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Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Export EU: A guide to the European Union for Australian Business

SECTION 2:  A-Z of Trade and Market Information

A

Accession:  the formal processes countries go through to join the EU (or another international organisation or agreement).  Accession to the EU requires compliance with a range of regimes and measures.  See also Copenhagen criteria.

Accession Treaty:  the act of joining the EU is known as ‘accession’ and the treaties that embody the conclusions of the negotiations between applicant states and the existing member states of the EU are known as ‘Treaties of Accession’.  The most recent treaty was signed on 16 April 2003 and paved the way for the enlargement of the EU to a total of 25 member states from May 2004.  The new member states are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia.  On joining the EU, applicants are obliged to adopt the "acquis", i.e. the EU’s detailed laws and rules.  The negotiations focus on the terms under which the applicants will adopt, implement and enforce the acquis as well as on possible transitional arrangements.

Acquis communautaire:  all legislation adopted under the treaties establishing the European Communities, including regulations, directives, decisions, recommendations and opinions.  When a country accedes to the European Union, its national legislation needs to be harmonised with the acquis communautaire.

ACP States:  African, Caribbean and Pacific Island States given preferential access to the EU market through the Lomé Convention, and more recently, the Cotonou Agreement.

Ad valorem tariff:   a tariff rate charged as a percentage of the value of the goods to be exported or imported.

Agenda for Cooperation: A 2003 review of the Joint Declaration on Relations between Australia and the EU resulted in the Australia-European Union: an Agenda for Cooperation.  This sets out initiatives for joint cooperation under seven headline areas: security and strategic issues, trade, education and science and technology, transport, environment, development cooperation, migration and asylum.  See also Joint Declaration.

Amsterdam Treaty: The 1997 Amsterdam Treaty finalised preparations for economic and monetary union, further deepened the internal market, and strengthened cooperation in both political and security matters, justice, international policing and immigration and asylum issues. 

Anti-dumping measures:  special import duties imposed when a firm, following an inquiry, is assessed as having sold a product in the importing market at prices below the one it charges for the same product in its home market.  In other words, it has been found to be dumping.  Anti-dumping measures are therefore a form of safeguards.  Under WTO rules, anti-dumping measures may only be imposed if in addition to the price differential material injury is caused to domestic industry producing like products in the importing country. [1]

Applied tariffs:  applied tariffs are the actual tariffs applied to goods entering a customs territory.  A WTO member may have bound tariffs at a certain level, but for a variety of reasons may choose to apply a lower tariff rate to goods coming in.

Article 133 Committee: a special committee of member state representatives which assists the Commission in its role as negotiator of trade agreements on behalf of the EU.

Australian Business in Europe (ABIE):  a networking organisation to assist and promote the conduct of business between Australia and Europe.  Founded in London in 1975, ABIE is a non-political organisation which provides a network for those interested in business between Europe and Australia as well as information, views and opinions to facilitate the conduct of business.  ABIE has established a presence in Belgium, France, Germany, Italy and other European countries.  Banking, insurance, finance, manufacturing and service industries are well represented, as are smaller enterprises.

Austrade: The Australian Trade Commission (Austrade) provides advice to companies on overseas markets and entry to those markets, and on what practical and financial help is available.  Austrade operates an international network of offices in 108 cities in 57 countries, which can help Australian businesses with local contacts and partnerships. Austrade also provides market research services and coordinates Australian involvement in international trade fairs.

  • Austrade’s Export Market Development Grants (EMDG) Scheme provides assistance to eligible small and medium Australian businesses seeking out and developing export markets by reimbursing part of the export marketing costs they incur.
  • In many regional areas, access to Austrade’s services is facilitated through TradeStart offices. TradeStart is a partnership between Austrade and a range of public and private sector service providers and provides a national network of 51 offices in regional centres across the country.

Australian Quarantine and Inspection Service (AQIS): provides inspection and certification for a range of animal and plant products exported from Australia.  See also quarantine.

Australian Icon

RM Williams is far and away the leading name in the Australian bush outfitting business.  With sales of over $50 million a year, the company’s retail and concept store program has grown to more than 100 locations in Australia and New Zealand and overseas stores in London and New York.

“The company is passionate about Australian bush heritage, we are very much a reflection of the Australian way of life and our unique Australian style,” says Hamish Turner, Chief Executive Officer, RM Williams.  RM Williams Outback magazine has one of the highest subscription rates of any magazine in Australia.  The magazine plays a key role in the company’s strategy for targeted marketing and promotions to reinforce their brand image and market position as an Australian icon.

RM Williams is continuing to expand its export business, particularly in the US, Canada, UK, Germany and other European countries.  The quality of its products and exposure to overseas markets through export and tourism has earned the company, among other accolades, the reputation of “the best boot-makers in the world”.

Autonomous Tariff Quotas (ATQs): Also called autonomous tariff suspensions and quotas, ATQs permit the total or partial waiver of the normal duties applicable to goods imported into the EU, for an unlimited quantity (suspension) or a limited quantity (quota).  The role of ATQs is to stimulate EU economic activity, improve competitive capacity, create employment and modernise structures, by allowing EU companies to import particular supplies at a lower cost.  The supplies concerned are raw materials, semi-finished goods, or components not available in the EU (suspensions), or which are available in the EU but in insufficient quantities (quotas).  ATQs are reviewed regularly by the EU to take account of technical or economic trends in products and markets after which permitted ATQs may be added to, modified or deleted. 

Photo Courtesy CSIRO

Australian rock lobsters

Following an intensive lobbying effort in Europe, and close cooperation between the Australian government and industry, exporters of Australian rock lobsters have gained a foot in the door in accessing the large EU market.

In October 2003, the EU granted an autonomous tariff quota (ATQ) enabling the import of 1500 tonnes of frozen rock lobster (Palinurus spp, Panulirus spp, Jasus spp) for further processing at 6 per cent duty – well down from the usual 12.5 per cent tariff – for the remainder of the 2003 calendar year.  It brought tariffs for Australian products into line with those of comparable species of lobster from the United States and Canada which already benefited from a similar tariff rate.

In March 2004, the European Union announced it would extend the lower tariff on rock lobster until December 2006.  This decision, covering a three-year period, provides an opportunity for Australian exporters to plan and take full opportunity of improved access to the EU market.

In 2003, Australian exports of rock lobster to the EU were worth $8 million, an increase of nearly 80 per cent over 2002, when rock lobster exports to that market totalled $4.5 million.

B

Barriers to Trade:  include physical barriers in the form of customs controls of goods, technical barriers in the form of specifications, standards and regulations, and tariffs, duties or other charges.

Binding Tariff Information (BTI):  a central instrument in the implementation process of the EU Common Customs Tariff, BTI ensures that the customs nomenclature is applied correctly and uniformly across all member states. Exporters may apply for BTI for their product.  The application is free of charge, but where customs incur specific costs in analysis, these may be passed on, and any documents submitted with the application may need to be translated.  See also, Customs classification.

Blue Box subsidies:  see Subsidies

Bound tariff rates:  The bound tariff rate is the rate which has been documented (and usually negotiated) in the WTO, and set down as a binding commitment.  Members of the WTO may not raise their tariffs above their bound rates except through negotiation with affected trading partners.

C

Cairns Group: a coalition of 17 diverse agricultural exporting countries with a common commitment to achieving a fair and market-oriented agricultural trading system.  Members of the Group are:  Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, the Philippines, South Africa, Thailand and Uruguay.

Since it formed in 1986, the Cairns Group has succeeded in putting agriculture firmly on the multilateral trade agenda.  It is an excellent example of successful coalition-building in the trade area.  By acting collectively the Cairns Group countries have had more influence and impact on the agriculture negotiations than any individual member could have had independently.

Carnet: an ATA (Admission Temporaire/Temporary Admission) carnet is a temporary importation customs document, issued by Chambers of Commerce in countries in the scheme given authorisation by the International Chamber of Commerce (ICC), Paris. It is known as the “ATA guarantee”.  A Carnet disposes of the need for raising bonds or depositing duty at customs posts in different countries.  The Carnet contains the appropriate customs clearance papers, and generally this method is preferred by Customs.

The ATA Carnet is a simple Customs document.  Inside are two vouchers for each foreign country you wish to visit.  You hand one voucher to the foreign Customs people when you enter the country and the other when you leave.  There are also two vouchers for presentation to Customs when leaving and returning to your own country.  You do not need to have your goods with you.  They can be sent on ahead if you prefer -- by road, rail, air or sea - even by post (with a few exceptions).  They can enter and leave countries at different points.  And a single Carnet enables you to visit an unlimited number of countries during one year.

Goods that qualify are:

  • Commercial samples and Advertising film (16mm) under the Commercial Samples Convention;
  • Goods for International Exhibition - under the Goods and Exhibition Convention;
  • Professional Equipment under the Professional Equipment Convention.

Carnets are available from Chambers of Commerce, and are recognised throughout the EU. [2]

CE Marking:  CE represents "Conformité Européene".  CE Marking indicates that the product may be legally sold in all 25 member states of the European Union.  Each member state must accept CE marked products without requiring any further testing or approval in relation to requirements covered by the New Approach directives.

CE Marking is evidence that the manufacturer is responsible for the conformity of their product to all provisions of the applicable New Approach Community directives.  It indicates that the product conforms to the relevant essential requirements, and other applicable provisions, and that the product has been subject to the appropriate conformity assessment procedures.  The CE Marking is mandatory for certain products and must be affixed before the product is placed on the market.  The manufacturer of the product is responsible for its conformity to the provisions of the directive(s) and the affixing of the CE Mark.  See also Mutual Recognition Agreement on Conformity Assessment.

The Department of Industry, Tourism & Resources has produced the following guide on the CE Mark: The European Union Standards and Conformity Assessment System: A guide for Australian Manufacturers and Exporters. This guide is available from their website by following the links to Industry, Agreements, ECMRA.

Chris Grow Engineering

Chris Grow Engineering is an Adelaide-based company which manufactures specialist mowers for use in vineyards.  They have been exporting to Californian wineries without trade barriers.  Increasing inquiries about the mowers from Europe prompted Chris Grow Engineering to obtain the CE mark.

The CE mark certifies that a product conforms to the relevant EU standards, and all machinery products placed on the European market must display the CE mark before they can be imported.

“When we first looked at obtaining a CE mark for our products, we found the options of having two European engineers come to Australia, or sending our machines to Europe, to be prohibitively expensive.”

“Via Austrade we obtained information about the CE mark and contact addresses for accredited conformity assessment bodies in Australia from the Department of Industry, Tourism and Resources.”

Chris Grow Engineering used the National Association of Testing Authorities (NATA) accredited compliance testing company Risk Plant Consultants to assess their products.

Certificates of Origin: see Export Documentation

Chambers of Commerce:  can be useful starting points for exporters.  They are located in most major cities and countries.  Chambers of Commerce provide valuable assistance to exporters through activities such as information seminars, facilitating trade delegations to key export markets and authorising and validating export license certificates.  The Chambers keep up to date copies of relevant publications on what requirements particular countries have for importing specific commodities.  They also have access to valuable country information through publications such as the World Trade Almanac.  Australia has Chambers of Commerce in all its capital cities.

Chambers of Commerce also play a key role in facilitating trade in Europe.  It can be helpful to contact the relevant chamber of commerce in the destination market you are looking to export to, as well as your local Chamber of Commerce. See the contacts section [ PDF ] to find where your nearest Chamber of Commerce is located.

See also, Austrade.

Codex Alimentarius Commission:  the international food standards-setting body, established under the joint auspices of the FAO and WHO, and currently with a membership of 165 countries, including Australia.  The Codex secretariat is located in Rome.  EU member states are members of Codex in their own right, with the European Commission participating as an observer.  The European Commission has sought membership in its own right, in recognition of its shared competencies with EU member states in relation to food issues. 

