Opinion of the European Committee of the Regions — A more responsible trade and investment policy
Date: 2016-04-08
Institutions: Commission for Economic Policy, European Committee of the Regions
Subjects: European Globalisation Adjustment Fund, common commercial policy, economic growth, globalisation, international trade, investment policy, sustainable development, trade agreement (EU), trade relations








C_2016240EN.01003701.xml










1.7.2016   


EN


Official Journal of the European Union


C 240/37





Opinion of the European Committee of the Regions — A more responsible trade and investment policy
(2016/C 240/07)











Rapporteur:


Cllr. Neale RICHMOND (IE/EPP), Dun Laoghaire Rathdown County Council




Reference document:


Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Trade for all: Towards a more responsible trade and investment policy
COM(2015) 497 final








I.   GENERAL REMARKS

THE EUROPEAN COMMITTEE OF THE REGIONS








1.


Expressly welcomes the Commission’s communication of 14 October 2015 entitled ‘Trade for all: Towards a more responsible trade and investment policy’ recognising the important potential that trade can unveil in terms of growth, employment and job creation, and investment in the EU;












2.


Supports the Commission’s ambition to ensure that the benefits of globalisation are fairly distributed and the negative impacts are mitigated and emphasises that, in order to level the playing field, modern trade agreements require moving beyond just tariffs and putting emphasis on SMEs; agrees moreover with the Commission that trade policy can work only if Europe continues its focus on removing obstacles to the completion of the single market;












3.


Welcomes the Commission’s commitment upon which every significant initiative in the field of trade policy will be subject to a sustainability impact assessment; reminds the importance of carrying ex post evaluations and highlights that impact assessments and evaluations including appropriate consultation of all stakeholders are crucial for the formulation of sound, transparent and evidence-based trade policies;












4.


Calls on the Commission to provide a timely assessment of the impact on the EU’s budget and EU-funded structural policies (European Structural and Investment Funds, European Globalisation Adjustment Fund, etc.) of trade liberalisation measures foreseen in free-trade agreements or deriving from multilateral arrangements such as the question of granting China a market economy status;












5.


Underlines that measures financed under the European Globalisation Adjustment Fund (EGF) are often short-term oriented and asks for increased coordination with other EU policies, specifically cohesion policy, in order to ensure that the current regional disparities within the EU will not only not be further increased, but will in fact be reduced;












6.


Recognises the economic importance of regulatory harmonisation as it decreases the number of legal rules with which trade partners in an agreement have to comply. Points out however the need to make sure that such harmonisation in the EU trade agreements maintains or improves standards with regards to consumer, environment and workers’ rights protection;












7.


Expects the European Commission to demonstrate transparency as regards its ambitious plans for future international trade agreements. In this context draws the attention to its ambition to redefine the EU’s relationships with African partners, Latin America and the Caribbean as well as to further intensify the trade cooperation in the framework of EU’s neighbourhood policy;












8.


Highlights the pivotal role of SMEs as the backbone of regional and local development and therefore to the EU cohesion as a whole and recalls that cross-compliance costs to international standards are usually higher for SMEs than for multinational corporations. Welcomes, in that respect, the fact that the Commission gives SMEs an important place in its strategy by highlighting the difficulties they may face with regard to trade liberalisation and asks that LRAs are consistently involved in the dialogue foreseen to take place between the Commission and the Member States on SMEs’ special needs;












9.


Underlines that the three key principles of effectiveness, transparency and values at times may be conflicting and acknowledges the Communication argument that trade policy should consider and possibly also promote many other policy areas but seeks greater clarity as to how this could be put into effect in a practical way; stresses furthermore that economic interests must not take precedence over the guarantee of equitable access to public services;












10.


Underlines, the need to make sure, when setting up an International Investment Court, that, throughout the transitional period until the Court has fully replaced all investment dispute resolution mechanisms provided in EU trade agreements, economic interests do not prevail over the right of competent public authorities to provide public services under the appropriate mix they deem necessary;












11.


Welcomes the announcement by the European Commission on 29 February 2016 that the investment protection chapter of the free trade agreement between the EU and Canada (CETA) picks up on the elements of the reformed approach proposed by the EU for a more transparent system for the settlement of investor-state disputes and provides for:






—


more binding wording as to the right to regulate at all government levels on investment protection,










—


the implementation of a permanent and institutionalised court responsible for settling disputes, with 15 members who will be appointed in advance by the parties to the agreement,










—


the establishment of a court of appeal that will enable the examination of decisions from the point of view of their legality and their cancellation in case of error,










—


more detailed ethics rules for avoiding any conflict of interest,










—


the commitment of the EU and Canada to work on setting up a permanent multilateral jurisdiction or appeal court for investment;
















12.


