Discourse over free trade is key to preventing protectionism

In October 2009, after a series of controversial talks, the European Union (EU) and South Korea finally initialled the Free Trade Agreement (FTA) they had been negotiating for just over two years. This will serve as the most visible expression so far of the Global Europe communication, which was announced in October 2006 by the Commission's Directorate-General (DG) for Trade. The strategy spelled the end of the ‘moratorium’ on new FTA initiatives that had been at the heart of EU trade policy since 1999 with a new emphasis on negotiating bilateral trade agreements with emerging (and largely Asian) economies. More importantly, Global Europe stressed the need for a ‘rejection of protectionism at home’ implicitly targeting Europe's few remaining ‘pockets of protection’ (European Commission Citation2006b). In exchange for offering trade partners liberalisation in these areas, the European Commission was to seek reciprocal concessions where EU firms were competitive. The EU–Korea FTA is a case in point, obtaining substantial gains for European service suppliers and investors in Korea in exchange for a significant opening of the automobile sector, which was still reeling from the effects of the economic crisis.

In light of the collective action problem identified by the literature on the domestic sources of trade policy (Baldwin Citation1985; Hillman Citation1989; Grossman and Helpman Citation1994; Hiscox Citation2002) – that protectionists are more likely to mobilise and shape policy than the ‘winners’ from liberalisation, due to the concentrated and more immediate nature of the losses incurred and the greater diffusion of the benefits (see Olson Citation1965, Citation1983) – accounting for liberal trade policy outcomes has often been seen as an intellectual puzzle for scholars of International Political Economy (IPE) (see, e.g. Dür Citation2010). In this vein, the literature on EU trade policy often points to the institutional insulation of policy-makers from protectionist pressures (Meunier and Nicolaïdis 1999; Meunier Citation2005; this argument is also made for the USA, see Destler Citation2005; Chorev Citation2007). However, in our view, this is not a sufficient explanation of the EU–Korea FTA since the evidence suggests that import-competing interests enjoyed good access to key officials during both the negotiation and ratification of the agreement. Although the elected European Parliament (EP) was the focal point of many of their high-profile interventions, protectionists were also shown to have access to supposedly more insulated policy-makers in Member States and the Commission itself, particularly in DG Enterprise and Industry. This suggests that even in politically insulated policy structures, decision-makers cannot avoid the distributive politics of liberalisation. This point is rendered all the more poignant by the advent of the 2008 Financial Crisis which galvanised opposition to the FTA, especially from the powerful automobile sector. This did not stop the EU, however, from signing the agreement in October 2010 and then ratifying it without significant revisions in February 2011. In sum, as there was a strong mobilisation of protectionists with good access to policy-makers, this liberal policy outcome cannot be explained purely in terms of institutional insulation nor be simply ‘read off’ from the material interests of societal actors.

This article seeks to answer two related questions that this raises. For one, there is the issue of explaining why the Commission chose to pursue the controversial trade-offs envisaged by the Global Europe strategy and put into action in the EU–Korea FTA. A second, more important puzzle is the question of how the Commission was able to overcome the major opposition mounted against the trade agreement with Korea. Given the difficulties associated with the rational/material approaches reviewed above, this article develops a constructivist framework to study the role of ideas in trade policy-making. In particular, it seeks to broaden our understanding of the power of strategically invoked economic discourses, going beyond the existing constructivist literature's focus on ‘globalisation discourse’. Moreover, given that this literature has sometimes struggled to identify the strategic nature of appeals to external economic imperatives, we also develop a novel analytical strategy to determine whether an actor has disingenuously invoked such discursive constraints to legitimate unpopular policy decisions. As a result, we are able to show how DG Trade constructed an ideational imperative for liberalisation to legitimate the trade-offs inherent to Global Europe and the EU–Korea FTA.Footnote1 This, it is argued, was a reflection of neoliberal ideas about the market held by policy-makers, who saw in liberalisation a desirable outcome in itself. It is important at this stage to emphasise that we are not saying that conventional accounts of trade policy cannot explain the EU–Korea FTA. Rather, our analysis suggests that ideas and language play an important role in constructing economic narratives that enable policy-makers to achieve free trade outcomes – even in the face of protectionist pressures (which in theory could, and in practice did, overcome policy insulation).