercial Instrument - Other Differences’, AgenceEurope, December 12 1994, at 8; ‘New E.U Trade Weapon May Hold Deadly Firepower’, EuropeanReports No 1998, December 12, 1994, at V9.

136 ‘Sir Leon Outlines Future Priorities and Defends Quotas’, European Reports No 1986, October 22, 1994,at V 10; ‘New E.U. Trade Weapon May Hold Deadly Firepower’, European Reports No 1998, December3, 1994, at V 9; ‘Leon Brittan Announces Changes in European Union’s Trade Policy Instruments’,Agence Europe No 6347, October 29, 1994, at 7; ‘Sir Leon Brittan Announces Community’s TradeDefence Instruments Are to Be Strengthened’, Agence Europe No 6342, at 8; ‘Sir Leon Brittan DiscussesCommerce Defence Instruments, U.S., China, Protection of European Culture’, Agence Europe No 6393,at 11; ‘Sir Leon Puts his Free Trade Stamp on E.U. Policy’, European Reports No 1990, November 5,1994, at V 6.

137 Opinion 1/94, (Competence of the Community to Conclude International Agreements Concerning Servicesand the Protection of Intellectual Property- Article 228(6) of the Treaty), [1994] ECR I-5267. Zijlmans,‘The Exclusive External Competence of the European Community’, (1995) 2 Maastricht Journal 405–429;A. Arnull, ‘The Scope of the Common Commercial Policy: A Coda on Opinion 1/94’, in N. Emiliou andO’Keeffe (eds.), The European Union and World Trade Law after the Uruguay Round, (John Wiley & Sons1996), 343–360; Hilf, ‘The E.C.J.’s Opinion on the WTO –No Surprise but Wise?’, (1995) 6 European J.Int’ L. 245–259; Bourgeois, ‘The EC in the WTO and Advisory Opinion 1/94: An EchternachProcession’, (1995) 32 Common Market L. Rev. 763–787.

obtained politically.138 In March 1994, before signing the Marrakech protocols, theCommission submitted to the Court a request for an Article 228(6) Opinion as towhether the Community had exclusive competence to conclude the WTO Agreementand its annexed agreements, either on the basis of Article 113 or on the basis of theCommunity’s implied powers.

The European Court of Justice, not surprisingly, seemed to align far more with theinterests and concerns of the Member States than with its own past case law and helda narrow interpretation of Article 113. It seemed to establish a balance between theneed for efficiency in the Common Commercial Policy, the need to safeguard thedomestic sphere of the Community, and thus, ensure that the division of competences,as stated in the Treaty, are not jeopardised in any substantial manner, and facilitate therequirement for Member States and Community institutions to pursue joint action.139

The Court considered that the scope of Article 113 included all trade in goods butonly limited areas of trade in services and intellectual property rights. With regard totrade measures affecting goods, it has made clear that Article 113 would apply to allsuch measures,140 despite the fact that they might contain provisions dealing withhealth,141 development policy,142 human rights,143 or have foreign or security objec-tives.144 In the area of services, only measures affecting cross-border services would fallwithin the scope of Article 113.145 Concerning the protection of intellectual property,only customs measures affecting counterfeit trade in goods fall within the scope ofArticle 113.146 The Community could also have exclusive trade powers on the basis ofits implied powers whenever it had adopted measures which could be affected byMember State action,147 or when such measures include provisions relating to thetreatment of nationals of non-member countries or expressly confer on its institutions



138 On the debate on Article 113 during the intergovernmental conference leading to Maastricht, seeCommission of the European Communities, Initial Contribution by the Commission to the Inter-governmental Conference on Political Union, SEC (91) 500, Brussels 15 May 1991; Devuyst, ‘The E.C.’sCommon Commercial Policy and the Treaty of the European Union: An Overview of the Negotiations’,(1992) 16 World Competition 67–80 (1992); M. Maresceau, The ‘Concept of ‘Common CommercialPolicy’ and the Difficult Road to Maastricht’, in M. Maresceau (ed.), The European Community’sCommercial Policy After 1992: The Legal Dimension, (Martinus Nijhoff Publishers 1993), 2–20.

139 Cf, Tridimas/Eeckhout, ‘The External Competence of the Community and the Case Law of the Court ofJustice: Principle versus Pragmatism’, (1994) YB. E. L. 143–177.

140 Opinion 1/94, paragraphs 21–34.141 Case 62/88, Hellenic Republic v. Council of the European Communities, [1990] ECR 1546, paragraph 18.142 Case 45/86, Commission of the European Communities v. Council of the European Communities, [1987]

ECR 1493, paragraphs 19–20.143 Case C-268/94, Portuguese Republic v. Council of the European Union, [1996] ECR I-6177, paragraphs

24–27.144 Case C-124/95, The Queen, ex parte Centro-Com Srl v. HM Treasury and Bank of England, [1997] ECR I-

81; Case C-70/94, Fritz Werner Industrie-Austrustungen GmbH v. Federal Republic of Germany, [1995]ECR I-3189; Case C-83/94, Criminal Proceedings against Peter Leifer and Others, [1995] ECR I-3231.

145 Opinion 1/94, paragraphs 45–48; Opinion 2/92, Third Revised Decision of the OECD on NationalTreatment, [1995] ECR I-521, paragraphs 24–25; Case C-360/93, European Parliament v. Council of theEuropean Union, [1996] ECR I-1195, paragraphs 29–30.

146 Opinion 1/94, paragraphs 57–58. However, ancillary provisions for the organisation of purely consultativeprocedures, or clauses calling on the other party to raise the level of protection of intellectual property,may be included in acts falling within the scope of Article 113. Cf, Case C-268/94, Portuguese Republic v.Council of the European Union, [1996] ECR I-6177, paragraph 77.

147 Opinion 1/94, paragraph 77.

powers to negotiate with non-member countries.148 It could also have exclusiveimplied powers on the sole basis of the provisions of the Treaty if the adoption of suchmeasures in the external sphere were to be inextricably linked to the adoption ofdomestic measures.149 Furthermore, the Community could have exclusive competenceunder its implied powers on the basis of its internal power to harmonise only if it hadachieved a complete harmonisation of the rules.150

The Opinion of the European Court of Justice would seriously affect theimplementation of the new market access instrument. First, it would condition thebargaining process leading to the adoption of the instrument. As the instrument waspart of a package aimed at implementing the Uruguay Round agreements, its adoptionwould require unanimity in the Council and the assent of the European Parliament.This would affect both the substantial and procedural provisions of the instrument.Second, as we shall see, the Member States would seriously limit the scope of theinstrument on the basis of the Opinion.

As a result of Opinion 1/94 and the fact that the Uruguay Round agreementsestablished a specific institutional framework by organising co-operation procedures, theEuropean Parliament was able to express its opinion on the proposed market accessinstrument.151 The Parliament supported the Commission’s proposal. On December 12,1994, the Committee on Economics, Monetary Affairs and Industrial Policyunanimously approved its opinion on the implementation of the Uruguay Round for theCommittee on External Economic Relations. The opinion considered the Commission’sproposal to be necessary to allow the E.U. to undertake the removal of technical barriersnot regulated by the WTO agreements. It also considered as necessary the Commission’sthird track proposal, in order to allow access to third country markets which wasequivalent to the one allowed by the E.U. to the exports of third countries.152 Hence, theCommittee’s opinion seemed to be in favour of a more aggressive and flexible tradepolicy instrument which could allow the Community to influence the future rules of theinternational trading system. Three days later, on December 15, the EuropeanParliament, under Article 228 (3) of the Treaty, approved the Commission’s legislativeproposal as part of the GATT 94 package by simple majority.153



148 Opinion 1/94, paragraph 95. On the implied powers in external trade after Opinion 1/94, see Maunu,‘The Implied External Competence of the European Community after the ECJ Opinion 1/94 –TowardsCoherence or Diversity?’, (1995/2) Legal Issues of European Integration 114–127.

149 Opinion 1/94, paragraph 86. This was followed in Opinion 2/92, Third Revised Decision of the OECD onNational Treatment, [1995] ECR I-521, paragraph 32.

150 See Opinion 1/94, paragraph 88. However, as most of the internal market is based on Directives usingminimum harmonisation standards, the exclusive implied powers in external trade are seriously limited.Cf, M. Cremona, ‘External Relations and External Competence: The Emergence of an Integrated Policy’,in Craig and de Burca (eds.), The Evolution of E.U. Law, (Oxford University P 1999), 137–174, 155.

151 Kuipjer, ‘The Conclusion of the Uruguay Round Results by the European Community’, (1995) 6European J. Int’l L. 222–244, 226–230; P. L. H. Van den Bossche, ‘The European Community and theUruguay Round Agreements’, in J. H. Jackson and A. Sykes (eds.), Implementing the Uruguay Round,(Clarendon Press 1997), 23–102.

