Order Code RS21185
March 27, 2002
CRS Report for Congress
Received through the CRS Web
Trade Policymaking in the European Union:
Institutional Framework
Raymond J. Ahearn
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Summary
Trade policy in the EU is made in the context of legal provisions provided by the
1957 Treaty of Rome. As part of this treaty, an institutional framework for the making
of trade policy — common commercial policy — was established. Despite relatively few
changes in the treaty base of the EU’s common commercial policy, its institutional
framework has evolved over time as the scope of what constitutes trade policy has
changed. The roles and functions of key institutions — the European Commission, the
Council of Ministers, subordinate bodies of the Council, the European Parliament, and
the European Court of Justice – are described in this report. The actual process of how
the EU makes trade policy is of growing interest to the United States as the EU
continues to play a larger and more assertive role in the world economy. This report will
be updated as events warrant.
Background
The EU is a treaty-based institutional framework that defines and manages economic
and political cooperation among its fifteen members. Impetus for the formation of the EU
came in the aftermath of the devastation of World War II with the signing of several
treaties by six countries – Belgium, France, Germany, Italy, Luxembourg, and the
Netherlands.1 By agreeing to integrate their economies in matters of coal and steel
production, trade, and nuclear energy, Europe’s leaders hoped to achieve a closer union
among the people’s of Europe and avoid another war on the continent.
As a result of the 1957 “Rome Treaties,” the European Economic Community (EEC)
came into force in January 1958. The EEC was designed to merge separate national
markets into a single common market that provides free movement of goods, people,
capital, and services across borders. To provide for the free move movement of goods,
1 Denmark, Ireland, and the United Kingdom joined the original six members in 1973; Greece
joined in 1981; Spain and Portugal followed in 1986; and Austria, Finland, and Sweden became
members in 1995.
Congressional Research Service ˜ The Library of Congress

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the EEC recognized that it required a common external trade policy to prevent one
member state from importing foreign goods at cheaper prices due to lower tariffs and then
re-exporting the items to another member state with higher tariffs.
Article 113 of the Treaty of Rome provides the legal framework for trade
policymaking. Embedded in this provision are two grants of authority for the making of
trade policy: (1) from the member states and their parliaments to the assembly of European
states, acting collectively through the Council of Ministers; and (2) from the Council of
Ministers to the European Commission.2 Article 113 states as follows:
! the common commercial policy shall be based upon uniform principles,
particularly in regard to tariff rates, the conclusion of tariff and other
agreements, the achievement of uniformity in measures of liberalization,
export policy, and measures to protect such as those to be taken in the
event of dumping or subsidies.
! the Commission shall submit proposals to the Council for implementing
the common commercial policy.
! where agreements with third countries need to be negotiated, the
Commission shall make recommendations to the Council, which shall
authorize the Commission to open negotiations.
! the Commission shall conduct these negotiations in consultation with a
special committee appointed by the Council to assist the Commission in
this task and within the framework of such directives as the Council may
issue for it.
Despite substantial changes in the international economic environment and in the
global trade agenda over the past four decades, Article 113 has been modified only slightly
on three occasions. The 1991 Maastricht Treaty on European Union (TEU) deleted and
added some text that did not modify the substance of the article. The 1997 Treaty of
Amsterdam amended article 113 (and renumbered it 133) by extending the scope of the
common commercial policy from goods to negotiations on services and intellectual
property in cases where the Council of Ministers agrees unanimously.3 And the 2000
Treaty of Nice, when ratified, will make further changes in the framework for the adoption
of agreements in the areas of services and intellectual property.4 On the other hand, the
2 Meunier, Sophie and Kalypso Nicolaidis, “Who Speaks for Europe? The Delegation of Trade
Authority in the EU,” Journal of Common Market Studies, September 1999, Vol. 37, No. 3, p.
480.
3 Young, Alasdair R., The Adaptation of European Foreign Economic Policy: From Rome to
Seattle, Journal of Common Market Studies, Vol. 38, No.1, March 2000, pp. 100-101. In a 1994
decision, the European Court of Justice had ruled that services and intellectual property are policy
areas subject to mixed national and community competence. In such areas, the principle of
unanimity can be required to adopt any agreement concluded.
4 Under Nice, agreements in the area of trade in services and commercial aspects of intellectual
property can be concluded by qualified majority vote, except when the external negotiation would
(continued...)

