Free trade between EU and USA

On Monday 17th June during the 39th G8 summit in Northern Ireland the United States and European Union confirmed that they will launch negotiations on one of the world's most ambitious free-trade agreements, promising thousands of jobs and speedier growth on both sides of the Atlantic.

Such a plan was first considered three decades ago but knocked down by Francein the 1990s. Europe has now managed to get Paris onside, opening the way to a deal that could boost the EU and U.S. economies by more than $100 billion a year each.
The first round of negotiations will take place in Washington on July 8, the White House said in a statement.
The United States and Europe account for almost half of the world's total output and a third of its trade. A free-trade deal therefore holds the prospect of massive economic gains and accompanying jobs.
While both U.S. and EU negotiators are aware that a final deal will be tough to clinch, they are also conscious of the rising power and influence of China and the need to deepen Western economic integration in order to compete with Asia.
Issues over media protection and "cultural exception" could still complicate negotiations.
France had threatened to block the start of talks until the EU's other 26 governments accepted its demand to shield movies and online entertainment from competition from Hollywood and Silicon Valley.

The United States and the European Commission, the executive arm of the 27-country European Union, hope for a free-trade deal by the end of 2014 - a tight deadline in complex international trade talks that usually take many years.

The London-based Centre for Economic Policy Research estimates a pact - to be known as the Transatlantic Trade and Investment Partnership - could boost the EU economy by 119 billion euros ($159 billion) a year, and the U.S. economy by 95 billion euros.
However, a report commissioned by Germany's non-profit Bertelsmann Foundation and published on Monday, said the United States may benefit more than Europe. A deal could increase GDP per capita in the United States by 13 percent over the long term but by only 5 percent on average for the European Union, the study found.
 

According to DW journalist Bernd Riegert who has published this week: "where there are so many winners, there are also bound to be a few losers that are left behind. Especially since the volume of world trade will not see a rapid increase with a deal between the US and Europe; it will just be redirected. 

The large trading blocks will only end up dealing more with each other, while exports to other world regions and especially imports from Latin America, Asia and Africa into the new super free trade zone could decrease. This is according to a study by the renowned Ifo Institute in Munich.

The study said that if tariffs between the US and Europe are eliminated, then states in West Africa, that traditionally trade with France or Belgium, will be at a disadvantage. 

Suppliers from the developing countries would be displaced by American companies. Even Canada and Mexico, which have so far joined the North American Free Trade Agreement with the US, would lose out, with their market shares taken over by Europe.

Other losers would be China and Australia, as products exported from these countries into the new free trade zone would become more expensive. Countries like Brazil, Kazakhstan and Indonesia, however, could belong to the winning side as they would be able to unload their raw materials in a much larger market".


Time and experience will indicate us the benefits and incovenients of that trade agreement and also the major winners.
 

Catalonia a leading exporting area

Catalonia the leading region in Spain exporting goods or services wordlwide, here below there is the Catalan export Infographic which shows the big figures of Catalonia Internationalization in 2012.

Catalonis is already selling more out of its borders than in the domestic market (spain).

Branding

What is branding?

The definition in wikipedia says :

Brand is the "name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."^[1] Initially, Branding was adopted to differentiate one person's cattle from another's by means of a distinctive symbol burned into the animal's skin with a hot iron stamp, and was subsequently used in business, marketing and advertising. A modern example of a brand is Coca Cola which belongs to the Coca-Cola Company. A brand is the most valuable fixed asset of a Corporation.

When you are setting up a company, creating products or services before launching or marketing them you have to bear in mind the importance of the name branding which is a key element of success.

You can see a video (made by G. Wedell) which explains the concept branding and the importance of a brand strategy.

Rail freight in Europe

We are at the beginnig of the year, a period of good intentions and one of them for companies could be to contribute to reduce pollution.
Tranport of goods is an area to make some improvements for instance changing shippings goods from trucks to rail.


The Rail Freight operators generally propose three means of transportation:

Segment	Description	Commodities	Share of volume
Single Wagon	The client wants to transport a few wagons	Chemicals, Vehicles and Machinery	50 %
Full train	The client has enough goods to fill a train (600 meter or 24 4-axle wagons)	Coal and Steel, Construction materials	35 %
Intermodal	Transportation by container: the container or trailer is lifted on the wagon	Finished goods, Containerized goods	15 %

source: UIC


 

Traditionally rail freight transportation was proposed from one national provider but a few years ago deregulation was decided following EU legislation. Nowadays competition is allowed in almost every European country. For instance more than 151 different railway operators exist in Germany (source:www.vdv.de).

Rail freight transport is enjoying good growth prospects in Europe, with overall demand for transport continuing to rise and structural congestion phenomena emerging on roads and motorways. 

