The aim of this study is to explain why the Commission gets exclusive competence in the new trade issues in service, intellectual property and investment. Looking back into the development of trade competence, the question arises as to ask why the Commission has been able to gain exclusive competence in a field where many Member States tried so hard to push it back and where even the Commission’s natural ally, the Court, refused to support it. After the 1994 ECJ ruling, the Commission has persistently carried its proposals for exclusive competence into the following IGCs. The development from Amsterdam Treaty to Lisbon Treaty has witnessed a gradual enlargement of the Commission’s exclusive competence in the new trade issues. It is thus interesting to ask how has the Commission been able to gain powers in a hostile environment, faced with stiff resistance by the Member States? This study argues that two factors are mainly responsible for the concentration of more EC trade competence. First, the increasing embeddedness of EU in international trade regime raises the functional need for more exclusive competence. A more comprehensive and institutionalized international trade regime exerts pressure both on the Commission and the national government. The incorporation of new trade issues into trade agenda (GATS, TRIPS, TRIMS), as well as the streamlined Dispute Settlement Body (DSB) increase the embeddedness of EU in the international trade regime. There is then more functional need for exclusive competence from the Commission to guarantee coherent performance at the international level. Second, because of the evolution of trade preferences of the domestic related industries, the Commission seized the support of the related industries from the domestic constituency, thus more leverage to ask exclusive competence from principals. The Commission as agent could exploit the developments from international institutions and domestic constituencies to get more power from the principals Starting from the PA framework, this study has analyzed the preferences of the Commission and that of the member states concerning the exclusive competence in new trade issues. It is argued that the commission is more than a “simple agent” of the member states. It can deprive its own preferences from three sources. First, in external trade, the commission is the only representative of the Community that has legitimacy to advocate the interests of the EC. This institutional setting requires enough credibility and autonomy in order to conduct successful negotiations. Second, the Commission is more liberalization-oriented than the member states. By using its agenda-setting power, the Commission can explore the different positions among the member states and bind them together with its own liberalization-oriented proposal. Third, the Commission is a bureaucratic actor with rational considerations to maximize its own power. It enjoys the historical continuity, expertise and informational asymmetry vis-à-vis the member states. This bureaucratic nature leads to the desire to get more power, which can be achieved by more integration or the transfer of competence to the supranational level. On the side of the member states, two points are raised concerning their preference towards external trade competence. First, the delegated power of external trade competence in Rome Treaty has the nature of a “permanent delegation”. This means that it is difficult or almost impossible for the member states to reverse the integration process and take back their delegated trade authority. Although they can exert significant control mechanism through the comitology procedure, the commission has a “lock-in” position in external trade policies and can explore the differences among member states. Second, as to the trade policy concerning the new trade issues, the member states have a “default point” of sovereignty concern, which means that they need to be convinced by functional purposes for more sovereignty transfer. From the PA perspective, the principals are not ready to make a transfer of sovereignty in its domestic sensitive domain, unless there are enough pressures from the domestic interests or other functional purposes. It is argued that the Community’s increasing embeddedness in international trade regime is mainly responsible to the Commission’s preference of getting more exclusive competence. The more embeddedness of EU in the international trade regime, the more inclined the Commission to acquire exclusive competence in related trade issues. After the early 1990s, there is clear strengthening of the institutional framework in international trade regime. On the one hand, there was incorporation of new trade issues into the international trade agenda. On the other, there was a much strengthened legal procedure of WTO (dispute settlement body). Institutionally speaking, the development of WTO put the Commission at an advantageous position vis-à-vis the member states. This development has caused the tendency of the Commission for more centralization of authority in trade issues. The Commission had explored this “opportunity of window” from international development and developed clear preferences for exclusive competence in the new trade issues. Its basic argument for exclusive competence has been the credibility and efficiency to conduct successful negotiations within WTO. This argument has been repeated in different IGCs and amounted enough functional pressure on the member states. The strengthening of the institutional framework of the WTO had important impact on the balance of power within the EC when it comes to trade policy. The second argument goes to the preference evolution of domestic actors. It is tried to bridge the gap between domestic preferences and the institutional setting of exclusive competence at the Community. Although there is no direct linkage between these two factors, there is obvious trend of the European service providers to go to the Commission and conduct supranational lobbying. This evolution process was a response to the interaction with international and regional changes. Taking telecommunications for example, the European regulatory integration leads to the evolution of the business actors’ preferences towards more Europe wide solutions. The preferences turn to be more liberalization-oriented and achieve more market access in global