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February 24 2022 is history. In the spirit of nineteenth-century nationalism, the leadership of an authoritarian and capitalist Russia decided to use military aggression in order to fulfil its aims, and crosses the borders of a state associated with the European Union (EU), a Union based upon the fundamental trust that violence between European states is nowadays unlikely. Two views on international relations and the role of law are confronted, one political view based on power, scantly limited by public international law, and another, where the rule of law, liberalism and human rights serve as a guarantee for peace and cooperation between states.

Russia’s war against Ukraine can be seen at once as a military assault on the role of the EU in Europe and constitutes as such the most direct and clear challenge to the Union’s ability to act in accordance with its values. However, this ability is also challenged by other purely material circumstances. Ever since the Renaissance, the demography, the aptitude for industrial innovation and the advancement of arts and culture have made it possible for the European countries to exercise their influence on the rest of the world. Notably since the end of World War II, the Western European ideas of how a democratic state, characterised by human rights and social aims, is to be realised within a liberal market economy have prevailed. However, during the twenty-first century, the global trend is in the direction of a new pluralism where the role of Europe is diminishing. To be sure, Europe, organised within the EU, is still the world’s biggest economy measured in GDP per capita, and its largest trading bloc. The EU is the most important trading partner for 80 countries of the world and ranks first in both inward and outward-bound international investments (European Commission, 2023). At the same time, this leading position is declining as a result of the fact that the EU population in relation to the world population is diminishing, and so is its part of the world’s economy and trade. This trend is occurring parallel to the increase of importance of countries that do not share the European view of the ideal society. In 2021, one-third of the world’s population lived under authoritarian rule, and only 6.4% lived in full-fledged democracies according to the Democracy Index of the Economist (The Economist, 2022).

This chapter explores the questions to what extent, and how, the EU and its member states influence other countries to adopt domestic rules as well as international cooperation mechanisms comparable to the democratic and liberal social market economy model and international policy aims of the EU. Such ability seems, to this author, being of great importance for a harmonious future development of political and trade cooperation on a world level, as well as for cooperation between the EU and its partners in their bilateral relations. And it is of relevance for the survival of the foundational ideology of the Union itself.

The chapter does not purport to provide an exact answer to the questions outlined above, nor does it draw the contours of their future implications. Instead, it points out and systematises the most relevant circumstances that condition the EU’s ability to extend its values beyond its borders, and it does so from seven aspects. First, it provides a background in consideration of theories of power in international relations. Second, it gives a historical explanation of the influence of European legal thinking in the world, and why European-inspired law meets resistance for particularly cultural reasons in Asian and African countries. The third aspect relates to how the EU’s soft and economic power influences its commercial partners to introduce EU market rules in their jurisdictions. The fourth aspect illuminates how the EU model, in its quality of an economic as well as a political project, has inspired countries in Latin America as well as in Africa to establish economic communities with political aims. The fifth one is directed towards the economic power that the EU exercises in the bilateral trade agreements that the EU has established with most countries in the world. The sixth aspect focuses on the influence that the EU exercises in multinational economic organisations, foremost the WTO; and the seventh aspect puts the EU model for cooperation in relation to future alternatives, in particular to those led by China. The chapter ends with final reflections on Europe in the present world disorder.

Geo- and Real Politics Meet Liberal and Value-Based Politics—A Theoretic Background to EU Powers

One way of analysing Europe’s place in a multipolar world is to depart from the teachings of the Swedish political scientist Rudolf Kjellén (1864–1922). He was partly inspired by the German legal philosopher von Savigny, the principal member of the historical school, which was critical of the opinions of the liberals about the possibility to couching abstractly framed rules of universal application (von Savigny, 1831). Contrary to the liberals, he meant that law is created by tradition and results from how legal rules have been shaped over time within a national culture. He consequently meant that law should reflect the national spirit. Kjellén understood the development within a state to be a political and dialectical struggle for power between progress, attached to liberalism, and reaction, attached to the traditional values of a country, expressed as conservatism. When it comes to international relations, Kjellén introduced the concept of geopolitics, and in a spirit of real politics (Realpolitik) he meant that the will to expand is part of the nature of the great resourceful powers as well as their reasoning in terms of spheres of interest (Kjellén, 1911, 1916). It is not without merit to use his theories for explaining the causes of the present authoritarian military/police rule of Russia as well as of Russia’s will for re-establishing the Russian/Soviet empire. His theories can also serve as a tool for explaining the EU’s value-driven foreign policy as well as the resistance to it from non-European cultures.

The comprehension of international relations by Kjellén, that rational interests and not ideas are the decisive factors behind the foreign policy of nations, is also close to the theory of real politics, but it is Hans J. Morgenthau who stands as the Nestor of the theory of real politics and its application on international relations. In his quality of an international lawyer as well as a political scientist, he was well aware of the relation between law and politics in international relations.

Morgenthau meant that states are acting rationally in conformity with their interests and that international politics is a struggle for power in which states use international law but even more their political resources for attaining maximal power and thereby national security (Morgenthau, 1948). He divides the concept of power into three parts: political power, economic power and charismatic power. Political power includes unilateral decisions about military force towards another state, economic power is exercised by a state when using its economic resources for compelling another state, charismatic power, that Morgenthau also calls the power over the minds of men, relates most of all to the cultural influence that a state may enjoy in relation to other states. The United States since long possess all three types of power while South Korea may be referred to as an example of a country that has got charismatic power since the 2010’s via its music, films and technological achievements.