152 European Parliament Session Documents, Opinion for the Committee on External Relations of theCommittee on Economics, Monetary Affairs and Industrial Policy, 12 December 1994.

153 Cf, ‘European, French, and Italian Parliaments Endorse Uruguay Round’, European Reports No 2002, 17December, 1994, at V 7; ‘European Parliament Plenary Session, GATT Trade Agreements. ParliamentGives Assent’, European Reports No 2006 Supplement, 11 January, 1995, at 14–15; ‘With its Assent onthe Marrakech Agreements, the European Parliament Approves the Changes to Community TradeRegulations’, Agence Europe No 6380, 16 December, 1994, at 4.

On December 19, the Council of Ministers adopted the ‘Trade Barriers Regulation’as part of the Uruguay Round package only after it had reached an overall politicalcompromise both amongst the Member States and with the Commission.154 However,before enacting the TBR, it carefully amended some features of the Commission’sproposal in order to make sure that the instrument would not go beyond the GATTand so that it would not lose control over the procedure. The free trade Member Statesallowed for no flexibility and made sure that the TBR would be strictly committed tothe standard of international trade law as contained in international agreements.155

Furthermore, the Council introduced Article 2 (8) of the TBR and thus, made it clearthat the term services should only be taken to mean those services in respect of whichinternational trade agreements can be concluded by the Community on the basis ofArticle 113 of the Treaty.

C The TBR’s Strict Commitment to the Standard of International Trade Law

The new Regulation aims to tackle foreign obstacles to trade against which theCommunity may have a right of action under international trade rules.156 Inter-national trade rules are strictly those contained in international agreements to whichthe Community is a party and which have an impact on international trade.157 Article1(1) of the TBR makes it clear that the basic purpose of the TBR is to exercise theCommunity’s rights in the WTO. With this purpose, the TBR establishes three tracks:

First, the Regulation allows for complaints to be brought on behalf of the Com-munity industry when they contain sufficient evidence of injury as a result of obstaclesto trade in third countries that have an effect on the Community market. Thecharacteristic feature of this track is that the foreign obstacle must have an effect on theCommunity’s domestic market. In this sense, theoretically speaking, the action need notonly refer to imports but may also affect exports. The defensive action of the TBR is,thereby, residually maintained. Although the TBR, as part of the new MAS, wasintended to tackle foreign trade measures having an effect on foreign markets, it wouldnot, for the more protectionist Member States, have been politically acceptable to deletethe provision referring to the protection of the Community market.158 Under this track,it will be possible to allege the infringement of any international agreement, be itbilateral or multilateral, which sets out rules applicable to trade. This defensive right ofaction could be an alternative to the use of the Community’s Countervailing DutyRegulation.159 However, this defensive action is seriously limited by the requirements to



154 ‘E.U. Ministers Announce Formal Ratification of Uruguay Round’, European Reports No 2004, 24December, 1994, at V 5; ‘Political Agreement by Council on Results and Implementation of UruguayRound’, Agence Europe No 6380, 19–20 December 1994, at 6.

155 Norall, ‘Some Thoughts on the New Community Trade Barriers Regulation’, (1995) 3 InternationalTrade Law Reporter 67.

156 Articles 2 (1) and 2(2) of the TBR.157 Article 2(2) Ibid.158 Interview at the Commission, Brussels, April 1997.159 Council Regulation 2026/97, O.J. 21.10.97 L288/1. From an international viewpoint, the TBR’s defensive

action could be used in parallel to a countervailing duty investigation as Footnote 33 of the Agreement onSubsidies and Countervailing Measures, O.J. 23.12.94 L335/156, allows for the parallel invocation of botha domestic countervailing investigation and the dispute settlement procedures provided for prohibitedand actionable subsidies. However, Article 15 of the TBR states that the instrument will not apply incases covered by other existing rules in the common commercial policy field.

act on behalf of the domestic industry and by the requirement to prove the existence ofinjury.160 In fact, only one case has been initiated under this defensive track and thiswas in combination with an offensive right of action under Article 4 of the TBR.161

The main improvement of the Regulation is to require the Community institutionsto act after receiving, on behalf of Community enterprises, complaints containingsufficient evidence of obstacles to trade which have an effect on the market of a thirdcountry and which result in adverse effects for Community business.162 FollowingArticle 58(2) of the Treaty, a Community enterprise is considered to be a company orfirm formed in accordance with the law of a Member State and having its registeredoffice, central administration or principal place of business within the Community, andas directly concerned by the production of goods or services which are the subject ofthe obstacle to trade.163 Both public, and private, sector Community enterprises mayfile a complaint. Sole practitioners are not covered by the TBR unless they set up anundertaking under the conditions laid down by the law of the Member State in which



160 The concepts of domestic industry and injury are basically the same as those contained in the anti-dumping and countervailing duty regulations. Articles 2(3) and 2(5) of the TBR. Compare with Article 3and Article 4 of Council Regulation (EC) 384/96, O.J. 6.3.96 L56/1 as amended by Council Regulation(EC) 2331/96, O.J. 6.12.96 L317/1, and Council Regulation 095/98, O.J. 30.4.98 L128/18. Compare withArticle 8 and Article 9 of Council Regulation (EC) 2026/97, O.J. 21.10.97 L288/1.

161 Brazilian Export Financing Programme, O.J. 17.4.99 C108/33 (where the complaint was filed pursuant toArticles 3 and 4 of the TBR as the complainant was in fact the Community industry of the like productand it was able to provide prima facie evidence that the obstacle to trade had an impact on both a foreignmarket and on the Community market as it was suffering a loss of sales and market share in theCommunity and a resulting loss of profits).

162 Article 4(1) of the TBR; cf, McNelis, ‘The European Union Trade Barriers Regulation: A More EffectiveInstrument’, (1998) 1 Journal International Economic Law 149–155, 149.

163 Article 2(6) of theTBR. In fact, it seems that most of the complaints received have been filed not byindividual enterprises but by associations of enterprises. Cf, United States Antidumping Act of 1916, O.J.25.2.97 C 58/14 (where the complaint was filed by EUROFER); Trade Obstacles to Leather in Argentina,O.J. 26.2.97 C59/6 (where the complaint was filed by COTANCE); Import Licensing for Steel Plates inBrazil, O.J. 27.6.97 C 197/5(where the complaint was filed by EUROFER); Trade Obstacles to Cognac inBrazil, O.J. 2.4.97 C 103/3 (where the complaint was filed by BNIC); Trade Obstacles to Copper Scrap inKorea and India, O.J. 22.5.96 C 148(where the complaint was filed by EUROMETAUX); Trade Barriersto the Leather Sector in Japan, O.J. 9.4.97 C 110/2 (where the complaint was filed by COTANCE); Rulesof Origin for Textiles in the United States, O.J. 4.3.97 L 62/43 (where the complaint was filed byFEDERTESSILE); Protection of Sound Recordings in Thailand, O.J. 16.1.96 L 11/7 (where the complaint,under the old NCPI, was filed by IFPI); Music Licencing Practices in the United States, O.J. 11.6.97 C177/2 (where the complaint was filed by IMRO); Brazilian Import Licencing Regime for Steel Plates, O.J.27..6.97 C 197/2 (where the complaint was filed by EUROFER); Brazilian Import Licencing Regime forTextile Products, O.J. 27.2.98 C 63/2 (where the complaint was filed by FEBELTEX); Trade PracticesMaintained by Canada in Relation to Imports of Prosciutto di Parma, O.J. 22.6.99 C176/6 (where thecomplaint was filed by Il Consorzio del Prosciutto di Parma); Measures Imposed by the Republic of KoreaAffecting Trade in Pharmaceutical Products, O.J. 30.7.99 C218/3 (where the complaint was filed byEFPIA).This might be due to the fact that in practice it is very difficult for a medium or small enterpriseto handle a TBR complaint. For small and medium enterprises, it might be a problem to appear publiclyto attack trade practices which take place in the market where it intends to do business. The TBR doesnot allow the Commission to keep the name of the complainant as confidential. The Commissionservices, however, will keep confidential the name of those enterprises which are represented by theassociation filing the case. Interview at the Commission, Brussels, May 1997. However, it is interesting tonote the integration effect of the TBR. The TBR might incentive the creation of Community associationsof small and medium enterprises. Exceptions to this trend are Brazilian Trade Barriers to Sorbirtol, O.J.24.11.98 C 361/13 (where the complaint was filed by the group Cerestar Holding BV); Brazilian ExportFinancing Programme, O.J. 17.4.99 C108/33 (where the complaint was filed by Dornier Luftfahrt GmbH).

they are established. Under the TBR, Community institutions should acceptcomplaints from the subsidiaries of foreign enterprises which are incorporated in anEC Member State. Thus, the TBR may be combined with the retaliatory instrument ofa different trading partner. Big multinationals may be capable of increasing thepressure on third countries by compelling the European Union and other tradingpartners to open cases against a certain third country. Furthermore, the Commissionhas broadly interpreted Article 2(6) by accepting cases from enterprises which do notactually produce the goods in the Community but trade therein with goods fromforeign countries.164 Naturally, enterprises or groups of enterprises which, in practice,represent the Community industry can also request this type of action.165

Action on behalf of Community enterprises requires a right of action which is basedon the international trade rules contained in multilateral or plurilateral tradeagreements, specifically, but not necessarily limited to, the WTO Agreement and itsannexed Agreements. As a result of the political trade off, the Regulation strictly limitsoffensive action on behalf of Community enterprises to multilateral or plurilateraltrade agreements.166 Bilateral agreements and all agreements which are not exclusivelytrade agreements should be excluded.167 While the most common multilateral orplurilateral trade agreements will be the WTO Agreements, they could also include theShipbuilding Agreements or the OECD Export Credit Agreement.

