EU continues fight against rising protectionism and clarifies sanctions

The European Union's efforts to tackle rising protectionism worldwide managed to generate some €8bn in additional exports during 2019. But trade barriers continue to grow and threaten the recovery from Covid-19, warns the EC. The Commission’s annual Trade and Investment Barriers report, published this week, reveals some notable successes in tackling protectionism, particularly in the food sector. Coordinated efforts by the Commission, member states and EU business organisations in the framework of the Market Access Partnership, allowed European companies to regain important export markets in 2019. Beef exporters from France, Ireland and The Netherlands, for example, regained access to China. Producers from Ireland and Croatia recovered access to Japan and Dutch pork producers can now export also to Mexico. Polish producers of baby milk powder can now export again to Egypt, and Belgian pear producers regained access to the Mexican market. But the report finds that the total number of trade barriers around the world now amounts to 438, out of which 43 were introduced last year by 22 different countries. The EU said the high number of new restrictions hindering EU exports shows that protectionism has become “deeply ingrained” in global trade and will not help the European and global Covid-19 economic recovery effort. European Commissioner for Trade Phil Hogan commented: “We have… been facing a worrying sea change in world trade. Barriers affect EU export sectors of particular importance and obstacles spread across regions. While we focus all our efforts on the post-Covid-19 economic recovery, this calls for new impetus to enforcement. It is essential to keep global trade flows open.” The EC warns that EU companies face multiple, new unlawful barriers in sectors of strategic importance, notably information and communication technology, electronics, auto and other high-tech industries. It says the highest number of trade restrictions affect access to the Chinese and Russian markets – respectively 38 and 31 measures. China also imposed the highest number of new restrictions in 2019, followed by south Mediterranean and Middle Eastern countries. The EC says that given the need to step up enforcement efforts, it will soon nominate a chief trade enforcement officer to coordinate and steer all EU enforcement actions. It will also establish a single entry point for trade issues, to respond faster and more effectively to trade-restrictive practices by EU trading partners. On 16 June, the Commission also launched a review of EU trade policy that seeks, among other proposals, to improve enforcement efforts to help small businesses that face unjustified export restrictions in countries outside the bloc. The EC has also issued an opinion that clarifies how existing financial sanctions should be interpreted, in particular when it comes to freezing assets. The EC says the opinion should provide clarity to member states’ competent authorities about the implementation of restrictive measures imposed by the EU in this field. The opinion focuses on the sanctions imposed because of Russian actions that undermined or threatened the territorial integrity, sovereignty and independence of Ukraine. It was requested by EU national competent authorities, which are responsible for implementing EU sanctions. Valdis Dombrovskis, executive vice-president for an Economy that Works for People, also responsible within the Commission for EU financial and economic sanctions, commented: “This opinion will contribute to ensuring that member states and their operators act consistently and effectively when they implement EU sanctions. It will clarify the scope of the asset freeze imposed on sanctioned individuals or entities. We have no doubt that it will contribute to a clearer and stronger application of sanctions across the EU.” Council Regulation (EU) No 269/2014 imposes the freezing of all assets belonging to, owned, held or controlled by the listed natural and legal persons, and a prohibition to make funds and economic resources available to them. The Commission clarifies that the assets of an entity controlled by a listed person must be frozen, even if the entity is not listed. However, the controlled entity may obtain the lifting of the freeze on some or all of its assets if it provides evidence that they are in fact not controlled by the listed person, explains the EC. The text further clarifies that funds and economic resources cannot be made available to entities controlled by listed persons, except in specific cases foreseen as derogations in the sanctions regime. It also specifies that the provision of labour or services to entities controlled by listed persons can amount to making economic resources indirectly available to the listed persons, if it enables the latter to ultimately obtain an economic benefit. The EU has about 40 different sanctions regimes currently in place. Since March 2014, the EU has progressively imposed restrictive measures against Russia. The measures were adopted in response to the illegal annexation of Crimea and the deliberate destabilisation of Ukraine.

EU continues fight against rising protectionism and clarifies sanctions

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