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Trade defence report: Restoring the level playing field for European producers

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EU trade defence measures are effective in reducing unfair international trading practices, according to an annual report published today by the European Commission. The anti-dumping or anti-subsidy duties imposed by the Commission lead on average to an 80% decrease in unfair imports, leaving other foreign supplies unaffected. EU measures protect now also 23,000 more jobs than a year before.

Commissioner for Trade Phil Hogan said: “A strong and effective trade defence is of key importance to protect our companies and jobs against unfair trading practices and to ensure diversity of supply. Making sure our companies operate in fair market conditions will be even more crucial in the times of post-corona crisis recovery. While imports offer more choice at a competitive price for our consumers and businesses, we need to make sure they come to Europe on fair terms, not dumped or subsidised, and that they do not make us overdependent. That’s why I am pleased to see that the system we have in place works and that the reforms of the last years are paying off.”

The report highlights in particular:

Continued high-level of EU trade defence activity:  In 2019, the Commission launched 16 investigations (against 10 in 2018) and imposed 12 new measures (against 6 in 2018). An intensive activity in reviewing existing measures resulted in the conclusion of 18 expiry reviews, 11 more than in 2018. At the end of 2019, the EU had in place 140 trade defence measures, 5% more compared to the year before. Those included 121 anti-dumping, 16 anti-subsidy and three safeguard measures.  The highest number of EU trade defence measures concerns imports from countries such as China (93 of the existing anti-dumping and anti-subsidy measures), Russia (10 measures), India (7 measures) and the U.S. (6 measures).

Increase in the number of EU jobs protected:  The measure imposed in 2019 increased the number of jobs benefitting from the EU trade defence by 23,000, bringing the total number of direct EU jobs protected to 343,000.

Sustained effectiveness of EU trade defence measures in reducing unfair imports: Thanks to an average 80% reduction in injurious imports because of EU trade defence measures, EU producers can maintain their activity and EU users of concerned products continue enjoying diversified sources of supply.

Resolute action to safeguard EU steel market: Following up on the 2018 U.S. import duty on steel, in early 2019 the Commission adopted definitive safeguard measures for a range of steel products of all origin. This was necessary to avoid a further sharp increase of imports that threatened to worsen the already fragile economic condition of EU steel producers. The measures were subsequently reviewed to maintain traditional trade flows and diversity of sources of supply. Half of the new anti-dumping and anti-subsidy investigations in 2019 also concerned iron and steel products.

Strong focus on enforcement and countering circumvention: 2019 saw an increase of cases targeting circumvention of duties in place, for instance by passing through other exporters or via other countries. The Commission launched a record number of four anti-circumvention investigations on its own initiative, including the largest such investigation to date on tableware and kitchenware from China, which extended duties to 30 more companies. 

New recourse to safeguard measures: In addition to the safeguard measures on steel, the Commission also put in place safeguard measures for Indica rice from Cambodia and Myanmar. The measures taken under the rules of the Generalised Scheme of Preferences followed requests addressed to the Commission by rice-producing EU Member States. Those are the first safeguard measures triggered by the EU in a long time.

Strong defence of EU exporters targeted in foreign trade defence investigations: Measures taken by other countries against imports from the EU stood again at a high level of 175 in 2019. Such a high level is expected to be maintained in the future, due to numerous cases initiated in 2019. The Commission has been very firm in intervening in foreign investigations that unfairly target EU exports. In two notable cases – anti-subsidy measures imposed by the U.S. on table olives from Spain and the measures on frozen fries – the Commission initiated trade dispute settlement in the World Trade Organization.

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‘Industry 4.0’ tech for post-COVID world, is driving inequality

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Developing countries must embrace ground-breaking technologies that have been a critical tool in tackling the COVID-19 pandemic, or else face even greater inequalities than before, UN economic development  experts at UNCTAD said on Thursday.

“Very few countries create the technologies that drive this revolution – most of them are created in China and the US – but all countries will be affected by it”, said UNCTAD’s Shamika Sirimanne, head of Division on Technology and Logistics. “Almost none of the developing countries we studied is prepared for the consequences.”

The appeal, which is highlighted in a new UNCTAD report, relates to all things digital and connective, so-called “Industry 4.0” or “frontier technologies”, that include artificial intelligence, big data, blockchain, 5G, 3D printing, robotics, drones, nanotechnology and solar energy.

Gene editing, another fast-evolving sector, has demonstrated its worth in the last year, with the accelerated development of new coronavirus vaccines.

Drone aid

In developing countries, digital tools can be used to monitor ground water contamination, deliver medical supplies to remote communities via drones, or track diseases using big data, said UNCTAD’s Sirimanne.

But “most of these examples remain at pilot level, without ever being scaled-up to reach those most in need: the poor. To be successful, technology deployment must fulfil the five As: availability, affordability, awareness, accessibility, and the ability for effective use.”

Income gap widening

With an estimated market value of $350 billion today, the array of emerging digital solutions for life after COVID is likely to be worth over $3 trillion by 2025 – hence the need for developing countries to invest in training and infrastructure to be part of it, Sirimanne maintained.

“Most Industry 4.0 technologies that are being deployed in developed countries save labour in routine tasks affecting mid-level skill jobs. They reward digital skills and capital”, she said, pointing to the significant increase in the market value of the world’s leading digital platforms during the pandemic.

Innovation dividends

“The largest gains have been made by Amazon, Apple and Tencent,” Sirimanne continued. “This is not surprising given that a very small number of very large firms provided most of the digital solutions that we have used to cope with various lockdowns and travel restrictions.”

