WORLD TRADE ORGANIZATION
ORGANISATION MONDIALE DU COMMERCE
ORGANIZACIÓN MUNDIAL DEL COMERCIOWT/TPR/M/102/Add.1
23 September 2002
(02-5090)
Trade Policy Review Body
24 and 26 July 2002Original: English/
               anglais/
               inglés
TRADE POLICY REVIEW
EUROPEAN UNION
Minutes of Meeting
Addendum
Chairperson:  H.E. Ms Amina Chawahir Mohamed (Kenya)
This document contains the advance written questions, and replies provided by the European
Commission.1
__________________________________________________________________________________
Organe d'examen des politiques commerciales
24 et 26 Juillet 2002
EXAMEN DES POLITIQUES COMMERCIALES
UNION EUROPÉENNE
Compte rendu de la réunion
Addendum
Président:  S.E.  Mme Amina Chawahir Mohamed (Kenya)
Le présent document contient les questions écrites communiquées à l'avance et les réponses
fournies par la commission européenne.1
__________________________________________________________________________________
Órgano de Examen de las Políticas Comerciales
24 y 26 de julio de 2002
EXAMEN DE LAS POLÍTICAS COMERCIALES
UNIÓN EUROPEA
Acta de la reunión
Addendum
Presidente:  Excma. Sra. Ami na Chawahir Mohamed (Kenya)
En el presente documento figuran las preguntas presentadas anticipadamente por escrito,
junto con las respuestas facilitadas por la comisión europea.1
                                                     
1 In English only./En anglais seulement./En inglés solamente.WT/TPR/M/102/Add.1
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ADVANCE WRITTEN QUESTIONS BY MEMBERS AND REPLIES PROVIDED BY THE
EUROPEAN COMMISSION
QUESTIONS FROM SWITZERLAND
Agriculture
Q1 The prospect of the EU expanding to the East is becoming clearer.  To what extent will this
affect the level of intervention prices for the major agricultural products (cereals, milk, meat), the
current system of milk quotas, the total support levels in the "orange" box, export subsidies, and
market access (customs duties) in the enlarged EU?
Under the most likely scenario, ten new Member States will join the EU from 2004. The basic
principle is the undertaking of the acquis communaut aire albeit with certain necessary amendments.
Consequently, the EU will maintain its milk quot a system even if individual application might pose
problems for the Central and Eastern European countries given the calculations already carried out.
The European Community does not foresee any immediate effect on intervention prices of productsunder market organization. With respect to the other points raised, the Community will respect all its
WTO commitments.
Technical Barriers to Trade (Chapter III.1 of the Report by the Secretariat) and other
Measures
Q2 To paragraph 2: The report indicates that the seizures of counterfeit and pirated goods
increased of one third from 1999 to 2000 and again of 27% in 2001. Does the EU note the same trend
for 2002? Are the same product categories affected?
It is too early to draw any final conclusions at the moment, but similar trends seem to be
followed.
Q3 To related Table III.I: In several EU Members the seizures of counterfeit and pirated goods
have decreased or increased significantly. To which factors can such changes be attributed?
It has been found that where counterfeit was detected in one location, traffic rapidly moved to
another location in the Community which can explain such significant changes.
Q4 To paragraph 4: The report mentions that there are 31 free zones, established by the Member
States in enclosed areas located in maritime ports, airports or islands. Are changes foreseen in the
future, namely because of the EU enlargement, in the number of free zones?
EU enlargement will indeed alter the number of  free zones in the Community, but the exact
number cannot be known until the EU  takes a formal decision as to which countries will join when,
and the countries concerned notify the Commission of the free zones in operation on the date of
accession.
The candidate countries will not implement th e Community's customs legislation fully until
the time of accession. This means that a number of so-called "free zones" those  countries may have
now is not necessarily the number that will  be free zones in the enlarged Community.WT/TPR/M/102/Add.1
Page 4
Q5 To paragraph 15: For which reasons the overall excise duty for cigarettes in the most popular
price category will be raised to EUR 64 as from 1 July 2006, and only from 1 January 2008 for two
Members?
Article 4.2 of Directive 2002/10/EC provides that Spain and Greece are authorised to raise
the minimum duty on the MMPC to Eur 64 by 1 January 2008 at latest. All other Member States,
according to Article 1 of the said directive, have to reach the Eur 64 level for the MMPC as from1 July 2006.
This text is the result of the legislative process of the EU (ie Council decision on the basis of a
Commission proposal) and takes into account, amongst other factors:
- the general aim of reducing divergencies in the absolute level of taxation of cigarettes in the 
MSs,
- the different levels of duties from which the various Member States are starting, ie the 
different effort required from each MS.
By means of the approved text, the final aim of reducing the absolute differences in taxation
levels is achieved, while allowing a smooth transition for those MSs, from which a greater effort is
demanded (as they start from lower levels).
Q6 To paragraph 41: In early 2002, the EC Commission launched an online consultation about
the New Approach concept. Switzerland would be very much interested in information about the
current status of the evaluation procedure in this context. Furthermore, Switzerland would like to
know when and where the conclusions and results of the consultation will be published.
The Commission services are in the process of producing a Communication to the Council
and the European Parliament concerning the New Approach. The Communication is not yet finalised,
but is expected to be adopted in October 2002. It will concentrate on a small number of issues,
namely, the designation and notification procedure for notified bodies, the CE conformity marking
and market surveillance.
Q7 To paragraph 41: Some product sectors are still ruled by Old Approach Directives. Are there
any plans to transform existing old Approach Directives into Directives based on the New Approach
concept or to apply this concept outside the field of product related legislation?
There is no systematic plan to convert all old approach sectors to the new approach.  Instead,
legislative changes are considered on a case-by-case basis. Therefore as existing sectoral legislation
is assessed, application of the new approach would certainly be considered, and could be proposed if
considered appropriate.
Q8 To paragraph 41: In the frame of the New and Global Approach, Directives should contain
only the so called "essential requirements" concerning the safety of a product. These basic
requirements are then specified in harmonised standards that are applicable in the field of a particular
Directive. If a product is manufactured based on these standards, this will lead to a presumption of
conformity with the basic requirements defined in the relevant Directive(s). This concept makes it
obsolete that the Directive itself must contain detailed technical requirements which often do notreflect existing technical know-how in a specific sector. Switzerland would like to know, why certain
Directives that are developed according to the New Approach still contain detailed technical
requirements instead of basic requirements together with references to harmonised standards. This is
e.g. the case for the new Measuring Instruments Di rective where the present Draft still contains far
too detailed technical requirements that should be replaced by a reference to harmonised standards.
Switzerland is of the opinion that the adoption of new Directives as well as the revision of existingWT/TPR/M/102/Add.1
Page 5
ones should be comprehensively and coherently based on the criteria defined in the New Approach
concept.
The EU endeavours to apply the principles of the new and global approaches in a consistent
manner, however there are sector specific issues that necessitate these principles being applied in a
way that meets the specifics of the sector. In the case of the Measuring Instruments Directive, the
metrological requirements that measuring instruments shall satisfy are still restricted to essentials forthe control of tasks that are legally required. Even though some of these requirements are laid down
in the directive, they do not pre-empt technical solutions or impede technological progress by beingtoo specific. It should also be noted that the Commission's proposal is still under discussion in the
Council and European Parliament, so the text of the directive could undergo change.
Q9 In paragraph 43 the EU highlights major developments in the area of food law, including the
establishment of the European Food Safety Authority  (EFSA), whose most important role will be the
scientific input for the EU decision making proces s. Is there a legal framework providing for third
country participation within EFSA or for access to scientific data?
The scientific data collected by the EFSA and the opinions of its scientific committee and
panels will be made available on the web. The EFSA will work in an open and transparent manner
and will make available to all any information on risks in the food chain, emerging risks and the
results of studies it undertakes.
The founding Regulation also provides for the EFSA to collaborate with third countries on
scientific information gathering and data collection and it is probable that once the EFSA becomes
operational it will develop close relationships with third countries in this respect. The EFSA will alsoform specific relationships with countries with  whom it has signed sp ecial agreements and whom
apply the same standards of food law, notably the EEA and EFTA countries. In addition and when
requested to do so by the Commission, the EFSA will provide scientific and technical assistance, with
a view to improve cooperation between the Community, applicant countries, international
organisations and third countries in the field within its mission- Article 23(i)
Q10 With respect to the Commission system for rapid exchange of information among Member
States in the event of a serious and immediate risk to health and safety of consumers from foodstuffs,
which is referred to in paragraph 48, Switzerland believes that this is an important step towards food
safety cooperation across national boarders. Taking into account the significant trade in food and food
products between EU and Switzerland, the Swiss authorities would be highly interested to take part in
this information exchange. Are there any provisions that would allow third countries to participate in
the information exchange?
Yes. Regulation (EC) No 178/2002 of the European parliament and of the Council of
28 January 2002 laying down the general principles and requirements of food law, establishing the
European Food Safety Authority and laying down procedures in matters of food safety provides for
the possibility for third countries to, participate in Rapid Alert System for Food and Feed. Article 50
paragraph 6 of this Regulation foresees "Participa tion in the rapid alert system may be opened up to
applicant countries, third countries or internatio nal organisation, on the basis of agreements between
the Community and those countries or international organisations, in accordance with the procedures
defined in those agreements. The latter shall be based on reciprocity and shall include confidentiality
measures equivalent to those applicable in the Community."
An official request for participation has to be addressed to Mr. R. Coleman, Director General
of the Health and Consumer Protection Direct orate General of the European Commission.WT/TPR/M/102/Add.1
Page 6
Q11 In paragraph 52 of the review the EU refers  to its voluntary eco-labeling scheme, which is
available to EU products as well as to non-EU products. It is, however, indicated that some national
eco-labeling schemes exist in parallel. Switzerland highly welcomes the EU-wide eco-labeling
scheme but is, however, concerned that national labeling schemes, which in some countries enjoy
greater confidence than the EU logo, might affect the trade facilitating effect of the EU eco-label. In
paragraph 60 the EU refers to its policy on international standardization and confirms its trade
facilitating role. In this context it would be interesting to know, whether there are any efforts being
undertaken to achieve greater harmonisation between Member States on eco-labeling i.e. fully replace
national logos by the EU labeling scheme?
The Flower (the EU eco-label) established at  the beginning of 2002 a co-operation and co-
ordination management group within the EU Eco-labe lling Board, whose role is to develop the co-
operation and co-ordination between the eco-labels in the EU (and candidate countries).
Representatives from each of these labels participate in 4 meetings per year. A programme of
work has been initiated, amongst others to exchange  information systematically, to better coordinate
product group development, to examine the possibilities of mutual recognition, and to clarify the
common and complementary roles of the different labels with respect to different product groups,harmonising criteria where appropriate but also maintaining divergences where appropriate.
Further details may be found on the website http://europa.eu.int/ecolabel, more specifically at:
http://europa.eu.int/comm/environment/ecolabel/background/pm_managementgroups.htm#coopWT/TPR/M/102/Add.1
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QUESTIONS FROM THE GOVERNMENT OF CANADA
Government Report WT/TPR/G/102
II. Key Developments in the EU; (1) Political/Institutional Developments; Paragraph 8:
Q12 Paragraph 8 states that a broad reflection on how to improve the functioning of the Union was
launched through the Commission’s White Paper on European Governance in Summer 2001. It alsoindicates that this has placed stress on improving the regulatory environment and on greater
involvement of all stakeholders in the European policy-making process, objectives the EU has also
sought internationally. Please describe recent developments on the involvement of third country
stakeholders in this process.
The White Paper on European governance launched a broad public consultation to collect
contributions from Member States, Candidate and other third countries, and representatives of the
civil society, stakeholders, etc…
This consultation ended on 31 March 2002. The Commission has received a substantial
response. Some 8% of the contributions came fr om third countries, including responses from non-EU
countries (international associations, United States of America, Russia, Canada, Norway,
Switzerland, Australia) and canditate countries (Roumania, Poland; Hungary, Tchec Republic).
Some non-EU contributors have argued that governance principles  applied by the
Commission within the EU, notably with regard to consultation and better regulation, should  also be
applicable towards non-EU governments and interested parties.  The Commission is currently
examining the response received in the above public consultation and will, before the end of the year,
present a report.
III. The EU Trade Policy Framework; Paragraph 26:
Q13 Paragraph 26 mentions that the EU is also committed to carrying out Sustainability Impact
Assessments (SIAs) of both its multilateral and bi lateral trade negotiations. A general SIA of the EU’s
negotiating mandate was carried out before the launch of the new round, with further sectoral
assessments now being carried out. Please pr ovide information on the methodology behind the
Sustainability Impact Assessments (SIAs). Also, please explain how these SIAs relate to the EU’s
approach to "sustainability" and various EU Corporate Social Responsibility (CSR) initiatives.
SIA: complete Information on SIA methodology is available on the website at
http://europa.eu.int/comm/trade/ and at the address of our consultant :
-SIA of WTO negotiations : http://idpm.man.ac.uk/sia-trade/
- SIA of MERCOSUR/Chile negotia tions : www.planistat.com/sia
Sustainability Impact Assessment devel oped by DG Trade aims at improving the quality and
coherence of trade policy  by identifying sustainability trade off.
SIA should help integrating sustainability into trade policy :
• by analysing the issues of a trade negotiations with respect to sustainable development
• by informing negotiators of the possible social, environmental and economic consequences of 
a trade agreement
• by providing guidelines for the design of possible flanking measures, the sphere of activity of 
which can exceed the commercial field (internal policy, capacity building, international regulation), and which will make it possible to maximise the positive impact and to reduce the
negative impact of the trade negotiations in question.WT/TPR/M/102/Add.1
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Thus, the objective of an SIA is not to assess the desirability of further liberalisation overall
but rather :
• To provide elements of information on the possib le range of impacts, thus making it possible 
to ensure the final decisions are the optimal ones
• to accompany and optimise th eir implementation, which is often essential for the 
sustainability of agreements
Process and content of SIA:
SIA is not only an assessment study but also a process
External and internal processes are very important for the quality and relevance  of an SIA and for its
integration  in the negotiations
Because of the complexity of the issues at stake, SIAs have to take place in the frame of a
relevant process which ensure proper consultation and transparency :
• consultation is necessary to contribute to identification of main sustainability issues and to 
gather the broadest expertise possible credibility in the SIA has to be based on an immediate 
and complete transparency
Whereas SIA are a analytical tool for policy maker dedicated to improve coherence and
quality of trade policy, CSR is an action tool, among others, through which policy objectives can be
implemented. SIA is aimed at helping policy makers,  while CSR is targered mainly to business, but
both seek to achieve the same objective, which is sustainable development (SD).
Linkages between CSR and SIA are possible: flanking measures set out by an SIA can help
companies, with the support of public authorities, to better identify and endorse good practices in the
field of SD."
IV. The EU’s Trade Policy at a Global Level;  (1) The EU and the WTO; (i) Strengthening 
and promoting the multilateral system; Paragraph 29:
Q14 Paragraph 29 states that the EU position, based on Article 20 of the Agreement on Agriculture
(AoA), takes into account the need to aim at a balance between trade concerns (market access, export
competition, domestic support) and non-trade concerns (the protection of the environment, the
sustained vitality of rural communities, food safety, and other consumer concerns including animal
welfare), which reflect important societal goals.
Please explain how the EU plans to identify and measure any incremental production costs
associated with animal welfare standards. How does the EU plan on preventing government-
subsidized animal welfare standards from becoming trade-distorting or from relying on mechanisms
that distort trade? Please explain why the EU does not keep non-trade concerns like animal welfare
outside the realm of a trade body such as the WTO, and why it does not choose instead a moreappropriate standard-setting body such as the OIE (Organisation Internationale des Epizooties).
Animal welfare, which is an increasing societal goal in Europe as in other countries, entails
additional costs that may justify legitimate comp ensation for farmers. The EC propose different
options to address such a non-trade concern issue: 1) the development of multilateral agreements, 2)appropriate labelling rules, and 3) exemption of the compensation of additional costs or income
foregone to meet animal welfare standards, from reduction commitments. All of these options are
cumulative and not exclusive.WT/TPR/M/102/Add.1
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IV. The EU’s Trade Policy at a Global Level; (1) The EU and the WTO; (ii) Preparing and 
launching a broad and balanced round; Paragraph 45:
Q15 According to paragraph 45, from the EU poin t of view, it has continued to be equally
important to seek improvements to existing rules in such areas such as trade defence or technical
barriers to trade, and regional trade agreements, in order again to improve transparency and
predictability for traders, investors, consumers, and governments.  Please explain what type ofconditions the EU proposes in regard to improv ements to rules on regional trade agreements.
The EU welcomes the inclusion within the DDA of negotiations to clarify and improve the
disciplines and procedures applying to regional trade agreements under existing WTO provisions,
while taking into account their developmenta l aspects.  The EU has made a submission
1 to the
Negotiating Group on Rules outlining its initial position in relation to this aspect of the work of the
Negotiating Group and identifying a number of issues  that merit discussion and analysis during the
course of the negotiations.  The EU can be expected to come forward with further proposals and ideas
as the negotiations progress.
IV. The EU’s Trade Policy at a Global Level; (1) The EU and the WTO; (ii) Preparing and 
launching a broad and balanced round; Paragraph 51:
Q16 Paragraph 51 states that in regional trade agreements, the EU’s objective to start negotiations
for clear and quite strict rules defining the conditions to be met for FTAs and regional agreements to
be WTO-compatible, was also satisfactorily agreed in the Doha mandate. Please explain what type of
conditions the EU proposes in regard to improv ements to rules on regional trade agreements.
See answer to question above.
VI. Conclusion; Paragraph 99:
Q17 Paragraph 99 states that increasingly, the EU’s approach to FTAs will extend beyond goods
and services liberalization to more comprehensive rule-making engagements. Please indicate what is
meant by "more comprehensive rule-making engagements".
The EU has concluded regional agreements with a wide range of partners, for example
recently with South Africa, Mexico and Chile.  The EU is itself also the product of an ambitious
process of deep and wide-ranging regional integration.  Experience of these initiatives tends to show
that the positive impact of regional integration is particularly strong in cases where regional
agreements provide for “deep integration” in the sense of initiatives going beyond elimination of
import and export tariffs and measures having equivalent effect so as to provide for elimination ofnon-tariff barriers to trade and for regulatory harmonisation and convergence, even to the extent, in
some cases, of establishing common regulatory fr ameworks between RTA partners.  Even in cases
where full regulatory harmonisation and convergence may not themselves be immediately feasible,
measures to promote the equivalence or complementarity of regulatory approaches between RTA
partners are likely to support the positive trade and investment effects of liberalisation within aregional framework.
                                                     
1 Submission on Regional Trade Agreements by the European Communities and their Member States, 5
July 2002 (circulated in TN/RL/W/14 of 9 July)WT/TPR/M/102/Add.1
Page 10
VI. Conclusion; Paragraph 100:
Q18 Paragraph 100 indicates that the next big step ahead for the EU is to successfully manage a
smooth enlargement process, which will, no doubt, have its impacts at a global level. Since most of
the applicant countries have a large agriculture sector, please share how the Commission proposes to
extend the CAP and its extensive support mechanisms to these countries while respecting budgetary
constraints. Please indicate if further CAP reform will be necessary in the sectors not covered by themid-term review. Please outline some of the anticipated trade impacts of enlargement and particularly
explain how the EU proposes to compensate for the loss of existing rights of market access due to
enlargement. Also, please share your view on the status of existing Bilateral Investment Treaties with
Central and Eastern European members following EU membership.
The Commission's thinking on this issue is  basically laid down in its issues paper
"Enlargement and Agriculture: Successfully integrating the new Member States into the CAP" of
30.1.2002. This document as well as the relevant press release is available on the AGRI web-site
under enlargement.
As regards the economic impact of enlargement there are two studies, also available on the
web-site. The most recent one of March 2002 analyses the impact of various enlargement scenarios
on the candidate countries agri sectors.
Secretariat Report WT/TPR/S/102
Summary Observations; Paragraph 30:
Q19 Paragraph 30 states that a new European Food Safety Authority (EFSA) was also established
to provide scientific advice to the Commission on food policy matters, as well as to Member States
should they so request. A number of Member States have established authorities with mandates at
national level to ensure independent scientific advice. New regulatory requirements have also been
put into place with respect to labelling of food products of all origins to ensure traceability. We
understand that links to Member State food agencies will be maintained through an Advisory Forum
composed of one representative from each member states’ competent authority and that it will not
have a policy-making role. Please share how the EU intends to deal with situations where national
food safety agencies (e.g., France failing to lift its ban on UK beef) hold opposing views with the
EFSA and act upon it.
The Advisory Forum consists of representatives from the competent bodies in the Member
States which perform functions similar to those of the Authority.
The Forum should provide the main tool for the EFSA to develop close collaboration between
the competent bodies in the Member States and the Authority.
It will reinforce the scientific consensus between the community level and the MS levels.
EFSA will be able to ensure that available information on food risks is collected, analysed and made
commonly available. Scientific expertise of Member States at Community level will be mobilised and
centralised far more efficiently, and differences in scientific appreciation minimised, if not eliminated.
These networking mechanisms  will certainly facilitate early agreement on the most rational, science
based risk management measures to  be taken at Community level.
However, if despite these preventive mechanisms, there is a case of divergent scientific
opinions between EFSA and a national competent authority, a specific mechanism is provided in
Article 30 of the Regulation establishing EFSA.
Paragraph 4 of Article 30 states : "Where a substantive divergence over scientific issues has
been identified and the body in question is a Member State body, the Authority and the national body
shall be obliged to co-operate with a view to either resolving the divergence or preparing a jointWT/TPR/M/102/Add.1
Page 11
document clarifying the contentious scientific issues and identifying the relevant uncertainties in the
data.  This document shall be made public".
In addition and according to Article 27 (4), in those specific circumstances "the Advisory
Forum shall ensure close co-operation between the Authority and the competent bodies in the
Member States".
The above procedure provides for an examination of the reasons for the different views. In
some cases this may lead to a convergence. However the risk managers ultimately have to decidewhat they do with the divergent scientific opinions. It is the responsibility of the risk manager
(democratic institutions) to decide what action to take when faced with  divergent scientific opinion
not the EFSA. This is the legal process and legal infringement procedures are provided for in this
framework. (as was the case in the French/UK BSE matter).
II. Trade Policy Regime: Framework and Objectives; (1) General Framework;
(iii) Institutional Framework; Paragraphs 4 and 5:
Q20 Paragraphs 4 and 5 indicate that the Commission has the exclusive right of initiative for
proposed Community Acts and that they are implemented at Community level or at Member Statelevel, overseen by the Commission. Regardless of what entity is responsible for the actual
implementation of the measure, please share if the Commission is considering putting in place a
transparency framework for the Community Acts for which the Commission has the exclusive right of
initiative. Please indicate if the Commission intends to consult on these initiatives in a timely manner
before the initiative becomes final at the Commission level.
In the White Paper on European Governance, the Commission made a certain number of
commitments to the quality and tran sparency of improving the large number of consultations which it
already holds. In this regard, the Commission has published a list of bodies through which civil
society is being consulted and confirmed the protocols signed with the Economic and Social
Committee and the Committee of the Regions. Mo reover, the Commission will shortly publish
guidelines on the collection and use of expert advice by the Commission with a view to ensuring thatsuch advice comply with the principles of responsibility, pluralism and integrity.
Alongside the Action Plan on better regulation, the Commission adopted, on June 5
th 2002, a
Communication proposing minimum standards of cons ultation. This Communication is the subject of
a further public consultation and should be finally endorsed by the Commission by the end of 2002.
Reinforcing the consultation stage prior to legislative proposal will have no impact on thecommitments made with regard to the Economic and Social Committee and the Committee of the
Regions with a view to obtaining opinions, in appropriate cases, before exercising its right of
initiative; nor will it have an impact on the special role played by the social partners.
II. Trade Policy Regime: Framework and Objectives; (1) General Framework;
(iii) Transparency and public consultations; Paragraph 9:
Q21 Paragraph 9 mentions that publication of Community Acts is required in the Official Journal
of the European Communities  (Article 254). Does the Commission intend to develop a
comprehensive, on-line registry where all Community Acts will be easily obtainable, together withuser-friendly cross-references to Member State laws and other forms of implementation?
Community legislation is available on Eurolex and Celex. Celex also includes links to
implementing legislation in MS. Those two databases  are administered through the Publication Office
of the EC.WT/TPR/M/102/Add.1
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II. Trade Policy Regime Framework and Objectives; (1) General Framework;
(iii) Transparency and public consultations, Paragraph 10:
Q22 Paragraph 10 notes that the Commission’s White Paper on European Governance, issued in
July 2001, calls for a renewal of the "Community Method" by involving more people and
organizations in shaping and delivering EU policy,  and that since 2000, the Commission has applied a
code of conduct to consultations and intends to develop more extensive partnership arrangements.Please describe in greater detail the approach taken in the development of the these partnerships
arrangements.
The Commission is still giving consideration to the way in which this action point of the White
Paper on Governance should be implemented. More recent developments in the area of consultationwill be provided in the report for 2002.
As for the Code of Good Behaviour, the issue is not pertinent here.
II. Trade Policy Regime Framework and Objectives; (1) General Framework;
(iii) Transparency and public consultations, Paragraph 10:
Q23 Note 22 of paragraph 10 indicates that on 1 November 2000, a new Code of Good Behaviour
for relations between officials and the public came into force which, inter alia , provides for persons
with a direct interest in Commission proposals or decisions to be allowed to make their views directly
known to the Commission, and to be given the reasons on which the decisions are based and the
arrangements for appeal (European Commission Press Release IP/00/999).
Please explain EU’s assessment of the useful ness of the new Code of Good Behaviour and
indicate areas that need improvements.
Please indicate if the Commission keeps a public record of the representations made to the
Commission by persons with a direct interest in the matter.
Please share the criteria to be a "person with a direct interest".
Please indicate if natural or corporate persons from outside the EU qualify.Please explain the procedure used to make representations to the Commission.
Please indicate how and when persons with a direct interest are informed of the existence of
the proposals.
See reply to previous question.
II. Trade Policy Regime Framework and Objectives; (1) General Framework;
(iii) Transparency and public consultations, Paragraph 11:
Q24 Paragraph 11 mentions that the Commission has created the Consultation, the European
Commission and Civil Society (CONECCS) database, and that with respect to trade policy, the
Commission consults regularly with representatives of civil society, business, and trade unions
through plenary meetings, issue groups, and ad hoc  meetings. Please indicate if the EU currently has
any similar mechanism/registry for trading partners with specific interests to help them systematically
interact with the Commission through plenary meetings, issue groups, and ad hoc  meetings. If not,
please indicate if such a mechanism/registry is envisioned.
It should be noted that the CONECCS database is a voluntary register. The Commission does
not automatically grant access to consultation to those organisations registered in the date base. It
also should be noted that only non-governmental actors are eligible for the database.
The Commission recently launche d a programme of Sustainable Impact Assessments on trade
policy. These include assessments of negotiations with all major current trade negotiations (Chile andWT/TPR/M/102/Add.1
Page 13
Mercosur; WTO negotiations, forthcoming: ACP-EU , Gulf Cooperation Council negotiations). As
part of this process, the Commission calls for the widest possible consultations (including third contry
representatives) via direct contacts with the consultants, via ad hoc public meetings convened
specifically for this purpose and via discussion in the WTO Committee on Trade and Environment. An
agricultural SIA on the food crops sector was recently presented in this way. Public meetings are
announced on the DG Trade website. All studies are made available as they evolve (inception,
midterm and final reports) on contractors' websites for consultation and comment, whether to theCommission or directly to the contractor.
II. Trade Policy Regime Framework and Objectives; (4) External Trade Relations;
(iii) Preferential trade agreements and arrangements; Paragraph 45:
Q25 Paragraph 45 states, "The new regime incorporates the "Everything-But-Arms (EBA)"
initiative for LDCs, which took effect on 5 March 2001 and grants duty-free treatment for all products
(except for arms), with certain exceptions (rice, bananas, sugar), for which transitional arrangements
apply."
The EBA was implemented more than a year ago. One of the issues relates to the rules of
origin and cumulation provisions applied to least developed countries. In this respect, the EU had
made a commitment to reviewing and simplifying its rules of origin. Since the implementation of the
EBA, has the EU noted any increases in imports from LDCs? Has the EU reviewed its rules of origin
to facilitate access to its market for products originating from LDCs?
The EU has not taken a formal commitment to review rules of origin for LDCs. The
Commission, however, indicated that the application of rules of origin for LDCs would bestrengthened in order to avoid discrepancies vis-à-vis other preferential regimes such as the one for
OTCs. As indicated in the question, the EBA initiative was implemented only one year ago. The rules
of origin and cumulation were based on previous regimes, which implies a benefit for least
developing countries since they already knew the sy stem. Furthermore, the EC has offered assistance
in terms of training in origin rules through in-country seminars and other ad hoc actions. Finally wewould like to racall that beneficiaries can obtain derogations for rules of origin on the basis of
justified cases.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(i) Customs Procedures; Paragraph 1:
Q26 Paragraph 1 states that on 16 February 2001, the Commission announced a new strategy for
the Customs Union, building on the “Customs 2002" programme, to be renewed in "Customs 2007".
