Although there has been a large degree of integration between European Union member states, foreign relations is still a largely inter-governmental matter, with the 27 members controlling their own relations to a large degree. However with the Union holding more weight as a single bloc, there are at times attempts to speak with one voice, notably on trade and energy matters.
The Union has had a long standing commitment to the Western Balkans after the Community failed to develop a policy to intervene in the wars in the former Yugoslavia. That failure has spurred the development of the CFSP and expansion in the region to create stability there.
There have been other disputes, such as the dispute over textile imports into the EU (Bra wars) with domestic European manufactures losing out to cheaper Chinese imported goods. The PRC and EU are increasingly seeking cooperation, for example China joined the Galileo project investing €230 million and has been buying Airbus planes in return for a construction plant to be built in China; in 2006 China placed an order for 150 planes during a visit by the French President.
There are plans to replace the current 1985 EC-China Trade and Co-operation Agreement with a more comprehensive Partnership and Cooperation Agreement. The Union is China's main largest trading partner, and China is the Union's second largest partner.
The Union is India's largest trading partner, accounting for 20% of Indian trade. However India accounts for only 1.8% of the EU's trade and attracts only 0.3% of European Foreign Direct Investment, although still provides India's largest source. During 2005 EU-India trade grew by 20.3%.
There was controversy in 2006 when the Indian Mittal Steel Company sought to take-over the Luxembourg based steel company, Arcelor. The approach met with opposition from France and Luxembourg but was passed by the Commission who stated that were judging it on competition grounds only. (See: Arcelor-Mittal)
Moscow chose not to participate in the European Neighbourhood Policy, and instead to cooperate with the Union through "Common Spaces" (see main article). Russia also cooperates in the Northern Dimension.
EU-Russia relations are highly influenced by the Union's dependence upon Russia as an energy supplier. Clashes with Russia over energy are common, with leaders expressing doubt in Russia's reliance after supplies were partially cut on two occasions by transit countries after a dispute with them (see Ukrainian and Belarusian gas disputes).
The Union has since sought to diversify supplies away from Russia. In April 2007, Trade Commissioner Peter Mandelson described trust between Russia and the Union as being at its lowest level since the end of the Cold War as a result of the energy disputes.
Russia has objected to plans to base US Anti-ballistic missile defence systems in Poland and the Czech Republic seeing the move as hostility towards it. With some former Eastern bloc states joining NATO without signing the Treaty on Conventional Armed Forces in Europe, Russia has suggested it suspend implementation until it is signed and ratified by all NATO countries. In addition, Moscow has suggested it may target its weapons towards European countries if US weapons are eventually based there.
Following riots in Tallinn, the Estonian government moved a Soviet era war memorial (the Bronze Soldier of Tallinn) out of the city centre sparking indignation from Russia including "cyber-attacks" on Estonia. There followed a period of riots in Tallinn and around the Estonian embassy in Moscow.
Further problems include: a ban by Russia on Polish meat exports (due to allegations of low quality and unsafe meat exported from the country), which caused Poland to veto proposed EU-Russia pacts issues such as energy and migration; an oil blockade on Lithuania; and concerns by Latvia and Poland on the Nord Stream pipeline.
There have been agreements on other matters such as withdrawal of taxes on EU flights overflying Siberia. Outside the EU, Russia is a member of the Organisation for Security and Cooperation in Europe and the Council of Europe. As a member Russian citizens are able to appeal to the European Court of Human Rights in Strasbourg, where 363 judgements concerning Russia were brought to the court between 2002 and 2006, with 352 of those going against Russia. It does however largely comply with the court.
The United States is often seen as Europe's strategic partner, being ideologically and culturally similar as well as tied together through the NATO alliance. However recently, a number of rifts have emerged, particularly visible since the Iraq war.
As the European Union is built on a basis of international cooperation and the pooling of sovereignty for mutual benefit, it naturally seeks a similar approach in the rest of the world. It supports the United Nations and International Criminal Court as well as agreements such as the Kyoto protocol and human rights agreements. In contrast the United States has been taking a more unilateralist approach with a greater willingness to use military hard power above the European style soft power techniques.
The Iraq war and the War on terror are heavily criticised in Europe. However there still a relative amount of cooperation, in NATO and outside. For example, they have recently finalised an Open skies agreement. In April 2007 President-in-Council Angela Merkel agreed with the US an economic pact on a common market. Merkel hopes for it to be established by 2015. See also: EU-US Issues of contention.
