Policy insight is key to EU trade

By Wei Hsin-fang 魏杏芳

Jun 18, 2022

The annual EU-Taiwan Trade and Investment Dialogue occurred on June 2, with media reporting that it was the first time for it to be a ministerial-level meeting.

This shows that the EU is placing increased importance on relations with Taiwan.

This is a welcome development. It is also something that Taipei has been working hard to achieve.

However, when discussing deeper EU trade ties, the issues go beyond simply exploring ways to increase trade volume; they must also be seen from the perspective of competition policy.

While emphasizing compliance with competition policy, bilateral trade must also help maintain the resilience of the respective markets, and provide a boost to companies of all sizes and consumers.

From the EU's point of view - whether it be in terms of international trade, e-commerce in the digital era or direct investment - the objective is to achieve the EU single market.

Competition policy is a major tool to promote market integration and must be on an equal footing with trade policy. It is vital to understand this when dealing with the bloc.

The EU's competition policy differs from antitrust regulations in the US, in that the latter is based entirely on a market economy and free-competition principles, allowing businesses to pursue maximization of their economic interests.

EU policy is designed to facilitate the establishment of a single market while maintaining a free and competitive environment. This makes the EU competition policy instrumental in nature.

The EU's rules were laid out in the Treaty of Rome, the foundation of the common market, signed in 1957. In addition to traditional competition-related provisions prohibiting collusion and abuse of market dominance, the rules on competition were already applicable to state-owned and public utilities. The treaty also regarded state-supplied subsidies and aid as a competition issue and regulated them.

As a result, any move by Taiwan through direct or indirect government assistance to increase trade with the EU must take into consideration more than WTO rules. If policy set by Taipei harms the competitiveness of EU businesses in its internal market, it would be a non-market distortion, which the EU would consider to be within the scope of Taiwan's competition policy.

At the G7 summit last year, there were discussions about international trends in competition policy and law enforcement initiatives. Clearly, the trade forum is paying more attention to such issues.

At the beginning of the COVID-19 pandemic, the European Commission announced a temporary framework to assess antitrust issues related to business cooperation in response to emergency situations stemming from the outbreak.

This framework provided guidelines for flexible enforcement of the rules in what were exceptional times.

This year, the EU introduced a competition law to investigate whether Russian oil giant Gazprom had contravened the law when it threatened to control delivery of natural gas following the outbreak of war in Ukraine, causing energy prices in Europe to soar.

The role of competition policy is important for the green and digital transitions, which are a priority for the EU. The much discussed European Digital Markets Act seeks to enhance the commission's ability to regulate the gatekeeper industry through ex-ante control and ex-post enforcement of general competition law.

Competition policy is linked to the process of realizing the EU's goals in many ways. This is in contrast to the Executive Yuan's Smart Taiwan Task Force, which cannot even coordinate goals with the Fair Trade Commission.

The difference between Taiwan and the EU in the positioning of competition policymaking is evident. The solution is to understand the logic and core values of the EU's policy thinking, and how it sets rules in line with common interests.

Building a comprehensive competition policy is central to establishing substantial trade relations between Taiwan and the EU.

Wei Hsin-fang is a Fair Trade Commission commissioner and an adjunct associate professor in the Graduate Institute of Technology Management at National Taiwan University of Science and Technology.

Translated by Paul Cooper

(Originally published on TAIPEI TIMES, Editorials page8: https://www.taipeitimes.com/News/editorials/archives/2022/06/18/2003780065)