Friday, October 31, 2008

MEP in Seoul predicts EU Trade Agreement possible in 2008

South Korea and the European Union are ready to sign the free trade agreement (FTA) according to visiting European lawmakers in Seoul. The Chairman of the European Parliament's Korea delegation, Austrian conservative Member of European Parliamnet (MEP) Hubert Pirker said in a statement from Seoul, “The trade agreement between the European Union and South Korea is practically ready for signing.”

After a range of meetings in Seoul, Pirker said, “In our meetings and negotiations with the South Korean Prime Minister, the ministers for foreign affairs and trade as well as with the responsible Korean negotiators for the trade agreement, we were able to come to an agreement on concluding the negotiations. Some fine points will have to be ironed out over the next month, but I expect a final agreement ready for signature before the end of this year.”

The statement from the MEP came as a surprise to business observers in Seoul and Brussels as during the FTA talks in August, South Korean Trade Ministry sources had hinted at differences on those “sticky issues,” while EU negotiator Ignacio Garcia Bercero told New Europe on August 30 in Seoul, “We had a very fruitful discussion and we agreed to continue talks.”

South Korean Deputy Trade Minister Hye-min Lee and Deputy chief negotiator in August told New Europe about the “sticky” issues and expectations on both sides, lamenting, “On the services sector, the EU expects we should give more than what we have given to the US - but when we negotiated with the US - we already had EU FTA in mind.” “What we have agreed with the US is not just for the US but also for the EU. The Europeans are asking for more than that which is very difficult,” he said. “We will be obliged to change our regulations but European will not change anything while Europeans are set to gain from the FTA,” the Korean negotiator added.

According to business sources speaking to New Europe the EU had during talks in August flatly rejected the demand of South Korea with a booming auto-industry, to drop tariffs on South Korean cars within three years after the bilateral talks take effect.

Another major obstacle to the FTA negotiations is the legal sector as Doo-Sik Kim, an international trade lawyer told journalists at a lunch organised by the Korea Press Foundation on August 25. Addressing the fear of Korean legal sector about the take-over and expansion of the European law firms in the Korean market, Kim said it was one of the least highlighted subjects but there is a strong opposition from the concerned lawyer lobbies.

After meeting with Korean Prime Minister Dr. Han Seung-soo and the Speaker of the National Assembly, Kim Hyeong-o, responsible for the ratification of the agreement, all involved ministers of President Lee Myung-bak's government, Pirker, “In view of the international financial crisis and the regional and global security implications, this visit of the EU delegation is of high importance, also in the eyes of our South Korean counterparts.”

The EU is South Korea’s second largest trade partner after China. In 2007, the bilateral trade volume between South Korea and the EU amounted to USD 89.8 billion.

Thursday, October 30, 2008

EU sets out ambitious plans to tackle financial crisis

The European Commission announced on Wednesday (October 29) it will outline late November an economic recovery plan for the European Union to guide it from the present “financial crisis” to the “sustainable development” to avoid the prospect of recession.

“We will bring forward on November 26, a comprehensive EU recovery plan, based on the framework we have approved today,” Commission President Jose Manuel Barroso told journalists, adding, “that recovery plan will include targeted short-term actions to add to the medium-term reform agenda.”

Outlining a four-pronged framework as the basis of the plan, Barroso highlighted pragmatic measures to help families and households across Europe, coordination and solidarity among member states, full use of flexibility allowed by EU rules and global governance.


"Our top priority is to minimise the impact on jobs, purchasing power and prosperity of our citizens," he said. “We must keep unemployment to the absolute minimum and support those who have lost their jobs," Barroso added.

In a commission communication relating to the financial crisis, released after the press conference, the Commission stressed the need for social solidarity, saying that households and employees need to be cushioned from the full effects of the economic downturn.

The communication stated the chances for reviewing the terms for releasing money from the European Social Fund, which aims to provide educational opportunities and improve job skills, and review the effectiveness of the Global Adjustment Fund, which was established in 2007 to help workers laid off by companies that have moved their operations outside Europe.

Addressing a joint press conference with Barroso, European Economic and Monetary Affairs Commissioner Joaquin Almunia said, “We are now facing not only a financial crisis but a serious slowdown in our economies that is hitting households, businesses and jobs.”


Calling on member states to use flexibility provided in European fiscal rules in the case of sharp slowdowns, Almunia said, “They should use the room for manoeuvre they have to cushion the impact," adding, “we have red lines, we cannot put an excessive burden on the next generation.”

