international trade and investment: issues and policies
TRANSCRIPT
International trade and investment: issues and policies
EU Common Commercial Policy
Grzegorz Mazur
EU Common Commercial PolicyAGENDA
• EU Common Commercial Policy – the policy content
• EU as a common customs area
• EU trade policy instruments
• dimensions of shaping and managing the EU’s trade relations
• EU CCP strategies
EU’s Common Commercial Policy
• CCP – one of the oldest and the most European/common policies of the EU
• 1968 – Common External Tariff
• 1970 – Common Commercial Policy
• evolution of the CCP (content and competences)
EU’s Common Commercial Policyart. 207 TFEU
1. The common commercial policy shall be based on uniform principles, particularly with regard to changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services, and the commercial aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies.
EU’s Common Commercial Policyart. 207 TFEU
2. The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall adopt the measures defining the framework for implementing the common commercial policy.
3. Where agreements with one or more third countries or international organisationsneed to be negotiated and concluded, Article 218 shall apply, subject to the special provisions of this Article.
The Commission shall make recommendations to the Council, which shall authorise it to open the necessary negotiations. The Council and the Commission shall be responsible for ensuring that the agreements negotiated are compatible with internal Union policies and rules.
The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council to assist the Commission in this task and within the framework of such directives as the Council may issue to it. The Commission shall report regularly to the special committee and to the European Parliament on the progress of negotiations.
EU as a common customs area
• EEC/EU as a customs union - single trading area where all goods circulate freely, whether made in the EU or imported from outside
• duty on goods from outside the EU is generally paid when they first enter the EU, but after that there is nothing more to pay and no more checks
• uniform system of customs duties on imports from outside the EU
EU as a common customs area
• Not only duties, but also…• environment and health & safety regulations (e.g. refusing entry to
contaminated foodstuffs or potentially dangerous electrical appliances)
• dual-use items regulations
• tackling counterfeit goods and piracy
• protecting endangered species, e.g. checking trade in ivory, protected animals, birds and plants
• regulations on protecting European cultural heritage by watching for smuggled art treasures
EU as a common customs area
• the Union Customs Code (since 2013)• to ensure uniform conditions for the implementation of customs regulations -
the Code shall apply uniformly throughout the customs territory of the Union
• the general rules and procedures applicable to goods brought into or taken out of the customs territory of the Union
• customs procedure
• and common customs tariffs (the essence of any customs union)
Common External TariffHarmonized System (HS) & EU system
The EU classification system has 2 elements:
• The Combined Nomenclature (CN) - the EU’s 8-digit coding system. It is based on the Harmonized Commodity Description and Coding System (HS). The CN is used for the EU’s common customs tariff. It is also used to provide EU trade statistics
• The Integrated Tariff (TARIC) provides information on all trade policy and tariff measures that apply to specific goods in the EU (e.g. temporary suspension of duties, antidumping duties).
It is made up of the 8-digit code of the CN plus 2 extra digits (TARIC subheadings).
Harmonized System (HS)
• the Harmonized Commodity Description and Coding System generally referred to as "Harmonized System" or simply "HS" is a multipurpose international product nomenclature developed by the World Customs Organization (WCO)
• comprises about 5,000 commodity groups; each identified by a six digit code
• describe “what” is being shipped to and from countries worldwide
• before 1988, each item had to be classified under differing tariff systems of various countries. This slowed down and complicated international trade, making it very difficult to do business in many countries
• at present, the Harmonized System Nomenclature 2017 Edition is the valid version applied in international trade transactions
• used by more than 200 countries and economies as a basis for their customs tariffs and for the collection of international trade statistics
• most customs authorities require HS codes to be provided on import and export declarations
• over 98 % of the merchandise in international trade is classified in terms of the HS
• all existing products can be classified into the existing HS system by using the General Rules of Interpretation
• any product for which there is no current classification can be listed under the other classification
Harmonized System (HS) - 1988
• the first 6 digit numbers are supposed the same across the whole world
• each country can modify by adding two digits or four digits as per their requirements without changing first six digits
Harmonized System (HS) vs. national systems
Common External TariffTARIC
• TARIC - (TARif Intégré Communautaire; Integrated Tariff of the European Communities)
• multilingual database in which are integrated all measures relating to EU customs tariff, commercial and agricultural legislation
• secures the uniform application by all Member States and gives all economicoperators a clear view of all measures to be undertaken when importing intothe EU
• 10-digits tariff codes (in the EU it is needed 10 digit code to correctly classify goods on import)
• more than 40 thousands tariff codes• http://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en&QuotaAut
horities=false&ContextPath=
Common External TariffTARIC
• The TARIC contains the following main categories of measures:• Tariff measures
• Agricultural measures
• Trade Defence instruments
• Prohibitions and restrictions to import and export
• Surveillance of movements of goods at import and export
Common External Tariff
Source: WTO 2017, Trade Policy Review – the European Union
Common Commercial Policy2 pillars
•How to protect our market?
