EU Says Public Procurement Rules, 100% Screening Are Key U.S. Trade Barriers
The European Commission has published its first annual report to the European Council on trade and investment barriers for EU companies in EU strategic partner countries (the U.S., China, India, Russia, Japan, Brazil and Argentina). The report highlights efforts needed to tackle market access barriers related to government procurement, intellectual property rights (IPR) protection, the sustainable supply of raw materials, and customs-related barriers.
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Public Procurement, IPR, Raw Materials, Etc. Are Main EU Trade Policy Challenges
The EC states it is determined to make trade barrier removal in third country markets a corner-stone of its trade relationships. Its main trade policy challenge with strategic partners is not primarily in cutting tariffs, but in overcoming regulatory barriers, gaining better market access for services and investment, opening public procurement markets, better protecting and enforcing IPR, and tackling unjustified barriers hampering the supply of raw materials1. EU exports potentially affected by such measures were 9-12% of EU's total exports in 2009. Thus, solving these barriers would have a significant impact on EU exports.
Tacking Non-Tariff Trade Barriers is Key to Unlocking EU-U.S. Trade Potential
According to the report, given low average tariffs (under 3%), the key to unlocking the large potential of EU-U.S. transatlantic trade lies in tackling non-tariff barriers (NTB). The EC states that the biggest NTB obstacles to fostering this potential lie in the divergence of standards and regulations across the Atlantic, such as in government procurement markets and in imports screening initiatives.
U.S. "Buy American" Initiative Limits Gov't Procurement Markets for EU Bidders
The report states that due to the limited scope of government procurement agreements (GPAs) made by the U.S.2, there is a low level of openness of U.S. government procurement markets to EU bidders. The EC notes that the "Buy American" initiative has further limited effective access to U.S. public procurement markets in areas not covered by U.S. GPA commitments through new discriminatory provisions included in the American Economic Recovery and Reinvestment Act and similar legislation. Such provisions have created uncertainty for foreign operators in the U.S. and effectively exclude them from certain tenders, mainly in the construction sector. Additionally, the prohibition of U.S. government purchases from inverted companies (originally U.S. companies that change tax jurisdiction and invert to another country's tax system), is also harmful to EU companies.
100% Scanning Provisions of Containers Would Seriously Hinder EU-U.S. Trade
The EC states that another barrier potentially having a significant economic and practical impact on EU exports to the U.S. are its 100% scanning provisions. These provisions aim to enhance security by countering potential terrorist threats to the international maritime container trade system by performing 100% scanning of containers before arrival in U.S. ports of all U.S.-bound containers by July 1, 2012. According to the report, the repercussions from these provisions would act as a serious hindrance to EU-U.S. trade. The EC notes that while progress has recently been achieved towards the U.S. recognition of the concept of “authorized economic operator” in the Transatlantic Economic Council (TEC) discussions, the EU will have to continue to closely monitor further developments on this barrier.
EU Says Will be Ready to Raise Market Access Barriers Where Appropriate
The EC states that joint efforts are needed at all levels of EU member states to convey concerted messages to their strategic partners underlining the importance for their bilateral relationship of solving the barriers listed in this report. The EC notes that they already have a number of specific high level forums with some of the EU's strategic partners, such as the TEC with the U.S., the High Level Economic and Trade Dialog with China, or the High Level Group with Japan. The report concludes that while market access and notably regulatory barriers play an important role in these forums, the EU will also have to be ready, where appropriate, to raise market access barriers at Summits and other top level meetings.
Other Trade Issues Include China IPR, Raw Material Imports, Customs Barriers
Additional highlights from the report include EU difficulties with Chinese and Russian markets when exporting IP-protected goods and services; restrictions on export of raw materials imposed by Argentina, Brazil, China, India and Russia; customs-related barriers imposed by Russian customs and the Argentinean import licensing system, etc.
1The EC states these specific barriers were chosen based on recent joint assessments of the situation in the seven countries concerned, such as the key barrier exercise carried out in 2009-10 at the request of the Council, which led to prioritizing 203 barriers for 32 markets, and the continuous monitoring of protectionist measures introduced following the recent economic and financial crisis.
2GPA commitments in the U.S. only cover 3.2% of the U.S. public procurement market, compared to 15% in the EU.