Impact of the global recession Essay

“ We are in recession period ” . Nowadays, it is easy to see in the intelligence 1000 of articles mentioning to this phenomenon. Indeed, this recession affects all the universe and have effects for everybody. In this manner, we are traveling to concentrate this work on the impact of the planetary recession on the European Union ‘s ( UE ) external trade policy precedences.

Merely when the recession is turning up, due to the uncertainties about the soundness of the Bankss and pessimistic positions on employment activities, the UE seem to hold some troubles to organize a united forepart.

In fact, at the informal European Council of March 1st, the 27 Heads of State of the EU have so reiterated their desire to move “ together and coordinated ” . They besides stressed that “ protectionism is no reply to the current crisis. ” ( El Pais, March 5th 2009 )

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But, foremost of all, talking about Europe is talking about “ common market ” . Making a common market is the chief object of the Treaty of Rome in 1957 set uping the European Economic Community. It is besides the base which have been developed the most European policies.

Nowadays we are speaking about individual market alternatively of common market, which shows the grade of economic integrating achieved in 50 old ages.

The constitution of a common market is focused on the abolishment of barriers to merchandise goods, individuals, capital and services between member provinces. This attack responds to economic ends, but besides political. The Common Market should enable companies to spread out easy their activities, therefore bring forthing economic benefits but besides benefits for consumers who have a greater assortment of merchandises at more competitory monetary values.

The liberalisation of trade in goods ( Article 23 and 24 TEC ) is the first measure in implementing the Common Market. If the abolishment of imposts responsibilities between Member States is effectual from 1968, many non-tariff barriers continue to impact trade in goods between Member States throughout the ’70s.

First of wholly, we are traveling to see the precedences of the EU trade policy, and so, we will see the precedences against the planetary competition.

Precedences on the EU trade policy

Article 133 ( ex.113 ) establishes a common commercial policy based on:

  • unvarying rules,
  • the decision of duty and trade understandings, and
  • other trade-related steps.

The current crisis, which began in 2007, was originally a lodging crisis, fiscal and banking, before going an economic and societal crisis.

All those bubbles are characteristic of planetary macroeconomic instabilities, peculiarly the inability of the United States to finance its ain economic system, increased family liability and the increasing usage of Asiatic nest eggs.

Banks suffers in a high manner this recession, holding many losingss, and halting the recognition offer ( Besides know as “ recognition crunch ” ) . Expecting the negative effects, economic agents have revised their outlooks, taking the economic system into a barbarous circle: the dead ingestion, investing is plumping, the GDP is worsening, the concern failures and unemployment additions while, for the first clip in 25 old ages, international trade will diminish in 2009 ( -2.8 % harmonizing to the IMF ) .

The crisis is barbarous: the integrating of fiscal markets has led to a rapid transmittal of the crisis and a crisp reversal of outlooks. This resulted in a continued impairment in the prognosis of growing of assorted calculating bureaus: IMF, OECD and, in the European instance, the European Commission.

In this manner, concerns and families see their state of affairs deteriorate and go more cautious, taking to take down ingestion and investings.

Major stock indices have lost between 38 % ( FTSE100 ) and 58 % ( Nikkei ) of their value between June 2007 and February 2008, happening the low point reached in January 2003 and 1997. The autumn was peculiarly crisp since early September 2008, with a diminution in market indices between 25 % ( FTSE100 ) and 41 % ( Nikkei ) .

The economic and fiscal crisis led to a weakening of the currencies of states most vulnerable. This represent a hazard that depreciation amplifies the crisis by fueling guess against the currency in frightening foreign investors by raising the cost of debt denominated in foreign currency and finally doing the state ‘s economic histrions ( authorities, concerns, families ) bankrupt.

Some European states have besides experienced this state of affairs in the past because of economic and fiscal crisis coupled with inordinate public debt, like the United Kingdom in 1976 and 1993, or Italy in 1992. ( FEB. 2009 A«Confluences mediterraneeA» , Magazine )

The EU recession have effects with the external exchanges.

Precedences of the EU against the planetary competition

It is of import to state that Europe ‘s economic strength today, in a planetary market-place, depends wholly on our ability to stay globally competitory. Harmonizing to David O’Sullivan ( Director General for Trade at the European Commission ) , Some two-thirds of European imports are inputs to the production procedure, which means, that they are transformed into higher value added merchandises, which are exported. In this manner, the EU needs to import to export. Europe ‘s economic strength depends, in this manner, on its fight in the universe.

For the intent of market defense mechanism, the EU besides makes usage of regulations of beginning and local content demands ; wellness & A ; safety steps ; but besides administrative processs and proficient demands

The chief instruments to be identified are: duties, anti-dumping and anti-subsidy measures/safeguards ; quotas ; ( foreign ) trade barriers regulation ; market entree instrument/database.

Specific governments such as CAP and the EU banana government are extremely protectionist and/or discriminatory.

