EU’s trade rules attacked by eBay as stagflation takes hold

The EU bazaar

The channel will view with interest today’s announcement by Paloma Castro, head of EU liaison for the online auction giant eBay, that her company will lead a lobby effort for a change in EU trade rules that favour entrenched manufacturers “making money as they did in the 1950s.”

Castro said a Call for Action paper would be launched tomorrow, and that it was an ideal cause for MEPs to adopt at a time of rising inflation. As examples, she singled out differential pricing for national markets and charging web stores a higher price than offline shops for the same goods.

Castro was also critical of some brands’ refusal to let their brands be traded online at all, which she implied was evidence of a desire to close down online distribution. So, it appears that eBay intends to appeal to anti-elitist sentiment among the leftist majority of MEPs and it appears to already have the sympathy of EU Consumer Commissioner Meglena Kuneva.

Some recognition of high street retailers’ higher overheads seems fair. But, as we reported previously, a combination of a high street and an online presence is riding the current slowdown best. An “either-or” polarisation suits eBay’s corporate strategy, but it ain’t necessarily so.

Castro will need to be aware of voluntary scheme for companies, consultancies and NGOs to register how much they spend on lobbying EU policymakers, which comes into force today.

It has been obligatory for lobbyists to do this in the USA for many years, without in any way diminishing their influence. Whether or not it will have any beneficial effect on the transparency of EU decision making, however, is far from clear.

Stagflation

Meanwhile, the FT reported that purchasing managers’ indices for June show Eurozone economic activity contracted this month for the first time in five years. However, with Eurozone inflation at a 16-year high of 3.7 per cent, a rise in the base rate by the ECB is inevitable.

Stagflation is defined as the simultaneous existence of high inflation and high unemployment. It came to prominence in the UK during the 70s. Usually the central bank can boost flagging economic activity by lowering interest rates. However, since this has an inflationary effect and the primary remit of most central banks is to control inflation, it is constrained from doing so while inflation is above target.

In the UK, Chancellor Alistair Darling’s exhortation for the private sector to show “restraint” in wage settlements is doomed by the rise in the Retail Price Index, to which many pay deals are tied. It follows that the Bank of England is in the same situation as the ECB, only a percentage point higher.

The UK government’s use of the much-fudged Consumer Price Index to keep public sector deals at about two percent is also threatened by Unison, the largest public sector union, which wants to renegotiate a three-year pay deal for half a million NHS workers.

Conclusion

It appears eBay’s initiative is extremely well timed. EU bureaucrats will be anxious to divert attention from some of their practises, following yet another rejection of them by a member state, while national governments will seek to evade responsibility for their economic mismanagement.

The most probable result, however, will be that those parts of the private sector that cannot afford “influence” will blamed, as usual. Let’s hope the scapegoating will be mainly rhetorical.