RESTRICTED
WORLD TRADE WT/TPR/G/30
20October 1997
ORGANIZATION(97-4557)
Original: English/
French
TRADE POLICY REVIEW
EUROPEAN UNION
Report bytheEuropean Union
Pursuant totheAgreement Establishing theTrade Policy Review Mechanism
(Annex 3oftheMarrakesh Agreement Establishing theWorld Trade Organization), the
policy statement bytheEuropean Union isattached.
________________________________________________________________________________________
Note: Thisreport issubject torestricted circulation andpress embargo untiltheendofthemeeting
oftheTrade Policy Review Body ontheEuropean Union.European Union WT/TPR/G/30
Page 3
CONTENTS
Page
I. Introduction 5
II. Keydevelopments intheEUsince thelastreview 5
III. TheSingle Market 6
IV. TheEUandWTO 7
V. Future policy directions 10European Union WT/TPR/G/30
Page 5
I. Introduction
1. Thisisthefirstinterim review oftheEU’stradepolicy under therevised TPRM arrangements.
2. Since thelastTrade Policy Review oftheEU,there hasbeenagood dealofdebate, within
theEU,onquestions related toeconomic growth, jobcreation andinternational competitiveness. This
debate, related totheglobalisation oftheworld economy, hasremained highonthepublic agenda,
ascompetition inaglobal economy hasbeenviewed fromdifferent perspectives bydifferent sections
ofsociety.
3. Thisisanimportant back-drop fortheWTO ’strade policy review process. Likeallareas
ofeconomic policy, trade policy isameans totheendofproviding fortheeconomic prosperity of
individuals andsociety, andproviding theeconomic underpinning forwhatever levelofsocial provision
societies consider tobeappropriate. Public authorities havesought tohighlight thebenefits ofgreater
world-wide integration bypointing outthat,already, extra-EU exports directly account for9%ofEU
GDP and10%ofemployment (roughly theGDP oftheNetherlands, Austria, Finland andPortugal).
4. FortheEU,andforEuropean Governments, thisdebate hasbeenanimportant feature ofboth
internal andexternal economic policy overthepasttwoyears. Atthesame time, theEUhasbeen
engaged indealing withtheconsequences ofitsmost recent enlargement, infurther preparation for
future enlargement andtheintroduction oftheEuro, andintheconsolidation ofmany aspects ofits
external economic relations. Ineachoftheseareasofactivity, ourapproach hasreflected afundamental
commitment toanopenanddynamic market economy supporting appropriate levels ofsocial provision
andprotection, aswellassustainable development.
5. Theopenmultilateral trading system principally embodied intheWTO Agreement isacentral
anchor fortheexternal dimensions ofthiswider agenda. TheWTO ’ssystem ofrules, market access
commitments, enforcement through thedispute settlement system anditscommitment tofuture
negotiations andliberalisation through thebuilt-in agenda provides anexternal framework foragreement
andimplementation oftheright economic policies inasimilar wayasourowninternal market
programme provides asystem ofrules, ameans ofenforcement andofcourse acontinuous framework
forthefurther development oftheEU'sinternal market. TheEUremains committed tothefundamental
WTO objective ofprogressive multilateral liberalisation based onthenon-discrimination principle.
II. Keydevelopments intheEUsince thelastreview
6. Thiswider perspective hasbeenreflected inthefollowing keydevelopments overthepasttwo
years:-
(a) Theeconomic andtrade impact ofenlargement oftheEUtoinclude Sweden, Finland
andAustria from 1January 1995. Thiswassignificant bothfortheEUinternally
-asthree substantial economies became fullyintegrated intothesingle market -as
wellaschanging theEU'sexternal profile intheWTO. Inparticular, thethree new
Member States adopted theCommunity 'scommon commercial tariff fromtheoutset,
andtheArticle XXIV.6 compensation process provided byGATT 1994 wasrapidly
andsatisfactorily concluded infullcompliance withWTO rules.
(b) Attheendof1995, thefinalstageofthecustoms union withTurkey entered intoforce.
Thiswasasignificant achievement, bringing tofruition anambition shared bytheEU
andTurkeysincetheearly1960s.AnumberoflimitedtransitionalarrangementsremainWT/TPR/G/30 Trade Policy Review
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inforce forsome industrial products, andthepaceofagricultural liberalisation, while
slower, isnevertheless significant.
