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The IMF has issued its latest six-monthly World Economic Outlook, which again marked a continued shift towards protectionism in advanced economies.

As this and other recent reports[1] – and the direct experience of retailers, wholesalers and traders – show, there is a continued move away from open trading policies. In our view, the accelerating trend of countries looking to short-term measures to protect a particular sector ignores the long-term damage, not only to the wider economy, but also the long-term cost to themselves in lost competitiveness and economic health. A free global market and an open EU Single Market aim to allow consumers and businesses access to the goods and services they want to buy. Protectionism is essentially about the state making decisions which close off choices for ordinary people and companies.

Commenting today on the publication of the IMF report, EuroCommerce Director-General, Christian Verschueren, said:

“Too many countries in and outside the EU are trying to gain a marginal advantage by creating new barriers to businesses seeking to offer choice and good service to consumers. This is short-sighted - and ultimately self-defeating, hindering countries’ own growth and the creation of new jobs. In the EU, it is also undermining the Single Market on which all our economies depend. An unfinished and fragmented Single Market costs consumers and businesses billions of euros every year. This IMF report provides further valuable evidence for why the EU needs to equip itself to compete globally by eliminating discriminatory and unjustified restrictions on providing consumers with the best goods and services.”

~ENDS~

Traceability for food safety purposes helps retailers and wholesalers to manage their chain so that fast, targeted and accurate withdrawals can be undertaken, hence contributing to the mitigation of any potential food safety crisis. Additional mandatory traceability requirements are in place for fresh meat, including beef and beef products, and for fish. Products consisting of, or containing, GMOs and food/feed produced from GMOs are also subject to traceability requirements. Yet there is no legal basis or agreed definition of traceability for non-food products1. Over the years traceability requirements have gradually started being introduced for non-food products.

Consumer confidence is a key priority for retailers and wholesalers. To secure this confidence, consumer product safety is paramount. EU legislation needs to be streamlined for product safety, and by providing a common framework for all non-food products and clear responsibilities for every private and public operator, legal certainty will be increased. As economic operators, the commerce sector welcomes this as this will further strengthen safety mechanisms.

The EU seeks to encourage importers to source from poorer developing countries by reducing the import tariffs for a number of products. These incentives are provided by the EU Generalised System of Preferences (GSP).

The main elements of the current GSP maintain the improvements made in the past decade: no more annual graduation, simpler product classification, only one special incentive regime (GSP+), and enough time for importers to prepare.

At present, the GSP is being subject to a mid-term review. In this context, it is important that this exercise duly focuses on the main target group of the GSP, i.e. EU importers and their need for a simple, stable and predictable system.

Intended to help domestic manufacturers, anti-dumping, anti-subsidy measures and safeguards cause considerable damage to EU importers and consumers. The latter have a legitimate interest to be spared the adverse effects of EU trade defence action.

The potential for retail to promote sustainable consumption led to the creation of the Retailers’ Environmental Action Plan (REAP). Following from the Commission’s 2008 action plan on sustainable consumption and production, the European retail sector (represented by EuroCommerce and ERRT) and the European Commission launched REAP in 2009.

REAP has two pillars of activity: first, the Retail Forum for Sustainability and second the Matrix of Environmental Action Points (MAP). The Forum promotes best practice in the European retail sector and identifies opportunities and barriers that may drive or hinder the achievement of sustainable production and consumption, thereby involving relevant stakeholders including suppliers, consumer and civil society organisations, governments and academia. The MAP is an online database of commitments on environmental targets made by individual retail companies and associations, grouped into three categories: “What we sell,” “How we sell,” and “How we communicate.”

To date, 17 retail companies and 3 retail associations have signed up to REAP. They participate in the Retail Forum and they voluntarily make commitments to promote more sustainable products, lower the environmental impacts of their activities and their supply chains, and raise awareness among consumers. All signatories’ individual commitments are available in a database (the MAP) which is updated annually, and regularly reviewed by the Commission. Collectively, the REAP members have also developed various voluntary agreements, such as the Retail Environmental Sustainability Code in 2010, the waste agreement in 2012, and the Commitment to the Circular Economy in 2016. REAP’s current focus (2016-2019) is on the Circular Economy.

In May 2016, the European Commission published a proposal for a Regulation on addressing geoblocking and other forms of discrimination based on customer’s nationality or place of residence.

