Legal base	—
Document originated	16 December 2008
Deposited in Parliament	13 January 2009
Department	Business, Enterprise and Regulatory Reform
Basis of consideration	EM of 23 January 2009
Previous Committee Report	None, but see footnotes 24 and 25
To be discussed in Council	See para 6.6 below
Committee's assessment	Politically important
Committee's decision	Cleared

Background

6.1 According to the Commission, open markets create opportunities for growth, employment and investment, and are of particular importance for the Community, as the largest trading block in the world. However, it suggests that the current financial and economic crisis might bring about more protectionism, and that removing existing trade barriers — notably through the conclusion of the Doha Round — but also through bilateral and regional approaches has acquired further importance. It notes that the Global Europe Strategy[24] is an essential external pillar of the Lisbon Strategy, and that the renewed Market Access Strategy[25] is a key strand of this, the importance of these efforts to open markets being recognised by the European Council's endorsement in spring 2008 of the Commission's suggestion that it should report each year on these issues.

The current document

6.2 This Communication is the first such report, and is regarded by the Commission as a further step in developing a stronger external dimension to the Lisbon Strategy. It addresses first the issue of non-tariff barriers, which it says are seen by firms as increasingly important, compared with traditional measures such as import tariffs and duties. It adds that the most frequent barriers include burdensome customs procedures, as well as discriminatory tax rules, technical regulations, standards and conformity assessment procedures, sanitary and phyto-sanitary measures, restrictions on access to raw materials, poor protection of intellectual property rights, barriers to trade in services and foreign direct investment, restrictive public procurement rules, and abusive use of trade defence instruments or unfair use of subsidies. However, it also recognises that addressing these barriers is a complicated, technically challenging and time-consuming process, and that much depends on whether or not a barrier is in pursuit of a legitimate aim. It draws a further distinction between those which arise from different social, environmental, health and consumer objectives, and those which are used more systematically to protect domestic production.

6.3 The Communication goes on to examine in more depth the different barriers faced by European exporters. Thus:

• in the case of non-tariff barriers to goods, it reinforces the need to tackle those used systematically, and cites a number of examples of the problems encountered by different industrial sectors, such as automobiles, chemicals, pharmaceuticals, electronic equipment, and agricultural and food products;
• as regards services and establishment, it notes that, although there are many barriers to the entry of Community firms (including nationality and residency requirements, limits on foreign ownership or shareholding, or on the type of legal entity, or entry being subject to an economic needs test), it is often complex to detect and remove these;
• in the case of public procurement (which it says makes up an average of 15% of the GDP of OECD countries), Community suppliers can rely on the Agreement on Government Procurement, which provides for common disciplines and public advertising of major contracts: however, whilst a number of other countries[26] have signed up to this, many WTO members have not, and several procurement areas and contracting entities are not bound by the rules, even though the Community's own procurement market is relatively open to foreign competition; and
• as regards protection of intellectual property, European industry remains deeply concerned at the extent to which its rights are infringed in certain regions, by lack of legal protection or effective enforcement, with an OECD study in 2007 having suggested that international trade in counterfeit and pirated products could be some $200 billion a year — a figure which it says could well be increased by several hundred billion dollars if products traded and produced domestically, or distributed via the internet were to be included: the Commission also highlights the record number of Customs seizures of counterfeit and pirated products in 2007, notably in areas posing health and safety concerns, such as cosmetics, toys, foodstuffs and medicines.

6.4 The Communication then looks at the Community response to existing barriers, in the light of the Global Europe and Market Access Strategies. It draws attention to a broad range of instruments, including:

Trade agreements

It sees these as a primary tool to provide market access for Community exporters, and adds that, whilst multilateral negotiations in the context of the WTO (notably the swift conclusion of the Doha Round), is crucial to achieving a rule-based international system, bilateral Free Trade Agreements often provide for more comprehensive and deeper engagements, especially with important trading partners in Asia.

Bilateral relations

The Commission suggests that regular and more ad hoc bilateral contacts, for example through the Transatlantic Economic Council, can also be an effective way of addressing trade barriers and regulatory issues, as can assertive trade diplomacy, and trade-related assistance, for example in the training of customs officials.

Formal instruments

The Commission says that instruments such as the WTO Technical Barriers to Trade and Sanitary and Phytosanitary Agreements are increasingly important in securing open trade opportunities and enabling concerns to be addressed at an early stage, failing which the Community's Trade Barriers Regulation (which enables companies to request the Commission to investigate complaints and seek redress) and the WTO dispute settlement procedures can be effective remedies.

Regulatory cooperation

The Commission points out that the Community has long experience with regulatory convergence and cooperation within the single market, and that such cooperation on a multilateral or bilateral basis can address unnecessary barriers caused by differences in regulatory practice, both in addressing specific issues and in building a relationship between regulators.. It adds that, in some cases, regulatory convergence may be appropriate, whilst in others recognition or equivalence agreements can be helpful.

Market Access Partnership

The Commission notes that the Market Access Strategy established a new, stronger partnership between the Commission, Member States and business in order to pool resources and expertise to detect and remove barriers. It says that monthly meetings of the Market Access Advisory Council have become the main focal point for coordination, supported by specific expert groups, and that local Market Access Teams have been established in most of the Community's major export markets, proving to be especially valuable in providing an early warning mechanism and local knowledge and contacts.

The Commission concludes by saying that the Community's future activities should be based upon a coordinated approach, setting priorities (with priority being given to areas where there is a strong economic interest, and a real impact can be achieved within a reasonable time), listening to stakeholders, and making full use of the available range of instruments.

The Government's view

6.5 In his Explanatory Memorandum of 23 January 2009, the Minister for Trade, Investment and Consumer Affairs at the Department for Business, Enterprise and Regulatory Reform (Mr Gareth Thomas) notes that this Communication does not propose any new instruments or policy measures. He adds that the re-launch of the Market Access Strategy followed a consultation process in which the Government and UK business participated fully, and that the latter remains fully involved in the development of the Strategy. He also says that the Communication is consistent with the Government's objectives for developing free and open markets.

6.6 The Minister says that the Communication is subject to continuing discussion in the Council and its relevant preparatory bodies, and that a report will be agreed for the Spring European Council on 19-20 March.

Conclusion

6.7 Although this Communication in many ways covers ground similar to that set out in the Market Access Strategy, it provides a useful resumé of the various trade barriers which exist, and of the measures being taken to address these. Consequently, whilst we are clearing the document, we think it right to draw it to the attention of the House.

25   (28575) 8753/07: see HC 41-xxii (2006-07), chapter 15 (16 May 2007). Back

26   Including, the US, Japan, Canada and Korea. Back