Common Agricultural Policy (CAP):  The objectives of the Common Agricultural Policy (CAP), stated in Article 33 of the Treaty establishing the European Community, are to increase production in the sector concerned, provide a fair income for farmers, stabilise markets, assure the availability of supplies, and ensure that these supplies reach consumers at reasonable prices.  These objectives are to be attained by common organisation of agricultural markets, through instruments that include regulation of prices, aids for production and marketing of the various products, storage and carryover arrangements and common machinery for stabilising imports or exports. The European Commission has the major responsibility for implementing the CAP.

The CAP encourages over-production of many agricultural commodities, especially in times of low world prices, leading to a distortion of international agricultural markets.  This is of serious concern to Australia, as an efficient and unsubsidized exporter of agricultural products.

The CAP reforms agreed by EU member states in June 2003 are a step forward in introducing greater market orientation into EU farm production by scaling back the link between farm subsidies and production.  The key elements of the reforms, covering cereals, oilseeds, protein crops, beef, and dairy, are:

  • a single farm payment for EU farmers, independent of production levels (“decoupled”), although some coupled elements may be maintained to prevent production from being abandoned;
  • this payment will be linked to farmers meeting certain criteria on environmental practices, food safety, animal and plant health, and animal welfare standards (“cross compliance”);
  • a reduction in direct payments (“modulation”) to larger farms to finance a new rural development policy;
  • a “financial discipline” mechanism to prevent spending exceeding the budgetary ceiling.

Ten[3] member states opted to introduce decoupled payments to farmers from 1 January 2005, with the remaining five pre-enlargement member states doing so in 2006.  The 10 new members are subject to a different regime which reflects the differing nature of their agricultural industry, although Malta and Slovenia have indicated their intention to implement the new arrangements in 2007.

Further CAP reform proposals on the so-called ‘Mediterranean products’ – olive oil, cotton, and tobacco – and hops were agreed in April 2004.  These reforms, to be implemented in 2006, follow the direction of the 2003 reforms and provide for full or partial decoupling.  The Commission is also considering reforms to the sugar regime.

None of these reforms do anything to improve market access or address export subsidies.  These issues, along with reductions in domestic support, are being pursued vigorously in the current WTO round of multilateral negotiations.

The CAP accounts for about half of the total EU budget.  Following agreement in 2002 by EU leaders, the growth in overall CAP budget expenditure, other than that for rural development, is limited to one per cent per year in nominal terms, for the period 2007-13.  The CAP reforms were based on the limits agreed at the 2002 Brussels Summit, including full funding for extending the CAP to the 10 new member states, and do nothing to reduce the overall level of support to EU farmers.  Preliminary estimates of the budget costs for direct payments and market support of the CAP after the reforms show that expenditure would rise from euro 42 billion in 2004 to euro 49 billion in 2013 for the EU-25.

Common Commercial Policy (CCP):  the external aspect of the single market which harmonises member states' trade policy around common principles relating to tariff rates, trade agreements, liberalisation measures, export policy and anti-dumping.  Under the CCP, the European Commission is empowered to negotiate international trade agreements on behalf of the EU on the basis of a mandate agreed by the member states.

Community Legislation:  EU Legislation takes different forms, depending on the objectives to be achieved.  Legally binding legislation takes the form of regulations, directives and decisions, which can be adopted by the Commission, the Council or the European Parliament acting jointly with the Council.  Non legally binding recommendations or opinions can also be delivered by the EU institutions.

Regulations have general application, are binding in their entirety and are directly applicable in all member states.  An example of this is Regulation No 2913/92 of 12 October 1992 (as amended), which deals with the valuation of goods for customs purposes.  All states were immediately bound by this Regulation which becomes part of their domestic law, and thus, valuation of goods becomes harmonised across the EU.

Directives are binding, but as to the result to be achieved, not the form or methods. As an example Council Directive 89/108/EEC of 21 December 1988 sets out the rules for the quick-freezing, packaging, labelling and inspection of quick-frozen foodstuffs.  This directive is designed to harmonise the member states' laws on quick-frozen foods, so as to facilitate their free movement within the Community.  Member states are required to implement domestic legislation to achieve the objectives of the Directive, and ensure compliance by industry.

Decisions are binding in entirety on those to whom they are addressed, and usually deal with specific questions.  For example, while a Directive was issued concerning the general safety requirement for consumable products (Directive 92/59/EEC of 29 June 1992), it was a Decision (1999/815/EC - Official Journal L 315, 09.12.1999, then as amended) which prohibits member states from placing on the market toys and child care articles, intended to be placed in the mouth by children under three years of age, made of soft PVC containing certain phthalates, due to safety considerations.

Recommendations and opinions have no binding force, instead carrying political and moral significance.  These enable the community institutions to express a view to the member states, which is not binding and does not place any legal obligations on the addressees.  A recommendation may be used to urge a particular form of behaviour, while an opinion is used where the Community institutions are called upon to state a view on a current situation or particular event.

Community Trade Mark (CTM):  The Community trade mark grants its proprietor a uniform right valid in all member states of the European Union by means of one procedural system. The CTM is unitary in nature and gives proprietors exclusive rights enabling them to prohibit any third parties from using the sign in their commercial or industrial activities.  The CTM has been designed to complement the national systems of protection.  The European Trade Mark Office is located in Alicante, Spain.  For more information, contact the Office for Harmonization in the Internal Market (Trademarks and Designs).

Competition Policy:  designed to prevent price fixing, collusion and abuse of monopoly or significant market power.

Rules on competition at EU level are established by the Council of the European Union.  Member states retain the authority to rule on competition matters within their own national jurisdiction The Commission is charged with the implementation of such rules, in cooperation with member state national authorities.  Commission rulings on infringements of competition rules are enforceable by the Court of Justice.  Member states are also bound by common rules on competition in the operation of public enterprises and special concessions for private enterprises.

In practical terms, this policy impacts on exporters when appointing distributors.  A firm may appoint only one distributor but may not call this agent an 'exclusive' distributor.

Conformity Assessment:  Conformity Assessment is the different methods (testing, inspection and certification) used to demonstrate that products comply with requirements.  See also Mutual Recognition Agreement on Conformity Assessment.

Conformity Assessment Body:  A body whose activities and expertise include performance of all or any stage of the conformity assessment process. 

A list of Conformity Assessment Bodies eligible to provide conformity assessment services to Australian exporters under the EC-Australia MRA is available from the Department of Industry, Tourism and Resources, details in the contacts section.  See also Mutual Recognition Agreement on Conformity Assessment.

Constitution:  after two years of negotiation, the member states agreed on the text of the Constitutional Treaty for the European Union at the June 2004 Summit in Ireland.  The Constitution, once ratified, will replace the series of Treaties which established the European Union and its institutions.  See also Treaties.

Copenhagen criteria:  so named because the criteria were developed at the 1993 meeting of the European Council in Copenhagen, refer to a number of political and economic criteria that candidate countries for EU membership are required to meet before accession negotiations can begin. They are:

  • stability of institutions guaranteeing democracy, the rule of law, human rights and the respect for and protection of minorities;
  • the existence of a functioning market economy;
  • the capacity to cope with competitive pressure and market forces within the EU; and
  • the ability to take on the obligations of memberships including adherence to the aims of political, economic and monetary union.

Cotonou Agreement:  named after the capital of Benin in West Africa where it was signed in June 2000, a 20-year agreement on trade, development and political cooperation between the EU and the African, Caribbean and Pacific countries (ACP).  This agreement entered into force in April 2003.  See also Economic Partnership Arrangement.

Council of Europe:  established in 1948 following a call from Sir Winston Churchill in 1946 for creation of a united states of Europe, was the first coming together of European States in the search for a new, more peaceful and engaged Europe. While the Council of Europe could be said to have spawned the ultimate formation of the European Union, it did not evolve itself into a ‘united states’ of Europe.  The Council of Europe is an intergovernmental organisation with aims including the protection of human rights, pluralist democracy and the rule of law, and promotion of Europe's cultural identity and diversity. Any European state can become a member of the Council of Europe provided it accepts the principle of the rule of law and guarantees human rights and fundamental freedoms to everyone under its jurisdiction.  Current membership is 46 states.

The Council of Europe should not be confused with the Council of the European Union, which comprises Ministers of the EU, nor with the European Council, which brings together Heads of State or Government. 

Council of the European Union:  usually known as the Council of Ministers, is the EU's decision-making and legislative body, although in certain areas it shares the legislative function with the European Parliament.  The Council of Ministers enacts EU legislation (regulations, directives and decisions), and it has joint control, with the European Parliament, over the EU budget.  The Council is assisted by a General Secretariat.  Each EU member state in turn holds the presidency of the Council for six months.  The Council consists of member state ministers, with the minister attending varying according to the subject of the meeting.  See also European Council.

Customs classification

“Ensure your product is classified correctly before shipping,” says Ryan Hill, International Business Manager of Paton’s Macadamias.  “One of our trial shipments of product into an EU member state was unfortunately classified differently in other member states of the EU.  Our product was charged 29 per cent (plus variable content) duty, instead of the usual 8 per cent (plus variable content), and once the classification was made by the relevant customs authority, having the classification changed proved time consuming and expensive.

“A better way to go is to approach the relevant customs authorities and seek a tariff classification at the point of entry. For food products they will ask for the ingredients and may laboratory test it to check (approximate cost is US$110).  Once a product is classified, you may request a Binding Tariff Information (BTI) document for the product, which is valid for six years, and the country may keep a control sample, ensuring future shipments are of the same ingredient mix.  At least this way you have a chance of appeal prior to shipping the goods & won’t face demurrage whilst the BTI is done.”

The European Union has a common external tariff, the operation of which is guided by Regulation 2913/92 (as amended).  This regulation established the Community Customs Code.  Customs classification relies on the World Customs Organisation's Harmonised System.  The implementing provisions for classification are in Commission Regulation (EEC) No. 2454/93. It has been amended several times.  For some specific products, the Commission gives instructions to Customs authorities on how they are to be classified.

The World Customs Organisation periodically announces such international decisions, including the establishment of new classification opinions and explanatory notes and of amendments to existing explanatory notes. These announcements may be found on the World Customs Organisation's web site.  Such decisions may also affect binding tariff decisions.

Customs duties:  Customs duties were harmonised in the EU on the formation of the customs union.  All entry points to the EU single market apply the same tariff rates.  (See also customs classification.)

Customs policy:  described by the EU as 'a foundation of the Union and an essential element in the functioning of the single market'. The importance of customs policy to the successful operation of the single market can't be understated.  'The single market can only function properly where there are common rules applied in a common way at its external borders - all Customs administrations acting as one. These common rules go beyond the Customs Union as such - with its common tariff - and extend to all aspects of trade policy, such as preferential trade, health and environmental controls, the common agricultural and fisheries policies, the protection of our economic interests by non-tariff instruments and external relations policy measures.'

Customs union:  the creation of a single market from more than one customs territory (usually a country) where all external duties are harmonised.  There are no internal tariffs applied to the movement of goods.

Customs valuation:  Valuation of goods for customs purposes is based primarily on the transaction value: the price actually paid or payable for the goods when sold for export, adjusted where necessary.  The applicable provisions are set out in Chapter 3 of Regulation 2913 of 12 October 1992, as amended. 

D

Data Protection:  EU member states are bound by a Directive of the European Parliament in relation to personal data protection [Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data]. The Directive contains a provision (Article 25) allowing the transfer of personal data to a third (non-EU) country where that country has an adequate level of data protection.  The European Commission (EC) assesses the adequacy of the level of protection afforded by a third country.

To date only five non-EU countries (Canada, Argentina, Guernsey, Switzerland and Hungary, the latter of which is now a member of the EU) have been formally assessed as having an adequate level of data protection. The US ‘Safe Harbour’ arrangement and transfer of Air Passenger Name Records have also been accepted as adequate. The European Commission has commenced assessments of the data privacy regimes of other third countries including Australia and Japan.

The effects of this legislation are that EU companies cannot transfer personal data to countries that do not meet its privacy protection adequacy test. 

