Market Access Partnerships – questions and answers

On 18 April 2007, the European Commission adopted the Communication ‘Global Europe: A Stronger Partnership’ to deliver Market Access for European exporters. This strategy for breaking down trade barriers abroad and creating new export opportunities is part of the Commission’s new Global Europe trade policy framework. The centre-piece of this new approach is a new decentralised partnership between the Commission, EU Member States and business on the ground in third countries where local expertise makes trade barriers easier to identify and tackle.

1. Why does market access matter?

As the European Commission’s Global Europe policy framework sets out, it believes that 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. It stresses that there is a 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 as 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.

2. How does a stronger Market Access Partnership fit with the shift in emphasis in EU Trade Policy announced in Global Europe?

This paper is an integral part of the Global Europe policy. There is no incompatibility either with what we are trying to complete with the DDA and start with the FTA negotiations. In this sense, these negotiations “serve” the overall strategy of barrier removal. In another, the market access networks will serve to sharpen up the “targets” for these negotiations. This is a two way system.

The Market Access Partnership will help to identify the right mix of policy instruments available for specific barrier removal activities from the broader trade policy tool-box, now being sharpened and modernised as the Global Europe framework is rolled out.

3. Can you give some illustrative examples of solved market access cases?

Tax discrimination in Colombia against imported motor vehicles

Colombia’s VAT was designed in such way as to discriminate foreign cars and to unfairly protect local manufacturers. Following a Trade Barriers Regulation complaint, the Commission raised the issue with the Colombian authorities who agreed to eliminate the tax discrimination by 2005. As a result, EU car exporters secured a level playing field vis-à-vis their competitors established in Colombia.

Mexican legislation on diesel emissions

Mexico notified draft legislation covering diesel emissions to the World Trade Organisation’s TBT (Technical Barriers to Trade) Committee. The draft legislation would have accepted only US EPA standards and thereby effectively deny access to lucrative Mexican market for EU diesel automobile exporters. Following comments by the EU to the TBT Notification and a series of bilateral discussions with the Mexican authorities, Mexico adopted revised legislation on diesel emissions in August 2006, accepting both EURO and EPA standards.

Elimination of Balance of Payments Restrictions in India

India had applied Balance of Payments Restrictions since 1960 to a wide range of consumer goods. The expected additional turnover for EU business was around €2 billion. Following complaints by EU industry and a subsequent request for a WTO panel, India agreed with the Commission to progressively eliminate these restrictions over four years.

Safeguard on dairy products in South Korea

South Korea imposed safeguard measures taking the form of quotas on skimmed milk powder preparations. Negotiations and formal WTO consultations failed to find a solution. The subsequent dispute settlement procedure found these measures in breach of the provisions applicable to safeguards. Korea has informed the EU that it has revoked the illegal measure.

Elimination of Discriminatory Fees on Pharmaceuticals in Ukraine

Ukraine set up fees for the registration of imported pharmaceutical products at 100 times the level applicable for domestic products. This system effectively hindered market access for EU industry and was also detrimental to Ukraine’s health policy. Following high level consultations and the initiation of a WTO dispute settlement procedure, the discriminatory fees were eventually removed.

4. Why revise European market access policy 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.

These new types of barriers are more complicated technically challenging and time consuming to detect, analyse and remove. Both a study conducted by external consultants and the results of the recent public consultation 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.

5. What are the key reforms proposed?

The paper proposes a stronger Market Access Partnership to Deliver Market Access, and to this end:

• promotes the idea of full cooperation between networks of market access experts throughout the Commission and with Member States and business;
• sets out a clearer, more results-oriented approach focused on the concrete problems in the form of trade barriers that European companies face in third country markets;
• reiterates our commitment to using multilateral and bilateral approaches to encourage progressive and enforceable trade liberalisation;
• foresees a better use of local knowledge and local initiative through the development of locally based EU Market Access Teams drawn from Commission delegations, Member State embassies and business organisations;
• suggests better prioritisation in choosing which trade barriers to focus on;
• proposes other changes related to provide a more efficient and transparent service to, including improvement to the Market Access Database.

6. Does the new policy imply any change to the Common Commercial Policy?

The Commission has a clear role to play…

This initiative is not about re-writing the Treaty. Commission must and will do its job properly, and the paper is intended pragmatically to help us do that. But at the same time, we need to move on from the notion that nothing happens without the Commission. This does not reflect the reality. Member States, and not just the bigger ones, carry out their own market access work for their own companies. This is fine, but we can and should do more to build synergies such as from teaming up in intelligence gathering etc. This is why we can and should do much more together in terms of identification, analysis, barrier removal and follow up.