Almunia said: "Given that inflationary pressures are now easing, monetary and fiscal policy can contribute to supporting demand ... member states can now use the room for maneuver they have created.”

Almunia insisted that the Stability and Growth Pact is the appropriate policy framework for the EU, adding that in case of extra-ordinary condition like present, the pact will be interpreted flexibly, allowing budget deficits to exceed three percent of gross domestic production provided the deviation is small and temporary.

“The pact is about peer support in a difficult situation as the one we are living in and not only about peer pressure,” he said.

Echoing Almunia, Barroso said EU countries should use to its full potential the flexibility that exists within the EU fiscal discipline, as well as within the competition, state aids and internal market rules.

Warning, “We need to swim together or else we will sink together,” Barroso also acknowledged that the member states held the "main instruments" for reviving growth and not the European Union adding, “Europe must confront the economic downturn with the same robust and coordinated approach we have taken on the financial crisis.”

Commission President Barroso, however, cautioned against using the financial crisis to bring in protectionism saying, “Trade barriers shut out prosperity and open the gates instead to short-term, economic populism. So yes to pro-activism, but no to protectionism.”


Barroso and Almunia also urged the member states to look at the possibility of strengthening supranational financial institutions. Barroso said governments should also consider giving more money to the European Investment Bank that could direct funding to infrastructure projects or provide loans for small businesses hit by the credit crunch.

The European Bank for Reconstruction and Development (EBRD) could also receive more capital. The commission communication stated, “The EBRD has been playing a key role in financial sector reform and in financing the private sector in our newer member states. In the current financing environment its activities in these countries could be strengthened.


In the spirit of solidarity, EU governments agreed late Tuesday (October 28) to lend Hungary 6.5 billion Euro in a joint bid with the International Monetary Fund (IMF) to help the country deal with the financial crisis.

Barroso said the EU stands ready to provide substantial medium-term financial assistance to other member states experiencing balance of payments pressures or serious financial stability risks saying, “we need to be prudent but also vigilant.”

Amid fears that several new EU member states and other countries might eventually need assistance, Commissioner Almunia confirmed that no other country has asked for a rescue package similar to one provided to Hungary.

Hinting at the crisis-situation in Ukraine and others, Commission President Barroso said, “neighbours are under stress but EU institutions are ready to provide.”


Barroso promised EU support to improve cooperation and coherence at international level saying, “When you have global interdependence, you need global governance.”

Commenting on the Summit of Group of 20 in Washington on November 15 to reform the global financial system, Barroso said the summit must deliver the first results so as to rebuild a climate of confidence, which is part of the solution to the current crisis.

Urging China to be part of the solution, Barroso said, “China has been benefiting from this globalisation and has made big financial reserves and its time to show that they can help in this time of crisis.”

Barroso called on the IMF to be prepared to intervene with emergency financing as there were signs that the crisis is spreading to emerging markets. China and the Gulf countries could do more to help the IMF support countries hit by the financial crisis, Barroso said adding, “The idea put forward by (British) Prime Minister Gordon Brown, and I completely agree with him, is that China and others could help more the IMF ... Not only China but also the Gulf countries could maybe give a concrete demonstration of their sense of responsibility.”

On the subject of overhaul of the relevant financial institutions, the commission communication stated, “Europe is well placed to play an active role in designing the new global architecture and making it work effectively,” based on key principles of efficiency, transparency plus accountability and representation.

Commenting on the plunging stock markets even with the pumping of liquidity in the banking system, Barroso blamed it on lack of confidence in the economy, Barroso said, “People are expecting the negative effects on the so-called real economy and that's why it's important ... that we are acting in a coordinated way to address the problems of the real economy.” Barroso sounded positive as he declared, “Europe will come through this financial storm and will emerge stronger.”

Almunia said that he had made a proposal to raise the maximum EU aid to member states facing financing troubles to 25 billion Euro as according to a 2002 rule, the EU can provide up to 12 billion Euro in total financial assistance to member states that do not use the Euro when they run into a balance of payments crisis.

"We sent to the council (of member states) proposals for increasing this ceiling to 25 billion Euro," Almunia told journalists. EU officials later said that it will be on the agenda of the meeting of the EU finance ministers on Tuesday (November 4) in Brussels.

Wednesday, October 29, 2008

European leaders to meet ahead of financial summit

European leaders are set to gather in Brussels Nov 7 to try and agree to a consensus ahead of a global financial summit to address reforms to international financial institutions.