The power of the EU vis-à-vis third states is based on its economic power, but maybe even more on its charismatic attraction. The EU itself is arguably better explained by the liberal theories within the academic subject of international relations than by the real political ones. In its quality of an organisation, it constitutes an institutionalised peaceful area of international cooperation that is built upon binding rules of law, democracy and free trade. This organisation has an influence on third states both as an example of successful cooperation and of being the hub of a net of cooperation organised around free trade agreements between the EU and third states. These agreements do not only comprise rules on trade, creating economic interdependence but they also include legal obligations on matters of, e.g., protection of human rights and the environment.

The theory about charismatic power to influence the action of others has been further developed by the political scientist Joseph Nye, who named it “soft power”. When speaking about the soft power of the EU, we must not forget the importance of the culture of its member states for creating the power of attraction of the EU. Again, the EU rather serves as a hub or as an umbrella assembling the member states.

Nye makes a distinction between hard power on the one side, consisting of political and economic power, and soft power on the other. He means that soft power cannot be very well created by governments but is the result of non-state actors in an open society. It is influenced by culture and political values concerning democracy and human rights like a free press and the right to demonstrate (Nye, 1990). But decisions on foreign policy may also be important like the will to cooperate with treaty partners and being favourable to multilateralism (Nye, 2004). The observations by Nye may very well have had the case of Europe and the European Union in mind.

European circumstances are the focus of the study by the legal scholar Anu Bradford. With her book The Brussels Effect—How the European Union Rules the World she demonstrates concretely how the EU by adopting internal legislation and regulatory standards in areas such as product safety, competition and data protection, exercises economic and mainly soft international power resulting in rules and norms voluntarily taken over and followed by the world at large (Bradford, 2020).

A Historical Background to the Present EU Influence in the World

In order to understand the power of the EU and of its member states, not the least the importance of law as a soft power, it is difficult to ignore the history of Europe’s relations with the world and its colonial heritage. This heritage still negatively affects the minds of those peoples that were subjects of the British, French and Russian Empires, as well as of those of the Belgian and Portuguese systems. The since long ended Spanish one has less impact today. At the same time, the colonial systems contributed to modernisation of those societies in the European sense, in determining geographical borders, in setting up an administrative apparatus, school systems and legal systems moulded after European prototypes.

The British and French Empires reached their largest extension after the First World War and the Peace of Versailles, but simultaneously the resistance to colonialism took off. However, it would take until the end of World War II for an almost forty-year-long decolonisation period to get started. The Russian Empire, on the contrary, together with the Austrian and German Empires, was split up after World War I, but it was re-established after World War II in the form of the Soviet Empire based on political, ideological and military power. It collapsed with the Soviet Union in 1991, but the present war in Ukraine is part of the political ambition of a re-established Russian Empire.

The decolonisation of the British Empire proceeded fairly peacefully, i.e., without major resistance from the British government, yet not from British people in Kenya and former Southern Rhodesia, and the newly sovereign states could be assembled with the United Kingdom in the informal “conversation club”, the British Commonwealth of Nations. The decolonisation of the French Empire, by contrast, could only be achieved through crises, in Tunisia and Morocco, and through war, in Indochina and Algeria. The efforts by France to establish institutionalised cooperation with former colonies within firstly the French Union and thereafter through the French Community, la Communauté française, failed because of the domineering role of France. Neither could the Portuguese system be ended without wars. The strongest resistance movements in some of the French and Portuguese colonies were of communist ideology and after those countries had reached independence they were declared people’s republics and initiated economic systems inspired by the Soviet model.

In particular, during the 1960s and 1970s, the belief in a planned economy, nationalisation, and state-owned companies was strong, in Europe as well as in the newly independent states, and many former colonies considered themselves to be threatened by imperialism in all its four dimensions: political, economic, cultural and ideological. Despite the fact that the Soviet Union displayed three of these dimensions in relation to its neighbourhood, the newly independent states positioned themselves against the former Western colonial powers and the United States. Together with the Soviet Union and its puppet states, they formed a majority in the United Nations General Assembly and could carry through resolutions against what they considered to be economic imperialism from the West: 1962 on Permanent Sovereignty of States over their Natural Resources (UN, 1962); on a New International Economic Order (1972) and the Charter of Economic Rights and Duties of States (1974). These resolutions confirmed the principle of state sovereignty and non-interference in internal affairs, including the choice of economic system, the right to expropriate foreign property in application of the national law of the expropriating state and to claim access to new technologies.

However, the major part of international trade was between the richer OECD countries, and in order not to be further marginalised the developing countries chose to find compatible arrangements with the established Western order. The former colonies could keep their traditional duty-free trade between them and the metropolis by entering into the large non-reciprocal free trade arrangements with the EEC/EU, the Yaoundé (1963) and Lomé conventions (1975, 1979), giving free access to the common market of the EU for the former colonies, while at the same time allowing them to keep their markets protected. In addition, these agreements contained parts on economic and technical cooperation and aid, e.g., on advanced legal and administrative training. The developing countries furthermore entered into bilateral agreements on investments and investment protection with many European countries individually, conditioning the right to expropriation, and a majority of the developing countries acceded to the World Bank International Centre for Settlement of Investment Disputes, giving multinational companies the right to have their disputes with the investing state settled by an international arbitration court, which decides on the basis of international law. The developing countries also participated actively in the negotiations leading up to the establishment of the World Trade Organisation (WTO) and became members with special status granting them favourable rights and exceptions. WTO membership encroaches somewhat upon domestic sovereignty, as it entails obligations about ensuring competent administration and independent courts; obligations that are patent when it comes to the protection of intellectual property rights.