(c) More widely, theprocess ofworking together withpartners inCentral andEastern
Europe forwhom accession totheEUisashared vocation hasdeveloped overthe
pasttwoyearsintoawideranging andcomprehensive process ofco-operation, technical
assistance andrealeconomic integration, building ontheEurope Agreements theEU
haswitheachofthetencountries concerned.
7. Most recently, theCommission hasdelivered itsopinions ontheaccession applications from
thetenCentral andEastern European applicants. TheCommission recommended opening negotiations
withPoland, theCzech Republic, Hungary, Slovenia andEstonia. ForRomania, Slovakia, Latvia,
Lithuania andBulgaria, theCommission considers thatnegotiations should openassoonastheysatisfy
theconditions defined bytheCopenhagen European Council. TheEuropean Council atitsDecember
meeting inLuxembourg isexpected totakethenecessary decisions ontheoverall enlargement process.
8. TheCommission 'sopinions formed partofAgenda 2000 which setsouttheCommission ’s
views ofthedevelopment oftheEuropean Union bothforfurther enlargement andforthechallenges
fortheEUofthe21stcentury. These proposals, currently under consideration within theEU,are
intended toprovide foranew, outward looking andopenagenda based ontheaimsofenlargement
oftheEUandsubstantive policy reform inkeyareas. Thisincludes proposals forreform inagriculture,
regional development funding andbudgetary arrangements fortheperiod 2000-2006.
9. Within theEU,theprocess ofconsolidating theinterface between theinternal market andthe
WTO system hascontinued. In1995 and1996 theEUhasputinplace theCustoms 2000 project,
aimed atconsolidating theEU'sinstitutional machinery intheWorld Customs Organisation andthe
WTO, aswellasproviding appropriate institutional andtechnical underpinning forco-operation between
theCommission andtheadministrations inMember States inthefullrange ofcustoms procedures.
III. TheSingle Market
10. Attheendof1996, thefirstfullreview oftheoperation ofthesingle market wascompleted
bytheCommission. Theresult hasshown thatthesingle market programme hasbeeneffective in
providing fortheintegration ofEUeconomies. Atthesame time, ithasalsohighlighted anumber
ofareas where further work needs tobeundertaken toensure thatthefullbenefit ofthesingle market
programme isrealised. Thishasbeenreflected inaAction Planonthesingle market adopted bythe
Amsterdam European Council inJune1997. Encouragingly fortheTPRM process, thesingle market
reviewalsoshowedthatthirdcountrysuppliersofgoods,servicesandinvestmenttotheEUhadbenefited
from thesingle market programme justasmuch aspeople andcompanies within theEU.
11. Within theinternal market, there havealsobeenimportant developments ineconomic policy.
Theadoption in1994 oftheWhite Paper entitled "Growth, Competitiveness, andEmployment: the
challenges andways forward intothe21stcentury" hasformed thecentre piece forsubsequent policy
thinking onarange ofmicro-economic questions.
12. Preparations havecontinued fortheintroduction oftheEuro asprovided intheMaastricht
Treaty. Thisprocess hasplayed animportant roleinshaping macro-economic policies within theEU,
andinhelping thewider process ofeconomic andeconomic policy convergence tocontinue toevolve.European Union WT/TPR/G/30
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IV. TheEUandWTO
13. Within thecontext oftheWTO, while theSingapore Ministerial Conference, theconclusion
oftheITAandthebasic Telecommunications Agreement haveallprovided highlights overthepast
twoyears itisimportant toremember thattheprocess ofimplementing theUruguay Round results
hasalsobeenamajor feature ofEUactivity through thisperiod. Thetaskhasbeencomplicated by
thefactthatimplementation hascoincided withenlargement, andwiththeimplementation ofreforms
totheEU'sCommon Agricultural Policy.
14. Atthesame time, newmeasures totackle market access barriers inthirdcountries havebeen
putinplace asaresult oftheadoption ofanewmarket access strategy andarelated Regulation on
tradebarriers. Themarket access strategy adopted bytheEUCouncil ofMinisters isexplicitly intended
toprovide aclear andeffective articulation between theCommunity 'smultilateral agenda, andits
approach tobilateral market access questions withtrading partners within thewider WTO framework.
These initiatives needtobeseeninthecontext oftheEU'sfundamental commitment totheWTO 's
dispute settlement system andtheEU'sprofound disquiet attheuseofunilateral coercion tosettle trade
disputes.
