Monday, October 24, 2011

Interview: Mr. Karel de Gucht, European Union Trade Commissioner

In January 2010, Mr. Karel de Gucht, took over as the European Commissioner for Trade. At the same time, in the new Commission the trade portfolio was extended to cover the coordination of industrial relations with other world powers (Transatlantic Economic Council, TEC). Previously, he had served as the development & humanitarian aid commissioner, Belgian deputy prime minister, and Belgian minister of foreign affairs. He has a law degree from the Free University of Brussels, and at the age of 26 become a member of the European Parliament. After 14 years of active experience, Commissioner De Gucht became a Belgian senator, and a year later was elected to the Flemish Parliament as a member of the Vlaams Liberaal Democraten, and served as party chairman from 1999–2003. Commissioner De Gucht is a lawyer and teaches at the Free University of Brussels. In 2002, he received the title of minister of state. In an exclusive interview, Commissioner De Gucht speaks about the EU trade policy, EU-Korea FTA and his priorities:
In November last year, the European Commission laid out its blueprint for an EU trade policy, for five years, to help revitalise Europe’s economy. What are the main elements of this strategy and what has been the progress so far? This is a time when Europe and most of the other developed economies are under the threat of economic stagnation or even decline. We are facing years of constrained demand, arising from the financial crisis and the imbalances it brought to our economies. In this context, the main objective of the EU trade policy is to be a catalyst of growth and employment. Our main tools are the multilateral Doha agenda, as well trade agreements with individual partner countries. The multilateral track is very important as, in my opinion, the WTO framework is what kept the world from sinking into protectionism throughout the economic crisis. Bilateral agreements can also play a very useful and complementary role insofar as they allow us to pursue levels of liberalisation which go beyond the Doha agenda, and to pursue them faster. The EU-Korea FTA is one big achievement of this policy so far. We hope to secure similar deals with other major EU trade partners, such as India and Mercosur. We are also renewing our efforts to ensure that European business gets a fair deal and that our rights are respected. As an example of that, we are working on a EU instrument to help secure better and reciprocal access to public procurement markets in developed countries and large emerging markets. Our studies indicate that in the EU thirty-six million jobs depend directly on indirectly on trade. By completing the already tabled trade agreements, and working together with our partners to further liberalize trade, we can increase the EU GDP by 150 billion euro. To illustrate, this is the same as the GDP of a country like Ireland. Our message to European citizens, companies and Member States is that trade is not a cause our employment problems, but part of the solution, and a vital component of the EU overall strategy for smart, sustainable and inclusive growth. It is now over 100 days since the EU-Korea FTA was implemented. From an EU perspective, do you think the results so far are satisfactory? Although it is quite early to comment on the impact of the EU-Korea FTA after only 3 months of operation, we can already see some benefits materializing: Trade flows had a positive initial response to the FTA, especially on the side of EU exports which showed well over 20% growth relative to 2010. Export sales for certain EU agricultural products such as pork, cheese, wine, chocolate or luxury products such as cars, clothes and accessories have gone up, while prices have decreased for Korean consumers. This is good for EU companies but also for Korean consumers who have wider choice and cheaper prices. At a time of increasing inflationary pressures in Korea, in particular for foodstuffs, this must be a welcome contribution. At consumer level, FTA has created more awareness among Korean consumers and people for EU products. There is also a positive "perception" effect that quality EU products are becoming a better value for Koreans, due to the lower duties. On the regulatory field, since 1st July double certification is not required anymore for most safety standards for EU cars imported into Korea. EU industrial equipment and machinery can also can be self-certified in Europe by the manufacturer for Korean electromagnetic compatibility and electric safety requirements. This is a very important achievement, for two product categories that together represent nearly 40% of the EU exports. We also now have a more solid framework for regulatory co-operation, to try to avoid that any non-tariff barriers that might jeopardize trade between the EU and Korean in the future. In order to maximize benefits from the FTA, EU businesses still need to learn more about its rules, the import procedures and the Korean market. For example, EU exporters need to undergo the necessary procedures with their national customs in order to become approved exporter and thus get the benefit of reduced duties. According to the feedback we received, there is still some work to be done in this respect. The 1st EU-ASEAN Business Summit took place in May this year. What was the outcome of the summit, and what are your views on economic ties with the block of ten countries? This Business Summit