In 1992, after the foremost challenger of the European view on society, the Soviet Union, had collapsed, its command economy system was recognised as inefficient, and the states that had been part of the Soviet system had started transforming themselves into liberal states in the Western sense of the concept, with democracy, the rule of law, market economy and respect for human rights. Many of them were aiming towards membership of the European Union and liberal democracy seemed to be the only important ideology in the world. The political scientist Francis Fukuyama (1992) formulated his winning thesis that history had reached its end. He based his thesis on the fact that parliamentary democracy and market economy had become the norm also in Eastern Europe, Latin America and Asia.

Fukuyama’s thesis was disputed by his colleague, the political scientist Samuel Huntington (1996). According to his opinion, history continues, but conflicts in the world will not take place between states separated by political ideology. They will rather occur as a result of differences of cultures or civilisations that are not bound by national borders. He defined seven such world views: (1) Western, (2) Latin American, (3) Islamic, (4) Chinese, (5) Hindu, (6) Japanese and (7) African. The Western belief in universal values would be shared by a shrinking part of humanity and they would lose their global convincing power.

This classification of world views coincides in broad terms with the one drawn up by the legal scientist René David (1950), when he analysed the major legal systems of the world later described extensively by Konrad Zweigert and Hein Kötz (1995). However, analyses from legal science are more directed towards the coexistence of legal cultures than what is the case in political science, where pointing at conflicts is frequent in order to illuminate essential differences. Legal science may explain how in some countries, parts of life like marriage and penal law may be regulated for instance by Muslim law, on the basis of traditional religious values, while administrative and business life is mainly regulated by law of European origin. In the fields of constitutional and administrative law, a great part of the principles expressed in the constitutions of the European countries have been included in the constitutions of the former colonies. In some cases, this has been effectuated in a very concrete way, for example, in respect of human rights, the constitution of Gabon refers directly to the French Declaration of Human Rights of 1789.

In the same line as Huntington, the legal scientist Patrick Glenn (2000) emphasises that, from a legal point of view, many legal systems of the world are not pure but represent commixtures of traditions from various origins. He stresses that law is influenced and adapted depending on the social context of local societies. He points to the fact that legal traditions are conservative by nature and that they are connected to a view of society as being static. This entails that societies do only change very gradually, often as a result of new traditions being gradually consolidated, many of those originating from other traditional cultures (Cf. Kjellén, supra, on dialectic progress). The legal historian Alan Watson (1974) has underlined the importance for social change that new law is imported, and transplanted, but that this reformation of law can fail in countries with strong legal traditions by the fact that the transplanted law is repelled.

In order to explain how and why local law that has been shaped after European models is being actually applied, both in the private and the public law fields, it is consequently necessary to investigate the role of cultural traditions. Within the public law field this may explain the strengthening of presidential power, or, regarding human rights in Africa, that the African Charter puts equal emphasis on individual and collective rights and it also emphasises the duties of the individual towards country and family.

Today, not only the UK and France but also other European countries and the EU play a role as sources of inspiration for law reform in the partner countries. Furthermore, the EU is financing vast programmes on legal cooperation. They are often carried out in cooperation with EU member states or non-governmental organisations. Worth to mention is also the cooperation within the legal field that takes place between French-speaking supreme courts within l’Association des Cours suprêmes judiciaires francophones and that courts in countries with ties to Europe not seldom refer to French or English case law when interpreting their own law. The EU is also the only non-African representative at the sessions of the African Commission for human and peoples’ rights.

In this admittedly brief historical overview of European/EU influence in the world it is also appropriate to mention a positive heritage of the colonial past, namely languages. English, French, Spanish and Portuguese have united nations within states and united states in cooperation between themselves and with Europe. As these languages are also official languages of the EU, all its legal acts are easily accessible and ready to be transformed into the legal systems of the EU partner countries.

Social Market Economy—A Soft Power Asset for the EU’s Global Influence

For Germany, having been dominated since the beginning of the 1950s by a moderate ordoliberal thinking (Gerber, 1998), i.e., permitting social aims within a liberal economy, it has been a condition for transferring power to the EU in order to create a Common European Market, that such transfer would not result in making it difficult to reach national social aims. Such aims were therefore also to be part of EU policy. This view has been consistently shared by all the member states of the EU. Already in 1951, when the first European Community, the European Coal and Steel Community, was created, liberalisation was therefore complemented by financial means allowing ECSC to provide support for professional training, expected to be needed as a result of the industrial transformation. This capacity increased when a social fund was created simultaneously with the establishment of the European Economic Community (EEC) in 1957. The EEC also received competence to make politics with social contents, e.g., concerning the prohibition of sexual discrimination related to working life, part-time work, and parental leave. Already in the 1970s the EEC set out the objective of becoming a social community, eine Sozialgemeinschaft, according to the German social democratic chancellor Willy Brandt (Brandt, 2019; Leibfried, 1992). Environmental policy was officially recognised as an EU policy with the Single European Act in 1986 and the social quality of EU policy was manifested by the EC Social Charter 1989, and written into the Lisbon Treaty Article 3(3) confirming that the EU shall be based on a social market economy.