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institutional framework for the making of commercial policy has evolved over time as the
scope of what constitutes trade policy has increased to incorporate domestic regulations
and non-tariff issues.
European Commission
The European Commission is the EU’s version of a central executive body, vested
with power to propose legislation and common policies. The Commission also acts as the
guardian of EU treaties to ensure that EU legislation is implemented by all members.
For the trade issue, the Commission has broad authorities and responsibilities. Most
importantly, the Commission develops proposals for the initiation and content of
international trade negotiations and negotiates on behalf of the EU. In drawing up trade
proposals, the Commission seeks to balance different national and sectoral interests.
Depending on the negotiation and the mandate provided by the Council, the Commission
has considerable flexibility in deciding on negotiating tactics. The Commission also has
much autonomy for administering the EU’s trade remedy procedures (anti-dumping,
countervailing duty and safeguard procedures) against foreign non-members.
The Commission is headed by twenty commissioners who are nominated by the
Member States and then selected by consensus for a five-year term. Each commissioner
is charged with acting in support of EU needs and goals, independent of instructions from
national governments. Most commissioners have held high office in their home countries
previous to coming to Brussels. Each commissioner has an assigned portfolio and can
draw on the Commission’s administrative staff of 21,000 civil servants (often referred to
as Eurocrats) for support. In addition, they are assisted by a small cabinet or team of aides.
As a body they meet once a week to adopt proposals and finalize Commission policy.
When necessary, decisions of the Commission are made by majority vote.
The group of Commission officials directly responsible for trade policy matters is
located in the Trade Directorate. Directorates for the Internal Market and Industrial
Affairs, Competition, and Agriculture also have considerable input into trade policy. Each
directorate is headed by a director-general, who is equivalent in rank to the top civil
servant in a government ministry. The directors-general report to one of the twenty
Commissioners.5
Council of Ministers
While the Commission has the power and responsibility to initiate trade proposals,
the Council of Ministers (formally named the Council of the European Union since the
Maastricht Treaty went into effect in 1993) has the power to establish objectives for trade
negotiations (a negotiating mandate) and the ultimate authority to implement results. As
4 (...continued)
require the adoption of internal rules such as taxation that still requires unanimity. France
successfully negotiated a provision requiring cultural issues to be subject to the unanimity
principle.
5 Hayes, J.P., Making Trade Policy in the European Community, St. Martin’s Press, 1993, pp.
33-35.

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provided in Article 113, the Commission conducts trade negotiations “within the
framework of such directives as the Council may issue to it.” As interpreted over the
years, the Council has very broad powers in the conduct of all bilateral, regional, and
multilateral trade negotiations through its role as the main legislative body of the EU.
The Council is composed of ministers from each member government. The ministers
represent the interests of their member states. Different ministers participate in the Council
depending on the subject matter under discussion. From the mid-1980s, discussions on
trade policy have often been on the agenda of the Council of Foreign Ministers although
trade ministers have occupied the national chairs for discussion of numerous trade
matters.6
The Treaty of Rome provides that the Council shall make its trade policy decisions
by qualified majority vote (QMV) where formal decisions are required, or by unanimity
in some cases affecting trade in services and intellectual property protection. Each member
state has a given number of votes determined by a weighting system that takes population
and other factors into account. Currently, five member states and twenty-six votes are
necessary to form a blocking minority. In practice, however, the Council tends not to vote
on major trade issues, but reaches decisions by consensus.
Subordinate Bodies of the Council
The third institution referred to in the Rome Treaty is a special committee. Based
on the language of Article 113 (see above), it seems clear that the Council viewed the
special committee as its representative or watchdog over the Commission in its work on
trade issues. Initially called the 113 Committee but renamed the 133 Committee, it plays
a key role in helping member states influence EU trade policy.7 While the role of the 133
Committee is formally consultative, the assistance it provides the Commission is at the
heart of EU decision-making on trade.8
The 133 Committee meets at both the full committee or senior level and at the level
of deputies. Charged with overall responsibility for trade policy, the full members (often
referred to as Titulairies) meet on a monthly basis (August excepted). Full members tend
to be senior civil servants drawn from national ministries of trade, foreign affairs, or
finance. Usually close personally to the ministers they serve, they tend to have a good
sense of what actions are politically acceptable within their member states. As many full
6 Holt, J.P. pp. 36-37. The Council of Foreign Ministers was regarded as the top level decision-
making group until the European Council was added to the Council structure in 1974. Composed
of the Presidents or Prime Ministers of each member state and the president of the Commission,
this grouping, often referred to as the EU Summit, meets at least twice a year. Trade issues,
however, generally are discussed and settled at levels below the European Council.
7 The 133 Committee is still referred to as the 113 Committee in a number of journals and articles.
With the entry into force of the Amsterdam Treaty in 1997, the 113 Committee was renamed the
133 Committee as a result of the renumbering of Article 113 of the Treaty of Rome.
8 Murphy, Anna. “In the Maelstrom of Change – Article 113 Committee in the Governance of
External Economic Policy,” In Christiansen, Thomas, and E. Kirchner, Administering the New
Europe: Committee Governance in the European Union
(Manchester: MUP) 2000.