Traffic increases of between 50 and 100% over the next ten years seem realistic. Rail’s situation is even better on the other continents, where it is often the key mode of transport, clocking up market shares of 40 % and more (that is the case in China, India, Australia, South Africa and the United States). 

The demand for the four land transport modes (road, rail, inland waterways and pipelines) in the EU27 added up to 2 595 billion tkm in 2006. Road transport accounted for 72.7% of this total, rail for 16.7%, inland waterways for 5.3% and oil pipelines for the remaining 5.2% (source: European Commission).

Some advantages of rail freight are:

-Competitive price

-Environment

-Safety

Concerning the issue to adress in this post: environment.

Rail is an alternative. If we compare road to rail, 90% of the total domestic transport emissions come from the road whilst rail is responsible for only 0.6% of diesel emissions. Between 1990 and 2005, the European railways managed to cut their CO₂ emissions by 21% (source: UIC).

Rail freight is the eco-friendly solution to transport more goods in a better way for the climate. CO₂ emissions are indeed 8 times less then the road and rail freight is actually the most energy efficient transport mode (soruce: UIC). It is also the most efficient transport mode from a land use point of view because it avoids congestion and guarantees safety. And one should not forget another of the major advantages of rail: the reduction of exhaust emissions, often highly concentrated in cities because of the cars.

Icex lanza el simulador de costes de establecimiento

El ICEX (Instituto de Comercio Exterior - España-) acaba de lanzar una nueva herramienta online: el simulador de costes de establecimiento.

El simulador te  permite conocer en poco tiempo el coste aproximado de instalación de su empresa en el mercado seleccionado y en otros países comparables. 

Según la institución el usuario selecciona, en función de sus necesidades concretas, aquéllas que definen su implantación, como número de locales, metros cuadrados, personal, suministros, etcétera. En cada apartado el usuario puede añadir gastos no incluidos en la herramienta, introduciendo el concepto e importe. Además, existe la opción de ampliar información y detalles de cada apartado.

Las cifras ofrecidas provienen de la información recogida por la red de oficinas económicas y comerciales de España en el exterior, obtenidas de fuentes verificadas. No obstante, después de haber utilizado el simulador, la información debe ser siempre contrastada de manera previa a cualquier decisión de establecimiento.

Al final del proceso, el empresario obtendrá un informe resumido con los principales costes de establecimiento y el resultado de esa misma simulación en otros dos países comparables para así valorar la posible implantación en diferentes mercados.  Estos datos se pueden convertir además a la moneda local del país.

Asimismo, en la misma página, la herramienta dispone de información adicional relacionada con el mercado seleccionado (Directorio de Empresas Españolas Establecidas en el País, principales apoyos locales ofrecidos a la inversión extranjera, etc.).

Hay que aprovecharlo porque el servicio es temporalmente gratuito y puede accederse solo registrándose en la página web del Icex.

 

Common customs tariff

The European Union has has establish for all its memebers a common regulation in terms of customs tariffs and duties. Since the completion of the internal market, goods can circulate freely between Member States. The 'Common Customs Tariff' (CCT) therefore applies to the import of goods across the external borders of the EU.

The tariff is common to all EU members, but the rates of duty differ from one kind of import to another depending on what they are and where they come from. The rates depend on the economic sensitivity of products.

The tariff is therefore the name given to the combination of the nomenclature (or classification of goods) and the duty rates which apply to each class of goods. In addition the tariff contains all other Community legislation that has an effect on the level of customs duty payable on a particular import, for example country of origin.

The tariff is a concept, a collection of laws as opposed to a single codified law in itself. There is however a kind of working tariff, called TARIC, which is not actually a piece of legislation.

Through the tariff, the Community applies the principle that domestic producers should be able to compete fairly and equally on the internal market with manufacturers exporting from other countries

The Nomenclature governed by the Convention on the Harmonized Commodity Description and Coding System, commonly known as "HS Nomenclature", is an international multipurpose nomenclature which was elaborated under the auspices of the World Customs Organisation (WCO). At present there are 138 Contracting Parties to this Convention, however, it is applied by more than 200 administrations worldwide, mostly to set up their national customs tariff and for the collection of economic statistical data. The European Union and its member states together represent a block of 28 Contracting Parties to the aforementioned Convention.

The HS Nomenclature comprises about 5,000 commodity groups which are identified by a 6-digit code and arranged according to a legal and logical structure based on fixed rules. The Combined Nomenclature of the European Union (EU) integrates the HS Nomenclature and comprises additional 8-digit subdivisions and legal notes specifically created to address the needs of the Community.

