MercoPress. South Atlantic News Agency

EU takes stock of effect of globalization on trade

Trade Commissioner Peter Mandelson hopes to trigger a debate this week on how the EU should deal with low-cost producers in Asia and South America and find ways to solve trade issues if a World Trade Organization deal falls through next year.

On Wednesday he will publish a paper setting out how Europe can stay competitive ? investing more in research and development to make products the rest of the world wants and demanding patent protection to guard the fruits of that work.

Europe needs to update its current trade framework to take account of the growing trend for companies to build factories abroad to make goods more cheaply than they could at home and import those goods ? and the profits ? back to Europe.

This complicates trade disputes such as the still unresolved row over Chinese and Vietnamese shoe imports. European shoemakers are demanding the European Commission take action against below-cost imports that unfairly undercut them; at the same time, retailers and companies that outsource production protest that any extra charges targeting foreign producers will hurt them too.

??There are new economic factors that we think should be reflected in how we determine injury and the European interest,'' EU spokesman Peter Power said.

So-called anti-dumping duties ??are there to counteract unfair trading practices and there can be no moving away from that ... but we think it is important to have the debate and to take account of new economic realities,'' he said. ??We may end up with the status quo.''

No firm proposals are on the table at this point but the EU says it wants to win the political arguments at home for greater openness and engagement with the global economy while making sure Europeans can access foreign markets and are treated fairly abroad.

This argument has already split EU nations over the shoes row as ??northern liberals'' such as Britain, Scandinavia and Germany oppose duties in the name of free trade in favor of their own importers. Meanwhile, southern European countries, such as Italy, Spain and Greece, say they need to protect their craft and textile industries against illegal imports. Efforts to bridge the gap have failed time and again ahead of an Oct. 7 deadline to impose duties.

Axel Berkovsky, an associate policy analyst at the European Policy Centre, figures the EU may have to rely on China's goodwill to help it negotiate the crisis. ??This is going to happen again and again unless China gives the EU more time to adapt,'' Berkovsky said. ??Italy and Spain had 10 years to get ready for stronger competition ? they knew the European market would open to competition and they didn't prepare.''

Even they as manufacturing countries have a lot to gain from China, he said, which presents an opportunity to sell high-quality fashion goods to a burgeoning middle class and machinery to local firms.

China also has to stick to WTO rules to avoid further disputes, he said. It is now rowing with the EU and the US at the WTO over illegal tariffs on their car parts. ??China is not very good at addressing these issues,'' Berkovsky said. ??They are not playing by the rules.''

The EU is preparing bilateral trade deals with India and South Korea and laying the groundwork for agreements with other nations in South America and the Middle East. It is also planning a widespread review of its relationship with China.

This does not mean a WTO agreement is on the back burner, the EU's Power said. But the EU is seeking extras that can complement a deal: better trade access, fewer tariff barriers and intellectual property rights protection.

European Commission President Jose Manuel Barroso said earlier this month that these deals would be more ambitious than the agreement the EU was trying to reach in the Doha round of trade talks, which fell apart over disputes on farm tariffs and subsidies.

These deals would call for other nations to open up government contracts to foreign companies and push open other sectors such as banking and telecoms.

However, the EU's major business lobby UNICE said the trend toward bilateral deals risks weakening the bloc's negotiating position at the WTO and could see EU demands for labour and social rights swept aside.