WTO Releases Trade Policy Review For EU

The World Trade Organization (WTO) released a trade policy review for the European Union (EU) on July 16, finding that the EU has managed to avoid protectionism as it grapples with its debt crisis.

The focus of EU policy over the past two years has been on the financial crises and there have been relatively few changes to trade policies, laws, or institutions in other areas. However, the fact that there has been no retreat into protectionism is, in itself, a positive sign, according to the report.

The WTO found that there have not been any major changes to tariffs or market access generally in the EU. Although there are a large number of duty-free tariff lines and the average MFN tariff is 6.5 percent, some sectors, particularly agriculture, remain relatively well protected, sometimes by complex or seasonal tariffs. However, relatively few countries trade with the EU on an MFN basis as the EU has a considerable number of trade agreements with other countries as well as GSP and GSP+, and EBA schemes.

The report also notes that different member States charge different rates of value added tax and excise duties while corporate and personal taxation systems and rates of tax vary widely from one member State to another. The complexity of the taxation system, including collection and payment, for example for VAT, can result in additional compliance costs for economic operators while the application of reduced VAT rates for some products results in significant revenue transfers to some sectors that are typically not traded. If all reduced rates were removed, the standard rate of VAT could in certain member States theoretically be dropped by up to 7.5 percent without any impact on overall revenue.

Source: Tax News