Please indicate if the Customs 2007 programme will include provisions on the advance information
for targeting and pre-release purposes, and provisions that integrate elements of the WCO RevisedKyoto Convention.
Advance information from a variety of sources is  used by Member States in their own systems
for risk management, targeting and pre-release purposes. The Customs 2007 programme supports
these efforts and provides the means for identifying and sharing best practices and to work towardsequivalent results. The proposal can be viewed at
http://europa.eu.int/comm/taxation_customs/proposals/customs/customs_prop.htm#2002 .WT/TPR/M/102/Add.1
Page 14
III. Trade Policies and Practices by Measure;, (1) Measures Directly Affecting Imports;
(i) Customs Procedures, Paragraph 2:
Q27 Paragraph 2 states that with respect to counterfeit and pirated goods, the customs
administrations recorded an increase of one third in seizures from 1999 to 2000, under legislation
implementing the TRIPS Agreement at the border. Please indicate if the EU legislation implemented
after the TRIPS Agreement meets minimal standards set, or if it goes beyond as requested by theprivate sector.
The EU legislation implemented after the TRIPS Agreement also covers other intellectual
property rights such patentsand design rights. In addition, this legislation allows the protection of
IPR's in situations other than simple importation, with the result that goods entered for other customs
regimes (e.g., transit, temporary import, export and re-export) are also covered.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(i) Customs Procedures, Paragraph 5:
Q28 Paragraph 5 refers to the good faith provision for importers, which allows for non-recovery of
duties in cases where the amount of duty legally owed was not entered in the accounts as a result of an
error on the part of the customs authorities, which could not reasonably have been detected by an
importer acting in good faith and in compliance with all of the provisions of the legislation. The
provision also indicates how an importer can meet the standard of good faith, which does not include
situations where the exporter has given incorrect information to the authorities of the exporting
country.  Please indicate how good faith is objectively and systematically determined.
In the context of the legal change in ques tion, which is focussed on imports involving
preferential treatment, there can be no subsequent entry in the accounts of a customs debt if the
amount legally owed was not originally entered in the accounts due to an error on the part of the
customs authorities which could not have been detected by the person liable, provided he has acted ingood faith and complied with all the provisions laid down by the law in force as regards the customs
declaration. The person liable can plead good faith inter alia when he can demonstrate that, during
the period of the trading operations concerned, he has taken due care to ensure that all of the
conditions for preferential treatment have been fulfilled.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(iv) Community tariffs, paragraph 11:
Q29 Paragraph 11 states, "The structure of tariffs in terms of stage of processing continues to show
evidence of tariff escalation, notably for food, beverage and tobacco products, as well as textileproducts."
The Uruguay Round Agreement on Agriculture made a significant contribution to improving
the terms and conditions for agricultural market access; however, it also resulted in a continuation of
major disparities in the terms of access between Members and across products. Paragraph 13 of the
Doha Declaration calls for "substantial improvements" in agricultural market access. How is the EUplanning to provide real improvements in market access, while proposing an approach to tariffs
similar to the one agreed upon during the Uruguay Round and while unwilling to discuss tariff quota
expansion?
The EC average MFN level of tariff for processed food is not higher than in other developed
countries. Moreover, a large majority of DCs does not even pay the MFN concerning processed food
on the EC market, as it is already very open to them (GSP, EBA initiative for LDCs, ACP, MED).WT/TPR/M/102/Add.1
Page 15
Other developed countries and the wealthiest developing countries should follow the lead of the
European Union in this field. At the MFN level, the EC supports the same linear approach as in theUruguay Round in order to reduce tariffs.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(v) Indirect Taxes, Paragraphs 13 and 14:
Q30 Paragraphs 13 and 14 mention that all EU Member States apply VAT and excise taxes to
imported products at rates that, in accordance with the national treatment principle, are the same for
goods supplied within the territory by the taxable person. We understand that off-line delivery of
goods resulting from e-commerce through imports into the Community are subject to VAT on the
bases of the national-treatment principle. For all non-EU e-commerce transactions, VAT is assessedon goods supplied within the Community on the basis of the destination principle. VAT is applied at
the point of origin up to a threshold (between 35,000 to 100,000 euros) for sales established by the
Member State of destination. Please indicate if the EU will maintain such a threshold. If so, please
explain the differences between the process for non-EU exporters and those from the EU.
Firstly, the threshold referred to by CAN applies only to intra-Community transactions to non
taxable persons (ie individuals) and not to imports; therefore, Canada should not be concerned with
this; anyway, to reply to their question, there are no plans at this stage to amend this rule - however,
as a general policy, the EU (Commission) examines on regular basis the VAT legislation to see
whether improvements can be made: in this context, it can not be excluded that the "threshold rule"
may be changed in the future.
Secondly,  we have to distinguish between goods and services:- for goods, national treatment principle applies, ie the VAT is applied by the Member 
State of importation (see above),
- for services (on-line delivery), as of now, in case of supply from non-EU countries, no
VAT is charged , as the place of supply is deemed to be the place where the supplier 
is based (eg Canada, where it would be considered as export and therefore exempted); however, VAT is charged for supplies from a Member State to 
another; this will be changed by the new E-commerce Directive (to enter into force on 1.7.2003), which will require VAT to be charged at destination, ie - in case 
of supply from a non-EU company to a EU  customer - in the Member State of 
destination.
This implies that:
- for non-EU "exporters" (eg a Canadian co mpany supplying to EU customer) of on-
line services, at present, no VAT is charged
- for EU-"exporters" (eg a EU company supp ying to another Member State's customer 
- intra-EU transaction, or outside the EU), VAT is charged where the supplier is based (origin).
As mentioned, the new E-commerce Directive will change as follows:
• For supplies by suppliers established outside of the EU to taxable persons in the EU, the 
reverse charge principle applies.
• For supplies by suppliers established outside of  the EU to non-taxable persons in the EU, the 
non-established taxable person (the supplier) will have to register for VAT in the EU and 
charge VAT in the Member State of consumption. Accordingly, it is the non-established taxable person, not the Member State, that collects the VAT.
• For supplies by suppliers established inside the EU to taxable persons in the EU, the reverse 
charge principle applies.
• For supplies by suppliers established inside the EU, the origin principle applies.WT/TPR/M/102/Add.1
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III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(vi) Prohibitions, Restrictions, Surveillan ce and Licensing Requirements; Paragraph 16:
Q31 Paragraph 16 states that the EU and Member States are participating in international efforts to
combat illicit traffic in diamonds. Please indicate if this participation exceeds the requirements
negotiated under the Kimberly Process. If so, please indicate to what extent.
Indeed the EU and Member States are participating in international efforts to combat illicit
traffic in diamonds within the framework of the Kimberley Process aiming at setting up an
international certification scheme for rough diam onds. Following UN Resolutions, the EU has also
taken restrictive measures against some African c ountries, such as Angola, Sierra Leone and Liberia,
prohibiting the importation of rough diamonds into  the Community not accompanied by a certificate
of origin delivered by the national Governments.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(vi) Prohibitions, Restrictions, Surveillance and Licensing Requirements; Paragraph 34:
Q32 Paragraph 34 states that in addition to imports of textiles and clothing products subject to
quotas, surveillance, or consultation, the Community requires licensing of imports from WTO
Members of certain agricultural products subject to common market organization – cereals, rice, beef
and veal, sheepmeat and goatmeat, milk and milk products, sugar, processed fruit and vegetables,
bananas, oil and fats, seeds, and wine – which, according to the Commission, serves a statistical
purpose and is granted automatically.  Please specify if under WTO legislation, statistical purposes
justifies the burden posed by the usage of licensing.
The same paragraph states, "A licence is also required to import within a tariff quota, which
applies to a large number of agricultural products."
Tariff quotas should be administered in ways that do not impede the full utilization of market
access opportunities. As part of this, it is important for importers and exporters that a country provides
readily-available transparent information to traders on its tariff quota administrative procedures, and
related terms and conditions. This would also include other information such as timely updates on
tariff quota fill rates. In Canada’s case, we provide easily- accessible information on the
administration of its agricultural tariff rate quota, applicable tariff rates, and the size of the access
commitment, as well as relevant inquiry points in its Notices to Importers, available on a web site
maintained by the Export and Import Controls Bureau. Moreover, this site provides frequent updateson tariff quota fill rates to enable traders to fill opportunities throughout the quota period.
Canadian exporters have had difficulties finding readily-available sources of information
from EC authorities. Does the EU maintain Enquir y Points to provide such information, as suggested
by the European Communities (G/C/W/363) in the discussions on Article X in the work program on
trade facilitation under paragraph 27 of the Doha Ministerial Declaration?
For a large majority of quotas there is the electronic data base of DG Taxud which give an
updated each day which can be consulted by all operators. For others, they are managed by DG
AGRI, import certificates are delivered many  days before importation of the products.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; Paragraph 40:
Q33 Paragraph 40 mentions that in order for a product to be placed on the market of a Member
State, it must comply with the relevant regulations, where they exist, to meet health, safety, and
environmental objectives, established by means of conformity assessment procedures; in all other
cases, a general product safety requirement applies. Given the complexity of the EU system, CanadianWT/TPR/M/102/Add.1
Page 17
exporters and authorities would welcome assistance locating relevant standards and regulations that
apply to specific products.  Please indicate if the EU Enquiry Point (established to fulfil therequirements of the WTO TBT/SPS Agreement) is able to provide such information. Please also
indicate if the EU can provide direction to manufacturers to enable them to access information on
requirements of individual member states.
EC TBT Enquiry Point may provide such in formation. It suggests that the request of
information is precise enough to facilitate the necessary research for identification of the information.
Information on requirements of Member States for access to their market (mainly in non-harmonised
areas) can be obtained through the National TBT Enquiry Points.
For the products coming under the New Approach this information can be accessed on
www.newapproach.org.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; Paragraph 41:
Q34 Paragraph 41 states that product regulations at Community level are of two main types: "old
approach" product-specific regulation lays down detailed and specific technical requirements, and
applies in particular to motor vehicles, chemicals, food products, and pharmaceutical products;
"new-approach" regulations, which apply to a large number of areas, limit mandatory obligations to
essential requirements, defined to meet health, safety, and environmental objectives, while leaving
specific technical solutions to meet these requirements to the market, either through voluntary
standards or a manufacturer's own solution. Please indicate the steps being taken to streamline this
process for the delivery of standards in the EU. Plea se explain if this consensual process change or be
altered in order to adapt to an enlarged EU.
The way the EU does product regulations is subject to the better regulation package adopted
by the Commission, which is responsible for drawi ng up legislative proposals for the EU. With a view
to enlargement the recently established convention looks into law-making procedures in the EU andpossibilities on how to alter them. Other than the legislative process there is no need to alter the
voluntary standardisation system in an enlarged EU. The European standards bodies are already now
operating on the basis of more national partner institutes than present EU member states.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; Paragraph 41:
Q35 Paragraph 41 mentions that the manufacturer must affix the "CE" mark to the product to
indicate compliance with essential requirements, which has been established by the prescribed
conformity assessment procedures, including, among others, the manufacturer’s declaration ofconformity, without which the product may not be placed on the EU market. Please elaborate on the
steps that must be taken for a manufacturer to obtain the ability to use the CE mark.
The steps a manufacturer must take to affix the CE mark to a product depends upon the
sector. To understand the principles involved please consult website:http://europa.eu.int/comm/enterprise/newapproach/legislation/guide/legislation.htm
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; Paragraph 42:
Q36 Paragraph 42 and footnote 80 mentions that  in non-harmonized areas, Member States may
legislate but are required to notify the Commission of draft national measures to prevent unjustifiedWT/TPR/M/102/Add.1
Page 18
restrictions to trade. Please document the extent to which Member States notify the Commission. 
Please enumerate the measures of control to ensure notifications take place. Please share the
consequences of non-notification. Please indicate if national measures which are notified to the
Commission, are systematically and simultaneously notified to the WTO Secretariat. If not, please
explain why.
Regarding notifications of Member States within the European Community, please note that
member States have stricter obligations on the basis of Directive 98/34/EC which provides that they
have to notify to the Commission any draft technical regulation on products or Information Society
services. Information on this procedure, the number of notifications etc. can be obtained at the
following address: http://europa.eu.int/comm/enterprise/tris
It has to be noted that within this system the only conditions that has to be met for a
notification to be made by a Member State is that "it is a technical regulation" with a definition
broader that this of the TBT Agreement. The othe r two conditions of the TBT Agreement i.e. a)
notification is required when there are no international standards concerning the matter covered by
the proposed measure or when the meaasure deviates from such an international standard, and b) the
measure needs to have an considerable impact on trade, do not need to be met for a notification to theCommission. Furthermore, a measure not notified by a Member State to the Commission, according
to the jursiprudence of the European Court of Justice is not opposable to third parties by National
Courts. Particular measures of control of measur es not notified are not in place but Member States
take care of ensuring such notifications.
Measures notified to the Commission are not systematically notified to the WTO Secretariat,
since the conditions to be met for a notification are different as just explained.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; Paragraph 44:
Q37 Paragraph 44 mentions that the EU or a Member State is to publish draft and final legislation,
notify the WTO of draft regulations that may "have a significant effect on trade of other Members",and generally provide a 60-day period for comments. With reference to Table III.4, please explain the
downward trend of EU notifications since 1999. Please explain why the notification numbers of
Belgium and the Netherlands are at a much higher level compared to other EU Members.
The number of EU notifications each year is linked to the number of measures (which meet
the conditions necessary for a measure to be notified under the TBT Agreement) proposed within the
same year at EU level.
Member States of the EU notify directly to the WTO Organisation.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; Paragraph 44:
Q38 Paragraph 44 states that the EU or a Member State is to publish draft and final legislation,
notify the WTO of draft regulations that may have a significant effect on trade of other Members, and
generally provide a 60-day period for comments; in 2000 and 2001, the EU and its Member Statesnotified the WTO of 148 and 110 measures under the TBT Agreement, respectively (Table III.4);
additional measures were notified to the SPS Committee. Please explain the process within the EU for
circulating subsequent drafts of legislation once amendments have been proposed (i.e., by
Parliament). Please indicate the current timeframe for providing comments on such proposed
amendments, if any.WT/TPR/M/102/Add.1
Page 19
The circulation of draft legislation (once amendments have been introduced) and the
timeframe for comments on those depends of the procedure followed for the adoption of eachparticular measure. Regarding comments from third coutnries on measures notified by the EC, it has
to be noted that these comments are taken into consideration by the different actors of the legislative
procedure. They do continue to be valid independently of a subsequent amendment of the notified
measure with the EU.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; Paragraph 44:
Q39 Paragraph 44 mentions that the European standard-setting organizations and their national
committees have each accepted the TBT Code of Good Practice for the Preparation, Adoption andApplication of Standards. Please indicate which internal mechanisms exist within the Commission or
elsewhere to monitor the application of the TBT Code.
The TBT Code of Good Practice for the Preparation, Adoption and Application of Standards
does not foresee such a mechanism. If Canada interpre ts the TBT Code in such a way this should be
raised with all members.
III. Trade Policies and Practices by Measure; (1) Measures directly affecting imports;
(viii) Product regulations and standards; (b) Regulatory Developments; Paragraph 46
Q40 Paragraph 46 summarizes the EU’s future policy  on chemicals. This policy would have the
effect of transferring responsibility from public authorities to industry for the testing and riskassessment of chemicals. It also outlines a new system of registration, evaluation, and authorisation
(REACH) for new and existing chemical substances  applying to producers, importers and downstream
users.
Please clarify the extent to which the EU is prepared to accept data or test results from other
countries in assessing chemicals. More specifically, please indicate if the Community will accept non-EU test results.
The White Paper clearly states that information generated elsewhere, such as under the US
HPV initiative or the ICCA initiative on “existing”  substances, will be taken into account. However,
that information may need to be supplemented in order to meet the requirements of the White Paper.
 The European Commission aims at taking international developments into account  when drafting
the future chemicals legislation, in particular the provisions of the Global Harmonised System (GHS)
for the classification and labelling of chemicals. It will continue to follow-up international activities
working towards greater standardisation/harmonisation in chemicals assessment.
 Under the future EU chemicals system, test da ta and other information on chemicals will be
submitted by individual companies (or groups of  them) to the authorities, wherever they were
generated. This includes OECD activities and the voluntary initiative of the International Council of
Chemicals Associations (ICCA). Authorities will ex amine, as appropriate, whether the data are valid
for EU purposes or whether they need to be s upplemented. With the EU being an OECD Member, and
also in the framework of the new chemicals policy, EU experts from the receiving authorities willtherefore take proper account of test results from  countries which are members of the OECD's Mutual
Acceptance of Data Decision.
Thus, the validity of data, to be provided by industry , will be examined "bottom-up"
by experts  of the authorities on a substance-by-substance basis. A "top-down" regulatory
co-operation  between the EU and Canada does not seem to match with the shift of
responsibility from regulators towards industry on the collection of data, as intended in theWT/TPR/M/102/Add.1
Page 20
White Paper. However, sharing of views and exp eriences on the respective approaches in  the
EU and Canada would be helpful;
Q41 Please indicate how the EU will address and treat products manufactured outside the
Community that may contain untested or unregistered substances.
This is a complex issue. The Commission inte ntion is to develop a workable system for
substances in products ("articles"),  without putting the ambition of a high level of protection
of human health and environment at risk.
The Working Group on "Substances in Products", which was one of the eight Working
Groups the Commission had organised from Oct ober 2001 to February 2002, considered that
a general obligation could be established fo r importers and manufacture rs of articles, when
those articles contain unregiste red dangerous substances that  are released during normal
use.
Q42 Please explain how manufacturers and dow nstream users would share the costs and
responsibility for providing the required assessmen t information. Please explain the impact and
financial implications of the EU scheme for Small and Medium Sized Enterprises (SMEs).
 It is important to be aware of the role of downstream users  in the future chemicals system.
Downstream users will be obliged to undertake  safety assessments for the uses to which substances
are put, including in articles. The assessments al so need to include disposal and waste management
issues. They should keep the assessments to themse lves and not submit them to an authority. This
means a limited administrative effort for downstream users.
 When preparing the assessments, downstream users will build on the test data and other
information provided by manufacturers and importers when selling the chemicals. The Commission
thinks that it will be an advantage for downstream users that this information will be more abundantunder the REACH system than is the case today. It will be an obligation for manufacturers and
importers to provide information and risk asse ssment for “intended” uses, which will cover
downstream uses to a large extent. The Commission is currently working on the details of
implementation in the future legislation.
 Should a downstream user apply a chemical in a different way ("non-intended use"), he could
either communicate that use to the manufacturer, in  order that the manufacturer may add it to the list
of intended uses and provide the downstream user with additional information. - Or the downstream
user keeps his “non-intended use” confidential. For this case the Commission are considering a
simple, confidential announcement to the authority ("po st-card notification"). Additional testing of the
chemical will not be necessary if the “non-intended use” can be considered as safe in view of theavailable information.
 Only in exceptional cases may additional testing and a particular risk assessment for the
"non-intended use" be necessary. It is clear from  the White Paper that the testing data should be
protected by property rights. Downstream users may prefer to purchase the chemical from competing
manufacturers who have the “non-intended use” already registered under REACH.
 In conclusion, the future chemicals system should provide an incentive for manufacturers to
register as many intended uses as possible. Do wnstream users should obtain more information than
today, which will enable them more easily to asse ss the risks arising from the use of chemicals.
 The possible financial impact of the White Paper on business, including SMEs, has been
estimated in a Business Impact Study  undertaken by the Commission. Given the different scenarios
and assumptions about the implementation of the White Paper, costs may range between 2 and 8
billion Euros, with the most likely amount being 3.6 billion Euros  over the first 10 years, when
existing substances will be fed into the new system. Further information can be taken fromWT/TPR/M/102/Add.1
Page 21
http://europa.eu.int/comm/enterprise/chemicals/conference/conference2/index.htm
Q43 The proposed European regime promotes substitution of dangerous chemicals with safer
products. Please share how the EU proposes to im plement the authorisation process of the REACH
system and the substitution principle.
From past experience, the European Commission considers that bans and restrictions of
chemical substances will continue to be based on risk assessment and expert advice. The advice may
include elements from international sources. The Commission would take this advice as the basis for
its decision.
The Commission considers it difficult to "command" substitution. The authorisation
requirement will, by itself, encourage substitution. The decision of an individual company to apply for
an authorisation of a certain chemical substance (or not) will be influenced by the availability of
substitutes for that chemical, as will the granting (or not) of the authorisation. Market forces should
help ensure that substitution is undertaken where appropriate and suitable
III. Trade Policies and Practices by Measure, (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; (b) Regulatory Developments; Paragraph 49:
Q44 In relation to paragraph 49, one area of reported controversy concerns the placement on the
EU market of genetically modified organisms (GMO s) and products that may contain GMOs or GMO
derivatives. Although the new legislative framework for authorizations is tighter in a number of
respects, certain Member States remain opposed to placement on the market without comprehensive
labelling requirements on traceability, currently under consideration.
Q45 The Members States have blocked the EU approval process for GMOs since March 1998.
This has adversely affected Canadian exports as GMOs must be approved before they are
commercialized. What is the EU’s rationale for failing to provide a scientifically sound approval
process for GMOs, particularly as there is no evidence that GMOs approved under an internationallyrecognized approach, such as those developed by the OECD and FAO/WHO, are any less safe than
their conventional counterparts?
Q46 Canada recognizes that the EC has proposed COM (2001) 182, the Proposal for a Regulation
of the European Parliament and of the Council concerning traceability and labelling of geneticallymodified organisms and traceability of food and feed products produced from genetically modified
organisms, and COM (2001) 425, the Proposal for a Re gulation of the European Parliament and of the
Council on genetically modified food and feed, to restart the approval process. However, in our
official comments to the EU, we indicated our concerns that these proposals are discriminatory, very
costly, unworkable, and unenforceable.  Please explain how the EU can justify the rationale for theseproposed regulations, on the basis of science, feasibility, and its WTO obligation to select the least
trade restrictive alternative.
The EU regulatory system for the placing on the market of GM products is founded on a
comprehensive scientific pre-market risk assessment .  The procedure involves all Member States and
where they raise objections, the relevant Scientific Committees are consulted for opinion.  In light of a
favourable decision, Member States are required to vote and at this stage, a qualified majority must
be obtained if the product is to be placed on the market.  Since April 1998, certain Member States
have become increasingly reluctant to vote in favour of new approvals.  This reluctance does not,
however, reflect a failure to provide a scientifically sound approval process but the political positions
within Member States.WT/TPR/M/102/Add.1
Page 22
The proposed Regulations will lay down a general, horizontal framework for regulating
genetically modified food and feed, including a centralised authorisation procedure and labellingprovisions and a general, horizontal framework for traceability and labelling of genetically modified
organisms and traceability of genetically modified food and feed.
The European Commission believes that the proposed requirements will enhance
transparency and facilitate the implementation of measures, where appropriate, to ensure safety
throughout the food and feed chain, contributing also to restore users and consumers confidence inthe application of gene technology in the agro-food sector.
It should be clarified that the facilitation of accurate labelling is generally not linked to
safety, but provides an improvement in the fairness and transparency of transactions. It will thereby
facilitate the task of operators who must comply with regulatory or commercial requirements on the
part of their customers, such as labelling of the final product.
The European Commission would also like to point out that it remains illegal to import
GMOs or genetically modified food into the European Union that have not received authorisation in
accordance with current European Community law.  Operators are, therefore, already obliged to
ensure that unauthorised GMOs or genetically m odified foods are not imported into the European
Community.
The European Commission has given detailed reasoning why it is of the opinion that the
proposed legislation is neither discriminatory, very costly, unworkable, and unenforceable in its
response to comments submitted by WTO members under either G/TBT/N/EEC/7 and/or
G/SPS/N/EEC/150 and G/TBT/N/EEC/6 and/o r G/SPS/N/EEC/149.
This has already been communicated to Canada on 17 July 2002.
III. Trade Policies and Practices by Measure, (1) Measures directly affecting imports;
(viii) Product regulations and standards; (b) regulatory developments; Labelling;
Paragraph 51:
Q47 Paragraph 51 states that a mandatory labelling requirement has been proposed for animal-
tested cosmetics until the entry into force of a ban on animal-tested cosmetics, which would apply toall such products, including of imported origin.
Please indicate the current situation in the EU with regard to cosmetics that have been tested
on animals.
As from 1 July 2002, the ban on marketing of cosmet ics tested in animals, as laid down in the
6th amendment, came into force.
Q48 Please provide the status with respect to the 6th and 7th Amendments.
The 6th amendment is in force. The 7th has received its second reading in the EP and will
now go to conciliation.
Q49 Please explain how the proposed ban on animal testing will be compliant with the EU's WTO-
obligations.
In regard to the concerns raised by Canada wi th respect to the marketing ban of cosmetic
products containing ingredients or combinations of ingredients tested on animals the European
Commission would like to respond as follows:
(a) Date of entry into force of the amendment (assuming that this relates to the 6
th
amendment, which introduced a provision on a marketing ban); notification under TBT agreement
Article 4(1)(i) of Directive 76/768/EEC , introduced by Directive 93/35/EEC (6th amendment) provides
for a prohibition of “the marketing of cosmetic products containing ingredients or combinations ofWT/TPR/M/102/Add.1
Page 23
ingredients tested on animals after 30 June 2002 in order to meet the requirements of this Directive”. 
Therefore, according to the current provisions, there is a prohibition of the marketing in the
EU of any cosmetic that would contain one or more ingredients or combinations of ingredients, which
have been subject to tests performed on animals after the 30 June 2002.
Hence either no immediate or only a very limited effect on the marketing of cosmetic products
is to be expected as ingredients or combinations which have been subject to animal testing before
30 June 2002 will not be affected by the marketing ban. One has to assume that the potentialeconomic ramifications for the time being can be considered negligible.
However, the issue of the marketing ban is currently under discussion in the context of the 7
th
amendment to Directive 76/768/EEC. Given the fact t hat this legislation is subject to the co-decision
procedure, a conciliation phase was initiated at the beginning of July. To date a final political
solution to the marketing ban has not yet been found and may still take some more months.
Concerning a postponement of the current marketing ban, it has to be pointed out that the
European Commission - in the context of the res ponsibilities that are incumbent upon it - intends to
propose an interim solution that provides legal clarity and protection to the legitimate interests of
economic operators.
The Commission is presently in the process of notifying the 7th amendment to the TBT Committee.
(b) Coverage of the legislation
As mentioned, this marketing ban would cover all cosmetic products in the meaning of Article 1 of
Directive 76/768/EEC. For clarificati on, according to the EU legislation:
A "cosmetic product" shall mean any substance or preparation intended to be placed in contact withthe various external parts of the human body (epide rmis, hair system, nails, lips and external genital
organs) or with the teeth and the mucous membranes of the oral cavity with a view exclusively or
mainly to cleaning them, perfuming them, ch anging their appearance and/or correcting body odours
and/or protecting them or keeping them in good condition.
In addition, Annex I to the Directive gives an illustrative list of products to be considered as
cosmetic products within the meaning of this definition:
ILLUSTRATIVE LIST BY CATEGORY OF COSMETIC PRODUCTS
- Creams, emulsions, lotions, gels and oils for the skin (hands, face, feet, etc.).
- Face masks (with the exception of peeling products).- Tinted bases (liquids, pastes, powders).
- Make-up powders, after-bath powders, hygienic powders, etc.
- Toilet soaps, deodorant soaps, etc.
- Perfumes, toilet waters and eau de Cologne.
- Bath and shower preparations (salts, foams, oils, gels, etc.).- Depilatories.
- Deodorants and anti-perspirants.
- Hair care products:
- hair tints and bleaches,
- products for waving, straightening and fixing,- setting products,
- cleansing products (lotions, powders, shampoos),
- conditioning products (lotions, creams, oils),
- hairdressing products (lotions, lacquers, brilliantines).
- Shaving products (creams, foams, lotions, etc.).
- Products for making-up and removing make-up from the face and the eyes
- Products intended for application to the lips.- Products for care of the teeth and the mouth.WT/TPR/M/102/Add.1
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- Products for nail care and make-up.
- Products for external intimate hygiene.- Sunbathing products.
- Products for tanning without sun.
- Skin-whitening products.
- Anti-wrinkle products.
Therefore, it covers most products listed under HS Chapter 33.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(viii) Product Regulations and Standards; (c) Standards; International Standard Setting;
Paragraph 61:
Q50 Relating to paragraph 61, please explain how can the differential in level of transposition of
international standards between the CEN (40%) and the CENELEC (80%) be explained, given the
fact that the CEN committed itself, and the CENELEC has obliged itself to adopt international
standards as European ones. Please indicate if the EC, or the CEN, is considering measures at this
point to narrow the differential.
The differential in the transposition of ISO and IEC standards can be explained by the scope
of both the IEC and CENELEC dealing exclusively with the electro-technical sector and the ISO and
CEN dealing with all others. Since CEN and ISO standardisation activity covers a broad range of
products, services and applications from all other than the electro-technical sectors there is higher
cultural and geographic diversity in their activities. In the electro-technical field which is also
characterised by goods that are intensively traded on world markets there is less divergence.
III. Trade Policies and Practices by Measure; (1) Measures Directly Affecting Imports;
(ix) Government Procurement, Paragraph 72 and 73:
Q51 Paragraph 72 indicates that under the proposed new legislative framework, the first group of
three directives would be consolidated into a single directive, covering supplies, works, and services.
