REPORT FROM THE COMMISSION TO THE EUROPEAN COUNCIL Trade and Investment Barriers Report 2013
Date: 2013-02-28
Institutions: European Commission
Subjects: China, European undertaking, India, Japan, Mercosur, Russia, United States, common commercial policy, foreign trade, international market, investment abroad, market access

EUROPEAN 
COMMISSION 

Brussels, 28.2.2013  
COM(2013) 103 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN COUNCIL 

Trade and Investment Barriers Report 2013 

EN 

   EN 

 
 
 
 
  
 
REPORT FROM THE COMMISSION TO THE EUROPEAN COUNCIL 

Trade and Investment Barriers Report 2013 

INTRODUCTION 

In 2012, the Commission presented its second Trade and Investment Barriers Report (TIBR) 
to  the  European  Council.  The  report,  as  the  first  one,  implemented  a  mandate  given  in  the 
Europe 2020 Strategy1 which was subsequently taken up in the Commission's Communication 
"Trade, Growth and World Affairs"2. This Communication committed to "produce from 2011 
onwards an annual trade and investment barriers report for the Spring European Council as 
our  key  instrument  to  monitor  trade  barriers  and  protectionist  measures  and  trigger 
appropriate enforcement action". 

The  report  is  meant  to  highlight  a  selection  of  key  barriers  faced  by  European  Union  (EU) 
companies,  and  more  generally  to  raise  awareness  on  the  importance  of  addressing  trade 
obstacles  in  such  way  that  companies  can  fully  reap  the  benefits  of  the  global  market  in 
accordance  not  only  with  what  has  been  negotiated  with  the  EU's  trading  partners  at  the 
multilateral or bilateral level, but also with the commitments taken in other fora to foster free 
trade, e.g. in the context of G20 meetings.  

In view of protracted economic stagnation in the EU, this third report is all the more important 
as  a  pillar  of  our  market  access  strategy  and  as  a  complement  to  the  EU's  ambitious 
negotiating agenda. As pointed out in the Commission Staff Working Document on external 
sources of growth3, the contribution of external demand to economic development is bound to 
increase in the future, as 90% of global economic growth is expected to be generated outside 
the  EU  by  2015.  Moreover,  due  to  the  generalisation  of  interdependent  regional  and  global 
supply  chains,  the  EU  must  confirm  its  prominent  role  as  a  key  value-provider  on  a  global 
scale  be  it  in  manufacturing,  R&D,  design,  logistics,  etc.  In  order  to  fully  consolidate  this 
potential,  stronger  links  with  the  new  global  centres  of  growth  –  that  have  been  largely 
covered  in  the  2012  edition  of  the  TIBR  –  are  therefore  crucial  in  ensuring  sustainable 
economic recovery in the EU.  

To  this  end,  this  third  edition  of  the  TIBR  (2013)  provides  an  account  of  the  progress 
achieved on those barriers identified in previous editions of the TIBR (2011 and 2012) which 
continue to be of concern to EU exporters and could not be fully solved to date. Furthermore, 
the TIBR 2013 also highlights a number of new barriers which appeared in 2012 and deserve 

1  

2 

3  

"Starting  in  2011  and  then  annually  before  the  Spring  European  Council,  a  trade  and  investment 
barriers  report  identifying  ways  to  improve  market  access  and  regulatory  environment  for  EU 
companies"  in  Europe  2020,  A  European  strategy  for  smart,  sustainable  and  inclusive  growth, 
ec.europa.eu/research/era/docs/en/investing-in-research-european-commission-europe-2020-2010.pdf 

Growth 

Trade, 
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0612:FIN:EN:PDF  
trade.ec.europa.eu/doclib/docs/2010/november/tradoc_146955.pdf  

and  World 

Affairs, 

(2010) 

COM 

612, 

9.11.2010., 

eur-

Commission Staff Working Document on external sources of growth, Progress report on EU trade and 
investment 
2012, 
trade.ec.europa.eu/doclib/docs/2012/july/tradoc_149807.pdf  

relationships 

economic 

partners, 

with 

key 

2

 
 
 
                                                 
 
 
 
concerted action and political prioritisation both by the Commission and the Member States in 
certain key markets.  

The focus of this report on some of the EU's strategic partners does obviously not mean that 
barriers  in  other  markets  should  be  neglected.  On  the  contrary,  the  Commission  is  actively 
engaging with a far broader group of trading partners to improve market access conditions for 
EU companies still confronted with a considerable number of trade obstacles.  

Monitoring of trade barriers 

The TIBR is one of the reporting exercises which assess, monitor and address trade barriers 
faced  by  EU  exporters.  These  reporting  exercises  pursue  different  objectives,  although  they 
mechanically overlap to a certain extent: 

First, and as  mentioned above, the TIBR highlights a selection  of  key  barriers  faced  by  EU 
companies in a limited number of markets. It aims at raising awareness at the political level of 
the importance of tackling these barriers as a priority. 

Second,  the  monitoring  of  potentially  trade  restrictive  measures4  (ninth  report  published  in 
June 2012) is a broader exercise to identify measures adopted in the context of the financial 
and  economic  crisis.  This  exercise  demonstrated  that  protectionism  was  on  the  rise  in  the 
markets  of  many  of  our  partners  notably  through  the  implementation  in  several  emerging 
economies of industrialisation policies often based on local content requirements and import 
substitution practices.  

Third, in the context of the Market Access Strategy, and starting in 2009 further to specific 
request  by  the  Council,  DG  TRADE  has  also  been  conducting  a  more  comprehensive  "Key 
barriers  exercise".  It  resulted  in  an  overall  selection  of  220  barriers  in  32  markets.  The 
purpose  is  to  prioritise  among  trade  issues,  by  establishing  with  input  from  Member  States 
and business priority lists not exceeding 10 barriers per country, in order to focus on the most 
economically  and  legally  relevant  ones.  The  list  is  regularly  reviewed  and  accompanied  by 
hymsheets for Member States use  in order  to ensure that  concerted messages  are conveyed. 
This exercise obviously includes barriers in the six countries addressed in the TIBR report, as 
well as barriers in Ukraine, Indonesia, Mexico, Thailand or Israel for instance.  

As  in  the  2012  edition,  this  report  focuses  on  market  access  barriers  in  some  of  the  EU's 
strategic  partners,  i.e.  China,  India,  Japan,  Brazil5,  Russia  and  the  United  States  (US),  for 
three main reasons. First, these selected partners represent the EU's main exports markets, in 
terms  of  goods  (40.9%  of  goods  exports  in  2010),  services  (40.0%)  and  foreign  direct 
investments (41.1% of FDI outward stock): the US is the EU’s 1st export market, China 2nd, 
Russia 4th, Japan 6th, India 8th and Brazil 9th.  

4  

5 

trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149526.pdf  

And in some cases Argentina / Mercosur 

3

 
 
                                                 
 
Share of EU exports of 
goods (2010)
18.0%
8.4%
6.4%
3.3%
2.6%
2.3%
59.1%
1349.6

Share of EU exports of 
services (2010)
23.9%
4.2%
4.3%
3.7%
2.0%
1.8%
60.0%
531.9

Share of EU FDI - 
outward stock (2010)
28.8%
1.8%
2.9%
2.3%
0.8%
4.5%
58.9%
4152.0

US
China
Russia
Japan
India
Brazil
Other
Total (bn€)

Second, among its ten largest export markets, the EU already has preferential trade relations 
with  the  other  partners:  Norway  and  Switzerland  have  access  to  the  internal  market 
respectively  through  the  European  Economic  Area  and  specific  agreements;  the  customs 
unions  with  Turkey;  and  since  2011  the  Free  Trade  Agreement  (FTA)  with  South  Korea. 
Trade relations with these four partners are therefore facilitated by specific trade instruments 
that provide additional channels to address trade barriers, as opposed to the six key partners 
identified in this report.  

