EU unit eases the way for exporters

Date: 03/07/1997

By Shada Islam

EUROPEAN exporters, worried about being locked out of some of the world's fastest growing markets, are turning to the European Commission's special 'market access' unit for help in overcoming global trade barriers.

Trade Commissioner Sir Leon Brittan set up the unit in February last year as part of a new drive to boost Europe's presence in the world's most lucrative export markets. Brittan said the Commission “was determined to pursue a more active market-opening strategy in order to remove the toughest obstacles to Europe's exports”.

European companies were asked to help the Commission in identifying the key countries and markets which interested them and to provide details of the barriers that kept them out.

Dorian Prince, head of the special market access team, says the Commission's new pro-active approach to opening up world markets is working well, with European businesses “flooding” the unit with complaints about the obstacles they face.

“European exporters still come up against an array of barriers, ranging from prohibitively high customs tariffs and import bans to national standards designed to protect domestic suppliers, to discrimination in government contracts or even to malpractice,” he adds.

So far, 800 trade barriers have been identified and another 600 complaints are waiting to be scrutinised.

Prince's job is to make sure such obstacles are dismantled as quickly as possible. Each complaint is carefully checked out - with the country concerned, with EU member states and with Union delegations abroad - and discussed with other Commission services and national trade officials.

“We go through the list of barriers one by one to see if the problems are real,” Prince explains. “We try to define an appropriate course of action for each major trade barrier.”

Sometimes informal bilateral discussions can produce results.

On other occasions, only action taken in the World Trade Organisation (WTO) will force a country to bring down barriers.

Companies can complain to the Commission using the traditional route - by letter or personal contact - or they can contact a special “market access database” available on the Internet (see below).

Exporters who click on to the web site can access a range of market, customs and legislative information, including a list of all the major trade barriers and the measures being taken to address them.

Companies can, for example, find out the rate of duty for their exports in India, see if their patent will be respected in China, whether they need an import licence or will have to clear any special customs regulations elsewhere.

Most importantly, the system provides an interactive means of communication between business and the Commission.

The Union's more combative, less defensive approach to opening up foreign markets comes in response to the rise in global interdependence.

“Exporting is no longer a luxury even for small and medium-sized enterprises,” stresses Prince. “To be competitive, firms have to be present in all the world's major markets.”

He adds that it is especially important for European firms to “tap into the huge growth opportunities in the newly emerging markets of Asia, Latin America and eastern Europe”.

But the EU scheme has nothing in common with the United States' controversial 301 legislation which allows unilateral trade action against countries deemed to be blocking American exports.

“It is inconceivable that the EU could ever take trade measures which were not compatible with the WTO,” emphasises Prince. “Our aim is to ensure that countries respect their WTO obligations. We are not in the business of threats and retaliatory trade action.”

As such, the unit does not have any new market-opening instrument at its disposal. Instead, the aim is to use existing national and European rules, and the powers of the WTO, to break down world trade barriers.

Recourse to the organisation's consultation and dispute settlement mechanisms is frequent. Since it launched the market access strategy last year, the Commission has lodged over 40 complaints with the WTO, covering more than 25 countries.

The issues taken up include instances of customs duties levied in excess of rates “bound” or registered with the WTO, discrimination in government procurement, illegal subsidies, discriminatory rates of tax on spirits and alcoholic beverages, “local content” rules for automobiles and burdensome technical and health standards.

Most of these issues are the subject of consultations within the trading organisation. If no satisfactory solution is found, the next step is to ask for the creation of a disputes settlement panel, whose rulings are binding on all members.

The EU has, for instance, asked for the creation of panels to deal with Chile and South Korea's tax regimes for spirits and Indonesia's national car strategy.

Before taking action in the WTO, however, efforts are made to resolve the differences through informal bilateral discussions with the country concerned.

The Union has, for example, dropped its threat to challenge South Korea's anti-import “frugality campaign” following assurances from Seoul that the measures do not discriminate against European exports.

There are also other routes. Ongoing negotiations with China, Russia, Vietnam and Taiwan on their bids for WTO membership, for instance, offer an “excellent opportunity to clear up many problems currently facing European exporters”, says Prince.

Negotiations on free trade agreements under way with eastern and central European states and southern Mediterranean countries offer another forum for discussions on trade access. And diplomatic pressure, applied through ministerial and other high-level meetings, is also used to tackle barriers which do not involve a direct breach of a country's international commitments.

The Union's new strategy is being carefully scrutinised by Asian and Latin American trade experts. “We were uneasy about the EU's new focus on market access at first, but we cannot really object,” says an Asian trade official. “The EU has every right to check out trade barriers - as long as it does not take unilateral action.”

The Union's focus on the WTO rather than American-style 301 actions is welcome, he adds. “But we are watching carefully to see that there is no misuse of powers.”

The unit's web site address is: ttp://mkaccdb.eu.int