Civil Society, Development & Aid, Economy & Trade, Europe, Headlines

EUROPE: Commission Shows its Corporate Hand

David Cronin

BRUSSELS, Oct 28 2008 (IPS) - The intimate relationship between policymakers and multinational companies was illustrated Oct. 28 when the European Commission virtually handed over the headquarters of its trade department to the umbrella group for Europe’s employers.

BusinessEurope, as the group is known, used three floors of the Charlemagne, the Brussels building where EU trade officials are based, to host a conference on the progress that has been made since a blueprint for stripping away barriers that firms encounter in foreign markets was published two years ago.

The dominance of large business interests at the event was heavily criticised by some anti-poverty activists, who regard that 2006 strategy – baptised Global Europe – as an effort to undermine social and environmental legislation in poorer countries.

In a new report, Corporate Europe Observatory (CEO), an organisation that monitors the influence the private sector yields over EU policy, notes that the strategy is “entirely focused” on helping to boost the profits of major firms. It commits the EU to exerting pressure on poor countries to weaken regulations that are regarded as pesky by investors. Efforts in that direction can reduce the possibilities that those countries have to protect their environment or to improve the lot of the impoverished, according to CEO.

As well as receiving 750,000 euros (930,000 dollars) in funding last year from the European Commission, which is the executive arm of the EU, BusinessEurope has benefited from secretive briefings on how trade negotiations between the EU and other countries have been advancing. No similar access to the corridors of power is given to trade unionists, representatives of small firms or to non-governmental organisations, CEO says.

CEO spokesman Kim Bizzarri said that EU officials do not appear to have realised that deregulation has been a major factor behind the crisis which has beset the international banking system.

“The Global Europe communication is a manifesto for a neo-liberal Europe,” he said. “The current financial crisis offers a window of opportunity to step back and reassess the corporate agenda of the European Commission, particularly the Global Europe strategy. Rather than using this window of opportunity to reflect on its policies, the European Commission is extremely eager to push the Global Europe strategy even more aggressively.”

Jens Holm, a Swedish member of the European Parliament, said it is “very distressing” that BusinessEurope has been effectively been given the keys to the Commission’s trade department. This, he argued, is at variance with the “impartiality that is meant to be the natural character” of the EU’s executive branch. He called on the Commission “to remove Business Europe from your premises” as it “can afford to rent an office on the local property market.”

But David O’Sullivan, the Commission’s director-general for trade, denied that he wants full-scale deregulation. “I’m not a rabid free trader,” he said. “We need regulation and there may well be a regulation deficit in the financial area. We do not live in an unregulated trading environment, and I never said we need to deregulate the trading environment. We need to keep markets open.”

Nevertheless, some of the participants in the conference specifically identified environmental laws as a barrier that they encounter when trading. Michael Baunton, a representative of Caterpillar, the maker of heavy vehicles for the construction industry and the military, said that his company frequently has to deal with different pollution standards in countries where it operates. “There is regulation that is well-meaning that should not apply to us,” he added.

An assessment by the Commission of the Global Europe strategy states that the EU is the world’s largest investor in foreign countries. As a result of strong exports in such sectors as cars, chemicals and pharmaceutical products, the Union recorded a surplus in the trade of manufactured goods worth 162 billion euros in 2007.

And despite the rapid growth of ’emerging’ economies like China and India, the report shows that at nearly 20 percent the EU has maintained a sizeable share of global merchandise trade since the mid-1990s, a drop of only 1 percent in that period.

But the report contended that the EU is not exporting as many high-technology products as it should based on its level of economic development. “This raises concerns about the EU’s capacity in the future to keep its products at the cutting edge of quality and innovation,” the report added.

As part of the Global Europe strategy, the Union is negotiating free trade agreements with India, South Korea and the 10-nation Association for South East Asian Nations (ASEAN). The Commission is hoping an accord with Korea can be reached in the next few months, although it concedes that deals with India and ASEAN will take longer to be clinched.

Reinhard Quick, a trade specialist with BusinessEurope, said that it is “essential” any eventual agreements “eliminate tariffs altogether”, referring to the taxes that countries levy on imports.

But many anti-poverty groups are fearful of the impact that these accords will have, especially as they would require the countries signing them to remove most of their trade taxes, thereby depriving them of an important source of public revenue. Free trade will also expose domestic firms and small farmers in Asia to intense competition.