France, which holds the rotating European Union presidency this year, said in a brief statement Friday that the informal meeting of EU heads of state and government will prepare the EU's 27 member-states for an upcoming financial summit Nov 15 in Washington on the global financial crisis.

The summit was announced by the White House after a meeting last weekend between US President George W. Bush, French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso.

The White House said President Bush would host leaders of 20 of the world's richest nations and biggest emerging economies, including India and China.

At an emergency EU Summit Oct 15-16 here, EU leaders had agreed that a massive overhaul of the world's financial system is needed to prevent another financial crisis and asked Sarkozy and Barroso to hold further discussions with the US administration.

The European Commission, the executive arm of the EU, however, failed to answer questions from journalists over what preparations were in place for the Nov 7 summit.

Commission spokesperson Pia Ahrenkilde Hansen said European Commission members are to meet Oct 29 to prepare for the upcoming global summit in the US.

The US-hosted talks are expected to draw leaders from the Group of 20: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, Britain, the US, and the European Union.

European managers learn 'good guanxi' in China

The European Union (EU) has teamed up with China in a two-way partnership for training professionals and managers. The programme offers high-level training for EU managers and professionals interested in gaining China expertise, as well as Chinese managers with an ambition to train in Europe.

According to a survey published recently by the human resource consultancy Hewitt Associates, 55 percent of corporations with a presence in China plan to hire new staff in 2008.

For the EU-based companies, especially small and medium enterprises (SMEs), the EU-China Managers Exchange and Training Programme (METP), financed by the EU and China, offers the possibility to train their employees to become qualified experts in the Chinese market.

Stefan Hell, team leader in Beijing said: 'Despite the strong coverage China has received through the Beijing Olympics, the country and its business culture remain unknown to most European managers.'

"To be successful in China, one needs a profound knowledge of economy, culture and business ethics. And this is what METP offers applicants. At the same time, the programme functions as a platform where Europeans and Chinese meet and build long-term relationships - the basic foundation for successful business in China,' he added.

Julius Daujotas from Lithuania, who has already travelled to China and participated in the programme, told IANS: 'The company I am working for (Umega AB) manufactures heating equipment for industrial and laboratory purposes. Mainly it's heating furnaces up to 1,800 degrees Celcius.'

'Our company is selling quite a lot in Asian markets, for example Pakistan, India, Indonesia, but the Chinese market was still unexplored for us. So, one of the main objectives was to enter China with our production. To do that is a lot easier when you are able to speak Chinese, when you are familiar with local traditions and customs,' Daujotas explained.

'During the cultural training, we had a chance to meet each other more closely. For doing business in China, to have good 'guanxi' (relations) is very important,' he said.

'The most interesting experience during my stay was seeing the bargaining in markets - and the way salesmen try to attract your attention. Initially I was shocked, but then I understood the way of doing this and it became fun. Also it's a really good practice for your Chinese language,' Daujotas added.

Tuesday, October 28, 2008

Belgian regulator told to streamline market

The European Commission has given the green light to Belgium’s telecoms watchdog the Institut Belge des Services Postaux et des Telecommunications (BIPT,) to do the needful to bring down fixedline prices charged to the European citizens in the country. “BIPT has sought to force Belgium’s incumbent telecoms operator and the dominant player on the fixed-line market to comply with EU demands since 2000, but has failed to cut the costs that consumers have to foot,” the Commission said in a statement.

Viviane Reding, EU Commissioner for Information Society and Media said, “Although the Belgian retail calls markets have all the conditions to be competitive, leading to choice and affordable prices for Belgian consumers, the overall retail prices for fixed telephony in Belgium are one of the highest in the EU.” The Commissioner, who has come to symbolise EU citizens’ interests, warned the Belgian telecom industry: “This is simply not acceptable for Belgian consumers.

The European Commission will keep a very close eye on the Belgian market We ask the Belgian telecoms regulator to come back to us on this issue within a year’s time.” “BIPT should also revise its price control obligation imposed on Belgacom, the telecoms incumbent, to allow Belgian customers to make cheaper calls as soon as possible,” the Commission said in a statement. In a letter sent to BIPT, the Commission “endorsed BIPT’s finding that Belgacom is still dominant on the Belgian fixed line calls markets.”

Commenting on the letter sent to BIPT, a Commission spokesman told journalists, “For a three-minute local call in Belgium you pay 21.2 Euro cents. On an average in the EU you pay substantially below 10 Euro cents.” According to European laws the Commission can ask national regulators to enforce national rules to guarantee competition in their national markets but the Commission can not establish caps for local calls as it did for cross-border mobile services.