Paragraph 73 adds that other proposed substantive amendments to these directives concern the
introduction of the new possibilities for relations between the contracting authority and suppliers.
Please explain this statement.
The statement is no more than an introduction to the modifications referred to (ie competitive
dilaogue and framework agreements; other examples are central purchasing entities and electronic
auctions).
Q52 Please explain the "greater flexibility for technical specifications" referred to in paragraph 73
as forming part of the new legislation and identify how the provisions will be consistent with the
GPA.
This greater flexibility relates to the introduction in the directives of the possibility to specify
technical requirements in terms of performance where in current law reference has to be made todetailed technical specifications (ie standards); this is compatible with GPA (art VI) which states that
"technical specifications shall where appr opriate be in terms of performance...".
Q53 Please explain whether and how the new Commission strategy on Corporate Social
Responsibility will be reflected in the new legislative framework for government procurement
referred to in paragraphs 72 and 73.WT/TPR/M/102/Add.1
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CSR is “essentially a concept whereby companies decide voluntary to contribute to a better
society and a cleaner environment” (European Commission Green Paper: “Promoting a EuropeanFramework for Corporate  Social Responsibility”, July 2001, COM(2001) 366), it goes to the
behavior of the company. It follows, that a bid from  a company, which applies the principles of CSR,
does not present a better value for money over a bid from a company, which does not.
The principle of best value for money being confirmed in the revised directive (Political
agreement was reached in Council 21 May 2002 for the directive proposal COM(2000) 275 on thecoordination of procedures for the award of public supply contracts, public service contracts and
public works contracts and is awaiting second reading in the Parliament), there is little room for
CSR, as defined previously, in public procurement .
The directive does however allow for social and environmental considerations to be taken
into account : non-compliance with relevant legislat ion, i.e. in the social or environmental field, may
be taken into account by the purchaser in order to exclude a contractor from participating in a
contract.
III. Trade Policies and Practices by Measure; (2) Measures Directly Affecting Exports;
(iv) Export Subsidies, Paragraph 89:
Q54 Paragraph 89 states that in principle, the Community does not grant subsidies conditional
upon exportation, except for those provided for under the CAP on alcohol and incorporated products,
milk and milk products, beef and veal, pigmeat, eggs, poultry meat, sugar and related products, wine,
cereals, rice, fruit and vegetables, and processed fruit and vegetables. Please explain how the EU
continues to justify trade-distorting export subsidies, and when and how does it plan on phasing these
out.
The EU is ready to negotiate further reductio ns on the condition that all forms of export
subsidisation (export credits, abuse of food aid, unfair practices of state trading enterprises) will be
disciplined. At this stage, we cannot be more specific on either the subsidy reduction percentage or
the implementation period. This will depend on the WTO negotiations.
III. Trade Policies and Practices by Measure; (3) Measures directly affecting production
and trade
(i) Legal Framework for businesses; Paragraph 99:
Q55 Paragraph 99 states that the average rates of corporate taxation in the EU Member States
continue to differ significantly, with no sign of  convergence during the period under review. Although
the Commission has long favoured harmonization to reduce these differences, the Member States are
not unanimous on the issue; consequently, Commission action to date has focussed on enhanced
mechanisms for tax co-ordination, notably action to  reduce or eliminate "harmful tax competition". 
Please indicate how the EU Member States inte nd to proceed to honour their commitment to
the OECD’s project on Harmful Tax Competition which requires them to eliminate their harmful tax
features by 2003.
According to the agreed timetable, OECD members should eliminate the harmful features of
their harmful tax regimes by April 2003. In this respec t, it has to be noted that the EU Member States
- in a parallel process internal to the EU (the Code of Conduct for Business Taxation, part of the Tax
Package) - have also made a commitment to eliminate, in the framework of the Tax Package, the
harmful features of their harmful tax regimes already by the end of 2002, i.e. before the deadline in
the OECD work against harmful tax practices. As for how Member States intend to proceed in the
exercise, it is left to them to make sure that the timetable and the deadline are respected.WT/TPR/M/102/Add.1
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III. Trade Policies and Practices by Measure; (3) Measures Directly Affecting Production
and Trade(iv) Intellectual Property Rights Protection; Paragraph 134:
Q56 Paragraph 134 mentions that in November 2000, the Commission suggested a harmonizing
directive on enforcement of Intellectual Property Rights (IPRs) to go beyond the "minimalist
approach" of the TRIPS Agreement, which is to be presented in the course of 2002.  Please state theelements of the harmonizing directive and how EU Member States ensure the consistency in the
enforcement of the TRIPS Agreement. The great variation in seizures by the Member States
(table III.1 on page 26) raises questions of consistency.
The Communication from the Commission dated 30 November 2000 sets out an Action Plan
which includes, as a priority, the submission of a proposal for a Directive aimed at strengthening the
means for enforcing intellectual property rights and defining a general framework for the exchange of
information and administrative cooperation. This dr aft proposal is under preparation and it is hoped
that it will be presented to the Commission for adoption in the Autumn of 2002.
III. Trade Policies and Practices by Measure; (3) Measures Directly Affecting Production 
and Trade
(iv) Intellectual Property Rights Protection; Paragraph 135:
Q57 Paragraph 135 states, "In the TRIPS Council, the EU has sought establishment of a
multilateral system for the notification and registration of geographical indications for wines and
spirits, in accordance with Article 23.4 of the TRIPS Agreement, with a possible extension to otherproducts (e.g., cheese).  The Doha Ministerial Declaration provides for the negotiation of a system for
wines and spirits, while the TRIPS Council could take up the issue of other products."
Please explain the process and the criteria used to evaluate the eligibility and selection of
product for protection as a geographical indication. What mechanisms are used to prevent the
establishment of protected geographical indications from becoming a disguised barrier to trade?
The WTO regime of protection of geographical indications ("GIs") is based on the principle
of territoriality and, hence, in the recognition and protection of a geographical indication in the
country of origin.  The EU proposal for a multilateral system of notification and registration (the
"multilateral register") fully acknowleges this principle and proposes that only GIs protected in thecountry of origin be registrable at the WTO level.  The product scope of such multilateral register will
be decided by the WTO membership in due course.  For the time being, the Doha Ministerial
Declaration provides for a product scope limited to GIs for wines and spirits.  Those GIs, in the EU,
have to meet the criteria of Article 22.1 of the TRIPs Agreement.  Evidence supporting that those
requirements (i.e., a link between a certain quality, reputation and other characteristic and aterritory) are met varies from case to case and may encompass, as a way of example, chemical and
other scientific evidence proving that, e.g., that the protected quality bears a link with the territory.
Finally, protected GIs as any other intellectual property right (the TRIPs recognizes many
others like patents, trademarks or designs), is, by definition, not a "disquised barrier to trade".
Intellectual property rights (IPRs) protect and reward creativity, investment and goodwill that isincorporated in tradeable product.  International protection of GIs, like that of any other IPR, ensures
that free flow of those goods is not curtailed and that the creativity, invesment and goodwill is
preserved for those who undertook it.  The multilateral register, as proposed by the EU, seeks to
ensure that that international protection, as envi sioned by the TRIPs Agreement, is facilitated and
made easier for right-holders, consumer organizations and public administrations alike.WT/TPR/M/102/Add.1
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IV. Developments in Selected Sectors; (1) Agriculture; (ii) Common Agricultural Policy 
(CAP)
(b) Future directions for the CAP; Paragraph 14:
Q58 Paragraph states, "The EU has also been an active participant in the negotiations under
Article 20 of the WTO Agreement on Agriculture to continue the reform process in the sector.  These
negotiations began in March 2000 and are now part of the DDA."
The July 10, 2002 proposal from the European Commission suggests a new form of farm
income payments that the EC claims will meet the criteria of Annex 2 of the Agreement on
Agriculture (green box). On what specific basis can such a claim be made? For example, what policy-
specific criteria of Annex 2 are these payments intended to meet? On what grounds would these
payments meet the fundamental requirements that th ey have no, or at most minimal, trade-distorting
effects or effects on production?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Q59 The proposal intends to transform payments currently claimed as "blue box" support
(Article 6.5) into payments claimed under Annex 2. In view of this proposed change, what is the
continued rationale for the EU position in ongoing WTO negotiations of seeking to maintain the
concept of the "blue box" (see G/AG/NG/W/90)?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
IV. Developments in Selected Sectors; (1) Agricu lture; (iii) Development in Selected Sectors;
Paragraph 24:
Q60 Paragraph 24 states that a ban on mammalian MBM in all animal feed was put into place as of
1 January 2001, and has been extended without deadline, pending a new policy on animal by-
products.
Since this ban goes beyond the recommended international animal health standards which is a
ruminant-to-ruminant feed ban, please indicate the EU’s scientific rationale for the mammalian ban.
The current prohibitions on the feeding of animal proteins to farmed animals (the extended
feed ban) are transitional measures, remaining in force until 30 June 2003, at the latest. By that time,
the feed ban should be reconsidered taking into a ccount, among others, the provisions in the Animal
By-Products Regulation which is expected to be adopted in September 2002.
The rationale for the extended feed ban are not indications or scientific evidence that animal
proteins from non-ruminants may transmit TSE, bu t concerns control and implementation aspects.
Firstly, it is very difficult to exclude the presence of ruminant proteins in ruminant feed if other
animal proteins are allowed. Secondly, cross-co ntamination between rumi nant feed and non-ruminant
feed containing ruminant proteins  was frequently observed before the implementation of the extended
feed ban.
Q61 Many of the provisions of the animal-by-products also go beyond international standards.
Where is the EU’s scientific rationale behind this proposal?
The EU considers the proposed Regulation on animal by-products to be fundamental to the
EU strategy of food and feed safety. The experiences of a range of food safety crises such as BSE,
foot-and-mouth disease and dioxin point to inadequ ate collection, treatment and disposal of animalWT/TPR/M/102/Add.1
Page 28
by-products as a key area of vulnerability in  our present food safety framework. The proposed
Regulation is in line with the opinions of the EU Scientific Steering Committee (SSC), whichrecommend that materials derived from animals declared unfit for human consumption following
health inspection should not be used in feed. In particular, the following scientific opinions are
relevant:
• Opinion on the safety of meat-and-bone meal from mammalian animals, naturally or 
experimentally susceptible to TSEs (adopted on 26-27 March 1998 and updated on 
24-25 September 1998)
• Opinion on the safety of tallow derived from ruminant tissues (adopted on 26-27 March 1998 
and revised on 28-29 June 2001)
• Report and opinion on the safety of gelatine (adopted on 26-27 March 1998 and updated on 
20-21 January 2000 and on 28-29 June 2001)
• Report and opinion on the safety of dicalcium phosphate precipitated from ruminant bones 
and used as an animal feed additive (adopted on 25-26 June 1998)
• Opinion on mammalian derived meat-and-bone meal  forming a cross-contaminant of animal 
feedstuffs (adopted on 24-25 September 1998)
• Report and opinion on the safety of hydrolysed proteins produced from bovine hides (adopted
on 22-23 October 1998)
• Opinion on the risks of non conventional transmissible agents, conventional infectious agents 
or other hazards such as toxic substances entering the human food or animal feed chain via raw material from fallen stock and dead animals (including also: ruminants, pigs, poultry, 
fish, wild/exotic/zoo animals, fur animals, cats and laboratory animals) or via condemned 
material (Fallen stock opinion) (adopted on 24-25 June 1999 and re-edited on 
22-23 July 1999)
• Opinion on the risk born by recycling animal by-products as feed with regard to propagating
TSE in non-ruminant farmed animals (Intra-species recycling opinion)(adopted on 17 September 1999)
• Opinion on the safety of ruminant blood with respect to TSE risks (adopted on 
13-14 April 2000)
IV. Developments in Selected Sectors; (1) Agricu lture; (iii) Development in Selected Sectors,
Paragraph 25:
Q62 Paragraph 25 states that other measures taken include the removal of specified high-risk
materials (SRM) as of 1 October 2000, applied equally in the EU and to imported products, except
from countries classified in category 1 of "Geogr aphical BSE Risk (GBR)", which is the highest risk
category. GBR assessment, category 1 to 5, is conducted by the Scientific Steering Committee of the
EU according to established methods last revised in January 2002.  These methods include an
assessment of the exposure of the country to BSE as a result of imports of live animals from the EU
and responses by the country to a questionnaire. According to the Commission, the categories of
countries and the measures to be applied are in line with the international standards of the OfficeInternational des Epizooties (OIE)."
The EU measures related to BSE and TSE have prohibited Canadian exports of gelatine, beef
casings, bone-in-beef, bovine animals, embryos and the proposed animal by-products legislation will
further eliminate our tallow exports. Canada disp utes the BSE geographic risk rating the EU has
assigned as it has never had a native case of BSE and is BSE-free under International Organization for
Epizootics (OIE) criteria. When will the EU bring its categorizations and risk-measurement in line
with the OIE?WT/TPR/M/102/Add.1
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Q63 The statement "Geographical BSE Risk (GBR ) assessment, category 1 to 5, is conducted by
the Scientific Steering Committee of the EU according to established methods last revised inJanuary 2002", may need some clarification in order that countries understand the relationship
between the EC's GBR classification exercise and the final assignment of the BSE status to a country.
Canada's understanding is that the GBR classification exercise (described in the January 2002
methodology and determined by the SSC) is still FOUR categories (I-IV) and not 5, as implied above.
Q64 Please clarify the relationship between the GBR rating of I to IV determined by the Scientific
Steering Committee and the BSE Status Categorisation of 1 to 5 to be determined by risk managers
according to 999/2001/EC. Please indicate how one numeric rating will affect the other.
The BSE categorisation in Regulation 999/2001 is in line with the OIE standard. However the
OIE has not yet categorised countries, and it is not possible to predict in which category the OIE will
place Canada. The actual categorisation will have to be made by the EU, taking into account the
advice from the SSC.
The determination of the BSE status comprises two steps: a risk assessment and the
evaluation of additional criteria as defined in Regulation 999/2001 and the OIE Code. The applyingcountries have been asked to specify whether the GBR can be used as the initial risk assessment in the
framework of the determination of the status, or whether they want to submit their own risk
assessment. Canada has submitted its own risk assessm ent. This risk assessment has been submitted
to the SSC for an opinion. Canada will have the opportunity to comment before the final opinion will
be adopted.
The GBR gives a rating between I and IV (four categories). The final BSE status will be
established based on the outcome of the risk asse ssment and the evaluation of the other criteria. The
final BSE status classifies countries into five categories, i.e. category 1 (BSE free) –category 5 (high
BSE risk). At this stage it is too early to give exact numerical predictions how countries will be
classified in relation to their GBR rating.
Q65 While Canada agrees that the EC criteria, as described in 999/2001/EC (which is not yet
being applied), for classifying a country's BSE status does closely mimic OIE standards, we do not
agree that all measures applied are in line with international standards. The OIE recommends a
ruminant-to-ruminant feed ban. In the EC's criteria for a BSE Status Category 1, it is stated that no
meat and bone meal or greaves derived from ruminants OR MAMMALS has been fed to ruminants.
We also note that when 999/2001/EC comes into effect, countries with a BSE status rating of 2, 3, 4or 5 will be required to certify that a full mamma lian-to-ruminant feed ban in place. This feed ban
requirement also extends beyond OIE requirements.  In addition, as of July 2002, the EC also has
restrictions in place with respect to imports of cattle embryos which are not consistent with OIE
standards. It is our understanding that this measure will be modified. Please indicate when it will be
amended
The measures referred to are fully in line with the OIE recommendations, except that where
the OIE recommends a ruminant to  ruminant feed ban, the EU has required a mammalian to ruminant
feed ban. This difference was motivated by reasons of control, as no country so far has been able to
demonstrate that a ruminant to rumi nant feed ban can be implemented effectively. In meetings on the
technical level between the Commission services and representatives of the Canadian authorities to
discuss this problem, Canada has been invited to demonstrate that it has an effective ruminant to
ruminant feed ban but has declined to do so.
In the OIE General Session this year, some of these OIE recommendations were amended.
These amendments will be reflected in the EU legi slation, and a proposal to delete the conditions for
embryos has already received a favourable opinion of the Standing Committee of the Food Chain and
Animal Health. It is expected that the proposal will be formally adopted shortly.WT/TPR/M/102/Add.1
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IV. Developments in Selected Sectors; (1) Agricu lture; (iii) Development in Selected Sectors,
Paragraph 26:
Q66 Paragraph 26 states that although not directly related to BSE, the legislation banning
hormones as growth promoters was revised as of 1 July 2001 on the basis of scientific evidence
collected by the Commission. The original legislation was the subject of a WTO dispute settlement
proceeding in the context of which certain, mainly agricultural, EU exports have undergone sanctionsin Canada and the United States. Modifications of the Directive to bring EU legislation into
compliance with the WTO ruling are currently under discussion in the Council and the European
Parliament.
The EU ban on growth-promoting hormones is not scientifically justified. In 1997, a WTO
panel ruled that the ban is inconsistent with the EU’s WTO obligations. The finding was confirmed bythe WTO Appellate Body in 1998. A WTO arbitrator gave the EU until May 1999 to comply with the
WTO rulings. Given the EU’s failure to comply with the WTO rulings, or provide adequate
compensation, Canada imposed retaliatory tariffs in July 1999. The EU has still not implemented the
WTO rulings. Please explain how modification of the Directive will bring EU legislation into
compliance with the WTO rulings. Please indicate if this modification will allow for export ofCanadian beef to the EU.
At the end of the World Trade Organisation (W TO) Dispute Settlement, the WTO Appellate
Body concluded that the prohibition of imports of meat from hormone-treated  animals to the EU did
not comply with the requirement that such a measur e should be based on a relevant assessment of the
risks to human health. As a consequence the European Commission immediately initiated a
complementary risk assessment which was mandated to the Scientific Committee on Veterinarymeasures relating to Public Health (SCVPH). The committee was asked to evaluate the risks to
human health from hormone residues in bovine me at and meat products treated with six hormones
(oestradiol 17 β, testosterone, progesterone, trenbolone acetate, zeranol and melengestrol acetate) for
growth promotion. The SCVPH concluded in 1999 th at no acceptable daily intake (ADI) could be
established for any of the six hormones evaluated. For oestradiol 17 β it concluded that there is a
substantial body of evidence suggesting that oestradiol 17 β has to be considered as a complete
carcinogen (exerts both tumour initiating and tumour promoting effects) and that the data available
would not allow a quantitative estimate of the risk . Since then the SCVPH has continued to take into
account any new emerging scientific data from any source, including the considerations of the United
Kingdom's Veterinary Products Committee (1999), the Committee on Veterinary Medicinal Productsof the EC (1999), the Joint FAO/WHO Expert Committee on Food Additives (JECFA).
In order to consider in particular data from third countries, an open call was published in
1999 requesting documentation from any interested party, including the industry, to provide any
relevant and recent scientific data and information in  their possession to be taken into account in the
complementary risk assessment. To close some of the evident knowledge gaps the EuropeanCommission has moreover commissioned 17 studies.
The EU proceeded as described to be sure t hat its decisions would always take account of
scientific developments. An effort has been made to ensure that all scientific evidence considered has
been peer reviewed. However so far, none of the scientific information made available could convince
scientists to reverse their evaluation of the six hormones in question, so that they had to re-affirmtheir advice in reviews. The last review was concluded as recent as April 2002.
The new legislative proposals of the EU have thus been based on the newest available
scientific opinions. Thus the measure is based on a scientific justification as requested in Article 3.3 of
the SPS agreement.
Canadian beef may be imported into the EU if the Canadian government can give sufficient
guarantees that it has not been treated with hormone s for growth promotion and thus complies with the
level of protection chosen by the EU.WT/TPR/M/102/Add.1
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Q67 In April 2002, the EU Scientific Committee on Veterinary Measures relating to Public Health
(SCVPH) re-affirmed, but only on the basis of partial, inconclusive results from the 17 studies andother recent scientific data, that the use of hormones as growth promoters for cattle poses a potential
health risk to consumers. Please indicate when conc lusive scientific evidence that justifies the EU ban
will be available.
The first scientific opinion of the Commission's independent advisory committee was adopted
in 1999.
It was transmitted to the Canadian authorities by the services of the European Commission.
Moreover it was made available for everybody on the European Commission homepage at :
http://europa.eu.int/comm/food/fs/him/him_index_en.html
The opinion was reviewed in May 2000 when new information became available and
confirmed the earlier opinion.
The 17 studies mentioned by the Canadians, were launched in early 1998, prior to the initial
scientific opinion of April 1999, in order to address certain gaps identified by the Commission
following the ruling of the WTO Appellate Body co ncerning the scientific basis for the EC import ban.
They provided additional information but did not addr ess the specific gaps identified in the first
scientific opinion.
In accordance with the Commission's willingness to continue to take into account new
scientific data, as soon as the results of the 17 studies became available, they where passed to the
Scientific Committee together with other recent scientific data.
In their latest opinion, the Committee confirme d the validity of the first opinion and stated
that no amendments were justified.
The Commission will keep the situation under review.
IV. Developments in Selected Sectors; (2) Fisheries; (ii) Common Fisheries Policy;
Paragraph 54, Table IV.3:
Q68 In Table IV.3, the EU notes that it maintain s an autonomous tariff rate quota (ATRQ) for
cooked and peeled shrimp of 5,000 tonnes at 6%. The table does not mention that this ATRQ has an
end-use requirement (i.e., further processing) in order to qualify for this lower rate.
Please identify whether there are similar end-use requirements for the other items listed in
Table IV.3, and, if so, please enumerate them. Please indicate if the EU would consider eliminating
such end-use requirements so that WTO members may make full use of these ATRQs.
As mentioned in the Secretariat’s report (par. 54), the suspensions and tariff quotas
implemented within the framework of the latest reform of the Community’s Common Organisation of
Markets, concern “fishery products intended for the processing industry”. To achieve this objective
end-use requirements must be specified to ensure that these products are not used for other purposes.All the items listed in Table IV.3 are subject to th e same end-use requirements. These are specified in
the implementing regulations (Council Regulations (CE) 104/2000 and 2803/2000). These regulations
are available at the Community’s web site www.europa.eu.int
As regards the last part of the first question, the Community does not consider that the end-
use requirements hamper the full use of the quotas. Some of the quotas listed in the table are fullyused. In addition, non-utilisation of the quotas can be related to weak demand for a particular
product or because exporters are not able to supply customers’ demands.
Q69 Please indicate whether these quotas can be made permanent and binding, given the stated
reliance by the EU on imports of fish products.WT/TPR/M/102/Add.1
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These tariff quotas and suspensions were opened on an autonomous basis, that is, without
compensation from other countries. Moreover, the volumes of the quotas are set in relation to marketsneeds and could be subject to changes.
Some of the quotas listed in the table will expire on 31 December 2003 (products covered by
Council Regulation (EC) 2803/2000). The functioning of these quotas will be reviewed before that
date.
The Community advocates a comprehensive round of negotiations on market access for non-
agricultural products, without exceptions. MFN duty rate reductions on the products covered by these
measures (autonomous suspensions and tariff quotas) could be effected within the framework of the
ongoing negotiations.
Q70 Many of the autonomous quotas listed are for unlimited amounts of the fishery product.
Please indicate if the EU is considering increasing the volume of fish imports subject to the other
ATRQs.
Only autonomous tariff suspensions allow for the import of unlimited quantities. Tariff quotas
are for limited amounts. On the last part of this qu estion, please refer to the reply given to the second
question.
IV. Developments in Selected Sectors; (5) E-Commerce; (ii) Policy developments;
(a) Overview, Paragraph 107:
Q71 Paragraph 107 mentions that the Commission is of the view that e-commerce either involves
the physical delivery of goods and is thus merchandise trade within the scope of GATT 1994, orinvolves electronic delivery, and therefore falls within the scope of GATS.  No mention is made,
however, of the EC’s Market Access (MA) and National Treatment (NT) obligations under the
GATS. Please clarify the nature of those GATS-sectoral commitments which it feels are most
applicable to electronic deliverables such as software and books.
EC commitments (as well as a number of other WTO members’ commitments) cover all
services involving consultancy on, development and implementation of software, as these are defined
under CPC 842. Under CPC 842, software is defined as “the sets of instructions required to make
computers work and communicate”. CPC 842 also exp lains that “the customer may have a choice of
using ready-made programmes off the shelf (packaged software), developing specific programmes forparticular requirements (customised software) or using a combination of the two”. Accordingly, it is
the understanding of the EC that software as de fined as “sets of instructions required to make
computers work and communicate” is covered by the scope of CPC 842.
IV. Developments in Selected Sectors; (5) E-Commerce; (ii) Policy developments; (d) 
Indirect taxation of deliveries of goods and services contracted over the Internet;
Paragraphs 117 and 118 :
Q72 Paragraph 117 refers to two different types of Value-Added Tax (VAT) arrangements which
are applied to off-line delivery of goods. Please clarify the differences between VAT arrangements for"destination principle" and for "distance sales".
The "destination principle" is fundamentally the idea of taxation at the place of consumption.
This stands in contrast to the "origin principle" , the concept of taxation based on the jurisdiction of
the supplier.
The "distance sales" regime generally applies to sales of goods by a supplier destined
principally to final consumers (as opposed to taxable persons) in another Member State.  This regimeWT/TPR/M/102/Add.1
Page 33
addresses the reality of an EU supplier facing a multitude of consumers based in different Member
States.  The VAT applies based on the "origin principle" up to a threshold for sales established by theMember State of destination.  The threshold is set at €100 000 (based on supplies of goods to the
Member State of destination in the previous calendar year) , but may be reduced to €35 000 by the
Member State of destination where it fears that the threshold of €100 000 would lead to serious
competitive distortions.
Q73 Paragraph 118 describes the EU Directive and Regulation governing the application of the
VAT to electronic deliveries. Given that EU-based suppliers of digital products will be required to
register in the country in which they are located and to levy the VAT at the rate applicable in that
country, please clarify the criteria for "business presence". Specifically, please clarify whether the
VAT-rate that EU suppliers would apply to digital products is to be determined solely on the basis ofthe country in which the company is incorporated or whether the VAT-rate could also be based on the
jurisdiction in which the company operates (i.e., the company is incorporated in Germany, but has its
operation -- which is not a separate legal entity -- in Portugal).
"Business presence" is not term found within EU VAT legislation.  Rather, this is a concept
which has crystallised as a result of the work carried out by the Working Party 9 Sub-group on
Electronic Commerce at the OECD.  Published guidelines on the place of consumption include the
following:  The place of consumption for cross-border supplies of services and intangible property
that are capable of delivery from a remote location made to a non-resident business recipient should
be the jurisdiction in which the recipient has located its business presence.  A footnote to this
guideline added that "[t]he 'business presence' is , in principle, the establishment (for example,
headquarters, registered office, or a branch of the business) of the recipient to which the supply is
made."
In the EU, Article 9(1) of the Sixth Directive sets out a broad principle that the place of
supply of a service is deemed to be the place where the supplier has established his business or has a
fixed establishment from which the service is supplied.  In absence of a place of business or fixed
establishment, it is the place where the supplier has his permanent address or usually resides.  Thisdeeming rule, it should be noted, is subject to a number of exceptions.
With regard to the specific example provided, ultimately the response would be predicated on
the particular facts of the situation.  As previously noted, the place of supply will be where there is a
fixed establishment from which a service is supplied.  Where the German company provides services
to consumers through the Portuguese branch, VAT is payable on those services in Portugal if that
branch has the human and technical resources characteristic of a fixed establishment, and the service
is actually provided by the branch. Otherwise, the supply would be subject to German VAT.
Q74 Furthermore, has the EU determined what the effect this Directive would have on the ability
of foreign suppliers to compete with local EU suppliers in the EU market?
No formal study has been undertaken regarding the ability of non-EU suppliers to compete
with EU established suppliers in the EU market.  It  is recognised that decisions Member States have
taken on tax rates may enable certain EU suppliers to  charge a lower amount of tax when selling to
consumers in other Member States, versus non-EU vendors participating in the special scheme sellingin the same locale and charging the local rate.  Although it is impossible to predict the overall
significance of such differences, it is probable that it will be either neutral or insignificant.  Moreover,
it must be recognised and acknowledged that tax rates are not the only factor in making a purchase
decision and, indeed, higher taxing Member States such as Ireland and Sweden are significant
providers of online music within the EU.
Additionally, it is important to remember th at approximately 90% of the online electronic
commerce business that occurs presently is business to business and no change in business practicesWT/TPR/M/102/Add.1
Page 34
will be required for non-EU vendors.  The new specia l scheme will only apply with respect to the 10%
of sales involving final consumers.
Finally, it is worth noting that the matter of the place of supply of services with regards to
intra-Community transactions is under review, and the online supply of digitized content is but one of
the matters to be considered.
IV. Developments in Selected Sectors; (5) E-Commerce; (ii) Policy Development;
Paragraph 113:
Q75 Paragraph 113 states that on 14 January 2002, an "adequate" level of protection was also
recognized for transfers of certain personal data from the EU to certain locations in Canada. A
Commission Decision (220/2/EC) recognizes the “adequacy” of Canada's Personal InformationProtection and Electronic Documents Act (PIPEDA) in meeting the requirements of the EU Data
Protection Directive (95/46/EC). While the Commission Decision is limited to the scope of the
PIPEDA, no specific geographical limitation on data transfers is provided for. Accordingly, please
explain why the Commission has included the phrase "to certain locations in Canada" in the
paragraph.
