Consultation on the EU's Market Access Strategy in a changing global economy

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1 Consultation on the EU's Market Access Strategy in a changing global economy This document commits only External Trade. It has been crafted as a basis for comments and does not prejudge the final form of any decision to be taken by the Commission. The consultation opens on 10 November 2006 and closes on 19 January Please note that: The maximum characters in open questions are always limited to 4000 characters (spaces included). The session time is limited to 1 hour 30 min, which means that you should submit your reply within this allotted time. If you would exceed this timeframe, your replies would unfortunately be lost. If your replies need to be co-ordinated internally, we suggest that you print the blank questionnaire, make it circulate among your colleagues/ services and elaborate your reply off-line (eg in MS Word). At the end, a designated person should enter the answers online (you can "copy/paste" text you prepared in word). After you have clicked on "submit", you should get a confirmation page stating that your reply has been recorded. If this is not the case, and if the survey page is re-loaded instead, please check if you have filled in correctly all compulsory questions, or if you have not exceeded the maximum number of characters for free text questions. In this case, an error message appears next to the question for which something is wrong or missing. Summary This consultation paper asks for your views on the European Union s Market Access Strategy, and the ways in which it might be improved. The paper is set out in four sections: 1. The EU s Market Access Strategy in a changing global economy 2. Identifying, prioritizing and tackling barriers to trade 3. The Market Access Database 4. Conclusion: new approaches to working together In each section, your comments are invited.

2 1. The EU s Market Access Strategy in a changing global economy As the recent Commission Global Europe policy framework sets out, Europe s trade policy must become an integral part of its wider approach to economic reform and competitiveness. A stronger EU economy at home means Europe has to be more competitive abroad. We need to open markets and create new opportunities for trade and ensure European companies are able to compete fairly in those markets. More specifically, Global Europe identifies the improvement of market access abroad for European exporters as a key part of increasing European competitiveness in global markets and creating growth and jobs. When regulating trade is necessary, it must be done in a transparent, non-discriminatory way that is as least trade-restrictive way possible. The effective use of all available policy instruments to reduce and remove barriers to trade is at the heart of the work of the European Commission. From its instigation in 1996, the European Commission s Market Access Strategy has focused on the enforcement of multilateral and bilateral market opening agreements, and on effective market access for EU exporters in third countries, hence addressing obstacles to trade which either impede market access or make it harder, more expensive or more cumbersome. It provides exporters with information on market access conditions in third countries, and creates a framework to tackle barriers in third countries to trade in goods and services, and to intellectual property rights and investment. 1.1 Why a review now? Over the last 10 years, the focus of market access concerns in the European Union has changed in an important way. Successive multilateral trade rounds and unilateral liberalisation have eroded tariff levels, especially in the developed world. While tariffs remain an important issue, non-tariff barriers, and other regulatory restrictions behind the border have become increasingly important in determining the access of EU exporters to third country markets. Legislation in many third countries now incorporates most of the WTO requirements on issues such as tariffs, intellectual property rights and technical barriers to trade. However, the expansion of WTO rules has not fully kept pace with the expanding range of trade barriers, and notifications to the WTO s Technical Barriers to Trade Committee are increasingly not breaches of existing WTO disciplines. In areas such as export taxation, intellectual property rights protection, product certification, public procurement and investment and services trade regulation, multilateral WTO rules do not fully reflect the complex problems faced by exporters. Moreover, even where WTO rules do exist the question of enforcement of this legislation remains a very real one in many cases. EU companies report that their problems are now increasingly focused on implementation and enforcement of existing obligations. The issue of intellectual property rights protection is a key area where non-enforcement of existing commitments is a growing problem for EU exporters.