It has been argued that the targeted country need not be a party to the agree-ment.168 However, taking Article 2(2) of the Regulation into account,169 it should be



164 Cf, United States Antidumping Act of 1916, O.J. 25.2.97 C 58/14 (where the main action concerns tradeobstacles in the United States against Thyssen, which buys steel products in eastern European countriesand allegedly dumps them in the United States). The Commission justified the initiation of this case onthe basis of the threat and discouraging effect which an eventual imposition of anti-dumping penalties onThyssen could have on the exports of steel of the Community industry.

165 Cf, Brazilian Export Financing Programme, O.J. 17.4.99 C108/33 (where the complaining enterprise wasde facto the only Community producer of the product in question); Measures Imposed by the Republic ofKorea Affecting Trade in Pharmaceutical Products, O.J. 30.7.99 C218/3 (where EFPIA represented theentire Community pharmaceutical industry).

166 Article 4(1). The Community institutions, however, made a very limited exception to this principle. InMass Housing Levy in Turkey, O.J. 17.12.96 L 326/71, the TBR was used to act against a Turkishinfringement of the Association Agreement between the European Community and Turkey. Thecomplainant had been, however, an association of Community enterprises. The case was initiated underthe NCPI but it was taken over by the TBR on the basis of Article 1 of Council Regulation (EC) No356/95, O.J. L 41/3 (1995) which stated that the TBR should enter into force on January 1, 1995 andshould apply to proceedings initiated after that date as well as to proceedings pending at that date and inrelation to which the Community examination procedures have been completed.

167 Unlike Article 1(2) applying generally to all actions and which reads ‘...but they can also be those laiddown in any other agreement to which the Community is a party and which sets out rules applicable totrade between the Community and third countries’, Article 4(1), which specifically applies to offensiveactions on behalf of Community enterprises, reads : ‘... Such complaint, however, shall only be admissibleif the obstacle to trade alleged therein is the subject of a right of action established under internationaltrade rules laid down in multilateral or plurilateral trade agreements.’

168 Cf, Beekmann, ‘The 1994 Revised Commercial Policy Instrument of the European Union’, (1995) 19World Competition 53–75, 65.

169Article 2(2) reads: ‘For the purposes of this Regulation and subject to paragraph 8, the Communityrights shall be those international trade rights of which it may avail itself under international trade rules.In this context, international trade rules are primarily those established under the auspices of WTO andlaid down in the Annexes to the WTO Agreement, but they can also be those laid down in any otheragreement to which the Community is a party and which sets out rules applicable to trade between theCommunity and third countries.’

considered that both the Community and the targeted country must be contractingparties. In this sense, an offensive action on behalf of Community enterprises is notpossible against countries such as the People’s Republic of China or Russia.170 TheCommunity will have to wait until these countries become a party to the WTO beforebeing able to tackle their obstacles to trade under the offensive action on behalf ofCommunity enterprises. This is a serious handicap for the effectiveness of theCommunity’s trade policy towards these countries as it has lost an effective tool toinfluence their transition towards a market economy.171

The Regulation considers that obstacles to trade shall be any trade practice adoptedor maintained by a third country.172 The trade obstacle must be created by a tradepractice of the country in question. There must be some sort of government relationwith the practice. Government may be considered to be both federal and sub-federallevels of public authority. The Commission has considered, as obstacles to trade,trading practices adopted by foreign enterprises which are caused by the lack ofadequate laws or the failure to enforce such laws as exist by the foreign country’spublic authorities.173 Obstacles to trade have not only been interpreted as encom-passing such practices which are actually taking place, but also the existence of laws orregulations which may result in the imposition of illegal obstacles to trade.174

Furthermore, the legal measures need not be in force but only part of the foreigncountry’s legal order.175 This interpretation is based on the idea that such laws orregulations imply a threat and thus deter European enterprises from doing business in



170 Cf, Gunther/Prost, ‘Le Reglement Communautaire sur les Obstacles au Commerce’, Les Echos, 11 July1996. Thus, while Sir Leon Brittan has rightly maintained in the European Parliament that action againstthe People’s Republic of China was possible under the Trade Barriers Regulation, his statements disguisethe fact that such action would not be possible at the request of a Community enterprise but only onbehalf of a Member State and mostly in regard to bilateral agreements with such a country. Cf, WrittenQuestion No 1970/96 by Wolfgang Nubbaumer to the Commission. Trade Relations with China, O.J. 4.12.96C365/56; Written Question No 0680/96 by Viviane Roding to the Commission. Import Quotas of Ceramicsfrom China, O.J. 25.6.96 C185/78.

171 This is in sharp contrast with the United States use of Section 301. Cf, People’s Republic of China Tariffson Major Home Appliances, 42 Fed.Reg 61103 (1977); People’s Republic of China Intellectual PropertyProtection, 57 Fed.Reg 3084 (1992); People’s Republic of China Market Access, 57 FR 47889 (1992);People’s Republic of China Intellectual Property Protection, 61 Fed.Reg. 33147 (1996). Thus, it is theUnited States who performs the policeman role in these countries. Cf, Peter Sutherland, EuropeanUniversity Institute, February 1996. However, it is also the United States who is able to obtain for itselfmost advantages from these countries by influencing with its own economic model the changes in them.

172 Article 2(1) of the TBR.173 Cf, Protection of Sound Recordings in Thailand, O.J. 16.1.96 L 11/7 (where the alleged practice was the

lack of adequate enforcement of laws protecting intellectual property rights); Trade Barriers to theLeather Sector in Japan, O.J. 9.4.97 C 110/2 (where one of the alleged practices was the toleration by theJapanese government of restrictive business practices in the leather sector).

174 United States Antidumping Act of 1916, O.J. 25.2.97 C 58/14 (where the alleged trade practice is theexistence of the United States Antidumping Act of 1916 which, if applied, would impose treble damagesagainst foreign companies not in accordance with the rules of WTO). In this sense, the Commission’sinterpretation seems to be fully supported by previous GATT precedent. Cf, United States- Definition ofIndustry Concerning Wine and Grape Products, SCM/71 (24 March 1986) adopted by the Committee onSubsidies and Countervailing Measures on April 28, 1992 BISD 39S/436, paragraph 4.1; cf, Article XVI(4)of the Agreement of WTO which reads: ‘Each Member shall ensure the conformity of its laws,regulations and administrative procedures with its obligations as provided in the annexed Agreements.’

175 Cf, Music Licensing Practices in the United States, O.J. 22.12.98 L346/60 (where the Commissionconsidered that a bill signed by the United States President which had not yet entered into force could bethe object of a WTO dispute settlement procedure and thus of TBR action).

such countries. Furthermore, the Commission has considered that the concept ofobstacles to trade may encompass both obstacles to the import into, or the exportfrom, the foreign country.176

An action on behalf of Community enterprises must allege the existence of a foreignobstacle to trade which has an impact on the market of a third country. However, thethird country need not be the same as that which adopts or maintains the tradepractice.177

The Community enterprise or Member State claiming an offensive right of actionmust provide prima facie evidence of the existence of adverse trade effects as well as amaterial impact on the Community market as a result of the foreign obstacle to trade.The concept of adverse trade effects seems to be rather loose. It is a threshold whichmay have been borrowed from Article 5 of the Agreement on Subsidies andCountervailing Measures.178 It can include both the actual or the threat of adverseeffects.179 In this sense, it is important to bear in mind that Article XXIII of the GATTdoes not protect trade flows but competitive opportunities to trade.180 Hence, adverseeffects could include the halt to exports, the loss of sales or market share, failure toincrease market share in contrast to what could be expected under normalcircumstances, increased competition in the Community market as a result of loss offoreign market share, increased costs, etc.. The Commission has interpreted adversetrade effects to include even the loss of image of a European enterprise.181 However, inorder to weed out any frivolous complaints, the Community enterprises must providesufficient evidence of the existence of a material impact on the Community market oron a Community region.182 Evidence of material impact could be, for example, the factthat the trade obstacles may affect companies, products or services other than thoseconcerned in the complaint, jobs at risk, the fact that the production, the enterprise orthe industry is localised in certain specific regions, the fact that the production or theenterprise is localised in disadvantaged regions, the fact that Community enterprisesare dependent on the world market for the supply of certain raw materials, thepossibility of using the trade obstacle as a precedent to discourage all Europeanexports, the fact that the complainant represents the entire Community industry of thelike product, etc.. Material impact must not be interpreted as an independent elementbut rather as one which should be weighted together with adverse trade effects in order



176 Cf, Trade Obstacles to Leather in Argentina, O.J. 26.2.97 C 59/6 (where one of the alleged obstacles isArgentinean practices restricting exports of hides); Trade Obstacles to Copper Scrap in Korea and India,O.J. 22.5.96 C 148.