The phrase `to certain locations´ was included to make clear that the adequacy decision does
not apply to the whole country as it is a partial decision, that does not apply to the whole country as it
is linked to the application of a specific piece of legislation.
The Canadian PIPEDA Act applies to private sector organisations that collect, use or
disclose personal information in the course of commercial activities. Initially the Act only applies to
organisations that are regulated at a federal level (federal works, undertakings or businesses) such asairlines, banks, broadcasters, inter-provinci al transportation companies and telecommunication
networks and to the disclosure by organisations (whether they are federally regulated or not) of
personal information for consideration outside a province or outside Canada. The Act also applies to
all businesses in the Territories as they are deemed to be federal works. The information itself must be
the subject of the transaction and the consideration is for the information. As of 2004 it will apply toall sectors except in cases where provinces have passed privacy legislation that has been deemed to
be substantially similar. If a province passes legisl ation that is deemed substantially similar, the
provincial legislation will apply to the intraprovincial collection, use or disclosure of personal
information.WT/TPR/M/102/Add.1
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QUESTIONS FROM GUATEMALA
REPORT BY THE SECRETARIAT WT/TPR/S/102
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) MEASURES DIRECTLY AFFECTING IMPORTS
(vi) Prohibitions, restrictions, surveillance, and licensing requirements(c) Textiles and clothing products
Q76 Paragraph 23:  "The general principle of the EU's regime for imports is 'liberalization of
imports, namely the absence of any quantitative re strictions', although the EC retains the right to
apply surveillance or safeguard measures (section (vii)), as well as trade defence measures(section (xi))."
What positive action is the European Union taking to make its rules of origin and non-tariff barriers
more flexible so as to improve access, especially for those developing countries that are competitive
in the textiles sector?
In the framework of the GSP, the Community is in principle in favour of allowing inter-
regional cumulation of origin between the coun tries of the Central American Common Market and
those of the Andean Community, as requested by these countries. This would allow Guatemala (a
member of the Central American Common Market) to  benefit from cumulation of origin with more
countries than is at present the case. The Community is waiting for the organisations and countries
concerned to fulfill certain pre-conditions before making the necessary amendments to its legislation.
(3) MEASURES DIRECTLY AFFECTING PRODUCTION AND TRADE
(iii) Subsidies
(a) Overview
Q77 Paragraph 116:  "The Commission reports that grants were the leading form of state aid to
manufacturing (61%), followed by tax exemptions (22%)."
Could the European Union explain what is meant by "grants" and "tax exemptions"?
Grants and tax exemptions
The first category comprises aid that is transferred in full to the recipient and accounts for
the vast majority of aid in all Member States. This category may be subdivided into two groups
depending on whether the aid was granted through the budget or through the tax or social security
system. Below is a list of aid instruments where the aid element is equal to the capital value of aid.
• Grants
• Interest subsidies received directly by the recipient
• Tax credits and other tax measures, where the benefit is not dependent on having a tax 
liability (i.e. if the tax credit exceeds the tax due, the excess amount is repaid)
• Tax allowances, exemptions, and rate relieves where the benefit is dependent on having a tax 
liability.
• Reduction in social security contributions.
• Grant equivalents e.g. sale or rental of public land or property at prices below market value
http://europa.eu.int/co mm/competition/state_aid/ scoreboard/conceptual_remarks.html#what_is
Q78 Paragraph 119:   "With respect to agriculture (Chapter IV (1)), disciplines apply under the
WTO Agreement on Agriculture, and their scope is to be addressed under the ongoing negotiations;while EU funding commitments to the sector have  remained stable during the period under review,WT/TPR/M/102/Add.1
Page 36
the EU has been concerned by the rising budgetary commitment of the United States in the proposed
2002 Farm Bill."How does the European Union consider that its modest revision of the Common Agricultural Policy
will affect the conduct of such important negotiations when it is hoped that a better balance will be
achieved in all the negotiations for countries that depend on agriculture, especially developing
countries?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
IV. DEVELOPMENTS IN SELECTED SECTORS
(1) AGRICULTURE
(iii) Developments in selected subsectors
Sugar
Q79 Paragraph 32:  "A special report on the management of the sugar CMO published by the
Court of Auditors in 2000, noted that it has remained untouched by CAP reform proposals in 1992 orunder Agenda 2000 …  The Court concludes that 'despite a situation of structural overproduction, the
Commission has repeatedly limited itself to proposing the continuation of the sugar regime and
maintaining the levels of quotas and prices unchanged'."
Could the European Union inform us how it intends to deal with this situation and whether it is
considering reforming the sugar sector in the near future?
The EC extended its current regime until 30 June 2006. However, the Commission will
present a report to the Council in 2003.
(ii) Common Agricultural Policy (CAP
(a) Overview
Q80 How does the European Union intend to revise its Common Agricultural Policy to bring it
into line with the negotiating objectives set in the Doha Ministerial Declaration?
The Agenda 2000 reform of the CAP is perfectly compatible with the objectives of the Doha
Ministerial Declaration.WT/TPR/M/102/Add.1
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QUESTIONS FROM NEW ZEALAND
Regional/bilateral
Q81 We are pleased to note that the EC recognises the importance of the multilateral trading
system and the need for any preferential arrangemen ts that might be agreed to contribute to and
strengthen the multilateral system (Secretariat report, para 16; EC report, paras 27, 60 and 97).  Whatsteps is the EC taking to ensure that its regional and bilateral trading agreements meet the GATT
Article XXIV requirement to cover "substantially all trade" and do not therefore detract from its and
other members’ efforts towards multilateral trade liberalisation?  Can the EC provide an outline of
how liberalisation of trade in the agriculture sector is provided for in its recently concluded agreement
with Chile?
In its negotiations for regional agreements, the EU always aims to ensure that WTO
requirements are satisfied, including as regards the coverage of “substantially all the trade”.  In this
regard, the EC applies an internal benchmark as a reference point for the minimum trade coverage
that should be achieved in any RTA entered into by the EU.  This benchmark is that any agreement
should provide for complete liberalisation of at least 90% of trade by volume, at the latest by the end
of any transitional period necessary to provide fo r implementation.  Furthe rmore, as indicated by
WTO rules, no major sector should be excluded from the scope of an RTA.
Negotiations for an Association Agreement with Chile, which incorporates an FTA foreseeing
a very high degree of liberalisation, were only concluded recently and the final text of the agreement,
including its annexes, are now being prepared for signature.  The parties will notify the FTA to the
WTO under the relevant provisions of GATT Article XXIV and GATS Article V in due course.
Agriculture and fisheries
Q82 We welcome the recognition by the EC of the importance of further liberalisation in the
agricultural sector for sustained and continued economic growth (Secretariat report, paras 45, 46; ECreport, paras 29, 41, 42).  We also welcome the emphasis in the CAP Mid Term Review proposals on
decoupling support from production.  What is the EC assessment of the implications of the MTR
proposals for movement of EC domestic support between the amber, blue and the green boxes?  We
note that neither export subsidies nor market access were addressed in the MTR – even though both
are integral to the Community’s agricultural policy.   How does the EC intend to further reform these
two pillars?
As MTR is a Commission proposal and thus not a EC measure, it is not appropriate to
respond in this context. As regards export subsidies, the EC is ready to negotiate further reductions
on the condition that all forms of export subsidisation (export credits, abuse of food aid, unfairpractices of state trading enterprises) will be disciplined. Moreover, the EC objective is to increase
market access to the benefit of all Members.
Q83 We are disappointed to note the EC remains a major user of export subsidies in the dairy
sector (1.68 billion euro in 1999-2000 – Secretariat report, page 72, para 10).  The Secretariat reportalso notes the EC’s export refunds in this sect or have crowded out unsubsidised trade (page 76,
para 30).  Given the highly trade-distorting system in place and the EC’s support for trade
liberalisation in the WTO, what consideration is the EC giving to accelerating "Agenda 2000" dairy
sector reforms?  While we are pleased to note the Mid-Term Review proposals include four options
being considered for the milk quota regime, could the EC explain the relative weight being placed on
each option?WT/TPR/M/102/Add.1
Page 38
The Commission presents four options without indicative preference and it would have to be
discussed by the Member States in the following months. Anticipation of Agenda 2000 dairy sectorreform is not included in these options. Overall,  as Ministers have not adopted MTR proposal, it is
not appropriate to be discussed in this context.
Q84 We note the EC’s estimates that significant excess capacity is one of the causes of resource
depletion in the fisheries sector (Secretariat report, para 48).  In what ways will support to thefisheries sector be modified to ensure that the industry is sustainable and that support is non trade-
distorting?
As paragraph 48 of Chapter IV does not contain any reference to the issues raised by New
Zealand in its question, we assume that it is paragraph 47 of the Secretariat’s report New Zealand isreferring to.
First of all it should be noted that views quoted in the Secretariat Report are those of the
Commission and not those of the European Communities.
The current Community legislation foresees the review of the Common Fisheries Policy
(CFP) in the course of 2002. It also provides that the Council shall decide before 31 December 2002on any necessary adjustments to be made.
On 28 May 2002 the Commission presented a reform package, containing a series of
legislative proposals (available at the EU web site www.europa.eu.int/comm/fisheries ).
Some of these proposals aim at reducing fishing ef fort under multi-annual plans. Further legal
proposals, reports and action plans will follow.
The above legislative proposals must be adopted by the Council of Ministers. The new CFP
will enter into force in 2003.
Air Services
Q85 When can a final ruling be expected from the European Court of Justice as to whether the
negotiation of the international air services agreements is a Community competence?  Has the ECbegun to consider the implications of such a rulin g for existing agreements with third countries, and
for the negotiation of future agreements?
The European Court of Justice is currently preparing its final ruling in the case on the so-
called "open-skies" air transport agreements, that the Commission has filed against eight MemberStates.  The Advocate General issued his opinion in February, and the final ruling can be expected
later this year, though no specific deadlines are applicable.
When the judgement is issued the EC will have to study it carefully before deciding on the
most appropriate course of action.
Food Safety
Q86 We welcome the EC’s focus on scientific evidence underpinning food safety policy, as
required by the WTO Agreement on the application of sanitary and phytosanitary measures (SPS
agreement).  We are concerned, however, at potential confusion between food safety and consumerinformation issues (Secretariat report, para 30).  Can the EC explain the objective of proposed product
tracing (traceability) requirements for many foods, feedstuffs and food-producing animals, and how it
will ensure that measures to ensure full product tracing will be no more trade restrictive than
necessary to meet this objective?  How does the EC propose to ensure consumer information
objectives for product tracing remain clear and separate from measures to ensure that food is safe for
human consumption?  What criteria will be used to distinguish clearly between cases whereWT/TPR/M/102/Add.1
Page 39
mandatory product tracing is required and those wh ere the use of product tracing systems should be
market-driven?
The general traceability requirements in Re gulation (EC) 178/2002 pr ovides that food and
feed business operators have to have systems in place to identify from whom they have received a food
or a feed (one step back) and to whom they have sold a food or a feed (one step forward).The
traceability requirements include food, feed, food-producing animals, and any other substance
intended to be, or expected to be, incorporated in to a food or feed, at all stages of production,
processsing and distribution. The objective is to establish a comprehensive system of traceability
within food and feed businesses so that targeted and accurate withdrawals can be undertaken or
information given to consumers or control officials. The European Commission considers that any
given piece of information can serve a number of purposes and objectives. When legislation includesmultiple objectives, there are almost always intertwined and there is therefore no need to distinguish
between clauses which primary serve one purpose and others which primary serve another purpose.
Nor is there, in the view of the European Commission any obligation under international treaties to
operate on the basis of such distinctions.
Operators are allowed and welcome on a voluntary basis to establish traceability
requirements which go beyond European Community law.
The European Commission considers that these traceability requirements are not trade
restrictive, but correspond in fact to the inform ation which is already transmitted between operators
and traders in the production and distribution chain.WT/TPR/M/102/Add.1
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QUESTIONS FROM JAPAN
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
1. EXTERNAL TRADE RELATIONS: Regional trade agreements
(1) Free trade agreement (WT/TPR/S/102, chapter II, p. 21, paragraph 31)
Q87 Japan would like to know why the Europ ean Economic Area (EEA) agreement has not been
notified to WTO under the GATT Article XXIV, in spite of the fact that this agreement has already
been notified under the GATS Article V.
Information on the Agreement on the European  Economic Area was circulated to GATT
Contracting Parties on 17 July 1992 in Document L/ 7048, in the form of a joint communication by the
EC and the EFTA states.  As the FTAs between the EC and each of the other EFTA states parties to
the EEA (Iceland, Liechtenstein and Norway) were already notified to the GATT in the early 1970s,
no notification was made under GATT Article XXIV.
(2) Interregional agreements (WT/TPR/S/102, chapter II, p. 23, paragraph 39)
Q88 Japan would like to know why the transitional period of liberalization of South Africa's
imports from the EU under the TDCA exceeds 10 years.
Under the EU’s Trade, D evelopment and Co-operation Agreement with Sough Africa
liberalisation of access to the South African market for products of EU origin takes place on a longer
timetable than is applied for trade in the opposite direction.  The EU considers that this asymmetricapproach to transition and the maximum 12-year duration of the transitional period for imports into
South Africa is justified on the basis of the significa nt difference between the levels of development of
the two parties.
(3) Bilateral and regional trade relations (WT/TPR/G/102, chapter IV, p. 15, paragraph 60)
Q89 The Report states that in addition to its su pport for the multilateral trading system the EU is
engaged in developing trade relations with other trade partners in the world through a number of
preferential trade regimes, free-trade areas and regional initiatives, and other bilateral relations. In this
regard, Japan wishes to have a detailed explana tion on the "Agreement on maritime transport between
the European Community and its Member States, on the one hand, and the People's Republic of China
on the other hand", which is due to be agreed by the end of 2002.
Concerning the above mentioned agreement, please provide detailed information on whether
it includes more discriminative provisions against possible third parties, compared to the existing
agreements between individual Member States and China.
The mentioned maritime agreement it expected to be signed in December 2002. The
agreement is the first maritime agreement to be concluded at EC level - and builds on the existing
bilateral agreements between China and Member St ates of the EC. The agreement does not - as it
could be understood from the questions - include provisions that discriminate against third parties.Instead, the agreement liberalises international mari time transport services, in particular in the
following areas:
• It allows and specifies how operators of either party are granted the right to establish entities 
to engage in the usual business within this area,
• It sets out the principles of free access to cargo and non-discrimination, and
• It prescribes how further co-operation on maritime issues will take place.WT/TPR/M/102/Add.1
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(4) Preferential trade regimes (WT/TPR/G/ 102, chapter IV, pp.15-16, paragraphs 61-64)
Q90 Japan seeks clarification on the legal status of the various agreements mentioned in
Chapter IV (1)(i), Preferential Trade Regimes, with regard to the WTO agreements.
(a)  Trade preferences for the ACP countries under the Cotonou Agreement are covered by a
waiver granted on 14 November 2001 (WT/MIN(01)/15);
(b) The EU GSP scheme operates under the umbrel la of the relevant provisions of the GATT
Enabling Clause (the Decision on differential and more favourable Treatment, Reciprocity and fuller
Participation of Developing Countries of 28 November 1979, L/4903);
(c) Autonomous Trade Measures in favour of countries of the Western Balkans are covered by
a waiver granted on 8 December 2000 (WT/L/380 and Corr 1)
(d)  the trade regime for products of the Overseas Countries and Territories (OCTs) was
notified under GATT Article XXIV in 1970.  The most recent biennial report on the operation of the
regime was circulated on 13 May 2002 in document WT/REG106/R/B/2, G/L/548.
(5) Free trade areas (WT/TPR/G/102, chapter IV, p. 17, paragraph 66)
Q91 Japan seeks clarification on the legal status of the new agreements with Switzerland on the
movement of natural persons, and air and road tran sport, from the viewpoint of the conformity with
the GATS.
These agreements reflect a process of progressive trade liberalisation between the EC and
one of its regional trading partners.
The bilateral agreement on air transport with Switzerland concerns traffic rights, which are
excluded by the Annex on Air Transport Services. Other elements, such as provisions for
groundhandling services may be subject to GATS disciplines.
As for the bilateral agreements on land trans port and free movement of persons these in part
deal with services covered by GATS. However, their provisions are covered by the relevant Article IIexemptions (MFN exemptions) listed by the EC. In the case of rail transport the agreement also has
provisions on transit and access to networks.
(6) Other bilateral relations (WT/TPR/G/102, chapter IV, p. 18, paragraph 75)
Q92 Referring to paragraph 75 of the Government Report, Japan requests that more detailed
information be provided on the ongoing negotiations with the United States concerning mutual
recognition in the area of services sectors (architects, engineers, insurance), especially its current status,
its future perspective and specific contents.
In the framework of the Transatlantic Econom ic Partnership (TEP), the EC and the USA
agreed at the end of 1999 to explore the possibilities of concluding sectoral mutual recognition in the
areas of professional services (architects and engineers) and insurance. On the substance, initial
discussions have focused on work plans for each sector that would include the details of the issues to
be negotiated and the clear objectives to be met. Formal negotiations have however not started yetand it is not clear when they will.WT/TPR/M/102/Add.1
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III. TRADE POLICIES AND PRACTICES BY MEASURES
1. MEASURES DIRECTLY AFFECTING IMPORTS(1) Safeguard measures (WT/TPR/S/102, chapter III, p. 37, paragraph 37)
Q93 With regard to the provisional safeguard measures imposed by the EU on certain steel
products, Japan has expressed its concern, through consultations between the European Communities
and Japan under Article 12.4 of the Agreement on Safeguards via correspondence, on the possiblespread of safeguard measures for the reason of trade diversion, as well as on the consistency of the
provisional measures taken by the EU with the WTO agreements.  Japan has also been seeking
clarification on the factual and legal issues used by the EU.  An investigation on safeguard measures
is currently being undertaken.  Japan would appreciate receiving an explanation on the current
situation of investigation and on the prospects of procedure, including the decision-making processwithin the EU.
The investigation into the need for definitive safeguard measures in relation to the 21 steel
products under investigation commenced on 28 March 2002. For each of the products concerned,
questionnaires were sent to the Community producers, and to exporting producers, importers andusers who had made themselves known to the Co mmission following publication of the Notice of
Initiation. The level of cooperation enjoyed by the Commission has been extremely high, particularly
in the case of Community producers and exporting producers. Questionnaire responses were received
from 110 exporting producers.
Following receipt of the questionnaire responses, verification visits were carried out by teams
of investigators at the premises of a large number of Community producers.  Verification visits were
also carried out at the premises of exporting pr oducers in a number of countries including Japan,
Korea, China, Brazil, Turkey and Romania, and at the premises of importers. Discussions also took
place with the authorities of a number of countries in which exporting producers are located.
The Notice of Initiation of the proceeding advised interested parties that they were entitled to
apply to be heard by the Commission. A number of pa rties availed themselves of this opportunity and
hearings have been held in Brussels.
The Commission is currently in the process of collating and analysing the large amount of
information which it has received.
Procedure: In relation to the decision making pr ocess to be followed within the EU, there are
two options - Commission decision or Council decision (see Articles 16 and 17 of regn (EC)
No 3285/94 and Articles 15 and 16 of regn (EC) No 519/94). No decision has yet been taken as towhich procedure will be adopted in this case.
Timing: As previously stated, the Commission aims to complete the current investigation by
the end of September 2002 or shortly thereafter.
(2) Product regulations and standards
(i) Machine tools (WT/TPR/S/102, chapter III, p. 38, paragraph 41)
Q94 There does not appear to exist any unified arrangements throughout the EU as a whole to
investigate and prosecute products, including machine tools, which do not carry "CE" mark when
placed on the EU market. Currently, such investigation and prosecution of products are left toindividual Member States.  Japan has been requesting through the Japan-EU Regulatory Reform
Dialogue that the European Commission formulate a law (regulation or directive) to unify measures
of investigation and prosecution in the case of violations against the “CE” marking-related legislation
within the EU.  This would thus give more consideration to the efforts made by companies from Japan
and other countries which abide diligently by the CE marking system.  Please provide EU’s
perspective for establishing such unified arrangement.WT/TPR/M/102/Add.1
Page 43
Market surveillance and other enforcement measures are the responsibility of the Member
States. The Commission has, however, initiated a dialogue with Member States with the aim ofachieving a common level of market surveillance throughout the Union. This issue is one that will be
addressed in the Communication that is planned on the review of the new and global approaches. This
Communication should be adopted in the fourth quarter of 2002
(iii) Automobile standards (WT/TPR/S/102, chapter III, p. 44, paragraph 60)
(a) Standards for the protection of pedestrians
Q95 Japan understands that the EU is independent ly going ahead with establishing standards to
protect the safety of pedestrians.  As such standards have an indirect effect on the grand design of a
vehicle, it is essential to bring them into interna tional harmonization.  Japan therefore requests that the
EU establishes its standards by reflecting therein the study report of the International Harmonized
Research Agenda (IHRA), under the framework of the World Forum for the Harmonization of
Vehicle Regulations (UN/ECE/WP29).
The EU supports the principle of global harmonisation of technical requirements. Indeed, the
EU has actively promoted international harmonisation in the area of pedestrian protection by taking
the initiative and proposing terms of reference fo r a working group within the 1998 UN/ECE Global
Agreement to deal with the further developments in this field. The chairman of this working group
comes from Japan.
At the present time the IHRA Pedestrian Protection working group has not reached its final
conclusions.  Earlier this year (6 months late) at the end of their 5 year mandate, the group presented
a report, but because they had not reached final conclusion, they requested further time, and weregranted another three years to finalise their work.  Their final report is not now expected until 2005,
after which the UN/ECE WG on Pedestrian Protection will have to prepare specific proposals for a
GTR based on that report. Consequently, a proposal can not be expected until 2006, probably, with
agreement/entry into force, possibly in 2008.  Therefore any IHRA/GTR provisions are still 5 or 6
years away.
Nonetheless, there are already many simi larities between the EU provisions under
consideration and those of the IHRA.  Many of the provisions suggested by IHRA are based on
development work carried out by the Europe an Enhanced Vehicle-sa fety Committee (EEVC)
sponsored by the Commission and Member States and used as the basis for the work within the
Commission and the industry.  Furthe rmore the provisions that will be proposed by the Commission
are based on a voluntary commitment by the European, Japanese and Korean car manufacturers who
have been able to participate in the developmen t work within the IHRA working group.  They have no
doubt considered the intermediate results of th e work that have been available from IHRA when
drafting their commitment.
Finally, pedestrian protection is a major road safety issue within the EU.  It would be
unacceptable to delay introduction of provisions while awaiting final conclusions from IHRA and the
development of a GTR.  When IHRA was establ ished in Melbourne, Australia in 1996 the
participating countries stated that participation in the IHRA co-operation"... does not mean ... that the
participating countries have agreed to a moratorium on regulations".   The Commission, therefore,
believes that it is fully within its rights and obligations to bring forward provisions for pedestrianprotection.  Those provisions, though, can in the future be adapted to technical progress to take
account of the final conclusions of the IHRA pedestrian protection working group, and a GTR.
(b) Technical regulations regarding the field of driving view
Q96 Practical discussions for establishing Global Technical Regulations, based on the 1998 Global
Agreement, as part of the efforts to enhance automobile safety and to promote an internationalWT/TPR/M/102/Add.1
Page 44
harmonization of automobile standards, have begun at the World Forum for the Harmonization of
Vehicle Regulations (UN/ECE/WP29).  Japan requests the EU’s positive cooperation whenestablishing Global Technical Regulations in the field of driving view.
The EC would be supportive of Japanese efforts to establish Global Technical Regulations in the
field of driving view. In this context the EC is looking forward to Japan presenting further results
from its current consultation process on his ma tter in the appropriate UN-ECE working group.
(4) Anti-dumping and countervailing meas ures (WT/TPR/S/102, chapter III, p. 49, 
paragraph 79)
Q97 Japan notes that there exist cases where anti-dumping measures were arbitrarily used by the
EU.  For example, in the case of components of  television cameras, the European Commission
initiated an anti-dumping investigation on its own without sufficient evidence, and in the case of
personal fax machines, the EC attempted to expand the definition of the product during the re-
examination.  The area of anti-dumping is an exception to the basic principles of the WTO, having,
for example, a non-discriminatory principle and a principle that any one duty should not exceed thebound rate of a duty, and thus should not be abused for protectionist purposes.  Japan therefore
requests that any future investigation be conducted in a fair and objective manner.
The EC shares Japan's view that the antidum ping instrument should not be abused for
protectionist purposes. However, we take issue with the implied allegation that the proceedings cited by
Japan were not conducted in a fair and objective manner and that measures were imposed
"arbitrarily".  Without going into any detail with regard to individual cases which we view as beinginappropriate in the context of a trade policy review, we affirm that the measures were taken after
thorough investigations which were initiated on the basis of sufficient evidence in line with the
applicable WTO rules and in conformity with EC legislation
Q98 According to the report by the Secretariat, some 40% of anti-dumping investigations are
terminated without measures being taken.  How does EU assess this figure?
For the year 2001, the EU initiated 28 investigations. During the same year, it terminated 12
investigations without imposing measures, i.e. 42,8%. Taken over the last three years (1999, 2000 and
2001), the average of investigations terminated without measures amounts to 46,8%, i.e; 25,8% in1999 (17 terminations against 66 initiations, 71,9% in 2000 (23 terminations against 32 initiations)
and 42,8% in 2001.
Q99 Furthermore, when anti-dumping investigation is initiated, the criteria set forth by the WTO
Anti-Dumping Agreement should be strictly applied. We would appreciate having the EU’s commenton this issue.
We agree with Japan that the provisions of  the WTO Antidumping Agreement with regard to
initiations, as well as all other provisions of this Agreement, should be strictly followed
2. MEASURES DIRECTLY AFFECTING PRODUCTION AND TRADE
(1) Legal framework for businesses (WT/ TPR/S/102, chapter III, p. 52, paragraph 92)
Q100 Japan is of the opinion that the Statute for a European Company (SE), adopted last year,
should admit the establishment of European companies by merger or transformation, not only to
publicly-held companies, but also to those privately- held.  Japan would also like to request the EU to
simplify the tax-related procedures for an SE under the European company law by allowing it to payWT/TPR/M/102/Add.1
Page 45
tax only to the Member State where its headquarters is located, after duducting the profit and loss of
all the subsidiaries and branches which belong to the SE.
At present, the determination of the tax base for corporate taxation is not harmonised in the
EU. Member States can legislate at their wish in this area, provided that their internal legislation
comply with the EU Treaty relevant provisions and principles, with particular regard to non-
discrimination. Only two Directives are at present applicable in the EU with regard to corporate
taxation: Directive 90/434/EEC on the common system  of taxation applicable to mergers, divisions,
transfers of assets and exchanges of shares, and Directive 90/435/EEC on the common system of
taxation applicable in the case of parent companies and subsidiaries of different Member States. Both
directives apply to those companies which are listed in the related annexes, in which the European
Company is not listed. In this respect, the EU is working to ensure that both Directives becomeapplicable to the European Company. Moreover, The Commission strategy for company taxation
presented in 2001 aims in the long-term, amongst others, at simplfying tax-related procedures for
companies, by allowing a consolidated corporate tax base for their EU activities.
(2) Competition policies
Q101 Japan understands that the EU has receiv ed comments from the European Automobile
Manufacturers Association (ACEA) on the new dr aft block-exemption regulation for motor-vehicle
distribution and servicing agreements.  One example is that the new draft regulation will have the
effect of diminishing comforts enjoyed by car buyers, by hampering the appropriate geographical
location of car dealers and garages. The ACEA th erefore requests that automobile manufacturers
should be allowed to control or limit the number and the distribution of service garages designated byautomobile dealers.  Japan would like to have  the response and view of the EU regarding such
requests.
Under EU law, distribution and servicing agreem ents in selective or exclusive distribution
systems are taken to be restrictive and are not considered to be in line with the competition rulesunless they have been "exempted" by the Commission. The Commission may exempt whole categories
of agreements in this manner. Car distributi on and servicing agreements have had their own such
"block exemption" since 1985.
The Commission found in a November 2000 report that the last block exemption,
number 1475/95 (please see our web site at http://europa.eu.int/comm/competition/car_sector/), hadnot had the required effects, and notably had not brought the required benefits to the consumer,
especially as regards the Internal Market and the consumer's right to buy cars in other Member
States. Much of the problem was that the old regulation allowed car manufacturers to give territorial
exclusivity to distributors operating within a selective distribution system; this let them carve up the
Internal Market along national lines.
