On Global Trade Alert

Deputy Director General, DG Trade
on the Presentation by Simon Evenett
Brussels Launch of Global Trade Alert
Résidence Palace, 4 September 2009

Peter Balás: Thanks for this opportunity to have a further meeting with Professor Evenett's team, as our colleagues have already met earlier and this shows the interest this initiative has generated also in the Commission and specifically in DG Trade, very much. We find it a very interesting and commendable initiative. It's important, politically, because really, under the present conditions, resisting protectionism is a major issue and it's a short-term issue. While certainly, in the EU's own trade policy objectives, the ongoing negotiations, starting with the Doha Round, are in the focus. It's also clear that those results will come only in the middle term, even under the best circumstances. As you know, just these days a ministerial meeting is going on in Delhi, an informal ministerial trying to give another boost to the Doha negotiations, but even if, as we hope, the negotiations will be completed in 2010, results might not start to be implemented before 2012. It's an awful long time under the present conditions.

On the other hand, there is a big difference between the Doha Round and its predecessor, the Uruguay Round. During the Uruguay Round, there was an ongoing standstill commitment, which meant that there was also monitoring exercise to look at how the standstill has been implemented, which hasn't been able to be agreed upon in the case of the Doha Round. Therefore, we have this economic crisis situation, people had really to rush to put something in place instead and this is perhaps one of the major, if not the major feature of the G20 process when it comes to trade, a kind of a political standstill, however, which formally doesn't exist in the WTO, in the global trade body.

This is a major concern and a major shortcoming and this is one more reason that all efforts by all organizations to look at what happens on the ground and how liberalization might be rolled back are especially important. Therefore, the EU very much support the WTO's exercise, now monitoring exercised that has now been supplemented by other international organizations and covering areas like investment rules, the OECD's and the World Bank's and the IMF's activities.

We also have the Commission and DG Trade, its own monitoring exercise. In our own exercise, what is also publicly available, we try to focus first of all, understandably, on those measures that affect the EU and especially EU's exports as market access is our major business. We also time this recurring, three-monthly service to the issuing of the WTO reports, including now the upcoming force report by the WTO to be ready by Pittsburgh G20 Summit. These reports, therefore, are intended to improve transparency and thereby to generate peer pressure and this is the basis for negotiations bilaterally and multilaterally about various measures taken, specific input into the WTO monitoring exercise and really, as has been mentioned by Professor Everett, to serve as a basis for formulating our trade strategy, how to deal with these issues.

Our own report is now just before being finalized, it will be also available on the public access, its predecessors, and it also gives an interesting picture. Now, let me here make perhaps a brief comparison between the two exercises because it shows that to a large extent we very much agree with the approach but, to be frank, there are also certain differences. That won't come as a surprise.

First of all, although the EU's own monitoring exercise has been in force now for a year or almost a year, we have identified 180 measures, versus over 300 taken and planned measures in the case of Global Trade Alert. It might show on one hand that GTA has a broader net and information basis to look at, but I think that there are also important perhaps methodological differences about how you look at measures. The GTA method has two major advantages, coming from its relative simplicity. It has this "traffic light" system and it is highly quantitative. In our own approach, we found the quantitative aspect and also the qualification of measures somewhat more complicated. And let me give you a few reasons why we see some issues, which have also possible impact on the methodology.

First of all, the qualification of measures. GTA qualifies measures into three groups - red, yellow, green more or less. And based on criteria which we do not quite know but understand it's a kind of expert panel and so it might be interesting to hear what is the more exact criteria for qualifying the various measures. So, we understand and we very much look forward to a more detailed analytical approach that as we understand is upcoming. That we try to do in the Commission, in DG Trade, on reports because we think that the qualification and thereby also the quantification is not as easy as it seems.

First of all, about an issue that we omit the so called "victims" - affected countries. The problem is that we found that it's awfully difficult to determine even for trade measures who are the affected countries. Most of the measures why they are discriminatory in the sense that they protect domestic industry producers versus foreigners, but except for some like anti-dumping and a few others, they are not focused on specific countries. So, in principle, every country is affected. Then who becomes a country who is an affected country? Who has ongoing exports that you can possibly see on the statistics. But, how big those exports are? What about intended exports and even more this is a problem with investment. Because in the case of investment who is an affected country? Who has already investment in the country, but normally investments established are not affected. Very often the investment measures are directed at new potential investors. How do you determine who they are? Which countries and how many? So, this, therefore, are about the effects and especially the quantification of effects at least, we would like to understand more to be able to use that, to what extent the GTA data can be used not just for transparency purposes which is extremely useful, but also as a basis for analysis and drawing conclusions.

Another issue is the treatment of various measures. GTA methodology as we understand doesn't make difference among the basic motives of the measures and it just looks at whether it's discriminatory or not. In our own reports while we also report for instance TDI measures, Trade Defense Measures, we clearly make a distinction between those measures which we consider legitimate reaction, countermeasures from those, especially in this case, to unfair practices, from those that want to simply defend the domestic producers from imports.

This is true for anti-dumping where we are seeing that as long as - and this is a very important qualification - the procedures meet international standards, we certainly would look at it differently than for instance safeguard measures. We simply want temporarily to protect imports. This distinction is even more true for subsidies that are government measures and other governments try to react to it. But, we have found if you understand that even the anti-counterfeiting measures that the US has taken are classified in the system as discriminatory.

The problem is that the GTA by its definition cannot look at especially company level offensive measures. So, the counterfeit, dumping, anti-competitive practices by nature cannot be looked at and quantified, but the government measures that are taken to neutralize these effects are looked at. They are made part of the analysis and are considered as discriminatory. So, therefore, we have at least certain question marks about the conclusions, not about the information, but about the conclusions one might draw from the quantitative elements.

That being said, I want to be very clear that we very much welcome this initiative. This is really, as has been said, a useful complement to the various monitoring efforts. And we would like to commend the colleagues that within such a really short time they were able to set up such an extensive exercise. And we do hope that these exchanges will be something that will prove useful for the future work and making these tools even more useful.