An absurd idea that has finally been thrown out. Enhanced management of the EU's trade policy as a priority objective in effective reciprocity with third countries (see this column yesterday) implies many different factors, including the rejection of a number of mistaken approaches from the past. In this connection, I will look at two cases that in my opinion are symbolically important.
I am referring in the first instance to the bizarre hypothesis of no longer maintaining in Europe anything other than the most refined aspects of industrial production (research, design, technological control and commercial management) and the location of the actual manufacturing of products elsewhere. This idea was the theory of the UK and it has partly been applied there. It implies that Europe abandons its craft-based capacity and youth training, and subsequently hands over a nice little present of technological control to other countries, as well as opening the way to endless quarrels regarding intellectual copyright and difficulty with its balance of trade.
The US experienced a development with Silicon Valley that partially went in the same direction, which increasingly meant the transfer abroad of the production of certain kinds of product designed in the US. At the same time, however, the authorities in this mythical valley were obliged to see things a little more clearly and noticed that there were always structures there for promoting innovation but not for manufacturing the products designed there! The situation in the EU is different because it is a single market with standard rules and can practice a certain division of labour in its single area, together with homogenous rules. In its industrial production, Germany gets its neighbours to manufacture some of its sub-products but maintains responsibility for the final product itself. The policy of transferring the manufacture of products outside of the EU is both inappropriate and a source of problems (and sometimes abuses) in its relations with the majority of third countries with which it has attempted this policy.
Public procurement and reciprocity. In the second symbolic example, the European Commission proposed that the authorities of member states be able to reject offers of participation in a public contract of the EU (whose value was above €5 million) if these offers came from companies in a country that did not accept offers from European companies in its own public contracts (see EUROPE 10604). This is a complex area, where international standards already exist but reciprocity must be an essential principle.
One particular example created a rather substantial controversy - the public contract for building motorways in Poland. This was won by Chinese companies, although China's public contracts are totally closed, with foreign companies not even being allowed to bid for these markets.
China, a special case. The Chinese authorities have explained their reasons and appear more open to dialogue and co-operation (yesterday, our publication announced the signing of a cooperation plan in the agricultural sector). The size of China mean that it is a special case from all points of view - trade in goods, the fight against counterfeiting, investment, monetary cooperation. Everything is linked to a specific analysis of EU-Chinese relations as a whole, which is increasingly crucial. This column will be returning to this issue.
Unconditional support for trade expansion. We are now getting to the important bit. What I am writing today, and what I began yesterday, should not create the impression that the EU is beginning to support a slowdown in the expansion of world trade. Quite the opposite. The EU's objective is to fully participate in this expansion, which will become, according to most forecasts, the single aspect of the global economy that will continue to grow in this difficult period.
Europe is therefore calling for a level playing field so that it can benefit from trade as much as the others. Its objective is to obtain, as much as possible, the scrapping of remaining barriers to world trade, in the context of free and fair competition.
On 31 May European trade ministers also held a special session on the role of international trade for growth and job creation (see EUROPE 10625), with a view to the forthcoming European Council on 28 and 29 June. Ministers first of all emphasised the importance of intra-Community trade: the president of the Council, Pia Olsen Dyhr, emphasised: “Trade is the only positive driving force for EU growth in 2012; without its contribution (+ 0.7%) growth would be negative.”
Most of the debate focused on relations with third countries.
Support for free trade bilateral agreements. On 31 May, Karel De Gucht provided an update on the situation and the different prospects. The president of the Council was clear in his conclusions - the EU is maintaining its principled commitment in favour of a multilateral agreement at the WTO but “as things are not shifting” in Geneva, it is now resolutely committed to pursuing free trade agreements on a bilateral basis with third countries that support this. In principle, the list of these countries is long and I will briefly provide an indication of them:
US. The goals are very far reaching and free trade is planned for goods, investment and services but work on this is still at a stage of preliminary discussions. Mr De Gucht's objective is the opening of negotiations at the beginning of 2013 for an 18-month period.
Japan. The objectives are less ambitious because Japan does not want to liberalise agricultural trade and it is restrictive in the field of public procurement. It should not be taken as read that these limitations will be acceptable to all member states. Within the above-mentioned limitations, negotiations could possibly begin very soon.
Canada and India. The goals are even more modest (trade pacts rather than free trade agreements); negotiations may be swift but disagreements on the most sensitive points remain. Certain aspects are still very controversial.
Mercosur. This column has for a long time asserted that the project as originally envisaged (the biggest free-trade zone in the world!) had no chance of succeeding. There needs to be a change in direction if anything substantial is to be achieved with Brazil and other countries from this region.
Colombia, Peru, Central America. Apart from a number of political complications (see EUROPE 10621), projects are making progress but their scale overall is rather limited.
Southeast Asia. The abandonment of projects incorporating ASEAN as a single entity has facilitated the more reasonable objective of bilateral agreements with different countries from this vast region. In a few cases (Singapore, Malaysia) negotiations have made rapid progress. With Vietnam we are at the beginning and projects with other countries are planned. We are aware that the agreement with South Korea has been concluded and has provoked a certain degree of protest and reservations.
Clear approach, justified demands. For the most part, the EU's approach is clear - unconditional support for the expansion of world trade and negotiations with all countries on the basis of reciprocity (specific treatment to help the poorest countries is obviously to be tackled elsewhere). (FR/transl.fl)