15. TheEUhascontinued toplayanactive partinthework oftheWTO 'sDispute Settlement
Body (DSB). TheEUseesthesharp increase inthenumber ofcases brought intotheWTO system
asasignthatthedispute settlement system hasfulfilled Members ’expectations ofproviding aneffective
means ofaddressing trade disputes. Thisisasignificant contribution totrade liberalisation andthe
implementation ofUruguay Round commitments. Atthesame time, asignificant number ofcases
brought tothedispute settlement system havebeenamicably settled atsome stageduring theprocedure.
Thisisapositive development, indicating thatmembers havenotlostsightoftheaimofthedispute
settlement mechanism offinding solutions mutually acceptable tothepartners andconsistent withthe
covered agreements, suggesting thattheimprovements tothedispute settlement system agreed atthe
endoftheUruguay Round haveachieved theirobjective. TheEUisfundamentally committed to
underpinning andenhancing both theeffectiveness andthecredibility ofthedispute settlement
mechanism.
16. AllofthesedevelopmentsformedthebackgroundtotheCommunity'spreparationfortheWTO's
Ministerial Conference inSingapore inDecember 1996. Inaddition toitsapproach tomarket access
questions, theEUalsoadopted policies related totradeandenvironment, investment andcompetition,
andlaidtheinternalfoundationforthesuccessfulnegotiationatSingaporeoftheInformationTechnology
Agreement.
17. Oninvestment, theEUseesitasrightfortheWTO Group oninvestment towiden thecompass
ofanalysis already undertaken inthecontext oftheMultilateral Agreement onInvestment context in
recent years. Getting theconditions rightforforeign investment willbeanimportant foundation for
thefurther integration oftheworld economy andforthedevelopment oftrade inyears tocome.
18. Onenvironment, theEUhadambitious goals fortheWTO 'sCommittee onTrade and
Environment (CTE) intherun-up totheSingapore Conference. Unfortunately, thesortofwide-ranging
progress theEUhadhoped tomake onthisissuedidnotprove possible. Nevertheless, theEUremains
committed totaking thisissueforward intheWTO andother multilateral forainyears tocome. The
EUisconvinced thattheissue isacentral aspect ofthewider goalofSustainable Development.
19. Oncompetition, theEUconsiders ittobeimportant todevelop thework oftheWTO group
onthisissue established asaresult oftheSingapore Conference, toconsider theextent towhichWT/TPR/G/30 Trade Policy Review
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conditions ofcompetition areabletounderpin effective market access inanincreasingly integrated
world economy.
20. Ontradeandlabour standards, theEUbelieves thateconomic growth anddevelopment fostered
byincreased trade liberalisation contribute tothepromotion ofcorelabour standards. TheEUrejects
theuseoflabour standards forprotectionist purposes, andagrees thatthecomparative advantage of
countries, particularly low-wage developing countries, mustinnowaybeputintoquestion. Asagreed
inSingapore, work topromote corelabour standards must continue.
21. TheITAagreed atSingapore andnowinforce wassupported bytheEUsince itsinception.
Thefirsttariff cutshavenowtaken place. Thanks totheITA,industry willbeassured ofunrestricted
access toITequipment -notonlyforthose whouseelectronic components tomanufacture butalso
those innonITindustries ortheservice sector which, toremain competitive, need access to
state-of-the-art informatics systems andsoftware andglobally competitive prices. TheITindustry
canaccelerate itsevolution towards global production onamore rational basis knowing thattariffs
(which actasinternal taxes) areeliminated. Looking beyond theresults already achieved, theEU
hopes thatother countries willjointheITA. TheEUisalsocontributing actively tothereview of
theAgreement ’sproduct coverage andotherissues, asforeseen intheAnnex totheSingapore declaration
onTrade inInformation Technology Products.
22. Theconclusion oftheWTO Agreement onBasic Telecommunications in1997 wasalsoan
important extension ofinternational rules andmarket opening fortheEU. TheEU’sownprocess
ofinternal liberalisation initstelecommunication market isfaradvanced andwillbecompleted on
1January 1998, thesamedateastheentry intoforce oftheWTO Agreement. Wewillbeinaposition
bytheagreed datetoconfirm that,asforeseen inthefourth protocol, allcommitments made are
implemented intothecorresponding internal regulations.