EU exports of goods to the rest of the 
world (2010)

US
China
Switzerland
Russia
Turkey
Japan
Norway
India
Brazil
South Korea
Other
Total

bn€
242.3
113.3
105.4
86.1
61.2
43.9
41.9
34.8
31.4
28.0
561.3
1349.6

%
18.0%
8.4%
7.8%
6.4%
4.5%
3.3%
3.1%
2.6%
2.3%
2.1%
41.6%
100.0%  

Finally, these strategic partners represent markets with strong growth potential for EU trade 
and  investment.  Emerging  countries  such  as  Brazil,  India,  China  and  to  a  certain  extent 
Russia, i.e. the so-called BRICs countries, will indeed continue to provide an increasing share 
of future opportunities  for EU businesses. Over the 2007-2011 period, China's GDP growth 
averaged 9.3%, India's 6.9%, Russia's 4.3% and Brazil's 2.7%, according to the World Bank6. 
Conversely the EU's GDP declined by 0.2% on average over the period and may stall over the 
next three years, with 0.4% of annual growth on average over the 2012-2014 period according 
to  the  Commission's  2012  autumn  forecasts7.  This  implies  that  exports  to  these  countries  is 
expected to play a pivotal role in driving the EU's future exports growth which is estimated to 
average 3.6% over the 2012-2014 period. Trade balance has not only mitigated the effects of 
the crisis since 2010, it is also foreseen as the main growth driver in 2013, as it was in 2011 
and 2012. 

6  

7  

data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries?display=default  

ec.europa.eu/economy_finance/publications/european_economy/2012/pdf/ee-2012-7_en.pdf  

4

 
 
 
                                                 
 
  
However, trade with the strategic partners identified in this report, although very significant, 
is  far  from  having  delivered  its  full  potential,  partly  because  these  markets  are  growing 
extremely  quickly  and  will  most  likely  continue  to  do  so,  but  mostly  because  they  are  not 
sufficiently open to EU exports. The fact that this trend has been confirmed in 2012 and that 
the  situation  has  further  deteriorated  in  a  number  of  these  key  markets  justifies  this  year's 
renewed focus on this limited number of partners. 

All  too  often,  EU  companies  still  face  considerable  barriers  entering  these  foreign  markets. 
Obstacles  usually  take  the  form  of  non-tariff  barriers  (NTBs),  such  as  technical  regulations 
and conformity assessment procedures, burdensome customs procedures or weak enforcement 
of intellectual property rights (IPR). The EU has been effectively addressing these matters in 
the  framework  of  the  Market  Access  Partnership.  Considering,  however,  that  these  barriers 
often proliferate in areas where multilateral trade disciplines are still rather incomplete – such 
as  in  government  procurement,  and  export  restrictions  –  the  further  development  of 
disciplines  going  beyond  the  current  WTO  rulebook  through  our  trade  negotiations  agenda 
remains an overarching priority. 

Over the past year and in parallel to its enforcement efforts, the EU has therefore proactively 
pursued its ambitious negotiating agenda. The FTA with Korea entered into force on 1 July 
2011 and has already started to provide significant economic benefits to EU companies and 
consumers.  Bilateral  trade  negotiations  were  concluded  with  Central  America,  along  with 
Peru and Colombia and these agreements received the consent of the European Parliament in 
December  2012.  Negotiations  for  a  Deep  and  Comprehensive  Free  Trade  Agreement 
(DCFTA)  including  far-reaching  disciplines  on  technical  and  regulatory  issues  have  been 
concluded with Ukraine and in December 2012 negotiations on an FTA with Singapore were 
completed. Trade talks with Canada are in their final phase. Meanwhile, negotiations are still 
on-going  with  India,  Mercosur,  Malaysia,  Armenia,  Georgia  and  Moldova,  and  have  been 
launched with Vietnam in 2012. In December 2011, the Council authorised launch of DCFTA 
negotiations  with  Morocco.  With  regard  to  Japan,  further  to  a  fruitful  scoping  exercise 
including  specific  provisions  related  to  NTBs,  the  Council  authorised  the  launch  of  FTA 
negotiations,  in  November  2012.  With  regard  to  the  US,  the  EU's  first  trading  partner, 

5

 
 
 
preparations are now underway to launch FTA negotiations. Indeed the High Level Working 
Group on Jobs and Growth has now delivered its final report, recommending negotiations on 
a comprehensive Transatlantic Trade and Investment Partnership. 

Preparatory talks have started with Tunisia, Jordan, Egypt and Morocco with a view to launch 
DCFTA  negotiations  once  the  countries  are  ready.  Finally,  discussions  are  also  being  held 
with  Indonesia,  Thailand  and  the  Philippines  in  view  of  possible  trade  talks  that  would 
complement  this  challenging  FTA  agenda  in  the  ASEAN  region.  Russia's  accession  to  the 
WTO,  an  important  trade  event  in  2012,  has  opened  new  perspectives  for  the  on-going 
negotiation  of  a  New  Agreement  designed  to  replace  the  Partnership  and  Cooperation 
Agreement  (PCA).  Further  to  discussions  at  the  EU-China  summit,  preparatory  work  is  on-
going with a view to launch talks on a stand-alone investment agreement. Finally, with regard 
to the two largest economies in the world, the US and China, the EU is engaged in high-level 
dialogues with both dealing, inter alia, with market access barriers.  

Trade  negotiations  and  enforcement  efforts  must  go  hand  in  hand  to  guarantee  the  EU's 
insertion  in  global  value  chains  and  ensure  stable  and  predictable  framework  conditions  for 
business  activities  worldwide.  Without  an  assertive  enforcement  strategy,  implemented 
simultaneously  through  trade  diplomacy,  dispute  settlement  and  negotiations,  and  implying 
action at different levels including at the highest political level notably in summits with third 
countries, the EU cannot guarantee the level playing field it owes to its business community 
on the global market. The Commission, Member States, and industry must continue to work 
together  in  accordance  with  the  Market  Access  Strategy  to  ensure  that  barriers  in  third 
countries are removed, and that attempts to apply new barriers are challenged. This way, EU 
companies  will  benefit  from  better  access  to  rapidly  expanding  foreign  markets  and 
effectively contribute to the EU's economic recovery.  

This third edition of the TIBR is structured as follows: Section 1 describes progress achieved 
with  regard  to  barriers  identified  in  the  last  report  and  options  for  further  action  where 
progress  is  not  yet  satisfactory.  Section  2  identifies  a  number  of  other  barriers  for  priority 
action  in  the  future.  Section  3  reflects  on  how  to  combine  available  tools  to  tackle  trade 
barriers in the most efficient manner. 

1.  2012 BARRIERS: WHAT PROGRESS WAS ACHIEVED? 

The TIBR 2012 identified 25 barriers in six trade partners / regions (US, China, Japan, India, 
Russia and Brazil / Argentina). These barriers were considered to be of major importance for 
EU business given the potential economic or systemic impact and the strategic importance of 
the  countries  where  those  barriers  had  emerged.  These  market  access  issues  have  been 
elevated  to  key  priorities  in  the  EU's  bilateral  trade  relations  with  the  countries  concerned. 
This means that the Commission has systematically raised them in all bilateral meetings, often 
up to the highest political level (e.g. summits). In addition, it should also be mentioned that 
Russia's  WTO  accession  on  22  August  2012  has  triggered  a  potential  for  solving  many 
longstanding market access issues, although new barriers have been erected in the course of 
this process. 