Welcomes the position adopted by the Commission on public services: that future EU trade agreements must not prevent government at all levels from providing, supporting or regulating public services, require states to privatise any service or prevent them from expanding the range of services they offer to the public;












13.


Stresses that local and regional authorities must at all times be able to organise the provision of services of general interest, independently of the way in which these services are provided and financed;




II.   POLICY RECOMMENDATIONS









14.


Welcomes the Council’s conclusions agreed at the Trade Council on 27 November 2015, as it represents a very balanced approach which shifts the emphasis but not the substance of trade policy in line with the EU’s foreign policy;












15.


Considers that the territorial dimension of the strategy should ensure that local and regional authorities across the EU will benefit fairly from growth and investment opportunities expected to be generated by free trade agreements and trade agreements in general, as these agreements are described in the Communication. It should also be made clear what free trade agreements might mean in relation to publicly funded activities at local level for safeguarding freedom of association and local self-government;












16.


Calls, in accordance with Articles 14 and 106 of the Treaty on the Functioning of the European Union (TFEU) and the Protocol (No 26) on services of general interest, for current and future services of general interest and services of general economic interest (including water supply, healthcare, social services, social security systems and education, waste management and public transport) to be excluded from the scope of trade agreements being negotiated;












17.


Believes there is an identified need for regional and local elaboration and delivery of SME internationalisation programmes involving local and regional stakeholders. This would also include identification of gaps in support to reduce the disparities and negative impacts that more open trade can bring to certain regions;












18.


Argues that it is important to recall that trade and investment is not only about opening markets, which in turn will stimulate competition and innovation to drive Europe’s competitiveness, which in turn could create jobs and growth, but also about the necessary development of all regions in order to strengthen economic, social and territorial cohesion and increase prosperity for all;












19.


Welcomes the emphasis on EU values within the new strategy and the promotion of core European values like sustainable development and human rights within trade agreements but believes they should be concretely set out;












20.


Recognises that regulatory convergence within free trade agreements at sectoral levels can free up unnecessary duplication of procedures and licensing requirements leading to equivalent outcomes; However, in order to avoid any subsequent litigation, it is important to word the text of the agreement clearly and to draw up an exhaustive ‘positive’ list of the services covered by the agreements on trade in services;












21.


Welcomes the communication’s focus on the untapped potential of SMEs and the need to provide them with well-targeted support, starting with the right trade policy;












22.


Identifies that regulatory convergence is particularly pertinent creating internationalisation opportunities and integration into global value chains for SMEs;












23.


Believes a balanced outcome in sensitive traditional sectors such as agriculture should be the objective in all EU FTAs, and that FTAs should inherently recognise and protect quality products against counterfeiting at international level;












24.


Agrees that the intensification of the debate around the EU’s trade policy provides an opportunity to better involve all stakeholders in the preparation, negotiation and implementation of our different initiatives in the field; to this end, however, transparency needs to be ensured to a greater extent than is the case today;












25.


Calls for strengthened measures to support sustainable development and good governance through trade agreements, multi-stakeholder initiatives and beyond, with an emphasis on free, fair and ethical trade, environmental protection, labour rights, decent working conditions, as well as human rights, health and consumer protection, animal welfare, ensuring the protection of cultural diversity and promoting development through trade, including Aid for Trade and the 2030 Agenda;












26.


Argues that trade agreements should provide equal opportunities across EU Member States, regions, including outermost regions and overseas territories of the EU, and all relevant sectors, including industry, agriculture and services. Welcome, in this context, that the Council underlined the need to facilitate and improve the integration of European companies in global value chains, in particular small and medium-sized enterprises;












27.


Welcomes the EU Commission’s commitment to transparency measures and hopes it will be followed up by other specific measures to promote greater visibility, such as mandatory transparency regarding negotiating positions, including those of the other parties. However, it criticises the communication for failing to address the more fundamental problems with transparency on trade policy making at the EU Member State level, for example how trade policy objectives are formulated before negotiations are started, i.e. at the stage when the 28 Member States set a mandate;












28.


Stresses that the rights of the EU consumer need to be better balanced in the trade debate beyond privacy matters, consumer safety and their right to know about products. The key components of consumer protection — information, transparency and freedom of choice — must be safeguarded and protected;












29.


Equal focus should be given to exporting SMEs and non-exporting SMEs, to ensure that the benefits of open trade and EU trade policy are not exclusively confined to those SMEs who contribute to the export economy of a Member State;












30.


Encourages EU negotiators to push for the inclusion of a ‘Small business’ chapter in all future EU trade agreements;












31.


Believes the reductions in the cost of regulation would positively lead to a greater uplift to help small and medium-sized businesses to break into new markets where duplicative systems between trading partners outside of FTAs act as a barrier to entry and helps bigger, well-established companies to monopolise markets;












32.