Australia has recently adopted new private sector privacy legislation. The legislation (which amends the Commonwealth Privacy Act 1988) establishes a co-regulatory regime for the protection of personal information handled by private sector organisations, containing provision for the development of approved privacy codes as well as ‘default’ legislative privacy standards (National Privacy Principles).

National Privacy Principle (NPP) 9 limits the circumstances in which personal information may be transferred from Australia to a recipient in a foreign country.  While there are some situations where transfer is permitted by NPP 9 (such as where the individual consents), there is a general prohibition on transfer of personal information out of Australia to other countries that do not have a law, binding scheme or contract that effectively upholds data protection standards that are substantially similar to the National Privacy Principles. Most EU-member countries have domestic data protection laws regulating private sector.  However, contractual measures protecting any personal information transferred may be needed in some circumstances.  Further information about Australia's private sector privacy legislation can be obtained from the Federal Privacy Commissioner's website.

The European Commission and Australia (the Attorney-General’s Department) are holding ongoing discussions concerning the free and safe flow of electronic data between EU member states and Australia.

Decision:  See Community Legislation

Decision-making in the European Union

The process of decision-making within the European Union involves a number of complex procedures and substantial interaction between the Council of Ministers, the European Commission and the European Parliament in order to come to a conclusion that has as much common support as possible.  The European Commission has the right to initiate legislation in respect of European Community matters, with the Council of Ministers only taking decisions on proposals from the Commission.  Similarly, the European Parliament cannot initiate legislation but considers proposals from the Commission in association with the Council.  This consideration and taking of decisions occurs through four types of legislative procedure. 

The four procedures are known as consultation, co-decision, cooperation and assent.

The consultation process requires the Parliament to provide a formal opinion, including proposed amendments, on a legislative proposal by the Commission.  The Commission considers the Parliament’s opinion and submits the original or a revised proposal to Council.  There is no legal requirement for the Commission or the Council to act on the Parliament’s amendments.  A Council working party and COREPER (the Committee of Permanent Representatives) will normally consider the Commission’s proposal after consultation.  The Council then adopts the proposal according to the voting procedure specified for the subject in question (e.g. unanimous agreement for matters concerning harmonisation of taxes and foreign policy, qualified majority agreement for matters relating to agriculture).  If the Council wishes to amend the Commission’s proposal, it must do so unanimously.

The co-decision and cooperation procedures are substantially more complex than those involving consultation.  In both, two readings are required by the European Parliament.  Co-decision is the normal mode of EU decision-making and applies to most Community policies relating to the single market, including environment, consumer policy, energy and transport.  It gives the Parliament the right to adopt legislation jointly with the Council.  The cooperation procedure relates to certain aspects of economic and monetary policy and involves the Council adopting a common position by qualified majority after receiving the Commission’s proposal.  The Parliament then has the right to amend, reject or accept the proposed legislation, before it is returned to the Commission and the Council.

The assent procedure, introduced by the Single European Act in 1986, gives the European Parliament the right of veto over a Council act. The procedure is used for the adoption of international agreements, as well as agreements that either create new institutions, or have significant budgetary implications for the EU, or require the amendment of EU legislation subject to co-decision.  Assent is also required for the accession of new members to the EU.  These legislative procedures may be simplified by the new EU constitution, if ratified by the member states.

Declaration of Conformity:  An EC Declaration of Conformity is a certificate issued by the manufacturer, or their authorised representative established in the EU, in which the manufacturer, or their representative, declares that a product being placed on the EU market complies with all the essential health and safety requirements that are detailed in the appropriate Annexes of the relevant New Approach Directives.  An EC declaration is often referred to as a “manufacturer's declaration”.

In support of a declaration of conformity, the manufacturer must establish technical documentation which enables the conformity of the product to be assessed by an appropriate authority when required for market surveillance purposes. This documentation must describe the design, manufacture and operation of the product and must be available to the surveillance authorities of EU member states for 10 years.

Decoupling: a term used to describe the process of separating the amount of subsidies EU farmers receive from the level of their agricultural production under the Common Agricultural Policy.  It is intended to reduce incentives to over-produce certain agricultural products.

Deepening:  relating to increasing integration: economic, social, legal etc, between the member states.  Used in contrast to 'widening' - expanding EU membership. 

Degressivity:  a term used within Europe to describe proposals for progressive reductions in subsidy payments.  It is most commonly applied to the CAP.

Derogation:  literally, a lessening or deviation from law, derogation refers to temporary suspension or waiver of requirements.  In drawing up regulations or directives, a special dispensation or exemption clause may be added to allow specified member states a temporary suspension or waiver from the requirements.

Directive:  see Community Legislation

Doha Round also known as the Doha Development Agenda, is the name given to the current round of WTO multilateral trade negotiations.  The Round was launched at the Fourth WTO Ministerial Conference in Doha, Qatar, on 14 November 2001.  The Doha Ministerial Declaration gives a specific commitment to negotiations on agriculture; services; non-agricultural market access (industrial products); a multilateral register for wines and spirits geographical indications; improvements and clarification of the dispute settlement understanding; WTO rules (covering anti-dumping, subsidies and countervailing measures, fisheries subsidies and regional trade agreements); and trade and environment.  Importantly, WTO members also reaffirmed at Doha that special and differential treatment for developing and least developed countries is an integral part of the WTO suite of agreements. 

Distribution

“Understanding your supply chain into different markets is critical”, says John Le Plastrier, Trading Manager for Seedmark.  “Most countries have a wide variety of customs, laws and capabilities that need to be considered and constantly monitored, especially with a complex product like planting seed. Having your own agent or office in major export destinations is imperative, and strong relationships with buyers is a must to work through the inevitable problems that occur when exporting.”

“The key to successful exporting is not when the product is bought or sold, but how the transaction is executed. This includes having expertise in domestic transport, ocean freight, banking, insurance, documentation, quarantine laws, tariffs, and local customs. Quite often a deal is made or broken on logistics, not price. The ability to deliver Just-In-Time is becoming a more valuable commodity in international trade and the companies that understand and can deliver on this are the ones that will prosper in the future.”

“Managing foreign exchange risk is obviously an important consideration and one which is quite often mismanaged as many smaller exporters do not understand or have the skills to manage this risk. Talking to your foreign exchange dealer and explaining the export trade you are doing can often highlight better ways to manage this risk.”

Seedmark is a company owned by grower shareholders and specialises in the production and marketing of a wide range of pasture legumes and forage seeds, cereals, pulses, spices and vegetable seeds. Started in 1964 as Seedco, Seedmark is now Australia's largest producer of pasture legume seeds suitable for dryland and irrigation farming systems.  Seedmark has clients in over 65 countries and is a six-time winner of Government Export Awards for outstanding achievement in export sales and marketing.

Documentation:   see export documentation

E

Eco-label: The Community eco-label award scheme is designed to promote products which have a reduced environmental impact compared with other products in the same product group; and to provide consumers with accurate and scientifically based information and guidance on products.  The eco-label may be awarded to products available in the Community which meet certain environmental requirements and specific eco-label criteria.

The criteria are set and reviewed by the European Union Eco-Labelling Board (EUEB), which is also responsible for the assessment and verification requirements relating to them. Applications may be made for award of the eco-label for a fee, and the Commission and member states are obliged to promote the Eco-label.

Any product to which the eco-label is awarded is recognisable by the 'daisy' logo, as described in Annex III to the Regulation. (Regulation (EC) No 1980/2000).

Economic and Monetary Union:  means a single monetary policy within a single economic market.  The three stages of economic and monetary union were firstly, the dismantling of internal barriers to the free movement of capital in the EU; secondly the establishment of the European Monetary Institute, the prohibition of financing the public sector by the central banks and the avoidance of excessive deficits in public finances; and thirdly, the transfer of monetary competence to the Eurosystem, the irrevocable fixing of exchange rates between the currencies of the participating EU member states and the introduction of the Euro. Monetary policy is run by the European Central Bank (ECB) See also Euro.

Economic Partnership Arrangement (EPA): a reciprocal and WTO-compatible free trade arrangement proposed as the basis of the EU trade relationship with Africa, Caribbean and Pacific (ACP) countries after January 2008.

EC Declaration of Conformity:  see Declaration of Conformity, Mutual Recognition Agreement on Conformity Assessment.

Enlargement: the EU has been through various phases of enlargement.

The original six – Belgium, Germany, France, Italy, Luxembourg and the Netherlands – were joined:

  • in 1973 by United Kingdom, Denmark and Ireland
  • in 1981 by Greece
  • in 1986 by Portugal and Spain
  • in 1995 by Austria, Finland and Sweden
  • in 2004 by Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia, and Slovak Republic.

Bulgaria and Romania are aiming to join in 2007.  Turkey and Croatia have been invited to commence accession negotiations in 2005.

Switzerland and Norway have both rejected EU membership by referendum, although Switzerland's (now dormant) application is still current.

Eur-lex:  The website listing all EU legislation, including the Official Journal, Treaties, Legislation in Force, Case law and Documents of public interest. 

Euro:  stands as one of the strongest symbols of European unification.  The euro became the official currency of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain on 1 January 1999.  Greece adopted the euro on 1 January 2001.  National currencies remained in circulation, but at fixed exchange rates against each other, until euro notes and coins were introduced into circulation on 1 January 2002.  These countries are known as the euro area.  The new member states will all be seeking to join the euro area in the near future.

European Australian Business Council (EABC) a national body established in Australia to promote the business interests of those EU member states which are represented in Australia by organisations such as chambers of commerce and industry, foreign trade offices, and other similar business/trade associations or representations.  EABC member organisations also represent corporate and individual members involved in trade and investment within Europe.

European Bank of Reconstruction and Development (EBRD):  established in 1991, with the aim of fostering economic transition in central and eastern Europe and the Commonwealth of Independent States.  Through its investments it promotes private sector activity, the strengthening of financial institutions and legal systems, and the development of the infrastructure needed to support the private sector.  The EBRD seeks to help its 27 countries of operations to implement structural and sectoral economic reforms.  The EBRD has a number of programs including the Trade Facilitation Programme, TurnAround Management Programme, and in collaboration with other financial intermediaries supports small and medium sized projects. 

European Central Bank (ECB) established in 1999, its role is to conduct monetary policy across theeuro area The principal objective of the ECB (assisted by the national central banks of euro area member states) is to maintain price stability.  The ECB has defined this as a year on year increase in consumer prices of below 2 per cent.  The two pillars which support this aim are the reference value for the annual growth of the broad monetary aggregate M3 of 4.5 per cent, and an assessment of a broad range of non-monetary economic and financial indicators (eg, projections for real GDP growth, inflation forecasts, unemployment and wages growth).

The ECB's tasks in pursuit of this objective are to define and implement monetary policy, conduct foreign exchange operations, hold and manage member states' official reserves, and promote the smooth operations of payment systems.

The European Central Bank is based in Frankfurt am Main, Germany.

European Coal and Steel Community (ECSC):  established under the Paris treaty in 1951, including Belgium, the Netherlands, Luxembourg, France, Germany, and Italy, and was the first integration of European country markets.

European Commission: the executive body, the “public service” of the EU, but is also more than this.  Sharing policy and decision-making powers with the Council and member states, the Commission consists of a President, nominated by common consent of the member states with the approval of the European Parliament, and 25 Commissioners, nominated by common consent of the member states and the President of the Commission.  The Commission's role is to ensure the implementation of the Treaties through the application of specific legislative and administrative measures. The Commission services employ over 20,000 civil servants, with a significant proportion of these employed as translators and interpreters for the EU's twenty official languages.  A new Commission assumed office in November 2004.  The structure and policy responsibilities of the Commission may also change under the new EU constitutional treaty.

European Commissioners: Each Commissioner is responsible for a portfolio and often has a political background.  While each Commissioner is appointed by the mutual agreement of the governments of the current member states, they may not take instructions from their own national governments.  They are to act in the interests of the Community, and the European Parliament supervises their actions.  Commissioners serve for a term of five years, to coincide with the term of the European Parliament. A new Commission assumed office in November 2004.

