A hard notion to define. Peter Mandelson's decision to give up, at least temporarily, on the revision of EU trade defence rules, obviously covers both planks of this revision: updating Council regulations, and the “guidelines” which the Commission itself sets for their application. These two planks are effectively inseparable; the latter is even the more important because it covers the interpretation of the two essential concepts: the notion of Community interest and how delocalisation is handled (see this column in the previous edition of our bulletin).
In order to define Community interest, we must take account of the interests of the European producers as well as the advantages of free competition, of the interests of the consumers as well as the interests of trade. These interests have always been partly contradictory, but there was a time when the separation between these interests was clear; now that is no longer the case. Industrial companies which have the component parts for their products made in a third country take the view that they have the right to take delivery of these parts without any obstacles, because they are contributing to their productivity. Consumers who want the lowest possible prices are becoming increasingly aware of the fact that they are, at the same time, workers: if they lose their jobs, they can no longer be consumers. And it is in the interests of the EU, as a large exporter, to ensure that trade is as free and open as possible. All of these interests overlap each other.
Seeking a definition of the “European interest”, in theory or in law, would be completely insane, and we must, in principle, make do with two classic criteria: a) the EU applies commercial defence measures only when illegal behaviour on the part of the exporter is proved; b) it must demand reciprocity of behaviour on the part of third countries. The details are a question of practice, hard to codify.
Influence over delocalisation. The “relations between commercial defence and the localisation” plank is more tangible, and leads to endless discussions on one fundamental aspect: to what extent should manufactured products made by European companies on other continents be placed, from all points of view, on the same footing as products produced in the EU? There is a school of thought in favour of this assimilation. The president of the Commission, José Manuel Barroso, had a certain amount of sympathy with this point of view when he stressed that “many companies acting outside the EU are European”. According to this school of thought, businesses would keep their so-called “noble functions”- research, product design, marketing etc- in Europe, whereas physical production would be delocalised to low-salary countries. This formula has been well developed, both for entire products and for separate parts which are then put together in Europe. There are western companies which have made massive amounts of money out of this. The American company Mattel (to name just one, which has filled entire newspapers) makes about 65% of its dolls and other toys in China.
There is no doubt that this form of production is legal. But how far can we say the products made in this way are European? The companies in question argue that if their spare parts are subject to anti-dumping duties or other obstacles, they lose their competitiveness against international competition; this would undermine the health of European industry. This argument is only partly acceptable, because none of the products in question are subject to specific restrictive measures - they are just subject to the normal rules: if dumping practices are proved, the relative duty is applicable, as is also the case with measures against piracy and counterfeiting. If the products respect the standards and the commercial practices are correct, “trade defence” doesn't come into it (every day, I shave with a German-brand razor, which was made in China and sold in Brussels).
We can understand the disappointment of the FTA (Foreign Trade Association) and of the European Parliament rapporteur, Christofer Fjellner (see our bulletin 9581), but the general interests of the European economy must take priority over the sectorial interests of importers and distributors. It makes a change for the worker organisations to take the same view as the captains of industry! Another member of the European Parliament, Gianluca Susta, reacted in exactly the opposite way to his colleague, stating that the services of Mr Mandelson had in fact pre-empted the application of the revision the commissioner has just decided to shelve: according to him, no new anti-dumping investigations were opened during the year 2007! He also calls for the correct application of provisions in force. I would only add that if the rules are followed, this is of benefit to all, including the Chinese exporters, in whose interests it lies to defend the reputation of their products. (F.R.)