23. AtSingapore, theEUsupported efforts totakeforward theAction Planinrespect ofLLDCs
aimed atusing aHigh Level Meeting onLLDC assistance inGeneva attheendofOctober asafocus
forfurther efforts tobetter integrate theleastdeveloped countries intotheworld economy andinto
themultilateral trading system. TheEUhasdecided onways toimprove access toitsownmarkets
forLLDC products inthecontext ofitsGSPscheme, andtheEUisnowlooking ahead toconsider
howbesttodevelopitsmarketaccessarrangementswithACPpartnersafterthepresentLoméConvention
expires in2000. TheEUremains concerned thattheleastdeveloped countries havenotenjoyed the
fullbenefits oftheintroduction oftheWTO agreement andhavebecome increasingly marginalised
within theworld economy. Thisisasituation theEUwillcontinue toaddress asapriority infuture
work, ensuring thatmeasures tofurther theintegration ofleastdeveloped countries remains highon
theWTO ’sagenda. Better coordination oftraderelated technical assistance, andsimplified origin rules
areamong possible means toalleviate these problems, aswould beabroader commitment amongst
WTOmemberstoworktowardsreducingtariffsonLLDCproducts,comparabletothosegrantedalready
bytheEU.Asapractical measure toimprove market access forLLDC 's,theEUwillbeoffering
alevelaccess equivalent toLomé toallLLDC 'sby1January 1998.
24. TheEUhastaken aforward looking position inwork nowunderway intheWTO infields
suchastrade facilitation, international standards andpractices under theTechnical Barriers toTrade
Agreement, rules oforigin andinthedeliberations oftheTRIPS council.
25. EUpolicy onregional preferential trade agreements hascontinued toevolve, following the
establishment oftheWTO 'sCommittee onRegional Trade Agreements atthebeginning of1996.
Recognising theneed toensure thatregional policies arefully compatible with, andsupport theEuropean Union WT/TPR/G/30
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multilateral trading system, theEUisafirmsupporter ofthework oftheCRTA, including itssystemic
work considering theinteraction ofregional preferential tradeagreements andtherights andobligations
contained within theWTO agreements, including thequestion whether these rights andobligations
should beclarified. Inrespect ofitsownpreferential agreements, theEUhasadopted clearguidelines
which givepriority toexisting commitments andmandates, onthebasisofwhich theEUwillcontinue
tonegotiate anumber offurther preferential agreements inthefuture. TheEU'sguidelines alsoensure
thatanynewproposals forpreferential agreements aremeasured against alistofindicative criteria,
allowing them tobesubject tocareful, consistent consideration onacase-by-case basis, inthelight
ofmultilateral obligations.
26. TheEUhasalsoputagooddealofeffort intothedevelopment ofimportant regional dialogues
ontrade policy issues withtheUnited States andCanada, aswellaswith withAsian, Mediterranean
andLatin American partners. Relations withtheUSandCanada havebeenmarked bythelaunch
in1995 oftheNewTransatlantic Agenda (NTA) withtheUS,andthesignature oftheEU-Canada
JointDeclaration andAction PlaninDecember 1996. These arrangements haveprovided thefoundation
foranewperiod ofcloser co-operation between theEUandtheUSandCanada, enabling foreign policy,
global andother economic concerns tobeaddressed inaneffective manner.
27. SofarastheUSisconcerned, theNTA reaffirms theshared commitment oftheEUandthe
UStostrengthening themultilateral trading system, andhasbeeninstrumental inlaying thefoundation
fortheITAandtheWTO Basic Telecommunications Agreement. Without prejudice tothiscommitment,
intherelated NewTransatlantic Market-place process, theEUandUSareworking toidentify and
reduce barriers totrade andinvestment, often inresponse toinitiatives from business. Therecent
Agreement onMutual Recognition ofConformity Assessment isagoodexample ofthiseffort. Similarly
withCanada,theActionPlanhasborneearlyfruitwithagreementsonMutualRecognitionofConformity
Assessment, Customs Co-operation andMutual Assistance. Talks have alsobeen completed on
agreements onco-operation incompetition matters andveterinary equivalence.
28. WithAsian partners, thegrowing importance fortheEUandtheentire Asian region hasbeen
demonstrated bythecreation in1996 oftheAsia-Europe Meeting (ASEM) asapermanent forum for
discussion onpolitical andeconomic issues. Inthetradefield, ASEM aimstoimprove economic and
investment opportunities forbothpartners through mechanisms suchasarecently adopted Investment
Promotion Action Plan, aTrade Facilitation Action Plan, andaninitiative oncustoms cooperation.