The official interpretation of the HS which provides for its uniform interpretation worldwide is ensured by the HS Committee which comprises representatives from the Contracting Parties to the HS Convention. Other administrations, international organisations, international commerce and industry are represented as observers.

 The official interpretation of the HS which provides for its uniform interpretation worldwide is ensured by the HS Committee which comprises representatives from the Contracting Parties to the HS Convention. Other administrations, international organisations, international commerce and industry are represented as observers.The HS Convention provides for two types of decisions taken by the HS Committee: 
1. Decisions which amend the Convention including its nomenclature (procedure under Article 16) 
2. desicions which "manage or interpret2 the Convention and which normally take form of classification decisions,Explanatory Notes or Classification opinions (procedure under article 8).

In both cases, the EU and its member states, together, dispose of a single vote only. The Contracting Parties may lodge a "reservation" against both types of decisions. A "reservation" against an amendment of the Convention (Article 16 procedure) annuls the decision that was taken. On the other hand, the legal effect of a "reservation" in the framework of an Article 8 procedure of the Convention is limited to a suspension of the decision which has to be re-examined at a later meeting of the Committee. In practice, this simply means that the definitive decision is delayed by 6 to 12 months.

Generally, the amendments to the HS Convention become binding for all Contracting Parties two years after they are notified by the Secretary General of the WCO. However, the decisions concerning the management and interpretation of the Convention are generally deemed to have been accepted by all Contracting Parties two months after the decision by the HS Committee.

 

Russia new WTO member

Russia is already a  member of the World Trade Organisation (WTO) since August 2012, for the European Union  this is an important fact here below there is the press release from the European Commission highlighting the main figures and points of the bilateral commerce and investments.

After 18 years of negotiations, Russia joins the World Trade Organisation as its 156th member. This accession is particularly important for the EU, as the EU is Russia's first trading partner and Russia is the EU's third trading partner. For the first time both entities will be bound by multilateral rules and obligations for their mutual trade.

"Today's WTO accession is a major step for Russia's further integration into the world economy", said EU Trade Commissioner Karel De Gucht. "It will facilitate investment and trade, help to accelerate the modernisation of the Russian economy and offer plenty of business opportunities for both Russian and European companies. I trust that Russia will meet the international trading rules and standards to which it has committed."

The WTO accession will have a positive impact on the conditions of trade and investment between Russia and the European Union. The geographical position of Russia and the importance of its market in terms of volume and growth make it a very important trading partner of the EU. As a consequence of the WTO accession, Russia will amongst others lower its import duties, limit its export duties, grant greater market access for EU services providers and facilitate rules and procedures in many areas affecting bilateral economic relations. Of particular importance will be regulations on customs procedures, the use of health and sanitary measures, technical standards and the protection of intellectual property.

Russia will be subject to WTO rules in all these areas, including its monitoring and enforcement mechanisms. The EU, together with its international partners, is in contact with Russia to ensure that it respects these WTO commitments. Certain recently implemented or proposed legislation seems to be at odds with Russia's commitments and would stand in the way of other WTO members fully realising the benefits expected from Russia's WTO accession. The EU is particularly concerned about the proposed new legislation providing for a car recycling fee which could discriminate against imported vehicles and hopes that this legislation will not be adopted.

Background

Russia is the third trading partner of the EU and the EU the first trading partner of Russia.

• EU exports to Russia in 2011: €108.4 billion
• EU imports from Russia in 2011: €199.5 billion
• Total trade in goods in 2011: €308 billion

The main exports of the EU to Russia are cars (€7 billion), medicines (€6 billion), car parts (€3.5 billion), telephones and parts (€2.5 billion) and tractors (€1 billion). The EU imports from Russia cover mainly raw materials. The main imports are oil (crude and refined: €130 billion) and gas (€24 billion). For these products, as well as for other important raw materials, Russia committed to limit its export duties.

The main changes related to the WTO accession of Russia concern market access improvements for goods and services. The import duties for goods will decrease from a current average of 10% to an average 7.8%. In some important sectors, such as automotive, the import duty reductions are more significant (decreasing from currently 30% to 25% upon accession and to 15% after 7 years). It is estimated that the overall tariff reduction will result in savings of €2.5 billion annually in import duties for EU exporters. Furthermore the reduced tariffs are estimated to stimulate €3.9 billion of additional EU exports to Russia per year.

In the telecommunications sector, Russia will phase out its current equity caps (49%) for foreign investors within 4 years. Furthermore, the WTO accession of Russia covers a range of regulatory issues including sanitary and phyto-sanitary rules, customs and intellectual property rights.

The EU is the largest foreign investor in Russia, with investments worth around €120 billion in 2010. Russian investments in the EU amounted to €42 billion in 2010.