EU to set up trade-barrier watchdogs

The European Commission is planning tougher action to prise open new markets for its companies in China, India and Russia, saying countries that fail to remove trade barriers will face further legal battles.

On 18 April 2007, Trade Commissioner Peter Mandelson presented plans to update Europe’s outdated ten-year-old market-access strategy.

The aim of the review is to shift the focus from tariffs barriers – which have been significantly reduced over the past decade – to modern, non-tariff, “behind-the-border” barriers, which make it difficult for European companies to export products to key markets. 

Obstacles faced by businesses today include burdensome customs procedures, discriminatory tax rules and technical regulations and non-enforcement of WTO rules. 

Mandelson said that such trade barriers cost European exporters hundreds of billions of euro in lost sales each year. In China alone, the annual cost is estimated at €20 billion per year in lost opportunities. 

The centre-piece of Mandelson’s strategy is a new “decentralised partnership” between the Commission and those with more experience of problems on the ground – companies, EU delegations and embassies of the 27 member states, which can more easily identify and tackle local trade barriers. 

One of the main tasks of these new ‘market-access teams’ will be to scrutinise the protection of intellectual property rights – a growing problem for EU exporters, especially in China. 

"EU business relies on growing markets abroad to fuel economic growth and jobs at home. We need to ensure that European companies are able to compete fairly in those markets," said EU Trade Commissioner Peter Mandelson

Although stressing that dialogue remained the EU's preferred means of attaining greater market access, he warned that "Europe's patience could wear thin", pointing to China, where the protection of intellectual property rights remained "patchy and uneven". "If dialogue doesn't work, there are other instruments at our disposal, including the initiation of WTO cases," he said. 

The EU executive stressed that the plan was not to target least developed countries or developing countries in Africa, the Caribbean and the Pacific (ACP countries). Nor was the aim to establish an "EU trade-policy militia", it added. "All we aim at is providing EU business with a level-playing field and fair conditions of competition in the modern global economy. We will keep our market open and are confident that our established trading partners like the US, or key emerging countries, notably the BRICS (Brazil, Russia, India and China) and the ASEANs (Association of South-East Asian Nations), will understand our concern to find fair rules in other markets around the world." 

Philippe De Buck, secretary-general of BusinessEurope, the EU's employers' lobby, said that the Commission's delegations and member states' embassies represented a "significant diplomatic force" but had so far been inefficient in solving companies' problems. "How many deal with the growing number of trade barriers that hurt, especially, SMEs? Very few. In the EC Delegations in China and Russia there are seven officials out of around one hundred staff in each. This is totally insufficient. If the EU wants to deliver on market access, it needs to put serious resources into this important field." 

"If European companies are excluded from emerging markets, Europe's economic future and competitiveness is compromised," he added. 

MEP Syed Kamall, trade spokesman for the British Conservative group at the European Parliament, said that Mandelson was right to seek ways of breaking down the barriers to trade, but added that the EU should also help developing nations that are held back by Europe's own stringent technical barriers to trade. 

"Entrepreneurs from developing countries want to sell their goods on the European market, but they say that the technical restrictions are too complex for them," he said, adding: "We could save a fortune in aid payments just by sending some of our own technical experts to help entrepreneurs in lesser developed countries understand the hoops they must jump through to gain access to European markets." 

With the Doha negotiations on a global trade pact still somewhat on standby, the trade commissioner wants to improve access to emerging markets both through bilateral free-trade agreements and by setting up local watchdogs to police existing World Trade Organization (WTO) rules. 

The Commission's recent decision to take India to the WTO over its exorbitant import taxes on wines and spirits (EURACTIV 27/03/07) attests to a more aggressive approach to market access, which is likely to mainly target countries such as China, India, Russia and Brazil – although the paper cites no specific countries – and could lead to a multiplication of legal cases and disputes. 

This novel approach to tackling trade barriers is an integral part of Europe's new trade strategy, presented late in 2006, with a view to ensuring that Europe remains a major global player, able to compete with low-cost manufacturing countries in Asia and Latin America (EURACTIV 05/10/06). 

The move is also an attempt to appease protectionist dissent by demonstrating that free trade means not only exposing EU markets to greater competition but also creating new opportunities for European companies abroad. 

  • The Communication will be examined by the Council and Parliament.
  • The Commission hopes that the first market-access teams can be set up within the next few months.

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