177 Cf, Brazilian Export Financing Programme, O.J. 17.14.99 C108/33 (where the practice is allegedly beingadopted by the Brazilian government but has an effect on the market of the United States in the form ofa loss of sales of the Community producer).

178 Article 5 of the Agreement on Subsidies includes in the concept of adverse effects injury in the sense ofthat of Anti-Dumping and Countervailing actions, nullification or impairment as interpreted by GATTcase law and serious prejudice or threat of serious prejudice. Article 5 of the Agreement on Subsidies andCountervailing Measures, MTN/FA II-13.

179 Article 2(4) of the TBR.180 Cf, Cottier, ‘Dispute Settlement in the World Trade Organisation: Characteristics and Structural

Implications for the European Union’, (1998) 35 Common Market L. Rev. 325–378, 361.181 Cf, Rules of Origin for Textiles in the United States, O.J. 4.3.97 L 62/43 (where it was considered that the

changes of rules of origin in the United States, which resulted in products which had traditionally beenlabelled as Made in Italy being labelled as Made in China implied a loss of image for the Communityenterprises trading with such products).

182 Article 2(4) of the TBR.

to ensure that the Community has an actual reason to be concerned by the foreignobstacle to trade.

Finally, the TBR allows Member States to request the Commission to start aprocedure against obstacles to trade that have an effect on the markets of theCommunity with a view to removing the injury resulting therefrom, and to respond toobstacles to trade which have an effect on the market of a third country with a view toremoving the adverse effects resulting therefrom.183 Member States may ask for actionto tackle obstacles to trade against which the Community has a right of action arisingfrom any international agreement to which it is a party. Thus, unlike Communityenterprises, Member States could ask the Community institutions to take action underbilateral agreements. However, Member States, suspicious of the TBR as an instru-ment which actually enhances the powers of the Commission in external trade, preferto use the general Article 113 procedure to tackle problems in foreign trade.184 Bydoing so, the Community institutions miss the chance of effectively tackling foreignobstacles in important rising markets which are not parties of major multilateral tradeagreements. The different domestic structures and resulting conflict of trade interestsbetween the Member States leads them to mistrust the Community institutions andconsequently, slowly to lose the battle over globalisation.

All decisions taken under any of the three tracks must be in the interest of theCommunity.185 The Commission has tended to interpret the Community interests in avery broad way. It has considered as Community interest the need to ensure that WTOpartners fully comply with their international obligations, the need to protect andenforce intellectual property rights and, in particular, geographical indications, theneed to safeguard the access of Community top quality products in the agriculturalsector to third country markets, the fact that the trade practice affects a wide range ofproducts and could also affect other Community industries, the fact that thecomplainant is a major industry and employer in the Community, the need to ensure amarket for exports in certain industrial sectors, the possibility that other countries mayengage in similar trade practices increasing the harm to the Community, etc..

The Commission may attempt to investigate facts not alleged in the complaintprovided such facts are related to the main issue of it. During the investigation, theCommission will also take eventual possible violations of international trade rulesother than those alleged in the complaint into account.186 It may also investigateproducts other than those referred to in the complaint, particularly those whichinterested parties, who make themselves known within the time limits, show to beaffected by the alleged practices which result in a obstacle to trade.187 Furthermore,the Commission may try to analyse legal provisions other than those alleged in thecomplaint, even if such provisions are not part of an agreement which give a right ofaction for a complaining party who is not a Member State.188 However, despite anybroad interpretations that the Community institutions may try to adopt, the fact is



183 Articles 1 and 6 Ibid.184 In fact, there has never been, either under the NCPI or the TBR, any case filed by a Member State.185 Articles 8, 11 and 12 TBR.186 Cf, Trade Practices Maintained by Canada in Relation to Imports of Prosciutto di Parma, O.J. 22.6.99

C176/6.187 Cf, Measures Imposed by the Republic of Korea Affecting Trade in Pharmaceutical Products, O.J. 30.7.99

C218/3.188 Interview at the Commission, June 1997.

that the TBR severely limits any action to the rule of international law. There must bea right of action which is derived from an international agreement.

A right of action exists when international trade rules either prohibit a practiceoutright, or give another party affected by the practice the right to seek the elimin-ation of the effects of the practice in question.189 Thus, the TBR may be used againstpractices which violate international agreements or which, though not prohibited,cause injury to the domestic industry of the Community or seriously prejudice theinterests of the Community,190 or simply nullify or impair the benefits arising fromsuch agreements. In this sense, it could be argued that the nullification andimpairment provisions of Article XXIII (1) (b) of GATT and the Understanding onthe Rules and Procedures Governing the Settlement of Disputes191 could be used toallow the Community some flexibility and to try to influence the agenda in new areasof trade.192 Traditionally, the GATT/WTO case law has considered the benefitsprotected to be the assurance of better market access through the improved marketcompetition derived from a tariff binding or the promise of a tariff binding.193

Nevertheless, some GATT/WTO panels reveal a certain tendency to consider, underspecial circumstances, a broader range of areas in which the tariff bindings are oflittle or no importance.194 This approach could improve the possibility of using thenullification and impairment provisions to develop new rules in new areas of trade.195

However, taking into account the GATT/WTO precedent on non-violation cases, andthe Kodak panel report in particular, such an approach would be extremelydifficult.196 A complaining party bringing a non-violation case before a WTO panelmust prove that it had a reasonable expectation that the benefits deriving from theagreement it was entering into would not be nullified or impaired by measures taking



189 Article 2(1) TBR.190 In this sense, see Article 5 of The Agreement on Subsidies and Countervailing Measures; cf, Brazilian

Export Financing Programme, O.J. 17.4.99 C108/33.191 Article 26 of the Understanding.192 In this sense, there have been two TBR cases against practices which, although they did not violate

international trade agreement were alleged to nullify or impair their benefits. Cf, Trade Obstacles toCopper Scrap in Korea and India, O.J. 22.5.96 C 148; Trade Barriers to the Leather Sector in Japan, O.J.9.4.97 C 110/2 (where one of the obstacles to trade alleged were certain restrictive business practiceswhich nullified or impaired the benefits of GATT). The Commission considered however that theseallegations had not been proven. Cf, Trade Barriers to the Leather Sector in Japan, O.J. 3.6.98 L159/65. Itis important to note that the European Community had already filed a non-violation case in the GATTDispute Settlement Mechanism against Japanese restrictive business practices which were considered tonullify or impair the benefits arising from GATT. Communication from the European Communities,Japan- Nullification or Impairment of the benefits Accruing to the EEC under the General Agreement andImpediment to the Attainment of GATT Objectives, L/5479, 8 April 1983; cf, Yamane, ‘EU Efforts toOpen the Japanese Market: Government, Market Structure and Private Practices’, (1998) 3 EuropeanForeign Affairs Rev. 481–504, 501.

193 Cf, Von Bogdandy, ‘The Non-Violation Procedure of Article XXIII:2 GATT: Its Operational Rationale’,(1992) 26:4 J. World Trade 95–111, 98.

194 Cf, EC Tariff Treatment of Citrus Products from Certain Countries in the Mediterranean Region, L/5776(1985); United States Measures Affecting Nicaragua, L/6053 (1986); cf, Chua, ‘Reasonable Expectationand Non-Violation Complaints in GATT/WTO Jurisprudence’, (1998) 32(2) J. World Trade 27–50, 39.

195 Cf, Cho, ‘GATT Non-Violation Issues in the WTO Framework: Are They the Achilles’ Heel of theDispute Settlement Process’, (1998) 39(2) Harvard Int’l L. J. 311–355 (arguing that the use of nonviolation cases should be limited and instead non violation should be reframed into violation cases withinthe context of the WTO or the other multilateral organisations).