This  section  will  report  on  the  progress  achieved  in  the  course  of  2012.  In  some  cases, 
progress has translated into the full removal of a barrier. In other cases, some  improvement 
has  been  achieved,  while  part  of  the  barrier  remains.  For  a  few  barriers,  the  situation  has 

6

 
 
 
deteriorated as compared to last year notwithstanding the numerous actions undertaken. The 
analysis in this section will be carried out on these three categories according to the degree of 
progress achieved.  

a.  Barriers where substantial progress was achieved 

For  China,  positive  developments  can  be  reported  on  the  EU's  action  to  address  export 
restrictions on raw materials. A WTO dispute settlement case was initiated on 23 June 2009 
by  the  EU  and  US,  followed  by  Mexico.  On  31  January  2012,  the  Appellate  Body  report 
upheld all the key claims raised by the EU, and confirmed the findings made by the panel in 
July  2011.  It  confirmed  that  China's  export  restrictions  on  several  industrial  raw  materials 
were in breach of China's WTO commitments and that the restrictions could not be justified 
for  reasons  of  environmental  protection  or  conservation  policy.  This  was  a  very  significant 
economic and systemic success, enforcing the rules that China has agreed to abide with when 
acceding  to  the  WTO.  China  had  been  granted  until  31  December  2012  for  implementation 
and has announced at the end of the year implementation measures which remove the export 
duties as well as the quotas. However, China subjects almost all products previously subject 
to a quota to export license requirements. The Commission will continue to monitor closely 
the  situation  and  the  development  of  exports,  and  in  particular  the  newly  introduced  export 
licensing requirements. 

On  13  March  2012,  a  second  case  was  launched  against  China,  as  the  EU,  US  and  Japan 
requested  consultations  on  China's  export  restrictions  of  rare  earths,  tungsten  and 
molybdenum. A panel has been set-up and a ruling is expected towards the end of 2013. 

With  regard  to  India,  the  TIBR  reported  last  year  that  progress  had  been  achieved  against 
quantitative  restrictions  introduced  in  2010  on  the  export  of  cotton,  namely  on  cotton  yarn 
and  raw  cotton.  In  August  2011,  the  Indian  government  had  indeed  lifted  all  remaining 
quantitative  restrictions  on  raw  cotton.  However,  this  progress  was  threatened  immediately 
after the TIBR publication in 2012 since a new partial ban was introduced on 5 March 2012 
prior  to  a  formal  removal  on  4  May.  Following  bilateral  and  sectoral  talks  with  the  Indian 
Government,  the  EU  obtained  commitments  from  the  Indian  side  not  to  introduce  export 
restrictions in the next season. 

In  Japan,  some  progress  had  been  reported  in  last  year's  TIBR.  Following  the  EU-Japan 
summit in May 2011, a scoping exercise was launched with a view to exploring the range and 
level  of  ambition  of  future  FTA  negotiations.  In  2012,  a  comprehensive  list  of  NTBs  was 
discussed  in  the  context  of  this  scoping  exercise.  On  some  of  these  identified  problems  the 
scoping  exercise  has  already  produced  results,  and  the  following  NTBs  included  in  the  list 
have now been solved: organic  food, liquor wholesale  licensing, transparency, expansion of 
Japan-EU mutual recognition agreement on good manufacturing practices on pharmaceuticals 
to  12  new  EU  Member  States,  and  designation  of  two  food  additives,  while  good  progress 
have been made towards the resolution of issues related to pyrotechnic safety devices in the 
car sector and the predictability of pricing of pharmaceuticals. Japan has also decided to lift 
the  ban  on  import  of  beef  from  France  and  the  Netherlands  for  animals  of  less  than  30 
months. The applications from other Member States are now being examined. It is expected 
that the effective opening would take place during spring 2013. In a number of other cases, 
such  as  radio  equipment,  medical  devices,  automotive  or  pharmaceuticals,  further  steps  to 
address  the  EU's  concerns  should  be  taken  by  Japan  before  end  of  March  2013.  For  the 
remaining issues, the future FTA negotiations should enable further progress to be made. 

7

 
 
With the WTO accession of Russia on 22 August 2012, the Russian import tariffs were bound 
for the first time. The main impact was the removal of the tariff hikes adopted in 2008 during 
the crisis.  

b.  Barriers where some progress was achieved 

The TIBR 2011 had indicated that the Commission's persistent action had paid off for one of 
the most systemic issues on the list of bilateral trade irritants with China. Important progress 
was indeed achieved in the first half of 2011 on the so-called "indigenous innovation" policy 
which is based on the principle of providing access to public procurement only for innovative 
products whose intellectual property is of Chinese origin.  

The  Ministry  of  Finance  had  repealed  3  basic  regulations  early  July  2011,  and  political 
announcements were made at the highest level. However, there is still evidence that pieces of 
legislation  that  call  for  the  synchronization  of  technology  standards  with  indigenous 
innovation  developments  are  being  published  at  the  regional  level  (e.g.  Guangdong 
government  regulation  which  came  into  force  in  March  2012).  Similarly,  elements  of 
indigenous  innovation  continue  to  reappear  under  one  form  or  another,  whether  on 
information  security  standards  developed  in  support  of  the  Multi-Level  Protection  System 
(MLPS),  or  new  government  procurement  catalogues,  such  as  cars  for  officials  or  party 
leaders,  or  the  new  draft  catalogue  by  the  National  Development  and  Reform  Commission 
(NDRC)  on  strategic  emerging  industries.  Progress  therefore  remains  fragile:  decoupling 
between  indigenous  innovation  policy  and  public  procurement  does  not  seem  to  be  a  fully 
established policy, and detailed monitoring remains required, especially as recent legislation 
appears to be increasingly sophisticated. 

In  the  area  of  standardisation  and  technical  regulation, Chinese  barriers  in  the  information 
security  sector  that  were  identified  as  a  priority  (e.g.  Office  of  the  State  Commercial 
Cryptography Administration [OSCCA] regulation on commercial encryption and the MLPS) 
continued to cause concern. Some limited progress8 has been made but difficulties remain on 
obtaining  OSCCA  certification  for  products  with  encryption,  and  implementation  of  the 
MLPS continues. 

Other issues of concern are Chinese export financing conditions and subsidies. China uses 
export credits which raise questions with respect to the OECD / WTO disciplines, in order to 
boost national champions' exports in capital-intensive, often high-tech, sectors. Some progress 
was  achieved  in  2012  since  China  has  signalled  its  willingness  in  principle  to  enter  into 
international  negotiations  regarding  export  financing  conditions.  A  first  meeting  of  an 
international working group was held in November 2012, and China has offered to host the 
next session in May 2013. The negotiation process has not had an easy start however. In order 
to  allow  the  participants  in  the  international  working  group  to  discuss  export  credit  issues 
further  at  an  informal  level  the  EU  will  host in  the  meantime  a  technical  meeting  in  March 
2013. 

8 A China Compulsory Certification for Information Security Products (CC-IS) was granted to a foreign-owned 
enterprise (FOE) in May 2012, on the basis of an Encryption Testing licence from OSCCA. This was the first 
time  an  Encryption  Testing  license  had  been  granted  by  OSCCA  to  a  FOE.  However,  certification  was 
contingent  on  a  need  for  the  chip  used  on  the  smart  card  to  be  produced  by  a  Chinese  semiconductor 
manufacturer  with  embedded  Chinese  national  encryption  algorithms  (Source:  European  Union  Chamber  in 
China Position Paper 2012).  

