In the upcoming 2020 trade strategy, seen by EurActiv, EU Trade Commissioner Karel De Gucht intends to highlight the illegal state aid that helps the EU's competitors export to the bloc.
The EU is seeking greater reciprocity in trade, echoing calls by French President Nicolas Sarkozy, who has asked for the bloc's openness not to come at the expense of its businesses.
Many foreign countries are providing direct financial support to firms or sectors, or indirectly by exempting them from taxes or extensively purchasing their goods.
The trade strategy states that Brussels will use trade defence instruments to tackle "new forms of distortion such as subsidisation of strategic sectors, including where third countries use export restrictions to confer indirect benefits [on] downstream industries".
"We will explore whether and how to further update and modernise our trade defence instruments," says the document.
In 2011, the Commission will publish an annual report on trade and investment barriers, which will be presented to EU leaders at their spring European summit.
The report will represent the EU's "key instrument to monitor trade barriers and protectionist measures and trigger appropriate enforcement action," reads the document.
Support for SMEs' internationalisation
Illegal state aid abroad has a negative impact on EU small and medium-sized enterprises (SMEs), the strategy argues. It favours exports to the EU by keeping foreign product prices unfairly low and limits EU firms' exports to foreign countries.
"We will support EU businesses if third countries use trade defence instruments in an unfair way, including, where appropriate, by raising these issues in the WTO," reads the EU strategy.
The document also points out that, when appropriate, bilateral negotiations with trading partners could help solve these issues more efficiently than complex and time-consuming multilateral agreements.
Brussels intends to raise SME issues in international fora by recognising "that they often face real problems with cost-intensive trade defence investigations either as importers, users, complainants or exporters".
The Commission will also propose new measures during the course of 2011 to favour the internationalisation of European SMEs.
Who is in charge of trade defence?
The EU's more assertive trade strategy may however be undermined by internal EU scraps for power.
Indeed, it is still unclear which institution will have the final word on how and when to use trade defence instruments.
Commission proposals to give itself more control over trade defence tools, as provided for by the Lisbon Treaty, face strong opposition from Northern European member states, which intend to retain most of their power over commercial policy.
Access to public procurement markets abroad
Support for the internationalisation of EU firms will also seek to address access to public procurement markets in foreign countries. Brussels laments that the EU market for government contracts is much more open than those of its trading partners, notably China.
"While our market is already largely open, those of our major trading partners are much less so, especially at regional and local level," reads the document.
This imposes unfair limits on the internationalisation of EU companies, especially in sectors where they are highly competitive, notably "public transport, medical devices, pharmaceuticals and green technologies," reads the document.
Public procurement markets account for over 10% of GDP in large industrialised countries and are taking up a growing share in emerging economies.
The US market, for example, is worth over €1,000 billion, or 11% of US GDP. This share is even higher in other countries. In Canada it reaches 22%, while in Japan it is 18%, according to European Commission estimates.
China is top of the list of countries criticised by the EU. Beijing is yet to sign the Government Procurement Agreement (GPA), which is a voluntary commitment to open up national public procurement markets to WTO members.
"We are pushing for early Chinese accession to the GPA on the basis of an ambitious offer, in line with Chinese WTO accession commitments," states the EU document.
But China is not the only target of the new strategy. As a general policy, "the Commission will propose in 2011 a legislative proposal for an EU instrument to increase leverage to secure improved symmetry in access to public procurement markets in developed and large emerging economies," reads the trade strategy.