The replacement for regulation 1475/95, adopted by the Commission on 17 July 2002,
provides that when they appoint car distributors, manufacturers can no longer combine quantitative
selectivity with a territorial element, such as an exclusive territory or a protected location ("location
clause"). This means that if a manufacturer wants to give his distributors an exclusive territory, he
will be able to stop them opening additional outlet s, but will no longer be able to prevent them from
selling cars to independent resellers. If, on the other hand, he wants to stop sales to independent
resellers, he will not be able to use location clauses to prevent his authorised distributors from setting
up additional outlets in areas where other distributors are situated. However, in all cases,
manufacturers will continue to be able to fix a location for a distributor's first outlet, and distributors
will not simply be able to close down this outle t and move elsewhere. This will allow carmakers to
ensure that the density of their networks is maintained.WT/TPR/M/102/Add.1
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As far as authorised repair-only outlets are concerned, the manufacturer will no longer be
allowed to limit the number of such outlets or restrict their location, and an authorised repairer willbe able to set up shop wherever he wishes. By allowing repairers to be authorised by the
manufacturer without having to sell new cars, the Commission has reinforced the density of the
authorised repair network in two ways. Firstly, so me repairers who are currently independent will
choose to qualify as authorised repairers. Secondly, some authorised dealers who have their contracts
terminated when a car manufacturer re-organises his sales network will be able to stay on within the
repair network as authorised repairers. This should ensure that consumers will continue to benefit
from a dense network of repairers.
The Commission has given operators a three-year transition period to adapt to the ban on
location clauses in selective distribution agreements for the sale of new cars. A one-year transition
period applies to the other elements of the reform , including those relating to authorised repairers.
The new rules apply to all distributors, repairers, and car manufacturers operating in
Europe.
The Commission had many fruitful contacts with both JAMA and ACEA during the
consultation period leading to the adoption of the new regime, and also had wide consultations with
consumers and consumer groups.
(3) Intellectual property rights protection
(i) Intellectual property rights protection (WT/TPR/S/102, chapter III, p. 64, 
paragraph 133)
Q102 It is noted that no consensus was reache d in the Council on the Commission's proposal to
create a "Community Patent", a new unitary righ t, including a "Community Intellectual Property
Court" for its enforcement.  Please explain the reason why no consensus was reached and what the
future prospects are for establishing a Community Patent, including a Community Intellectual
Property Court.
Discussions within the Council have so far not been ripe for agreement. The discussions
continue with a view of reaching agreement which must be taken by unanimity.
(iii) Directive on copyright and neighbouring rights (WT/TPR/S/102, chapter III, pp. 67 and
68, paragraphs 145 and 146)
Q103 Japan welcomes the adoption of the Directive on the harmonisation of certain aspects of
copyright and related rights in the information societ y.  It is mentioned that this legislation has the
objective to implement the EU's international obl igations under the WCT and WPPT.  Please explain
the status quo and future prospects of the EU's accession to the WCT and WPPT.
Member states of the EU should implemen t the Directive 2001/29 on the harmonisation of
certain aspects of copyright and related rights in the information society before 22 December 2002.
Since this deadline has not yet been reached, Member States are still in the process of transposing the
provisions of the Directive into national law.
As regards the future prospects concerning the WCT and WPPT treaties, the Community and
its member states has yet to ratify both treaties. The implementation by the member states of the
Directive 2001/29 would enable the ratification. EU  is optimistic that this would happen during 2003.
Q104 Please explain the reason why there is no provis ion in the EU directives regarding the moral
right of performers, which is ensured by an obligation under the WPPT.  Please explain to what extent
each Member State ensures the moral right of performers.WT/TPR/M/102/Add.1
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The moral rights of authors and performers is an area which has not been harmonised at
Community level. The moral rights of rightholders is exercised according to the legislation of theMember States in conformity of their international obligations. Each Member State in order to ratify
the WPPT has to ensure that it provides moral rights for performers.
(Article 3 of the Directive)
Q105 Please provide information on the provisions of domestic law in each Member State with
regard to "the right of making available" under Article 3 of the Directive. If there is no clearprovision, please explain how one can ensure "the ri ght of making available" in each Member State,
and further clarify whether or not these conditions are consistent with the WCT or the WPPT.
Member States of the European Union are still in the process of implementing the Directive
on the harmonisation of certain aspects of copyright and related rights in the information society.Recitals 24 - 26 of the Directive provide interp retative guidance for the implementation of the
Article 3 paragraph 2.
(Article 5, paragraph 1 of the Directive)
Q106 Please provide information on concrete cases exempted from the right of re-production in
accordance with this Article.
Q107 Please provide the meaning in detail of "independent economic significance" in paragraph 1,
Article 5 of the Directive.
Member States of the European Union are still in the process of implementing the Directive
on the harmonisation of certain aspects of copyright and related rights in the information society.
Since the implementation dead line has not yet be en reached nor the Directive been enforced in
practice, there is no case law on the interpretation of individual provisions of the Directive.
Recitals 32 and 33 of the Directive provide interpretative guidance for the implementation of
the article 5 paragraph 1.
(Article 6 of the Directive)
Q108 Please clarify whether or not this Article obliges Member States to regulate both the
circumvention of technological measures and the production or distribution of circumvention
machines or programs.
Q109 Please clarify whether or not this Article applies to the program which enables the
circumvention of technological measures.
Q110 Please explain the meaning of "a limited commercially significant purpose or use other than
to circumvention", mentioned in paragraph 2 (b), Article 6 of the Directive (e.g. please clarifywhether or not this provision applies to copy-guard cancellers including watches).
Q111 Please clarify whether or not this Article obliges Member States to provide adequate legal
protection against the decoding of the scrambling of TV programs. If so, please explain the reason
why such a strict obligation has been set, as it means that the Directive shall pose a stricter obligationon Member States than the obligation of technical measures under Article 11 of the WCT or
Article 18 of the WPPT.WT/TPR/M/102/Add.1
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In general terms, article 6 provides legal protection against the circumvention of
technological measures designed to prevent non-authorised acts and against trade in devices,products or components which are primarily meant for the circumvention. If for example a computer
program were to fulfil the detailed conditions under article 6 paragraph 2, Member States should
provide legal protection against its manufacture, import, distribution, sale, rental, advertisement for
sale or rental, or possession for commercial purposes.
(v) System of copyright registration (WT/TPR/S/102, chapter III, pp. 63-65,
paragraphs 132-137)
Q112 Please provide information on the registration systems of copyrights if such a system has been
enforced in Member States.
Systems for registration of copyrights has not been introduced in the European Union.
IV. DEVELOPMENT IN SELECTED SECTORS
(1) AGRICULTURE: Common agricultural policy (CAP)(WT/TPR/S/102, chapter IV, p. 70, paragraph 5)
Q113 With regard to the mid-term review of th e Common Agriculture Policy (CAP), we understand
that a reform plan, aimed at decoupling direct payments from production and linking payments more
closely to food safety/quality, rural development and environment, is now under discussion.  We
would like to ask the EC what are the pr ospects for discussion on this reform plan.
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
(2) (WT/TPR/S/102, chapter IV, p. 73, paragraph 13)
Q114 As far as new acceding countries are concerned, will all the commitments made by the EC in
the previous and current WTO negotiations be applied to these countries once accepted as members?
If there exist any moratoriums, as indicated in the case of progressivity to agricultural domestic
support, a detailed explanation on the matter would be appreciated.
The EC will respect all its WTO commitments, before and after accession of new Member States.
2. FINANCIAL SERVICES
(WT/TPR/S/102, chapter IV, p. 85, paragraph 65)
Q115 Japan would like to request the EU to introduce a system in which products or services
provided by foreign enterprises, after being approved or licensed by one Member State, are
automatically accepted by other Member States, without any special requirement, or simply with the
requirement of reporting to the relevant authorities. Japan believes that the EU zone can in reality be
regarded as a single financial market with this system.
Japan would also like to request the EU to al low foreign enterprises to complete application
forms for the approval or licensing of their products or services, which can be submitted to the
regulatory authorities in multiple languages and to harmonize the various formats and contents of the
application forms throughout the EU. It’s not only burdensome for foreign enterprises to have to
complete application forms in the relevant languages in each Member State, but it is also an obstacle
for the promotion of business in the EU.  Japan believes that the above-mentioned modification of
procedures would contribute to improving business environment in EU Member States.WT/TPR/M/102/Add.1
Page 49
The EU has to a large extent harmonised the conditions for establishment and operation of
financial services companies in the EU, but has no plans to harmonise the approval or licensingprocedures for financial products or services
(2) (WT/TPR/S/102, chapter IV, p. 86, paragraph 67)
Q116 Does the EU have any plan to introduce a si ngle passport regime for the licensing of branches
of foreign financial institutions?  Please comment on the view that an equal competitive opportunity is
not ensured for foreign financial institutions if the EU proceeds to harmonize or deregulate only
activities of financial institutions established or incorporated with in the EU.  Should it leave the
activities of financial institutions established or incorporated outside the EU to those regulations
provided by the supervisory authorities of each Me mber State, this will result in a comparative
disadvantage for entry for foreign financial institutions with regard to branches.  Please comment on
this.
The EU has no plans to introduce a single pass port regime for the licensing of branches of
foreign financial institutions
(3) (WT/TPR/S/102, chapter IV, p. 86, paragraph 69)
Q117 Do the Council’s regulations of 1971 and 1972 allow the imposition of quantitative
restrictions for compulsory employment-related pension schemes (as considered by social security
schemes)? If such restrictions are allowed, which Member States impose such restrictions, and on
what terms?
Council Regulations 1408/71 and 574/72 have as an objective to protect people who move
from one Member State to another in the field of soci al security. In other words, their aim is to avoid
that people who make use of their rightto free movement, would be pûinished in their social security
rights.
These Regulations are based on ' PRINCIPLES/
1. There shall be no conlicts of law; to this end the Regulations stipulate that a worker is
insured in one Member state only: the State where he works, regardless his/her State of residence.
2. No discrimination based on nationality is allowed.
3. If, in order to be entitled to a benefit, you must prove having been insured for a certain
period, then periods of insurance completed in another Member state must be taken ointo
consideration as well.
4. If you have acquired a pension right (see above point 3), then this pension must be paid out
to you, wherever you reside in the EU.
Contrary to what is sugessted by Japan, these Regulations do not apply to occupational
pension schemes(apart from one exception in only one Member State) They only apply to statutory
schemes. This means that these regulations do not impose any restriction or limitation on
occupational pension shemes
Q118 What are the main aspects of the proposed regulations for a single market on supplementary
pension funds? Is there any possibility that such regulations permit discriminatory treatment on the
management of assets by foreign financial institutions or on foreign financial products?
The internal discussions concerning the supple mentary pension funds are still taking place
between the institutions concerned. They are exp ected to be terminated by next September.WT/TPR/M/102/Add.1
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(4) (WT/TPR/S/102, chapter IV, p. 88, paragraph 73)
Q119 What is the EU’s position on the integration of  non-life and life insurance businesses? If the
proposed Directive approves such integration, does this mean that foreign insurers (including those
establishing a commercial presence through branches) are allowed to conduct both non-life and life
insurance businesses?
The EU is not proposing to integrate life and non-life business.
(5) (WT/TPR/S/102, chapter IV, p. 89, paragraph 74)
Q120 How does the creation of a single market for insurance intermediaries affect the insurance
intermediary markets? Will the establishment of  such regulations result in a comparatively
unfavorable treatment of the activities of branches of foreign insurance intermediaries? Regarding
intermediaries for the cross-border supply of maritime, aviation and transport insurance, will those
intermediaries outside the EU be treated differently from those established with in the EU due to the
different supervisory policies of each Member State?
The proposal concerning a single market for insurance intermediaries will establish the
Single pass port. The conditions for establishment of branches will remain a Member State
competence
(6) (WT/TPR/S/102, chapter IV, p. 90, paragraph 80)
Q121 Are securities (or investment) companies allowed to conduct the management of businesses
for UCITS without establishing a separate company?  Are there no restrictions on investments via
UCITS with regard to foreign securities or bonds?
EU Member States have regulation on both secu rities and investment companies: investment
funds harmonised at European level (so-called UCITS, Directive 85/611/EEC last amended by
Directives 2001/107/EC and 2001/ 108/EC, OJ L 41 of 13.2.2002) and domestic investment funds,
regulation for the latter may be different. This answer refers to the harmonised UCITS types of
investment funds.
Management of businesses for UCITS may only be done by delegation, i.e. the non-UCITS
undertakings obtain a mandate for doing certain activ ities, e.g. like management, from an authorised
UCITS management company, provided they fulfil the requirements for delegation.
There are no investment restrictions for UCITS in the UCITS directive in regard to foreign
securities or bonds. However, as for European securities and bonds, the major part of the UCITS
assets has to be invested in listed securities/bonds or securities/bonds traded on regulated markets.Investments of UCITS in units of non-UCITS inve stment funds are limited to 30%, this applies to
European as well as third-country non-UCITS funds.
4. TELECOMMUNICATIONS
(2) (WT/TPR/S/102, chapter IV, p. 94, paragraph 92 and 94)
Q122 With regard to the "Interconnection Direct ive", please explain how the European Commission
intends to proceed with regard to Member States that do not abide by the requirement that "the
Reference Interconnection Offer shall include a description of the interconnection offerings broken
down into components according to market needs", as mentioned in Article 7-3 of the Interconnection
Directive (Directive 97/33/EC).  In addition, Japan requests the Commission to make it clear that the
"period for interconnection (including access to unbundled interconnection points in local loops)" isWT/TPR/M/102/Add.1
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included in part of the conditions that are to be described in the Reference Interconnection Offer, and
to notice this to all Member States.
Firstly, we check that our Member States transpose the directives into national law; this is
reported on in the annual implementation reports from the Commission; see eg,
http://www.europa.eu.int/information_society/ topics/telecoms/implementation/annual_report/
7report/index_en.htm; in case Member States do not properly transpose and apply the legislationreferred to by Japan, then the Commission will undertake infringement procedures, as described on:
http://www.europa.eu.int/information_society/to pics/telecoms/implementation/infringement/in
dex_en.htm; we can also confirm that Member States are required to ensure interconnection to be
provided in timely fashion as required under the Reference Paper which is part of our commitments
on telecommunications services under the GATS, as requested by Japan in the second part ofquestion 2.WT/TPR/M/102/Add.1
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QUESTIONS FROM THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU,
KINMEN AND MATSU
Subsidy on Agriculture:
(P. 19 paragraph 25)
Q123 Given that the EU has bound and reduced th e Aggregate Measurement of Support (AMS), as
well as the value and volume of subsidized exports, we request that the EU explain its use of AMS
and blue subsidy measures more specifically for agricultural products in terms of their compliancewith WTO regulations. We would like to know how th e EU’s justification on the use of those subsidy
measures.
The EC refers Taiwan to its notifications and related clarifications to the WTO CoA on
domestic support (G/A G/N/EEC/38 27/06/02).
Service trade:
(P. 20 paragraph 27)
Q124 The commitments in Services and List of Article II (MFN) exemptions of EU do not include
Sweden, Finland and Austria.  Please advise if there is any special consideration.  I s there any
possibility to consolidate those three countries’ spec ific commitments in servic es into the EU service
schedule?  In addition, does the EU has any plan to liberalize the audio-visual service?
The fact that Austria, Sweden and Finland have separate schedules and MFN lists is due to
the fact that during the Uruguay Round they were not yet Member States of the EC and therefore
negotiated at the time separately. However, from the 1st January 1995 Austria, Finland and Sweden
acceded to the EC and, as for other EC Member St ates, the negotiations are now carried out by the
European Commission on behalf of the Communities and its Member States. With regard to the
consolidation of the schedules into a single EC-15 schedule, we are giving consideration to the best
way to undertake this.
Regional Trade Agreements
(P. 21 paragraph 2)
Q125 We are concerned over the trade diversion effects of regional trade agreements, particularly in
view of the enlargement of the EU. We recognize the right of Members to enter into bilateral orregional preferential trading arrangements consistent with relevant WTO provisions.  We request that
the EU ensure such arrangements are trade-creating and not trade-distorting to the third parties.
The likely overall economic impact and advan tages/disadvantages of an agreement are
among the factors that the EU will consider when  assessing proposals for any new RTAs. Empirical
evidence tends to support the conclusion that the trade creation effects of RTAs outweigh any trade
diversion where - as in the EU - external MFN tariff protection is relatively low and bilateral trade 
relationships are already well developed.
As regards Enlargement, the EU recognises the potential significance of the accession of possibly as
many as 13 new Member States in the coming years. The net effects of Enlargement should be positivefor third countries, reflecting the stimulus to trade and investment that expansion of the single
European market will bring.  The EU has consistently pursued both regional and global openness in
trade, notably through EU leadership in GATT /WTO.  Enlargement will extend to the candidate
countries this open attitude towards reductions in trade barriers on a multilateral basis. In any event,
the EU will respect all relevant WTO obligations.WT/TPR/M/102/Add.1
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Customs procedures:
(P. 26 paragraph 2)
Q126 We are impressed by the outstanding enforcement statistics that seizures of counterfeited
goods by the EU customs administrations reported 33% and 27% increase in 2000 and 2001
respectively.  We would like to know what border measures have been taken against counterfeit and
pirated goods by the EU customs administrations during the last two years.
Increased accent has been laid on the monotoring of internationl trading routes which is
playing an essential role in protecting the EU market. Moreover, cooperation with the industry
covered by intellectual property has been further strenghtened, which can also be considered as a
most effective weapon.
(P. 26 paragraph 3)
Q127 As a result of technological advances, new products and inventions are entering the global
market at an accelerating pace. To deal with this, it is necessary to increase information transparency
and reduce discrepancies among individual customs territories. We therefore suggest that the EU
publish its binding advance tariff classification rulings on its website.
Binding Tariff Information (BTI) may be based on confidential data, whose disclosure would
be in breach of trade confidentiality on which traders depend to offer accurate and adequate details
of the products under scrutiny. The EC is currently studying the best profile for a public database
containing the non-confidential part of the tariff rulings. The database shall be open to the public as
soon as some major legal and technical issues are solved
Non-agricultural product tariff:
(P. 30 paragraph 11)
Q128 The tariffs of some of the EU’s products, such as trucks, television sets and video and audio
equipment, are higher than those in other develope d countries. In addition, the EU continues to apply
tariff escalation to processed food and textile products. Could the EU provide some clarification as to
the possiblity of reducing such tariffs.
As regards the tariffs referred to by the question, we would like to correct the statement since
for one of the products (trucks) the tariffs that can be found in other developed countries are certainly
higher. Furthermore it would be useful to point out that the rates quoted are the highest tariffs non-
agricultural products coming into the EU have to face, and that they are by far lower than the highesttariffs ("peaks") rates found in other developed countries on other non-agricultural products.  The EU
will not lower tariffs unilaterally. It therefore welcomes the comprehensive mandate for the current
round of multilateral negotiations, which will prevent any member from sheltering specific sectors. As
indicated in its submission to the Market Access Negotiating Group (TN/MA/W/1) the EU is ready for
an ambitious comprehensive approach to the negotiations provided it is matched by equally ambitiouscommitments by other members. Finally, as regards other related products, it should not be forgotten
that the EU has offered duty-free access under the terms and for the products covered by the ITA.WT/TPR/M/102/Add.1
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Value-added tax
(P. 31 paragraph 14)
Q129 In December 2001, the ECOF IN Council endorsed a political agreement on VAT for goods
and services sold through e-commerce, such as games, films, music, software, website hosting and
remote programme maintenance.  According to this new directive, taxation on services or products
provided through electronic commerce should be levied without regard to the locations of thesuppliers.  It is therefore consistent that non-EU suppliers should be required to register for VAT in
the EU Member State of their choice and then, once the transaction is conducted be charged VAT by
that member at the VAT rate applying in the consumer’s country of residence.  The VAT will then be
handed over to the EU country where the consumer resides.  However, overseas suppliers face the
complications which arise from dealing with 15 member states all applying different rates of VAT.The whole process of collecting VAT therefore places a greater compliance cost on overseas
suppliers.  We would suggest that the EU take th ese problems relating to electronic commerce into
consideration when harmonizing VAT among the member states.
Due to the fact that harmonised taxation among EU Member State has not been fully
achieved, we would like to have some indication of EU policy of future harmonisation of taxes,especially VAT.
First of all, it should be mentioned that the e-commerce Directive, to which the question refers,
only deals with supplies of services and not goods. For goods supplied off-line over the internet, they
will be as usual considered as importations in  the EU, and therefore taxation will occur in the
Member State of import.
With regard to on-line services, when they are supplied to taxable persons, there a reverse
charge mechanism is applied, addressing the concern raised by Taiwan.
Finally, with regard to electronically supplied services supplied by non-EU-established business
to non taxable persons (eg individuals) in the EU, non-EU-established traders may profit from a
simplified scheme for fulfilling their VAT obligations: thanks to this scheme, they will be able to
register on line and file declarations on line. Although they will have to charge the VAT of the
Member State where their customers are established, this should not raise any serious difficulties,having regard to the fact that they operate in an automated environment. Moreover, the non-EU-
established trader can always opt to create a fixed establishment in the EU and then be treated as any
other EU-established trader who supplies to EU clients (i.e. he will charge the VAT of the MS where
he has the fixed establishment for supplies to non taxable clients).
Q130 Taxation is far from harmonized among EU countries.  We would like to have some
indication of EU policy as to future harmonization of taxes, especially VAT.
As regards the EU policy, the general EU policy with regard to VAT aims at further
harmonisation, simplification and modernisation of the current EU VAT provisions. However, no
further specific details can be provided at this stage.
Protection of the consumer, the environment or animal welfare
(P. 32 paragraph 17)
Q131 The EU adopted a new instrument for food safety in February 2002 to suspend the
introduction and import jelly confectionary containing the food additive E 425 konjac in the EUmarket. However, konjac has been used as human consumption in Asia for many years and
scientifically proven to be healthy food product. Therefore, could the EU explain why konjac was
treated as a life threatening food product?  Are there any scientific evidence to support that konjac
does not meet the requirement of EU’s food safety standard?WT/TPR/M/102/Add.1
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The Commission suspended the marketing in the EU  of jelly confectionery containing the food
additive konjac (E 425) in March 2002 (Commission Decision 2002/247/EC).
The Commission adopted this measure due to the choking hazard the jelly mini-cups
constitute, especially to children. The consistency of jellies is such that they slip easily and are less
likely to cause the coughing reflex than harder objects. Moreover, konjac forms a very strong gel that
does not melt easily in the mouth and in addition to the consistency, the size and the shape of these
products constitute a risk. A warning label that some manufacturers already include on the product
highlighting the risk for children and the elderly is insufficient to protect children. A Community
measure was necessary as several Member States had already take similar measures whereas some
Member States had not taken any. E 425 konjac was suspended in all jelly confecitionery, as they may
pose the same risk as jelly mini-cups.
Please note, E 425 konjac is authorised for use in foodstuffs in general bu Directive 95/2/EC
on food additives other than colours and sweeteners (with certain restrictions in unprocessed foods
and with a maximum use level). This authorisation has not been changed. The restrictive measure on
the use of E 425 konjac is only directed to the application in jelly confectionery.
Safeguard Measures
(P. 37 paragraph 37)
Q132 We have noted that the EU initiated a safeguard investigation on 21 steel products on 27
March 2002, and took provisional action on the same date on 15 steel products in response to the U.S.
safeguard action on imports of steel, effective on 20 March 2002.  We would be very grateful if the
EU could share its views with us on the following procedural suggestions:
(a) Could the EU place the questionnaires and explanation form for fill-in in the related website 
so that the exporters may have easy access to it?
(b)  Would it be possible that exporters reach EU officials through internet, should the former 
have any questions about those questionnaires?
Questionnaires were despatched to all exporting producers who had made themselves known to
the Commission in connection with the safeguard proceedings between 17 and 19 April 2002, and areply was requested by 10 May 2002. In some cases, extensions were requested to this deadline, and
where justified, a short extension was granted.  On the basis of the responses received, verification
visits were carried out at a number of exporting producers between 27 may and 14 June. The
questionnaires were not available on the Commission’s website, but the Commission takes note of this
suggestion for the future.
Arrangements were, however, made so that interested parties could contact the Commission
officials dealing with the safeguard proceeding using the internet. The e-mail addresses of a number
of the officials concerned with the investigation were provided to exporting producers. (The address
of the Head of Section of the team dealing with the investigation is alain.gerzat@cec.eu.int ).
Chemicals:
(P. 40 paragraph 46)
Q133 In February 2001, the EU adopted a White Paper outlining a new chemical policy known as
"REACH" which stands for registrations, evaluati ons, and authorization of chemicals. The policy
denies access to the EU market of chemical products that are not registered for use or have notreceived the required license from EU authorities. As we feel this policy will disrupt the market and
become a trade restricting measure, we would like the EU to clarify how such policy might be
consistent with WTO obligations. We would also like to be informed of the current legislative status
of this policy.WT/TPR/M/102/Add.1
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The White Paper on the Strategy for a future Chemicals Policy is the Commission position on
what the future regulatory regime for chemicals might look like. The proposal for legislation iscurrently being drafted.
The Commission is well aware of WTO concerns and will not introduce any requirements which
it believes are in conflict with WTO rules.
Regulatory developments GMO
(P. 40 paragraph 47, P. 41 paragraph 49 and 51)
Q134 EU’s new legislation employs a more restrictive procedure, which is to be time-bound, and
requires mandatory labeling. Are there any risk assessment procedures undertaken before adopting
these measures? Is the assessment conducted by a quantitative method? Are there any scientificevidence of supporting mandatory labeling and other relevant regulatory measures? In addition, some
EU member states opposed the newly introduced measure, thus delaying the employment of
traceability on labels. What action will the EU take with to reduce the difference among Member
States? How does the EU verify the content of labeled GMOs? How will the EU tackle the situation
where traders do not label GMOs as mandated or label products with incorrect information? Whatmeasures will be taken against imported GMOs to be placed in the EU market?
EU legislation on GMOs has been in place since the early 1990s and throughout the decade, this
regulatory framework has been further extended and refined, notably by the introduction of sector-
specific legislation.  This legislation has been designed to protect its citizens' health and the
environment while simultaneously creating a unified market for biotechnology.
Directive 90/220/EEC on the deliberate release of genetically modified organisms, covers the
placing on the market for GMOs and includes us e as seed, animal feed and import and processing.
Use of GMOs in food has since May 1997 also required compliance with the Regulation on Novel
Foods and Novel Food Ingredients of 27 January 1997 (Regulation (EC) 258/97).
Directive 2001/18/EC, which replaces Direc tive 90/220/EEC on 17 October 2002, includes the
authorisation procedure for placing products on th e market.  This procedure is founded on a
comprehensive pre-market risk assessment, the principles for which are strenghened under therevised Directive.  This Directive also provides for time-limits for the sections of the authorisation
procedure and increases transparency via public consultation.  Post-market control measures may be
put in place dependent upon the conclusions of the risk assessment.
The European Commission would like to point out that it remains illegal to import GMOs or
genetically modified food into the European Union that have not received authorisation in
accordance with current European Community law.  Operators are, therefore, already obliged to
ensure that unauthorised GMOs or genetically m odified foods are not imported into the European
Community.
The proposed Regulation on GM food and feed di ffers from the current regulatory framework
applicable to genetically modified food and feed mainly in the following respects.
- A centralised Community procedure would be established for the authorisation of 
GM food (under the current system the authorisation procedure is only partly 
centralised). A single scientific evaluation would be undertaken by the European 
Food Safety Authority (under the current system  the scientific evaluation is originally
carried out by one Member State competent body and may have to be complemented by the relevant Scientific Committee(s) esta blished at Community level) followed by a
single authorisation decision by the Community
- The same centralised authorisation procedure would be applied to GM feed.
- A 10 years data exclusivity would be granted for some of the information submitted in
support of applications.WT/TPR/M/102/Add.1
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- Detailed requirements woul be introduced in respect of the particulars and 
documents to be supplied in support of applications (in particular lodging of reference material and methods for detection and identification);
- New transparency provisions, modelled on t hose laid down in Directive 2001/18/EC, 
would allow for public consultation after publication of the opinion of the European 
Food Authority.
- A threshold (maximum 1%) would be intr oduced for the adventitious or technically 
unavoidable presence of unapproved GM material in food and feed which have at 
least received a positive evaluation by the relevant scientific committee of the 
European Community (this was not foreseen in Regulation (EC) No 258/97 on novel 
foods).
- New labelling requirements would enable  consumers to make informed choices and 
avoid also deceptive practices.
The proposal extends the current labelling provisions to all genetically modified food
irrespective of the detectability of DNA or protein. Food that consists of, contains or is produced from
GMOs would have to be labelled as such. Thus all products, which are subject to authorisation under
the proposed Regulation, would henceforth also be subject to mandatory labelling.
The proposal for a Regulation concerning traceability (notified under G/TBT/N/EEC/7 and
G/SPS/N/EEC/150) would ensure that information c oncerning whether a food or a feed is consisting
of, containing or produced from a GMO is available at all stages of the placing on  the market and
should thereby facilitate accurate labelling of the final product and provide the means for inspection
and control of labelling claims.
Already under current European Community law genetically modified foods have to be
labelled even in cases where there are no specific handling, usage, safety, or compositionaldistinctions. The objective is to inform the consumer  about the fact that the food or food ingredient is
genetically modified.
The European Commission is aware that European consumers are demanding clear labelling
whether food contain or are produced from a GMO(s) in order to make an individual choice. The
European Commission believes that providing accu rate information by labelling all food or food
ingredients containing or produced from GMOs will foster confidence in the regulatory system and
social acceptance of the application of biotechnology in agri-food production, and ultimately
facilitates trade in such products.