8

 
 
                                                 
 
Last  year,  the  TIBR  mentioned  that  no  substantial  progress  had  been  achieved  in  India  on 
opening  to  foreign  investment  certain  sectors,  such  as  retail,  legal  services,  accountancy, 
insurance, banking and financial services. Equally, concerns persisted over the reform of the 
postal sector and potential negative impacts on express delivery services. However, in 2012, 
the  government  appears  to  have  embarked  on  an  economic  reform  agenda.  Some  concrete 
results of this process are opening of retail (single and multi-brand) to FDI and the decision to 
increase FDI in airlines. Other reforms being considered by Parliament are banking reforms 
and opening of insurance to FDI, both of which would confirm the intention of government to 
continue on the path of economic reform. 

introduced 

the  security  requirements 

Also  in  India,  some  limited  progress  was  achieved  on  telecoms  security  clearance 
in  2010  for 
requirements.  First,  concerning 
telecommunication  equipment:  these  were  finally  modified  in  order  to  eliminate  the  most 
burdensome  conditions  in  particular  removal  of  the  initial  requirement  to  escrow  source 
codes.  There  are  still  concerns  regarding  the  requirement  to  certify  equipment  deemed  of 
security  concerns  in  India,  contrary  to  international  practices  which  work  on  mutual 
recognition criteria. India has also been implementing a certification regime by the Bureau of 
Indian Standards (BIS) on imported and exported tyres for a long time. In September 2012, 
India removed one of the most burdensome elements of the scheme, notably the prohibition of 
selling  IS-marked  (Indian  Standard)  tyres  outside  the  Indian  market.  This  had  been  a  long 
standing request of the EU industry. However, a number of problems on the certification of 
tyres  remain  (fees  charged  per  tyre,  lengthy  procedures,  factory  inspections,  and  required 
bank guarantees, etc.). Regarding BIS certification of steel products, India has postponed the 
entry  into  force  of  the  certification  requirements  for  some  products  until  March  2013 
(previously  September  2012).  However, 
remain 
disproportionate and not in line with international practices in this area (factory inspections, 
long  deadlines,  excessive  testing,  fees).  The  certification  regimes  for  both  tyres  and  steel 
products  have  been  notified  by  India  under  the  WTO  Agreement  on  Technical  Barriers  to 
Trade  (TBT  Agreement)  and  are  regularly  being  discussed  in  the  framework  of  the  TBT 
Committee. 

requirements 

certification 

the 

In  the  US,  the  progress  reported  in  last  year's  TIBR  has  been  confirmed.  The  TIBR  had 
indicated  that  progress  had  been  achieved  as  regards  the  "100%  scanning"  legislation. 
Indeed,  as  a  result  of  a  number  of  actions,  including  from  the  EU,  the  US  Department  of 
Homeland  Security  delayed  the  requirements  for  100%  container  scanning  that  were 
scheduled  to  take  effect  in  July  2012,  for  two  years.  In  their  trade  policy  review,  the  US 
confirmed that the deadline for 100% scanning will not go into effect until 1 July 2014. The 
statutory requirement still applies but the deadline for implementation has been changed. The 
Secretary  of  Homeland  Security  has  the  authority  to  extend  it  again  at  that  time  but  no 
decision on such a further extension has been reached yet. 

Also  in  the  US,  while  this  legislation  remains  problematic  as  such,  there  had  been  some 
success  with  regard  to  the  "Buy  American"  legislation.  The  stimulus  package  introduced 
during the financial crisis in 2009 which contained far-reaching "Buy American" provisions 
expired in September 2011 and was not prolonged. 

On 25 January 2013, 8 months after the launch of the WTO dispute settlement consultations 
on trade-restrictive measures, Argentina repealed the non-automatic import licences. This is 
an important move and a result of EU's continuous efforts to bring Argentina into conformity 
with  its  WTO  obligations,  and  an  indication  that  the  WTO  dispute  settlement  mechanism 
serves its purpose. However, it does not address the entire set of trade-restrictive measures in 

9

 
 
force in Argentina. Accordingly, the EU has requested on 28 January 2013 a WTO panel to 
seek removal of two other illegal measures (see next section). 

c.  Barriers where no progress was achieved in 2012 

In  spite  of  action  undertaken  by  the  EU  during  2012,  including  in  some  cases  addressing 
issues at the highest political level, no significant progress could be achieved on a number of 
barriers which will remain on the list of priorities for 2013.  

Investment  continues  to  be  a  crucial  area  in  bilateral  relations  with  China,  given  the  vast 
potential offered by this country. Nevertheless, investment barriers persist and the picture has 
barely improved over the past year. The Foreign Investment Catalogue that was revised at the 
end  of  2011  was  disappointing  in  the  sense  that  it  indicated  liberalisation  in  only  a  limited 
number  of  areas,  while  in  some  other  areas  market  access  was  even  further  restricted.  An 
example  of  deterioration  is  foreign  investment  in  "components  manufacturing"  for  the 
automotive  industry  that  had  been  legally  "unrestricted"  until  the  adoption  of  the  2011 
Foreign Investment Catalogue. The end 2011 catalogue now restricts investment for electric 
vehicle batteries to a maximum of 50%. Although at the EU-China summit of 20 September 
2012  both  sides  reconfirmed  willingness  to  prepare  towards  the  launch  of  investment 
negotiations,  preliminary  contacts  between  the  two  administrations  continue  as  internal 
preparations on both sides are still on-going. 2012 has seen numerous official statements on 
further  opening  to  investments,  particularly  in  the  area  of  services.  It  remains  to  be  seen 
whether this will be followed up in practice. 

In the course of 2011, China adopted a national security review mechanism for mergers 
and acquisitions involving foreign investors, whereby China could block foreign acquisitions 
on  the  grounds  of  national  security  considerations.  The  final  mechanism  was  adopted  in 
September  2011.  The  problem  is  not  the  introduction  of  such  a  mechanism  per  se  (such 
mechanisms also exist in certain EU Member States), but that it has a very broad application – 
both  with  regards  to  sectors  and  the  definition  of  national  security  –  extending  far  beyond 
agreed international (OECD) principles. No progress can be reported and we are aware of a 
recent case involving a joint venture with an EU company that is currently going through the 
FDI screening mechanism where procedures and rules are still unclear and unpredictable, thus 
generating high uncertainty and discouraging potential investors. 

India's  new  policy  framework  on  telecoms  is  still  in  the  process  of  being  developed  but 
some  already  published  parts  of  the  policy  contain  local  content  requirements  (minimum 
30%) which favour domestically produced equipment and electronic products in procurement 
procedures.  Similar  provisions  exist  in  other  industrial  areas,  such  as  renewable  energy  and 
the  solar  energy  production.  While  India  is  not  a  party  to  the  Government  Procurement 
Agreement, these policy developments are rather worrying, in particular in the context of the 
current FTA negotiations, as they confirm India's intention to promote national champions in 
key  industrial  sectors  where  EU  operators  have  significant  stakes  in  India.  These  policies 
could  therefore  endanger  the  current  business  opportunities  in  India.  As  another  worrisome 
development, it is also important to note that India plans to impose local content requirements 
in private procurement of telecom equipment in relation to security sensitive considerations, a 
project which is of high concern to the industry.  

As  reported  last  year  some  progress  was  achieved  in  2011  with  India  on  Sanitary  and 
phytosanitary  (SPS)  issues.  More  specifically,  improved  prospects  of  alignment  to 
international standards were obtained on bovine genetic material (semen). However, despite 

10

 
 
India's commitment to amend these import conditions, no significant real progress was seen in 
2012.  The  Commission  continues  to  follow-up  closely  with  India  on  this  issue  but  remains 
worried  about  the  general  approach  of  India  of  keeping  unjustified  and  unnecessary  SPS 
measures as a way to maintain its agri-food market closed to imports. 

