6.1 EU external trade policy or Common Commercial Policy

The EEC's customs union for goods was successfully achieved, ahead of schedule, in 1968 with the removal of tariffs and quotas within "the Six". As internal tariffs were removed the Common External Tariff (CET), also known as the Common Customs Tariff (CCT), was introduced against the goods from 3^rd countries. The current average CET is in the range of 1.5% to 3% and expected to decline further.

The fact that the EEC was, and the EU is, a customs union and not a free trade area is significant.  In a free trade area the members retain the right to decide their own tariffs against 3^rd countries. In a customs union they do not. Moreover they retain the right to negotiate their own favourable bilateral trade deals. In both models there are no internal tariffs on those goods covered by the free trade agreement.

The Treaty of Rome (1957) stipulated that the EEC should represent its members in external trade matters in, for example, General Agreement on Tariffs and Trade (GATT) negotiations. GATT's successor is the World Trade Organisation (WTO). EU member states cannot, therefore, negotiate their own bilateral free trade agreements with favoured partners. They rely on the EU's trade Commissioner.

The prospect of Britain's joining the EEC in the 1970s was attractive for trade. Few question this. But tariffs on trade in industrial goods have fallen dramatically over the last 50 years globally. In the late 1940s, developed countries' tariffs on manufactured goods averaged about 40% but by 2000 the WTO estimated that they were about 4% (excluding textiles and clothing). Reflecting this fact, belonging to a regional customs union such as the EU is now much less relevant to business and trade than it was in the 1970s. Moreover, the stance of the EU on agricultural produce remains protectionist.

The Community's external trade policy reach has gradually extended. Developments include:

• Successive enlargements: Greece (1981), Spain and Portugal (1986), Austria, Finland and Sweden (1995), 10 countries (2004) and Romania and Bulgaria (2007).
• Trade agreements through the European Economic Area and with Switzerland.
• In Latin America, Free Trade Areas with, for example, Mexico and Chile.
• The Lomé Convention which was signed in Lomé (Togo) in 1975. It was a trade-and-aid agreement between the EU and many African, Caribbean and Pacific countries (ACP). The Lomé Convention was succeeded in June 2000 by the Cotonou (Benin) Agreement between the EU and the ACP countries.

The EU sets its tariffs and other customs rules on the basis of international agreements - mostly those negotiated within the World Customs Council (formerly the Customs Cooperation Council) and the World Trade Organisation. In principle these apply to all imports but the EU has trade agreements offering cut-rate entry and often duty-free access for goods from neighbouring, developing and emerging economies. These include the non-EU countries of the EEA, Switzerland, the ACP countries and countries around the Mediterranean basin (including the Balkans).

Rules of origin are those rules which determine the deemed country of origin of a manufactured product. The purpose of such rules is to regulate the dutiable status of products containing inputs from more than one country. The Community has two types: non-preferential and preferential.

Customs checkpoints at borders between EU countries disappeared in 1993.

RL, February 2007