Cheap goods from the east
In the last month European Trade Commissioner Peter Mandelson has proposed implementing anti-dumping duties on leather shoes imported from China and Vietnam. The reason is that these goods are so much cheaper than the EU-made alternative that they threaten the market for European shoes and therefore the jobs of those who make them. Mandelson is only permitted to do this if he can show anti-competitive practices by the overseas manufacturers. In the case of shoes he argues he can (see EurActiv 24 Feb 2006).
This was not so when cheap Chinese textiles began to flood the market last year following the lifting of WTO trade restrictions in January 2005. Here, import restrictions were imposed and, although an agreement was eventually reached with China, the fact remains that such measures are at base protectionist. The question therefore is: how can a globalised world cope with fully free trade while ensuring the preservation of traditional regional industries?
A second issue is jobs going out of the EU to be relocated in areas where labour is less expensive. The obvious example is the number of call centres located in India. Many manufacturing companies have also found that it is cheaper to move their production outside the EU. These are jobs that used to be available for EU workers.
The recent bid by Mittal Steel - a company based in Rotterdam, whose CEO and President both hold Indian passports - for the Luxemburg-based Arcelor has highlighted another area of concern. In a globalised, free-trade world national-based private companies will become increasingly vulnerable to foreign takeover bids. This leads to further concern for jobs. The position of the EU, voiced volubly by Commissioners Kroes (competition) and McCreevy (internal market - see speech, 9 March 2006) is that nationalism and protectionism should play no part in the ownership of companies: if a proposed takeover does not breach competition rules, it should go ahead. So far, however, this principle has been exercised predominantly in relation to mergers within Europe. Will it remain the same regarding takeover bids from non-EU firms?
Archaic labour laws?
One of the main reasons why goods can be produced so cheaply in the east is that the cost of labour is much lower. But added to that must be the fact that over the 30 years following the second world war, when the western world dominated all trade and trade unions became very strong, most European countries developed a set of labour laws which give rights to employees on pay levels, working hours, holidays etc quite unknown in eastern countries. Many argue that it is now time for these laws to be reformed to allow the flexibility needed to compete in a 21st century market.
European Globalisation Adjustment Fund
In March 2006, the Commission proposed the setting up of a fund to help workers in areas affected by trade shifts. It is proposed that the European Globalisation Adjustment Fund (EGF) would have up to €500 million to be distributed for the benefit of 50,000 workers. It would provide retraining, job search assistance and the promotion of entrepreneurship.