In Canada, until very recently, the foreign affairs department was called the Department of Foreign Affairs and International Trade (DFAIT). Today, DFAIT is divided into two departments: Foreign Affairs Canada, and International Trade Canada.
The European Union also puts emphasis on trade as a vital part of foreign affairs.
Why do you think that is so?
List as many reasons as you can. You can also use Canadian examples, if you are not very familiar with examples from the European Union.
External trade is extremely important for putting the European Union on the map as a global power. The EU’s external trade policy allows the EU’s 27 countries to pool their resources and speak with one voice. Since most of the world’s economies tend to cluster in large regional groups, a common trade policy gives the EU member states more bargaining power when negotiating trade with third countries.
Another aim of the European Union’s external trade is to liberalize world trade by lowering customs barriers, and establishing trade regulations in compliance with citizens concerns about the environment, health, and sustainable development. In doing so, the EU plays its part by helping the rest of the world gain more prosperity.
Interesting Facts about the EU and Trade:
- The idea of customs free trade was an idea that existed from the very beginning of the history of the European Union, with the Treaty of Rome in 1957. The original purpose of the treaty was to create a customs union between member states and a common tariff for imports from third countries.
- The Common External Tariff (CET) is a common tax applied to imports from third countries, regardless of the member state of destination. It also means that imports from other member states are exempt from the CET.
- The European Union has preferential trade agreements with certain areas:- the European Economic Area (EEA): EU countries PLUS Norway, Iceland & Liechtenstein
– Central and Eastern Europe countries
– Mediterranean countries
– African, Pacific, and Caribbean countries (APCs) consistent with the Lomé Conventions
These groupings are constructed because the different regions vary in their trade needs.
- The European Union deals with its external trade mostly through multilateral agreements with the World Trade Organization. (See What is Multilateral Trade? for more information about what this means.)
- The European Union accounts for about one-fifth of world trade!
What is multilateral trade?
Click HERE to learn more!
DID YOU KNOW…
That the EU is the second major investor in Canada and that Canada is the fourth major investor in the EU?