European Communities:  formed in July 1967, were the result of the merging of the European Economic Community (EEC), the European Coal and Steel Community (ECSC) and Euratom. With the entry into force of the Treaty on European Union in 1993, the EC became the EU.

European Council: brings together the Heads of State or Government of the member states of the European Union and the President of the European Commission. The Council usually meets at least twice a year. 

The European Council cannot legislate but its written conclusions provide guidance and impetus to the Council of Ministers.

It should not be confused with the Council of Europe (which is an international organisation) or with the Council of the European Union (which consists of the Ministers of the member states served by a Council Secretariat).

European Court of Justice:  responsible for ruling on the interpretation of the Treaties, the consistency of acts of Community institutions and the European Central Bank with Treaty provisions, and cases of Community law The Commission or individual member states may bring cases to the Court of Justice where they consider a member state has failed to fulfil its obligations under the Treaty.  The Court can impose fines and penalties on member states if they fail to comply with Court rulings.

The European Court of Justice consists of 25 Judges, nominated by common accord of the member states for a renewable term of six years.  The Judges are assisted by eight Advocates-General, nominated by the member states for a renewable six-year term.

The seat of the Court of Justice and the Court of First Instance is Luxembourg.

European Economic Area (EEA):  The European Economic Area includes all member states of the EU and three of the four states of European Free Trade Agreement (EFTA), (Iceland, Liechtenstein and Norway) and forms a single market. Switzerland, while being a member of EFTA, is not part of the EEA. 

European Economic Community (EEC):  established by the Treaty of Rome in 1957.  In 1967 the EEC was merged with the European Coal and Steel Community (ECSC) and European Atomic Energy Community (Euratom), to form the European Communities (EC).  With the entry into force of the Treaty on European Union in 1993, the EC became the EU.

European Free Trade Association (EFTA):  a free trade association comprising Iceland, Liechtenstein, Norway and Switzerland. While EFTA does not envisage the same level of integration as that of the EU, it contains provisions on restrictive business practices and the right of establishment of enterprises of member countries.

European Investment Bank: grants loans and guarantees finance to facilitate: projects in less developed regions of the EU; projects to modernise enterprises or develop new activities relevant to the progressive establishment of the common market that are too large to be funded from member state resources; and projects of interest to several member states that are too large to be funded from member state resources.  The Bank operates on a non-profit basis and is funded through its own resources and use of the capital markets.

The European Investment Bank is based in Luxembourg.

European Parliament (EP):  directly elected by the citizens of the European Union (EU) for five-year terms.  The last elections were held in June 2004.  The seat of the European Parliament is in Strasbourg where one-week plenary sessions are held once a month. Unlike national legislatures, the European Parliament does not normally have the right to introduce legislation, this being the prerogative of the European Commission.  The main functions of the Parliament are: consideration of the European Commission’s legislative proposals and co-decision with the Council of Ministers (which is the prime decision-making body of the EU, on which all member states are represented) in the legislative process; control over EU activities through confirmation of the appointment of the European Commission (and the right to censure it) and through the written and oral questions it can put to the Commission and Council; and sharing of budgetary powers with the Council in voting on the annual budget and overseeing its implementation.  See also Decision Making in the EU.

European Patent Convention (EPC):  Convention adopted in 1973 by 13 European states which rationalised procedures for issuing patents by establishing a common judicial system.  See Patents.

European Patent Office (EPO): established in 1973 by the Munich convention to issue patents valid throughout Europe.  The EPO has its headquarters in Munich, a branch in The Hague, and sub-offices in Berlin and Vienna.

The member states of the EPO are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Germany, Denmark, Estonia, Finland, France, Greece, Hungary, Iceland, Ireland, Italy, Liechtenstein, Lithuania, Luxembourg, Monaco, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.  Countries expected to join the EPO system in the near future include Albania, Croatia, Latvia, and the Former Yugoslav Republic of Macedonia.

The EPO grants European patents under a unitary and centralised procedure. By filing a single patent application in any of the three official languages - English, French or German - an applicant can obtain patent protection in as many EPO member and extension states as desired. The office receives over 160 000 patent applications per year.

Once a patent is granted, it becomes the legal responsibility of the countries designated by the applicant in their application, and in each of them affords the same protection as a national patent. It is valid for 20 years, although extensions are possible for patents relating to pharmaceutical and plant protection products.

European Union (EU):  Established by the Treaty on European Union (also referred to as the Maastricht Treaty), signed in December 1991 and coming into force in November 1993, the EU was designed to mark a new stage in the process of creating a closer union among the peoples of Europe.  The Treaty on EU set objectives of economic and monetary union (including the establishment of a single currency), the implementation of common and security policy, protection of rights and interests through introduction of citizenship of the Union, closer cooperation on justice and home affairs, and maintenance and building on the acquis communautaire.

Everything But Arms (EBA): a policy of the EU which provides 42 least developed countries (LDCs) duty-free access to the EU markets without quota or other restrictions for all agricultural primary and processed products.  EU imports of sugar, bananas, and rice are subject to progressively reducing tariffs and increased access transition arrangements until completely phased out by 2009.

Excise:  Excise duty is applied to manufactured tobacco, alcohol and alcoholic beverages and mineral oils.  Council Directive 92/12/EEC of February 25 1992 (as amended), describes the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products. Excise is payable on both imported and locally manufactured products, either at the time of production within the territory of the Community or of their importation.  The payment of excise on imported goods may be suspended under tax-warehousing arrangements.

The amount of excise charged may vary between member states, and member states can continue to levy other (unharmonised) taxes on these products (green taxes) and others, such as vehicle registration or road taxes, fees, etc.  Excise duty tables are published on the internet.

Export Documentation: 

Certificate of Origin

A Certificate of Origin is an export document needed to certify the place of growth, production or manufacture of the goods specified thereon.  It is needed when:

  • Exporting to specific countries;
  • Required by the consignee for customs clearance;
  • Stipulated in a letter of credit.

How to obtain a Certificate of Origin

A Certificate of Origin can be obtained from State Chambers of Commerce and other issuing bodies by completing a Declaration of Origin and providing other relevant export documentation.  A Declaration of Origin is an affidavit signed by the exporter or his/her representative certifying the country of growth, production or manufacture of the exported goods.  Copies of the following documents may also be required:

  • Commercial Invoice;
  • Bill of Lading (seafreight);
  • House Airway Bill (airfreight);
  • Letter of Credit (if applicable).

Other document certification

It may be necessary to carry a variety of certified documents overseas.  State Chambers can certify (by stamping) the validity of a wide range of documents. These include Certificates of Origin prepared by the exporter of his/her representative and other documents including health certificates, agency agreements / contracts, visa letters, packing lists, AQIS certificates, DPI certificates, certificate of free sale etc.

How to obtain certification

To obtain certification original documents must be submitted for stamping.  An extra copy may also be required for the issuing Chamber’s records.

For further information on Certificates of Origin and Certifications contact your local State Chamber of Commerce.[4]

Export Finance and Insurance Corporation (EFIC): Australia’s export credit agency, has a charter from the Government to increase the volume of Australian exports, and reports to the Minister for Trade. It is a self-funding, statutory corporation, wholly-owned and guaranteed by the Commonwealth of Australia.  EFIC assists Australian exporters and investors to compete internationally by providing a range of insurance and finance facilities for their overseas contracts and investments:

EFIC’s Export Finance Group provides a range of services to assist the export of Australian capital goods and services and investment in overseas projects. Its products include: medium- to long-term finance to overseas buyers, such as Direct Loans and Export Finance Guarantees to finance the purchase of Australian capital goods or services, Advance Payment and Performance Bonds and guarantees, Political Risk Insurance (for Investors and Lenders), Medium-Term Payment Insurance and Unfair Bond Calling Insurance. 

For smaller exporters, EFIC can help secure working capital finance from financial institutions through its Export Working Capital Guarantee (EWCG). An EWCG can be beneficial to exporters who face a working capital shortage when fulfilling export contracts where there is a mismatch between the timing of outgoing costs and incoming revenues. The facility may assist small- to medium-sized businesses to obtain unsecured pre-shipment finance where they do not have sufficient security to obtain additional bank finance.  EFIC may provide a guarantee to the exporter’s relationship bank, which then provides the necessary working capital funds.

In 2003, EFIC sold its short-term credit insurance business to Atradius, one of the world’s largest providers of insurance to exporters. This reflected the view that the private market had grown rapidly in the provision of short term trade insurance and that there was no longer a rationale for government involvement.

EFIC works closely with other Commonwealth industry and export facilitation agencies such as AusIndustry and Austrade to further assist Australian companies in strengthening their trading potential and experience. 

EFIC can be contacted on tel: 1800 887 588, email: info@efic.gov.au

EFIC worked closely with Austal Ships Pty Ltd and its bank to provide a flexible financing solution to support the sale of a trimaran ferry to Fred Olsen S.A.

EFIC customised its Export Finance Guarantee for Austal’s bank in relation to the sale, which was by way of a unique contractual structure.

Bob McKinnon, Managing Director, Austal says that, “EFIC worked with our bank to structure an innovative and sophisticated financing option that enabled us to conclude this landmark sale”.

The trimaran will be the world's largest high-speed multi-hull vessel and will be based on a new hull form collaboratively developed between Fred Olsen S.A. and Austal and involving more than three years of research and development. The new trimaran will operate in the Canary Islands on the routes from Los Cristianos, Tenerife to San Sebastian, Gomera and the island of Palma.

Export Market Development Grants (EMDG):   The EMDG Scheme provides assistance to small and medium Australian exporters committed to, and capable of, seeking out and developing export business by repaying part of their promotional expenses. Applicants may qualify for up to 50 per cent reimbursement of eligible export marketing expenses above $15,000 pa to a maximum of eight grants. Up to $200,000 pa may be reimbursed.  For further information, please refer to Austrade’s website.

F

Forum for European-Australian Science and Technology (FEAST) Cooperation: is aimed at highlighting the multilateral and bilateral cooperation between Europe and Australia and at improving this cooperation.  FEAST has successfully established itself through a series of events, including conducting information seminars on major developments (such as the European Union’s 6th Framework programme for Research), as well as information and partner matching services through a dedicated website.  See also the Department of Education, Science and Training’s website

Four freedoms:  the free movement of goods, capital, labour and services.  The expression is often used in the context of the Treaty Establishing the European Communities (also known as the Treaty of Rome) where they are mandated in Titles I and III, and also in relation to the single market.

Free Trade Area:  a group of two or more countries that have eliminated tariffs and quotas on substantially all the trade amongst themselves.  Participating countries may continue to apply their own tariffs on external goods, or they may agree on working towards a common external tariff.  Free trade areas are called reciprocal when all partners eliminate their tariffs and other barriers towards the other partners.  See also, Customs Union. 

Freight:  when it is cheaper to freight to Europe than Brisbane

Many potential exporters are discouraged from exporting to Europe because of the distance and related expectations of high transport costs reducing profit margins.  However, many businesses exporting all round the world, including Europe, say that the transport costs are the same whether they are exporting to Asia, or Europe.  In fact, David Michell, Chief Executive, Michell Pty Ltd states that “from Adelaide, it is cheaper to freight to Europe than Brisbane”.

“We have found transport costs to be around 3-4 per cent of product cost whether we ship to Europe, the US or Asia” notes Mr Michell.  However, he cautions that “distribution costs and port fees vary significantly from port to port”.  It is important to research the various routes for getting your product to the destination market to ensure you are not paying more than you need. 

“Shipping prices also vary substantially for different container sizes.  We saved $50,000, or 25 per cent of our total shipping costs, on a shipment to Europe just by using 40 foot, rather than 20 foot containers.  But, you need to make sure the port you are delivering to is able to handle 40 foot containers, and that the land transport distribution networks from that port exist.  Many ports and roads aren’t equipped to deal with 40 foot containers.  While most trains can take 40 foot containers, they can be expensive. Make sure you get a full costing of the various transport logistics options to ensure you get value for money.”