In  2011,  no  improvements  had  been  obtained  on  the  barriers  identified  for  the  Mercosur 
countries,  where,  on  the  contrary,  we  had  observed  the  continuation  of  some  protectionist 
tendencies notably with regard to the measures in place in Argentina and Brazil. For some of 
these  barriers  (e.g.  restrictions  in  maritime  transport  and  export  restrictions  on  raw 
materials  in  Argentina  and  Brazil),  the  FTA  negotiation  was  envisaged  as  the  main 
framework  for  these  issues  to  be  discussed.  Although  negotiations  with  Mercosur  have 
progressed  very  slowly,  on  26  January  2013  the  parties  agreed  at  ministerial  level  that  an 
exchange of offers will take place no later than the last quarter of 2013. 

increasing.  Argentina's  policy  on 

import  restricting  measures  are 

Overall, 
re-
industrialisation  and  import  substitution  is  on-going  and  discriminates  imports.  In  February 
2012,  Argentina  implemented  a  new  single  electronic  window  for  all  imports  with  an 
obligation  of  sworn  prior  importer  declarations  on  all  imports,  subject  to  discretionary 
approvals of various State Agencies. This adds to already serious delays of imports in many 
sectors. In April 2012, this system was extended to the services sector. Foreign companies are 
also  increasingly  affected  by  restrictions  of  transferring  foreign  currencies,  dividends  and 
royalties.  In  addition,  importers  have  to  respect  import  balancing  requirements.  These 
measures are at odds, in particular with the prohibition to institute quantitative restrictions as 
well as the obligation of non-discrimination and national treatment principle under the GATT 
1994 and the rules of the Agreement on Import Licensing Procedures. On 25 May 2012, the 
EU requested WTO dispute settlement consultations on non-automatic licenses (which were 
repealed  in  January  2013  –  see  above),  sworn  prior  importer  declarations  and  import 
balancing requirements but the consultations of July brought no results. On 6 December 2012 
the EU asked the WTO to rule over the legality of Argentina's trade-restrictive measures and 
to  establish  a  panel.  The  US  and  Japan  have  requested  the  establishment  of  a  panel  on  the 
same day on the same measures.  

Argentina also maintained restrictions in the reinsurance services sector. In February 2011, 
the Argentine insurance regulator (Superintendencia de Seguros de la Nacion or SSN) issued 
a resolution modifying the regulatory framework for reinsurance. Among its main provisions, 
the new regulation restricts market access by only authorising national companies or locally-
established branches of foreign companies to provide reinsurance services in the country. No 
progress has been achieved. 

The  situation  did  not  improve  as  regards  access  to  government  procurement  in  Brazil.  In 
2010,  Brazil  introduced  a  25%  horizontal  preference  margin  in  its  national  public 
procurement  law,  which  was  immediately  applied  to  the  Information  and  communications 
technology sector. No progress has been made in 2012. 

Brazil also tightened its procedures for imports of textiles and clothing by means of stricter 
customs  controls  since  the  last  quarter  of  2011.  Textiles  and  clothing  imports  are  passing 
through the grey and red customs procedures. This means that goods are subject to physical 
inspection and samples can be subject to laboratory tests. No progress can be reported. 

11

 
 
 
2.  OTHER  SIGNIFICANT  BARRIERS  INCLUDING  PRIORITIES  FOR  THIS 

YEAR'S TIBR  

In addition to the barriers identified as unsolved in the 2012 TIBR, a number of new market 
access  barriers  that  have  emerged  this  year  have  been  included  in  the  list  of  priorities  for 
enforcement action.  

a.  New barriers 

The 2012 TIBR reported that in September 2011, Brazil had increased the tax on industrial 
products (IPI) on sales of automotive vehicles and trucks that do not meet certain conditions 
of local production. The temporary IPI rules of 2011 were replaced by new rules in October 
2012  for  the  period  2013-2017,  with  further  conditions  and  requirements  (the  so-called 
INOVAR-AUTO  support  programme).  Local  manufacturers  will  be  able  to  benefit  from 
reductions  on  the  IPI  tax  if  they  comply  with  conditions  concerning,  among  other  things, 
investment  in  R&D  and  performance  of  an  increasing  number  of  manufacturing  steps  in 
Brazil. Tax reductions are granted in the form of an incremental tax credit that is linked to the 
use  of  domestically  produced  car  parts.  Brazil  has  therefore  prolonged,  in  essence,  the 
discriminatory tax regime initially put in place in 2011. The 2013-2017 regime continues to 
provide incentives for local production to the detriment of imports.  

The  use  of indirect taxes  to  afford  protection  to  Brazilian manufacturers  against  imports  is 
not limited to the automotive sector. Problematic measures have been reported also in other 
sectors,  such  as  electronics  and  telecommunication  equipment.  There  is  concern  about  the 
possible  extension  of  questionable  tax  practices  to  more  areas,  including  with  the  aim  of 
subsidising Brazilian exporting companies.  

The  problems  detected  with  regard  to  internal  taxation  are  further  compounded  by  Brazil's 
decision, in October 2012, following a Mercosur summit decision, to raise tariffs on a 100 
lines up to WTO bound rates as an exception to the common Mercosur tariff. While this is 
not  in  breach  of  WTO  commitments,  the  decision  does  not  conform  to  the  G20's  political 
commitment to refrain from taking import restricting measures. Many products are included, 
such  as  ceramic  products  and  refractories,  paper,  viscose  yarns,  processed  potatoes, 
chemicals,  etc.,  many  of  which  are  of  significant  economic  importance  for  the  EU.  An 
additional tariff hike of 100 lines as exception to the common Mercosur tariff is expected in 
early 2013. 

On  cars  there  is  a  trend  in  Brazil  to  implement  own  domestic  regulations  and  own 
certification  procedures  for  car  parts  whereas  in  the  past  UNECE  certified  and  marked 
products were accepted in Brazil without additional testing, certification or marking. Ideally, 
Brazil  should  join  the  multilateral  agreement  on  the  adoption  of  uniform  technical 
prescriptions  and  reciprocal  recognition  of  approvals  for  cars  and  car  parts  (UNECE  1958 
Agreement)  but  political  will  to  do  so  is  not  secured.  Alternatively  ways  to  facilitate  the 
acceptance by Brazil of conformity assessment procedures (testing and audits) carried out in 
the EU would help EU manufacturers.  

The local content requirements trend mentioned in the case of Brazil and India as detailed 
above can also be observed in China, although local content requirements are generally not 
published in national or local Chinese regulations. That does not mean that they do not exist, 
but  rather  that  they  have  become  more  sophisticated  and  hidden  than  in  the  past.  In  recent 
years,  government  procurement  has  also  arisen  as  a  major  area  of  concern.  Public 

12

 
 
procurement  in  China  is  mainly  governed  by  two  laws  –  the  Government  Procurement  law 
(estimated  market  value  CNY  1.13  trillion,  and  which  does  not  apply  to  State  owned 
enterprises  [SOEs])  and  the  Bidding  and  Tendering  Law  (estimated  market  value  CNY  8.3 
trillion,  and  which  applies  to  SOEs).  In  some  cases  local  governments  have  stipulated  local 
content  requirements  of  70%.  In  practice,  the  requirement  of  "domestic  goods"  in  bidding 
documents  and  the  lack  of  clear  guidance  on  the  definition  of  such  "domestic  goods"  have 
prevented foreign invested companies established in China from having equal access to public 
procurement contracts.  

