Removal of certain trade barriers
New trade barriers
In March 2012 the European Commission presented its second annual Trade and Investment Barriers Report(1) to the European Council. The report forms a central pillar of the European Union's continuing efforts to enforce the trade commitments of its strategic trade partners, including China, India, Japan, Mercosur (Brazil/Argentina in particular), Russia and the United States. The focus on these countries is justified by the fact that they represent nearly half of the European Union's trade in goods and services and direct foreign investment.
The emphasis on bilateral attention to trade relations may be brought into even sharper focus in light of the diminishing prospects of the World Trade Organisation's (WTO) Doha Development Round of multilateral trade negotiations and the propensity for protectionist measures.
Removal of certain trade barriers
The report first illustrates where progress has been achieved on the 21 trade barriers identified in the 2011 report. It notes, in particular, the removal of restrictions on the export of cotton and relaxed licensing requirements for telecommunications equipment in India.
The commission also considered that some progress has been achieved on the indigenous innovation policy and export restrictions on raw materials in China, and with respect to the alignment of India's sanitary and phytosanitary measures with international standards. The ongoing free trade agreement negotiations with India have helped to address the latter point. The commission also reported that it pursued Japan on commitments that it had made on medical devices at the 2009 EU-Japan Summit, and that there is optimism that preferential trade negotiations can be initiated with Japan this year. Progress had been made as regards the 100% scanning and 'Buy American' legislation, although the commission considered that more progress is required on the latter issue given recent US legislative developments (eg, the American Jobs Act).
Finally, the report dedicates an entire subsection to the implications of Russia's accession to the WTO for longstanding market access issues that affect the European Union. Specifically, the European Union will benefit from:
- the phasing out of trade-related investment measures in the automotive sector;
- reformed customs practices;
- better IP protection; and
- full Russian compliance with international standards in the sphere of sanitary and phytosanitary measures.
Finally, the report identifies six new trade barriers, including the National Manufacturing Policy in India, which provides incentives for indigenous manufacturing in the form of tax concessions and government subsidies. This policy is characterised as part of a perceived trend towards local content requirements in other countries such as Russia and Brazil. In addition, the report underlines the likelihood that China will continue to support "strategic emerging industries", including through steering investment and financing, as well as through its partiality to standardisation and conformity assessment requirements, which have been used to foster industrial development. The report also cites as a cause for concern new measures in Mercosur's automotive, reinsurance and textile sectors.
When read alongside the recent resolution of the European Parliament, which guides the work of the commission and the member states on trade barriers, the report sends a clear signal that the European Union intends to take seriously its new enforcement strategy. In a climate of growing competition on world markets and protectionist tendencies related to the global financial crisis, the removal of trade barriers is a top priority of the European Union's trade and economic policy.
For further information on this topic please contact Charles Julien at King & Spalding LLP by telephone (+41 22 591 0804), fax (+41 22 591 0880) or email ([email protected]).
(1) Available from the website of the Directorate General for Trade of the European Commission at http://trade.ec.europa.eu/doclib/docs/2012/february/tradoc_149143.pdf.