Michell is the world’s largest exporter and processor of Australian wool.  Through its global outlook and worldwide sales offices, Michell has become recognised as a leader in the provision of high-quality products to the wool consuming regions of the world, including Asia, the United States, the European Union and the Australian domestic market.

G

Garwood International

(insert photo)Peter Vanheiden, (Special Projects Manager) and David Horrocks, (Director), with the Australian Technology Showcase award winning Bantam product which is the spearhead of Garwood's European Export thrust.

“Australia's comparative advantage in labour costs means that we have defence for any price challenge,” says David Horrocks, Director of Garwood International. “Europe is a great market for us.  They have the money and will spend it to get what they want.  We have the technological and engineering expertise to fill their needs.”

“Rather than using a main distributor for Europe, we are establishing our own sales office together with at least one and maybe two other Australian manufacturers who are involved in our industry.  By establishing an ‘Australian syndicate’ and combining our product and expertise we hope to gain more clout in the marketplace, spread our risk and increase our potential for greater volume sales.  The potential margin increase for our combined sales over what can be achieved locally in Australia is a big inducement to put in the effort.  The present low A$ levels against the British and other European currencies is a help and by the time, if ever, that the A$ gets back up to the levels of years ago we hope to be well enough established that the price differential will not be such a bar to success.”

Garwood International, specialising in Environmental Control Equipment, has successfully grown exports to the UK and is currently looking closely at other EU countries as new potential markets, for direct sales.  Previously Garwood has sold technology into Germany.

GATS (General Agreement on Trade in Services):  the first and only set of multilateral rules covering international trade in services. It is an outcome of the Uruguay Round, which came into force in January 1995.  It covers all internationally traded services with two exceptions: services provided to the public in the exercise of governmental authority (government procurement) and, in the air transport sector, traffic rights and all services directly related to exercise of traffic rights.  The GATS also defines ways in which a service can be traded.

GATT (General Agreement on Tariffs and Trade):  establishes multilateral obligations for trade in goods.  Negotiated following the end of World War 2, the GATT is the founding agreement in a set of agreements which now constitute the rules agreed to by World Trade Organization (WTO) member countries to regulate world trade. 

Generalised System of Preferences (GSP):  first proposed at UNCTAD II in 1968, gives developing countries a margin of preference in the tariff rates their goods face in the markets of developed countries and in this way increases their competitiveness. The preferential tariff rates are included on-line in the TARIC database.  See also, Lomé Convention.

Genetically Modified Organisms (GMOs): organisms in which the genetic material (DNA) has been altered using biotechnology.  A number of crops (such as certain types of tomatoes, flowers, cotton and grains) that have been modified in order to better withstand pest or diseases or to enhance productivity come into this category.  Consumer concerns about health risks and the ethical and social implications of genetic engineering have led the EU to call for a labelling of all products which contain GMOs.  A number of EU member states have imposed a moratorium on GMO imports, a move which is under challenge in the WTO.

Geographical Indications: Under the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) a geographical indication identifies a good as originating from a particular geographical source, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin. (Article 22)

Government Procurement: known in the EU more commonly asPublic Procurement, Government Procurement in the EU is worth around 14 per cent of GNP each year.  The tendency to allocate tenders to local firms was one of the obstacles to the efficient functioning of the EU single market.  In an effort to address this issue, the EU adopted four Directives on the subject, covering works contracts, supply contracts, service contracts and finally procurement by "utilities", that is to say enterprises operating in the water, energy, transport and telecommunications sectors.

Government Procurement Agreement (GPA): a WTO plurilateral agreement with 37 signatories, including the EU.  Its purpose is to open up as much of Government procurement business as possible to international competition (but only from other signatories to the agreement).  Designed to increase transparency in government procurement and to eliminate discrimination against foreign products or suppliers, the present agreement and commitments were negotiated in the Uruguay Round.  Australia is not a signatory to the Agreement as it considers its provisions inequitable - it departs from the WTO principle of non-discrimination; it allows bilateral agreements between signatories that enable carve outs of sensitive and potentially lucrative sectors; and it establishes prescriptive procedural requirements at odds with Australian Federal, State and Territory practice and policies.

Green Box: see Subsidies.

Green labelling: See eco-label

H

“Harmonised Standards”: Technical specifications adopted by a European standards institution on the basis of a mandate from the Commission of the European Community.  Harmonised standards are published in the Official Journal.

Harmonised Commodity Description and Coding System:  often referred to as the Harmonised System.  It is a system for classifying goods traded internationally embodied in the International Convention on the Harmonised Commodity description and Coding System, managed by the World Customs Organisation.  The Harmonised System is used mainly for customs purposes to achieve international uniformity in the classification of goods.  As such it is also relevant for the administration of rules of origin. It contains 96 chapters, 1,241 headings and more than 5000 six digit sub-headings which may be subdivided further to reflect national administrative and statistical requirements.  Beyond the six-digit level of agreed classification, countries and economies develop their own further customs classification of goods and this is where there is potential for goods to be classified differently.

I

Import Licensing:  the need to obtain a permit for importing a product.

Incoterms: make international trade easier and help traders in different countries to understand one another. These standard trade definitions that are most commonly used in international contracts are protected by the International Chamber of Commerce Copyright.

For detailed information on Incoterms go to the International Chamber of Commerce.  The thirteen Incoterms are listed below:

EXW: EX WORKS (named place)

FCA: FREE CARRIER (named place)

FAS: FREE ALONGSIDE SHIP (named port of shipment)

FOB: FREE ON BOARD (named port of shipment)

CFR: COST AND FREIGHT (named port of destination)

CIF: COST, INSURANCE AND FREIGHT (named port of destination)

CIP: CARRIAGE AND INSURANCE PAID TO (named place of destination)

CPT: CARRIAGE PAID TO (named place of destination)

DAF: DELIVERED AT FRONTIER (named place)

DDP: DELIVERED DUTY PAID (named place of destination)

DDU : DELIVERED DUTY UNPAID (named place of destination)

DES: DELIVERED EX SHIP (named port of destination)

DEQ: DELIVERED EX QUAY (named port of destination)

Intellectual Property (IP): a type of intangible property comprising rights derived from creative and inventive endeavours, or signs, words and symbols used to distinguish goods and services in the market place.  IP rights include copyright (rights in literary, musical, artistic, photographic and audiovisual works), and industrial property rights (rights in inventions, trademarks, industrial designs and geographical indications or appellations of origin).  IP law gives creators and inventors certain exclusive rights with respect to their creations and inventions, and provides businesses and consumers alike with confidence that distinctive signs such as trade marks are not used in a way that deceives or misleads the public.

Internal Frontiers:  the borders between member states within the EU.

International Office of Vine and Wine (OIV) a scientific and technical inter-governmental organisation working in the field of vine and vine-based products.  The OIV was established by international agreement in 1924.  There were eight founding members of the OIV - Spain, France, Greece, Luxembourg, Portugal and Tunisia.  Other countries have successively joined, including Australia and New Zealand.  The OIV seeks to inform members of the measures they can adopt to accommodate concerns of producers, consumers and other participants in the wine sector.  It also seeks to contribute to international harmonisation of existing practices and standards and, to contribute to the preparation of new international standards. 

International Plant Protection Convention (IPPC) The International Plant Protection Convention (IPPC) is an international treaty for protecting plant health. The purpose of the IPPC is to secure common and effective action to prevent the spread and introduction of pests of plants and plant products and to promote appropriate measures for their control. It applies to protection of cultivated plants and plant products and to the protection of natural flora.

Investment:  The regulation of investment remains with individual EU member states.

J

Joint Agreements:  Australia and the EU have a number of joint agreements. These include the 1994 Agreement relating to Science and Technology Cooperation, the 1994Agreement with European Community on Trade in Wine, the 1998 EU-Australia Agreement on Mutual Recognition in relation to Conformity Assessment, Certificates and Markings.

Joint Declaration on Relations between Australia and the European Union:  signed on 26 June 1997, a comprehensive, non-treaty status political declaration on relations between Australia and the EU.  The Declaration commits Australia and the EU to strengthen relations and to cooperate across the many areas in which we have shared interests, including in the areas of peace and security, migration, asylum and refugee protection issues, trade and economic issues, science and technology, education and training, the environment, and development cooperation.  See also Agenda for Cooperation.

L

Labelling

“When labelling wine for export to the EU, it's important to get it right before you press the print key!” says Tracey Nicholas, International Product Manager with the Hardy Wine Company.  “We had one wine shipment delayed at the border because the lettering expressing alcohol content was 0.5mm smaller than the regulations required.  There are also different symbols required for recycling in different countries, and other regulations.  For example, in Denmark we can't use PVC capsules, instead we must use PET.  Don't be discouraged, however.  The EU has proven to be a growth market for the Australian wine industry, with exports rising from $73 million in 1990 to $1.132 billion in 2002.  It has definitely been worth the effort for us.”

Hardy’s now checks every new label design with Australian Wine and Brandy Corporation and the UK Wine Standards Board before production to ensure it meets EU as well as member state requirements.  This is not mandatory but is a good idea to save time and money.

Your target country may have requirements in regards to:

  • Government regulations – eg:
    • name and address of the manufacturer and/or exporter and/or importer;
    • country of origin marked in a certain way;
    • description of product composition;
    • net weight and volume of contents, possibly stated in the local unit;
    • ingredients listed for food items;
    • ‘use by date’, or ‘best before’ date;
    • storage conditions once opened;
    • instructions for use.
  • Health standards and mandatory warnings – eg:
    • warnings as to any hazards classified by the authority of the country;
    • be careful making claims such as ‘low fat’, ‘longer lasting’ or other comparative or health related descriptors as this may be strictly regulated.
  • Correct use of foreign language on the label:

In some countries legislation requires that the local language must appear in type no smaller than the manufacturer’s language, or that the language appear on the label itself – not on a sticker affixed later.  If you are exporting to non-English speaking countries you need also to be aware that there may be different dialects for different regions.  Make sure that your product name translated into the importing country’s language or in English is not offensive to that country.

In addition to the importing country’s laws relating to labelling, the Australian Customs Service also requires compliance with the following:

  • Exporters should be aware that it is an offence to knowingly apply any false trade descriptions to any goods destined for export or to export such goods. A false trade description means any description which by addition, deletion, effacement or otherwise is false or is likely to mislead.
  • Trade description markings must be:
    • in prominent and legible characters; and
    • on a principal label or brand attached to the goods in a prominent position in as permanent manner as practical.
  • The Commerce (Trade Descriptions Act) 1905 provides that any goods exported in contravention of any regulation may be seized and forfeited to the Crown.

If you are uncertain about any aspect of Customs requirements on labelling/trade descriptions contact a Customs Information Centre on 1300 363 263. The Customs Department also produces a ‘Customs Guide for Business’, available on their website or a copy may be requested from a Customs Information Centre.

Lomé Convention:  first signed in 1975, an umbrella agreement for 71 African, Caribbean and Pacific (ACP) states with the EU. The agreement provided for non-reciprocal trade preferences for ACP states.  These included duty-free access for all industrial and a large part of agricultural and processed agricultural products as well as preferential tariffs for almost all the remaining agricultural products.  The Lomé Convention expired in February 2000, and has been succeeded by the Cotonou Agreement.

Lisbon Strategy or Lisbon Agenda: the central objective of the EU’s 2000 Lisbon Strategy is to become “the most competitive and dynamic knowledge-based economy in the world by 2010, capable of sustainable economic growth, with more and better jobs and greater social cohesion”.  The Strategy involves increasing competition in energy, transport, postal and financial services sectors.  It also aims to reduce state aid to companies and highlights the EU’s social policy goals of harmonising education policy and job-creation.