In  Argentina,  the  government  has  worryingly  and  actively  pursued  that  certain  sectors  and 
industries increase  local  content  in  their  production  process  in  the  last  years.  As  a  result,  a 
wide  range  of  sectors  and  industries  are  bound  by  local  content  requirements  including: 
mining,  automotives,  footwear,  agriculture,  machinery,  construction  materials,  medicines, 
chemicals and textiles. Services sectors are also highly concerned by the government policy: 
bank, insurance and media services are bound by heavy local content requirements. 

In  April  2012,  in  Argentina,  the  Government  took  the  decision  to  expropriate  51%  of  YPF 
shares  owned  by  the  Spanish  company  Repsol  and  51%  of  the  shares  in  Repsol  YPF  GAS 
S.A.,  owned  by  the  Spanish  company  Repsol  Butano  S.A..  First,  this  expropriation  may  be 
discriminatory as only one shareholders' shares in YPF were expropriated, not others. Second, 
contrary  to  the  Spain-Argentina  Bilateral  Investment  Treaty  provisions,  Argentina  has  not 
provided any compensation for the loss of the former owner. 

India  has  recently  notified  the  TBT  Committee  of  its  intention  to  impose  a  compulsory 
registration scheme on electronic and information technology goods. The system at stake 
(e.g.  obligation  to  test  the  products  in  Indian  laboratories  as  of  April  2013)  establishes  a 
conformity  assessment  procedure  which  is  stricter  than  necessary  as  regards  the  risks  non-
conformity would create. In the EU, such products are considered low risk products and are 
therefore subject to suppliers' declaration of conformity. EU-India trade on these products can 
be significantly affected.  

A further case of concern is China’s VAT exemption for domestically produced regional 
aircraft.  This  exemption  raises  serious  difficulties  under  the  non-discrimination  WTO 
obligations  and  hampers  market  access  for  foreign  producers.  The  issue  will  be  further 
pursued so that China brings itself into compliance with its international commitments. 

b.  Russia  –  new  barriers  upon  WTO  accession,  in  addition  to  longstanding 

market access issues 

Russia  has  concluded  its  18  year  negotiation  process  towards  WTO  accession  and  formally 
acceded to  the WTO on 22 August 2012. This accession  is  welcomed  as  a  milestone  in  the 
improvement  of  trade  relations  with  this  country.  However,  in  the  run  up  of  its  accession 
Russia maintained or adopted a series of protectionist measures, the majority of which are not 
in compliance with Russia's WTO commitments. 

As regards the cars recycling fee for vehicles,  as  from  1  September  2012,  new  framework 
legislation and its implementing decree came into force, establishing a recycling system with 
recycling  fees  for  vehicles  to  be  put  in  circulation.  Domestic  manufacturers  can  give  a 
guarantee concerning the recycling of their vehicles instead of paying the fee, while foreign 
suppliers must pay the fee as a condition for the registration of the imported car – a clearly 
discriminatory measure. Bilateral negotiations are on-going with a view to finding a solution 

13

 
 
 
on  this  issue.  If  no  results  can  be  achieved,  the  EU  will  consider  launching  a  WTO  dispute 
settlement proceeding. 

For  a  wide  range  of  products  including  used  vehicles,  paper,  car  bodies  and  several  others, 
Russia is applying since its WTO accession import tariffs that are higher than the committed 
(so-called bound) levels (e.g. by adding a specific duty in the form of a minimum import price 
to the existing ad valorem duty)9. These measures which are in breach of WTO commitments 
should  be  terminated  rapidly.  Bilateral  negotiations  are  on-going.  Some  progress  has  been 
achieved  toward  the  amendment  of  a  number  of  tariff  lines  by  1  March  2013,  but  not  as 
regards tariffs on car bodies.  

On TBT, a number of technical regulations (e.g. alcoholic drinks, cars and textiles) have been 
recently prepared in the context of the Russia, Kazakhstan, Belarus Customs Union (CU). If 
these  are  approved  in  the  current  form  they  will  amount  to  difficulties  for  EU  operators  to 
place  their  products  on  the  Russian  market.  Russia  has  been  asked  to  comply  with  its 
obligations  under  the  WTO  TBT  Agreement  by  notifying  draft  technical  regulations  at  an 
early appropriate stage in order to give an opportunity to other WTO Members to analyse and 
comment on them. Two notifications (on alcoholic drinks and cars) have been received so far 
but  Russia  did  not  provide  the  opportunity  for  other  WTO  Members  to  comment  on  it  as 
requested by the TBT Agreement. The problems with alcoholic drinks and textiles have been 
discussed extensively at bilateral and multilateral level. 

Progress  on  many  SPS  issues  was  expected  upon  Russia's  WTO  accession,  since  Russia 
should normally ensure from day-one full compliance with the WTO SPS Agreement and the 
relevant international standards. It should ensure in particular that its SPS measures are based 
on the principles of transparency and scientific justification and should guarantee that they are 
proportionate  and  justified.  However,  new  barriers  were  put  in  place,  and  some  existing 
restrictions still remain. Since 20 March 2012, Russia has banned the import of live animals 
from the EU. The disproportionate ban on slaughter pigs was justified by Russian authorities 
because of irregularities found in the health certificates of certain shipments from the EU. EU 
food producers still face extremely long delays or refusal to be newly authorised for exports to 
Russia or the CU, and Member States are invited to request audits of their system. Bilateral 
negotiations are on-going but so far without any satisfactory results. Recently Russia started a 
series of new SPS measures concerning ban of chilled meat and potato seeds from Germany. 
The EU is worried by the systemic use of bans towards its product by Russia as soon as one 
problem arise, without taking into account the WTO principles of justified and proportionate 
actions for SPS measures. 

With regard to wood imports from Russia, the EU-Russia bilateral agreement concerning two 
tariff-rate  quotas  (TRQs)  for  spruce  and  pine  should  have  allowed  EU  operators  to  import 
these wood species at significantly reduced export duty rates as of September 2012. However, 
the  issuance  of  export  licences  was  seriously  delayed  and  the  EU  had  to  raise  the  issue  on 
several occasions to remove the most important obstacles. After months of delay, the issuance 
of export licences has finally started and imports of wood under the TRQs are now increasing 
significantly. The EU will ensure that this trend is not reversed in 2013.  

c.  Implementation of the FTA with South Korea 

9  

It should be noted that a similar situation could occur in the case of Ukraine, which is in the process of 
revising certain of its applied rates. Besides, Ukraine has also initiated WTO procedure for revision of 
its bound rates for a large number of tariff lines, which could create an unfortunate precedent. 

14

 
 
                                                 
 
The FTA between the EU and South Korea has been provisionally applied since July 201110. 
It  is  the  first  of  a  new  generation  FTA  and  is  characterised  by  its  far-reaching  and 
comprehensive nature. It is also the EU's first trade deal with an East Asian country.  

The main conclusions, based on a comparison of data for the first year of implementation of 
the agreement (July 2011 – June 2012) with an average of the data from the past four years 
(the "reference period") suggest that EU exports to South Korea increased by 37% overall. At 
the same time, EU imports from South Korea have only marginally increased (1%).  

With  regard  to  the  remaining  obstacles  to  trade,  the  agreement's  institutional  structure  has 
enabled the Commission to raise important concerns such as, inter alia, South Korea's ban on 
EU beef imports as well as South Korea’s refusal to accept international UNECE marking on 
certain car parts. The Commission will continue its efforts to resolve these and other market 
access problems to the benefit of the EU industry. Since the entry into force of the FTA, there 
have already been  some positive developments e.g. in the automotive sector, with regard to 
tyre  marking,  acceptance  of  UNECE  type-approval certificates  for  cars  which  belong  to  the 
same family, car part manufacturer registration, emissions measurement and electric vehicle 
standards.  

d.  Other barriers on the markets of selected strategic partners 

In  a  number  of  cases,  significant  progress  was  observed  in  relation  to  a  number  of  barriers 
which had not been reported in the 2012 TIBR.  