•How to promote our export?
Trade instrumentstariffs (customs, customs duties)
• is a tax on imports (sometimes also exports) levied by a government
• the most common way to protect one’s economy from import competition
• one of the oldest trade policy instruments
• forms by goods directions• import tariffs
• export tariffs
• transit tariffs (forbidden since 1921)
Tariffsforms by calculation method
• ad valorem tariff - calculated as a fixed percentage of the value of the commodity imported
• specific tariffs are computed on the physical quantity of the good being imported (e.g., 188.20 EUR / 100 kg cheese to the EU).
The physical quantity may be expressed in ways that are difficult to determine without laboratory equipment. The European Union charges duties on certain dairy products based on the weight of lactic matter in the product.
• mixed tariffs are expressed as either a specific or an ad valorem rate, depending on which generates the most (or sometimes least) revenue
• compound tariffs include both ad valorem and a specific component (http://ec.europa.eu/taxation_customs/dds2/taric/measures.jsp?Lang=en&SimDate=20170529&Area=AU&Taric=1704109000&LangDescr=en)
Customs tariffs (general classification)tariffs – bound vs. applied
• bound tariff rate – maximum duty rates that are committed in the WTO and are difficult to raise
• some countries, especially those with higher bound tariffs, decide to set their actual tariffs at lower levels than their bound rates. The actual tariff rate is called the applied tariff rate
How to protect our market?
• Common External Tariff of the EU (since 1968)
• Current level of customs traiffs is generally low
• anti-dumping actions
• anti-subsidies actions (countervailing measures)
• safeguards: emergency protection from imports
Non-tariff barrierscontingency protection measures
• Dumping is a situation of international price discrimination, where the price of a product when sold in the importing country is less than the price of that product in the market of the exporting country
• Predatory dumping – temporary sale of a commodity at below cost or at a lower price abroad in order to drive foreign producers out of business, after which prices are raised to take advantage of the newly acquired monopoly power abroad.
Non-tariff barriersanti-dumping measures
To introduce anti-dumping measures the government has to be able to show that:
• dumping is taking place
• calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price)
• and show that the dumping is causing injury or threatening to do so.
Non-tariff barriersanti-dumping measures
• in the simplest of cases, one identifies dumping simply by comparing prices in two markets
• in most cases it is necessary to undertake a series of complex analytical steps in order to determine the appropriate price in the market of the exporting country (the “normal value”) and the appropriate price in the market of the importing country (the “export price”) so as to be able to undertake an appropriate comparison
• anti-dumping investigation
• complex task if country is not recognised as a ‘market economy’
Non-tariff barriersanti-dumping measures
• normal value - is generally the price of the product at issue, in the ordinary course of trade, when destined for consumption in the exporting country market. In certain circumstances, for example when there are no sales in the domestic market, it may not be possible to determine normal value on this basis
• two alternatives are provided:• the price at which the product is sold to a third country• the “constructed value” of the product, which is calculated on the basis of
the cost of production, plus selling, general, and administrative expenses, and profits.
