The true challenge. Let us not talk about the victory of one group of member states over another, and especially not about protectionism winning out over free trade. EU Trade Commissioner Peter Mandelson said he is abandoning attempts to reform the EU trade defence instruments due to lack of consensus among the member states. This is not a good explanation, because the Commission should not make its initiatives contingent upon prior agreement from governments. It is natural that it should seek such agreement, of course, but countries differ in their views and the Commission has to come down on one side of the fence. This is, in fact, exactly what it regularly does, whether over the regulation on chemical products (REACH), services of general interest, car emissions, or the upcoming energy and climate package. But the case of trade defence is different. It is not a matter of the EU, a leading player on the global trade scene, turning protectionist, but rather, quite simply, of the EU safeguarding its right to protect itself from abuse and bending of the rules by other parties: dumping, unauthorised subsidies and counterfeiting. The existing instruments should not be weakened. Instead, future extension of these instruments should be envisaged with the aim of ensuring the compulsory and generalised respect of quality and safety standards, to the benefit and well-being of consumers and Mother Nature.
It is not a question of liberalism versus protectionism. Naturally, mammoth tangible interests are at play here, but the sector-specific interests of supermarkets, big retail chains, etc, are not the priority. The question stretches well beyond this and is raised in a different way. At the Commission itself, there were very acute concerns about Peter Mandelson's project. And Peter Mandelson acknowledged that when applying pressure on its trade partners (China above all) to get them to respect rules, the EU must not give the impression that it is dropping its guard. Fundamental business choices are at stake. In November 2007, in the midst of the controversy, I looked in my column at the true question: 'Should Europe keep a diverse and powerful manufacturing base?' (see bulletin 9541).
The question extends much further than a review of procedures. It is possible that some technical matters, like the duration of measures, might be altered, and what Peter Mandelson describes at real improvements in accessibility, transparency, rapidity and clarity can always be made. The heart of the matter, however, lies in two areas which the commissioner says should have been clarified, not by revising Council regulations but rather by guidelines to guide the European Commission itself when applying the rules in question. The two areas are:
1. Defining the EU interest. In any trade defence measure, there are many different interests at stake -those of European manufacturers suffering from unfair competition, the interests of importers, supermarkets and big retail chains and the interests of consumers. The European authorities (the Commission, Council and also national civil services during the period when the Commission prepares draft legislation) have to decide among the often conflicting range of interests before them where EU interests lie. How are they to measure the balance between the interests of European manufacturers (some of whom aim to defend their own lack of efficiency or their inability to compete) and the interest of consumers, who benefit, at first sight, from low cost imports? The basic principle is to avoid barriers to free competition - European manufacturers have to adapt to free competition in the interest of consumers; 'trade defence' only comes into play in the case of illegal practices by manufacturers from outside the EU. It is clear, however, that an infinite range of nuances comes into play when implementing this principle, determined by application guidelines whose importance is therefore crucial.
2. What makes a manufacturer a 'European manufacturer'? The question of business relocation is raised when defining what makes a manufacturer a 'European manufacturer'. When European companies transfer production to outside the EU, are they still 'European manufactures'? Is there an upper limit, a percentage beyond which companies lose the status of 'European manufacturers'? This is one of the complex issues surrounding relocation which Peter Mandelson has touched upon (see bulletin 9580). The companies in question maintain that their status as European manufacturers cannot be challenged and that as European manufacturers, they should not be hit by anti-dumping measures.
Peter Mandelson himself has given up, for the immediate term at least, on the attempt to amend current practices. In my column on Monday I will draw some lessons and conclusions from this development.
(F.R.)