On the long-standing issue of Computer Reservation Systems (CRS), China has, with the 
entering into force of the Interim Regulations, at last put a legal framework in place to enable 
foreign CRS providers to operate in the Chinese market. Difficulties in the implementation of 
this new framework still seem to exist, and the Commission will continue to closely monitor 
the situation in the light of China's WTO commitments. 

Regarding  cosmetics  in  China,  difficulties  still  persist  regarding  the  approval  of  new 
ingredients,  and  of  products  containing  new  ingredients.  However,  some  progress  can  be 
reported on other cosmetics issues. For instance, during the bilateral talks with the EU on 25 
October 2012, the State Food and Drug Administration (SFDA) confirmed that after extensive 
consultations  with  the  industry  and  with  trade  partners,  they  had  decided  to  postpone  the 
intended legislation on  reclassification of a considerable number of product categories  from 
"non-special" to "special" products11. Such reclassification would have entailed significantly 
more burdensome requirements. Future plans will be considered in the context of the revision 
of the CHMR (China cosmetics basic regulation) which is planned for 2013-2014. China has 
indicated  that  they  may  consider  moving  away  from  a  pre-market  approval  system  to  a 
notification regime system. However, it remains unclear whether this would be the case for all 
cosmetic products. 

Regarding  Chinese  CO2  /  fuel  efficiency  regulations  the  Ministry  of  Industry  and 
Information  Technology  (MIIT)  stated  that  plans  for  a  uniform  consumption  target  were 

10  

11  

of 

The  FTA  is provisionally  applied  in  the  EU  until  all  EU  Member  States  have  ratified  it.  The  state of 
play 
the  Council's  Agreements  website: 
can 
www.consilium.europa.eu/policies/agreements/search-the-agreements-
database?command=details&id=&lang=en&aid=2010036&doclang=EN 

ratification 

checked 

the 

on 

be 

WTO TBT notification G/TBT/N/CHN/887 

15

 
 
 
                                                 
 
shelved and that MIIT would use a corporate average system instead (as in the EU). However, 
MIIT  also  indicated  that  in  calculating  these  averages  it  would  not  be  possible  to  pool 
domestically produced fleet with imported fleet, which is problematic since imported vehicles 
tend  to  be  the  bigger,  up-scale,  and  niche  vehicles,  which  are  often  heavier  and  consume 
more. The inability to pool may make it difficult to reach the average target for the imported 
fleet. 

Finally,  China  postponed  the  NDRC  draft  pricing  policy  on  implantable  medical  devices 
which  stipulated  a  price  cap  on  advanced  medical  implants  and  also  foresaw  a  complicated 
but discriminatory maximum price calculation between domestically produced and imported 
products. There is a risk that the measure is raised again after the leadership transition, but for 
the moment these pricing plans are not being pursued. 

The  US  has  announced  that  in  2013  the  longstanding  final  rule  on  Bovine  Spongiform 
Encephalopathy (BSE) will be published and the Classical Swine Fever rule will enter into 
force.  Besides,  end  2012,  the  proposed  notice  for  swine  vesicular  disease,  which  will 
recognise some Italian regions free of this disease, was published for public comments. The 
EU  expects  that  soon  after  the  publication  of  these  rules,  EU  exports  to  the  US  of  bovines, 
pigs and their products will resume. However, the EU remains worried by the extremely long 
delays in treating other SPS export applications submitted by the EU, e.g. apples, pears and 
bell peppers.  

Brazil has announced that the SPS measures related to the imports of ruminant animals (e.g. 
bovines,  ovines)  and  their  products  from  the  EU,  related  to  Transmissible  Spongiform 
Encephalopathies  (TSE),  could  soon  be  aligned  with  the  relevant  international  standard  and 
allow  trade.  On  the  other  hand,  Brazil  made no  significant  progress  on  executing  their  own 
calendar of visits to EU Member States. This continues to negatively and very seriously affect 
the exports from the EU, mostly of added-value products of animal origin.  

3.  HOW TO COMBINE AVAILABLE TOOLS TO TACKLE TRADE BARRIERS 

This section aims to provide an overview on how to use the combination of the different tools 
at the EU's disposal.  

a.  Trade diplomacy 

Trade diplomacy is an important element of the EU’s external relations and conducted both 
at working level within EU institutions, in close cooperation with EU Delegations in the field, 
and  Member  States  administrations,  and  as  an  exercise  undertaken  at  the  highest  political 
level, for example during summits and bilateral contacts. The way the EU conducts its trade 
diplomacy  and  external  economic  relations  reflects  the  call  by  the  European  Council  for 
improved synergies between the EU and national levels, consistent with the provisions of the 
Treaties,  for  enhanced  coordination  between  institutional  actors,  for  better  integration  of  all 
relevant  instruments  and  policies,  and  for  summit  meetings  with  third  countries  to  be  used 
more effectively. Trade diplomacy is part of the EU’s coherent approach on external action. 

Trade  diplomacy  is  usually  the  fastest  way  to  tackle  trade  barriers  as  it  does  not  require  a 
specific context, as in the case of FTA negotiations, or a long and complex litigation strategy 

16

 
 
 
as  in  the  case  of  trade  disputes.  Direct  contacts  with  local  authorities  can  be  sufficient  to 
highlight barriers, and point to the inconsistency of certain measures with WTO obligations.  

In addition, such a way to address trade barriers is indeed a diplomatic tool, as its objective is 
precisely to solve issues, suggesting that no party has to lose while the other wins. This avoids 
the risk of escalation in the disputes and retaliatory measures, legal or not. 

However, the efficiency of trade diplomacy depends on the possibility to convince the country 
concerned that it is in its own interest to address barriers at stake. This depends in particular 
on:  

• 

• 

• 

the  possibility  to  demonstrate  convincingly  that  removing  the  barrier  would  create 
benefits  for  its  consumers  and  companies,  to  an  extent  that  would  exceed  losses  for 
other  companies  in  direct  competition  with  the  EU  companies  that  suffer  from  the 
barrier.  

the  EU’s  capacity  to  provide  convincing  alternative  solutions,  concrete  proposals, 
ideally based on its own experience and the wealth of experience in its Member States 
and lessons-learnt. Regulatory cooperation or dialogues are a very useful tool to do so. 
Such  cooperation  should  be  fully  integrated  in  and  support  the  overall  external 
economic  agenda  of  the  EU  vis-à-vis  a  particular  country,  thereby  complementing 
trade negotiations and facilitating market access12. 

the  possibility  to  bring  the  matter  to  Court:  it  can  be  successful  if  the  threat  of 
litigation create a sufficient deterrent to prompt the country to remove the barrier. In 
that  sense,  a  credible  and  efficient  dispute  settlement  process  is  crucial  to  deliver 
results on the trade diplomacy front. 

This  demonstrates  that  effectiveness  of  trade  diplomacy  is  much  higher  when  used  in 
combination  with  other  instruments,  as  the  most  practical  tools  can  only  deliver  if  they  are 
backed by credible sanctions mechanisms.  

b.  Dispute settlement 

In terms of dispute settlement, the EU has been among the most active WTO members over 
the past 17 years, since the creation of the Dispute Settlement Body (DSB) in 199513. Over 
the  last  two  years,  the  EU  launched  five  new  offensive  disputes.  The  EU  is  currently 
challenging rules on local content, discretionary import licensing, export restrictions and the 
abuse  of  anti-dumping  and  countervailing  duties  imposed  by  third  countries  against  EU 
exports.  

