Business Beyond the Reef

… that is the question.

With apologies to the Bard, something is rotten in Denmark, where health vikings in the Danish government are assaulting products that contain vitamin or mineral supplements. Such products, all the rage in the rest of the world, are dangerous in the sight of the Danes, who have decided that there can be too much of a good thing. The Danes passed a law in 2004 to ban vitamin or mineral additives in food, but have only recently gotten around to fully enforcing the ban.

U.S. companies saw it coming. Kelloggs, which has merrily added vitamins to its cereals to appease American parents, submitted most of its products for approval by the Danes – and were turned down on every one of them. They have had to go to the extra expense of separate production runs for Denmark that leave the offending vitamins in Battle Creek. But others were seemingly caught unawares.

Vegemite with Velveeta. Yum.

The British are absolutely incensed that their beloved Marmite has been banned. Ditto the Australians, who can no longer peddle Kraft’s Vegemite. (Note to reader: this post is about trade barriers, not good taste.) Malted milk rates special ire, with bans for both Horlicks and Ovaltine. And Farley’s Rusks, a dry biscuit popular in England (but owned by America’s Heinz), is on the hit list.

The stated explanation is that humans can get too many vitamins and minerals, and that is a bad thing. The Danes, however, have not banned breathing despite acknowledgement that too much oxygen can also be a bad thing. And they still allow added vitamins and minerals in the form of vitamin capsules that any Dane can pick up at the local druggist. So, is the key that food with vitamins must be chewed, while capsules are merely swallowed (if not too big)?

A similar conundrum arose in Austria during the EU-US battles over genetically-modified organisms (GMOs). The fight persists, but in a lower key today, since even European farmers are attracted to demonstrated performance and safety in many GMO crops and herds. The Austrians were perhaps the staunchest of GMO opponents, but it became clear to me, working in Vienna at the time, that the fight was actually about how the GMOs were to be ingested by humans. Austrians opposed GMOs in their steaks and veggies, but eagerly accepted new pharmaceuticals that had been made from GMOs. Thus, I had to conclude that swallowing was OK, but chewing was verboten.

The Danes must be talking to the Austrians. In the meantime, “Alas, poor Horlicks!” is cried in the hamlets of Denmark.

Does your firm sell to governments in Europe?  Do you want to get into European procurement markets? Information on the government procurement systems of Western Europe and most of the European Union has been readily available for a long time, but that hasn’t always been the case in some of Europe’s smaller and newer markets.

Are you selling in Montenegro?

Our friends at the Federation of International Trade Associations (see their link to the right) have highlighted  the website of SIGMA, a joint EU-OECD project to improve governance. Though an interesting site if you are into political mumbo-jumbo, what really grabbed my attention were are couple of pages of links. There are comprehensive links to the public procurement websites of 21 EU member states, plus Croatia, Macedonia, Georgia, Montenegro, Serbia and Turkey. Some of these are in the local language only, while others offer good information in English, French, German or other languages.  These are the sites where upcoming procurements are announced.

Sometimes, you really need to know a country’s procurement laws and regulations. That’s when SIGMA’s links to public procurement legislation can be invaluable. Links are provided not only to the EU’s procurement regs and those of most EU members, but also to places where such laws have been difficult to find: Albania, Bosnia & Herzegovina, Bulgaria, Croatia, Cyprus, Kosovo, Latvia, Macedonia, Malta, Montenegro, Serbia and Turkey. Almost all of these have been translated into English.

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I’m miffed.  I checked those cables that WikiLeaks has put up so far – and none of my old cables are included. Of course, they’ve got a lot more to release, so I can hope. I want my 15 minutes of fame!

The headline looked good: the European Union makes unilateral tariff reductions for Pakistani products to help that benighted country recover from its disastrous floods.  All good humanitarian stuff – until you read the fine print.

The surface story is that, on January 1, Brussels will give duty-free access to its market – with no expectation of reciprocity – for goods that make up about 27% of Pakistan’s current exports to Europe.  This covers 80-some tariff lines and the duty-free entry is good for three years.  And most of the products are textiles or leather goods, like shoes.  Just the sort of thing that Pakistan’s flood victims would have made, right?  The Eurocrats must feel warm and fuzzy.

Let's fix it by buying cloth! But no bed linens.

Now the back story, as revealed by Asia Times among others.  First, it doesn’t take genius to see that duty-free access for Pakistan’s textiles is going to come out of somebody else’s looms, probably in places like Bangladesh, India or Sri Lanka with whom Pakistan competes.  So the cost of Europe’s largess will be paid by other flood or war victims in other countries.  Perhaps this is an unintended consequence.  But we can count on these countries trying to block Brussels’ action in the WTO.

Second, the items that Europe will allow in are primarily raw materials or unfinished goods, not the finished textile items that might compete with European factories.  Brussels has very carefully kept out the finished goods, especially bed linens, in which Pakistan is a tough competitor worldwide.  We might want to help flood victims, but not so badly that we might risk losing some sales ourselves.  Besides, the prime beneficiaries in Pakistan are more likely to be the big mills that turn out raw materials or semi-finished products, not the flood victims unless they all happen to get jobs at those mills.

No, this smacks a bit more about lowering costs for European textile processors who are having a tough time coming out of the recession.  But we’re going to call it humanitarian aid for Pakistani flood victims.