Labeling
(P. 41 paragraph 51)
Q135 The EU had mandatory labeling requirements for health warnings on tobacco products, and
recently adopted a new policy on tobacco products, in regard to their manufacture, presentation and
sale, including labeling, to be implemented by 30 September 2002. Under this new policy, terms suchas "low tar", "light", "ultra-light", and "mild" ar e all prohibited to be part of the brand. Does this
measure retroactively apply to existing tobacco comp anies, and their brand names? What will be the
justification of this new policy under the TRIPS Agreement in terms of prohibiting those misleading
terms to be part of the brand?
The provision on misleading descriptors in Directive 2001/37/CE, concerning the
manufacture, presentation and sale of tobacco products, states that: "With effect from
30 September 2003, and without prejudice to Article 5(1) [provision on descritpion of tar, nicotine
and CO yields], text, names, trade marks and figurative or other signs suggesting that a particular
tobacco product is less harmful than others shall not be used on the packaging of tobacco products".
The reasons for this provision are stated in recital 27 of the Directive:WT/TPR/M/102/Add.1
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"(27) The use on tobacco product packaging of certain texts, such as "low-tar", "light",
"ultra-light", "mild", names, pictures and figurative or other signs, may mislead the consumer into the
belief that such products are less harmful and give rise to changes in consumption. Smoking
behaviour and addiction, and not only the content of certain substances contained in the product
before consumption, also determine the level of inhaled substances. This fact is not reflected in the
use of such terms and so may undermine the labelli ng requirements set in this Directive. In order to
ensure the proper functioning of the internal market, and given the development of proposedinternational rules, the prohibition of such use s hould be provided for at Community level, giving
sufficient time for introduction of this rule."
The reference to the "proposed international rules" is to the WHO Framework Convention on
Tobacco Control, being currently negotiated both by Member States and by the EU; approval of the
Convention is scheduled by May 2003.
The rule on misleading descriptors allows for a longer introduction period
(30 September 2003 instead of 2002).
As regards the TRIPS agreements, the provision is prima facie compatible both with the
"national treatment" and the "most favoured nation" clauses.
The Court of First instance of the EEC has been  invested of the problem of compatibility of
this provision with trade marks law (Case T-223/01); the Court of First instance still has to pronunce
itself on the admissibility of this challenge, (introduced by the Japan tobacco Association vs. the
Council).
European standard-setting
(P. 44 paragraph 58)
Q136 The report states that the standardization is nearing completion for toy, weighing instruments,
gas appliances, and simple pressure vessels.  We would like to know when the program of
harmonized standards (as mentioned in COM(2001)527 ) will be finalized and the content of the
program.
The content of the program can be found in the workprogram of the European
Standardisation Committee CEN and on the internet (www.cen.org). The business plans of the
respective technical committees provide information on the progess of work in these areas.
Anti-dumping
(P. 49 paragraph79)
Q137 We note that, as of 2001, the EU has 175, second largest number notified anti-dumping
measures in force, only behind that of the United States. Are there any plans to reduce the application
of anti-dumping measures?  More than one third of 175 anti-dumping measures applied to only threemembers and what is the rationale behind this? Is there anything the EU plans to do to improve this
imbalanced situation?
The fact that the EU has as of 2001 175 anti-dumping measures in force just reflects its
position as one of the biggest trading partners of most WTO Members. This in turn leads to anincreased exposure of the Community´s industries to unfair trade practices. The use of AD can not
only be measured in terms of actual numbers of measures in force but has also to be considered in
terms of total value of imports concerned. On this  basis the Community is an extremely moderate user
of the instrument.
In regard to the ruling concerning imports of Cotton-Type Bedlinnen from India we want to
point out that it only concerned this specific case. In deciding to accept applications for special
reviews for all cases where the same method of calculation was applied the Community went beyondWT/TPR/M/102/Add.1
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the ruling. The calculation method is explained in the disclosure to each concerned company so that
they can apply for review when they are qualified. In addition the Community has prepared a claimsform which should help companies to compile the necessary information. This should easily enable
SMEs to successfully apply for such reviews. It has to be underlined that an annual administrative
review would constitute a considerable burden for the exporting producers concerned.
The requirements for the application of interim reviews are in full conformity with WTO
rules. According to these rules  there is no legal time frame. However all applications are generallytreated by the Community´s services as quickly as possible.
The reason for the significant increase in countervailing measures reflects the fact that an
increased number of subsidies not in conformity with WTO rules have been established by WTO
Members. We also note that the total number of CVDs has decreased again from 17 in 2000 to 16 in
2001.
Harmonizing directive on enforcement of IPRs
(P. 64 paragraph 134)
Q138 Please advise us of the major points in the “Harmonizing Directive on Enforcement of IPRs”.
A draft proposal is still under discussion within the Commission. The proposal for a Directive
should be presented by the Commission in the Autumn 2002. It is therefore much too early to give
precise information on the content of this future proposal. However, the Commission described the
outline of its future proposal in its follow -up Communication to the Green Paper on Combating
Counterfeiting and Piracy in the Single Market which was adopted on 30.11.2000 (COM(2000)789
final). The text of this Communication is available at the following address:
http://europa.eu.int/comm/internal_market/en/indprop/piracy/counterf.htm. The aim of this
proposal will be twofold: 1) to harmonise the laws of the EU Member States on the means of
enforcing intellectual property rights, including measures and procedures on searching, seizure and
evidence; and 2) to establish a framework for administrative co-operation and the exchange of
information between the Member States. Furthermor e, this proposal should not in principle contain
provisions harmonising criminal sanctions as such . This issue could be examined by the Commission
in the medium term.
WIPO WCT & WPPT
(P. 66 paragraph 140,141,142)
Q139 Please advise us of the development on the establishment of “Community Patent” and
"Community Intellectual Property Court".  We would also like to be provided with the legislation
status of “computer-implemented inventions”.
A proposal for a Community patent regulati on has been tabled by the Commission on
1 August 2000. After a first reading of the proposal the Council has concentrated discussions on the
main political issues which are: The language regime for the grant of Community patents (extent of
translations into EC languages), the relationsship between the Community patent and the European
Patent Convention (necessary amendments to the EPC), the role of the European Patent Office and
National Patent Offices (suncontracting), financial agreements (distribution of renewal fees) and the
jurisdictional arrangements. No final decision on theses issues has ben taken so far. Discussions in
the Council have shown that a decision can only be  made on all the subjects combined. The Council
therefore will concentrate on what has appeared to be the crucial question from among those listed
above: the jurisdictional arrangements. On this subject the Commision will shortly table a detailed
Commission working document on the pl anned Community patent jurisdiction.WT/TPR/M/102/Add.1
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The proposal for a directive on the patentability of computer-implemented inventions was
adopted by the Commission on 20 February 2002. It seeks to harmonise the way in which inventionswhich make use of computer software are handled under patent law. Perhaps 15% of all patent
applications now fall into this category. The overall approach of the proposal is to follow EPO
practice and jurisprudence, according to which such inventions are patentable provided they make a
so-called "technical contribution".  Non-technical inventions, especially business methods, but also
methods involving simple data processing are not and will not be patentable. This approach resolvessome technical divergences in practice which have arisen between member states and will set limits
on possible future development of jurisprudence, but does not represent any major change overall in
the current legal situation. The legal basis of the proposal requires the agreement of the European
Parliament and of the member states (qualified majority) in a co-decision process. Discussions are
under way in the Council experts group and in Parliamentary committees. A Hearing is planned forearly October in the Parliament’s Legal Affairs and Internal Market Committee. It is hoped that a
common position can be achieved by the November Competitiveness Council.
Security regulation
(P. 71 paragraph 68) Table IV.5
Q140 Please explain the legislative schedule of "Directive on Insider Dealing and Market
Manipulation" and "Takeover Bids Directive", which we understand are expected to be promulgated
in the latter part of 2002 and 2003 respectively.
Regarding the Directive on Insider Dealing and Market Manipulation, discussions are
continuing between the institutions involved. Agreement is expected by the end of the year. Nodecision has yet been taken regarding the Takeover Bids Directive.
Telecommunications
(P. 79 paragraph 92)
Q141 Is "high speed bit stream access" available in Denmark, Germany, the Netherlands, Austria,
Finland and Sweden?
Bitstream access is not required under the LLU Regulation, and does not form part of the
obligatory Reference Unbundling Offer.  However, for the information of the government of Taiwan,
bitstream access is available as a wholesale product to new entrants in all of the countries referred in
their question, with the exception of Germany.  Furthermore, as far as the "speed" or data-rate of this
service is concerned, the government of Taiwan should note that this is determined on the basis of the
application of the principles of non-discrimination and technical feasibility in the context of
commercial negotiations between operators.
(P. 81 paragraph 100)
Q142 Please provide us the reason for increasing the threshold of SMP (significant market power)
from 25% to 40% of the market share?
The SMP threshold has been aligned with th e competiton law concept of dominance, and is
defined as follows: An undertaking shall be deem ed to have significant market power if, either
individually or jointly with others, it enjoys a position equivalent to dominance, that is to say a
position of economic strength affording it the power to behave to an appreciable extent independently
of competitors, customers and ultimately consumers. Note that this is not a simple market share test.WT/TPR/M/102/Add.1
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The reason for the change is to better align sector specific regulation in the telecoms sector with the
general principles of competition(anti-trust) law
E-commerce
(P. 98 paragraph 109)
Q143 Please explain why the "Data Protection Directive" restricts branch offices with their
headquarters situated outside the EU providing information- related services in EU area.
This is a mistake. The paragraph in question refers to the e-commerce directive, not to the
Data Protection directive.
(P. 99 paragraph 112)
Q144 Please describe the status of consultations with third countries on carrying out the Data
Protection Directive, and how the EU judges whether a third country has reached a level of personal
data protection that would enable it to exchange data with EU members.
In the EU, the protection of personal data in ensured by Directive 95/46 of 24th October 1995.
The Directive harmonises Member States’ data protection laws with a view to ensuring the free
movement of personal data within the EU while ensuri ng that the privacy of individuals enjoys a high
level of protection. Without the Directive, different national approaches to data protection would
create barriers within the EU’s internal market  and the free movement of personal information would
be impaired.
The Directive also establishes rules designed to ensure that data is only transferred to non-
EU countries when its continued adequate level of protection is guaranteed.  Without such rules, the
high standards of data protection established by the Directive would quickly be undermined.  One
means by which such “adequacy” can be determined is through a decision by the Commission based
on a country’s domestic law. The effect of such a decision is that data can flow to that third countrywithout any further safeguard being necessary.
In looking at how non-EU countries deal with privacy, the Commission will first compare the
rules with those of the directive and then establish whether the criteria laid down by the group of the
data protection commissioners are met. See to that extent the paper ` Transfers of personal data to
third countries: Applying Articles 25 and 26 of the EU data protection directive´ adopted by the
Article 29 Working Party in July 1998
(http://europa.eu.int/comm/internal_mar ket/en/dataprot/wpdocs/wpdocs_98.htm).
After the decisions on Switzerland, Hungary, US safe harbor and Canada (PIPEDA act), the
European Commission is presently studying the s ituation in a number of other countries which have
approached the EU on this issue.
(P. 101 paragraph 117, 118)
Q145 Collection of value-added tax online will lead to consumers’ privacy disclosure.  Please
advise if there are any precautious measures being adopted.
Any measure taken at European level will have to respect the rest of the existing EC legal
framework, including the EU data protection directive.WT/TPR/M/102/Add.1
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QUESTIONS FROM HONG KONG, CHINA
Tariffs
(WT/TPR/S/102, P.x, Paras. 24-25; WT/TPR/S/102, P. 29-30, Paras. 10-11)
Q146 The EU market for non-agricultural products (except for textiles and clothing products) is
largely open. The simple average applied tariff rate for non-agricultural products is 4.1%.  However,
certain products such as textiles and clothing have much higher tariff rates (the highest simple average
applied tariff rate being 11.9%) and there is evidence of tariff escalation.  Interested to know if the EU
has any plan to reduce the disparity by bringing down the tariff rates of these products.
The Commission disagrees with the qualification "except for textiles and clothing products"
contained in the question. In fact, the EU's average tariff in textiles is 9 % and as such is considerably
lower than those of most other countries, in particular exporting countries.
Future tariff reductions are subject to negotiations and the level of reduction will depend on the
ambitiousness of the approach shown by other Members
Product Regulations and Standards
(WT/TPR/S/102, P. ix, Para. 29; WT/TPR/S/102, P. 37, Para. 39)
Q147 Since the last Review in mid-2000, the EU a nd its Member States have put in place new
regulations for certain products.  Note that certain WTO Members perceive these new productregulations as significant trade barriers.  Where there are no internationally agreed standards, how
does the EU ensure that any measures introduced for health, safety and environment objectives would
not be more trade restrictive than necessary?
If the EU decides to introduce product regul ations, whenever deemed necessary for the
protection of legitimate objectives, and in the absence of international standards, it is commonly
prompted to an approach that is least trade restrictive as possible. The reason for this is twofold. Any
new measures will also have an impact on trade within the EU and all interested stakeholders
(manufacturers, etc.) will influence the decisi on making process to avoid unnecessary trade
restrictions. Trade with third countries is likewise concerned. And the EU parties engaged in tradewith third countries and also comments from third countries will argue against measures that are
more trade restrictive than necessary.
Anti-dumping (AD)
(WT/TPR/S/102, P. x, Para. 27; and P. 49, Para. 79; WT/TPR/G/102, P. 9, Para. 33)
Q148 The number of new AD cases initiated by EU continues to remain at a high level, with 28 new
cases initiated in 2001.  Noting that the EU has underlined in the Government Report its interest in
preventing the misuse of trade defence instruments, we would like to know if the EU has any concrete
plans to introduce additional measures to prevent the abusive use of AD measures.
The EC reaffirms to Hong Kong that it has a strong interest to prevent the misuse of trade
defence instruments. In regard to additional measures to prevent the abusive use of AD measures we
want to point out that already the EU only takes measures after thourough investigations which were
initiated on the basis of sufficient evidence in line with the applicable WTO rules and in conformity
with strict EC legislation. The Community even goes beyond WTO rules in requiring the Community
interest test before measures can be applied. The fact that the average of investigations over the lastthree years which were terminated without measures amounts to 46,8% can be considered as proof ofWT/TPR/M/102/Add.1
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the thoroughness of the EU`s methods and ways of conducting investigations and that everything is
done to prevent abuse. The Community does not apply antidumping measures in an abusive manner.
Financial services
(WT/TPR/S/102, P. 85, Paras. 64 and 66)
Q149 It is noted that the core principle of the “single passport” is for the “host” Member State to
recognize the authorization granted by the “home” Member State.  It is also noted that the
commitments under the Fifth Protocol extend the principle to third-country providers subject to
limitations placed on national treatment.  In fact, the host country may impose requirements on a
financial service provider to achieve imperative objectives (the principle of the “general good”).
Prima facie, it appears that this would have nullified the single passport principle in practice, becausethe establishment by a third-country provider in any host Member State does not guarantee the right
of establishment in the other Member States, which may maintain entirely different sets of
requirements.  We would be glad to have the EU’s  elaboration on how this is operated in practice and
whether there can be a truely single harmonized authorization throughout the Union.
The Community legislation in the area of financial services is the result of harmonisation of
Member States’ national legislation at a minimum level, based upon mutual recognition between the
regulators and the supervisors of the individual Member States. That mutual recognition is the
precondition for the a) the single passport, and b) home country supervisory control. It also implies
that only companies incorporated by a head office or a subsidiary in one of the jurisdictions covered
by mutual recognition will benefit from the right of establishment and the right to supply services on a
cross-border basis.
Third country financial companies that establish as subsidiaries in the Community would
benefit, as would the branches they chose to set up throughout the Community from their EU-based
subsidiary (indirect branching).
Because no harmonisation has taken place at Co mmunity level regarding the establishment
and the operation of branches of third country financial firms in Member States, the latter remain freeto set the conditions for such establishment as well as the operating conditions. The European
Commission has no competence to intervene in the de cisions taken by Member States in this regard.
Directive 2000/12/CE relating to the taking up and the pursuit of business of credit
institutions, contains in its Annex I a list of activities subject to mutual recognition. Activities not
included in the list are thus subject to the rules of the EU Treaty and to national legislation, as areactivities carried out by branches, which are not covered by mutual recognition as stated above.
The mutual recognition in the insurance sector for instance, covers classes of insurance, but
not individual products. The latter is a matter of contract between the insurance company and the
policy holder. The European Community has no intentio n of intervening in this  contractual freedom.
Finally, the implementation of the Financial Services Action Plan by 2005 will greatly
enhance the opportunities for financial services companies in the Community, to take full advantage
of a truly internal market.
Telecommunications
(WT/TPR/S/102, P.95, Paras. 96 and 97)
Q150 It is glad to note that there is the new general authorization regime designed to replace the
existing individual licences so as to address the s hortcomings in the existing regime.  However, it is
admitted that in practice there is no such a general approach to authorizing market entry for
communication service providers, but a patchwork of 15 national regimes which themselves are
widely divergent in their basic approach and specific detail.  We would be interested to know if there
is any follow-up action to address the said problem.WT/TPR/M/102/Add.1
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The new Authorisation Directive will have been tranposed into national law by 25 July 2003;
it aims exactly to implement an internal market in electronic communications networks and services
through the harmonisation and simplification of authorisation rules and conditions in order to
facilitate their provision throughout the Community;this new regime will therefore replace the
existing 15 national regimes, which Hong Kong re fers to, by a new simpler and common regime
which will ensure that service providers across the European Union will not be required to supply
different information to member states' authorities in order to obtain the required authorisation toprovide services to the public.WT/TPR/M/102/Add.1
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QUESTIONS FROM AUSTRALIA
Preferential trade arrangements
Q151 We note that the EU imports from only nine non-EU WTO Members are subject to
exclusively MFN treatment in all sectors (Secretariat report, page17, paragraph 19).  How does the
EU balance its commitment to the WTO trading sy stem and the Doha Round negotiations with its
extensive network of preferential and regional trade arrangements?
The central plank of the EU’s trade policy is its support for the open, rules-based multilateral
trading system, which is based on WTO.  The EU ’s strong commitment to a multilateral approach to
trade liberalisation and rule-making has been very evident during the period under review, as the EUhas been in the forefront of efforts to launch a new Round of multilateral trade negotiations, the
comprehensive agenda for which offers benefits to all WTO Members.
WTO rules recognise that regional trade agreements (RTAs) can make a positive contribution
to the development of trade.  RTAs can also provide the basis for much more far-reaching trade
liberalisation, regulatory initiatives and elimination of non-tariff barriers to trade than have yet beenpossible within the WTO, where decisions are taken by consensus within the membership (144
Members and steadily rising). At the same time, the relevant WTO rules establish a multilateral
discipline on RTAs and the EU always negotiates its regional agreements to be compatible with those
rules. The EU also recognises that differences of view among WTO Members exist as to how the
relevant WTO rules and procedures should be interpreted and applied and accordingly welcomes the
inclusion of this wider issue within the negotiating agenda of the DDA.
In relation to the statement in the Secretariat report that imports into the EU from nine WTO
Members are subject to exclusively MFN treatment in all sectors, it should be noted - as indeed has
been pointed out by the EU in previous TPRM exerc ises - that many of the countries benefiting from
preferential access to the Community market do so on a non-reciprocal basis, for example under the
GSP.  EU exporters to these countries are subject to MFN market access conditions, which are
generally only liable to be improved as a result of multilateral negotiation.
Q152 In the past, have such preferential arrangements resulted in a substantial expansion of exports
by the EU’s developing country partners?
With regard to preferences for ACP products under the Lome Conventions, the Commission
and the ACP States have analysed the effects of the generous preferences provided on ACP exports.
While the Lome preferences have resulted in a substantial expansion of ACP exports to the EU for
some products and for some countries, they have not been sufficient to maintain the ACP share of the
EU market overall. Of course, it cannot be known what would have happened to the ACP market
share in the absence of preferences.In general it has been concluded that trade preferences are not anautomatic engine for trade growth but rather offer opportunities. The extent to which such
opportunities can be seized depends on a variety of factors related among other things to the
production, supply and trading capacity of the beneficiary countries, their trade and investment
policies, their capacity to handle issues related to trade etc. This is why the ACP-EU Partnership
Agreement signed in Cotonou provides for Economic Partnership Agreements to address these issues
in a comprehensive way.
Q153 A recent UNCTAD quantitative assessment of the impact of the EU’s "Everything but Arms"
initiative found that most of the benefits to least developed countries would arise from greater
preferential access for sugar and rice.  How does the EU explain its decision to postpone full
implementation of tariff cuts for these products under the agreement until September 2009 ?WT/TPR/M/102/Add.1
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It should be recalled that the EC was the first to introduce such a scheme and only one other
WTO Member (New-Zealand) has so far followed our example. Regarding sugar and rice the EC isalready a major importer from developing countr ies including the LDCs. The phasing-in of the
benefits for sugar and rice were necessary in order to allow for the necessary adaptations of the EC
domestic provisions. Unfortunately, it is too soon to evaluate benefits of such an initiative.
Q154 To what extent have least developed countries fully used the preferences on offer under the
"Everything but Arms" initiative?
Either the beneficiary countries have "fully" used the preferences or "to a certain extend". On
the other hand, as there are no quotas, beneficiariy countries are entitled to make use of the
preferences without any limits. Total imports fr om LDCs in 2001 were 13,4 billion €, eligibles for
preferences (other than MFN 0 % and without sugar, rice, bananas and arms) were 6,4 billion €,
preferential were 2 billion €. The utilization rate thus was 32,2%.
Animal welfare
Q155 The EU has identified animal welfare as a non-trade issue that needs to be addressed by the
WTO.  What could the WTO do that national governments cannot already do to respond to the animal
welfare concerns of their domestic constituents?
Animal welfare, which is an increasing societal goal in Europe as in other countries, entails
additional costs that may justify legitimate comp ensation for farmers. The EC propose different
options to address such a non-trade concern issue: 1) the development of multilateral agreements, 2)appropriate labelling rules, and 3) exemption of the compensation of additional costs or income
foregone to meet animal welfare standards, from reduction commitments. All of these options are
cumulatif and not exclusive. It should be discussed in the WTO.
GMO traceability and labelling (G/SPS/N/EEC/149 and G/TBT/EU/6 refer)
Q156 We note that the Scientific Committee of the European Commission reported in 2001 that
there was no scientific evidence of GMO food and feed posing any greater risk to human health than
their conventional counterparts.  In the absence of an identifiable risk to human health, how does the
EU’s proposed “traceability” system meet SPS requirements?
Regulation (EC) No 178/2002 (O.J. No. L 31/1 of 1 February 2002) laying down the
general principles and requirements of food law (General Food Law), establishing theEuropean Food Safety Authority and laying dow n procedures in matters of food safety
provides in terms of traceab ility that all food and feed busin ess operators must have systems
in place to identify from whom they have recei ved a food or feed and to whom they have sold
a food or feed (one step back and one step forward).
This is due to the fact that experience has  shown that the functioning of the market in
food and feed can be jeopardised where it is im possible to trace food and feed. The European
Community therefore deems it necessary to establish a comprehensive system of traceabilityof all food and feed within food and feed businesses so that targeted and accurate
withdrawals can be undertaken or informati on given to consumers or control officials,
thereby avoiding the potential for unnecessary wi der disruption in the event of food safety
problems.WT/TPR/M/102/Add.1
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However, traceability provisions in curre nt European Community law governing food
and feed and in the General Food Law do not specifically address tr aceability of products
produced from GMOs.
The concept of traceability  specifically for GMOs was introduced into European
Community law for the first time in Direc tive 2001/18/EC (O.J. No L 106/1 of 17 April 2002)
on the deliberate release of GMOs into the environment in so far as Article 4(6) requires thatMember States shall ensure traceability at all stages of the placing on the market of GMOs.
The retro-active tracking of the movement  of GMOs and food and feed produced from
GMOs through the production and distribution c hains will be fac ilitated by traceability
requirements based on transmission and retention of  relevant information for such products,
at all stages of their placing on the market. Such a traceability "system" facilitates
• withdrawal of products should an unforeseen risk to human health, animal health or 
the environment be established;
• monitoring of potential environmental effects;
• accurate labelling, including control and verification of labelling claims.
The objectives for traceability of GMOs  and products produced from GMOs are not
identical and therefore the specified informati on to be transmitted and retained differs for
each. This Proposal provides for the traceab ility of individual GMOs within a product on the
basis of authorised transformation events.
Traceability to facilitate withdrawals and environmental monitoring of GMOs will,
therefore, require that the specific iden tity of a GMO and its associated traits and
characteristics c an be established.
It is essential that the spec ific identity of GMOs that are to be intentionally introduced
into the environment for cultivation can be established.  This is because these productscontain ‘viable’ GMOs that are capable of reproduction and di ssemination.  In this context,
the Proposal requires that operators have to specify exactly the identity of the GMOs
contained in the products and transmit this in formation to the operator receiving the product.
Specific identity is provided for by use of  unique codes assigned to individual GMOs.
Transmission and retention of information that a food or feed is produced from
GMOs throughout the production and distribution c hain would facilitate labelling of the final
product for operators under the current Eur opean Community food labelling scheme. It
would also provide the means for inspection and control of compliance with current labelling
provisions for GM foods and redu ce reliance on detection methodology.
It should be clarified that the facilitation of  accurate labelling is  generally not linked
to safety, but provides an improvement in the fairness and transparency of transactions. Itwill thereby facilitate the task of operators who must comply with regulatory or commercialrequirements on the part of their customers,  such as labelling of the final product.
The European Commission believes that the proposed requirements will enhance
transparency and facilitate the implementation of measures, where appropriate, to ensuresafety throughout the food and feed chain, contri buting also to restore users and consumers
confidence in the application of gene  technology in the agro-food sector.
Q157 Has the EU conducted a science-based risk assessment or based its measure on an
international standard?  If so, can the EU provide us with a copy?
The information requirements for the identific ation of individual GMOs closely align
with those provided for under the Cart agena Biosafety Protocol with regard toWT/TPR/M/102/Add.1
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transboundary movements.  The European Commission considers that this is of significant
importance if a harmonised and consistent approach is to be achieved for trade with third
countries, particularly where bulk shipments are concerned.
The objectives of the Proposal in respect to GMOs for direct use in food, feed or
processing and food and feed products produced from GMOs, notably facilitatingwithdrawals and accurate labelling of food are currently discussed in several committees of
Codex Alimentarius. The committees concerned are the Codex General Committee, theCodex Committee on Food Import and Export In spection and Certification Systems and the
Codex Committee on Food Labelling.
Q158 Can the EU provide a scientific or other explanation behind its proposal to discriminate
between foods produced from GMOs (including highly refined oils and sugars that have no traces of
modified DNA or protein) and foods produced with GM enzymes (eg enzyme processing aids used in
the production of many cheeses and wines)?  If not, this suggests the measure is not based on aconcern about human health.
Enzymes, as such, are not excluded from the scope of the provisions of the Proposal.
Enzymes are used in food production either as additives, or as processing aids. Additives, including
enzymes used as food additives, are food ingred ients, i.e. food under European Community law and
therefore subject to the provisions of the Propos al. Processing aids (i.e. materials used during
processing but not present in the finished product), including enzymes used as processing aids, arenot food ingredients, i.e. they are not
 food under European Community law; they are therefore not
subject to the provisions of the Proposal.
The European Commission would like to stress that the Proposal is not, in this respect, in any
way different from the current legal situation as it results from the application of Regulation (EC) No
258/97, which has never let to any concern in this respect. However, the European Commission hasalready announced to the European Parliament that it is considering bringing forward new
legislation on enzymes
Q159 At the first reading of the GM proposals in late June 2002, the European Parliament insisted
that each GMO present in a commodity shipment mu st be named specifically with a unique code,
rather than being able to list the GMOs that the shipment "may contain" where the product is destined
for use as food, feed or processing.  This debate is similar to the position being pursued by the EU in
the Biosafety Protocol negotiations in respect of commodity shipments.  Noting that the EU advised
the European Parliament on 3 July 2002 that these requirements "will put significant obstacles in the
way of the practical implementation of the legislation and hamper international trade", can the EUexplain how these requirements will be implemented in a manner consistent with WTO rules?
In terms of the information to be transmitted to ensure, traceability, it is important to
recognise that the objectives of traceability for GMOs are not identical to those for products
produced from GMOs.  It is essential that the specific identity of GMOs to be intentionally introducedinto the environment for cu ltivation can be established.  This is because these products contain ‘live’
GMOs that are capable of reproduction and disse mination.  Therefore the Proposal requires that
operators specify exactly the identity of the GMOs contained in the products.
Conversely, the potential risk to the envir onment from products containing GMOs for direct
use in food, feed or processing will be limited as they are not intended for cultivation.  The
Commission, therefore, considers it both appropr iate and adequate that products, including bulk
shipments, containing GMOs for food, feed and processing are accompanied by documentationstating this use, with a list of unique codes for th e GMOs that the product or shipment may contain.  WT/TPR/M/102/Add.1
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The Commission Proposal reflects this requirement via a specific derogation for such GMOs
and the Commission considers that it is consistent with the provisions of the Biosafety Protocol.
The Parliament adopted, at its first reading, amendments that removed the derogation and
also introduced the requirement for unique codes to be transmitted for the GMOs from which
products are produced.  The Commission rejected acceptance of these amendments in the debate
prior to the plenary vote in Parliament on 3 July 2002.