Non-tariff barriersanti-dumping measures
• anti-dumping measures can only be applied if the dumping is hurting the industry in the importing country
• the investigation must evaluate all relevant economic factors that have a bearing on the state of the industry
• if the investigation finds that the above conditions have been met (dumping, injury), then anti-dumping measures can be imposed on imports of the product concerned
• the measures usually take the form of an ad valorem duty, but could also be specific duties or price undertakings.
Non-tariff barriersanti-dumping measures
• anti-dumping investigations are to end immediately in cases where the authorities determine that the margin of dumping is insignificantly small (defined as less than 2% of the export price of the product).
• anti-dumping duties are generally imposed for 5 years
• anti-dumping investigation is againts a company (not a state)
Non-tariff barriersanti-dumping measures
Non-tariff barriersanti-subsidies measures
• a subsidy - a financial contribution made by (or on behalf of) a government or public body which confers a benefit to the recipient (company/group of companies/industry)• a direct or potential transfer of funds (e.g. grants, loans, equity injection or loan
guarantees)
• government revenues foregone or not collected (e.g. tax credits)
• government provision of goods and services (other than general infrastructure)
• government purchase of goods
• any of the above functions performed by a private body (e.g. a bank) on the instruction of the government
Non-tariff barriersanti-subsidies measures
• a 'benefit' is conferred if any of the above financial contributions are provided on terms more favourable than those available on the market. For example, if the government provides electricity at below market price or buys a product at above its market value
• “specific” subsidy — i.e. a subsidy available only to an enterprise, industry, group of enterprises, or group of industries
• in contrast, a subsidy which is generally or broadly available – like training aid or aid to small businesses – is not normally considered specific
Non-tariff barriersanti-subsidies measures
• anti-subsidies investigation must show that:• the imports benefit from a specific subsidy
• there is injury suffered by the country’s industry
• there is a causal link between the injury and the subsidised imports
• countervailing duty (the parallel of anti-dumping duty) can only be charged after the importing country has conducted a detailed investigation similar to that required for anti-dumping action
• the subsidised exporter can also agree to raise its export prices as an alternative to its exports being charged countervailing duty.
Non-tariff barrierssafeguards
• a country may restrict imports of a product temporarily (take “safeguard” actions) if its domestic industry is injured or threatened with injury caused by a surge in imports (the injury has to be serious)
• an import “surge” justifying safeguard action can be a real increase in imports (an absolute increase); or it can be an increase in the imports’ share of a shrinking market, even if the import quantity has not increased (relative increase)
• when imposed, a safeguard measure should be applied only to the extent necessary to prevent or remedy serious injury and to help the industry concerned to adjust
• where quantitative restrictions (quotas) are imposed, they normally should not reduce the quantities of imports below the annual average for the last three representative years for which statistics are available
Non-tariff barrierssafeguards
contingency protection measures in the EU (2013-2016)
Exports from the EU
• export, generally, is not under quantity restrictions• any exemptions?
• subsidising export is generally prohibited
• only in relation to agricultural products (restricted after Nairobi 2015) - exceptions until 2020
’Soft’ instruments:
• trainings and seminars for SMEs
• support for participation in international fairs and exhibitions
• information about problems in entering foreign markets
• Export Market Database: http://madb.europa.eu/madb/indexPubli.htm
Exports from the EU
Dimensions of the
EU Trade Policy
trade policy
multilateralism bilateralism/
