Promoting Austrian goods in light of the EU internal market principles

1. Rechtwissenschaftiche Fakultät der Universität Wien European Lectures Series Promoting Austrian goods in light of the EU internal market principles Dr Janja Hojnik University of Maribor, Slovenia 23 March 2015

2. Free trade v. protectionism • What are their (dis)advantages?

3. THREE CRISES CHALLENGING GLOBAL FREE TRADE • ECONOMIC CRISIS • FOOD CRISIS • CLIMATE CHANGE CRISIS

4. Buy Austrian! • „Das in rot gehaltene Zeichen (…) steht für ein Bioprodukt, dessen Rohstoffe zu 100 Prozent aus Österreich kommen…“

5. Other EU MemberStatestoo! • BUY IRISH, 1982&2010: http://www.guaranteedirish.ie/ • BUY GREEK, 1985 & 2010: http://www.helpsavegreece.com/ • Markenqualitätausdeutschen Landen, 1993

6. BounItalia SpA: patrimonio alimentare d’Italia • Kiváló Magyar Élelmiszer (KME – Quality Food from Hungary) • Czech KLASA značka(KLASA Mark)

7. Slovenia: • Acton promotion of agricultural and food products (2011) • „I amBuyingSlovenian“ campaign • „BuyDomestic“ campaign

8. Typicalreasoning: • Slovenia: • Minister for Agriculture Dejan Židan: “a buyer, who buys Slovenian food gives work to our farmer and worker; this way the state budget is being filled; high food safety is being guaranteed and an important step towards climate change prevention is being done (the transport is the greatest polluter)”

9. CROATIA • Kupujmo hrvatsko • Vrijedne ruke

10. BUY AMERICANBuy American Act of 1933;Buy American provision of the Surface Transportation Assistance Act of 1982;American Recovery and Reinvestment Act of 2009 (ARRA);recently reheated due to Texas House Bill 558, - would require the purchase of iron, steel, and manufactured goods made in the United States for certain state, state-aided, and governmental entity construction projects.

11. The Alliance for American Manufacturing (AAM) claims that domestic sourcing requirementsare “the most effective way to ensure taxpayer dollars are used to create and maintain jobs and manufacturing capacity to the maximum extent possible, thereby vastly improving the stimulative effect of government spending.” The AAM calls Buy American “a proven job creation tool that is broadly supported by Congress, the American people, and hundreds of local governments throughout the United States.”

12. CONSUMER ETHNOCENTRISM • beliefs accepted from the consumer about the appropriateness, that is, morality of the purchase of foreign products; • the consequences of consumer ethnocentricity include overestimation of the quality and value of domestic products and underestimation of the virtues of imports, a moral obligation to buy domestic products, and intense preference for domestic products; • the notion that some consumers believe it is somehow wrong to purchase foreign-made products, because it will hurt the domestic economy, cause the loss of jobs, and, in short, because, from their view, it is plainly unpatriotic« (Shimp, 1984)

13. Sources of consumer ethnocentrism • Culture, parental upbringing • Campaigns • Companies • Workers associations • States • DIRECTLY: Protectionist public procurement • INDIRECTLY • Formal influence: requirement to purchase domestic goods - case 72/83, Campus Oil • Informal influence: country of origin labels & buy domestic campaigns

14. Does product country of origin matter? • Do you know where certain goods come from? • Should the consumers have the right to be informed on the origin of the goods?

15. EU Court on COOL measures • »It has to be recognized that the purpose of indications of origin or origin-marking is to enable consumers to distinguish between domestic and imported products and that this enables them to assert any prejudices which they may have against foreign products. (…) Within (the common) market, the origin-marking requirement not only makes the marketing in a Member State of goods produced in other Member States in the sectors in question more difficult; it also has the effect of slowing down economic interpenetration in the Community by handicapping the sale of goods produced as the result of a division of labour between Member States.« UK “made in” case (207/83, para. 17)

16. WTO panels on COOL measures • "there can be good reasons – apart from any protectionist motives – why a WTO Member might want information to be provided as to the origin of products, and particularly meat products, at the retail level". • “providing consumer information on origin is a legitimate objective” Korea – Various Measures on Beef US – COOL Measures

17. Consumer ethnocentrism & EU single market • Article 34 TFEU: prohibition of quantitative restrictions and measures having equivalent effect • Vertical/horizontal direct effect? • Barriers to free movement? • Justification?

18. Sponsor‘s role • Vertical direct effect of Art 34 TFEU; • motions of private entities are also caught by Art 34 TFEU, provided they can be attributed to the state – be it because: • they were established by the state, • largely financed by the government or • through obligatory contribution of companies in certain sectors, and/or • have members that are appointed or controlled by public authorities • states are responsible for public statements of their officials which reflect the state’s official point of view, regardless of whether they have a binding effect or not… (C-470/03, COS.MET).

19. A barrier to FMG?Buy Irish case (249/81) • The Court condemned the campaign because it reflected the Irish government’s desire to achieve “the substitution of domestic products for imported products and was liable to affect the volume of trade between Member States”

20. Germany quality marking case (C-325/00) • »Such a scheme, set up in order to promote the distribution of agricultural and food products made in Germany and for which the advertising message underlines the German origin of the relevant products, may encourage consumers to buy the products with the CMA label to the exclusion of imported products«; • »(t)he fact that the use of that quality label is optional does not mean that it ceases to be an unjustified obstacle to trade«.

21. WTO nationaltreatment rule • Artice III:4 GATT: »The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use (…).« Article XX – derogations It can hardly be expected that the latter will consider “buy domestic” campaigns as a disproportional barrier to free trade.

22. Justifying „buy domestic“ campaigns • Protection of domestic producers and workers? • National tradition? • Consumer protection? • Food security? • Environmental protection?

23. Commission‘s Green Paper 2011(436) • “Regional and local markets are an essential meeting place for producers and consumers. They enable the former to receive the rewards for their labours more efficiently and the latter to contribute to the development of their local areas, reduce the environmental impact of their consumption habits and access a wide variety of products rooted in their traditions and ways of life.” • “Consumption of European products needs to be encouraged, on the one hand, by promoting the image of the products and, on the other, by raising awareness of Europe’s quality systems among consumers and among producers (…) Europe must use all of its energy to promote its specialities and its production methods in the same way as its main trade partners (United States, Australia, Canada, etc.) are doing”.

24. Mandatory „made in EU“ labelling • Made-in" labelling should be made mandatory for non-food products sold on the single market; • to tighten up product safety requirements and market surveillance rules so as to strengthen consumer protection in the EU.

25. Concluding remarks • Buying domestic is "a plea made to us, and not a reason given to us as to why to favour Canadian products.„ (H.E. Beaudeaulais) • Based on 2 assumptions: • consumers correspond to the campaigns & • the state manages to conceal this win-win formula from the other states. • Not xenomanic consumers, but consumers without negative stereotypes about foreign goods; • Free trade advantages and consumers‘ choice.

26. Thank you for your attention!Janja.hojnik@um.si