Peter Mandelson's trade strategy, which after a few clarifications has acquired the status of the Commission's communication under the solemn title, “Global Europe competing in the world”, offers no surprises of policy and contains a number of unrealistic hypotheses and oversights. Agence EUROPE has done its duty at a level of information gathering and provided a broad summary of the documents before its approval and public release (EUROPE 9278), a report of Mr Mandelson's press conference (EUROPE 9279) and a summary of the main reactions (EUROPE 9280). This column has indicated a number of questions raised by this text; today I will be providing a more detailed analysis of it.
A welcome but theoretic firmness. There are no surprises at a level of doctrine: orientation towards greater world trade is considered as being positive in itself. This won't astonish anyone, given that Peter Mandelson and Charlie McCreevy's (co-signatories of the draft, together with Günter Verheugen) leanings are well known. What is new, to an extent, is the firmness with which the Commission underlines that the opening up of the European market should be subject to a significant number of conditions. It points out that custom duties are becoming increasingly less important and that knowledge, innovation, intellectual property, services and the efficient use of resources are now the keys to competitiveness. It is on these aspects that the EU has to take action. Emerging countries (China, Brazil, India etc.) have to give up their “unnecessarily high barriers to EU exports”. The opening up of the markets should apply not just to custom duties and quantitative restrictions but also to non-tariff barriers that are not covered by the WTO system, including access to resources (energy, metals, scrap iron, raw materials. The priority areas in which action in the direction of further opening up should be made is intellectuall property, services, investment conditions, public procurement and competition (the latter covers both anti-competitive practices of companies and state aid, which are often very high).
The general part of the document in my open is very theoretical. The presentation of the problems and solutions is obviously correct. Third countries should also apply competition rules that are more or less the same as those of the EU and which respect intellectual property rights, open up their public procurement markets and free up the services market. These are understandable and wise objectives but they have absolutely no chance of being attained within any reasonable time frame. For example, the facts prove to what point counterfeiting and piracy are thriving. Before talking about free trade, we need to have obtained serious and tangible results in the fight against these scourges for obvious reasons that are not only economic (I am not going to return to the awful consequences results from false medicines or false spare parts). Safeguard measures really do have to become effective: if customs services discover containers full of watches, textiles or other counterfeit products, they should not just seize the goods but block imports of the products in question from the countries involved, as it is impossible to control all the containers (only a minimum percentage is inspected). The document recognises that the greatest challenge is applying existing commitments “particularly in the emerging economies”. But even with highly industrialised countries the dialogue is not easy and results are not always brilliant as I once again read that, “We have stepped up co-operation with partners like the US and with Japan on IPR and we have worked to protect EU geographical indications. But there is much more to do”.
Public procurement and reciprocity. Second example: if an important third country refuses a priori reciprocity in public procurement, it should receive the firm response of having the corresponding European market closed to it. The Mandelson document is convoluted and therefore ineffective, “we should consider introducing carefully targeted restrictions on access to parts of the EU procurement market”. However, the same text indicates that some “important trading partners have made clear that they do not want to move towards reciprocity”. Emerging countries are the most reticent, but the problem is a general one as I also read in the document that European firms, even when they are world leaders “face discriminatory practices in almost all our trading partners, which effectively close off exporting opportunities”.
The general impression the document creates is that the priority objective of Mr Mandelson and Mr McCreevy remains the opening up of the borders - of the EU and the others if possible. Effective reciprocity and precautions are cited but sometimes, in their eyes appear, to be of secondary importance.
Major oversights: ACP countries and the environment. The demand to safeguard trade advantages to the benefit of ACP and other poor countries is mentioned but in a way that appears to have been added at the last minute, tagged on, perhaps, after a few remarks made by other Commissioners.
Hence, among the aspects that need “to be taken into account”, and cited at the end of the list, “as well as the risk that the preferential access to EU markets currently enjoyed by our neighbouring and developing country partners…”. In my opinion, this is not a risk but a certainty: neither ACP countries or other poor countries are able to compete with emerging economies and the generalised opening up of the borders into free trade zones everywhere would eliminate these countries from the European market. We can also read, “We will also take into account the development needs of our partners and the potential effects on poor countries' preferential access to EU markets”. This is all very well and good to say “we will take into account” but it is all in vain because when we try to find an allusion to how this can be done, what possible measures could be applied, there is not a single word. On the contrary, the document underlines that Free Trade Agreements “are part of our negotiations for concluding economic partnerships with African, Caribbean and Pacific countries”. This is a prudent formulation but which reaffirms, nonetheless, the free trade structure of the agreements sought with the ACP countries and which is in fact increasingly being contested.
I got the same impression with the “sentences added” when reading the more marginal passages in the document on the environmental and sustainable growth objectives. By citing the restrictions that certain important trade partners are applying to limit access of certain European industrial sectors to energy resources or raw materials, the text says that “restrictions on access to resources should be removed” (which is logical) but the precision, “Unless they can be justified for security or environmental reasons” appears to be have been inserted in an artificial way. Further on we can read that “The pursuit of economic growth through trade can have environmental implications, particularly for biodiversity and our climate” but the conclusion to this remark is very poor, “The links between trade policy and climate change in particular will require further examination”. It would have been preferable for this examination to have come before the spectacular free trade zones programme.
Standards, rules and “Community preferences” Another essential aspect is the question of standards and rules governing world trade. Pierre Jonckheer MEP affirmed that he had read an invitation in the first draft of the document calling for them to stop calling for the introduction of European standards and give preference to world standards. The final version indicates that, “We must play a leading role in sharing best practice and developing global rules and standards…This is not about downgrading our rules. It is about taking an open and flexible approach in setting our rules and seeking to prevent future trade friction”.
Whatever the exact terms, Mr Jonckheer sees this orientation as the definitive renunciation of a concept that three years ago was widely debated and which provoked quite a stir: “Community preferences”. This definition in my opinion is misleading because those who have had the chance to follow the dossier could get the impression that we are talking about a special category of trade preferences. In fact it involves “Community preferences” and the debate focuses on the issue of whether a WTO country would be able to apply a specific safeguard clause to oppose imports of certain products because its national public opinion rejects them. An example cited in this connection was that of the meat with hormones in it and genetically modified organisms, which a substantial number of European citizens are rejecting.
This problem was discussed in a conference organised on 15 September 2004 by Pascal Lamy, who at the time was in charge of trade policy (a post that he would leave three months later). Differing opinions were expressed during the conference. After this event we have not heard anything else on the issue; the very concept appears to have totally disappeared. I devoted two commentaries to this issue in our bulletins of 8 and 21 September 2004. I still believe that it is certainly a controversial concept but it deserves better than simply disappearing into oblivion.
I will end my analysis here of the different aspects I consider essential in the Mandelson document. Some conclusions need drawing from it, which will notably focus on the operational follow-up. This will be for tomorrow. (FR)