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Economic Challenges of Globalisation

Page history last edited by Jasmine Ganeshalingam 13 years ago

EU and the Economic Challenges of globalisation


The General Agreement on Tariffs and Trade (GATT), which saw the reduction of trade barriers has arguably provided a platform for the rise of interdependence and globalisation. The domestic sphere and the external sphere were altered and no longer in balance, as a result of this, states had to develop new approaches to dealing with the growing lapse between political authority and market forces based on their individual domestic market frameworks. The reason why different countries have different reactions to globalisation is because they have ‘diverse market frameworks’. This means that not all countries can successfully face the challenges of globalisation to the same degree. It can therefore be concluded that the EU is not able to make changes by force in foreign countries or be able to create the framework for the global economic order; for this reason it has a soft approach. Moreover, the EU is “an economic superpower, which cannot meet its expectations and be assertive in the international trading system” (Molyneux 1999, p. 387).


Member States such as the Netherlands, Germany, Sweden and Denmark have the ability to solve the problem of external threats via privatized protectionism due to their corporatist structures. They consequently are able to develop internal policies while at the same time ‘staying open to the international trading system’.


With divergent economic cultures, integration is still possible, as long as there is economic stability coupled with the protection of external force’s influence. However, when national economies are not stable, integration is no longer feasible as economic choices will have to be made and it is the case that the varying economic cultures will tend to opt for divergent trade policies as their priorities are not all one and the same.  This results in Member States seeking to exert more influence on matters that are external, as a result of losing the ability to manage their own national economies. Member States will then lose trust of other Member States. They will also lose trust of the whole integration project, as a result of the divergence in trade policy preferences that they have all opted for in order to cope with globalisation. This results in a scenario where Member States have lost all trust of the European Union’ central powers, and this situation will remain the same as long as they view their own national economic structures as being significantly different as that of the EU’s. "As a result, Member States will try to keep control of trade policy both against the Community central powers and within the latter’s institutional system" (ibid: 389).


It must not be implied that the Common Commercial Policy is intergovernmental because of the evident lack of trust. The challenges faced by globalisation must be met by Member States working together so that they will ultimately be able to aggregate the benefits of unity. Because Member States will be faced with coping with globalisation on one hand, and lack of trust between each other on the other hand, a balance will be have to struck, whereby Intergovernmental forces and supranational forces will be in continuous disagreement and dialogue in order to find a solution to the dilemmas caused by the external dimension.


The decision-making process of the Community trade therefore entails mult-layer negotiations; between the Member States and the Commission, as well as negotiations between the Member States themselves. Moreover, these negotiations include the additional influences of the European Parliament and the input of business and labour communities. 



Other Links


More information on the economic challenges the European Union faces can be found below:


Economic Challenges to the European Union


Economic Challenges of Enlargement


Single European Currency





Garcia-Molyneux, C. (1999), 'The Trade Barriers Regulation: The European Union as a Player in the Globalisation Game'. European Law Journal, Vol. 5 (4), pp. 375–418.


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