Q160 When does the Commission intend to respond to comments made by Member governments to
its SPS and TBT notifications?
The response has been transmitted mid-July.
Q161 Can the EU provide an estimate of the co sts involved in developing, maintaining and
enforcing the proposed system?
In the explanatory memorandum to the Proposal the European Commission stated that it is
difficult to estimate the costs of introducing traceability specifically for GMOs and products producedfrom GMOs. This view is shared by the United States Department of Agriculture (USDA) who in a
recent article stated that “estimating the magnitude of the costs of identity preservation, tracing, and
labelling is complex and subject to varying assumptions” (see Agricultural Outlook/January-
February 2002).
The European Commission considers that the transmission and retention of information can
largely be incorporated into existing (documentary) systems for transactions and as such should not
imply significant extra costs for operators and consum ers. Information with respect to the supplier,
customer, price, and transaction date as well as the nature, source, contents and amount of the
product already accompanies the majority of transactions.
For operators supplying food derived from GMOs to the market, traceability only implies that
operators must inform the next operator in the chain that the food, feed or food/feed ingredient is
derived from GMOs and retain that document. This is neither particularly burdensome nor costly andit does not entail segregation.
Aggregated costs, if any, will be passed on to the consumer and the labelling of GM foods
ensures that consumer demands will ultimately dri ve the market in the direction of their preferences
also taking into account the price of the food.
Traceability and systematic labelling will promote transparency in the market place and the
freedom of choice for consumers, as well as, leaving it to the market forces to decide the fate of the
different products.
The Proposal foresees that transmission and retention of information as a means to facilitate
traceability will even limit the need for sampling a nd testing of products to confirm their identity at
every stage of the placing on the market. This would result in a reduction in the costs for companiesto meet the current labelling criteria in European Community law particularly for retailers.
Q162 Has the EU considered alternative, less trade restrictive mechanisms?
The Commission has discussed various options  with EU Member States and stakeholders
(discussion paper available on http://europa.eu.i nt/comm/food/fs/gmo/gmo_index_en.html) .
The proposed approach was chosen for the following reasons:
• A non-harmonised approach resulting in the establishment of different traceability 
requirements in Member States may hinder the free movement of products, creating conditions of unequal and unfair competition.  The costs of such an approach are difficult to 
estimate but would most likely result in much higher costs for all operators.WT/TPR/M/102/Add.1
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• The Proposal foresees that transmission and retention of information as a means to facilitate 
traceability will limit the need for sampling and testing of products to confirm their identity at
every stage of the placing on the market. Current experience with detection methods demonstrates that testing raw ingredients is mu ch more simple and cost-effective than testing 
the final products on the supermarket shelves.
• Weighing the potential costs of traceability against the potential costs of no traceability 
system it was concluded that the establishment of effective traceability requirements could 
prevent excessive economic losses or brand damage in case an unforeseen risk to human 
health or the environment arises.The recent case in the United States, where a genetically modified maize variety approved only for use in animal feed entered the food chain and the 
subsequent need for urgent recall of products from the market, has clearly demonstrated the 
usefulness of a traceability system.
Although voluntary traceability systems can also  be useful, mandatory ones are more likely to
be followed in a consistent way by all operators in the production and distribution chain, which canalso be instrumental in helping prevent such problems arising in the first place, thereby avoiding
potential huge costs for the companies involved and for public authorities.
Q163 How does the EU intend to address the important practical issues of inability to detect traces
of novel DNA and/or protein in highly refined f oods, opening the way for fraud and difficulties in
enforcing compliance, in implementing its measure?
The European Commission would certainly acknowledge that enforcement of traceability
provisions is more difficult when it is not possible to verify the truthfulness of claims through
analytical methods.
Control based on paper documentation is not new, but has existed for many years. For
instance Article 4.5 of the Codex Standard for Food Labelling provides that the country of origin of
the food shall be declared if its omission would mislead or deceive the consumer. Country of origin
labelling claims can in most cases not be verified through analytical methods, but is verified through
paper-based traceability.
According to a paper (CX/FICS 02/2 of January 2002) prepared by the Australian Secretariat
of the Codex Committee on Food Import ad Ex port Inspection and certification systems “the
application of traceability “to ensure fair practices in the food trade” is probably most directly linked
to the first of the General Principles set down in the General Standard for Labelling of Pre-packaged
Foods which reads: “Pre-packaged food shall not be described or presented on any label or in any
labelling in a manner that is false, misleading or is likely to create an erroneous impression
regarding its character in any respect”.  This application is also expressed in the Guidelines for theProduction, Processing, Labelling and Marketing of Or ganically Produced Foods, the aims of which
include “to protect consumers against deception a nd fraud in the market place and unsubstantiated
product claims”.
In other words paper-based traceability can be and is applied to ensure fair practices in the
food trade, to provide relevant information and to protect consumers against deception and fraud.
For instance, origin labelling and dolphin safe  tuna labelling are implemented and controlled
on the basis of paper-based traceability.
All legislation can potentially lead to fraudulent practices, however fraudulent practices do
not necessarily lead to distrust in regulatory regimes, but rather in the operators who commit fraud.
Q164 How do the proposed regulations contained in Notification G/SPS/N/EEC/149 take account of
the requirements of the Biosafety Protocol "as regards importer obligations and notification"?
The proposed Regulation has taken into account Article 11.4 of the Biosafety Protocol which
determines that “ a Party may take a decision on the import of living modified organisms intended forWT/TPR/M/102/Add.1
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direct use as food or feed or processing under it s domestic regulatory framework that is consistent
with the objective of this Protocol”.
As regards labelling, the Biosafety Protocol covers the issue of advanced information
agreement between parties to protect biological diversity, but does not address labelling of products
containing or produced from GMOs or LMOs fo r the purpose of information the consumer or
facilitating consumer choice.
Biosafety Protocol
Q165 Australia notes that the Commission's Trade Directorate took a case to the European Court of
Justice in 2001 concerning shared competence of the Biosafety Protocol, because of concerns that EU
Member States may use the Protocol against the trade interests of the EU and the WTO.  That casewas lost by the Trade Directorate.  The EU announced its ratification of the Biosafety Protocol in
June 2002, and Member States are in the process of ratifying.  Can the EU assure Australia that the
EU and its Member States will implement the Protocol in a way that is consistent with WTO rules,
including the need to base import decisions on scientific risk analyses?
The Commission recently adopted a Proposal to implement the provisions of the Biosafety
Protocol into Community law.  This Propos al aims to ensure a harmonised approach to
implementation in the European Union and consistency with WTO rules were taken into account
during its drafting.  The Proposal is currently under discussion in the European Parliament and with
the Member States.
European Food Safety Authority
Q166 How will EFSA interact with Member State agencies?
The EFSA will develop close working links with the national food administrations and where
they exist with national food agencies across the European Community. It will work through theprinciples of partnership and collaboration and form networks of scientific and technical
organisations. The EFSA will work closely with the heads of national agencies or their scientific
directors to build such collaboration and sharing of scientific data and information. The Advisory
Forum which is one of the components of the EFSA will be instrumental in building this
collaboration.
Q167 How will overall duplication be avoided?
The EFSA is not there to prevent scientists in the different member states from work in the
same field indeed this should be encouraged Ho wever, the EFSA networking system should help to
avoid unnecessary duplication since an efficient sharing of informatio n between EFSA and the
Member states will be in place ..
Q168 How will disagreements be dealt with, should they arise?
Scientific debate and differences in opinion are part of the normal scientific process.
However the EFSA networking mechanisms will ensure that available information on food risks is
collected, analysed and made commonly available. The sharing of informat ion and networking will
certainly minimise differences in scientific appreciation.
If however disagreement arise on scientific matter which are causing serious concern the
EFSA has a mechanism to bring together the different scientists and explore the reasons for the
different views. Sometimes this may be due to di fferent data or interpretation of the same data andWT/TPR/M/102/Add.1
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discussion can sometimes lead to a shared understanding. If however the scientists do not come to a
common understanding and there is still room for disagreement, the EFSA will issue a reportexplaining the disagreement, the source of this and if further work is needed to come to an agreed
conclusion. One of the mission of the Advisory Forum will be to facilitate this kind of co-operation.
but  the EFSA will not be the arbiter of scientific views.
Q169 How will separation of risk assessment and risk management functions between EFSA and
the Commission and Parliament lead to sound science based decision-making and not to a diminution
of the science?
On the contrary the EFSA will be integral to the development of scientific data and opinions
on which the European Food law will be based. Regulation 178/2002/EC laying down the generalprinciples of food law establishes the principle that European Food law will follow risk analysis
principles, and in particular will be based on the scientific risk assessments and opinions expressed
by the European Food Safety Authority. One of the reasons for establishing the EFSA is to ensure that
there can be substantial emphasis given to scientific debate and that opinions can be developed by an
independent organisation which is not influenced by political or other subjective elements. The riskmanagers will then need to consider their actions in the light of the independent scientific advice.
Domestic regulation
Q170 How does the EU balance its need for domestic regulatory reform, including the need to
respond to particular consumer concerns, with its commitment to the multilateral trading system and
without introducing measures which unnecessarily restrict international trade?
The EC considers that there is no contradiction between NTCs and further liberalisation.
Moreover, it is no intention of the EC to use NT Cs in a protectionist view. The Doha declaration
states that the Non-Trade Concerns (NTCs) reflec ted in the negotiating proposals will be taken into
account in the negotiations.
Agriculture
Market access
Q171 The CAP mid-term review proposal gives li ttle indication that the EU is interested in
improvements in market access for agricultural products.  If the mid-term review proposal is intended
to be the EU’s blueprint for negotiations, how doe s the EU intend to fulfil the commitment made in
the Doha Declaration to negotiate “substantial improvements in market access”? Over the past three
years the EU has regularly underfilled its quotas on a large range of agricultural products.  This has
been brought to the attention of the EU by various  WTO members in every session of the COA.  How
does the EU plan to rectify this?
As MTR is a proposal from Commission and not EC measures, it is not appropriate to
respond in this context. As regards TRQs, the EC has already provided all the necessary information
on licensing and other import requirements on agricultural products to the WTO CoA.
Export subsidies
Q172 The EU has agreed to negotiations aimed at phasing out export subsidies.  We note the CAP
mid-term review proposal makes a direct link between genuine cuts in surpluses and the resulting
reduced need for export subsidies.  What is the EU’s policy direction on this? What are the export
volumes and levels of export subsidy provided in 2001 for alcohol and incorporated products, milkWT/TPR/M/102/Add.1
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and milk products, beef and veal, pigmeat, eggs, poultry meat, sugar and related products, wine,
cereals, fruit and vegetables and processed fruit and vegetables?
On export subsidies, the EC is clear, we say that we are ready to negotiate further reductions
on the conditions that all forms of export subsidisation will be disciplined. Figures related to the
2000/2001 campaign have been submitted to th e WTO and are available under notification
G/AG/N/EEC/36.  The Commission of the European Communities is now working on the preparation
of the notification related to the campaign 2001/2002. As soon as the figures are available, the EC
would submit to the WTO a new notification on exports subsisides.
Hormonal growth promotants
Q173 In relation to the use of hormones as growth promotants in cattle, when does the EU expect to
modify the relevant Directive to bring EU legislation into compliance with the WTO DSB ruling?
A proposal to modify the relevant directive has been introduced in the decision making process
of the European Community. It is expected that it will be adopted before the end of 2002.
Dairy
Q174 The Secretariat report (page 76, paragraph 28) not es that the Court of Auditors found that the
EU’s milk quota system sets the quota level too high in relation to demand, leading to structural
surpluses which are then sold on world markets through utilisation of export subsidies.  As Agenda
2000 already provides for an increase in dairy quotas from 2005 and milk surpluses are expected torise further following EU enlargement, what steps does the EU plan to take to address this distortion
to world trade?
The Commission presents four options without indicative preference and it would have to be
discussed by the Member States in the following months. Anticipation of Agenda 2000 dairy sectorreform is not included in these options. Overall,  as Ministers have not adopted MTR proposal, it is
not appropriate to be discussed in this context.
Environment
Q175 How will the EU ensure consistency across Member States in the implementation of
environmental liability regulations?  If this coordination and consistency is not possible, how will the
EU manage the negative impacts on trade in goods?
Once the proposal is adopted [proposal for a Directive of the European Parliament and of
the Council on environmental liability with regard to the prevention and remedying of environmental
damage - COM(2002) 17 final of 23 January 2002 (OJ C 151 E, 25.6.2002, p. 132)], environmental
liability will be regulated within the EU through a Dire ctive, i.e. an instrument that is binding, as to
the result to be achieved, upon each Member State to which it is addressed while leaving to the
national authorities the choice of form and methods to achieve the prescribed result.
The Commission proposed to adopt this new legi slation on the basis of Article 175 of the EC
Treaty, because of its environmental objective. This means that Member States may, where
appropriate, rely on Article 176 of the EC Treaty, which allows Member States to maintain or
introduce more stringent protective measures, provided that they are compatible with the EC Treaty.
In any case, Article 18 of the proposal explicitly confirms the right of Member States to maintain or
adopt more stringent provisions in relation to the prevention and remedying of environmental
damage.WT/TPR/M/102/Add.1
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The European Court of Justice has jurisdiction to give preliminary rulings concerning the
interpretation of the future Directive to ensure its uniform application throughout the Union.
Should any Member State fail to implement and enfo rce the future Directive, insofar as the
minimum requirements established therein would not be complied with, the review procedures
provided for in the Directive could be used at  national level, while the Commission may lodge an
action before the European Court of Justice against the Member State concerned for failure to fulfil
its obligations under the Directive.
Conversely, the Commission may not bring a case before the European Court of Justice when
a Member State fails to ensure a proper enforcement of the more stringent provisions it has adopted
on an unilateral basis.
It follows from the above that, from a strict legal viewpoint, no  uniform implementation of the
future Directive on environmental liability may be ensured. However, this is only the case for morestringent provisions - the Directive would ensure, as a minimum requirement, that the Polluter Pays
Principle is both applied and enforced. In particu lar, any damage to the environment would need to
be remedied through restoration of the damaged site and/or additional improvements to the
environment. It can therefore be said that the future Directive should be a major improvement in
comparison with the current situation, where some operators could derive an economic advantagefrom the absence of liability for purely ecologi cal damage. In other words, the common basis that
should result from the adoption of the future Directive would be to remove any real risk of distortion.
In addition, it does not seem that the issue of th e uniform application of the future Directive
on environmental liability could have any noticea ble impact on international trade in goods, as
evidenced by the fact that diverging national liability laws exist does not seem to have a noticeable
adverse impact on international trade in goods. It should be noted in that respect that the proposal
exempt from its scope damage caused by incidents regulated by relevant international conventions.
Geographical indications
Q176 How many geographical indications are protected in the EU for: EU member state wine
products?
Around 4200 geographical indications.EU member state spirit products?
Some 204 geographical indications.
EU member state products other than wines and spirits?
Some 570.
Non-EU WTO member wine products?
EU provides TRIPs +, “ex officio” type of protection to a “few hundred” of geographical
indications recognized as such in South Africa, Australia, Chile and Switzerland. (See Annex of thesebilateral agreements.). All third country GIs on wines and spirits have access to the level of
protection that Article 23 of the TRIPs Agreemen t prescribes that must be made available to
“interested parties” (e.g., right-holders of geogr aphical indications) of any WTO member. Such level
and efficient enforcement is fully available through our court procedures via Regulation 1493/99 and
is left to right-holders. Regulation 1493/99 provides with legal grounds to any WTO member on any
GI (be it for a third country or from the EU) to invoke that “the description and presentation of the
products (…), and any form of advertising for such products, must not be incorrect  (…) even if theWT/TPR/M/102/Add.1
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information is used in translation or with a reference to the actual provenance or with additions such
as "kind", "type", "style", "imitation", "brand"  or the like.”2  Consequently, in the EC, any WTO GI
right-holder can invoke this provision before any court or tribunal and effectively protect its GI.
Regulation 1493/99 applies to all wines, be them EU  or third country wines, and, under EU law, is
directly applicable by all national courts and tribunals. As wines in the EU cannot be used in the
course of trade unless in conformity with Regulation 1493/99, the purpose of Article 23.1 of the TRIPs
Agreement, that is, to provide the legal means to forbid the use of GI on wine for another wine, is fullymet.
In addition, Regulation 1493/99 provides that “Member States shall take all necessary
measures to enable interested parties to prevent, on the terms set out in Articles 23 and 24 of the
Agreement on Trade-Related Aspects of Intellectual Property Rights, the use in the Community of a
geographical indication attached to the products referred to in Article 1(2)(b) for products notoriginating in the place indicated by the geographical indication
3 in question, even where the true
origin of the goods is indicated or the geographical indication is used in translation or accompanied
by expressions such as “kind”, “type”, “style”, “imitation” or the like.”4  Similar provisions exist for
other wines products and spirits.5  Those provisions, while imposing an obligation on the EU Member
States, can also be invoked before national courts directly.
Non-EU WTO member spirit products?
See above. Please note that specific bilateral agreements on spirits have also been concluded
with Mexico and the United States.
Non-EU WTO member products other than wine and spirits?
No bilateral agreements concerning geographical indications on those products have been
concluded to date. Having said this, All GI right-holders from any WTO member can access the
baseline level of protection prescribed by the EU Member States legislation on unfair competition. In
addition, certain types of products also have seen that type of protection enacted. To give an example,for geographical indications on foodstuffs, Directive 2000/13/EC of the European Parliament and of
the Council of 20  March 2000 on the approximation of the laws of the Member States relating to the
labeling, presentation and advertising of f oodstuffs provides (Article 2) that:
“ The labeling and methods used must not:
(a) be such as could mislead the purchaser to a material degree, particularly:
(i) as to the characteristics of the foodstuff and, in particular, as to its nature,
identity, properties, composition, quantity, durability, origin or provenance , 
                                                     
2 See Articles 47 and 48 of Regulation 1493/99
3 Article 50.2 of EC Regulation 1493/99.
2. For the purposes of this Article, geographical indications is taken to mean indications which identify a
product as originating in the territory of a third country which is a member of the World Trade Organisation or
in a region or locality within that territory, in cases where a certain quality, reputation or other givencharacteristic of the product may be attributed e ssentially to that geographical place of origin.
4 Article 50 of EC Regulation 1493/99
5 See Regulation (EC) No 3378/94 of the European Parliament and of the Council of
22 December 1994 amending Regulation (EEC) No 1576/89 laying down general rules on the definition,
description and presentation of spirit drinks and Regulation (EEC) No 1601/91 laying down general rules on thedefinition, description and presentation of aromatized wines, aromatized wine-based drinks and aromatized
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method of manufacture or production; only an indication of the
manufacturer, packager or seller.”
This provision can be invoked according to the implementation carried out by each EU
Member State, or, in the alternative, directly to national courts.
Q177 Are additional geographical indications protec ted/protectable at EU member state level? What
are these?
See response above. For example, how would a geographical indication for a textile product
or a handicraft product be protected in the EU? Via the Member States general unfair competition
laws and any specific labeling laws that may be applicable.
Q178 EU Regulation 2081/92 applies to foodstuffs and agricultural products, Regulation 1493/99
applies to wine geographical indications.  How are geographical indications for other products
protected in the EU?
See response above.
Q179 For example, how would a geographical indi cation for a textile product or a handicraft
product be protected in the EU?
Via the Member States general unfair competition laws and any specific labeling laws that
may be applicable.
Q180 Is Regulation 2081/92 the only mechanism for protecting non wine and spirit geographical
indications in the EU?
No, se above.
Q181 What other laws are relevant?
See above.
Q182 Are there laws which regulate unfair competition or consumer protection that would also been
applicable?
Yes, see above.
Q183 How can Australian producers obtain information from the EU concerning protection of an
Australian geographical indication?
By contacting the relevant Commission or Member States relevant services.  This information
is publicly available in www.europa.eu.int . It is up to Australia to assess the validity of its GI under
Art. 22.1 Trips.
Q184 How can Australian producers apply for protection of an Australian geographical indication
in the EU.
Generally before national courts via the mechanisms that provide TRIPs protection as
described above, Australian producers can invoke the protection of the pre-TRIPs bilateral wine
agreement that contains provisions on the protection of geographical indications.WT/TPR/M/102/Add.1
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On request, the Commission is prepared to reply to questions with regard to wine name
protection during the forthcoming EC/Australia ne gotiations on the outstanding issues of the 1994
EC/Australia Wine Agreement. Because of this Agreement, and following several rounds of wine
negotiations the Commission has had with them si nce 1994, the Australians should be well informed
about our system of wine name protection.WT/TPR/M/102/Add.1
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QUESTIONS POSED BY ARGENTINA
II. TRADE POLICIES AND PRACTICES BY MEASURE
(1) Measures directly affecting imports
(iv) Community tariff
Q185 In footnote 16 on page 29 of the Report by the Secretariat, it is indicated that in 2000
information was given on the seasonal entry prices for fruits and vegetables which remain in place.
Has there been any change in the seasonal regime  since mid-2000 to date?  Could the EU provide
updated information on entry prices for these products?
The Entry price system is published each year in the EC tariffs (See OJ L 279/2001 where all
the system / tariffs is/are laid down). There was no changes from 2000 onwards. The UR commitments
have been fully implemented. The following countr ies have to pay the full duties: AUSTRALIE,
CANADA, COREE, REPUBLIQUE DE, COREE, REPUBLIQUE POPULAIRE DEMOCRATIQUE
DE, ETATS-UNIS + PORTO-RICO + LES ILES MARIANNES DU NORD, HONG-
KONG,JAPON,NOUVELLE-ZELANDE,SINGAPOUR,TAIWAN, PROVINCE DE CHINE. The MFNclause is applicable to all countries, even non-WTO members. (Council Reg. 2658/87). As regards
duty rates other than MFN, such information can be find in the document TARIC published at the
Official Journal C104 A 30/02/2002 ISSN 03786986.
(vii) Safeguard measures
Safeguard measures on steel products
Q186 In paragraph 37 [7] in the Report by the Secretariat (WT/TPR/S/102), there is a
reference to the adoption of safeguard measures on various steel products.  Could the following be
clarified.
A criterion was adopted for determining the tariff quota, namely, imports for the period
1999/2000/2001 plus 10 per cent, but only imports for 2001 were taken into account to determine thethresholds for triggering the safeguard measure.  Could the EU explain why it used this criterion?
Does the EU not consider that it would have been more appropriate to take the same reference
period as that used to determine the amount of the quota?
Argentina's question refers to two issues, the calculation of the level of quota and the
calculation of the 3% treshold for identifying those developing countries that can be exempted from
safeguard measures. The two issues are based on different articles of the WTO Agreement on
Safeguards, namely Article 5 as regards the type and level of the measures and Article 9 as regards
development country treatment.
Article 9 of the Agreement on Safeguards does not specify any criteria for calculating the 3%
treshold. The EU decided to take 2001 as the basis for the developing country exemptions in order to
ensure that data were as up to date as possible. This was considered more appropriate than following
the critera used to calculate quota level. When determining the latter, based on 1999 to 2001 import
levels plus 10%, the EU intended to respect traditional levels of imports whilst reflecting that these
imports were increasing.
(viii) Product regulations and standards
Q187 With regard to the proposed EU regulation on the labelling and traceability of genetically
modified organisms (GMOs) and genetically modified foods, the difficulties and complications thatWT/TPR/M/102/Add.1
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will arise as a result of implementation of this measure are a matter of concern.  Moreover, its
implementation will lead to a marked rise in cost s that will inevitably affect both ends of the
marketing chains (producers and consumers).
Q188 Argentina would like to know to what extent the EU has assessed the impact that this
regulation will have on domestic and foreign markets?
Q189 In addition, could the EU explain how it intends to obtain supplies of GMO products and by-
products, currently imported from third countries, as traditional suppliers cannot meet the strict
requirements in the aforementioned regulation, bear ing in mind that the EU cannot substitute such
GMO imports by domestic production.
The obligatory information requirements foreseen by the European Commission's Proposal
(notified under G/TBT/N/EEC/7 and G/SPS/N/EEC/150) are requirements that are in most cases
required either under European Community law or normal commercial transactions. The only
additional element is that this information will have to be transmitted to all operators in the
commercial chain within the European Community.
The European Commission would also like to refer to Article 18 of the Biosafety Protocol
concerning transboundary movements of living modified organisms (LMOs), which provides that
• GMOs for intentional introduction into the environment have to be accompanied by 
documentation that specifies their identity and relevant traits and characteristics.  This clearly requires some form of unique identification for individual GMOs.
• GMOs intended for direct use as food or feed, or for processing, shall be accompanied by 
documentation which clearly identifies that they  “may contain” living modified organisms 
and are not intended for intentional introduction into the environment. A decision on the 
detailed requirements for this purpose, including specification of their identity and any 
unique identification, shall be taken no later than two years after the date of entry into force 
of this Protocol
To date, more than 120 countries , many of which are developing countries, have signed up to
the Biosafety Protocol and this, as a matter of course, includes the requirements of Article 18.
The Proposal does not require operators to identify all individual events present in a
shipment of GMOs intended for food, feed or processing. In fact, Article 4, paragraph 2 of the
Proposal specifies that the operator is only obliged to provide a list of the unique codes for the GMOs
that the shipment may contain together with a decl aration that the product shall only be used as food
or feed, or for processing. A system for attribut ing unique codes to GMOs has already been agreed by
the OECD and it is foreseen that this will be ac counted for in developing the system under the
Proposal.
The European Commission would also like to point out that it remains illegal to import
GMOs or genetically modified food into the European Union that have not received authorisation in
accordance with current European Community law.  Operators are, therefore, already obliged to
ensure that unauthorised GMOs or genetically m odified foods are not imported into the European
Community.
In the explanatory memorandum to the Proposal the European Commission stated that it is
difficult to estimate the costs of introducing traceability specifically for GMOs and products produced
from GMOs. This view is shared by the United States Department of Agriculture (USDA) who in a
recent article stated that “estimating the magnitude of the costs of identity preservation, tracing, andlabelling is complex and subject to varying assumptions” (see Agricultural Outlook/January-
February 2002).
The European Commission considers that the transmission and retention of information can
largely be incorporated into existing (documentary) systems for transactions and as such should not
imply significant extra costs for operators and consum ers. Information with respect to the supplier,WT/TPR/M/102/Add.1
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customer, price, and transaction date as well as the nature, source, contents and amount of the
product already accompanies the majority of transactions.
For operators supplying food derived from GMOs to the market, traceability only implies that
operators must inform the next operator in the chain that the food, feed or food/feed ingredient is
derived from GMOs and retain that document. This is neither particularly burdensome nor costly and
it does not entail segregation.
Aggregated costs, if any, will be passed on to the consumer and the labelling of GM foods
ensures that consumer demands will ultimately dri ve the market in the direction of their preferences
also taking into account the price of the food.
Traceability and systematic labelling will promote transparency in the market place and the
freedom of choice for consumers, as well as, leaving it to the market forces to decide the fate of the
different products.
The Proposal foresees that transmission and retention of information as a means to facilitate
traceability will even limit the need for sampling a nd testing of products to confirm their identity at
every stage of the placing on the market. This would result in a reduction in the costs for companies
to meet the current labelling criteria in European Community law particularly for retailers.
Sampling and testing would, however, still be required for verification whenever reliable
documentation is not available from exporting countries and for control and inspection purposes. A
degree of cost must, therefore, be considered in this respect. The Proposal foresees that the European
Commission shall develop guidance on sampling and detection. This will minimise legal uncertainty
and alleviate the burden in terms of testing and sampling for operators. Current experience with
detection methods demonstrates that testing raw in gredients is much more simple and cost-effective
than testing the final products on the supermarket shelves.
It should be emphasised that the potential costs of traceability should also be weighed against
the potential costs of no traceability system. The establishment of effective traceability requirements
could prevent excessive economic losses or brand da mage in case an unforeseen risk to human health
or the environment arises. The recent case in the United States, where a genetically modified maize
variety approved only for use in animal feed entered the food chain and the subsequent need for
urgent recall of products from the market, has clearly demonstrated the usefulness of a traceabilitysystem. Although voluntary traceability systems can also be useful, mandatory ones are more likely to
be followed in a consistent way by all operators in the production and distribution chain, which can
also be instrumental in helping prevent such problems arising in the first place, thereby avoiding
potential huge costs for the companies involved and for public authorities.
(2) Measures directly affecting exports
(iv) Export subsidies
Q190 In paragraph 89 it is indicated that export subsidies granted by the European Union are
intended to cover the difference between Community prices and international prices, without whichsuch exports could not take place.  What measures are being taken to resolve the dilemma of being
unable to export without subsidies, particularly in the context of reform of the CAP and taking into
account the commitment adopted in Doha on export subsidies for agricultural products?
The EC has substantially reduced the use of export subsidies since 1995. Export subsidies are
becoming less and less significant, falling from 25% of the value of farm exports in 1992 to 5.2% in
2001. In 2001, export refund expenditure was €2.763 billions.WT/TPR/M/102/Add.1
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IV. DEVELOPMENTS IN SELECTED SECTORS
(1) Agriculture
Q191  In paragraph 42 of the report by the Govern ment (WT/TPR/G/102), th e EU states that the
Doha Ministerial Conference confirmed "the commitment to negotiate on market access, domestic
support and all forms of export subsidies".  It does not mention, however, how these undertakings are
to be put into effect because the Doha Ministerial Declaration contains a commitment to negotiationsaimed at:  substantial improvements in market access, reductions of, with a view to phasing out, all
forms of export subsidies, and substantial reductions in trade-distorting domestic support.