regionalism
unilateralism
EU’s trade policydimensions of creating trade policy
EU’s trade policymultilateralism - WTO
• European countries and EEC/EU as an active participant in GATT rounds since the beginning (1948) (double membership)
• Article XXIV GATT
• „defensive approach” within the GATT until the 80s (e.g. agriculture, services)
• „open and liberal approach” during the Uruguay round
• strong support for WTO
• EC/EU as a founding member of WTO (together with EU member states)
• since the 90s EC/EU as one of the strongest proponent of multilateralism
EU
EEC
Iceland
Liechtenstein
Norway
SwitzerlandUkraine
Georgia
MoldovaSouth Korea
Turkey
Canada
USA
Singapore
Japan
Mercosur
Argentina
Brasil
Paraguay
Uruguay
GCC
Saudi Arabia, Bahrajn, Qatar, Kuwait,
Oman, UAE
Mexico
Columbia
Peru
Equador
Chile
Vietnam
Malaysia
Indonesia
Philippines
Papua New Guinea
Fiji
India
Central America
Guatemala, Honduras, Costarica,
Nicaragua, Panama, Salvador
CARIFORUM
Antigua & Barbuda, Bahamas,
Barbados, Belize, Dominica,
Dominican, Grenada, Guyan,
Jamajka, St Kitts i Nevis, St Lucia, St
Vincent & Grenadines, Surinam,
Trynidad & Tobago
ESA
Madagascar
Mauritius
Seychelles
Zimbabwe
SADC
Botswana, Lesotho,
Mozambique, Namibia,
RSA, Suazi
EAC
Burundi, Kenya,
Ruanda, Tanzania,
Uganda
Pacific
Fiji, Kiribati, Micronesia, Nauru, Palau,
Papua New Guinea, Tuvalu, Samoa,
Cook I., Marshalls I., Salomons I., Tonga,
Tuvalu, Vanuatu
ECOWAS
Benin, Burkina Faso, Gambia,
Ghana, Gwinea, Gwinea
Bissau, Liberia, Mali,
Mauretania, Niger, Nigeria,
Senegal, Sierra Leone, Togo,
Wybrzeże Kości Słoniowej,
Wyspy Zielonego Przylądka
ESA
Djibutti, Eritrea, Ethiopia,
Comoros, Malawi, Mauritius,
Madagascar, Seychelles, Sudan,
Zambia, Zimbabwe
CEMACChad, DRC, Gabon, Eq. Guinea, Central African Republic, Republic of
Congo
+ St. Thomas and Prince Islands
Cameroon
Ghana
Ivory Coast
Euro-Med
Algeria, Egypt, Israel
Jordan, Lebanon, Morocco,
Palestynian A., Tunisia,
SAA
Albania, Bosnia &
Herzegovina, Montenegro,
Kosovo, Macedonia,
Serbia
RSA
Thailand
in force
adopted but not yet in force
under negotiations
EU’s trade policybilateralism
• Generalised System of Preferences (GSP, GSP+, EBA)
• unilateral trade defence instruments (e.g. antidumping investigations; embargos)
GSP
GSP GSP+ EBA
EU’s trade policyunilateralism
EU trade policy strategy
in the 21st century
EU trade strategies1999 - „managed globalisation”
• broadly defined ”trade” (services, IPR, public procurement, competition policy, social and environmental aspects related to trade) – new regulations needed at the multilateral level
• new institutional framework for a deep liberalisation of trade and financial flows
• central position for multilateralism• enlargement of WTO• development of WTO regulations (more ambitious and comprehensive regulations) –
„Singapore issues”• ”Lamy’s doctrine” vs. ”competitive liberalisation” (promoted by USA)
EU trade strategies2006 - „Global Europe – competining in the world”
• new strategy and re-orientation of priorities (after WTO ministerial conference in Cancun 2003)
• from multilateralism towards bilateralism/regionalism (FTA)
• new generation FTAs (comprehensive and ambitious in scope) with priority partners:• relatively closed for EU investments and export• economically dynamic market with huge potential• South Korea, ASEAN, Mercosur, Russia, India and GCC
• China – biggest single challenge for EU’s trade policy
EU trade strategies2010 - „Towards strategy 2020”
• stressed the importance of developing and emerging economies
• trade barriers (behind-the-borders) and the threat of growing protectionism
• trade in services, investments and public procurement
• 2013 – important also developed markets (USA, Japan)
EU trade strategies2015 - „Towards strategy 2020”
• trade in services and mobility of specialists
• e-commerce and transborder data flows
• important position and support for SMEs
• greater transparency in CCP
• special support for developing countries (also elements such as human rights, democracy, environment), especially LDCs (EBA for services?)
• nothing about China (market-economy status and BIT) and Russia
Grzegorz Mazur
Institute of International Business and Economics
Poznań University of Economics and Business
Macerata 2019