was the first experience for us in the context of the annual ASEAN-EU Economic Ministers Consultation. It was a positive experience, in which I was very happy to participate. My previous impressions about the creativity and dynamism of the business environment in South East Asia was confirmed by a full day of discussions which focused on a number of concrete examples and success stories, but also highlighted some of the regulatory barriers in this region, on which we need to focus. ASEAN is a huge market and one of the world's sources of economic growth. We in Europe realize very well that our continued welfare in the decades to come depends on forging stronger links with those sources of growth. Likewise, connecting to the European market will be crucial for ASEAN’s economic success as well. The European Union remains actively engaged with ASEAN as a region as well as with its members as individual countries. We are negotiating free trade agreements with Singapore and Malaysia and our door is open to other ASEAN partners sharing our objective to negotiate trade agreements for the 21st century. Historically, our negotiations with ASEAN have been somewhat complicated by the diversity of the ASEAN member countries. Although we now recognize that there is no 'one size fits all' agreement, our ultimate goal of a regional EU-ASEAN trade agreement remains valid. We are following with great interest ASEAN's steps towards an Economic Community in 2015. We support the ASEAN economic integration process —both politically and economically. With 60 years’ experience of building our own single market, we know both the challenges and the rewards brought by economic integration. The Doha Development Agenda negotiations within the World Trade Organisation continue to be in a state of flux. Do you think there will be any scope for progress on this front? What is the EU position? There is wide agreement on the importance and value of the global multilateral trading system; global trade rules have helped to limit the attempts to protect markets during the current crisis and should be used to roll back protectionism where it has occurred. The WTO has demonstrated its flexibility to adapt to the new realities of the world economy: as a global institution it genuinely reflects the changing balance in the global economy – emerging countries are now major players in the WTO, as demonstrated by their key role in the DDA. Its dispute settlement system is probably the most effective international enforcement body – all WTO members obey its rulings, even if sometimes slowly and imperfectly. The WTO has proven its worth. The EU remains committed to finding a way through the Doha impasse, but to do so will demand even greater political commitment and that requires business to speak up for the Doha Round if we are to succeed. Doha remains a deal worth doing, with important benefits for developing and emerging economies and we are really not so far apart that it could not be done. Today the WTO rules offer an important base line and the successful conclusion of the Doha talks will strengthen that, for example in the chapter on Rules, by addressing non-tariff barriers. The European sovereign debt crisis has rattled the global economy. What are your views on the present crisis? Do you think this will adversely affect the trade relations with other countries? We are well aware that the backlash from the financial and economic crisis has weakened our economic image throughout the world. Our economic recovery is robust but still uneven and several member states have a tough job in adjusting their public finances. But the economic fundamentals of the European Union are still strong and healthy, and the political sense of urgency and effectiveness in dealing with the challenges must not be doubted. The euro will survive the present difficulties and it will come out stronger. Trade is the fuel that powers the global economy. It has been one of the most important factors in the recovery – in Europe and elsewhere. The volume of global trade has recovered from the low point reached in May 2009. In many countries, exports are the only engine of growth, while competitively priced inputs are helping to businesses to keep down costs. The crisis reconfirmed the importance of global trade rules which had been taken for granted. Global trade rules provide an important shield against protectionism and a framework within which the recovery takes place. The WTO has been in charge of monitoring trade restrictive practices and protectionism in the context of the economic crisis and has estimated that new import restrictions introduced by G20 members overall affected a very small fraction of world imports. Significantly, the few protectionist measures we have seen either affected areas not currently covered by the WTO such as government procurement or were introduced by countries that are not yet part of the WTO system. However, the longer the economic crisis lasts, the more we will see protectionist pressures and assorted restrictive measures being introduced, whether in Latin America, in Asia or elsewhere. The current crisis underlines the significance of moving ahead with an ambitious trade agenda to deliver growth much needed to maintain the EU's welfare States. Trade is part of our strategy to exit the current economic crisis. Our agenda will reach beyond tariff barriers and address the regulatory practices that stop trade flowing, particularly between developed and emerging economies.