Over the same period, the EU has gained significant victories in WTO dispute settlements: the 
EU  won  an  important  case  against  China's  restrictions  on  the  exportations  of  raw  materials 

12  

13  

detailed 

As 
ec.europa.eu/citizens_agenda/docs/sec_2007_1519_en.pdf  

instance 

the 

for 

in 

Single  market 

review 

in 

2007 

– 

Out  of  452  disputes  brought  to  the  DSB  as  of  November  2012,  the  EU  has  been  involved  in  87 
offensive cases (and 73 defensive cases)13, i.e. 19.2% of all cases, 66 of which against one of the six 
countries / region identified in this report (32 against the US, 4 against Brazil, 8 against Argentina, 10 
against India, 6 against Japan, 6 against China, none against Russia so far), i.e. 75.9% of EU offensive 
cases. 

17

 
 
                                                 
 
 
and ensured that EU spirits in the Philippines benefit from non-discriminatory treatment. The 
EU has also settled the long-standing dispute with the US on the "zeroing methodology" on 
anti-dumping. The broad litigation with the US on Large Civil Aircraft continues, and the EU 
has obtained important WTO rulings against US' illegal subsidies to Boeing.  

To  further  strengthen  the  enforcement  pillar  of  EU  trade  policy,  the  Commission  has  also 
recently  proposed  improved  rules  to  enforce  EU's  rights  under  international  trade 
agreements14.  The  objective  is  to  allow  the  EU  to  react  swiftly  and  efficiently  in  order  to 
defend  its  rights.  The  Commission  is  proposing  a  Regulation  to  establish  a  clear  and 
predictable framework for adopting implementing acts following international trade disputes 
that have a negative economic impact on the EU.  

c.  Effective use of WTO Committees  

With regard to technical regulations and conformity assessment procedures, the EU is, along 
with  the  US,  the  most  active  WTO  Member  in  the  TBT  and  SPS  Committees.  TBT 
Committee meetings in Geneva are an effective tool for highlighting the EU's concerns with 
technical regulations introduced by other WTO Members, enhancing the transparency of such 
requirements,  raising  awareness  and  building  alliances  with  other  WTO  Members  affected. 
The  March  2012  meeting  of  the  TBT  Committee  witnessed  discussion  on  65  specific  trade 
concerns – the highest number ever – of which the EU raised or supported 35.  

The EU's pro-active approach is not limited to the TBT and SPS Committees and extends to 
all  other  WTO  Committees.  Import  Licensing  Procedures  and  Trade  Related  Investment 
Measures  (TRIMS)  Committees  are  the  most  relevant  ones  with  regard  to  the  trade  barriers 
mentioned in this report.  

d.  FTA negotiations 

Preferential trade agreement negotiations, and notably FTAs and DCFTA, but also WTO 
accession negotiations can be a useful instrument to address certain specific trade disruptive 
measures  in  third  countries,  in  conjunction  with  the  other  instruments  mentioned  above. 
Among the six countries and regions discussed in this report, the EU is currently negotiating 
FTAs with two, namely India and Brazil / Argentina (as part of Mercosur) and will enter into 
negotiations  with  Japan  soon  and  possibly  with  the  US  within  the  next  few  months.  These 
negotiations, along with the New Agreement talks with Russia, can set a positive framework 
to address trade barriers, for a number of reasons:  

First,  in  negotiations  the  EU's  position  as  a  key  export  destination  provides  it  with  an 
opportunity  to  extract  concessions  from  third  countries  which  have  a  strong  incentive  to 
negotiate with a 500 million consumer-strong integrated market. 

Second,  such  agreements  are  precisely  designed  to  address  a  large  number  of  barriers 
simultaneously  and  where  possible,  to  include  stricter  disciplines  than  existing  international 
trade  rules.  For  this  reason,  the  EU  aims  at  obtaining  more  through  these  discussions  than 
from simple enforcement of existing rules.   

Finally, new generation FTAs can facilitate trade disputes resolution as they include bilateral 
dispute settlement mechanisms, based on the WTO model. FTAs also set up a comprehensive 

14  

trade.ec.europa.eu/doclib/press/index.cfm?id=856  

18

 
 
                                                 
structure  of  sectoral  and  thematic  working  groups  and  committees  to  ensure  proper 
implementation of the agreement, and to prevent new barriers for being erected in the future. 

However,  as  a  market  access  tool,  preferential  trade  agreements  have  also  their  limitations. 
For instance, there are one-off occasions: barriers which will not have been solved through the 
process,  or  which  emerged  afterwards,  will  have  to  be  addressed  via  other  channels.  In 
addition, the time needed to negotiate and adopt FTAs does not always provide a good match 
for  much  faster  business  cycles.  Finally,  the  balance  of  concessions  is  difficult  to  find  and 
often means that not all trade barriers can be addressed at the same time and specifically and 
some have to be given priority to reach an overall satisfactory agreement. 

5. 

CONCLUSION 

Trade is expected to drive most of the EU's economic growth for the years to come. It will 
also  provide  one  of  the  most  important  tests  for  our  continent's  competitiveness  on  global 
markets via our industry's capacity to consolidate regional value chains and be an integral part 
of  global  ones.  In  this  context,  the  Commission  intends  to  further  strengthen  its  partnership 
instruments  under  the  Market  Access  Strategy  to  address  trade  and  investment  barriers 
worldwide  to  make  sure  the  playing  field  is  levelled  for  our  economic  potential  to  be  fully 
unleashed.  In  order  to  make  the  collective  trade  diplomacy  efforts  conducted  by  the 
Commission,  EU  Delegations  and  Member  States  on  the  ground  in  third  countries  more 
effective,  the  Commission  will  in  particular  regularly  review  and  update  the  list  of  key 
barriers  in  the  markets  of  our  main  trading  partners  and  provide  Member  States  with 
hymsheets allowing them to convey concerted messages in their contacts with the authorities 
of  the  countries  concerned.  Trade  diplomacy  will  benefit  from  optimising  the  use  of  all 
relevant instruments and policies, and of summit meetings with third countries and the EU’s 
external relations across the board – the EEAS shall support these efforts and work towards 
greater consistency. 

The EU remains the world's largest exporter, importer, foreign direct investor and recipient of 
foreign  direct  investment.  It  has  managed  to  hold  on  a  share  close  to  20%  of  total  world 
exports15  over  the  years  in  spite  of  the  economic  crisis  and  the  dramatic  changes  that  have 
shaped world trade over the last 30 years. Our massive manufacturing trade surplus of €281 
billion – a figure that has increased fivefold since 2000 – has more than compensated for the 
increase in our energy bill over the same period. EU surplus in services has been multiplied 
by more than 20 in 10 years at €108 billion in  2011 and the EU's agricultural trade balance 
has shifted from a deficit of more than €3 bi llion in 2000 to a surplus of about €7 billion in 
2011.  

In support of this telling track record, the Commission together with the Member States will 
continue to step up its efforts to remove barriers in third countries through concerted action 
and by using in combination all means available to ensure fair market access. Besides trade 
diplomacy conducted from Brussels and on the ground, this includes using in an effective way 
WTO Committees, enforcing commitments taken under multilateral and bilateral agreements 
also  via  well-targeted  dispute  settlements,  when  necessary,  when  the  EU's  partners  do  not 
respect their international obligations, and taking best advantage of FTA negotiations to solve 
trade barriers in a systemic way. 

15 Trade in goods, oil and gas excluded, source UN-COMTRADE database 

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