In the 1970s and 1980s, considerations of welfare politics were inherent in many EU rules that were introduced in order to establish the common market. In the field of agricultural policy, heavily regulated by the EEC, prices should be reasonable to consumers (EEC Article 39(1,e)). EEC rules were issued on product liability, consumer credit and prohibition of misleading advertising. Considerations of environmental or social nature were taken into account when EEC technical standards were introduced, e.g., about exhaust gas cleaning and security regulations for cars, sulphur in fuel oil, industrial discharge of dangerous substances, norms for air quality, sound level for machines, procedures for control of chemical substances before they are marketed, classification, marketing and norms for dangerous substances, limits to the use of hormones for animal breeding, limits to the use of pesticides and other poisonous substances for protecting plants, regulation on additives and packaging materials for food products, on the contents of marketing and packaging of cosmetics, classification marking and prohibition of textile substances, rules on approval of pharmaceutical substances, security norms for toys etc.

EU legislation on the quality of products and production processes is an ever-ongoing activity, the resulting rules being compulsory both for goods produced in the EU, as well as for those imported into the EU. Therefore, all companies wanting to sell their products in the common market need to make them in conformity with EU standards. In fact, as convincingly shown by Bradford (2020), many international companies tend to adapt all their production to EU standards. They do so because of the giant size of the EU market, the biggest consumer market in the world, and as it is cheaper to follow one standard than to produce different products for different markets, companies chose EU standards for all their markets, and as EU standards mostly are the strictest of the world such products are admitted everywhere. Hence, EU standards become world standards.

It is worth noting that adapting products to EU standards is not merely a technical matter, but that the social aims of the standards are simultaneously being marketed abroad. Anu Bradford mentions in this respect in particular the EU regulation on Registration, Evaluation, Authorisation and Restriction of Chemical Products (REACH) (Bradford, 2020, p.193). It does not put the responsibility on the state but on producers and importers for collecting and assessing information on the properties and hazards of substances. The regulation has not only had an impact on companies but it has also led to legislation in most countries with a large chemical industry, e.g., China, Japan, South Korea, India and Turkey.

Bradford points at EU legislation in one field that is particularly illustrative of EU soft power influence on not only commercial conditions but also on human rights in the digital economy, namely the EU General Data Protection Regulation (GDPR) from 2016 about personal data (Bradford, 2020, p.133 et seq.). It is applicable to all companies collecting data on people in the EU, irrespective of whether they are being established on EU territory or outside of it. Bradford found that national legislation corresponding to EU law has been introduced by 120 countries worldwide. The USA is an exception while the Chinese legislation resembles it on paper.

The social aims of the EU are not absent even in the most typical ordoliberal field, competition policy. According to the original Article 86(b) EEC Treaty, current Article 102 (b) TFEU companies with a dominant position are not allowed to act in ways leading to the prejudice of consumers. In a similar manner, the original Article 85 (1) EEC Treaty and present Article 101(1) TFEU prohibiting restrictive agreements may, according to the third paragraph of the same article, allow exceptions to the rule in certain cases, provided consumers get a fair share of the resulting benefits. Still, from a power perspective, the EU’s external actions in the field of EU competition policy are of mainly economic nature.

If a company, regardless of its nationality, acts in a way that is contrary to the EU’s competition rules, and its conduct has effects on the internal market of the Union, the European Commission has the right to open infringement proceedings and may decide to impose very high fines, of up to 10 per cent of the annual turnover of the infringing undertakings. The Commission also has the power to prohibit the acquisition or merger of undertaking, the decisions of the Commission being subject to judicial review before the Court of Justice of the European Union (CJEU). Such decisions of the Commission and of the CJEU have legal effects worldwide. What is more, not only has EU competition law produced worldwide effects through its application by EU institutions, but it has, according to Bradford, served as a model for the competition laws of the major part of the 130 states of the world (Bradford, 2020, p.115). Not only have its substantive provisions been almost literally transferred but also its administrative set up with an independent competition authority whose decisions may be controlled by a court of law.

The European social market economy has evidently a charismatic soft power, mixed with some economic power instruments encouraging countries all over the world to undertake legal reforms in the direction of the European model. The reasons can be explained by economic and objective factors as well as by cultural and ideological circumstances. The need for companies to export to the European market can be considered an economic factor, and objective factors are the circumstance that laws of purely commercial and technical nature are neutral to cultural traditions and are therefore easily integrated into legal systems of non-European countries. As cultural and ideological factors can be considered the fact that the elites of many countries are well acquainted with European languages and culture, and they are positive to European ideology concerning the government being active in assuring consumer and environmental interests in a market economy. Regarding competition law, they share, according to Bradford (2020, p.122), the European view that it should express a compromise between the free market and the will of governments to interfere in order to take consumer interests, small- and medium-sized companies, and market structure into consideration. Moreover, as European competition law also includes control of state aid and market structure it could inspire countries like China, India and Russia.

The European Union Inspiring the Establishment of Regional Organisations With Economic as well as Political Aims and Objectives in Latin America and Africa

The EU serves as an inspiration for countries not willing to go as far as to establish a federation, but yet wanting to have intimate regional cooperation in the economic area and to coordinate their policies generally. Organisations having the European Community/European Union as a model have been established in Latin America and Africa. This occurrence can be understood as a result of the soft power of the EU. One such organisation was created already in 1969 when the Andean Community, La Communidad Andina (CAN), was established by its members Bolivia, Colombia, Ecuador and Peru. Among these novel organisations, it is CAN that is the copy following most truly the original EEC and the EU, and having the most efficient legal system. The institutions of CAN correspond to those of the EU with a Council consisting of the heads of states, agreeing about the larger policy questions and settling political disputes between the member states, a Council of Ministers taking supranational norms, decisions, a Commission making proposals, a Parliament, and a Court of Justice having the power to control that the CAN-Treaty, the economic constitution, is respected by the member states (Alter & Helfer, 2017). Important for the efficiency of the organisation, and for assuring that persons can rely on the economic rights of the constitution, is the fact that it has been given direct effect in the national legal orders of the member states and that their courts may submit to the CAN Court of Justice requests for preliminary rulings, that are binding for the national courts.

