The Political Economy of EU Trade Policy: A Literature Review

This paper presents a review of the literature on the external trade policy of the European Union (EU) and the procedures that apply to it. This is an important topic for scholars of the EU and international trade alike. Trade is one of the core policies of the EU, and an analysis of the procedures that shape EU trade policy is essential to understand the trade liberalization strategy that the EU pursues in international negotiations. This paper discusses the political economy literature on EU institutions with a focus on delegation. It analyzes why EU member states decided to delegate trade policy to the EU and what the welfare effects of this decision were. Furthermore, it examines the costs of monitoring and control that result from this delegation. It also studies whether the ratification requirements for trade agreements represent an advantage for the EU in international trade negotiations. The paper concludes that delegation of trade policy to the EU is generally considered as welfare enhancing in the literature, but that control mechanisms are important. Furthermore, it finds that domestic constraints can enhance the EU’s bargaining position in international negotiations.