European parliament enjoys 'great and growing role' in EU free trade agreements

With Doha in the doldrums, the negotiation and enforcement of the EU's many bilateral free trade agreements is of crucial importance to Europe's spirits sector, argues spiritsEurope's Paul Skehan.


By Paul Skehan

30 Sep 2013

How many manufacturing sectors in Europe produce large trading surpluses each year, are recognised as world class and are based on European tradition and knowhow? Distilled spirits are as old as time, and were produced initially for local consumption, but today, the European spirits sector supplies the world with quality products.

On many occasions, the European parliament has underlined the importance of an offensive EU trade agenda, to ensure that EU companies have fair access to all significant markets. This agenda includes trade diplomacy, negotiations of free trade agreements (FTAs) and recourse to WTO dispute procedures.

The focus on growing our external trade is welcomed by Europe's distillers both large and small - many of which export. Total spirits exports hit an all-time record of over €10bn in 2012, a 20 per cent increase compared to the previous year, making spirits the EU's most valuable agri-food export, generating a positive balance of trade close to €9bn (compared to €7bn in 2011).

With many mature markets in Europe currently facing difficulties, the European spirits sector depends on this assertive external trade policy to continue delivering growth and jobs. The emergence of increasingly affluent middle classes in Brazil, Russia, China and many other countries means that premium European spirits have greater and greater opportunities to displace local products.

EU spirits are now sold in more than 150 countries around the world but the growth of the sector depends not only on the economic vitality of emerging markets but also on the capacity of the EU to open-up those markets for European producers.

With the stalling of Doha, the negotiation of bilateral FTAs has become a vital activity, one which the spirits sector supports and endorses. We constantly share with the parliament and commission our expectations for such FTAs: the elimination of import tariffs and non-tariff barriers, and the abolition of tax discrimination - but we also urge the protection of our knowhow and brands.

Indeed, our sector represents 46 categories of different spirit drinks and more than 300 European geographic indications (GIs) whose protection is always fundamental in FTA negotiations. These 'GIs' bring immense added value to the European economy in terms of growth and employment as their production can never be 'delocalised': Cognac will always only be produced in the Cognac region, Irish Whiskey in Ireland, Scotch in Scotland…

The US remains our largest export market (over €3bn in exports in 2012). [pullquote]While we experience no major problems in terms of access or tariffs, the TTIP represents an opportunity to outline regulatory best practices for distilled spirits[/pullquote] with the ultimate objective of removing non-tariff barriers and preventing the adoption of new ones.

Another FTA recently approved by the European parliament with Colombia and Peru is very promising. Of course, these markets are still very small compared to the top-10 of our exporting countries (€35m and €30m export value respectively in 2012), but there is great potential thanks to the removal of trade barriers.

In addition, as with the TTIP, these two FTAs may also serve as a useful benchmark for future negotiations. A new concept has been introduced which is the "local treatment" clause, meaning that imported products should benefit from the rules as apply to products in a local region of a given country.

We would love to see positive outcomes to other FTAs currently being negotiated, such as with India, Canada, Vietnam or Thailand. At the same time, we also understand that there are consequences of the multiplication of such FTAs.

In the past, the commission's DG Trade has always played an extremely positive role - not only negotiating the FTAs themselves, but then also enforcing the terms and commitments entered into. Logically, an explosion in the number of agreements negotiated will also lead to a significant increase in the number of infringements encountered. Our hope, therefore, is that adequate human resources are made available to DG Trade not only to negotiate mammoth agreements such as TTIP, but also to police them effectively afterwards.

Our sector generates jobs and growth (currently around one million people are employed in and around the industry). This growth is primarily driven by increased sales into export markets; with Doha moribund, the negotiation and enforcement of bilateral FTAs is of paramount importance. There, the European parliament has a great and growing role.

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