…but the Commission is not stepping into Member States’ affairs such as export promotion

Member States clearly want to maintain their existing roles, tackling proactively the problems of their own companies. The European Commission can help with that, and they can help Commission with the (growing) number of problems affecting companies from more than one Member State, such as in emerging countries. More to the point, the proposed Partnership should provide efficiencies and synergies on all sides.

7. How can we expect that the new approach will be more effective than the existing 1996 arrangements?

The Commission has avoided the temptation to come up with new machinery or create new institutions. That risked distracting us from core tasks, and instead we have gone for important, but incremental, changes in the policy process. There’s no magic in terms of tackling barriers: successful action relies on the right number of quality staff, a solid tool-box of instruments (stretching from negotiations to mediation mechanisms and trade diplomacy), a sense of sharper prioritisation of our work, proper cooperation in the Partnership that we propose with more synergies through sharing tasks, more decentralisation with better local working and a bottom-up approach in a manner and a time-frame that is compatible with business needs.

A renewed visible focus on specific barrier removal actions and an assertive Market Access Partnership is also ensured by its linkage to the Global Europe initiative which identified 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.

8. Will there be sufficient resources to ensure the new policy is effective?

The success of this initiative will depend on the strength of the new partnership that we are able to establish, dedicating sufficient resources to it, and making best use of these resources that we bring, collectively, to the project. The most effective pooling of all available resources, which inevitably will never be unlimited, will lead to synergies and help to increase the efficiency of the system. The Commission is committed to taking up this challenge and invites all involved parties to contribute to implementing this new partnership.

9. What benefits and challenges do you foresee in prioritising?

The anticipated increase in the already substantial number of trade barriers reported, coupled with the increasing complexity and difficulty of tackling them, means that it is important to ensure that we focus and act on the highest priority barriers. However, prioritisation must not be a straitjacket, but must help provide guidance to use resources better. While all complaints received should continue to be examined, this will happen in the light of objective prioritisation indicators discussed with Member States and EU business, including small and medium sized enterprises.

These indicators could include the potential economic benefits for EU business, the seriousness of the infringement of trade rules or the likelihood of removing the barrier within a reasonable timeframe.

In terms of the outcomes of the prioritisation process, priorities could be defined in terms of countries, sectors or types of problems. There is of course the challenge that, for instance, each sector will consider its own concerns as a priority. The Market Access Partnership with its networks of market access experts should provide a transparent tool in finding the right balance between legitimate specific interests and the advantage of focussing efforts on key issues.

10. How is a stronger Market Access Partnership expected to play out in practical terms in Commission Delegations?

The paper foresees the development of “Market Access Teams”, comprising the local Commission Commercial Counsellor, as well as officials from Member States and people from the local chambers of commerce, EU business locally, etc. Precisely how they organise themselves would partly be a matter for the Delegation concerned, but Market Access Teams would have a clear focus on barriers: identifying, preventing, analysing, and often coming up with ideas for their resolution. We don’t envisage permanent secretariats etc, but regular meetings with contributions from both Member States and industry. In the larger delegations, there might be separate working groups or taskforces on particular issues.

11. Does this policy mean that we are heading for trouble for our relations with some of our trading partners?

We are certainly not planning to target least developed countries, nor will ACP countries be amongst those prioritised for barrier removal under the Market Access Partnership.

Moreover, regarding developed and key emerging countries, on which we will focus our attention, we do not intend to establish an EU trade policy militia. All we aim at is providing EU business with a level-playing field and fair conditions of competition in the modern global economy. We will keep our market open and are confident that our established trading partners like the US, or key emerging countries, notably the BRICS and the ASEANs, will understand our concern to find fair rules in other markets around the world.

A more assertive approach does not mean forcing open markets, and will obviously reflect the capacities of the markets in question. The EU will ask of trading partners only what their level of development allows – keeping in mind that the situation of countries might change over time.

12. How is this paper to be implemented in the coming months?

In the first instance, we hope the Council and other institutions will consider the paper carefully: we look to early discussions with them. We hope that the Council will adopt Council Conclusions that support the main thrust of the proposals.

Second, Commission wants to get a first set of local Market Access Teams and a reinforced cooperation of the Commission with Member States and business through the existing institutional framework and a strengthened informal network of market access experts from all sides up and running as soon as possible.

Third, the Commission will work closely with its partners to publicize widely, also among Small and Medium-sized Enterprises, the services of the Market Access Partnership, including its informational tool, the Market Access Database, and propose changes, for instance regarding problem registration and feed-back, to make the system more efficient and transparent for business.

The Market Access Partnership can build on the existing market access strategy; improvements will be carefully monitored to ensure a continuous development of this initiative.

Source: European Commission