3 Dealing with non-tariff and regulatory barriers and the enforcement of existing commitments in these areas is complex work at the heart of modern trade policy. It will increasingly define the market access work of the European Commission. A recent study conducted by external consultants suggested that many EU exporters believe the Market Access Strategy needs to be re-visited and renewed in order to increase its effectiveness. Ten years after its establishment, a review of the Commission s Market Access Strategy will enable us to ensure that it adequately reflects a rapidly changing global economy. 1.2 Trade barriers in the modern global economy The barriers faced by EU exporters can be categorized in the following way: 1. Tariff barriers. Although these have been eroded by successive multilateral trade rounds, high tariffs still pose problems for EU exporters. 2. Burdensome customs procedures for import, export and transit. 3. Unnecessary technical regulations, standards and conformity assessment procedures. 4. Sanitary and phyto-sanitary restrictions that are not justified within existing WTO rules on health and safety restrictions. 5. Restrictions on access to raw materials, particularly restrictive export practices that drive up prices for key mineral and metal goods. 6. Poor protection of intellectual property rights including geographical indications, and the key questions of implementation and enforcement. 7. Barriers to trade in services such as foreign ownership caps, joint venture obligations and discriminatory treatments. 8. Barriers in foreign direct investment such as the exclusion of foreign investors from certain sectors, quantitative limitations on investment or ownership and discriminatory treatments. 9. Restrictive government procurement rules that prevent EU companies from bidding effectively for public contracts in third countries. 10. Unfair use of trade defence instruments by third countries. 11. Use of state aids and other subsidies by third countries in a way that constitute Market Access barriers. 1.3 The scope of this review This review focuses on the delivery of improved market access within the basic framework of the existing Market Access Strategy. It asks respondents to reflect on how we can streamline communication and improve information flows between the Commission, Member States and business, improve the focus of the service and deliver the best possible results for EU exporters on the ground. It also focuses on the operation of the European Commission s Market Access Database, which has been the key operational tool of the Market Access Strategy, providing free on-line information for EU exporters on around one hundred countries and hundreds of identified trade barriers. This review asks how the content and operation of the Market Access Database might be adjusted to improve user-friendliness and reflect changing needs.

4 1.4 Please tell us about yourself 1. Name of the organisation or institution on behalf of which you respond 2. Country where your organisation is based AT - Austria BE - Belgium CY - Cyprus CZ - Czech Republic DE - Germany DK - Denmark EE - Estonia EL - Greece ES - Spain FI - Finland FR - France HU - Hungary IE - Ireland IT - Italy LT - Lithuania LU - Luxembourg LV - Latvia MT - Malta NL - Netherlands PL - Poland PT - Portugal SE - Sweden SI - Slovenia SK - Slovakia UK - United Kingdom BG - Bulgaria RO - Romania 3. Type of organisation An EU Small or Medium sized Enterprise (SME) A larger European company An EU or a national trade association An association of SME's A Member State or a public or semi-public authority A civil society organisation Other contributor 4. address The information collected by DG Trade will be used to publish a summary of views submitted in the consultation on DG Trade s website, together with an annexed list of respondents. Any information submitted will not be re-used for an incompatible purpose. In particular, DG Trade will not divulge your personal data for direct marketing purposes. DG Trade will only

5 keep the data for the time necessary to fulfil the purpose of collection or further processing. IT systems are protected to safeguard your information against possible misuse or unauthorised access. If you have queries or complaints as regards the privacy policy statement, please contact Anonymous views will be taken into account, and drawn on in the summary response to the consultation. Do you wish your participation to remain confidential? 2. Identifying, prioritising and tackling barriers to trade Maximising the effectiveness of the European Commission s market access strategy is a question of determining the best possible use of all resources in order to identify, prioritise and tackle trade barriers. 2.1 How do we identify barriers? The key issues in improving the identification of trade barriers relate to how we improve the flow of information to the European Commission on trade barriers. Identification of market access problems for EU exporters tends to be demand driven. Complaints are passed to the Commission by EU exporters either directly, or through Member States and trade associations. The extent to which a better system can be devised for identifying barriers is an important question, and will determine the new partnership of the Commission with Member States and business to identify and prioritise barriers. Modern "21st century" barriers are more complicated, technically challenging and resource absorbing to detect, analyse and remove. In addition, tackling barriers created by poor implementation requires us to do better at surveying markets, detecting enforcement gaps, and encouraging implementation of existing commitments. Better, and more systematic contacts and coordination between the Commission, EU Delegations and Member States embassies in targeted countries could help identify trade barriers, particularly non tariff barriers, on the ground. This could even prevent some potential barriers by improved monitoring of planned new legislation and regulations. Institutional arrangements have been set up with Member States as part of the 1996 Market Access Strategy, including a Market Access Advisory Committee chaired by the Commission. These mechanisms could be strengthened. Consultations with business on barrier removal, both at the horizontal and sectoral level, undoubtedly need to be reinforced. The European Commission is increasingly reliant on detailed information from EU companies to obtain a clear picture of market access issues on our target markets. It has a responsibility to provide both regular general feed-back on the state of play in its work in removing barriers, and to let business know where matters stand in relation to a particular barrier. This flow of information in both directions will be central to an effective Market Access Strategy in the future.

