EU Economic Statecraft: A Case Study of the Trade-Social Policy Nexus in EU-ASEAN Trade Relations

Abstract

Free trade, while opening world markets and providing opportunities for growth, is feared by many as degrading social standards. Indeed, during the last decades, there has been a growing debate about the compatibility between the international trading regime and respect for core human rights. Since the signing of the Lisbon Treaty in 2007, the European Unions (EU) trade policy has become an integrated part of its external relations which are guided by a set of quasi-constitutional values. Consequently, the EU has aimed to be a key player in the trade-social policy debate, by focusing on the promotion of labor standards through its trade instruments. However, the EUs supposed normative policies, where trade access is made conditional upon the protection of labor standards, go far from uncontested. Opponents of the approach insist that fair trade linkage is merely a Trojan horse for protectionism against competition from low-wage countries. The lack of general agreement on the issue complicates EU policymaking, thereby slowing down progress in multilateral and bilateral trade negotiations. At the same time, trade is a key foreign policy tool for the EU in its assertion of power on the global stage. After all, the EUs self-proclaimed normative identity implies that its actorness on the international scene relies on primarily non-military means. Therefore, the current tensions between the trade regime and the human rights regime are felt nowhere as intense as within the Union. Many scholars have extensively researched the issue of a so-called social clause in trade relations. Nevertheless, current literature focuses primarily on the debate in abstract, theoretical terms and in the multinational context of the World Trade Organization (WTO). Surprisingly, despite the explicit political commitment on the part of the EU, academic literature barely contains in-depth case studies of the social dimensions of the EUs commercial policy. A thorough understanding of the EUs behavior and strategy is nonetheless indispensable to illuminate the nature of power in international relations and to derive policy recommendations for the future. In this master thesis, a case study is presented of the EUs fair trade linkage policies in its relations with the Association of Southeast Asian Nations (ASEAN). More particularly, light is shed on the EUs balancing exercise between managing globalization on the one hand, and fully engaging in global competition on the other hand. By framing the EUs position within the literature on economic statecraft, a theoretical bridging of the EU as formidable trading power and as a normative power becomes possible. Moreover, the adoption of a tripartite, longitudinal approach allows for an understanding of the origins of the EUs principled approach (commitment), the translation of principles into action (capacity) and the impact of the policy (consequences). More precisely, in the first part of this thesis, an overview of the EUs commitment to the promotion of social standards through its trade relations with ASEAN is presented. In the second part of this master thesis, the capacity of the EU to deliver this normative aspect is analyzed. Future research is necessary to adequately assess the impact or consequences of the EUs approach. The study revealed the following key findings. With regards to the origin of the EUs principled approach, the analysis shows that European trade policy outcomes reflect a combination of purely normative preferences, but also bureaucratic interests and responses to concerns of the public. Against this background, it comes as no surprise that European trade instruments primarily focus on informational and overt diffusion of norms. Stated differently, norms are mostly spread through declaratory and strategic communications and by means of the EUs physical presence in ASEAN countries. Additionally, yet to a lesser extent, the EU also aims to promote social policy through the institutionalization of its relationship with ASEAN and through various agreements and their respective memberships of international organizations. At the same time, the exchange of goods and assistance between the EU and ASEAN present another avenue for norm diffusion on the part of the former. Finally, contagion, or the unintentional diffusion of norms can happen continuously and everywhere. Overall, the analysis has shown how limitations for the EU to act as a norms exporter in the multilateral trading regime severely shape its policies. The EU is certainly active in bilateral and unilateral contexts. At this point, however, the EU faces a double challenge as it has to balance its normative and commercial policies both horizontally and vertically. The outcome of the analysis therefore definitely provokes some new insights and questions. A first absolutely necessary step is to evaluate the effectiveness of the current approach. Future research is required to this purpose.