Noting that all national telecom regulators have the possibility to use tools such as a price cap on retail tariffs, the Commission spokesman added, “We recommend that the Belgian regulator makes full use of the instruments available to them under EU telecom rules.” The Commission asked BIPT to ensure complete enforcement of the existing wholesale measures and to let the Commission know of the results of a new market analysis within the next year.

Explaining the one year time period, the Commission spokesman told journalists that usually the national regulators submit their reports every two years but in this case the Commission has asked for an early assessment report. The spokesman lamented the fact that even though all the regulatory measures needed are in place in Belgium, the prices are still highest in the EU. The Commission identified the non-implementation of the wholesale line rental obligation imposed on Belgacom in 2006 and asked the national regulator for a better implementation, stating, “the wholesale line rental obligation, which was imposed on Belgacom by BIPT in 2006 and which allows alternative operators to use Belgacom’s networks, has not been implemented so far.”

Answering questions from the journalists, the spokesman clarified that the action against Belgium was not the first such move as there have been similar cases the latest was concerning Italy.

Moreover, the carrier pre-select system, launched in 2000 along with high broadband penetration is yet to have a significant effect on the fixed line telephony market in Belgium.

“The carrier (pre-)selection obligation, which allows consumers in Belgium to choose their preferred provider to supply their telecoms services, was imposed as early as 2000 and should have led, together with Belgium’s high broadband penetration, to effective competition in the fixed telephony market,” the Commission stated, adding, “in particular, the remedies should ensure that consumers benefit from cost reductions resulting from decreased wholesale interconnection charges.”

Market observers pointed that the present intervention under the leadership of Commissioner Reding is set to lower interconnection prices and usher in an era of tighter price controls on Belgacom’s retail offers thus benefiting the European citizens.

EU’s Blue Card visa scheme gets green light

The European Union Council of Ministers of Justice and Home Affairs slated to meet on November 27-28 in Bru ssels is expected to rubber stamp the Blue Card, a fast-track work visa, a decision made at the ambassadors’ level. “As the decision was agreed at the ambassadors’ level, it’s not yet official but we do not foresee any further debates and the decision will be ratified by the EU ministers next month,” an EU official said. France holds the rotating EU Presidency for the second half of 2008 till the end of December. In addition, the EU leaders en dorsed an EU immigration package and put on hold the restart of frozen trade and partnership talks with Russia.

With major countries like Germany and United Kingdom pushing for competition to get the best talents, the EU states significantly weakened the Commission’s original plans by insisting that it is up to national governments to decide how many migrants should enter their countries and what qualifications they should have. With a fast track application process along with making it easier for workers to bring families along and get housing the Blue Card, with validity of four years falls way short of original proposal.

Moreover, the Blue Card would only be issued under strict income conditions, with migrants expected to be earning at least one- and-ahalf times the gross national average wage. The Blue Card, a brain child of European Commission President Jose Manuel Barroso, was designed to be on par with Green Card system of the USA, the final version has lost much of its shine according to EU sources in Brussels.

Barroso had told journalists on September 29 in Marseille, France after the EU-India Summit: “We have made a proposal precisely to make it easier for qualified professionals to come to Europe because we want to remain open and in fact we want more people coming to Europe namely some migrants, qualified migrants and sometimes we find it’s difficult for them to come so we made a proposal and that proposal is being negotiated by the Council of member states and I think the final outcome will be a good one.”

Addressing a joint press conference with Indian Prime Minister Manmohan Singh and current EU Presidency holder French President Nicolas Sarkozy, Barroso had said, “I think it will a good outcome, a balanced proposals especially for the Indians to come to Europe and cooperate inside our member states.”

Asked to comment on the diluting of his proposals, Barroso told journalists, “of course sometimes we want more ambitious results but this is the way we work in the EU we have to understand we are 27 countries so at the end it has to be a compromise between all the countries because thats very much linked to their national sovereignty.”

Commenting on the upcoming proposals, Umesh Shenoy, an Indian software consultant working in Brussels, Belgium said, “Blue Card will greatly alleviate the problem of restrictive movement for non- EU employees within the EU countries. Hopefully will bring stability to otherwise chaotic procedure that comes with applying for work permit and residence cards. This will be useful for Multinational institutions which require workforce to be mobile and It is a win-win situation for both employer and employees alike in the longer term.”