196 Japan- Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R.

place in the foreign country.197 First, a non-violation case would require a positivemeasure of a government.198 A private action may be considered as a governmentmeasure if there is sufficient government involvement in it. It is unlikely thatgovernmental tolerance of private practices would be considered as a non-violationcase; unless such action is reflected in a positive measure such as the granting of anexemption by the competition authorities or the failure to fulfil legal obligations.199

The benefits may refer to the agreements of GATT 1947 as well as those of the WTOagreements. However, the contracting party must not have been able to foresee thenullifying or impairing event. Thus, if the measure existed before the GATTconcession, there would be a strong presumption that the complainant should haveanticipated the measure. Moreover, it is the complaining party that has the burden ofproving the nullification or impairment of benefits in non-violation cases.200 It mustbe proven that the measure had more than a de minimis contribution to nullificationor impairment. Whenever the complaint refers to a trade obstacle other than a cleartrade barrier such as a quota or a tariff, the complaining party has the heavy burdenof proving the existence of adverse effects. In any case, the Panel cannot ask thecontracting party to remove the nullifying or impairing measure but only allow forcompensatory measures.201 Thus, the possibilities of using the non-violation pro-visions to influence the future developments of the international trading system areseriously limited.

It could be argued that the Community institutions could initiate TBR investig-ations against obstacles in cases where it is not clear whether or not there is alegitimate right of action arising from an international trade agreement. In thissense, the Commission will initiate investigations whenever there is simple primafacie evidence of a right of action arising from international agreements.202 TheCommission could use the threat that the initiation of an investigation implies in



197 Cf, Petersmann, ‘Violation-Complaints and Non-Violation Complaints in Public International TradeLaw’, (1991) 34 G. Y. B. Int’l L. 175 (1991); P. Pescatore, ‘Drafting and Analyzing Decisions on DisputeSettlement, in P. Pecatore, Davey and A. Lowendfeld, (eds.), Handbook of WTO/GATT DisputeSettlement, (Volume I) (Transnational Juris Publications Inc, 5th 1995). For the GATT case law on nonviolation cases, see Australian Subsidy on Ammonium Sulphate, 6 November 1950,BISD 7S/68; EuropeanEconomic Community- Production Aids Granted on Canned Peaches, Canned Pears, Canned Fruit Cocktailand Dried Grapes, L/5778, 20 November 1985; German Import Duties on Starch and Potato Flour, BISD 3S/78 (1955); Treatment by Germany of Imports of Sardines, G/26, 31 October 1952, BISD 1S/53; ItalianDiscrimination Against Imported Agricultural Machinery, L/833, 23 October 1958, BISD 7 Supp. p. 68;Japan, Trade in Semi-Conductors, L 6309, 24 March 1988, BISD 35 S/116; Uruguayan Recourse to ArticleXXIII, L/1923, 16 November 1962, BISD 11 S/95; United States- Restrictions on the Importation of Sugarand Sugar-Containing Products Applied under the 1955 Waiver and under the Headnote to the Schedule ofTariff Concessions, L/6631, 22 June 1990; Panel on Vitamins, L/53331, 18 June 1982, BISD 29S/110.

198 The only time a government negative measure has been considered as giving rise to a non-violation casewas in German Import Duties on Starch and Potato Flour, BISD 3 S/78 (1955) where the non fulfilment ofa promise was considered nullifying the reasonable expectations of the claiming party.

199 Cf, Komuro, ‘Kodak-Fuiji Film Dispute and the WTO Panel Ruling’, (1998) 32(5) J. World Trade161–217, 215–217.

200 Cf, Uruguayan Recourse to Article XXIII, L/1923, 16 November 1962, BISD 11 S/95, paragraph 15;United States- Restrictions on the Importation of Sugar and Sugar-Containing Products Applied under the1955 Waiver and under the Headnote to the Schedule of Tariff Concessions, L/6631, 22 June 1990,paragraph 5.20; Japan, Trade in Semi-Conductors, L 6309, 24 March 1988, BISD 35 S/116, paragraph131.

201 Cf, Australian Subsidy on Ammonium Sulphate, 6 November 1950, BISD 7S/68, paragraph 16.202 Cf, United States Antidumping Act of 1916, O.J. 25.2.97 C 58/14.

order to change foreign trade practices even if they were not clear-cut cases. Thus,the formality of the procedure, with its strict deadlines, could intimidate foreigncountries.203 However, the provisions of the TBR jeopardise the credibility of suchthreats. Article 12 (2) of the Regulation makes clear that the Community must followthe dispute settlement commitment whenever this is required by its internationalcommitments.204 The possibility of threatening third countries in unclear cases islimited by the fact that, in most cases, it will be a WTO Panel that will decide on theissue. Secondly, as we shall see, even after the whole procedure has been followed,and the WTO Dispute Settlement Mechanism has allowed for the adoption ofretaliatory measures, the Council must decide to retaliate by qualified majority. It isdoubtful whether the majority of Member States would support retaliation in nonclear-cut cases. Thus, from a strategic point of view, the best thing that the foreigncountry should do is to wait until the very last moment before removing themeasures.

The TBR’s commitment to international trade law could be relativised; it could beargued that the instrument adds very little to the Community powers of retaliationbecause it could always take measures under the general Article 113 of the Treaty.205

Indeed, the Community could always follow the general market access strategyprocedure and adopt, if necessary, measures under Article 113 of the Treaty. However,while this interpretation is legally correct, it is undeniable that this instrument creates amechanism which makes retaliation much easier and thus increases the threat againstthe foreign country in order to change its trade practice.206 The foreign country willcertainly not perceive in the same manner a threat of measures taken following adetailed mechanism and after a whole procedure has been adopted, as opposed tounder general constitutional power.

Thus, the political bargaining which preceded the implementation of the TBRgreatly limited the flexibility of the previous Regulation. The strict and inflexiblecommitment to international trade law has become the most important feature of theTBR.207 Indeed, the basic principle of the Commission is ‘never try to imagine anyunilateral TBR action which would not be compatible with the Community’sinternational obligations under the WTO’.208 This approach does not necessarily



203 In fact, there have been several cases in which the mere threat of initiating a case has removed the foreignobstacle to trade.

204 An interesting issue is whether the Community may retaliate in cases of loopholes within the disputesettlement procedure. An example of this could be Article 9 of the Agreement on Subsidies and Counter-vailing Measures which provides for a dispute settlement procedure before the Subsidies Committeewhere non actionable subsidies have caused serious adverse effects to the domestic industry of aContracting Party. However, unlike the general rules on the Understanding on Rules and ProceduresGoverning the Settlement of Disputes, Article 9 does not guarantee that the Subsidies Committee disputesettlement procedure will not be blocked. In cases where the Community finds itself in a situation wherethe foreign country maintaining the obstacle to trade blocks the procedure, it should be able to retaliatethough no formal authorisation has been granted.

205 Cf, Bourgeois, op cit n 131, at 2.206 An example of this is Rules of Origin for Textiles in the United States, O.J. 4.3.97 L62/43 (where the

United States did not take the requests of the European Union seriously until a TBR procedure wasinitiated).

207 But cf, Beekmann, ‘The 1994 Revised Commercial Policy Instrument of the European Union’, (1995) 19World Competition53–75.

208 P. Sourmelis, ‘Seminar on the Trade Barriers Regulation’, Commission of the European Community,Brussels, March 1997.

reflect a stronger devotion to the multilateral trading system.209 Instead, the commit-ment to international trade law in the TBR is the point of equilibrium between thedifferent constitutional powers of the Community. The free trade Member States hadallowed for a more active market access instrument only on condition that it wasstrictly committed to the standards of international trade law as contained ininternational agreements.

The TBR’s commitment to international trade law may explain why the Com-mission seems to be so interested in an efficient WTO Dispute Settlement Mechanism,and thus calls on Member States to keep their faith in the WTO.210 But this approachmight not always be useful. First, as explained above, strong trading partners mayneed some flexibility in order to influence the system. The world trading system is agame in which the rules are in permanent development. In this sense, the constructionof a common European market model implies, to a certain extent, its protection at aninternational level.

Second, overemphasising the element of international trade law can lead to blindreliance on the international trading legal system and lead us to consider theenforcement of international trade law as always being in the interest of theCommunity. Thus, in the notices of initiation in all TBR cases, the Commission hasstated that ensuring that third countries fully comply with their commitments underthe WTO Agreements is a priority for the interests of the European Community. TheCommission believes that the United States has successfully played the role of theinternational trade law enforcer and the European Union should start to play the samegame.211 But what the Commission seems to overlook is the fact that the WTOagreements simply enshrine an Anglo-Saxon market model which does not reflect thevariety of systems within the European market. In a game, it is not only importanthow well the actors play, but what the rules are. In a casino, no matter how good theplayers are, the house always wins. Enforcing the rules of the international tradingsystem might not be in the interests of the Community because, maybe, theinternational legal system is not always in the Community’s interests. Moreover,enforcing the rules of the system on other parties implies accepting the possibility ofhaving those same rules enforced against oneself. Thus, if the Community cannoteffectively influence the rules of such a system, it is playing a game which it can neverwin.