Expressing optimism about the potential for developing countries to be carried along with the new wave of digitalisation rather than be swamped by it, the UNCTAD economist downplayed concerns that increasing workforce automation risked putting people in poorer countries out of a job.

This is because “not all tasks in a job are automated, and, most importantly, that new products, tasks, professions, and economic activities are created throughout the economy”, Sirimanne said.

‘Job polarization’

“The low wages …for skills in developing countries plus the demographic trends will not create economic incentives to replace labour in manufacturing – not yet.”

According to UNCTAD, over the past two decades, the expansion in high and low-wage jobs – a phenomenon known as “job polarization” – has led to only a single-digit reduction in medium-skilled jobs in developed and developing countries (of four and six per cent respectively).

“So, it is expected that low and lower-middle income developing countries will be less exposed to potential negative effects of AI and robots on job polarization”, Sirimanne explained.

Nonetheless, the UN trade and development body cautioned that there appeared to be little sign of galloping inequality slowing down in the new digital age, pointing to data indicating that the income gap between developed and developing countries is $40,749 in real terms today, up from $17,000 in 1970.

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Greater Innovation Critical to Driving Sustained Economic Recovery in East Asia

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Innovation is critical to productivity growth and economic progress in developing East Asia in a rapidly changing world, according to a new World Bank report launched today.

Countries in developing East Asia have an impressive record of sustained growth and poverty reduction.  But slowing productivity growth, uncertainties in global trade, and technological advances are increasing the need to transition to new and better modes of production to sustain economic performance.

To support policy makers in meeting this challenge, The Innovation Imperative for Developing East Asia examines the state of innovation in the region, analyzes the key constraints firms face in innovating, and lays out an agenda for action to spur innovation-led growth.

A large body of evidence links innovation to higher productivity,” said Victoria Kwakwa, World Bank Vice President for East Asia and Pacific. “The COVID-19 pandemic, climate change, along with the fast-evolving global environment, have raised urgency for governments in the region to promote greater innovation through better policies.

While developing East Asia is home to several high-profile innovators, data presented in the report show that most countries in the region (except China) innovate less than would be expected given their per capita income levels. Most firms operate far from the technological frontier. And the region is falling behind the advanced economies in the breadth and intensity of new technology use.

“Aside from some noteworthy examples, the vast majority of firms in developing East Asia are currently not innovating,” said Xavier Cirera, a lead author of the report. “A broad-based model of innovation is thus needed – that supports a large mass of firms in adopting new technologies, while also enabling more-sophisticated firms to undertake projects at the cutting edge.”

The report identifies several factors that impede innovation in the region, including inadequate information on new technologies, uncertainty about returns to innovation projects, weak firm capabilities, insufficient staff skills, and limited financing options. Moreover, countries’ innovation policies and institutions are often not aligned with firms’ capabilities and needs.

To spur innovation, the report argues that countries need to reorient policy to promote diffusion of existing technologies, not just invention; support innovation in the services sectors, not just manufacturing; and strengthen firms’ innovation capabilities. Taking this broader view of innovation policy will be critical to enabling productivity gains among a broader swath of firms in the region.

“It is important for governments in the region to support innovation in services, given their rising importance in these economies – not only for better service quality but increasingly as key inputs for manufacturing,” said Andrew Mason, also a lead author of the report.

Countries also need to strengthen key complementary factors for innovation, including workers’ skills and instruments to finance innovation projects. Building stronger links between national research institutions and firms will also be critical to fostering innovation-led growth in the region.

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Sea transport is primary route for counterfeiters

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More than half of the total value of counterfeit goods seized around the world are shipped by sea, according to a new OECD-EUIPO report.

Misuse of Containerized Maritime Shipping In the Global Trade of Counterfeits says that seaborne transport accounts for more than 80% of the volume of merchandise traded between countries, and more than 70% of the total value of trade.

Containerships carried 56% of the total value of seized counterfeits in 2016. The People’s Republic of China was the largest provenance economy for container shipments, making up 79% of the total value of maritime containers containing fakes and seized worldwide. India, Malaysia, Mexico, Singapore, Thailand, Turkey and the United Arab Emirates are also among the top provenance economies for counterfeit and pirated goods traded worldwide.

Between 2014 and 2016, 82% of the seized value of counterfeit perfumes and cosmetics by customs authorities worldwide, 81% of the value of fake footwear and 73% of the value of customs seizures of fake foodstuff and toys and games concerned sea shipments. Additional analysis showed that over half of containers transported in 2016 by ships from economies known to be major sources of counterfeits entered the European Union through Germany, the Netherlands and the United Kingdom. There are also some EU countries, such as Bulgaria, Croatia, Greece and Romania, with relatively low volumes of containers trade in general, but with a high level of imports from counterfeiting-intense economies.

To combat illicit trade, a number of risk-assessment and targeting methods have been adapted for containerised shipping, in particular to enforce against illicit trade in narcotics and hazardous and prohibited goods. But the analysis reveals that the illicit trade in counterfeits has not been a high priority for enforcement, as shipments of counterfeits are commonly perceived as “commercial trade infractions” rather than criminal activity. Consequently, existing enforcement efforts may not be adequately tailored to respond to this risk, according to the report.  Tailored and flexible governance solutions are required to strengthen risk-assessment and targeting methods against counterfeits.

As well as infringing trademarks and copyright, counterfeit and pirated goods entail health and safety risks, product malfunctions and loss of income for companies and governments. Earlier OECD-EUIPO work has shown that imports of counterfeit and pirated goods amounted to up to USD 509 billion in 2016, or around 3.3% of global trade.

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