Supports more open trade as the antidote to low levels of investment through acting as a stimulant for global economy at a time when debt levels remain high;












33.


Notes the communication’s strong focus on bilateral free trade agreements (FTAs), but recommends that the EU should once again see its trade policy more firmly within the framework of the multilateral agenda at the WTO;












34.


Is concerned that the increased focus on the bilateral trade agenda is promoting economic bloc formation and discriminatory and deregulatory competition, to the detriment of economically weaker states with limited bargaining power;












35.


Points out that an increasingly complex network of standards and trade rules is disadvantageous for all, and calls on the Commission to ensure synergies between, and uniformity in, the bilateral, plurilateral and multilateral agreements currently being negotiated. New agreements should also be inspired by the principles of clarity, transparency and simplification;












36.


Request that EU trade policy should consider specifically promoting trade in sectors where the EU is a world leader, for instance green technology;












37.


Requests that the regions and local and regional chambers of commerce or equivalent representational/multiplier organisations be properly informed of the challenges and opportunities created by increased international trade. This is especially important for SMEs as they are more likely to lack the resources to monitor developments in world trade on their own;












38.


Believes there should be greater coherency for trade policy with the policies aiming to help developing countries, without losing sight however of the importance of strategic development and continued growth in the EU;












39.


Stresses that labour standards, including the eight fundamental International Labour Organisation conventions, must be equally implemented in all chapters of trade agreements, and that these agreements must include a revision clause allowing a party to leave the agreement or to suspend commitments in the event of infringements of labour and social standards;












40.


Underlines that in relation to investment agreements, commitments to ring-fencing legitimate public policy measures against challenge presented by free trade agreements is paramount as there should be no impediments to MSs pursuing legitimate public policy measures such as against tobacco consumption;












41.


Points out that the ISDS and ICS discussion is complicated and calls for legal disputes affecting compliance with trade agreements to be referred to the public courts at the place of the defendant’s registered office, and for proceedings to be conducted in the defendant’s language and governed by the laws in force in the defendant’s country; the right of appeal must be possible; mechanisms for settling disputes between states should draw on the procedures in place at the WTO;












42.


Also calls on the Commission to ensure that, until the ICS is established, investor-state dispute resolution mechanisms based on most favoured nation clauses are not used without limit, outside the scope of the relevant trade agreement;












43.


Argues that it is necessary that trade agreements, even after having been agreed and ratified, have a mechanism (some sort of regulatory overseeing body) that allows technical adjustments, as well as a revision clause allowing for a possible fresh review of the agreement in question and a clause allowing decisions on liberalisation measures to be reversed at any time — including for decisions taken by local and regional authorities on matters falling within their own remit;












44.


It is also important that those representing the EU and the trade partner(s) in this body are well informed and that balanced representation of interests is ensured;












45.


Emphasises that it is important to try to simplify trade with all the other countries with which the EU does not have a FTA;












46.


Agrees that rebalancing the relative contribution of developed and emerging economies to the system is a key requirement to move forward in the future;












47.


Stresses that EU trade agreements must not lead to lower levels of consumer, environmental or social and labour protection than are in place in the European Union and the individual Member States today. It must also continue to be possible to further develop these levels. It recommends that these principles be strengthened and that it be clarified that this also applies to questions of product safety and health, animal and data protection; expects the European Union’s room for manoeuvre, and that of its Member States’ parliaments and governments, to be maintained, thus also safeguarding the public’s democratic opportunity to exert influence;












48.


calls for measures to support consumers in the context of cross-border trade in goods and services with third countries, for example in the form of online helpdesks which provide information or advice in connection with disputes;












49.


Endorses the inclusion of anti-corruption provisions in trade agreements as another measure to ensure all businesses and consumers can seek the benefits of an agreement thus reducing regional fault lines;












50.


Believes the Committee of the Regions has an integral role in ensuring that the benefits of trade agreements are felt at a local and regional level and to scrutinise those agreements whose benefits have not been felt at a more local level;












51.


Highlights the need for the EU to include public procurement in international trade agreements, providing at the same time leverage in negotiations, in order to respond to the mismatch between the openness of EU’s public procurement markets and the restrictive practices by major trading partners;












52.


Welcomes the revised proposal of the European Commission on the International Procurement Instrument (1) and underlines that this tool can contribute to the fight against corruption in third countries. Furthermore asks for a balanced use of the instrument in order to prevent it from being used to protect or close the EU’s public procurement markets;












53.


Highlights the specific needs of EU SMEs and the difficulties they may face participating in third country public procurement markets. Welcomes in that respect the fact that the instrument will not apply to tenders submitted by EU SMEs and the fact that its application will be limited to contracts above a certain threshold.





Brussels, 8 April 2016.


The President of the European Committee of the Regions

Markku MARKKULA




(1)  COM(2016) 34 final.