Fabian Demicoli

EU assesses progress of its strategy to dismantle trade barriers

 The European Commission has published its second Trade and Investment Barriers Report, which describes the progress achieved in dismantling barriers to the markets of six strategic economic partners – China, India, Japan, Mercosur, Russia and the US.

The report recognises some success stories in the removal of certain trade barriers, such as in India, but also underlines the overall persistence of barriers for European business to access key markets.  Dismantling these barriers would improve and open up new export and investment opportunities for European companies and people. The report will be presented to the European Council on 1-2 March.

"With protectionism an ever present threat, we need to make sure that trade remains open in order to boost jobs and growth. Today's report shows that our enforcement strategy is paying off in fighting unfair barriers to trade and investment; yet, we need to strengthen our vigilance and double our efforts in order to make sure that openness is maintained worldwide. The EU's commitment to ensuring trade openness remains firm", stated EU Trade Commissioner Karel De Gucht.

The Trade and Investment Barriers Report 2012 assesses the progress achieved on the 21 barriers which were selected in 2011 in the first edition of the report:

Two trade barriers were fully removed in India: export restrictions on cotton and security requirements for telecommunication equipments.

Progress was achieved in:

China: indigenous innovation and export restrictions on raw materials (on the latter, WTO Appellate Body report confirmed the incompatibility of the Chinese measures with WTO rules and China's WTO accession commitments IP/12/87)

India: sanitary and phytosanitary rules

Japan: government access to procurement and regulatory requirements for medical devices

USA: 100% scanning of containers and "Buy American"

-No positive movement could be seen in the following cases:

China: investment catalogue and IT security

India: equity caps

Japan: financial services

Argentina and Brazil: restrictions in maritime transport and export restrictions on raw materials

Argentina: import licensing

Brazil: 25% preference margin in government procurement.

A specific section of the report is dedicated to Russia due to the nature of the WTO accession process, which can potentially lead to the removal of the selected priority barriers (trade-related investment measures in automotive and car components sector; customs practices; Intellectual Property related issues; Sanitary and Phytosanitary issues).

The report also identifies 6 new priorities of barriers to trade and investment:

China: national security review mechanism for mergers and acquisitions involving foreign investors and export financing and subsidies

India: National Manufacturing Policy

Brazil: tax on industrial products (IPI) and import procedures for textiles and clothing

Argentina: restrictions in reinsurance services.

 

The report highlights a recent trend in emerging economies where industrial policies contain trade-restrictive elements. These often take the form of:

local content requirements (such as in investment policy and government procurement),

overly burdensome standardisation and conformity assessment requirements, which discriminates against foreign products,

measures having an equivalent effect to quantitative import restrictions,

and export restrictions particularly applied to raw materials.

Background

The Trade and Investment Barriers Report is part of a broader enforcement strategy that aims at ensuring that the EU's trade partners abide by their commitments and maintain open markets. The purpose of the report is to focus attention on efforts needed – including at the highest political level – to ensure market access for European companies in important markets outside the EU. In order to make this effort more effective, the Member States also have to share it by conveying commonly agreed messages in their bilateral contacts with these countries.

The report is a vehicle to set priorities on an annual basis among the market access barriers to 6 key trading partners (China, India, Japan, Mercosur, Russia and the US) and provides an assessment of progress achieved. These 6 countries together covered 45.7% of the EU's trade in goods in 2011 and 44.8% of EU's trade in commercial services in 2010. As far as foreign direct investment is concerned, these countries counted for 47.7% of EU's FDIs in 2010.

For further information:

Trade and Investment Barriers Report 2012
http://trade.ec.europa.eu/doclib/html/149143.htm

Trade and Investment Barriers Report 2011
http://trade.ec.europa.eu/doclib/html/147629.htm

On the Market Access Strategy

http://ec.europa.eu/trade/creating-opportunities/trade-topics/market-access/index_en.htm

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