EuroCommerce supports the general aim of the draft geoblocking Regulation to fight discrimination against consumers, to increase consumer choice and better prices. However, the best way to encourage cross-border expansion of e-commerce is to remove the legal and regulatory barriers to a true Single Market, providing a level playing-field for businesses and a better offering to consumers. These include product-related issues (labelling, technical requirements, product safety, market-specific design, and WEEE), consumer-related issues (diverging consumer protection rules, different language, consumer service and expectations, and sales promotions laws), differing VAT forms, rates and regulations, delivery costs and options, territorial supply constraints, etc. Merely banning geoblocking without addressing the reasons why traders are not in a position to serve other markets will not achieve this.
While supporting the Regulation’s general aim to fight discrimination against consumers, EuroCommerce calls for more legal clarity and for rules to be more practical for both consumers and traders. The proposal, as it stands, brings new risks for traders, but it does not increase legal certainty to alleviate these.

1. Consumers are at the heart of the supply chain: The supply chain exists to supply consumers with the goods they demand, at prices they are willing and able to pay. To meet ever-changing consumer demands, retailers need efficient and well-functioning supply chains. Retailers have no contract with consumers: switching supermarkets comes at no cost, and consumers do so if a competitor offers better service and better prices. Retailers need to stock “must have” branded goods, which consumers expect to find in stores. But they also need to stand out from competitors, and do so by investing in differentiation and segmentation, complementing their assortment with products catering for special consumer needs such as budget lines, local or foreign specialities, organic, fair trade or “free-from” (e.g. gluten or lactose free) products.
2. Competition: Retailers thrive on competition. Strong competition in retail has led to greater consumer choice, continuous innovation and more efficiency, which reads through to competitive prices for consumers; but it also means relatively low net margins (1-3% on average). The balance of bargaining power between manufacturers and retailers depends on the product and can change over time. Manufacturer concentration remains very high in certain product categories. Many leading brands are made by large manufacturers with a global presence and a strong position in European markets. No retailer can impose a unilateral deal on a manufacturer of a ‘must-have’ product, even if it is an SME.
3. Fair dealing and freedom of contract: Retailers believe in fair dealing and freedom of contract as the basis for their commercial relationships. Engaging in unfair practices simply undermines their ability to source and offer a wide range of products, ultimately damaging their competitive position. Freedom of contract is a key principle in business-to-business relations. A contract is the outcome of a negotiation in which both parties may make concessions in order to reach an agreement. Therefore, trading practices should not be considered in isolation, but in the light of the overall contract. Out of millions of transactions taking place every year across Europe, only a few raise problems, and companies have worked to put in place systems to deal with them e.g. through a commitment to the Supply Chain Initiative (SCI).

The European Commission launched a consultation in 2017, seeking stakeholders’ views on the modernization and simplification of the Common Agriculture Policy, with a view to shaping the future of the CAP. At a conference in July 2017, Commissioner Hogan outlined the following key challenges facing agriculture: challenging market situations and the need to improve farmer resilience, generation renewal, simplification, future multi-financial framework and uncertainty over the future CAP budget, international trade and market access, and sustainability. The consultation generated massive interest, with nearly 350,000 responses, largely from individuals. Key outcomes of the consultation show a consensus on the need for modernisation and for pursuing simplification, but also a tension between societal expectations of the CAP to deliver more on sustainability, and the need to make agriculture more attractive and economically stronger.

The European Commission will follow-up with a communication including possible policy measures in Autumn 2017/early 2018.

The retail and wholesale sector is a key stakeholder in the agri-food chain. They need a farming sector that is sustainable, able to adapt to changing circumstances, and meet changing consumer demand. They have long argued that regulating trading practices at EU level would be mere gesture politics and would not help address farmers’ issues.

Sixteen years ago, the WTO started the Doha Development Agenda (DDA), its latest Round of multilateral trade negotiations. Among the key DDA principles are unanimity and the principle that nothing is agreed until everything is agreed (“Single Undertaking”).

Originally scheduled to end in December 2004, the DDA has failed to yield most of the expected results. Most deals were reached in areas exempted from the Single Undertaking, such as the Trade Facilitation Agreement (TFA) 2013 in Bali and the Information Technology Agreement (ITA) 2015 in Nairobi.

Since the launch of the DDA, new issues have gained new momentum in the world economy, such as e.g. global value chains or e-commerce. The “Singapore Issues” (investment, competition and public procurement), dropped 2003 in Cancun, continue to need a multilateral framework under the WTO.

Developing countries rightly urge the WTO to confirm its focus on development with undiminished commitment. Despite including development in its name, the DDA has largely failed to meet poorer countries’ needs and expectations. The challenge for the WTO post-Nairobi is to reconcile the need for negotiations on new issues with a continued focus on development.