(UN)certainty matrix

Carlos Andrés Dávila Castañeda

Hiram Moliere Madrid Correa
EUROPEAN UNION AS SOURCE OF (UN)CERTAINTY
● Uncertainty about global trade disputes, the economic challenges stemming from climate change and
geopolitical factors are contributing to increased levels of policy-related uncertainty in Europe

● In response to uncertainty shocks, EU may reduce their investment, hiring or orders for foreign
intermediates, leading to a deceleration in trade and aggregate investment

● Consumers, in turn, may react to increased uncertainty by postponing consumption and increasing
precautionary savings
● 4
Domestic legitimacy measured by elections results (3)
● “The concept of political legitimacy is central to virtually all of political science because it pertains to
how power may be used in ways that citizens consciously accept”

● Pro-European Union powers managed to keep control of the European Parliament in the bloc-wide
elections of May 2019, following a surge in support for liberal and green parties in Germany, France
and the U.K

● we can assume that thanks to Since 1999, the center-right European People’s Party and its
predecessors have held the most seats, people are aware of their results and accept them
Domestic legitimacy measured by economic results (2)
International legitimacy measured by trade treaties (3)
“The EU has a common trade policy, whereby the European Commission negotiates trade agreements and
represents the EU’s interests on behalf of its 28 Member States. As such, trade policy is an exclusive power
of the EU — so only the EU, and not individual Member States, can legislate on trade matters and conclude
international trade agreements”

when making trade deals, the EU seeks to tackle those things that get in the way of trade when dealing with
other countries

● removing or cutting customs duties (taxes) on goods;

● scrapping any limits (quotas) on the amounts of goods that can be exported;
● allowing enterprises to provide services and bid for public contracts;
● cutting red tape which makes it harder for enterprises to export.
International legitimacy measured by trade and FDI (4)
The EU adopted in 2012 a regulation creating a set of rules for bilateral investment agreements between
individual EU members and non-EU countries, so as to make sure that they are consistent with EU law and
with the EU’s investment policy.

The regulation sets the conditions for applying the more than 1400 bilateral investment agreements
currently in force, as well as the conditions for EU members to modify existing agreements and negotiate or
conclude new ones. Those conditions are:
● that the agreement is not in conflict with EU law
● that the agreement is consistent with the EU’s principles and objectives for external action
● that the Commission did not submit or decided to submit a recommendation to open negotiations with the non-EU country
concerned
● that the agreement does not create a serious obstacle to the EU negotiating or concluding bilateral investment agreements
with non-EU countries
Domestic and international legitimacy measured by citizens’
rights(5)
The term ‘fundamental rights’ is used in European Union (EU) to express the concept of ‘human rights’
within a specific EU internal context.

Traditionally, the term ‘fundamental rights’ is used in a constitutional setting whereas the term ‘human
rights’ is used in international law.

The EU has recently adopted key legislative and policy measures in, for example, the areas of victim
protection, human trafficking and various EU Member States, among other steps, reformed their child
protection systems and made efforts to shorten the length of court proceedings.
Economic and trade relations with China( 4)
The EU is China's largest trading partner,and China is the EU's second largest trade partner after the
United States, while the EU has put an arms embargo and numerous anti-dumping measures in place.

“There is a dispute over textile imports into the EU (the Bra wars) with domestic European manufactures
losing out to cheaper Chinese imported goods. The EU and China have finally reached an agreement ending
the 'conflict of textiles', which poisoned their relations for several weeks. Both parties (the Chinese
government on the one hand, European Commission on the other) have finally found a deal that appears to
end the dispute between Beijing and Brussels. Under the terms of the agreement, China agreed, in exchange
for the release of 80 million items held in European ports, only half of these are deducted from its export
quotas”
Economic and trade relations with USA (2)

The European Union and the United States have the largest bilateral trade and investment relationship and
enjoy the most integrated economic relationship in the world.

Total US investment in the EU is three times higher than in all of Asia.

EU investment in the US is around eight times the amount of EU investment in India and China together.

The transatlantic relationship also defines the shape of the global economy as a whole. Either the EU or the
US is the largest trade and investment partner for almost all other countries in the global economy.
Economic and trade relations with Mexico(4)
The European Union and Mexico have reached an "agreement in principle" on the main trade parts of a new
EU-Mexico association agreement. The new agreement replaces a previous deal between the EU and Mexico
from 2000.

The new deal will:

● scrap high Mexican tariffs on European food and drinks

● allow EU firms to sell more services to Mexico
● pledge to protect workers' rights and the environment
Position regarding international institutions, such as WTO,
UN (3)
“The World Trade Organization (WTO) is made of governments and customs territories that set, apply and
enforce the global rules for trade between themselves.”

The WTO's highest decision-making body is the Ministerial Conference. The EU Trade
Commissionerrepresents the EU in this forum.

The European Commission also represents the EU in

● the General Council of the WTO, which acts on behalf of the Ministerial Conference and meets
regularly
● subsidiary WTO bodies, which set up rules for specific areas of world trade, e.g. respecting the
environment and monitor how they’re applied
SOURCES
● https://www.ecb.europa.eu/pub/economic-bulletin/focus/2019/html/ecb.ebbox201905_04~6b149ccb66.en.html
● https://www.bloomberg.com/graphics/2019-european-parliament-elections/

● https://ejpr.onlinelibrary.wiley.com/doi/full/10.1111/j.1475-6765.2006.00307.x

● https://ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_goods_-_tariffs

● https://ec.europa.eu/trade/policy/accessing-markets/investment/

● https://fra.europa.eu/en/about-fundamental-rights/frequently-asked-questions#difference-human-fundamental-rights

● https://en.wikipedia.org/wiki/China%E2%80%93European_Union_relations#Trade_conflicts

● https://ec.europa.eu/trade/policy/countries-and-regions/countries/united-states/#targetText=Total%20US%20investment%20in
%20the,than%20in%20all%20of%20Asia.&targetText=Either%20the%20EU%20or%20the,third%20of%20world%20trade%20fl
ows.
● https://ec.europa.eu/trade/policy/in-focus/eu-mexico-trade-agreement/#targetText=The%20European%20Union%20and%20Me
xico,EU%20and%20Mexico%20from%202000.&targetText=allow%20EU%20firms%20to%20sell,workers'%20rights%20and%2
0the%20environment
● https://ec.europa.eu/trade/policy/eu-and-wto/