The Eu universe trade represent 20 % of all universe trade. In 2002, 19 % universe trade was in goods and 24 % universe trade was in services. ( Beginning: Australian Bureau of Statistics,2009 )

However, we can detect a lessening of trades in 2009. In fact 16 % universe trade in goods ( Automobile, manner, Aircraft, etc. ) and 19 % in trade services due to the fiscal crisis.

At the same clip, it is of import that companies have just entree to 3rd markets, In fact, there are frequently more barriers than our ain markets. Presents, we can see an inter-dependence between economic systems. EU fight depends on turning prosperity in our major and future markets. Europe needs to be unfastened to this inter-economie and non insulate.

The EU is the planetary leader in exports of services, with 27.6 % ( 2007 ) of the universe market against 19.4 % for the US and 5.2 % for Japan.

Harmonizing to the economic expert Jennifer McKeown, “ the recession in the eurozone is worsened dramatically and this one, is much deeper than in the U.S. ” ( 14th feb. 2010 Capital economic sciences ) .

France and Spain, which until now had narrowly escaped recession, are enduring the impact of the crisis with a negative consequence of 1.2 and 1 % severally. ( 14th feb. 2010 Capital economic sciences )

In this manner, for the European trade Comision, making new chances for EU exporters – big or little – in markets abroad is a cardinal portion of the European Commission ‘s work.

In 2007, a “ Market entree Partnership ” , was create to place trade barriers before they appear and tackle bing obstructions to merchandise. But besides to do a better prioritisation of resources and a better usage of chances presented by dialogues ( in the Doha Round, focal point on the non-tarrifs barriers ) . And eventually, the enforcement of trade regulations every bit good.

Thankss to this “ Market entree Partnership ” , we could see how Malaysia removed the imports limitations on European vinos and liquors ( Article on ac.europe.eu web site, 17/11/2008 ) . Korea altering regulations for cosmetics imports every bit good ( Article on ac.europe.eu web site, 22/09/2008 ) . Argentina adopt besides new trade-friendly regulations for high quality EU nutrients ( Article on ac.europa.eu web site, 20/06/2008 ) .

The current societal and economic state of affairs in Europe is characterized by a unstable and insecure growth and the beginning of an economic recession, which still unknown deepness and continuance.

In facing the fiscal crisis, the EU remains a competitory economic system which is attributable in big portion to its capacity to implement structural reform.

The Council of the European Union ( 26 March 2001 ) affirmed:

“ An unfastened and strong system of many-sided trade regulations provides the best footing for heightening the part of external trade to the Union ‘s strategic end. ”

Bibliography

Newspapers

  • El Pais, 5th March 2009

Magazine

  • Capital economic sciences ( 14th February ) .
  • J-F. Jamet ( 2009 ) , “ De l’endettement a la stagnancy: une maladie macro-economique italienne ” , february 2009, num.68 of A«Confluences mediterraneeA» : “ Italie, le expansive bond nut arriere? “ .

Books

  • Brunnermeier K. ( 2008 ) , ‘Deciphering the 2007-2008 Liquidiy and Credit Crunch ‘ , Journal of Economic Perspectives, 2009, 23 ( 1 ) .
  • El Agraa The European Union, Economics and Policies 8th edition Cambridge
  • Lirzin F. ( 2008 ) , ‘L’Union europeenne face a la crise financiere: quelles reponses? ‘ , Policy paper de la Fondation Robert Schuman, Question d’Europe nA°110http: //www.robert-schuman.eu/question_europe.php? num=qe-110
  • Jamet J-F ( 2008 ) , “ Quelle peut-etre La reponse europeenne face a la crise financiere? “ , Revue d’Economie Financiere, juin 2008.
  • Saha D. et von Weizsacker J. ( 2008 ) , ‘Estimating the size of the European stimulation bundles for 2009 ‘ , Bruegel Policy Brief, Issue 2008/12
  • Darvas Z. et Pisani-Ferry J. ( 2008 ) , ‘Avoiding a new European divide ‘ , Bruegel Policy Brief, Issue 2008/10. hypertext transfer protocol: //www.bruegel.org/10245
  • Sapir A. , Trade liberalisation and the harmonisation of societal policies: lessons from European integrating, C.E.P.R. Discussion Papers.

Web sites

  • hypertext transfer protocol: //ec.europa.eu/trade/creating-opportunities/trade-topics/market-access/
  • Market Access in a Global Economy, available on: hypertext transfer protocol: //trade.ec.europa.eu/doclib/docs/2007/february/tradoc_133291.pdf

Market Access Partnership articles,

  • hypertext transfer protocol: //trade.ec.europa.eu/doclib/stories/full_stories.cfm? ID=101 & A ; langId=EN & A ; sort=topic
  • hypertext transfer protocol: //trade.ec.europa.eu/doclib/stories/full_stories.cfm? ID=107 & A ; langId=EN & A ; sort=topic
  • hypertext transfer protocol: //trade.ec.europa.eu/doclib/stories/full_stories.cfm? ID=109 & A ; langId=EN & A ; sort=topic

Artworks

  • hypertext transfer protocol: //www.delaus.ec.europa.eu/eu_and_australia/Trade & A ; Investment/index.htm