Peter Mandelson's motives. EU Trade Commissioner Peter Mandelson believes that the EU's management of trade defence instruments should be partially reviewed. Not because he thinks they have not worked well, but rather to adapt to profound changes in world trade. In its Green Paper last year, the European Commission did not challenge the principles or objectives of the current raft of trade defence instruments, but it did indicate that it would be changing the way they are used and how they operate. Globalisation has altered the very structure of world trade and many EU companies (and US companies too, for that matter) have transferred often a hefty chunk of production to other countries. When importing back into the EU market, should their special interests be taken into consideration when assessing European interests in anti-dumping procedures? And how about the interests of big importers and retailers? Mandelson does not think these interests should win the day but they should be taken into consideration when defining European interests.
Those backing this argument point out that the situation is far more complex than it might appear at first sight. Not all manufacturing is necessarily relocated - it can be certain aspects of production, with the end product remaining European. Anti-dumping duties on these imported parts increase production costs to the detriment of the competitiveness of EU industry, facing tough international competition and difficult monetary conditions (the euro's high interest rate). The falling competitiveness of these industries could negatively impact on jobs. And lorry-drivers and traders also provide jobs in the EU.
Mandelson recognised in an interview that there are divergent interests at play and huge pressure is being exerted. He said it was his job to try and win consensus among the member states.
This desire for consensus has not materialised. The member states are divided and the divergent interests in the business world have exploded (see this column in issue 9540).
EU manufacturing industry hits back. Last May, a highly significant group of EU industry organisations (representing chemicals, fertilisers, synthetic fibres, steel tubing, non-ferrous metal and cotton) sent Jose Manuel Barroso a letter accusing the European Commission of failing to respect the anti-dumping measures in force and of already applying measures from the December 2006 Green Paper, without waiting for either the end of the reflection process or the Council's deliberations. A little later, organisations representing business interests in Germany (BDI), France (MEDEF), Italy (Confindustria) and Spain (CEOE) published a joint statement opposing any watering down of anti-dumping regulations, arguing that effective use had to be made of trade defence instruments in the form in which they already exist. They argued that urgent action against counterfeiting was required. Rather than protectionism, this is proper application of free competition.
The above four business organisations organised a seminar on Thursday 8 November, attended by the European Trade Union Confederation (ETUC) and sections of industry opposing the planned changes. The participants said Mandelson's plans were rejected by the vast majority of EU industry and any weakening of trade defence instruments would wreak immediate and serious havoc, damaging its competitiveness. They said the instruments were the final barrier for reducing the impact of a strategy to destroy EU industry. Until a uniform competition regime has been introduced at global level, the EU's trade defence instruments must remain. Any review should aim at making it easier for small and medium-sized enterprises to make use of the instruments.
The seminar's participants also pointed out that the EU's system is the most balanced and restrained in the world. No similar criteria for assessing anti-dumping measures exist, there are no criteria elsewhere in the world along the lines of the EU's economic interest criterion, and other parts of the world do not apply the principle of always applying the lowest level of duty emerging from the damage assessment. Companies need clear, uniform rules. The rules in force are clear and uniform but some of the changes under consideration would feed in uncertainty and extra costs. BDI, MEDEF, Confinindustria and CEOE echo the criticism that the Commission has started to apply the new rules de facto without waiting for the Council to give its views. They point out that anti-dumping laws have little impact on consumer prices but over-large price margins are sometimes applied by importers and retailers. Even according to the Commission's Green Paper, the anti-dumping and anti-subsidy duties introduced by the EU cover less than 0.50% of total EU imports. The seminar organisers reject the argument that duty on goods produced by EU companies outside the EU weakens the overall competitiveness of EU industry. They described the interests of European manufacturers which have transferred production overseas as 'absolutely legitimate', but argued that dumping is unfair, irrespective of who is actually doing the dumping.
Serious repercussions. In general, the seminar organisers believe there is a psychological threshold below which EU manufacturing cannot go without jeopardising its very existence, which would be disastrous for employment and the service industry (which often services manufacturing companies). They say the watering down of trade defence instruments would: a) send a negative political signal to global trade partners -at a time when several countries (the United States and India) are sharpening the teeth of their own precautionary measures, the EU would be sending a signal of weakness by diluting its position in international negotiations; and b) would lead to a badly timed politicisation of the use of trade defence instruments when decisions should be based solely on the outcome of investigations and technical analysis.
Trade union organisations take a tough line. The support of trade union organisations for the position outlined above was demonstrated by the tough line taken by John Monks, ETUC Secretary General, in the seminar's closing address (see EUROPE 9540). He made three main arguments: 1) trade defence instruments should be maintained and improved because they are a critical element in the EU's growth and employment strategy. Some of Mandelson's planned changes would undermine important areas of the European project; 2) US workers have the option of introducing complaints against unfair imports and participating in proceedings. European workers are calling for the same right; 3) the EU should defend its values, which reject social and environmental dumping in Europe, and should also defend these values outside Europe (by opposing the import of products that don' respect these values); 4) trade defence instruments should remain indispensable until competition legislation on a par with EU legislation is introduced at global level, and a body is given responsibility for ensuring it is respected.
Some parts of John Monks' argument may go beyond what captains of industry would desire, but it is generally clear. Workers' organisations are calling for globalisation to be accompanied by rules and conditions - trade rules to ensure clear, fair competition; and effective health and environmental rules. A world authority to ensure that these conditions are respected will not be set up tomorrow, and that is why the EU's raft of trade defence measures has to be kept as it is.
The true challenge. It has to be recognised that when it comes to principles, Peter Mandelson shares the above arguments. He was a staunch defender of them when the EU was introducing anti-dumping measures against Chinese and Vietnamese shoes, measures slammed by member states which don't make shoes. And again, he recently said that to ensure free trade, we have to ensure it is fair. I don't suppose he has changed his mind. So this is not a disagreement with the commissioner about fundamental beliefs, but rather a difference over interpretation and application. He will have to take account of objections in his final proposals.
What is at stake is not the interests of any one company but rather the very fundamentals of the EU economy. Should the EU give up most of its manufacturing industry, leaving manufacturing to economies where the social and natural conditions are more favourable, and focus instead on high tech products, services and finance? This is no theoretical question. There are moves in this direction, backed by university professors who are as fanatical as some of the most extreme politicians but, by definition, worthy of respect.
The European Parliament should make its position clear. We are faced with a crucial issue and would like to hear the European Parliament's views on it. Thus far, the EP has been holding back, holding an informal hearing in July 2007. A handful of MEPs have expressed their personal views (like Toika Saifi in the spring). The European Parliament has to take its courage in both hands and make its views clear if it wants to really play the role it is claiming for itself in defining the future of Europe.
(F.R.)