Although the younger generations do not recall restrictions on trade, Malta has experienced moments in history when everything which had to be imported required a licence.

More often than not these licence applications were refused for one reason or another, since anything which was considered as competing with locally-produced goods was automatically banned.

Furthermore, commercial transactions between Malta and other countries was subject to barter trade agreements in an attempt to close the trade gap. This meant that unless the other country imported from Malta the agreed amount of locally-manufactured goods, it was not possible to import from that country. In the meantime, it was only possible to import certain items such as meat, fish, dairy products, sugar, timber, and cement, under a bulk-buying scheme administered by the

government. It is worth recalling

history to appreciate the present.

With trade liberalisation, importation in the 1990s soared, providing consumers with a significant increase in choice from a vast array of newly-

available products. Nevertheless, up to April 2004 the number of products requiring an import licence was still rather extensive. In fact an average of 1,100 import licences per month were being issued. We therefore had a situation where importers had the onerous task of applying for an import licence in respect of several products despite the fact that the number of products subject to restricted importation had been drastically reduced.

Imports are still on the increase, with recent trade statistics showing that in the past year the importation of goods showed a substantial increase with a Lm25 million or 14.4 per cent increase in capital goods and a further Lm25 million in consumer goods. This could also be a correlation to the removal of protective levies on local products.

This meant that hundreds of products became cheaper and more than Lm7 million remained in the consumers’ pockets through the removal of levies. On the other hand, we have witnessed that well-established and quality Maltese products are able to compete well in a free market.

With Malta’s accession to the European Union, the import licensing regime has been substantially overhauled. New

regulations were issued in order to bring this regime in line with Community law or with the

special arrangements or derogations which Malta obtained

during the process of negotiations for accession. The overhaul in Importation Control Regulations took place through a legal notice published last June and as a result of the new regulations, the number of products requiring a licence has been sharply reduced.

Products which still require a trading licence are mainly those imported from countries outside the EU. These include live animals, meat products, fish products, vegetables and fruit, animal feed, chemicals and veterinary medicinals.

However, as a result of an

international agreement under the auspices of the World Trade Organisation with a view to further liberalise trade, those surveillance and restrictive measures on products imported from WTO-member countries have been removed as from 1 January. Therefore, quantitative restrictions on footwear, ceramics and porcelain have now also been removed completely.

Nevertheless, one must not get the impression that liberalisation signifies anarchy. While it is

laudable to reduce administrative burdens to facilitate trade, it is imperative that this is balanced with initiatives which protect the consumer, the environment and traditional local industries. In this regard it is worth noting that import licence applications are referred to the relevant departments or government entities, prior to issue. Further more

sensitive products not requiring a license are subject to authorisations issued by other departments or government entities.

These initiatives are not stand-alones but are complemented by the concerted efforts of the Customs Department and the police in their fight against smuggling, the new and old illicit traffic in weapons, illegal or expired drugs, cigarettes, money laundering, counterfeit goods, works of art, endangered and/or protected species, radioactive materials, hazardous waste and goods which cause harm to health and the environment.

To this, one must add the sterling work being carried out in the area of tax evasion, consumer protection, competition policy, intellectual property, market surveillance and the setting and enforcement of standards which together serve to provide us with a safe yet free market environment – a market which provides choice, but which is guarded against illicit and dangerous trade.

One of the fundamental pillars of the EU is that of free trade across national borders of the Union, which now exceeds 450 million people.

To ensure the smooth running of this principle, the Commerce Division in the Competitiveness and Communications Ministry is running the local office for the SOLVIT network. This initiative has been set up by the European Commission to ensure that EU citizens and businesses benefit from internal market rights. SOLVIT is an informal way of solving problems caused by the misapplication of internal market rules by public administration in the member states.

The network is coordinated by the Commission and the centres are operated by member states themselves. SOLVIT is free of charge. This centre is important in ensuring that free movement of trade is truly and freely practiced throughout the Union and ensures that any problems which may arise in this regard can be solved effectively, quickly and free of charge to ensure that EU citizens are not deterred from using the services of this centre.

Although there are no difficulties in the movement of goods within the EU, one area which must be given priority is the free movement of services. Moreover, the importance of ensuring that all barriers to the free movement of services are removed is

accentuated by the fact that such initiatives were identified by the European Commission as being crucial in enhancing competitiveness within the Union. This led in turn to the proposal by the Commission in January 2004 for a directive on services in the internal market.

The purpose of the directive is to remove all obstacles that militate against achieving the full economic benefits of the internal market in a Europe without

borders. One of the main aims of the directive is in fact to remove the archaic bureaucratic systems that still prevail in Europe and that do not allow the market to fully develop its economic

potential.

The directive covers all services provided to consumers and businesses except those provided directly by public authorities for no remuneration in fulfilment of their social, cultural, educational or legal obligations. It also leaves out services covered directly by EU law, such as financial

services, telecommunications and transport.

This proposed EU directive is aimed at improving the freedom of establishment of service-providers and the cross-border movement of services by making it easier for European citizens and businesses to conduct trade in

services. The focus of the directive is the reduction of regulatory requirements and the simplification of administrative procedures.

While the opening up of borders and the elimination of trade

barriers in today’s globalised world has changed the way we do business to the advantage of

consumers, we must also bear in mind that as a country we now face new competitors. It is therefore not by coincidence that national competitiveness is at the top of our agenda.

In addition to measures already taken to boost our competitiveness, we must ensure that 2005 will be a milestone in implementing concrete initiatives to achieve our goal. This requires a collective effort from government, social partners and industry. I am confident that all the parties concerned are ready to take the bull by the horns and work together to continue paving the way for our country’s success.

Censu Galea is Competitiveness and Communications Minister

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