The Central American Community (SICA), Sistema de integración centroamericana, corresponds as well, grosso modo, to the EC/EU, and its Court of Justice quotes cases decided by the European Court of Justice, but the other community organisations in Latin America do not live up to the original. The southern common market, Mercosur, which comprises Argentina, Brazil, Paraguay and Uruguay, still lacks an efficient tribunal; the Caribbean Community (Caricom) lacks efficient political institutions, but on the other hand it has an efficient tribunal having wide competences. The tribunal is part of the judicial systems of the member states, and it serves as an appellate tribunal in even private- and penal law cases.

On the African continent, the EU model has most clearly inspired the creation of the West African economic and monetary union, l’Union Économique et Monétaire Ouest Africaine, consisting of seven French-speaking and one Portuguese-speaking country. Its institutions, including its Court of Justice with vast competences, correspond fully to those of the EU, but unfortunately the work of the court has come to a standstill during the last years. The Central African Economic and Monetary Community, la Communauté Économique et Monétaire de l’Afrique Central, (CEMAC), consisting of six member states, is worth mentioning. It has the same institutional structure as the EU, including a Court of Justice which has, at least on paper, the same competences as the EU court. As these organisations are aiming to establish common markets with free movement for goods, services, persons and capital, it is logical that they find inspiration in the EU.

The EU has actively supported these countries in Africa, Latin America and the Caribbean to cooperate within their community organisations and to have rules corresponding to those of the EU, but the EU has also concluded agreements with other countries of these regions encouraging regional cooperation and taking rules corresponding to those of the EU. Among such organisations are the wide-encompassing African Union (AU) established in 2000, and the Southern African Development Community (SADC), established in 1992. Both of them have ambitious aims, corresponding to those of the EU, but only the future will show how the communities in this important continent may develop.

The EU Bilateral Trade and Cooperation Agreements—Means to Influence Partner States to Follow the EU Model of Social Market Economy

The EU has concluded trade and partnership agreements with most of the countries of the world and can be considered to use its economic power in the Morgenthau sense in its relations with its partners. This power is strengthened in EU relations with developing countries by the fact that trade agreements with them are often accompanied by technical and financial aid and loans from the EU.

An active EU trade policy started some 50 years ago as a result of legal and political necessity. With the establishment of the customs union, the power of deciding tariffs and concluding tariff and trade agreements was transferred from the EU member states to the EU institutions. The 1957 EEC Treaty Article 113 stated that commercial policy was a domain where the EEC (EU) had exclusive competence. By concluding free trade agreements between the EEC and former colonies interruption of privileged trade between them and their respective metropolis was prevented. Instead, it was extended to all EEC member states, allowing non-discrimination between them.

Exclusive EU competence means power to the EU but at the same time loss of important external policy tools for individual member states. Consequently, the latter have been cautious to put limits to its expansion. With Article 207 TFEU, member states agreed that the common commercial policy encompasses tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services, commercial aspects of intellectual property, foreign direct investment, export policy measures and protective measures such as antidumping duties or countervailing duties in the event of subsidies.

However, the Court of Justice of the European Union (CJEU) has made a wide interpretation of the concept of commercial policy. The leading case is still the opinion 2/15 (CJEU, 2017) on the EU agreement with Singapore (EUSFTA). The CJEU interpretation departs from the words of Article 207 that the commercial policy shall be conducted in the context of the principles and objectives of the Union’s external action. Those aims are enumerated in Article 21 (a) to (h) of the Treaty on European Union (TEU). They relate to a wide array of matters from peace, democracy and human rights to the environment. An agreement can be classified as a commercial agreement even if it affects such non-commercial matters under the condition that it relates specifically to international trade in that it is essentially intended to promote, facilitate or govern such trade and has direct and immediate effects on it (CJEU, 2017). A second condition is that a commercial agreement may not have a legislative effect. The EU legislative procedure must be followed to create binding internal law.

In the Opinion EUSFTA the Court affirmed that sustainable development may be included in the New Generation Free Trade Agreements as it is relevant or essential to trade, as it is an objective of the EU mentioned in Article 21(2)(f) TEU and as Articles 9 and 11 TFEU contain guarantees concerning the protection of workers and the environment. Such guarantees must consequently be an integral part of EU commercial policy. Trade agreements may make liberalisation of trade subject to the condition that the parties comply with their international obligations concerning the protection of workers and the environment (CJEU, 2017). It may also contain provisions compelling parties to combat illegal actions in the environmental and social fields.

EU external exclusive competence, however, is not limited to commercial policy. According to the early case law of the CJEU (1971 and 1977), and to Article 3(2) TFEU, it may concern any area where the EU has competence to legislate. In fact, member state competence is pre-empted as soon as the EU has issued a legislative act, and the competence in the matter is transferred to the EU institutions. The EU may thereafter use this exclusive competence to conclude international agreements.

Still, some trade agreements contain matters under member state competence, but all EU agreements are prepared and negotiated by the Commission and reflect its view on EU international relations. It may have a clear value-driven trade policy. As expressed by the former Trade Commissioner Cecilia Malmström in 2015: “The new approach will safeguard the European social and regulatory model at home […] the new approach also involves using trade agreements and trade preference programmes as levers to promote, around the world, values like sustainable development, human rights, fair and equitable trade and the fight against corruption. We will use future EU agreements to improve the responsibility of supply chains” (EU Commission/Trade, 2015).

