International Economic Policy-Making of the EU and the US
Foreign economic policy-making varies between regions given the size of their economy and the nature of their foreign policy mechanism in the international arena. Policies would take into consideration political interests and economic competence in the globe, while it can easily blend with domestic policy. In the case of the European Union, the Union represents its member countries in creating foreign policies that would not just cover their international policies but also their domestic policies: may it be for political or economic reasons. Unlike the United States, which only has to represent one state in the international market, the European Union would need to represent all of its member states in the international arena, thus the need to have institutions shape up its foreign and domestic economic policy-making scheme. In this end, from the General Assembly to the European Court of Justice, these institutions enables the EU not only to create a unified international economic policy, but also enable the member states to administer these policies in the domestic and global level.
The European Union could be considered the largest single economic entity in the globe with almost half a billion population, sustaining its gross domestic product that rivals that of the United States. The EU’s presence in the global market also makes it the largest exporter and importer of goods and services, allowing the union to sustain foreign direct investments, foreign aid and services. Investors and foreign labor flock the region given the opportunities available in the region. Aside from trade, the EU can also be seen in improving world capital and migratory flows, which makes the EU a global economic power that can compete against the United States. With regards to the EU’s foreign economic policy-making strategy, it differs from other nations such as the US because it the EU represents a collection of member states that share the same political and economic sovereignty. Nonetheless, it shares the same sentiment with other economic powers into influencing the foreign economic policy agenda of the globe . However, in terms of foreign economic policy-making, the EU’s policy-making strategy is structured to include its institutions to follow a set of responsibilities as seen in the founding treaties supporting the EU. These institutions also secure policies, either political or economic policies, which would improve the EU’s image in the international sphere.
Many experts believe the EU’s policy-making structure in the international economic level is highly complex, especially as to how it is structured and administered. Factors such as the domestic relationship between member states, EU intergovernmental structures and institutions, and the supranational institutions influence the level of bureaucracy involved in economic policy-making. While the member countries differ in terms of its national interest, the EU member states had improved in relations upon the creation of the European Coal and Steel Community, which was the first economic-related institution that handled economic issues for the EU in 1951. After the ECSC, the EU’s policy-making scheme for economic policies is refined under the Treaty of Rome or the European Economic Community of 1957. Under the EEC, the institution handles the creation of a single common market that would ensure free trade and relations between member countries. In creating a free movement of goods and other services, the EEC recognized that there should be a common external trading policy to ensure that member states would continue to trade with one another in the same prices.
The Treaty of Rome or the EEC treaty listed the policy framework and responsibilities of the major and minor institutions under the EU in the creation of foreign economic policies. Articles 137-144 outlines the role of the Assembly, which is tasked to draw up proposals, represented by individuals from member states, and deliberate on how policies are to be adopted in applying economic policy in responding Member States. Articles 145 to 155 cover the responsibilities handled by the European Council. Under these articles, the Council is tasked to ensure that member states coordinate with the other to ensure application of general economic policies and to confer in terms of disposing decisions. The Council is also tasked to review the proposals sent to them by the Commission and propose suggestions to the Commission in revising economic policies that would benefit the region. The Council also establishes objectives for negotiations (may it be for trade or investment) and implement treaties once a qualified majority vote is done. The following articles, Articles 156-193 outlines the role of the European Commission, tasked to ensure that the Treaty of Rome and its provisions is enacted by the institutions of the EU and to ensure that competence is sustained by both the Assembly and the Council. The Commission can be considered the central governing body in the EU that can propose legislation and common policies that is easily initiated in both domestic and global aspect. In the case of international economic policies, the Commission handles proposals that would balance national and sectoral interests of the Union and ensure that the EU can represent all member states in the international arena. The Commission also has much flexibility to administer procedures that would sustain protect economic interests of member states from foreign non-members or partners.
Under Articles 164 to 188 of the Treaty of Rome, the European Court of Justice is tasked to ensure that policies administered and founded through the treaty is sustained by the member countries and the institutions from the development of policies up to its implementation. The ECJ also covers a legal framework to ensure that member states are punished should they fail to fulfill their duties under the Treaty of Rome and other succeeding treaties. The ECJ is also tasked under the Treaty to review the lawfulness of acts by the Commission and the Council. Validity and interpretation of statutes are also accessed by the ECJ to ensure that foreign and domestic economic policies are interpreted properly by the member states . Aside from the major institutions supporting the policy-making framework of the EU, the Rome Treaty also noted that special committees aid in the creation of economic policies for trade and other economic agendas. In the case of trade, special committees such as the 133 Committee aids member states influence the overall trade policy of the EU abroad. Special committees are also seen as an adviser to the Commission in terms of what must be included in negotiations and revisions that can be done to proposed economic policies. Finally, the European Parliament also involves itself in economic policy making, however, it is not as direct and influential as that of the other EU institutions. While it cannot directly influence laws and enact them, it can veto legislation that may affect areas such as social policies, agriculture, and the internal market .
Aside from the identified institutions listed by the Treaty of Rome, institutions handling EU’s policies on foreign affairs, finance and trade such as the Council of Ministers for Trade, Industry, and Agriculture and the European Council of Finance Ministers (ECOFIN) also aid in the development of the EU’s international economic policy. The Council of Permanent Representatives (COREPER) briefs member state representatives regarding meetings and provide mediums to ensure continuous consultation and discussion between EU institutions and member nations. The European Central Bank, the European Bank for Reconstruction and Development (handling development aid), and the European Investment Bank (controlling the EU’s foreign and domestic investments) also influence foreign economic policy as they handle the EU’s monetary policy and investment, as well as development programs for newly acceded nations and for Eastern Europe . The European Central Bank was established in 1999 to head the Economic and Monetary Union, which unified the Eurozone and the currency. Finally, the Economic and Social Committee also influences foreign economic policy of the EU as it is a consulting body to various economic policies that is not reached by the European Parliament .
