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EU Reports Progress, Challenges in Lowering Foreign Trade Barriers

Friday, March 21, 2014
Sandler, Travis & Rosenberg Trade Report

The European Commission released March 20 a report detailing its efforts in 2013 to remove “some of the most trade-distortive barriers that hinder EU companies’ access to the markets of China, India, Japan, Mercosur (Brazil/Argentina), Russia and the U.S.” The fourth Trade and Investment Barriers Report describes the “substantial or partial progress” made on the barriers identified in the previous edition and analyzes some of the most serious new measures put in place in the last year.

Barriers Removed

- In December 2013 China issued a new circular that once again exempts the logistics and shipping industry from the value-added tax and additional local surcharge on gross proceeds collected from clients.

- In September 2013 China notified the EU that it had repealed a VAT exemption for sale of specific models of domestically manufactured regional aircraft in China.

- The Indian government suspended the implementation of preferential procurement policies in favor of domestically manufactured electronic goods and telecommunication products. It has also postponed to July 1, 2014, the mandatory testing and certification requirements for telecom network elements for security reasons and has introduced changes in its investment rules that open the possibility for 100% foreign ownership in the telecom sector.

- Brazil’s list of 100 temporary exceptions to the Common External Tariff was terminated at the end of October 2013 and a new list of 100 CET exceptions planned for early 2013 was not enforced.

- Argentina eliminated non-automatic licenses (except for bicycles) in January 2013.

- Russia now requires domestic car makers to pay the same recycling fee as foreign manufacturers and has eliminated a discriminatory list of exporters that greatly limited the eligibility of EU companies to export under wood tariff-rate quotas.

- The U.S. expanded the list of EU members states or regions considered free of classical swine fever, avian influenza, exotic Newcastle disease and swine vesicular disease, and a final rule on bovine spongiform encephalopathy was published. Together, these changes should allow EU exports of beef to the U.S. to resume.

Barriers Remaining

- China: indigenous innovation policy, local content requirements, information security barriers (e.g., revised commercial encryption regulations), and cosmetics regulations

- India: Bureau of Indian Standards certification regime for tires, sanitary and phytosanitary issues (e.g., pork, bovine genetic material, plants and plant products)

- Argentina: local content requirements

- Brazil and Argentina: measures hindering the provision of maritime services between Mercosur countries

- Russia: SPS measures such as excessively stringent requirements on antibiotic residues, inspection results or border control findings on agricultural products and plants; burdensome technical regulations, non-transparent application of requirements, and the coexistence of partly overlapping and excessive certification, conformity assessment and authorization procedures


Barriers Imposed

- China decided in February 2013 to test or ask for the results of tests of phthalates content in EU spirits and wine and in June launched antidumping and countervailing duty investigations of EU wines.

- In April 2013 the Japanese Forestry Agency introduced a “Wood Use Points Program” that results in discriminatory treatment of imported wood. So far, most approvals have been for Japanese wood species and most applications submitted for foreign species from EU member states have been rejected.

- India increased its customs duty on new high-end cars from 75% to 100% and its duty on new motorcycles with an engine capacity of greater than 800 cc from 60% to 75%.

- Russia banned imports of live pigs and pork products from the entire EU following the detection of isolated cases of African swine fever in wild boars close to the Belorussian border.

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