EU international cooperation agreements can best be described as circles consisting of groups of countries. A first inner one comprises the European countries that live up to the conditions of EU membership but have chosen to abstain: the EFTA countries Island, Liechtenstein and Norway. They are parties together with the EU in the European Economic Area (EEA) establishing a free trade area between the parties. Moreover, the EEA agreement obliges the EU partner states to swiftly adopt all new EU internal market rules except those regulating agriculture and fishery. By doing so, the partners are recognised as members of the internal market.

A second circle consists of European states fulfilling the so-called Copenhagen criteria, i.e., having institutions guaranteeing democracy, the rule of law, human rights including the protection of minorities, having a functioning market economy and an ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union (European Council, 1993). European countries living up to those criteria may apply for membership of the European Union. They obtain the status of candidate state. The association agreements that they conclude with the EU foresee that they successively adopt EU compulsory as well as non-compulsory rules. Türkiye since long, Ukraine, Georgia, Moldova, Albania, Montenegro and North Macedonia are among those countries together with Serbia.

An especially comprehensive dialogue based on European values takes place with African countries south of the Sahara and with Caribbean and Pacific states. (cf. Article 208 TFEU). They have had association agreements with the EU for almost 60 years establishing free trade and economic and technical cooperation. The early Yaoundé-Convention and its successors the Lomé Conventions as well as the present Cotonou agreement are not only aiming at contributing to economic and political development but also, contrary to a devide et impera strategy, to facilitate for the EU partner states to cooperate between themselves. These are bilateral agreements between the EU on the one side and the partner states on the other, but they also establish common bodies where decisions are taken by consensus between the EU, as one part, and all the partner countries as the other part. The agreements do not only set up governmental bodies but they also contain a democratic element, namely a parliamentary assembly. As a consequence of this cooperation with the EU, the EU partner countries have established the Organisation of African, Caribbean and Pacific States (OACP), which is the largest organisation of developing countries.

The new post-Cotonou agreement, the EU-OACP Partnership agreement, initiated in 2021, resembles a development strategy with welfare state aims for the cooperation of the EU and its 79 partner states covering actions in all areas of the society. It lays down six priority areas: (1) human rights, democracy and governance, accommodating the African concept of peoples and rights with the rule of law and gender equality, good administration and combating corruption, (2) peace and security, including non-spreading of nuclear weapons, (3) human and social development, (4) environmental sustainability and climate change, (5) inclusive sustainable economic growth and development and (6) migration and mobility. It continues with a part about global alliances and international cooperation aiming to make the EU and OACS privileged political partners. This new partnership agreement is combined with three specific, action-oriented regional protocols (Africa, Caribbean, Pacific) with a focus on regional needs.

Similar provisions have been included in trade- and partnership agreements with other overseas countries, e.g., the agreement with the CAN-countries, Colombia, Ecuador and Peru. Except for rules establishing free trade areas, they also have provisions about respect for the human rights of the UN Charter, political cooperation aiming at disarmament and to prevent the spread of nuclear weapons, transparency, respect of international conventions in the social and environmental fields as well as to promote biological diversity and to counteract climate change.

All free trade agreements of the EU nowadays include obligations about democracy and human rights, respect of ILO-conventions on labour law and of environmental conventions and to counteract climate change. A clause about democracy and human rights being essential elements of the agreement is to be found in many agreements, e.g., the neighbourhood agreements with the countries on the southern and eastern sides of the Mediterranean. This clause justifies a party to retaliate by suspending the economic parts of the agreement in case of non-fulfilment of the human rights obligation. However, in more recent agreements with stronger economies like Singapore, Vietnam, Canada, Japan and New Zealand, the obligation is only expressed in the preamble, without mentioning that it constitutes an essential part of the agreement. In the agreement about trade and cooperation between the EU and the UK it is framed in its more obligatory form as an article of the agreement.

In fact, the EU has only decided about sanctions in very flagrant cases, on less than 30 occasions. Such decisions are taken by the member states according to the procedure of political cooperation. It is to be noted that, except for member countries of the European Convention on Human Rights, human rights obligations refer to those of the UN conventions permitting a wide scope of interpretation taking consideration of as many legal cultures as there are members of the UN Council of Human Rights.

Like other international treaties, those of the EU lay down reciprocal obligations. However, most developing countries enjoy exceptions. Retaliatory measures by one party, e.g., the EU, may be taken only after negotiations between the parties and after an arbitral tribunal has established the existence of a breach. Suspension of obligations shall be proportionate and that is easiest to determine if the breach has caused economic damage. Infringement of the obligation of sustainable development is to be settled through a dialogue between the parties.

The EU agreements with third states also refer to economic human rights that are better sanctioned than the classic ones. Intellectual property rights belong to them. They concern copyright, patents and designs and are nowadays part of all EU free trade agreements. They oblige the parties to have adequate intellectual property legislation giving right to individuals and enterprises to access competent national courts in order to have their rights tried. Protection of investments is another economic right. It is included in the more recent free trade agreements or added to them in a separate part. In case of expropriation contrary to the agreement, the investor, i.e., an individual or an enterprise from the EU or its partner country, has the right to sue the expropriating state in an impartial arbitration tribunal.