In comparison to the European Union, the US also undergoes a similar framework in creating its own foreign economic policies. Throughout the years, the US had utilized changing economic policy-making schemes depending on the administration handling the government, making international economic policy-making complicated and new in each term. In Eisenhower’s tenure, he established the National Security Council to be a part of the economic policy development alongside the State and Commerce Department, the Foreign Operations Administration, the National Advisory Council, and the Cabinet. The NSC became the final stage of the process, however, it was replaced by the Council on Foreign Economic Policy in 1954. The CFEP covered policy creation, becoming the opponent of the NSC on decision-making and enforcing the economic policy to be passed . In the case of President Kennedy, he favored an ad hoc coordination between his committees and advisers instead on relying on institutions. In international economic concerns, Kennedy utilized two main institutions to assist in developing his administrations’ international economic policies: “troika” (covering the Chair of the CEA, the Secretary of Treasury, and the Director of the Office of Management and Budget) and the Trade Representative’s Office (which is now the International Trade Commission). In the case of President Johnson, he did not rely on institutions and only relied on his groups of advisers. In Nixon’s tenure, international economic policy was not given a clear process due to the lack of experts that can stand as the economic deputy. Instead, he created the Council on International Economic Policy in 1971 to handle all international economic issues. However, the CIEP failed to sustain economic policy creation thus the creation of the Council on Economic Policy.
In the case of President Ford, he tried to simplify the international economic policy-making process and only established the Economic Policy Board to aid the government in economic policy-making. The EPB covered representatives from sectors such as Agriculture, Commerce, Labor and the Treasury; supported by the OMB and the CEA. The institution also covers both domestic and international issues, meeting regularly as it coordinated economic policy issues with involved agencies. Under President Carter, he replaced the EPB to the Economic Policy Group, covering the same structure as that of the EPB but it was ineffective in providing economic policies for the country. By the time Regan came into office, he introduced several councils that would form the Economic Policy Council to handle international and domestic economic issues. However, like its predecessors, it had lost power due to unclear responsibility. The EPC was re-used by George Bush, however, Bush’ policy-making strategy was disorganized that led to a complication in international economic policies. For Clinton’s tenure, he utilized the National Economic Council to coordinate and implement economic policies for both domestic and international context. The NEC also proposed policies that would reflect Clinton’s agenda, recalibrating the economic policy-making process for both international and domestic sectors .
Today, the international economic policy-making process of the US is influenced and assisted by three groups. First, the executive departments handle the majority of responsibilities in US international economic such as the Treasury Department and the Department of State. The Treasury Department is the adviser to the president pertaining to international and domestic economic policy and represents the country in the international arena such as in the IMF, World Bank, and in the World Trade Organization. The Treasury Department also handles negotiations with international organizations to sustain US contribution and influence. The Department of State handles both external relations and implementation of foreign economic and development policies. The Department of Agriculture (which tackles agricultural trade, training, and negotiations) and the Department of Commerce (which tackles international trade responsibilities and monitoring) also influence policy-making. The Department of Energy also influences international economic policies as it covers negotiations and coordination with partner governments and organizations on electricity use. The Department of Labor covers issues on international labor, as well as the creation of bodies that would aid American workers in foreign soil. Second, other agencies with smaller or narrower responsibilities also influence US economic policy such as the Federal Reserve Board and the US International Trade Commission. The FRB covers the monetary, credit, and operating standards of the Federal Reserve, and is also the US equivalent of the European Central Bank. The FRB influences the nations’ international balance-of-payments position and foreign economic policy in general as it would regulate the echange rate. The ITC influences policies pertaining to unfair trading practices. Finally, EOP agencies under the Office of the President also play an active role on the country’s foreign economic policy. The Council of Economic Advisers, for example, assists the president in assessing the state of the US economy and advise the president on economic policies .
Given the process of economic policy-making for both groups, it is visible that they vary greatly from the institutions influencing their economic policy to the nature of responsibilities given to these actors. First, since the European Union represents a collection of states in terms of its foreign economic policies and would require institutions to dissect and agree upon the policies, it differs greatly to the United States’ economic policy-making strategy due to the fact the US government would only need to sustain policies that would serve one nation. Aside from this, both the US and the EU’s policy-making institutions greatly differ in their responsibility and role in economic policy-making. In an example, while both the Treasury Department and the European Commission can be considered key leaders in economic policy-making, the Treasury Department of the US represents the US in the international financial sphere. However, in the case of the EU, the European Commission serves as a mediator to ensure the enforcement of policies. Finally, the foreign economic policy-making strategy and institutions also vary between the two due to how institutions are founded. In the case of the EU, the institutions are provided its responsibilities by the establishing treaties of the EU rather than be created by its leadership, making the institutions permanent. In the case of the US, the administrations determine the creation of institutions which would aid in international economic policy creation. A president may be able to abolish present institutions if they wish to apply a different economic strategy.
With the help of the institutions and treaties that supports the European Union, it is no wonder that its international economic policies are capable of representing the entire European region and enable its member states to implement these policies easily. On the one hand, the number of institutions involved in EU’s economic policy-making may indeed be confusing and complex, however, it is visible that they have provided avenues for member states to agree upon policies that would benefit them all as a region. On the other hand, it greatly differs from the US perspective as the EU only follows a determined policy framework handled by its permanent institutions.
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