Living Modified Organisms (LMOs): organisms in which the genetic material has been altered through modern biotechnology and which are capable of propagation. They may include plants, animals or micro-organisms, including processed and unprocessed foods and pharmaceutical products, with wide application to agricultural production, environmental management and public health.

M

Maastricht:  The Treaty on European Union, also known as the Maastricht Treaty, agreed in December 1991, which came into force in November 1993.  The 'Maastricht criteria' is also the common name for the convergence criteria, which sets out the qualifications countries must meet to be able to adopt the euro.  These economic criteria are low inflation, sound public finances, low interest rates and stable exchange rates, and the political independence of their national central banks.

Market Access:  market access describes the extent to which goods may enter a market and the conditions, including tariffs, quotas, standards, licences, excises, which may affect that entry.

Modulation: a system which reduces support payments for large farm businesses under the Common Agricultural Policy, and uses the savings to finance rural development and environmental programs.

Monetary Policy: covered by Articles 105 to 111 (former Articles 105 to 109) of the EC Treaty. It is fundamental to economic and monetary union (EMU).

Most Favoured Nation (MFN) Principle:  enshrined as Article 1 of the GATT, which obliges WTO member nations to offer the same treatment to imports from any nation, as that which applies to imports from their most favoured trading partner.  That is, if a lower tariff or other trade concession is offered to one (WTO Member) trading partner, it must be offered, immediately and unconditionally to all trading partners.  Allowable exceptions include where WTO members establish a free trade area or a customs union, and preferential rates to developing countries as allowed under the Generalised System of Preferences.

‘Multi-speed’ Europe: the term used to describe the idea of a method of differentiated integration whereby common objectives are pursued by a group of member states both able and willing to advance, it being implied that the others will follow later.

Mutual Recognition Agreement on Conformity Assessment:  in full, the Australia-European Community Mutual Recognition Agreement (Aust-EC MRA) on Conformity Assessment.  The Aust-EC MRA came into force on 1 January 1999 and is now fully operational.

The MRA assists Australian exporters by allowing products traded between Europe and Australia to be tested and certified for compliance with the regulatory requirements of the importing country prior to export.  In the case of Australian exporters, this means compliance with the requirements of the relevant European Community Directives (New Approach Directives) or regulations can be established in Australia and the CE marking applied to the product prior to export.  In this way the product can be placed on the EU market with, usually, no further intervention by EC authorities for the range of products covered by the MRA.  (Australian firms can still choose to have their product assessed in the European Union by one of their conformity assessment bodies.)

The MRA currently covers regulated products in the following eight industry sectors:

  • automotive products
  • electromagnetic compatibility (EMC)
  • low voltage electrical equipment
  • telecommunications terminal equipment
  • machinery
  • medical devices
  • pharmaceuticals - Good Manufacturing Practice (GMP)
  • pressure equipment

The MRA benefits Australian business by eliminating the time delays and costs associated with obtaining regulatory approval in the importing country.  The major beneficiaries are private businesses, especially small and medium-sized enterprises.

N

National Treatment:  a requirement on WTO members that imports must be treated no less favourably than those originating or supplied domestically.  See also Most Favoured Nation.

New Approach Directives:A directive is binding for all member states. It specifies regulations for a particular subject field and the date from which the regulations apply. Member states are allowed to decide for themselves the form and method to be used when incorporating the regulations of the Directive in national legislation.

New Approach Directives are adopted for broad product areas or defined risks. EU policy is to limit the adoption of New Approach directives to areas where national legislation can create legitimate barriers to trade.  Because New Approach directives apply to broad product areas and only cover one or a few types of risks, any product may be covered by more than one directive.  In most cases the manufacturer can choose both how to meet the essential requirements and the means to demonstrate that the product conforms to technical requirements.

The New Approach Directives are:
90/396/EEC Appliances burning gaseous fuels
00/9/EC Cableway installations designed to carry persons
89/106/EEC Construction products
89/336/EEC Electromagnetic compatibility
94/9/EC Equipment and protective systems in potentially explosive atmospheres
93/15/EEC Explosives for civil uses
95/16/EC Lifts
73/23/EEC Low voltage equipment
90/385/EEC Medical devices: Active implantable
93/42/EEC Medical devices: General
98/79/EC Medical devices: In vitro diagnostic
90/384/EEC Non-automatic weighing instruments
94/62/EC Packaging and packaging waste
89/686/EEC Personal protective equipment
97/23/EC Pressure equipment
99/5/EC Radio and telecommunications terminal equipment
94/25/EC Recreational craft
98/37/EC Safety of machinery
88/378/EEC Safety of toys
87/404/EEC Simple pressure vessels
92/42/EEC Efficiency requirements for new hot-water boilers fired with liquid or gaseous fluids

New Opportunities

“Over the last few years the importance of the European market has grown for ACL Bearing Company”, says Shemek Wisniewski, Regional Manager, Europe and Middle East. ACL Bearings’ presence in the market spreads from Spain to Russia and from Finland to Greece. Altogether, ACL has customers in 15 European countries and its products are distributed to another 6-8 countries in the region.

“The major challenge for ACL Bearing Company has been the ‘tyranny of distance’ perception among European distributors. In order to overcome that, increasing number of products are being air freighted to individual customers.” Fast order turn-around and quick deliveries mean that ACL products are as attractive as products from within Europe.

“With always increasing competition ACL has made a strategic decision to focus on quality, increased range of products and service.”

“In the upcoming year it will be interesting to observe the effect of EU enlargement on automotive aftermarket sectors in new as well as old EU member states. By participating in the regional automotive trade shows and through frequent visits to the market we want to be able to capitalise on any upcoming opportunities in the region.”

ACL Bearing Company is Australia’s only manufacturer of precision engine bearings for automotive applications and the largest manufacturer of powder metallurgy components for automotive applications, domestic whitegoods, industrial and other applications. The firm employs around 470 people and exports about half of its total production to 40 countries in North America, Asia, Europe and Africa. It won Tasmanian Exporter of the Year in 1998 and Australian Car Industry Supplier of the Year for 1999 and 2000.

Nice Treaty:  signed in 2000, it foreshadowed the significant changes for the European Commission, Parliament and Council post-enlargement.  The Treaty of Nice allows EU business to continue until the EU constitutional treaty is implemented.

Non Discrimination:  a fundamental concept in the multilateral trade framework.  A country may not discriminate among foreign supplier countries, and it may not apply adverse discriminatory treatment to products once they have entered its territory legally.  The WTO rules permit some exceptions to this concept under strictly defined conditions.  For example, members of a free-trade area or a customs union may discriminate against non-members in the application of tariff rates.  WTO members may also maintain preferential tariff schemes for developing countries.[5]

Non-Tariff Barriers:  government measures other than tariffs that restrict trade flows.  Includes quantitative restrictions, import licensing, voluntary restraint arrangements, standards, labelling and quarantine.

“Non-trade” concerns: The WTO Agreement on Agriculture provides significant scope for governments to pursue important “non-trade” concerns such as food security, the environment, structural adjustment, rural development, and poverty alleviation.  Most countries accept that agriculture is not only about producing food and fibre, but also has multiple functions, including realising non-trade objectives.  The question debated in the WTO is whether trade-distorting subsidies are needed to allow agriculture to perform its many roles. 

O

Office International des Epizooties (OIE) an intergovernmental organisation created by international agreement in 1924.  Its mission is to guarantee the transparency of animal disease status worldwide.  Each OIE member undertakes to report animal diseases detected in its territory, after which the OIE disseminates the information to other countries, allowing them to take the necessary preventative action. 

Official Journal (OJ):  Official Journal of the European Communities is available on line at Eur-lex.

“Open skies” arrangements:  It isthe policy of the Australian Government, when it is in the national interest, to negotiate reciprocal “open skies” arrangements with like-minded partners to remove restrictions which prevent further liberalisation of air services.  These restrictions include: passenger and freight capacity; and frequency to, from, between and beyond Australia and our trading partners; code sharing on each others’ airlines; the routes to be operated, including points of access in both countries, as well as access to third country markets; multiple designation of airlines, and; prices.

Opting out:  an exemption granted to a country that does not wish to join the other member states in a particular area of EU cooperation.  For example, the UK has opted out of the Economic and Monetary Union and Denmark has opted out of joint security arrangements.

P

Packaging: see Labelling.

Patents

“Selling engineering technology to Germany is a bit like selling ice to Eskimos,” says Bishop Technology Group's Managing Director Bruce Grey, “but we've been doing it successfully for years.  In fact, Bishop rack and pinion steering systems are in 20 per cent of all cars, including Mercedes Benz, Ford and Jaguar.

“What has been vital to our success is intellectual property protection.  Over the years, our creative ingenuity has been complemented by our skill in commercialising intellectual property.  We hold over 350 patents and patent applications, and have successfully licensed our technology to engineering corporations throughout the world.

“Protecting ideas is an ongoing process.  Pre-empting the market, and continually refining ideas and inventions is crucial to continuing success.  We take advantage of the fact that Australian engineers can be up to a fifth of the cost of an engineer in Europe and we licence our technology all around the world.”

Patent protection in the EU is a combination system.  Patents are lodged with the European Patent Office (EPO), which allows for the filing of a single patent application in either English, French or German. The patent application is examined by the EPO and if allowable is allowed to proceed to grant upon payment of fees and translation of the claim set into the three official languages.  However, in order for the Patent to be effective in the designated member states, it must be translated into the official language of the member state and lodged with the National Patent Office of the member state. This process is referred to as "validation". Once a patent is validated in a member state, annuity fees are payable in that member state, if you wish to keep it in force for the remainder of the twenty year life.

The advantage of the EPO is that the applicant need only prosecute the application in a single language before a single examining authority, and need only worry about translating costs once the patent is granted.  It is worth noting that the cost of patents in Europe is five to eight times higher than in the US, largely because of these translation costs.  However, once the European Patent is granted and then validated in various member states, the responsibility for keeping protection in force transfers to the member states.  After a European Patent is granted, this does not mean that the applicant will validate the patent in all states. For instance most of Bishop's European patents are only validated in the automotive manufacturing countries of Germany, United Kingdom, France, Italy, Spain and Sweden.  In recent times, Bishop has added Switzerland to the list.

It is essential to check the status of cases before the individual National Patent Offices once the cases are no longer the responsibility of the EPO. However, INPADOC which is a subscriber database, keeps legal status of patent families. If you know the details of one of the patents in the patent family it is possible to retrieve status on various corresponding patents.

Payment

Finance of International Trade

Information provided by Garry Hay, Head of Trade Solutions, National Australia Bank Limited, Sydney.

Export sales present fantastic new opportunities for business growth, however greater emphasis should be placed on risk management to ensure success.

The danger is, that in the interests of sales growth, many of the usual business disciplines used to verify the credit worthiness of new buyers, avoid payment delays and ensure the right payment mechanism is in place are often relaxed.

This may occur because the usual sources of information on buyers are not as readily available, difficulties in cross border communication and the nature of the more complex payment methods that are involved. 

A consistent approach to addressing some of the risk issues is important for long term export sales success. Some of the key issues for consideration are classified under the following:

  • What risks are involved?
  • How do I manage those risks?
  • What is the impact on business cash-flow and how best to finance?

What risks are involved?

  • Non-payment – country (political) and or buyer credit risk
  • Financial markets risk - currency and or interest rate risk
  • Shipping and transit risks

How do I manage these risks?

  • Choosing the most appropriate method of payment and/or insurance protection (ie, letters of credit, documentary collections, trade credit insurance) giving consideration to the country and or buyer credit risk, industry practice, operating cycles, terms of payment and or buyer/supplier financing requirements.
  • Managing currency and/or interest rate risks through appropriate hedging strategies.
  • Covering transit risks with appropriate insurance cover – marine/air risk insurance cover.

What is the impact on cash flow and how best to finance?