The Court of Justice of the European Union has accorded many individuals and companies a further important right by recognising direct effect of most free trade- and partnership agreements in the EU. This effect was first accorded the EU/EFTA states’ free trade agreements (CJEU, 1982), thereafter the Europe Agreements of the candidate countries (CJEU, 1987), the partnership agreements of East European countries (CJEU, 2005), and association agreements with developing countries (CJEU, 2016). If a person considers that such a free trade agreement gives more rights than national law, that same person may rely on the agreement in a national court, and the court may ask the CJEU for an interpretative ruling. If national law is incompatible with the agreement, the rules of the agreement prevail. This direct effect is granted by the EU on a unilateral and non-reciprocal basis.

The Influence of the EU in Multinational Economic Organisations

On the multilateral level, for example in the UN, the International Monetary Fund (IMF), the World Bank, the Food and Agriculture Organization (FAO) and the World Trade Organisation (WTO), the EU takes part in various forms. In organisations dealing with questions that are under the exclusive competence of the EU, the EU is represented by the European Commission; in some organisations the EU is a member together with its member states, such as the WTO; in organisations limiting membership to states, only the EU member states have membership, but the European Commission coordinates their positions. Multilateral organisations and bodies may be active in various domains. Some bodies develop product standards, others—health and environmental norms, and some UN bodies deal with human rights, where the EU has taken an active role.

However, it is the WTO that is the central organisation for global economic governance and for EU efforts to prioritise an international multilateral trade system bound by law. The crisis of the WTO and its diminished importance to the advantage of new protectionism is a blow to EU policy.

The policy of the EU and its member states can be analysed as an effort to attain multilateral economic governance characterised by a constitutional three-level system consisting of states, regional organisations and the WTO at the top. WTO and regional organisations mostly regulate the same questions: trade with goods and services, dumping, subsidies, intellectual property rights, investments etc. The regional organisations mostly follow the legal interpretations made by the WTO and its dispute settlement bodies.

This is true also for regional free trade agreements concluded by the EU. The system for settlement of disputes of these free trade agreements is moreover intimately tied to the one of the WTO. If a conflict concerns issues common to a trade agreement and the WTO, the parties may choose to have their conflict settled by the WTO settlement system. In this way, the free trade agreements and the WTO belong to the same system. Settlement of investment disputes of recent EU free trade agreements also reflects multilevel constitutionalism (Petersmann, 2012). They establish investment tribunals on two levels that could easily be integrated into a future system of investment tribunals of the WTO.

The crises that the WTO has gone through since the year 2017 should be considered in relation to three circumstances. Firstly, when the WTO was established in 1995, it corresponded fairly well with what its members wanted in the areas of reduction of obstacles to trade in goods and services, and of better protection of intellectual property. Since then, new conditions for trade have come into existence, but, because unanimity of all 164 members is required for making decisions, needed reform of the WTO has not been attained. Reform is urgent for subsidies, state trading enterprises, trade in services, compulsory technology transfer, investment issues, e-commerce and environmental and labour law. Furthermore, developing countries have the right to protectionist measures, and, as each country may qualify itself as a developing country, two-thirds of the WTO members have opted for that privileged status. Among them are countries with highly competitive industrial sectors, like China.

The second circumstance concerns the impracticability of dispute settlement to cure decisional inability. Dispute settlement consists of two steps, quasi-judicial panels and a permanent Appellate Body (Hallström, 1994). During its life period, this Appellate Body has been the most successful of all international courts, and used, to about the same extent, by rich as well as by poor countries. However, the lack of WTO reform has forced the Appellate Body to apply principles of law and thereby widen the application of WTO written rules. Such practice may be understood as legislating rather than strictly applying law.

Already before the Trump presidency, the United States had manifested its annoyance by court decisions in international economic questions, but President Trump decided in 2017 to cripple the WTO dispute settlement procedure by blocking the appointment of new judges of the Appellate Body. At present, the Appellate Body exists only on paper. A party that has lost a case in the Panel may still appeal to the Appellate Body, but it remains pending, and the decision of the Panel becomes non-effective. This makes the law less compulsory and gives more room to bilateral negotiations, where the parties may fully profit from their economic and political power.

Another reason for the United States to weaken the WTO was that China, the third strongest trading unit of the world, did not sufficiently live up to the requirements of free and fair trade. The state capitalist system of China, granting subsidies, other state aid, and having important state-owned enterprises, combined with a lack of transparency, resulted in a situation where competition conditions for foreign companies were being distorted in contradiction to the aim and objectives of the WTO. Such policy involves no challenges to Chinese communist party doctrine and economic success to China but is adverse to EU multilevel constitutionalism.

Future Alternatives or the European Model

It is an old saying that the future is in Africa, and so is the case when looking at the demography and the resources of raw materials, but the highest economic growth in the world takes place in the countries belonging to the large regional free trade organisations in Asia (Hsieh, 2021; Rolland & Trubek, 2019), in particular in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CCTPP), comprising a great number of states in South East Asia, Latin American states bordering the Pacific and Australia and New Zeeland. China, because of its insufficient rules on state-owned enterprises and intellectual property, is not a member of CCTPP but of the second important organisation, the Regional Comprehensive Economic Partnership (RCEP), comprising the Southeast Asian ASEAN-countries and China, Australia and New Zealand. Both organisations have provisions on environmental protection and labour law but not on human rights. It is possible to consider that these organisations, together with the trade agreements referred to above, form a multilevel system together with the WTO. They regulate many common issues, they comprise dispute settlement systems with panels, copied from that of the WTO, and these panels shall pay regard to interpretations made by the WTO panels and its Appellate Body. Furthermore, if a dispute concerns an issue that is regulated by both the organisation concerned and the WTO, the complainant may choose to file its complaint to the WTO.

