The Foreign Trade Association (FTA), a leading business association of European and international commerce that promotes the values of free trade, has demanded that the European Union’s trade policy be adapted to today’s global value chains.
In a statement, it said the retail sector is an important part of this trade as it not only provides goods for consumers but also contributes a great deal to the European economic growth and generates jobs.
These benefits are in danger as a result of mercantilist views, still dominant in many political discourses stigmatising imports as detrimental. If such an attitude becomes prevalent, it would have serious consequences for many economic sectors that are increasingly dependent on imports and business outside the EU. Limiting imports to Europe would raise business costs and lower competitiveness for EU companies, and possible subsequent retaliation by exporting countries will close export and investment opportunities, the statement warned.
Today’s global value chains require a flexible and modern trade policy that has simple rules. In June 2014, FTA published its road map for EU Trade Policy 2014-2019 to call European decision-makers to develop a highly demanding commercial policy agenda. The FTA said its statement is based on the road map which is formulating in more details the international trade cornerstones for European retailers and importers and brand companies.
The FTA said the best way to achieve economic growth and the advantages mentioned above is through trade agreements and by far the most important facilitator of these is the WTO. It urged the European Commission to do all it can to successfully conclude the Doha Round – even if it means it is less ambitious than its original intent – so that at least some benefits can be realised. Following this, a new round should be launched which contains a more ambitious programme and new objectives. At the same time, it is important that the Trade in Services Agreement (TiSA) and the Information Technology Agreement (ITA) are also concluded successfully.
Of the various bi-lateral trade agreements currently under negotiation, the most important to EU businesses are those with Asian countries as it is here that the majority of sourcing is centred and the scope for expansion and investment is the greatest. In particular, agreements with Vietnam, other ASEAN countries, and India should be concluded as soon as possible and there would be distinct advantages to an investment agreement with China.
The FTA also raised the red flag over protectionist policies adopted by Turkey and Russia.
It said that the principles underlying much of the legislation on which today’s trade relies dates from a time when global sourcing was at levels far lower than today and terms such as “global value chains” were not yet considered. In two areas important to EU retailers, importers and distributors, significant change is required.
The EU’s anti-dumping regime lacks transparency and predictability. The first of these results in a lack of knowledge over what data has been considered and how decisions have been made that result in measures which impact negatively on the price of imports. The second results in an uncertainty about if and when measures will be imposed and the scope and level of those measures and imparts a significant burden on EU importers. Improvements are needed in both of these areas.
While backing EU companies for their concern about social affairs, labour rights and environment, the FTA said it has created two initiatives to enable importers to improve social and environmental conditions in their global supply chains – the Business Social Compliance Initiative (BSCI) and the Business Environmental Performance Initiative (BEPI). Indeed, responsible supply chains are a top priority for the EU retail sector.
However, sustainability can only exist where trade exists and it should not override the goal of greater trade facilitation. Therefore, the EU commercial policy should continue promoting dialogue to augment acceptance of sustainability objectives and core values, without limiting the scope of its mandate which is primarily about easing export and import activities.