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members serve for extended periods of time, they have a reputation for dealing with
sensitive issues on an informal basis.
The 133 Committee also usually meets weekly at the level of deputies. The deputies
are drawn from member states’ permanent representations based in Brussels. This group
focuses more on technical than political issues.
Since the 133 Committee is an advisory body, no formal votes are recorded and its
deliberations are not published. Matters tend to be discussed until a clear consensus or
effective majority has been reached, and the commission tends to follow its advice.
According to one interpretation, “the Commission rarely insists on going against the
wishes of the Committee (which it is legally entitled to do) for the simple reason that its
members reflect the wishes of ministers who ultimately have the power to refuse to
conclude the agreement negotiated by the Commission.”9
Matters which the 133 Committee wants to refer to the Council tend to be prepared
by the Committee of Permanent Representatives (COREPER). Comprising member state
officials who are national ambassadors to the EU, their deputies, and a secretariat with a
staff of about 2,000, COREPER is a key group that assists the Council.
European Parliament
The 626 member European Parliament (EP) plays a limited and mostly indirect role
in trade policy. While the EP cannot enact laws like most parliaments, it can veto
legislation in areas such as social policy, agriculture, and the EU’s internal market. But
the EP does not have a veto power over trade legislation. However, by holding hearings
and issuing reports, the EP can influence the atmosphere for consideration of trade issues.
The EP has tried to exert greater influence over trade issues, particularly those that
have a heavy regulatory component. Reflecting perhaps an effort to enhance its powers
vis-a-vis the Commission and member states, the EP has in recent years been the driving
force behind a number of controversial trade issues that have divided Washington and
Brussels. These include the EU ban on aircraft engine hush kits to meet noise standards,
data protection issues that affect U.S. firms, and broadcast and motion picture quotas. In
addition, the EP tried to amend and ultimately blocked the Commission’s proposed
directive that would have made unsolicited takeovers of EU firms easier.10
European Court of Justice
The European Court of Justice (ECJ) is the EU’s version of a Supreme Court with
the responsibility to decide what is legal and what is not under the founding Treaties.
Cases may be brought to the ECJ by the Commission, the European Parliament, member
governments, nationals of member governments, or foreign entities. Given its powers to
9 Hayes-Renshaw, Fiona and Helen Wallace, The Council of Ministers, St. Martin’s Press, 1997,
p. 88.
10 Van Oudernaren, John. “E Pluribus Confusio:: Living with the EU’s Structural Incoherence,”
The National Interest, Fall 2001, p. 28.

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interpret the provisions of the European treaties, the ECJ has played an important role in
implementing the EU’s common commercial policy.
The ECJ has played a major role in deciding how policy powers are to be assigned
between the Commission and member states in a number of issue areas. Known as the
issue of “competence,” the ECJ has clarified that trade in goods falls within the exclusive
competence of the EU, but that investment remains mainly within the competence of
member states. And in 1994 the ECJ rejected the Commission’s request to extend its
competence for goods to services and intellectual property as well. By ruling that these
were areas of mixed competence, thereby subject to the principle of unanimity, the ECJ
arguably reduced the leverage of the Commission vis-a-vis member states during internal
bargaining on the EU position.11
U.S. Interests
As the EU plays a larger and more assertive role in the world economy, its trade and
investment policies increasingly have the potential to help or hinder U.S. economic
interests. For this reason, it is important for policymakers and private sector interests to
understand how and why EU trade policies are crafted in order to represent and defend
U.S. interests to the greatest extent possible.
From the perspective of institutional arrangements, the making of EU trade policy can
appear relatively straightforward. The Commission has the power to propose new
initiatives and the Council has the power to approve. In making its decision, the Council
relies heavily on the advice of the 133 Committee.
While the roles and functions of the relevant decision-making institutions are spelled
out, the relative influence of the key actors – the Commission, the Council, and the 133
Committee – on any specific issue is not easy to discern. Nor is it clear how each of these
institutions reach agreement and why they may differ.
Unlike in the making of U.S. trade policy, the EU lacks formal and public mechanisms
for taking advice and recommendations from the private sector. Most of EU trade
policymaking is done informally and behind closed doors. A number of U.S. trade officials,
including former U.S. Trade Representative Charlene Barshefsky, have criticized this
process. In her view, some of the stress in the U.S.-EU trade relationship derives from an
EU decision-making system that is slow, opaque, and lacks clear lines of authority
between the Commission and member states.12 Given that the EU process is unlikely to
change as result of external criticism, U.S. policymakers face the challenge of trying to
better understand how the process works and can be influenced.
11 Woolcock, Stephen, “European Trade Policy,” In Wallace, Helen and William Wallace, Policy-
Making in the European Union,
Oxford University Press, 2000, pp.274-375.
12 Barshefsky, Charlene, “USTR Barshefsky on Transatlantic Economic Relationship,” January
17, 2001. Found on the worldwide web at [http://www.useu.be/ISSUES/bars0017.html].