The EU has negotiated agreements with most of the member states of the ASEAN, and many of them have entered into force. Their long-term aim is to establish a vast inter-regional EU/ASEAN free trade agreement. As far as trade relations between the EU and China are concerned a comprehensive agreement on investments has been negotiated. It refers in its preamble to the UN Charter of Human Rights and includes an extensive chapter on environmental protection, labour law, and social responsibility of companies. It is not in force as yet, and the parties intend to add an agreement on investment protection to it.

Both China and the parties to the great Asian free trade organisations are dependent on global trade. They therefore actively participate in the WTO, and loyally use its dispute settlement mechanism, but China also makes global trade politics via its Belt and Road Initiative (BRI). This project leads to the expansion of Chinese political power and its legal tradition building on the old Confucian idea that settlement of disputes by courts should be avoided as it is confrontational. Conflicts should instead be settled by negotiations in a spirit of due respect to the position of the stronger and the weaker party in a hierarchical system (Bogdan, 1994). From a legal point of view this way of settling disputes results in weak case law and ad hoc outcomes of the settlements.

BRI is a well-elaborated strategy for tying countries to China, and at present, it comprises more than 140 states. It is built as a global network coordinated by a light advisory forum. Being very flexible when it comes to institutions and legal norms does not correspond to an international organisation, neither does it live up to the WTO requirements of transparency and predictability of trade rules and their application. Its activity consists of carrying out specific projects based on international agreements and private law contracts. Those projects are financed with Chinese capital, and they mostly concern investments in raw material extraction and infrastructure like roads and ports. The agreements are primarily in the form of non-binding memoranda of understanding and binding agreements are concluded at the time when individual projects are to be carried out. In case of a conflict about the obligations of an agreement or of a contract, China wants Chinese to be the court language. It is expected that China will also increase the number of its free trade agreements and act to make Chinese norms global ones in fields like technical standards, information technology and e-trade.

Only China offers a viable alternative to the multilateralism of the present global economic governance. A political dimension to the economic BRI was formulated by China at the XIV BRICS Summit 2022, assembling Brazil, Russia, India, China and South Africa. It concerned a Global Security Initiative (GSI) based on Chinese values. It is to be understood as part of a scheme to take over global leadership from the USA, comprising economy as well as security policy. It is still vaguely formulated but is to be seen in relation to BRI, China's efforts to replace the US dollar with the Chinese Yuan as the main trading currency, to make Beijing the main depositary of reserve currencies and to replace the present digital system for international transactions with a Chinese one. Furthermore, the establishment of Chinese arbitration tribunals for international commerce in Beijing, Shenzhen and Xi’an can be understood as a Chinese desire to promote Chinese legal thinking in private law matters.

As far as Russia is concerned, it could have increased its general influence by democratising, strengthening the rule of law, developing its partnership agreement with the EU and simultaneously strengthening cooperation with Ukraine via its free trade agreement and completing it with agreements on cultural cooperation, but the Russian leadership chose the way of violence. The result is that the only direction for Russia is now to be integrated into the Chinese alternative.

Of the three great economic powers, the EU, the United States and China, it is today only the EU that expresses a clear voice for multilateralism in international trade, compulsory trade rules efficiently supervised, and for including human rights in trade agreements. The United States has not shared the EU’s positive view of multilateralism since almost ten years back; neither has the United States concluded as many free trade agreements as the EU and the US free trade agreements also differ from the EU ones regarding human rights. The US endeavours to uphold human rights outside of its trade agreements. It is also a US priority to sustain the very strong position of its multinational companies in the world economy.

It is clear, however, that the EU’s optimism about multilateralism stands in contrast with present realities. Mercantilism, pluralism and bilateral agreements have been the order of the day for more than 15 years. At the same time, the WTO and multilateralism are needed. All countries, as well as companies engaged in international trade, still need global WTO rules. This fact is demonstrated by the frequent use of its dispute settlement system by rich as well as poor countries, including China. The problem is the difficulty to adapt the WTO rules to new forms of protectionism.

Concluding Reflections

At the time of writing in 2023, two years had passed since the Court of Justice of the European Union celebrated the 50 years anniversary of one of its most important cases, ERTA, decided in 1971 (Case 22/70). It caused a considerable transfer of power from the EU member states to the EU institutions in the domain of external relations. It made clear that the external competence of the EU equals its internal, the so-called parallel doctrine, meaning that the EU may have exclusive competence not only in the field of commercial policy but in other fields of EU activity as well, and that competence in such fields become exclusive at the same time as the EU legislates in that field. Thanks to this ruling, the coordinated policy of the EU member states could be united into a forceful common EU external policy focusing on trade but carrying out the EU values and ideology about a social market economy (TEU Article 3(5)).

A motto of the external policy of the EU has been “Wandel duch Handel”, i.e., change by trade, meaning that trade with the EU would result in the partner countries approaching the EU ideological model. Belief in this credo was strongest in relation to Eastern Europe.

In 2022, the hope for a successful policy under this motto was partly frustrated. Russia did not develop towards democracy but in the contrary direction; the congress of the Chinese Communist Party in October 2022 decided to strengthen China’s centralised system and to retain its discriminating protectionism; the US administration under Joe Biden proved not to be more inclined than the former Trump administration to favour multilateralism; and the UN climate conference in November, touching upon areas under EU competence, made it evident that inability of national policy and the anarchy of the international system would lead to climate catastrophe.

Waiting for Godot, the EU is still influencing global neighbours through its soft and economic powers and with law as an instrument in order to make them approach the EU ideals.