The future of EU-Trade The future of EU-Trade DefenceDefence System System

2007 Seoul International 2007 Seoul International Forum on Trade RemediesForum on Trade Remedies

27-28 June, 200727-28 June, 2007

Harald Wenig, EU CommissionHarald Wenig, EU Commission

Main Subjects of Trade PolicyMain Subjects of Trade Policy Reduce Barriers to Trade (tariffs / non Reduce Barriers to Trade (tariffs / non

tariff barriers)tariff barriers) Increase Market AccessIncrease Market Access Investments Investments Increase “Fairness” of Trade Increase “Fairness” of Trade (IPR, TDI)(IPR, TDI) Acceptance and application of rules and Acceptance and application of rules and

valuesvalues Sector issues (steel, textile) Sector issues (steel, textile) Environment / Social IssuesEnvironment / Social Issues

Why do we need TDI?Why do we need TDI?

Lack of international competition lawLack of international competition law Within EU/ EEA “four freedoms“ and competition law Within EU/ EEA “four freedoms“ and competition law

appliesapplies No international competition rules, no “free movement“ of No international competition rules, no “free movement“ of

goodsgoods

Therefore:Therefore: Possibility of international (third country) cartelsPossibility of international (third country) cartels Subsidies in third (exporting) countries Subsidies in third (exporting) countries Creation of “national champions“ and “strategic industries“Creation of “national champions“ and “strategic industries“

Result : Low priced imports to EU which are not due to genuine Result : Low priced imports to EU which are not due to genuine competitiveness ofcompetitiveness of exportersexporters

While competitors within EU face strict rules (competition, While competitors within EU face strict rules (competition, environmental, social) almost no rules apply to competition environmental, social) almost no rules apply to competition from outside EU (except TDI)from outside EU (except TDI)

Trade Defence Instruments Trade Defence Instruments –AD/CVD–AD/CVD

Globalisation hits us allGlobalisation hits us all

TDI and the new economic realityTDI and the new economic reality Do we have the balance right?Do we have the balance right? Long supply chainsLong supply chains Producing industry VS ServicesProducing industry VS Services

Therefore: Change (?) Therefore: Change (?) and Trends in TDIand Trends in TDI

New trade pattern: New trade pattern: Producer / ImporterProducer / ImporterCompetition aspectsCompetition aspectsEnvironmental / Social aspectsEnvironmental / Social aspectsTransparencyTransparencyPolitisationPolitisationMES ChinaMES ChinaTrade Policy and Steel / TextilesTrade Policy and Steel / TextilesGreen PaperGreen Paper

Producer/importerProducer/importer

Globalisation changed the “front Globalisation changed the “front lines”lines”

What is a “producer” ?What is a “producer” ? R&D in Europe ?R&D in Europe ? Value of production ?Value of production ? Investment in exporting country ?Investment in exporting country ?

What are the consequences ?What are the consequences ?

Competition aspects ICompetition aspects I

No international competition rulesNo international competition rules Not allowed internally-why Not allowed internally-why

externally?externally? The sources of AD/ASThe sources of AD/AS State aids is (relatively) clear butState aids is (relatively) clear but

Dual pricing ?Dual pricing ? Input subsidiesInput subsidies No specificityNo specificity

Competition aspects II - Competition aspects II - The sources of “dumping”The sources of “dumping”

Tariff/Non-tariff barriersTariff/Non-tariff barriers High custom dutiesHigh custom duties Customs procedures, certifications, standards, Customs procedures, certifications, standards,

normsnorms

Private “cartel agreements”Private “cartel agreements” ““Abuses” of a (pre-) dominant positionAbuses” of a (pre-) dominant position State interventionsState interventions

Competition aspects IIICompetition aspects III

Examples of state intervention:Examples of state intervention: **Unperforming loans by state banksUnperforming loans by state banks **Export obligations/incentivesExport obligations/incentives **No inforcement of accounting No inforcement of accounting **Establishing « Strategic industries »Establishing « Strategic industries » **No competition lawNo competition law

Environmental / Social aspectsEnvironmental / Social aspects

The classic principle: not in TDIThe classic principle: not in TDI The double whammy argumentThe double whammy argument The flavour of the day?The flavour of the day?

TransparencyTransparency

Access to confidential files?Access to confidential files? More judicial proceduresMore judicial procedures

**Hearing officerHearing officer **Role of lobbyingRole of lobbying **Published deadlinesPublished deadlines

More assistance to SMEs?More assistance to SMEs?

Environmental / Social aspectsEnvironmental / Social aspects

The classic principle: not in TDIThe classic principle: not in TDI The double whammy argumentThe double whammy argument The flavour of the day?The flavour of the day?

PolitisationPolitisation

Real problem in EUReal problem in EU **27 Member states27 Member states **No homogeneous industrial fabricNo homogeneous industrial fabric **Wide discretion Wide discretion

Not only an EU problemNot only an EU problem **Monopolized exporting industryMonopolized exporting industry **Direct links to GovernmentDirect links to Government **Unsufficient legal system Unsufficient legal system **Good governance: work in progressGood governance: work in progress

MES China MES China

Why not subsidy law? Why not subsidy law? **Is the US approach a good one?Is the US approach a good one? **Input subsidies/specificitiesInput subsidies/specificities

Green PaperGreen Paper

Conflict of interests between: Conflict of interests between: producing andproducing and trading companiestrading companies

TransparencyTransparency PolitisationPolitisation Link with other policiesLink with other policies Procedural questionsProcedural questions

State of play and main points :State of play and main points :

Main points raised by importersMain points raised by importers Strengthen the Community Interest Test – give Strengthen the Community Interest Test – give

importers more weight importers more weight development policy considerationdevelopment policy consideration Reduced duration of measuresReduced duration of measures Increase thresholds (e.g. standing, Increase thresholds (e.g. standing, de-minimisde-minimis)) Higher injury standardsHigher injury standards

Main points raised by producersMain points raised by producers Environmental and social considerations in the Environmental and social considerations in the

Community Interest Test (e.g.Community Interest Test (e.g. Community Interest Test not applied if social and/or Community Interest Test not applied if social and/or

environmental dumpingenvironmental dumping Avoid double whammyAvoid double whammy Creation of an independent agencyCreation of an independent agency More effective and rapid imposition and More effective and rapid imposition and

implementation of measuresimplementation of measures

Green PaperGreen Paper

TDI – The future is bright (?)TDI – The future is bright (?)

Trade liberalisation and Safety valveTrade liberalisation and Safety valve Less TDI – More protectionnist Less TDI – More protectionnist

pressurepressure Without competition law, what else?Without competition law, what else? DG Comp. Int. (??)DG Comp. Int. (??)