6 The Commission currently maintains a range of dialogues with business. These may usefully be complemented with a centralised register for trade barrier problems. The Commission also needs to reflect carefully on how it can improve its service to small and medium sized enterprises either directly or working more closely with other organisations which represent SMEs. In addition, we should reflect on how SMEs can be better supported on the ground, to tackle problems such as IPR infringements. Please also reflect in your reply what contribution your organisation could make to improve identification of market access barriers. Q 1: Do you favour new approaches to enable the European Commission to work more effectively with Member States to anticipate likely problems in third markets? If yes, what specific approaches do you think might work? Q 2: Do you favour new arrangements to improve the flow of information between business and the European Commission on trade barrier problems? If yes, what specific suggestions do you have? What works well in existing arrangements? What could work better? Q 3: Should the European Commission s Market Access Strategy have additional special features to better suit the needs of Small and Medium sized industries? If yes, what specific arrangements would you recommend? [Please also reflect in your reply above what contribution your organisation could make to improve identification of market access barriers.] 2.2 How do we prioritise barriers for removal? Improving the identification of barriers to trade inevitably leads to an increased number of reported barriers. Given resource constraints, identified barriers will need to be prioritised. How do we do this? Analysis of the barriers takes place in the Commission in full consultation with the business concerned. Obvious initial questions include: whether or not there is a WTO violation involved; the likelihood of elimination of the barrier and the resulting economic benefits; and an assessment of the available resources and instruments.

7 One possible framework for prioritisation would be to agree at EU-level priorities to tackle on an annual, or multi-annual, basis [by both the EU and by Member States]. In terms of other tools, rather than a "scoreboard" approach to barrier removal, it may be helpful simply to ensure that a more accessible list of the key barriers being addressed is made available. Effective prioritisation and an overall focus on market access issues could also be supported by more systematic cooperation with other countries, outside the EU, whose interests are also affected by trade barriers in a given third country. Such innovations might help identify (a) priority problems e.g. export taxes, product registration requirements - (b) priority markets and (c) priority sectors. The Commission s efforts inevitably will need to be primarily focused on trade barriers in those markets where the EU has the highest levels of trading activities and where the impact of the restrictions is the greatest, and as set out in the Global Europe paper, our focus will be on developed and emerging economies. Q 4: How should the Commission prioritise trade barriers, markets and sectors to be addressed by the Market Access Strategy? 2.3 How do we tackle barriers? The European Commission is equipped to take action against trade barriers in a number of ways. The changing nature of modern trade barriers means that the question of the most appropriate instruments to tackle them also needs to be re-visited. The Global Europe trade policy framework stressed the continued commitment to the multilateral Doha trade negotiation as a clear priority. At the same time, it identified the need for a new generation of bilateral trade agreements in key EU markets with a specific focus on non-tariff barriers, a second phase of the IPR enforcement strategy and measures to open procurement markets abroad as central priorities for improving market access. As examples of how barriers to trade can be addressed in a number of negotiating contexts, the Commission is using the Non Agricultural Market Access (NAMA) negotiations in the Doha Round to address non-tariff barrier issues. It has used WTO accession negotiations to raise and resolve trade barrier problems. Other standard mechanisms to tackle obstacles to trade are bilateral negotiations, as set out in the Global Europe paper, for example; high-level visits and diplomatic demarches, although negotiating leverage in such circumstances cannot be taken for granted. To tackle the increasingly important area of regulatory "behind the border" obstacles, regulatory dialogues, dispute avoidance mechanisms and a reinforced EU position in international normative bodies are the key tools at our disposal. As far as possible, our goal should be to forestall unnecessary regulatory divergence, thereby tackling regulatory irritants upstream, before they become problems.