markets. Also, the on-going international negotiations have added more liberalization-specific preferences to the European service providers. Facing the changes of international regime and the prospect of a more liberalized global market, they have developed new type of global oriented preferences. This development has led to the change of lobbying effort of the domestic interests. When they find their preferences in line with that of the Commission’s, they would like to form business associations and go to the Commission to conduct business lobbying and thus circumvent the national state. Only the protectionist preferences would choose the national lobbying, because most of the protection preferences could not find the European base. Most of the service providers have taken part in ESF to express their liberalization preferences towards external trade. It is this explaining variable that functions insides the member states and push the member states to give up their sovereignty concern over the new trade issues. When it was converged with the functional purposes from the international level, there is enough pressure for the member states to agree for more sovereignty transfer. The increasing embeddedness in international trade regime and the evolution of domestic preferences towards more liberalization, have favored the Commission vis-à-vis the member states. Following the PA framework, the Commission can explore these two factors and push the member states to delegate more power. First of all, with the increasing embeddedness in international trade regime, the Commission can take advantage of the historical path and continue to represent the member states to negotiate the new trade issues. In reality, the Commission enjoys de facto competence in its external representation, especially in the legal dispute system. This ‘lock- in’ effect of the Commission’s role in international trade negotiations has given the Commission first argument to pursue more formal transfer of competence from the member states. Second, the Commission has taken an active role to seek the support of the domestic service actors. Since the middle 1990s, the Commission began to promote the involvement of societal interests in its policy making in order to increase its legitimacy. Under the name of civil society dialogue in 1998, for example, the Commission tried to formalize its consultation and include a broader range of interest groups by instituting a Civil Society Dialogue on the upcoming round of negotiations. It also called the founding of the most representative service association—European Service Forum-in 1999. These measures have helped the European Commission to integrate firms and other private actors into the trade policy-making process in order to gain bargaining leverage vis-à-vis the member states. This political interaction functions in nature as a ‘reversed lobbying’ process. In this scenario, the domestic actors no longer hold stable preferences and then go to the political arena for policy lobbying. It is the political actors that take the initiative and attract the domestic business actors into the political interaction process and can to a great extent influence their preference formation. There is thus a learning process taking place to the business actors, as was witnessed by the service industries during the 1990s. The Commission only responds well to those ‘pan-European’ preferences, which in the case of European service industries has led to the evolution of more liberalization oriented trade policies in the global market. The protectionist preferences have to go through the national door to object their voice, which is very rare in the case of European service industries. The strengthening position of the Commission vis-à-vis the member states reflects the concentration of Community power because of globalization and its internal integration. The increasing embeddedness in strengthened international trade regime not only gives the Commission direct incentive to ask for more power, it also helps to bridge the gap between the domestic constituencies and the Community. The internal integration process also continues to weaken the role of the member states and strengthen that of the supranational institutions. The member states have gradually lost their ability to use national policy tools over sensitive sectors due to the legislative instruments available to the Commission in enforcing market integration. This institutional change is further used by the commission to attract the domestic support of its pan- European policy initiative. There is thus an obvious weakening of “functional role” of the member states and the strengthening of that role on the Community. It is because of this that the Commission can push the member states to give up their sovereignty concern and delegate more power to the Commission. This study tries to describe a multi-polity nature of the EU and adds more dimensions to the PA framework in its EU application. The analysis has shown a “permanent nature” of delegation in EU trade policies and the centralization of trade authority in the Commission. This contradicts the claims of the PA framework that the agent can only pursue a limited “preference shirking” and principals can take full control through different oversight procedures. The Commission can take advantage of the institutional setting and pursue its own preferences in external trade, rather than a “simple agent” of the member states. That tendency of more community authority and less principal control reflects more a functional need than pure ideological considerations, which underlines the core predictions of Neo- functionalism. This development however, also indicates the tension between national sovereignty and supranational power. In the EU institutions, the delegation is not only to fulfill functional purposes, it also has a de facto “permanent nature”. The agent is favored a lot by the institutional setting and can thus explore wildly its own preferences, sometimes even “push” the principals to accept it. The principals, on the other hand, can only exert limited control as more and more competence is concentrated to the Community. By bringing other dimensions to the application of PA to European integration, it underlines the complexity of power delegation inside EU as well as the multi-polity nature of European integration.