Some of the key issues for consideration in determining cashflow impact and financing solutions are:

  • What payment terms to offer the buyer?
  • What currency to quote in (euro / A$ or another currency)? What is the cost/benefit and what are the risks?
  • Is the cash-flow impact prior to or following shipment or both?
  • How does the bank view finance for export sales?
  • What currency to finance in?
  • What are the financing alternatives?

Assistance and expertise is readily available from all major trading banks, when dealing in foreign markets. A more considered and comprehensive approach to financial risk management is highly recommended.

See also Export Finance and Insurance Corporation.

Point of entry:  a crucial consideration when considering export to the EU is which point of entry to use.  One must ensure that the distribution systems that exist from the point of entry will accommodate entry to the various final market destinations.  For example, the UK may not be the best point to land into the EU if the majority of goods will end up in France, as the distribution may be more difficult and expensive.

Preferential Access:  see Generalised System of Preferences (GSP), Lomé, Cotonou, Free Trade Agreements, Regional Trade Agreements.

Privacy:  See Data Protection

Procurement:  see Government Procurement.

Q

Quantitative restrictions (QR):  restrictions on trade in goods.  While QR on imports and exports between EU countries are prohibited under the EEC Treaty, the EU retains a number of quotas on imports from the rest of the world and a number of tariff quotas, mainly for agricultural and food products.

Quarantine: the Australian Quarantine and Inspection Service (AQIS) provides advice and assistance to existing and potential exporters of agricultural products and processed foods through its Export Facilitation Program.  The five export facilitation officers in the Program provide information free of charge on the following topics:

  • other countries' import conditions;
  • Australian legislative requirements for export;
  • documentation including export permits, health, phytosanitary and other certificates;
  • AQIS quality assurance arrangements;
  • premises registration requirements;
  • inspection procedures;
  • AQIS fees and charges.

The export facilitators can also act as the initial contact point for exporters who are experiencing difficulties with their exports in relation to government export documentation or other quarantine barriers.  This service is particularly helpful for new exporters who are unfamiliar with Australia’s export requirements and the importing country’s requirements.  If an issue does not come under AQIS’s jurisdiction, the facilitation officer can refer clients to other relevant agencies that may be able to assist.

R

REACH (EU draft legislation for the Registration, Evaluation and Authorisation of Chemicals): see Community Legislation

The EU’s proposed new regulation for the registration, evaluation and authorisation of industrial chemicals COM (2003) 644 is an example of how EU internal regulatory approaches may profoundly affect global markets and therefore the interests of trading partners such as Australia.

While Australia welcomes the legislation’s objectives to protect human health, safety and the environment (which are also key priorities for the Australian chemicals industry), we have some concerns about its far-reaching global effect and its complexity and likely economic impact on international markets.  It also cuts across efforts elsewhere to achieve a globally harmonised system.  The draft legislation may have unintended impacts in sectors such as minerals and metals where Australia has key interests.

The draft legislation is the subject of intensive lobbying from both industry and green groups.  EU member state political leaders, industry, third countries and regional groupings such as APEC have all criticised the proposal for being excessively complex, burdensome, costly and resource intensive.  Third countries are also concerned that REACH could have an unintended negative impact on markets beyond the EU.  The Australian Government, in consultation with Australian industry groups, is working with other affected non-EU countries and in multilateral fora such as the WTO to seek amendments to the legislation that will address Australia’s concerns.

Recommendation:  see Decision Making in the EU

Red box subsidies:  see Subsidies

Regional Trade Arrangement (RTA):  a free trade agreement, customs union or common market consisting of two or more countries.  The EU is a member of a number of RTAs (see the entry in the first section detailing the EU's approach to RTAs). 

RTAs will affect your business, and manufacturers must understand them to understand buyers' actions.  Those who can understand what RTAs exist and how they affect customers will have an advantage.  Under EU rules of origin, the Australian product, finished or added to in another country may still remain an Australian product, and attract the Most Favoured Nation duty rate.  On the other hand the product may be deemed to be from the country where the secondary production took place.  If this is in a developing country it may mean that it enters duty free, but if it was a textile product, it may mean that it is then subject to quota.  Understanding how trade flows are affected by RTAs and your specific business is crucial.

Regulation:  See Community Legislation

Risk: See payment

Rules of origin (ROOs): EC non-preferential origin provisions are based on two core criteria: "wholly obtained" and "last substantial transformation". These criteria determine how and when a product can be considered as originating in a specific country. In other words, a product shall be considered as originating in a country if it has been either wholly obtained or undergone sufficient working or processing in that country. 

Goods "wholly obtained" in a country are, for instance, mineral products extracted within its territory, harvested vegetable products or live animals born and raised there. The concept of "last substantial transformation", on the other hand, is best defined as a process that is economically justified, carried out in an undertaking equipped for that purpose and bringing about significant changes in inputs, so much so that the finished product has properties and composition which differ from that of its input.

Nevertheless, due to the complexity of some operations, the Community has sometimes adopted interpretative rules defining which operations are to be considered as origin-conferring. This was the case for textiles products and integrated circuits, for example.  In other cases, where complex assembly operations were at stake (such as for radios, TV sets and tape recorders), the last substantial operation was interpreted as implying an added-value criterion.

The first Regulation on origin dates back to 1968 (Regulation (EEC) No. 802/68). It was repealed by the Community Customs Code (Regulation no. 2913/92), which entered into force in 1994 and contained the provisions currently applied for non-preferential purposes.

Articles 22 to 27 of Regulation (EEC) No. 2913/92 (OJ No. L 302 of 19.10.1992) and Articles 35 to 65 and Annexes 9 to 13 of Regulation (EC) No. 2454/93 (OJ No. L 253 of 11.10.1993) lay down all provisions currently applied for non-preferential purposes.[6]

S

Safeguards: temporary measures taken to safeguard a domestic industry against heightened competition from imports.  Can include the imposition of tariffs, tariff quotas, quotas or other support to a domestic industry.  Most commonly, "safeguards" refers to action taken under Article XIX (Emergency Action on Imports of Particular Products) of the WTO framework.

Sanitary and Phytosanitary (SPS) Measures: those measures put in place by the EU (or any nation) to protect human, animal or plant life or health.  The WTO agreement on the application of SPSmeasures requires that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination, or a disguised restriction on trade.

Schengen (Agreement and Convention): one of the main objectives of the single market was the free movement of people.  By the Agreement signed at Schengen on 14 June 1985, Belgium, France, Germany, Luxembourg and the Netherlands agreed that they would gradually remove their common frontier controls and introduce freedom of movement for all individuals within the Schengen area.  These same five States signed the Convention Implementing the Schengen Agreement on 19 June 1990, although this only came into force in 1995.  The Convention lays down the arrangements and guarantees for implementing freedom of movement.  Italy, Spain, Portugal, Greece, Austria, Sweden, Finland and Denmark have since joined the list of signatories, while the non-EU states of Norway and Iceland also became parties to the Convention in 1996.  All new and future members of the EU will adopt the Schengen Convention as part of the acquis communautaire, however its application may not be simultaneous or may have time-lapse provisions.  Anyone travelling to the member states of the EU should check with the relevant embassy regarding visa requirements for Australians.  See Visas, acquis communautaire.

Science and Technology Cooperation:  see FEAST (Forum for European-Australian Science and Technology Cooperation)

Simpler Legislation for the Internal Market (SLIM):  in an effort to improve and simplify the legislation governing the functioning of the internal market, the European Commission has proposed a number of procedural improvements and simplifications.  These are greater cooperation 'mutual assistance' on VAT collection between member states, replacing the current refund procedure by a new mechanism allowing traders to deduct VAT paid anywhere in the Community to their own state, abolition of the rule that Community traders carrying out taxable transactions in a member state where they are not represented must appoint a tax representative there, and creation of a single contact point in each member state to make it easier for companies to register.

Single European Act: anamendment to the Treaty of Rome which came into effect on 1 July 1987, set a target date of 1 January 1993 for the creation of the internal market, when all customs controls were removed from within the EU.  Although internal tariffs and quotas on the movement of goods had been virtually abolished in 1969, other barriers had prevented the market from operating freely.  The Act defined the internal market as “an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured[7].  Current EU priorities for the single market now include further liberalisation in areas such as gas, electricity, postal services and transport, as well as completion of liberalisation of EU energy markets and electronic communications markets.  There are proposals from the European Commission to enhance the legislative basis of the internal market by completion of the Financial Services Action Plan; establishment of a regulatory framework for electronic commerce; adoption of an EU-wide intellectual property rights protection regime; and further liberalisation of transportation services.

Single Market (or Single European Market):  the formation of the single market was first envisaged in 1957 in the Treaty of Rome.  The Single European Act brought the Single Market further to fruition, in mandating practical steps to be taken towards the creation of an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured.

Stability and Growth Pact: is a set of commitments on economic management that Economic and Monetary Union (EMU) members adopted in 1999, when they launched the euro, to support fiscal discipline in the euro area.  The Pact calls for annual government budget deficits not to exceed three per cent of GDP, unless in exceptional circumstances.  It calls for a member’s public debt not to exceed 60 per cent of GDP or, if a member’s public debt is greater than this ceiling, the member should have policies in place to reduce the level to below the ceiling.  The Pact limits how much a member’s inflation rate may deviate from the euro area average.  EMU members agreed in May 2003 to pay greater attention to country-specific circumstances when assessing members’ conformity with the Pact’s requirements. 

Standards and conformity:  A manufacturer wishing to sell goods in the EU must ensure and, in some cases, have products tested to meet the standards or technical requirements which apply.  In the EU, these requirements are contained in the form of directives put out by the EU which cover a range of product areas, either 'old approach' directives, or 'new approach' directives.  European standards are adopted by either of the three European Standards organisations, CEN the European Committee for Standardisation, CENELEC, the European Committee for Electrotechnical Standardisation, and ETSI, the European Telecommunications Standards Institute.  See also Mutual Recognition Agreement for conformity assessment, CE Marking, Labelling, New Approach Directives.

Subsidies:  Subsidies are financial or in-kind assistance by governments to producers or exporters of commodities, manufactures and services.  This assistance can be in the form of direct payments, foregone government revenue (eg, non-collection of tax), forms of income or price support and so on.  The WTO Agreement on Subsidies and Countervailing Measures categorised the payment of subsidies into three sets: ‘Red box’ or prohibited subsidies (which are subsidies contingent upon export); ‘Amber box’ or actionable subsidies (subsidies which may only be maintained if they do not injure the domestic industry of another member); and ‘Green box’ or non-actionable subsidies (non-specific subsidies including domestic support for agriculture exempted from Uruguay Round reduction commitments).  Direct payment to agricultural producers under production-limiting programs (if linked to payments based on hectares and numbers of animals) not subject to Uruguay Round reductions are called 'blue box' subsidies.

TARIC (Integrated Tariff of the Community):  acronym for "Tarif Intégré de la Communauté".

The TARIC contains a nomenclature in 19 official languages with about 15,000 tariff lines, showing all third country and preferential duty rates actually applicable as well as all commercial policy measures.  The TARIC constitutes an instrument for practical use and information, but does not have a legal status in itself. The TARIC serves as a direct basis for the preparation of member states working tariffs. [8]

Tariff:  A duty or tax levied at the border on goods going from one customs territory (in most cases a country) to another.  The EU has a ‘common customs tariff’ (CCT) which applies uniformly across the member nations.  The CCT was implemented in July 1968.  Information on EU tariff rates can be obtained from Austrade or the Europa website.

See also TARIC, Generalised System of Preferences.

Tariff Classification:  When declaring goods for customs purposes, the goods must generally be classified within the Combined Nomenclature. This nomenclature is based on the internationally recognized Harmonized System, which is run by the World Customs Organisation (WCO). Tariff classification within the Combined Nomenclature may therefore be affected by international decisions related to the Harmonized System. The WCO periodically announces such international decisions, including the establishment of new classification opinions and explanatory notes and of amendments to existing explanatory notes. These announcements may be found on the WCO's web site.

Such decisions may also affect binding tariff decisions (Binding Tariff Information) made within the framework of Articles 5 to 12 of Regulation (EEC) No 2454/93 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code.