8 Finally, the EU of course retains the full right of recourse to the WTO Dispute Settlement Mechanism, and we have benefited considerably from the use of this mechanism since its instigation in However this procedure, as with all judicial systems, takes time and its remedies are only prospective. A key channel to the WTO dispute settlement mechanism is the EU Trade Barriers Regulation, which establishes a clear legal framework for the structured investigation of trade barriers in third countries and allows the Commission to present a clear case to trading partners on the need to address a particular market access question. It has been suggested that the current Trade Barriers Regulation procedure might be amended to include complaints against violation of bilateral treaties to which the EU is a party. One additional possibility would be to create some form of voluntary mediation mechanisms with trading partners to facilitate rapid consideration of problems. The Commission also needs to consider the issue of non-implementation and nonenforcement of agreed commitments as a capacity issue in some developing countries. Here lack of resources to implement and enforce agreements may underlie market access problems. Trade-related technical assistance will continue to be needed, and may play a very useful role in helping countries tackle barriers. The Commission is committed to strengthen its aid for trade with a commitment to reach a target of 1 billion a year by Undertaking barrier removal actions under the Market Access Strategy is key to improving the competitiveness of our exporters in other markets, while also taking into account wider objectives such as environmental impact and social issues. Q 5: What changes to existing EU approaches would help ensure faster, more effective resolution of issues for EU exporters? 3. The Market Access Database The European Commission s Market Access Database merits individual consideration because it has been the predominant operational tool of the European Commission s Market Access Strategy. The Market Access Database provides information on applied tariffs and import requirements in around a hundred countries and acts as a public record of about 500 market access barriers which largely reflect complaints reported by EU exporters. The Market Access Database is heavily used, receiving roughly half of all the hits on the Commission s trade website. A number of Member States also use the service in their trade promotion activities. The above-mentioned study to evaluate the impact of the Market Access Database suggested that some sections of the Market Access Database enjoy strong support, notably those providing information on applied tariffs, import formalities in third countries, and sanitary/phytosanitary controls. Other sections are seen as less effective and therefore requiring improvements, notably the database which collects together different sectoral and trade barriers.

9 The study highlighted respondents' views that the content of the Market Access Database could be adjusted to reflect the growing importance to EU exporters of areas including the services trade, intellectual property enforcement, investment and internal regulation. They also called for simplification and increased user-friendliness, in other words to have a very practical tool. Q 6: In general, do you feel the MADB is effective as a tool for exporters in its current form? Is it user friendly? What works well? What works less well? (please comment) Q 7: Does it cover the right range of information on export conditions and on barriers? range of info on MADB and the right range of countries? If not: To serve your needs better, what would need to be changed? 4. Conclusion: new approaches to working together The recent Global Europe paper highlighted the importance of opening markets abroad, while ensuring that Europe remains open to the world. As set out in this paper, the Commission is committed to delivering a comprehensive package to improve market access conditions for European companies. This will include a number of improvements in terms of identifying, prioritizing and tackling barriers, as well as re-designing the Market Access Database. The level of ambition of a renewed market access strategy and the results which can be expected to flow from this will of course depend on available resources. A substantial joint effort from the Commission, business, and Member States would be needed if we are to deliver a significantly improved service. The ambition of the system will therefore also depend on the quality and intensity of this new partnership to be put in place between the Commission, European business, and the Member States: and in particular, how effective we are in pooling our resources particularly "on the ground" in third countries.

10 Please tell us if you believe there are issues which we should consider beyond those outlined above, or if you have more general comments about the nature or scope of the areas outlined for consideration. Your comments: Thank you very much of taking part in this consultation. External Trade European Commission 10 November 2006

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