With the ongoing negotiations for the biggest free trade deal in history, the Transatlantic Trade and Investment Partnership (TTIP), transparency has become the new buzz word in trade policy, writes Christofer Fjellner.
Christofer Fjellner is an MEP and Vice Coordinator in the Committee on International Trade for the EPP Group.
The EU’s new Trade Commissioner Cecilia Malmström recently launched a transparency initiative to debunk the myths surrounding the agreement, and by so doing, aiming to strengthen the trust in the EU’s free trade agenda. But TTIP is not the only area of trade that affects the EU. There are numerous areas of trade where transparency is even more desperately needed.
During the last few years, a number of anti-dumping investigations have reached the public eye, in particular the European anti-dumping case against Chinese solar panels, which resulted in duties of 47.7 per cent following negotiations with the Chinese Chamber of Commerce. It was a controversial case, considering its size, but also since it targeted a renewable energy source needed to reach our climate goals. In addition, the level of duties imposed was questioned from politicians to lawyers, from producers to importers. Allowing for more transparency in the processes within the EU’s trade defence instruments could have been one way for the Commission to reduce the tensions surrounding the case, and in the long run to restore the ever-diminishing trust in the trade defence instruments.
That being said, increasing transparency in the area of anti-dumping and anti-subsidy has been an aim of the Commission, the former Trade Commissioner Karel de Gucht and the European Parliament for a long time. However, none of the proposed changes have tackled the issue head on. Feeble attempts have been made, but without much success.
One of the most tangible reforms that would increase transparency in a responsible way would be to copy the American transparency system called Administrative Protective Order (APO), an order issued to disclose certain non-public information to authorised representatives of the interested parties. This does neither mean full publication of the data online, nor the publication of sensitive information to the wider public. It is a balanced compromise solution that allows those who are in fact affected by the anti-dumping duties, both producers and importers, to check whether the data used in the investigation correspond with reality.
However, some commentators, including the Commission itself, argue that the risk of representatives leaking sensitive information outweigh the transparency benefits of such a system. I do not share this concern. Leaks are a constant problem, but there are ways to deter representatives from disclosing information to those not entitled to it. The American system has a strict confidentiality clause, with enforceable sanctions tied to the eventuality of non-compliance. Violating the confidentiality clause could, for example, result in the representative being banned from using the system, a sanction that could be extended to the law firm, federation, or other organisation, as a whole. The American system has shown that this deterrence mechanism has been successful.
But let’s be clear about one thing. Trade policy, and trade defence instruments, is political – regardless of what administrators and the friends of trade defence instruments often claim. The use of the instruments ought to be a mere mathematical and economical exercise. But those who have dipped their feet into the sea of trade policy can feel the politics. Thus, as with any institutional exertion of power, the political power embedded in the EU’s trade defence instruments needs checks and balances. TTIP enjoys several checks and balances within the Council and the European Parliament before and upon ratification. But due to the new decision-making processes in the trade defence systems stemming from the new comitology procedure, the checks and balances are not as robust as they once were. Thus, there is a stark difference between TTIP and trade defence instruments, a difference that needs to be handled accordingly. Here, transparency can play a constructive and pertinent role, since ultimately transparency has to serve a purpose. Transparency for the sake of transparency might be an admirable strategy, but not one which will lead to significant improvements and reforms on its own.
Increased transparency in anti-dumping and anti-subsidy is long overdue. It ought to have been even higher up on the agenda in the reform process, but other issues dominated the debate. But now that the modernisation process has reached a crossroads, new impetus is needed. An APO might be just what the modernisation needs. But I am not concerned. With the laudable transparency initiative over TTIP launched by Trade Commissioner Malmström, I have high hopes for the broader role for transparency in trade policy.