209 It could be argued that as a creature of law, the European Union gives great importance to the rule ofinternational law. In this sense, the European Court of Justice has consistently held that the Communityis bound by the rule of international law. Cf, Joined Cases 21–24/72, International Fruit Company, [1972]ECR 1219; Messen, ‘The Application of Rules of Public International Law within Community Law’,(1976) 13:4 Common Market L. Rev. 485–501 (1976). Furthermore, it has been advocated thatCommunity institutions should exercise self restraint when interpreting GATT law, so as to avoidunilateral interpretations not based on explicit or implicit consensus between the contracting parties. Cf,Opinion of Advocate General Van Gerven in Case 187/85, FEDIOL v. Commission, [1988] ECR 4155.The Court seemed to follow such opinion. But this is in strong contrast with many other areas of theCommunity’s trade policy; cf, Winters, ‘The EC and Protection: The Political Economy’, (1994) 38European Economic Rev. 596–603; G. Patterson, ‘The European Community as a Threat to the System’,in W. Cline (ed.), Trade Policy in the 1980s, (Institute for International Economics 1983), 223–242

210 Cf, EU/WTO: Sir Leon Brittan Explains Why it is in the EU’s Interest to Accept and Support WTODispute Settlement Procedures and Conclusion- Procedures in Progress, Agence Europe No 7076, 10October 1997, at 8.

211 Interview at the Commission, Brussels, March 1997.

D The Procedure and Scope of the TBR

The bargaining process which led to the inflexible commitment to international tradelaw also affected the procedural features of the regulation. Although devised in a morelimited way than the Commission’s 1992 proposal, the TBR was intended both torevitalise the role of the European Union in world trade and enhance the powers of theCommission against the Member States. However, the latter’s lack of trust in theCommunity, and their constant reassertion of power, severely limited the Commis-sion’s initial objectives. Nevertheless, the procedures of the TBR illustrate, first, howthe Common Commercial Policy is based on the need to keep a shifting balancebetween the advantages of acting together to pursue common goals and the need toensure that the interests of all the Member States are not jeopardised to anunacceptable extent. Second, they highlight the extent to which the ability of thedifferent trade policy actors to influence the decision-making process varies dependingon the level of policy, the step of the procedure at which the decision has to be takenand the area of international trade. Third, the mechanism of the TBR shows how,despite the control of Member States and the limitations on the scope of theinstrument, the Commission is sometimes able to achieve what it considers to be acommon goal.

The strict control of the Member States over the Commission’s MAS was to bebypassed by the TBR. The alliance between the Commission and Communityenterprises, through the new third track which allowed action on behalf of the latter,was intended to result in an improvement of the powers of the Commission.212 Thisenhancement was based both on how the decisions were to be taken and on the basicfeature of market access trade instruments: the threat of retaliation. The division ofpower between the Commission and the Council, with regard to decisions to be takenduring the procedure, implies a serious threat of retaliation in clear-cut cases ofviolation of international trade law which should compel the foreign government totake the Commission seriously.

Within forty-five days of the complaint being filed, the Commission must decidewhether or not to initiate an investigation procedure.213 Even if the Article 113Committee decided not to take action at the request of an enterprise or industry underthe MAS, the latter would still be able to ask the Commission to start a TBRinvestigation. During this period, the Commission must determinate whether there isprima facie evidence of the facts alleged in the complaint. In practice, most of theinitial analysis will have been done in the meetings between the Commission officialsand private business before the case is officially filed. Furthermore, Commissionofficials will even invite the private business to file a complaint after the case has beendiscussed within the Market Access Action Group and has been considered as ‘TBRinteresting’. Thus, most of the forty five day period is used to make sure that there isenough support within the Commission to launch the case and that there is nooverriding opposition within the Member States. As with all the steps of the TBR,Member States will be able to express their position, thus allowing the Commission



212 In this sense, it is no wonder the Commission’s call for the co-operation from European business in orderto implement the TBR. Cf, Stewart, ‘Market Access: A European Community Instrument to BreakDown Barriers to Trade’, (1996) 4 International Trade L. Reporter 121.

213 Article 5(4) of the TBR. This forty five day deadline may be suspended at the request of the complainantin order to allow the provision of complementary information. Cf, Brazilian Export FinancingProgramme, O.J. 17.4.99 C108/33.

both to reflect the different Member States’ interests and to put forward proposalswhich can obtain the necessary support, enabling a dialogue betweenintergovernmental and supranational interests.214 The views of the different MemberStates will be inputted by means of contacts with their permanent representations aswell as through the cabinets of the Commissioners, which represent a wide spectrum ofCommunity and national interests.215

Before deciding to initiate a procedure, the Commission must formally consult theMember States as they are represented in the TBR Advisory Committee.216 Inpractice, such formal meetings will serve only for an exchange of views betweennational and Commission officials and to state any different opinions which may exist.But as the foreseen procedure for this decision is the advisory committee procedure,217

the Commission does not, legally speaking, need the approval of the Committee inorder to initiate a case. Although it would be hard to conceive of the Commissionopening an investigation without being sure it had the support of most Member States,or that, at least, its decision would not be opposed by the majority of them, noMember State nor private party may challenge the Commission’s decision to open aninvestigation. Only the complaining party may have its day in court and challenge theCommission’s refusal to initiate an investigation. Thus, even if the Commissiondecided to refuse a TBR complaint which had previously been refused by the Article113 Committee, the private party could still make itself heard by appealing to theCourt of First Instance.

Despite the influence that Member States can exercise, the impossibility ofchallenging the Commission’s decision to open an investigation is a fundamentalenhancement of the Commission’s powers and of its ability to run foreign trade policyunilaterally in comparison with the general Article 113 procedure of the MAS.Whenever it is clear that there is a foreign violation of international trade law, theinitiation of an investigation implies a serious threat of retaliation against this foreigncountry. This threat will provide the Commission with some flexibility to bargain withthe foreign country and implement its trade policy without the strict control of theMember States.



214 Cf, M. Cini, The European Commission: Leadership, Organisation and Culture in the EU Administration,(Manchester University P 1996), 101–179, 111. For an analysis of this dialogue between the Commissionand the Member States within anti-dumping practice, see Holmes/Kepton, ‘EU Anti-dumping Policy: ARegulatory Perspective’, (1996) 3(4) J. European Public Policy 647–664, 653.

215 Cf, D. Spence, ‘Structure, Functions and Procedures in the Commission’, in G. Edwards and D. Spence(eds.), The European Commission, (Longman 1994), 97–116, 103. The national interests of theCommissioners was evident in the anti-dumping salmon cases. Cf, ‘EU/Norway: EU ContinuesDeliberations on a Possible Anti-Dumping Duty on Norwegian Salmon’, Agence Europe, No 6949, April7–8, 1997, at 5; ‘EU/Norway: Salmon Case Risks Having Disastrous Repercussion On Relation,Norwegian Prime Minister Says’ ,Agence Europe No 6953, April 12, 1997, at 7 bis; ‘EU/Anti-Dumping:Cotton, Salmon, Tubes and Bed Linen Cause Agitation in Community Circles’, Agence Europe No 6981,May 26–27, 1997, at 14; ‘EU/Norway: Commission Puts Off Decision on Salmon until Friday’, AgenceEurope No 6982, May 28, 1997, at 15 bis; ‘EU/ Norway: Commission Approves Measures Agreed WithNorwegians to reduce Effects of Dumping on Norwegian Salmon’, Agence Europe No 6986, June 2–3,1997, at 13.

216 Articles 8(1) and 7 of the TBR. The Commission will, in fact, also inform the 113 Committee. Article 7(2)TBR. On the role of committees within the Community decision making procedures, see Joerges/Neyer,‘From Intergovernmental Bargaining to Deliberative Political Process: The Constitutionalisation ofComitology’, (1997) 3(3) European Law Journal 273–299.

217 Article 3 of Council Decision 99/468, laying down the procedures for the exercise of implementing powersconferred on the Commission, O.J. 17.7.99 L 184/23.

The freedom of the Commission may further be seen by analysing the decisionswhich may be taken once an investigation has been initiated. It is the Commission thatmust conduct all investigations and negotiations. It must decide within five monthsfrom initiation, or seven months where complexity so demands, whether any actionsshould be taken.218 During this investigation period, the Commission will try todetermine whether there is a right of action for the Community and whether there areadverse effects or injury resulting from the foreign obstacle to trade. The Commissionwill send questionnaires to foreign governments, foreign and domestic companies, andwill send missions to gather information. It would be naïve, of course, to think that itwill not enter into some sort of negotiations. However, the Commission will have noobligation to exhaust the five to seven month period mentioned in the Regulation.Article 12(1) allows the Commission to make a decision on whether or not to takeaction without prior investigation if there is a clear-cut case. The Commission will thushave a certain degree of flexibility which allows it to speed up or slow down theprocedure in accordance with its needs.

