The Market for Trade Protection in the European Union*

This paper adopts a political economy approach to discuss the factors that will affect the endogenous determination of trade policy in a regional integration agreement such as the European Union (EU). Two main forces are at stake. First, some factors will lead to a dilution of preferences by interest groups with the consequence of lowering the protectionist tendencies in the union. Main elements include the increasing diversity of interests in the union which political authorities must consider as well as the free rider problem associated to larger lobbying groups in the EU. On the contrary, other factors tend to lead to a reinforcement of specific interest preferences conducing to higher external trade barriers, the "Fortress Europe " argument. For instance, industries weakened by internal competition may seek import relief from non-EU goods as a compensation for internal free trade. These protectionist forces will be enhanced in the presence of economies of scale in lobbying at the EU level. Hence, the external trade policy determination will depend on the institutions of the EU, their procedures and the trade policy instruments adopted on the one hand, and on the effect of regional integration on interest groups on the other hand. In particular, the respective role of the Commission and the Council of Ministers (and to a lesser extent the European Parliament), as well as their decision making process is assessed in this paper. Moreover, the role of regional integration on pressure groups at the national and European level is discussed