Tariff Rate Quota (TRQ):  determines the tariff payable on goods based on quantities imported.  For goods imported up to a specified quantity ('in quota'), a certain tariff will apply.  Any goods imported after the specified quantity has been met will attract a higher duty (referred to as 'out of quota').  The 'out-of-quota' rate is, in many cases, substantially higher than the 'in-quota' rate usually acting as a deterrent to further import of goods. 

Taxation: Despite the introduction of a single market and economic and monetary union, there is still no genuine Community policy on taxation.  In collaboration with the member states, the European Commission publishes a survey of the taxes in force in the member states of the EU.  The publication aims to provide all those interested in tax law with a general but complete view of the tax systems of the member states.  The taxes presented in the inventory are classified as follows:

1. Current taxes on income and wealth (direct taxes)

2. Capital taxes

3. Taxes linked to import and production (indirect taxes)

3.1. VAT and excise duties

3.2. Taxes on services

3.3. Others

The tax inventory may be accessed at the Europa website [ PDF ].

Direct Taxes:  There has been no harmonisation or coordination of direct taxes in the community.  (Personal tax, company tax, other direct taxes)

Indirect Taxes:  The most important agreement on tax harmonisation so far in the EU has been the agreement to apply value added tax at a rate of not less than 15 per cent throughout the EU (most EU states apply a higher rate, see table below).  In addition to this, states have harmonised the application of VAT, (VAT Directive 77/388/EEC) which has ensured that the tax was applied to the same transactions in all member states.

Technical Barriers to Trade (TBT):  refers to technical regulations which may create unnecessary obstacles to trade.  Under WTO rules, members are obliged to ensure that regulations are no more trade restricting than necessary.  Technical regulations, however, are allowed when they fulfill legitimate objectives such as ensuring protection of human health or safety or prevention of deceptive practices.

Technical considerations for software designed for the EU:

“A number of issues arose while developing a software package, the VP-ASP Shopping Cart, for sale and use outside of Australia,” says Howard Kadetz of VP-ASP. “The software allows the creation of an Internet shop. The technical issues involved in developing software that can be used worldwide include languages, euros, currency formats, date formatting, time differences.”

Terminology:  In the descriptions below, a merchant is someone who has bought the VP-ASP Shopping Cart and has set up an Internet shop. A customer is someone who is buying goods from that merchant on the Internet.

“Language Issues:  The software needed to be able to run in any language and in many cases to switch the language dynamically. To accomplish this, we removed all English words from the actual code and placed them into separate language files. One language file per language. The user of the software then selected their default language.

“Because our software allows merchants to sell their goods on the Internet, we also allow language switch dynamically. So that if the merchant sets the default language to say French, the customer can click a button and have the language changed to Russian. Product descriptions can be in any language and the descriptions change as the language changes if the merchant so chooses.

“Euros and National Currency:  Most European users of our software want the amounts displayed in both euros and their own national currency. A basic currency conversion is available that does the conversion. The merchant supplies the conversion rate. The software displays two columns of prices, the national currency and the euro price.

“Microsoft Windows has a facility called the ‘Local System Identifier’ (LCID). It is used to set the default currency symbol, date format, decimal point usage for say France. There is no LCID for the euro. This makes it difficult to have the correct currency symbol displayed as euros. To overcome this, we replaced the Microsoft format currency subroutine with our own. This allows the merchant to specify the currency symbol independent of Microsoft.

“Currency Formats:  Europeans have two unique requirements for currency formats. One is that many European countries use a comma as a decimal point. In France 1,00 means 1.00. This may cause problems if the underlying database expects decimal points and not commas. In our product a number conversion facility is available to converts comma to decimal as required.

“Some countries such as Turkey and Italy do not use decimal points at all. Our software allows the merchant to specify the number of decimal points to use for all currency displays.

“When a person needs to define a number, do not always assume that the number should have a decimal point if their country uses comma as a decimal point.

“Date Formats:  Date is notoriously difficult to use and display. Our own code normalizes dates internally to yyyy-mm-dd which is accepted by Microsoft and SQL databases. We also allow the merchant to specify how they wish the dates to display.

“States and Customer Information:  Many European countries do not have states. Our software is used both in the US, Australia and Europe. We have provided drop down lists for our US customers and the ability to remove state prompts for our European customers.

“Time Differences:  On the Internet, the actual location of the web hosting company can be on a different continent. To cater for this, we allow the merchant to specify a time difference from their locality and their web hosting company. This allows dates and times to appear as if they were local.”

The VP-ASP Shopping Cart was released in March 2000. VP-ASP has sold thousands of copies of the product in over 70 countries, including every country in the European Union plus Russia.  The free version has been downloaded in just about every country in the world and is used in many places as an education tool for learning Internet programming techniques.

Traceability: a system used to determine the authenticity of products.  In European Community Food Law, traceability is defined as “the ability to trace and follow a feed, food producing animal or substance intended to be, or expected to be, incorporated into a food or feed, through all stages of production, processing and distribution”.  There is no internationally agreed definition of traceability.  Negotiations as to whether international guidelines on traceability/product tracing are necessary are taking place in the Codex Alimentarius Commission (which develops international standards in food). 

Trade Mark: see Community Trade Mark.

Trade Displays and Exhibitions:  International trade fairs can be an effective way of promoting Australian products and services to targeted buyers and users overseas. Austrade co-ordinates Australian national stands at more than 100 international trade exhibitions each year. Austrade assists Australian exporters with stand design and construction, freight forwarding and clearance, and provision of exhibitor facilities.

Trade Missions and market visits are organised by both the Federal and State Governments.  Businesses can arrange to accompany other like or complementary businesses overseas, usually led by a Trade Minister.  Contact Austrade, and your relevant State or Territory authority to find out about upcoming missions.

TradeStart:  a partnership between Austrade and a range of public and private sector service providers. It is designed to improve access for small to medium businesses in regional and rural Australia to the export assistance services of Austrade. A national network of 18 TradeStart offices is now delivering the market expertise of Austrade’s global network to businesses in regional Australia.  Many TradeStart offices also deliver the Export Access program.  For further information refer to Austrade’s website.

Treaties:  The European Union was established through a series of treaties between its member states.  The 1957 Treaty of Rome established the European Economic Community (EEC) and was signed by the six founding members of the EU (Germany, France, Italy, Belgium, Netherlands, Luxembourg).  The Treaty of Rome has been revised several times by the Intergovernmental Conference of member states resulting in the 1992 Maastricht Treaty (The Treaty of European Union), the 1997 Amsterdam Treaty, and the 2000 Nice Treaty.  Once ratified by the member states, the new European Union Constitution, agreed to in June 2004, will replace the treaties.  See also Constitution.

TRIPS Agreement: Uruguay Round international trade negotiators recognised that intellectual property (IP) was an increasingly important component of international trade, and that different levels of protection of IP rights within WTO members could impede trade and investment.  This led to the conclusion of TRIPS – the Agreement on Trade-Related Aspects of Intellectual Property Rights – as one of the set of agreements making up the integrated WTO system of trade rules.  TRIPS recognises the commercial importance of know-how and design, technical and aesthetic innovation, commercial and geographic reputation, and original cultural works, and the damage to legitimate trade interests that occurs when IP rights are not effectively administered and enforced. 

U

Uruguay Round: a major round of multilateral trade negotiations underthe General Agreement on Tariffs and Trade (GATT), beginning in 1986 and concluding in 1993.  These negotiations achieved significant reductions in tariffs and trade barriers, established a stronger and clearer legal framework for the conduct of international trade, established a multilateral framework of disciplines for trade in services and protection of trade-related intellectual property rights and created the World Trade Organization (WTO).  See also Doha Round.

V

Visas:Visa/Passport requirements for the EU[9]

Tourist

Australian passport holders planning to holiday in the Schengen area countries for less than a total of 90 days within a six month period do not need a visa. Different conditions apply for the UK and Ireland.

Business

Business visas are still an area of national, rather than EU, competence. Business visitors to EU countries should check with the embassy or consulate(s) concerned about visa requirements for the countries they plan to do business in.

Working

All EU member states require Australian and New Zealand citizens to hold a Working Visa if they are planning to work in the member states. Applications for a Working Visa should be made direct to the member state embassy or consulate concerned.

See also Schengen Agreement.

Valuation for customs purposes:  see Customs Valuation.

VAT:  see taxation

W

EC-Australia Wine Agreement: on 31 January 1994, the Australian Government signed an agreement on trade in wine with the European Commission.  The Agreement was negotiated with the active participation of the Australian wine industry. 

The Agreement ensures improved access for Australian producers to the EU wine market, particularly through the lowering of certain technical barriers to Australian wines.  Under the agreement, the EU agreed to:

  • reduce the number of analyses needed for Australian wine to be imported into EU countries;
  • accept, via an approval mechanism set out in the agreement, Australian winemaking practices;
  • allow Australian wine to be labelled with multi-varietal and multi-regional blends; and
  • not introduce further certification requirements on Australian wine imports without prior consultation with Australia.

In return, Australian producers agreed to phase-out the use of certain European geographical names, eg, “champagne” and “port”, and to develop arrangements to phase out traditionally used terms, eg, “cru” and “chateau”.

EU Wine Labelling Regulations: the EU has introduced new labelling requirements (Regulation 753/2002) for all wine imported into the EU on or after 1 February 2004.  On behalf of Australia's wine producers, Australia is maintaining that the regulation is a barrier to trade because it makes it harder for Australian wines to be sold in the EU and increases costs.

The EU wine labelling regulation imposes strict conditions on the use of many common descriptive words used on wine labels to describe the qualities and production methods associated with the wine.

Specifically, under the regulation: 

  • third countries are required to regulate the conditions of use of a number of terms commonly used on wine labels, including those indicating:  colour (whether the wine is red or white);  vintage year;  vine varieties;  sweetness/acidity;  and traditional expressions (TE);
  • the use of TEs in the EU market is restricted.  Some TEs may only be used with the permission of the EU, eg, the word “cream” on sherry labels, and a small group of TEs may not be used at all in prescribed circumstances, eg, the words “ruby”, “tawny” and “vintage” on port labels;
  • certain bottle shapes are reserved for particular EU wines, eg, the “rosé” bottle shape.

World Trade Organization (WTO): successor to the GATT, and established in 1993 after the completion of the Uruguay Roundof multilateral trade negotiations, to help trade flow more smoothly, freely, fairly and predictably.  The WTO does this by facilitating the implementation, administration and operation of the outcomes of the Uruguay Round.  The WTO has 148members (as at October 2004), accounting for over 90 per cent of world trade. Twenty-six others are negotiating membership.  The WTO provides the forum for negotiations among Members on the existing agreements, and for negotiation of new agreements. The EU represents all its member states within the WTO on any WTO negotiations.  The WTO’s top level decision-making body is the Ministerial Conference which meets at least once every two years.

The WTO has a Secretariat headed by the Director-General, and is based in Geneva, Switzerland.  See also Doha Round, Uruguay Round, GATT, GATS.


[1] Goode, p 16

[2] Information supplied by the NSW State Chamber of Commerce.

[3] Austria, Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Portugal, Sweden and the United Kingdom

[4] Information supplied by the NSW State Chamber of Commerce

[5]Goode 193

[6] information provided by the Delegation of the European Commission

[7](ISR paper Standards and conformity) - [ PDF ]

[8] Taric is an instrument which was created at the same time as the Combined Nomenclature (CN) by Regulation 2658/87 (Art. 2). Another field for the application of TARIC codes is in automated customs clearance. The use of the TARIC codes is obligatory in customs and statistical declarations in trade with third countries (Article 5(2) of R 2658/87). It has to be entered in box 33 of the Single Administrative Document (SAD).

[9] further information should be obtained from the Delegation of the European Commission to Australia and New Zealand website or the embassies of the countries you are planning to visit.

Department of Foreign Affairs and Trade