EU-ASEAN linkshavealsobeenstrengthened through Ministerial agreement in1997onaprogramme
tocreate a"new dynamic" inEU-ASEAN relations inseveral fields including theeconomic.
29. Theimportance ofLatin America fortheEUisalsogrowing. Trade between thetworegions
hassignificantly increased during thelastfewyears. AEU-MERCOSUR framework co-operation
agreement wasconcluded inDecember 1995. Asimilar agreement wasconcluded withChile in
June1996, while aneconomic andco-operation agreement between theEUandMexico wasinitialled
inJuly1997. These agreements provide forenhanced cooperation across awiderange ofpolitical,
economic andcommercial activities. During theperiod under review, anewgeneration ofbilateral
Euro-Mediterranean agreements were alsoconcluded between theCommunity andanumber ofits
partners intheMediterranean region. These agreements provide fortrade liberalisation within a
comprehensive framework ofpolitical andeconomic cooperation, andrepresent thefirststeptowards
theachievement ofafuture Euro-Mediterranean freetrade zone.
30. TheEUremains committed toimproving theGovernment Procurement Agreement andto
extending bothitsmembership andcoverage. Furthermore theEUhasplayed anactive partinthe
work ofagroup tostudy transparency ingovernment procurement procedures, aswellasinwork onWT/TPR/G/30 Trade Policy Review
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procurement ofservices. Looking tothefuture, theEUseesgovernment procurement asasignificant
areaforfurther liberalisation within thewider global economy, building onthework nowunderway.
V. Future policy directions
31. Looking ahead, akeypartoftheEU'sapproach toexternal commercial policy remains its
commitment tofurther multilateral liberalisation focused ontheWTO system. Thisis-andwillcontinue
tobe-reflected inseveral ways:
(a) theEUiscommitted totheframework forfurther liberalisation already established
asaresult ofdecisions taken atthetimetheWTO wassetup(theso-called built-in
agenda) inrespect oftheadditional decisions taken atSingapore toinclude aspects of
investment, competition andgovernment procurement intheWTO ’sworkprogramme,
theEUisclearly committed tothetime-tables agreed foraddressing these issues, and
looks forward totaking anactive andconstructive partinthatprocess. Equally, the
EUintends tocontribute positively andactively tofurther initiatives toreview thescope
andcoverage oftheITA;
(b) tofurther theagenda oftrade facilitation (including standards andregulatory issues,
origin questions, customs procedures, andelectronic commerce);
(c) tocontinue toplayafullroleintheaccession ofnewmembers totheWTO infull
compliancewithWTOrulesandonthebasisofmeaningfulmarketaccesscommitments;
(d) andtoensure thattraditional market access issues remain intheforefront oftheWTO 's
future work.
32. FortheEU,ashared political commitment tothesuccessful conclusion ofthese negotiations
andfullimplementation ofthenegotiated commitments isthemain objective. TheWTO system and
themultilateral trading system more widely willonlycontinue todevelop ifitenjoys thewholehearted
support ofWTO members bothintheirdealings witheachother andintheirexplanation ofthereal,
longer-term benefits oftrade liberalisation totheir respective domestic political constituencies.
Governments should notgloss overtherealchallenges anddifficulties which canaccompany economic
change, butatthesame timetheyshould notallow debate ontrade questions tobeconducted ina
fragmented manner oronasectoral basisnotproviding aclearviewoftheglobal andmutual benefits
thatflowfrom comprehensive andbroad liberalisation.
33. Theaccessions process, thebuilt-in agenda andtheWTO ’swork programme provide together
anunparalleled opportunity forfurther liberalization andwider participation byallcountries inthe
global economy. TheEUseesaclearneedtotackle thistaskinacomprehensive, global way. Although
muchhasbeenachievedsincetheestablishmentoftheWTOthroughtheITAandthetelecommunications
negotiations, aswellascurrent work onfinancial services andother issues, there isultimately alimit
totheprogress which canbemade onanadhocorsectoral basis. Difficult market access and
rule-making challenges arebestaddressed globally, enabling allparticipants totakethewidest possible
viewoftheireconomic andother interest. Seizing thisopportunity willbethefirsttaskfortheWTO 's
members inthenewmillennium.