Once the Commission has concluded its investigation, it may take the followingdecisions. It may decide to terminate the procedure,219 to follow an internationaldispute settlement procedure,220 to suspend the procedure221 or that the Communityshould enter into an international agreement with the third state.222 In all such cases,the Commission’s decision will simply be subject to a safeguard committeeprocedure.223 Thus, unlike the Article 113 procedure, the Commission may go to theWTO or enter into bilateral consultations with a foreign country unless the Council,by a qualified majority, decides otherwise.

However, the Regulation makes it clear that the Commission may not conclude anyinternational agreement on its own.224 All negotiations of international agreementsfollowing a TBR procedure must be carried out according to the general rules ofArticle 113 of the Treaty.225 The Regulation follows the European Court of Justice’sdecision which held that, subject to certain exceptions, the conclusion of internationalagreements is within the competence of the Council and not the Commission.226 Thus,



218 Article 8 of the TBR.219 Cf, Mass Housing Levy in Turkey, O.J. 17.12.96 L 326/71; Import Licensing for Steel Plates in Brazil, O.J.

19.1.98 L32/38.220 Cf, Rules of Origin for Textiles in the United States, O.J. 4.3.97 L 62/43; United States Anti-dumping Act

of 1916, O.J. 28.4.98 L126/36; Japanese Practices in Respect of Imports of Leather, O.J. 3.6.98 L159/65;Music Licensing Practices in the United States, O. J. 22.12.98 L346/60; Trade Obstacles to Leather inArgentina, O.J. 4.11.98 L295/46.

221 Piracy of Sound Recordings in Thailand, O.J. 16.1.96 L 11/7.222 Article 11 of the TBR.223 The Commission must inform the Advisory Committee of its intention to take a decision. Once the

Commission has discussed the issue with the Committee and has adopted a decision, it must inform allthe Member States. The Commission’s decision shall apply unless, within ten days from the Commission’scommunication, any of the Member States decides to refer the matter to the Council. The latter may,within a period of thirty days from the referral, overturn the Commission’s decision only on a qualifiedmajority. Otherwise, the Commission’s decision stands. Article 14 of the TBR. Article 6 of CouncilDecision 99/468, laying down the procedures for the exercise of implementing powers conferred on theCommission, O.J. 17.7.99 L 184/23.

224 Under the old Regulation the Commission concluded on its own international agreements. Cf,Unauthorised Recordings in Indonesia. O.J. 17.5.88 L 123/51.

225 Article 11(3) of the TBR.226 Case C 327/91, France v. Commission, [1994] ECR I-3641; Burrows, ‘No General External Relations

Competence for the Commission’, (1995) 20 European Law Rev. 210.

Member States suspicious of the Commission’s action and willing to preserve theirinfluence in trade policy matters have restrained all attempts by the Commission toenhance its negotiating powers in the international scene further by means of TBRagreements.227

After following an international dispute settlement procedure whenever theCommunity’s commitments require so,228 the Commission may propose the adoptionof retaliation measures to the Council.229 The latter may only be able to adoptretaliatory measures by a qualified majority vote. Any Member State, the complainingparty or private parties affected by the measures may challenge the Council’s decisionbefore the ECJ. The free trade Member States limited the threat of retaliatorymeasures and, to a certain extent, the Commission’s powers to manoeuvre by estab-lishing the need for a qualified majority within the Council.230 However, wheneverthere is a clear-cut case of foreign violation of international trade law as contained ininternational agreements, the threat will be quite serious. It will be difficult for theCouncil to decide not to implement the retaliatory measures allowed for by the disputesettlement body after the whole TBR procedure has been followed.231

Nevertheless, the scope of the TBR and the powers of the Commission wereseriously diminished by the power struggle between the Member States and theCommunity regarding trade policy. As a result of both the ECJ’s Opinion on the WTOand the Member States’ continuing distrust of the Community institutions, someMember States in the Council were happy to introduce Article 2(8) of the Regulation.Furthermore, with the purpose of maintaining a sole legal basis and assuring theUruguay Round implementation package, the Commission decided not to introduceany legal basis for the instrument other than Article 113. Thus, the Court’s Opinionaffected the scope of the TBR with regard to the protection of the Communityinterests concerning intellectual property rights [IPRs] and services.

As Article 113 covers only the Community’s customs measures affecting counterfeitgoods, the scope of the TBR would, in principle, be seriously limited in the area of



227 In this sense, it is interesting to compare this provision with the Community’s practice of entering intoundertakings with foreign countries under the anti-dumping procedures. Many of the anti-dumpingprocedures have ended in undertakings. Cf, P. K. M. Tharakan, ‘The Political Economy of Anti-Dumping Undertakings in the European Communities’, (1991) 35 European Economic Review 132–1359;P. K. M. Tharakan, ‘East European Countries and Antidumping Undertakings’, in P.K.M. Tharakan(ed.), Policy Implications of Antidumping Measures, (North Holland 1991) 269–292. The Commissionmay both accept or offer undertakings from foreign exporters or producers; its decision being subjectonly to a guillotine procedure in the Council. Cf, Articles 8(2) and (5) Council Regulation 384/96, O.J.6.3.96 L 56/1, as amended; Case C-133/87 & C-150/87, Nashua Corporation v. Commission and Council,[1990] ECR 719; Case C-156/87, Gestetner v. Council, [1990] ECR I-781. The Commission’s powers underthe anti-dumping law are further enhanced by the fact that the Community authorities have a widemargin of discretion to refuse or accept such undertakings. Case 204/84, Toyo Bearing v. Council, [1987]ECR 1809; Case 258/84, Nippon Seiko v. Council, [1987] ECR 1923; Case 260/84, Minebea v. Council,[1987] ECR 1975; Joined Cases 294/86 & 77/87, Technointorg v. Commission and Council, [1988] ECR6077. Thus, it could be argued that the undertakings provisions in the anti-dumping rules have beensubject to capture by the Commission, in order to enhance its commercial policy powers.

228 Article 12 (2) of the TBR.229 Article 13(2) ibid.230 In this sense, anti-dumping and countervailing duties are imposed by simple majority within the Council.

Article 15(1) of Council Regulation 2026/97, O.J. 21.10.97 L288/1; Article 9(4) of Council Regulation384/96, O.J. 6.3.96 L56/1, as amended.

231 Interview at the Commission, June 1997. Interview with an official of Member State Permanent Repre-sentation to the European Union, July 1997.

IPRs. However, with the consent of the Member States, the Commission has been ableto adopt a broad interpretation which allows it to tackle, at least partially, foreigntrade obstacles in this area.232 Taking into account the fact that, from a strictly legalpoint of view, the TBR is simply a domestic procedural regulation, the Commissionhas, for the purpose of Article 113, considered that what is important is not whetherthe protection of IPRs falls within its scope but rather whether the foreign practiceaffecting IPRs is an obstacle to the trade of goods and services which fall under itsscope.233 The Commission has rightly considered that the aim of the TBR is to use thethreat of retaliatory measures in order to remove the foreign trade barrier. The foreigncountry’s decision does not necessarily affect the division of powers between theCommunity and the Member States because the division is only relevant to the extentthat it affects the Community’s internal order. Rather, it is simply a foreign country’saffair. The division of powers, between the Member States and the Community, andthe scope of Article 113, would be of relevance only if after a whole investigation hadbeen followed, it was considered necessary to take retaliatory measures or enter intoan agreement. Only in such cases, would it be necessary to suspend the TBR procedureand take measures in accordance with other legal basis. At this point, two scenarioscan be foreseen. First, the Community may have exclusive competence under a legalbasis other than Article 113. Such a basis might require a different decision-makingprocedure than qualified-majority voting. A diverse scenario would be that theCommunity does not have exclusive, or indeed any, competence to take the measure inquestion. Here, the Community and the Member States would have to act in the formof a mixity.234

Thus, although from a legal point of view, the Commission’s interpretation seems toimprove the possibilities of the TBR, the fact is that, from a strategic point of view, theTBR continues to be seriously ineffective with regard to the Community’s protectionof IPRs. Even with this interpretation, the threat of retaliation, and hence both thepossibility of allowing the Commission to manoeuvre in world trade and the possibili-ties of the foreign country removing the obstacle to trade, has been diminished. Thethreat of retaliation is proportional to the chances of the Council either adoptingretaliatory measures or taking another form of action. But if the Community has tosuspend the TBR and adopt measures under a more general legal basis, such as anarticle of the Treaty or in the form of mixity, the possibilities of the Council decidingsuch measures are significantly reduced. Thus, even under the Commission’s broadinterpretation, the threat of retaliation does not seem to be credible, the best thing fora foreign country being to wait until the very last moment before Community action isdecided. This will, of course, enhance the importance of the Council as the actor thattakes the decisions and limits the credibility of the Commission in the external sphere.A second-best policy, with regard to the protection of IPRs, will be the price paid forstronger Member State influence.



