The EU Trade Policy Review

The first week of July saw the WTO reviewing the EU Trade Policy report prepared by the WTO Secretariat. While there is a time lag between the Trade Policy Reviews of smaller economies, the leading traders, EU, China, US and Japan are reviewed once in two years.

The last review of the EU was in 2009, when the bloc was in serious recession. The July 2011 review is the first review since the treaty of Lisbon came into force on 1 December 2009, which altered the way that the EU adopts trade policy decisions and included foreign direct investment in the bloc’s common commercial policy. While the previous review took place in the midst of recession, this review took place during the ongoing debt crisis.

The review noted that despite intensified protectionist measures, the EU maintained the overall openness and transparency of its trade and investment regime and given the EU’s leadership position as the world’s largest trader, praised its decision “to refrain from tightening restrictions on imports in response to the crisis” as it had a “stabilising effect on the multilateral trading system.”

However, it also noted that the EU still has room for improvement in the areas of intellectual property, anti-dumping, etc., and that some long standing barriers to market access and other measures that distort international competition still exist.

With regard to the struggling Doha talks, the discussants at the review meeting, while recognising the EU’s active participation in the negotiations, urged the EU to “take on a position of greater leadership”. According to the review, while the EU attaches top priority to concluding the WTO Doha Round, it also continued pursuing “competition driven” FTAs. However, despite the continued growth of an extensive network of Preferential Trading Agreements, it was noted that some 85% of total EU imports entered under MFN in 2008.

The introduction of new ,more flexible Rules of Origin for products imported under GSP which are now applicable were noted to be more simple and allowing for additional goods, in particular, those processed in the Least Developed Countries, to qualify for preferential treatment.

Changes to the customs procedures due to security considerations were also noted. Advanced cargo information requirements have been introduced as part of the so called “safety and security amendment” to the customs code. Trade facilitation measures pursued by the EU include preparations for the establishment of a single window service and introduction of a customs registration number throughout the EU.

These measures as well as other ongoing trade facilitation initiatives were considered essential to help minimise transaction costs, especially those relating from measures to ensure physical security at national borders.

In the area of intellectual property, the EU has lowered the registration cost for community trademarks and strengthened enforcement of intellectual property rights, while major copyright and patent reforms are ongoing.

At the last review, several WTO members had indicated that the EU’s regulatory practices had become increasingly burdensome in gaining access to the EU market. This year’s review referring to it, has requested that the EU “considers carefully” the possible trade impact of its regulatory environment, including its high regulatory standards on food and product safety to ensure that its technical regulations and conformity assessment procedures don’t create unnecessary obstacles to trade with 3rd countries.

This year too, a number of WTO members spoke on the EU’s regulatory practices including that, the comment period for new regulations is often less than the standard 60 days. This shortened time has made it difficult for some members to make comments due to various reasons including limited institutional capacity.

The Trade Policy Reviews prepared by the WTO serves an extremely useful purpose as it is a detailed report about a country’s trade policy. The report on EU is also such a report, when studied in depth, gives a detailed picture about the 27-member country bloc, whose policies can make substantial impact on the rest of the world economies.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)