However there is difference between member-states in relations towards the United States, a number of governments supported the Iraq war for example. These states tend to be the more eurosceptic governments, namely the United Kingdom, Poland and the Czech Republic, the latter two have agreed to host elements of the United States' ballistic missile defence shield against public opinion on the matter, as was the case with the Iraq war. The Union as a whole is against the shield on the grounds that it would do little against real threats and would just antagonise countries such as Russia into another Cold War-style arms race.
Since 2001, EU policy is to stay constructively and strongly engaged with Pakistan and to make a significant and visible engagement, both in political and economic terms. Measures include resumption and upgrading of political dialogue, signature of a 3rd Generation Co-operation Agreement, as well as additional development assistance.
In December 2006, the Council of the EU called on Afghanistan and Pakistan to deepen relations and to cooperate closely to deal with insecurity in border areas, while urging Pakistan to build on current efforts to prevent the use of its territory by the Taliban.
In order to enhance Pakistan’s capacity on WTO related issues, a trade-related technical assistance programme was launched in 2004 with a view to streamlining procedures and processes for trade facilitation in compliance with EU norms and standards.
For the period 2002-2006 €75 million were originally allocated for development and economic cooperation. Additional EC support to Pakistan was provided following the events of 2001 in recognition of Pakistan’s role as a partner in the fight against terrorism, including € 50 million for financial service reforms and to support development of micro-finance SMEs.
The 8 October 2005 earthquake had a devastating effect on Northern Areas of Pakistan, in particular Azad Jammu and Kashmir and North West Frontier Province. In response to this calamity the Commission proposed an assistance package of € 93.6 million, consisting of both humanitarian aid (€ 43.6 million) and reconstruction support (€ 50 million) for commitment in 2005.
Substantial assistance was also provided under other thematic budget lines, including for Afghan refugees in Pakistan.
Under its environment cooperation policy, over the last decade the EC contributed a total of € 32 million to rehabilitation, management and conservation of natural resources, safeguarding and conservation of biodiversity, education and capacity-building through sustainable resource management with the involvement of local communities. Major target areas included upland areas of Punjab and Afghania (NWFP), benefiting more than 2 million people.
The EU has led diplomatic talks to get guarantees there will be development of nuclear power only while the United States, backing negotiations for now, has maintained a threat of military force. These talks have not yet succeeded, with the issue going to the UN where sanctions were placed. In 2007 Solana sought to renew talks and is due to meet Ali Larijani on 25 April 2007 to discuss resuming talks. Meanwhile, EU leaders, in April 2007, have imposed sanctions on Iran that go beyond those laid out in UN Resolution 1737.
Iran has also been been seeking to develop an oil bourse which would be the first to be denominated in euro. Although this has not featured in relations between the EU and Iran thus far, if it starts work it would have a considerable impact outside Iran.
Democracy and human rights is a consistent dividing line between the two blocs, a delegation of MEPs were refused to allow to speak on democracy during a trip in 2007. However there has been some co-operation: in 2003 the EU and ASEAN agreed to share intelligence on anti-terror matters. As of April 2007 the Commission is pursuing a free trade agreement with ASEAN.
In April 2007 the Commission offered ACP countries greater access to the EU market; tariff-free rice exports with duty- and quota-free sugar exports. However this offer is being fought by France who, along with other countries, wish to dilute the offer.
The Union has been developing ties with other regional bodies such as the Andean Community and Mercosur, with plans for association agreements between the EU and the two other blocs underway to help trade, research, democracy and human rights. Chile and Mexico have an Association Agreement with the EU.
A 2.6-billion euro financial package for Latin America was also put forward with 840-million euro for Central America. A major forum for European relations with Latin America is the Latin America, the Caribbean and the European Union Summit, a biannual meeting of heads of state and government held since 1999.
The European Union is expected to accede to the European Convention on Human Rights (the Convention). In 2005, the leaders of the Council of Europe reiterated their desire for the EU to accede without delay to ensure consistent human rights protection across Europe. There are also concerns about consistency in case law - the European Court of Justice (the EU's supreme court) is already treating the Convention as though it was part of the EU's legal system to prevent conflict between its judgements and those of the European Court of Human Rights (the court interpreting the Convention). Protocol No.14 of the Convention is designed to allow the EU to accede to the it and the Treaty of Lisbon contains a protocol binding the EU to joining. The EU would not be subordinate to the Council, but would be subject to its human rights law and external monitoring as its member states are currently. It is further proposed that the EU join as a member of the Council once it has attained its legal personality in the Treaty of Lisbon.