232 Cf, Vander Schuren/ Luff, loc cit n 116, at 217. Stewart, New Aspects of the EU Approach to the DisputeSettlement System- Trade Barriers Regulation, 5 (paper on file).

233 Cf, Trade Obstacles to Cognac in Brazil, O.J. 2.4.97 C 103/3 (where the case referred to obstacles to tradeof agricultural goods); Music Licensing Practices in the United States, O.J. 11.6.97 C 177/2 (where thecase referred to obstacles to trade of cross-border services, fees in regard to music broadcasting); TradePractices Maintained by Canada in Relation to Imports of Prosciutto di Parma, O.J. 22.6.99 C176/6 (wherethe case refers to obstacles to trade of agricultural products).

234 Cf, Kuipjer, ‘The New WTO Dispute Settlement System: The Impact on the European Community’,(1995) 29:6 J. World Trade 49–71, 58–60.

The Commission’s expansive interpretation seems to reflect the ambiguity of theentire Common Commercial Policy. While under Article 113 of the Treaty, the Com-munity does not have powers to negotiate agreements in the area of IPRs other thancustoms measures affecting counterfeit in goods, the Commission, by simply followingthe safeguard committee procedure established in an instrument adopted on the basisof Article 113, may bring IPRs cases before the WTO.235 Furthermore, this inter-pretation of the IPRs scope of the TBR highlights the mixity of the instrument and ofthe entire Common Commercial Policy. In a same proceeding, some measures may betaken by the Commission under the advisory committee procedure, others under thesafeguard procedure, and, finally, others may even require unanimity under a differentexclusive legal basis or on the basis of shared powers between the Community and theMember States. The Common Commercial Policy is thus in a continuum betweensupranationalism and intergovernmentalism. The power of the different actors toinfluence the outcome depends not only on the level of policy, as the comparisonbetween the MAS and the TBR shows, but also on the step at which the decision mustbe taken as well as the international trade sector which is affected. Moreover, ithighlights how the Common Commercial Policy is a balance between the need forefficiency and the need to take into account the diversity within the Community andthe sometimes resulting conflicting interests. The Member States’ acceptance of thisexpansive interpretation shows how the issue of the division of powers in the tradepolicy area is, in fact, one of procedure, as it affects the input of the different tradepolicy actors. Member States will agree to a common action but only as long as theirinterests are fully taken into consideration.

The problems of the TBR are much more severe in regard to trade in services. As aresult of Article 2(8), it will only be possible to open a TBR procedure with regard tothe services which fall under the scope of Article 113.236 Thus, the Commission will beable to open investigations only with regard to cross-border services. Among suchservices, it will be possible to include banking services, but then only those whichinvolve cross-border trade such as electronic transfers, counselling and financialanalysis performed either through electronic communication or post, insuranceservices strictly limited to cross-border operations, telecommunications, audio-visualservices which imply broadcasting via air or satellite but not cable, tourism serviceswhich are strictly limited to electronic or computer reservation services, etc..237 TheCommunity, however, will not be able to target foreign practices affecting importantemerging areas of trade, such as services which imply the establishment of legal orphysical persons or transport services.

The Commission, of course, hopes to change such this situation.238 There may betwo ways for the Community to broaden the scope of the instrument.239 First, theCommunity could consider getting rid of Article 2(8), introducing for the TBR otherTreaty provisions as a legal basis under which the Community might have exclusivecompetence to include international trade agreements beyond that covered by Article



235 Cf, Music Licensing Practices in the United States, O.J. 22.12.89 L346/60 (where the Commission, withthe consent of the Member States in the Advisory Committee, decided to take a case referring to the USviolation of IPRs with regard to music broadcasting to the WTO).

236 There have been several cases affecting foreign trade in services whose filing has been discouraged by theCommission because they did not fall under Article 113 of the Treaty.

237 Interview at the Commission, March 1997.238 Cf, Stewart, loc cit n 232.239 Interview at the Commission, June 1997.

113. This approach, however, could imply an alteration to the procedural elements ofthe TBR. The scope of the instrument would be broader but, very probably, both thethreat of retaliation and the role of the Commission would be significantly limited. Asecond, more complicated, approach would be to extend the scope of the TBR tocover fields where the competence is shared between the Community and the MemberStates. The Community would establish a code of conduct whereby the Commissionand the Member States would co-operate with the purpose of defending theCommunity’s interests in international trade. But again, this code of conduct wouldprobably complicate the decision-making procedure and inevitably reduce the threat ofretaliation and the role of the Commission.

In this sense, it seems that the Commission has used the Advisory Committee inorder to test the possibility of widening the scope of the instrument in the form ofintroducing a legal basis other than Article 113 of the Treaty. Thus, in one of theAdvisory Committee meetings, the Commission tried to foresee the Member States’position in the event of a formal proposal by presenting a draft memorandum for aninformal discussion. The response was rather discouraging but it illustrates how thequestion of the division of powers is one of conflicting trade interests between theMember States. While some Member States seemed to be ready to grant an expansionof the Community’s powers under the TBR, key Member States simply stated thatthere was no need for further changes. The idea was consequently dropped.240

Thus, the Commission waited until the end of the Intergovernmental Conferencewith the hope that an agreement between the Member States would extend the scopeof Article 113 of the Treaty, and, consequently, that of the instrument. But suchexpectations were never met.241 Nevertheless, the new Article 113 (5) could be read asallowing an ad hoc extension of the application of Article 113 to services andintellectual property for the specific purposes of the TBR.242 The Member Stateswould remain competent in all other aspects, such as the conclusion of internationalagreements, but they would be able to use, by unanimity, the muscle of the Communityin removing trade obstacles.

IV Conclusions

The TBR can be seen as an example of the European Union as player in the globalis-ation game by illustrating a shifting balance between an internal market diversity andthe need to act efficiently in the external sphere.

First, the TBR’s substantial and institutional features show how the persistence ofdifferent market economies within the Community, stressed by the process ofglobalisation, led the Community to adopt a second-best instrument. The MemberStates’ different approaches to international trade led them to distrust the Communityinstitutions and to adopt a TBR limited both in its narrow scope and in its strictcommitment to international trade law. As a result, the Community is bound to



240 Interview at the Commission, Brussels, May 1997.241 Dashwood, ‘The External Relations Provisions of the Amsterdam Treaty’, (1998) 35 Common Market L.

Rev. 1019–1045, 1022; Nefram. ‘Quelques Reflexions Sur la Reforme de la Politique Commerciale par leTraite D’Amsterdam: Le Maintien du Statu Quo et l’Unite de la Representation Internationale de laCoounaute’, (1998) 34(1–2) Cahiers de Droit Europeenne 137–154.

242 The European Policy Centre, Challenge Europe: Making Sense of the Amsterdam Treaty, (The EuropeanPolicy Centre 1998), 98.

enforce an international liberal order which it can influence only to a very limitedextent. By doing this, it oversees the existence of market diversity both at global andEuropean level.

Second, the TBR shows how the Common Commercial Policy is a struggle forpower between different actors. The trade instrument is an attempt to open a windowfor Commission action and European integration. It allows for more action on thepart of the Commission in the external sphere, as well as the creation of links betweenthe Commission and European business organisations. However, the Council hasmade sure that the Commission will not seize the instrument by introducing elementssuch as the need to inform the Article 113 Committee in addition to the AdvisoryCommittee, the impossibility for the Commission to conclude agreements on its own,the need for qualified majority in the Council in order to take any retaliatorymeasures, and the formal limitation of the scope of the instrument.

However, the TBR also highlights the superficiality of analysing the role of theEuropean Union in international trade either in supranational or intergovernmentalterms. Thus, in the TBR, there is a blurring of the line between both forces. On the onehand, the degree of influence of each of the actors depends on the decision that mustbe taken, and, as the threat of measures is the key element of the instrument, all suchdecisions have an impact on the external sphere. On the other hand, at each decision,all forces will be compelled to enter into a bargaining process. While the Commissionhas a strong control over most of the developments of the instrument, it must makesure that it has the support of the Member States. Similarly, though it is for theMember States to decide on the most severe decisions, the entire procedure ensuresthat the Commission will be able to influence the final outcome decisively.



The Trade Barriers Regulation: The European Union as a Player in the Globalisation Game

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