Could the European Union please explain which of the reforms in Agenda 2000 and the
considerations recently set out in the draft mid-term review contribute towards achieving substantial
improvements in market access?
With respect to MTR, as those are proposals from Commission and not EC measures, it is not
appropriate to respond in this context. With regard to Agenda 2000, it has enabled the EC to move
away to a significant extent from price support to wards direct payments, and substantially reduce the
use of export refunds.
Q192 Could the European Union also please indicate what other measures will be taken in order to
achieve a substantial reduction in trade-distorting domestic support, bearing in mind that in the draft
mid-term review of the reform of the Common Agricultural Policy (CAP) the reduction in levels of
support only accounts for 0.4 per cent of the expenditure on the CAP.
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Q193 It is stated in the Doha Ministerial Declaration that "non-trade concerns will be taken into
account" in the agricultural negotiations during the Round.  In paragraph 42 of the Report by the
Government (WT/TPR/G/102), the EU indicates that the Doha Ministerial Conference clearlyacknowledged "the multifunctional nature" of the ag ricultural sector.  Could the EU explain whether
the so-called "multifunctional nature" to which it refers corresponds to the aforementioned non-trade
concerns?
There is no contradiction between multifunctionality and non-trade concerns (NTCs). The
concept is part of NTCs. Multifunctionality that agriculture provides more goods than the production
of food and fibre, it contributes to the vitality of rural areas and to the protection of the environment.
Non-trade concerns include these concerns and others,  like the consumer information, food safety and
animal welfare, which are legitimate concerns of the consumers over how food is produced. In
addition, non-trade concerns are not at all in contradiction with further trade liberalisation andshould not be deemed as disguised means of pr otectionism. For example,  the EC only deems that
producers respecting higher standards should be legitimately compensated for additional costs due to
the protection of animals welfare.
Q194 In paragraph 13 on page 73 of the Report by the Secretariat it is indicated that in
January 2002 the Commission proposed to finance the addition of ten new Members as of 2004
through a progressive introduction of direct payments.  What types of measure are to be financed by
these payments?  Will they be green box measures?  Could the European Union give further details?
As no decision has been taken, it is premature to respond to this question.WT/TPR/M/102/Add.1
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Q195 In paragraph 26 on pages 75 and 76 of the Report by the Secretariat, it is indicated that
modification of the current legislation on meat with hormones, which was the subject of a dispute inthe WTO, was under discussion.  Could the European Union inform us whether this process has
begun and whether there is any draft text on this subject?  If so, can the draft be consulted?
The EC is in the process of amending the relevant Council Directive. The EC will fully inform
Members at an appropriate stage.
Q196 In paragraph 28 on page 76 of the Report by the Secretariat it is indicated that, following the
accession of new members to the European Union, the problem of overproduction of milk will
become worse.  Bearing in mind the Doha commitments, how will this problem be resolved without
increasing export subsidies?
As regards the determination of the reference quantity for milk with regard to WTO
constraints, this aspect is covered by basing the quota on a recent reference period and not on one
which predates the introduction of WTO constraints. Thus, the WTO commitments and their effective
implementation are sufficiently reflected as well as the market balance reached at the end of theUruguay round. WTO constraints also bear only indire ctly upon the level of milk production because
they apply separately to butter, skimmed milk powder, cheese and a miscellany of other milk products.
Q197  The considerations regarding the reform of the CAP indicate a clear refocusing on
sustainable, environmentally-friendly agriculture based on standards of quality (organic products) in
which agricultural producers would become more exposed to market trends.  This could lead to a cut-
back in domestic production.  Could the European Union indicate if there are any specialrecommendations on improving market access in order to meet any unsatisfied demand?
Annex I to this document contains specific quest ions relating to the mid-term review of the
Common Agricultural Policy.
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Domestic support
Q198  Could the EU specify which cereals are eligible for direct payments under production-
limiting programmes (Article 6.5 of the Agreement on Agriculture)?  In addition, could it also
indicate the amount of support in the form of payments covered by Article 6.5 of the Agreement on
Agriculture that has been paid annually since 1995 (to each sector) and for each of the commodities
specified?
Please consult the normal Commitee on Agricu lture report. This question has already been
raised by Argentina in June 2001.
Q199 Could the EU please indicate the amount of the support given to each cereal and to each of
the other basic commodities during the commercialization campaign of 1992?
Please consult the normal Commiteee on Agriculture report. This question has already been
raised by Argentina in June 2001.WT/TPR/M/102/Add.1
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Other sectors
(1) Wine
Q200 It would be interesting to know the EU's views on certain aspects of the common
organization of the market in wine (Council Regulation (EC) 1493/1999) and its relationship to trade.
According to Article 45 of the Regulation, except  for derogations, wines (whether or not imported)
that have undergone oenological practices not authorized by Community rules may not be offered ordisposed of for human consumption.
Could the Commission inform us whether there are exceptions to oenological practices not
authorized by Community rules?
Could the EU clarify whether, under the derogation regime, it may import wine from third
countries subject to oenological practices not authorized in Community territory?
Could the EU also clarify whether wines subject to oenological practices not authorized by
Community rules may be imported into EU territory if they come from a particular country
(country A) whereas wine subject to the same oenological practices from another country (country B)
would not be allowed access to the Community market?
Q201 Please explain how such cases are in conformity  with the obligations and rights deriving from
the MFN clause.
Article 45 of Council Regulation (EC) No. 1493/1999 is correctly in practice at Community
level. Derogations exist and are provided for by Council Acts (procedure mentioned in paragraph 2
of the said Article:  Article 133 of the Treaty). These questions have been raised several times by
Argentina, at all levels and a response was given by Commissioner Fischler to the Argentine Ministry
of Agriculture. The European Community is actively negotiations with Argentina to establish this type
of derogation to oenological practices applicable to  wines imported into the Community from third
countries..WT/TPR/M/102/Add.1
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QUESTIONS AND COMMENTS BY THE REPUBLIC OF KOREA
II. TRADE POLICY REGIME
P. 15 (para. 12)
Q202 The Korean Government believes that the en largement of the EU currently under negotiation
with 13 Central and Eastern European countries will contribute to promoting economic prosperity and
political security in Europe. However, there is a concern that an increase in intra-regional trade with
the new members may reduce trade with non-member countries.
What is the view of the EU on this possible "trade diversion" effect?
Thirteen countries have expressed their interest to join the EU, twelve of which are currently
engaged in accession negotiations. Not only will enlargement of the EU secure peace and stability in
the region, it will also reap significant economic benefits for the new Member States, for the EU as awhole, but also for third countries which will bene fit from an enlarged Single Market, with a single
set of rules, standards and certification.
In the run-up to accession, the Association Agreements which link candidate countries to the
EU provide for free trade in industrial products between the candidate countries and the EU. It is
therefore expected that enlargement will not lead to significant modifications of current trade patternsbetween the EU and the candidate countries.
The same applies to S. Korea, which mostly trades industrial products with the EU.
Moreover, S. Korean businesses will be able to draw increased opportunities from the alignment of
new Member States to the EU's external tariff as of their day of accession to the EU, which will lead
to an overall reduction in tariffs on industrial products in the region."
III. TRADE POLICIES AND PRACTICES BY MEASURE
P. 33 (para. 24)
Q203 The Report by the Secretariat indicated that the EU has applied different quota growth rates
for textiles from 0.18% to 16.37%, and that higher growth rates are applied to imports from some
developing countries.
Please provide the concrete criteria justifying the difference in the quota growth rates.
Growth rates are negotiated and must be seen in conjunction with the resulting base levels.
This being said, more fovourable treatment of sm all and least developed suppliers are fully in line
with condiserations underlying the Uruguay round.
P. 36 (para. 35)
Q204 As of January 2002, the EU has reintroduced the licensing requirement for steel products.
Although the license is granted automatically upon application, the requirement results in anadditional burden for importers who have to prepare various documents for the application and thus
this requirement functions as a trade barrier.  Does the EU have any plans to eliminate this
requirement?
Commission Regulation (EC) No 76/2002 of 17 January 2002 introduced prior Community
surveillance of imports of certain iron and steel pr oducts covered by the ECSC and EC Treaties.  This
administrative procedure, according to which importers of the products in question are required to
apply for surveillance documents, has as its sole purpose the provision of statistical informationWT/TPR/M/102/Add.1
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permitting rapid analysis of imports. These surveillance documents will be issued automatically,
without charge and for any quantities requested.
This measure was triggered by the worsening situation of the international steel market
observed from the middle of 2001.  This deterioration was fuelled, in particular, by the uncertainty
caused by the US "Section 201" safeguard investigation, and from March 2002, by the subsequent
protectionist US safeguard measures which imposed additional duties ranging from 8% to 30% ad
valorem on various categories of steel products.  Indeed, these severe American restrictionsthreatened to deflect large quantities of such products away from the US and onto the Community
market and thus to harm Community producers.
The EU intends to maintain its surveillance mechanism as long as the fundamental problems
in the international steel market remain unresolved.  However, it is working actively to promote a
solution to these underlying problems, including through active participation in the OECD steel
dialogue.
P. 37 (para. 37)
Q205 The Korean Government is concerned about the EU’s safeguard measures that have been
taken in reaction to the U.S. safeguard measures. China has also decided to follow suit by taking
similar measures. It is our concern that the spread of such import restrictive measures to other major
steel producing countries will, not only worsen the steel problem, but also negatively affect the
ongoing DDA negotiations.
During the Korea-EU bilateral consultation on April 12, Korea raised the question as to whether
there existed critical circumstances warranting the provisional measures, whether there had recently
been sharp increases in steel imports, and whether there was clear evidence on the causation betweensuch increases and injury to domestic industry.
Korea believes that unilateral import restrictions cannot resolve the current steel issue. Burden
sharing, not burden shifting, should be the solution to the global steel problem. In this regards, it is
necessary for the EU to set a good example by withdrawing the provisional measures as soon as
possible and refraining from taking import restrictive measures.
What is the view of the EU on this matter?
The EU steel industry is the pr imary victim of the increasingly protectionist stance adopted by
the US in relation to steel impo rts, culminating in the US steel safeguard measures announced on 5
March 2002. As a result of this, the EU was forced to adopt provisional steel safeguard measures.However, unlike the US measures, those measures provide generous tariff quotas roughly equivalent
to imports in 2001, and it is only beyond these tariff quotas that any additional duties are payable.
The EU agrees that unilateral import restrict ions cannot resolve the current steel issue.
Indeed, the Commission has undertaken that the EU steel safeguard measures will remain in force not
a day longer than the US safeguard measures. Nevertheless, whilst the US safeguard measuresremain in force, the EU has little option but to take  steps to ensure that the EU steel industry is not
seriously injured by further flood of steel imports arising as a result of trade diversion.
P. 49 (para. 79)
Q206 Korea was the third most frequent target of the EU’s anti-dumping measures in 2001 after the
US and China. Anti-dumping measures were imposed by the EU on 11 different items from Korea.
According to the Secretariat Report, the Comm ission emphasized that some 40% of anti-dumping
investigations are terminated without measures be ing taken. However, from Korea’s perspective, the
fact is evidence that the investigation of anti-dumping measures is being misused.
Considering that the investigation itself of ten damages the export company, more careful
initiation of antidumping measures is required. What is the view of the EU on this?WT/TPR/M/102/Add.1
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The EC shares Korea`s view that the antidumping instrument should not be abused for
protectionist purposes. However we reject the claim that investigations are being misused and affirmthat they are only initiated on the basis of sufficient evidence in line with the applicable WTO rules
and in conformity with strict EC legislation. Fu rthermore we point out that the Commission goes
beyond WTO rules in requiring the Community interest test before measures can be applied. The fact
that 40% of investigations are terminated withou t any measures being taken can be considered as
proof of the thoroughness of investigations.
P. 60, 63 (para. 119, 129-30)
Q207 The EU decided on June 27 that it will resume subsidies to its shipbuilding industry unless a
bilateral agreement can be concluded by September 30 of this year. The decision is regrettable since itprejudices the outcome of the bilateral consultations and it was made even before the WTO panel
decision on this issue.
From Korea’s perspective, the EU’s subsidy scheme will distort the fair trade system as it will be
provided to a specific industry and companies. Furthermore, it will have a negative impact on the
competitiveness of the EU economy itself.
What is the view of the EU on this ?
In the Commission’s view, the Council decision taken on June 27 to adopt the Regulation
concerning a temporary defensive mechanism to sh ipbuilding can in no way be seen as prejudicing
the outcome of the bilateral consultations. On the contrary, it should conduct to speed up the
conclusion of a mutual satisfactory solution before the end of September in order to avoid the
introduction of the temporary defensive mechanism. How ever while the EU has made it clear that it is
ready to resume talks with the Korean government, Korea has not yet replied to the Commission’s
invitation. If Korea decides not to come to the negotiating table, the EC will have no choice but to
speed up the WTO procedure.
It should also be emphasised that the temporary defensive mechanism is a clearly focused
measure, limited in time and scope, to defend th ose EU yards which are suffering most from unfair
Korean competition. It cannot be compared to general operating aid, which has been prohibited since
the beginning of 2001. Moreover, the maximum allowable aid level of 6% will only help yards to a
limited extent to win orders against Korean competition for the shiptypes in question.
Furthermore, in the Commission’s view, the proposal is fully compatible with WTO rules.
Subsidies, provided that they are not prohibited or are not demonstrated to cause "adverse effects",are legitimate national policy instruments, as far as the WTO is concerned. In granting the aid to its
domestic producers, the EC is not suspending any concessions or obligations towards Korea.
Therefore, the EC has the right to grant aid to its shipbuilders and, in fact, has done so for many
years up to 31 December 2000.
P. 66 (para. 140)
Q208 Please provide detailed information on the “Community Patent” regulation including the date
of effect of the new regulation.
The draft regulation is still under discussion within the Council of the European
Communities.WT/TPR/M/102/Add.1
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IV. DEVELOPMENT IN SELECTED SECTORS
P. 70-73 (para. 5-15)
Q209 There is a concern that the CAP reform pl an proposed by the Commission, if implemented as
it is, might make the production estimation of individual products more difficult and bring more
serious price fluctuations.
Please provide any analysis on the impact of the reform proposal on agricultural production.
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
P. 83-89 (para. 58-83)
Q210 Please provide detailed information on the current status of European financial market
integration and its future prospects.
Paragraphs 58-83 contain the detailed information on the current status of European
financial market integration and its future prospects as requested by Korea.
P. 93 (para. 90)
Q211 What is the concrete criteria for distinguishing the cases where the events of actions have a
European dimension and therefore the Community level competition rules are applied and the other
cases where national competition laws are applied?
Cases with a Community dimension involve more than one member state; but in any case, the
application of Community competition policy or member state competition laws is not really an issue,
since national competition laws mirror the Community competition rules; the issue is whether or not
the Commission needs to be involved or if a national competition or regulatory authority can handlethe case.
P. 95 (para. 95)
Q212 As the Secretariat's Report shows, state involvement in the telecommunication market is still
very high in many EU countries except for the UK and Denmark.
Please explain the future plan for further privatization of the telecommunication market.
State ownership or private ownership is not an issue (and is not dealt with in the WTO), what
is at stake is whether regulation is done in an impartial way by an effective and independent regulatorwhich is ensured as explained in paragraph 95 in the Secretariat’s report.WT/TPR/M/102/Add.1
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QUESTIONS FROM COSTA RICA
Part III(1)(vii) Safeguard measures
Q213 Paragraph 37 refers to the measures adopted in response to the safeguard applied by the
United States to imports of steel.  It states that an increase in the volume of trade above the level set in
2001 would trigger the application of supplementary duties and it also makes reference to additionalduties on products imported from the United States.  Do these measures correspond to the suspension
of substantially equivalent concessions or other obligations mentioned in Article 8.2 of the Agreement
on Safeguards of the GATT 1994?
Yes, the additional duties of between 8% and 100% on products imported from the United
States as referred to in parargaph 37 (second sentence), correspond to suspension of substantially
equivalent concessions or other obligations as referred to in Article 8.2 of the WTO Agreement on
Safeguards:
Part III(1)(viii) Product regulations and standards
Q214 What legislation applies to the placement of GMOs on the market?  Does it include
traceability requirements?  What are the products to which traceability requirements apply?
(Paragraph 49)
Directive 90/220/EEC on the deliberate release of genetically modified organisms, covers the
placing on the market for GMOs and includes us e as seed, animal feed and import and processing.
Use of GMOs in food has since May 1997 also required compliance with the Novel Foods Regulation.
The placing on the market of products under Di rective 90/220/EEC follows a step-by-step
authorisation procedure and a case by case assessment of the risks to human health and the
environment.  Autorisation is only granted where there is no reason to believe that a product
constitutes a risk to human health or the enviro nment.  Directive 90/220/EEC has recently been
revised and will be replaced by Directive 2001/18/EC on 17 October 2002.  The new Directivestrengthens the principles for risk assessment a nd also includes mandatory requirements for post-
market monitoring as well as labelling and traceability of products at all stages of their placing on
the market.
Products derived from GMOs, such as paste or ketchup from a GMO tomato are not covered
by the scope of  Directive 90/220/EEC (or Directive 2001/18/EC) but by vertical, sectoral legislation,
for example the Regulation on Novel Foods and Novel Food Ingredients of 27 January
1997(Regulation (EC) 258/97). Directiv e 90/219/EEC as amended by Council Directive 98/81/EC on
the contained use of GMMs regulates the contained use of GMMs for research and industrial
purposes.
Community legislation on GMOs has been in place since the early 1990s and throughout the
decade, this regulatory framework has been further extended and refined, notably by the introduction
of sector-specific legislation.  This legislation has been designed to protect its citizens' health and the
environment while simultaneously creating a unifie d market for biotechnology. More information on
the EU legislation and its underlying principles can be found on
http://europa.eu.int/comm/food/fs/gmo/gmo_index_en.html.
The general traceability requirements in Re gulation (EC) 178/2002 pr ovides that food and
feed business operators have to have systems in place to identify from whom they have received a
food or a feed (one step back) and to whom they ha ve sold a food or a feed (one step forward).The
traceability requirements include food, feed, food-producing animals, and any other substance
intended to be, or expected to be, incorporated into a food or feed, at all stages of production,
processsing and distribution. The objective is to establish a comprehensive system of traceabilityWT/TPR/M/102/Add.1
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within food and feed businesses so that targeted and accurate withdrawals can be undertaken or
information given to consumers or control officials. The European Commission considers that anygiven piece of information can serve a number of purposes and objectives.
Directive 2001/18/EC introduces a requirement that Member States should ensure
traceability at all stages of the placing on the mar ket of products.  In order to ensure a harmonised
approach for traceability, the Commission brought forward a legislative proposal for specific
traceabilty requirements for GMOs which is currently being discussed in the European Parliamentand with EU Member States.  The scope of this Proposal was extended to include food and feed
products produced from GMOs in order that traceability be applied throughout the production and
distribution chains. For further information see:
http://europa.eu.int/comm/food/fs/gmo/gmo_index_en.html.
Part III(1)(ix) Government procurement
Q215 It is stated that one indicator of the level of openness in awarding contracts is the share of
government procurement that is openly advertised in the Official Journal (some 15 per cent of all
procurement in 2000).  What is the amount or percentage of total government procurement that is
awarded to foreign suppliers?  (Paragraph 68)
The EU does not have figures for the amount of total procurement awarded to foreign
suppliers in 2000. Moreover the reliability of any figures in this respect are, in part, determined by
the definition and application of rules of origin.  The latest figures which are available, from a surveyundertaken in 1998, suggested that the level of import penetration into public procurement markets
for the EU as a whole was 10.3%, of which 1.8% was direct and 8.5% was i ndirect. (See OJ C 330 E,
21/11/2000 (p. 186)).
Q216 A single harmonized threshold expressed in euros will apply to each category of contract.
What are the parameters and the economic rationale used by the European Union to define such
thresholds?  Telecommunications are also included in the scope of covered services.  Whatconsiderations led to the inclusion of telecommunications services?  (Paragraph 72
The thresholds referred to in paragraph 72 are the result of a political agreement which
sought to balance the possible administrative costs of imposing formal EU wide procedures against
the likely economic benefits of inviting EU wi de competition across a whole range of goods and
services. They are, of course, in broad alignment with the GPA thresholds.
The reason for including telecommunication services within the scope of this first,
consolidated, Directive is the same as the reason cited in paragraph 74 to justify the exemption for
telecom operators from the utilities Directive, namely that effective competition has been realized in
the sector.
Q217 The proposed substantive amendments also include modified award and selection criteria.
What considerations were taken into account when modifying or establishing these criteria?
(Paragraph 73)
The proposed modifications to the sel ection and award criteria (described in
paragraph 73) are aimed at simplifying, clarifyi ng and improving the definition of criteria in
order to encourage greater transparency and competition. Thus, for example, there are
dispositions which clarify what criteria are leg itimate in respect to selection criteria and theWT/TPR/M/102/Add.1
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principle of announcing the relative weighting to  be given to different award criteria has
been introduced."
Part III(3)(ii) Competition policy
Q218 What are the changes in the "new policy on vert ical restraints", which led to a reduction in the
Commission's antitrust investigations in 2001?  (Paragraph 100 [101])
It is mentioned that mergers of a transnatio nal character require assessment by competition
policy authorities in different countries, on the basis of different laws and competition policy
practices.  Has consideration been given to adopting comprehensive legislation at the European Union
level so as to harmonize decisions and relevant remedial measures?  (Paragraph 102)
New block exemption regulation 2790 / 1999 OJ L336 of 29.12.1999 page 21 and Guidelines
on Vertical Restraints (OJ C291 of 13.10.2000) that are applicable since 1-6-2000 have lead to a
reduction in notifications as the new Block Exemption regulation covers a wider group of agreements.
Whilst the EU has not undertaken any formal harmonisation of the merger control laws of its
Member States, Member States have, in certain respects, unilaterally adapted their merger control
legislation to that of the EU. Moreover, a high level of convergence has been achieved between the
decision making practice of the European Co mmission and that of the national competition
authorities of its Member States.
Yes, this implies extraterritorial application of the EU rules, but only in as far as it deals with
effects of the anti-competitive arrangement within the EU.  Such cases are enforced by dealing with
the companies' EU subsidiaries or activities.
Part III(3)(iv) Intellectual property rights protection
Q219 Paragraph 134 of the Secretariat's Report indicates that, in 2002, the Commission will present
a directive to harmonize enforcement of intellectual property rights in order to go beyond the
"minimalist approach" of the TRIPS Agreement.  Plea se describe in detail what will be contained in
this directive, its main components and features, the levels of sanctions and criminal proceedings
(inter alia ) and approximately when it is intended to present it.
As regards the Directive on enforcement of IPRs, a draft is still under discussion within the
Commission. The proposal for a Directive should be presented by the Commission in the Autumn
2002. It is therefore much too early to give precise information on the content of this future proposal.
However, the Commission described the outline of its future proposal in its follow-up Communication
to the Green Paper on Combating Counterfeiting and Piracy in the Single Market which was adopted
on 30.11.2000 (COM(2000)789 final). The text of this Communication is available at the following
address:  http://europa.eu.int/comm/internal_market/ en/indprop/piracy/counterf.htm. The aim of this
proposal will be twofold: 1) to harmonise the laws of the EU Member States on the means of
enforcing intellectual property rights, including measures and procedures on searching, seizure and
evidence; and 2) to establish a framework for administrative co-operation and the exchange of
information between  the Member States. Furthermore, this proposal should not in principle contain
provisions harmonising criminal sanctions as such . This issue could be examined by the Commission
in the medium term
Q220 Paragraph 138 of the Secretariat's Report dealing with patents refers to the unitary procedure
for the protection of plant varieties available at the Community Plant Variety Office.  Is the
Community protection given to plant varieties identical to that given to patents?  If this is not the case,what are the main differences?WT/TPR/M/102/Add.1
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A Community Plant Variety Right is an intellectual property right, like a patent, but designed
for plant varieties of which material is produced and commercialised. The Community Plant VarietyOffice (CPVO), operating since 27 April 1995, implem ents and applies this scheme (see Regulation
(EC) No 2100 of 27 July 1994, OJ L 227 of 01/09/ 1994, pp. 1 - 30). Object of Community plant
variety rights can be varieties of all botanical genera and species, including, inter alia, hybrids
between genera or species. Community plant variety rights shall be granted for varieties that are
(a) distinct;(b) uniform;
(c) stable; and
(d) new.
Moreover, the variety must be designated by a denomination.
A holder of a CPVR is entitled to effect certain acts in relation to the protected variety.
Others wishing to effect those acts must firstly obtain the authorisation of the holder, who may attach
conditions and limitations to this authorisation. The acts in question are
(a) production or reproduction (multiplication);
(b) conditioning for the purpose of propagation;
(c) offering for sale;(d) selling or other marketing;
(e) exporting from the Community;
(f) importing to the Community;
(g) stocking for any of the purposes mentioned under points (a) to (f)
Part IV(3) (Financial services) (ii) Policy developments
Q221 Section (ii) essentially refers to the efforts made in the area of financial services at the internal
level in the European market.  What efforts are being made to open the market up outside theEuropean Union?  (Paragraphs 58-83).
EU policies are directly relevant to third-country financial service providers due to the
commitments made by the EU in the Fifth Protocol  to the GATS, which entered into force on 1 March
1999. These commitments extend the principle of the single passport to third-country providers
subject to limitations placed on national treatment. Third-country financial services providers enjoy
the new access opportunities created by the progress on FSAP, but must also assume the newobligations on financial service providers established in the EU.WT/TPR/M/102/Add.1
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QUESTIONS POSED BY URUGUAY
Report by the Secretariat.
Summary Observations.
Q222 Paragraph 25 states that "The simple average tariff on agricultural products is, at
16.1%, about four times higher than that on non-agricultural products, with above average tariffs onproducts subject to the Common Agricultural Policy (CAP).  Evidence of tariff escalation remains, in
particular on processed products."  The Doha Declaration states that, in the context of the current
agricultural negotiations in the WTO, substantial improvements in market access should be achieved.
How does the EU intend to implement this provision?
It is an automatic calculation which does not take into consideration notably our preferential
regime. We would like to recall in this context that no reliable data on prices and no reliable data on
how much basic products needed to make a pro cess product are existing. Consequently, estimates
which were given are only purely statistical values.
Q223 Paragraph 28 indicates that "The EU continues to make frequent use of the special safeguard
(SSG) mechanism under the WTO Agreement on Agriculture to impose 'snap-back' tariffs."  
According to Article 5.9 of the Agreement on Agriculture the time-limit for using it has
expired so the mechanism applied up until now is incompatible with the WTO;  consequently, what
measures does the EU intend to take in  order to comply with this provision?
SSG is used in a very limited way and it is always in application.
Trade policy regimes:  framework and objectives
Q224 In paragraph 7 of Chapter IV it is indicated that "The amount spent on the CAP was
€40.4 billion in 2000, accounting for around 43.9 per cent of Community expenditure" and
paragraph 11 states that "In absolute terms, the EU provided more support to its producers in 2000
than any other OECD members …".
Paragraph 14 [of Chapter II] indicates that, in the context of accession by new member States
and their participation in the CAP "The Commission anticipates new expenditure of  €5.6 billion in
2004 under a proposal issued on 30 January 2002, mainly as a result of agricultural subsidies …".
Could the EU indicate how it is going to r econcile the aforementioned subsidies with the
objective adopted by the Ministers in Doha to achie ve reductions of, with a view to phasing out, all
forms of export subsidies and substantial reductions in trade-distorting domestic support?
Concerning the amount of aid, it is misleading to  speak of 44 % of the budget. The EU budget
was a small part of the national budgets of the Member States. Agricultural expenditure representedjust 0.5% of EU GDP or less then 3% of total public expenditure of the EU and its Member States.
The EC will respect all its WTO commitments, before and after accession of new Member States.
Trade policies and practices by measure, export subsidies
(Paragraph 89)
Q225 In the Secretariat's Report it is indicated that, according to the latest available data, the total
amount of export refunds in 2000 was €4.2 billion.
In Doha, the Governments agreed to reduce a ll forms of export subsidies with a view to
gradually phasing them out and, as the EC has not yet presented any concrete proposals, we should
like to know how it intends to implement the provisions agreed by the Ministers in Doha.WT/TPR/M/102/Add.1
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Firstly, the EC has substantially reduced the use of export subsidies since 1995. Export
subsidies are becoming less and less significant, falli ng from 25% of the value of farm exports in 1992
to 5.2% in 2001. In 2001, export refund expenditure was €2.763 billions. On export subsidies, the EC
position is very clear, we say that we are ready to negotiate further reductions on the conditions that
all forms of export subsidisation will be disciplined.
Developments in selected sectors, agriculture
Q226 Paragraph 6 indicates that "Proposals made by the Commission … address:  the
reform of the rice regime to integrate the crop into the arable crop system … ".  We should like to
know whether the EU could provide further details on how it is planned to apply the new rice regime,
in particular as regards market access, and its possible impact because Uruguay, as the seventh largestexporter of rice in the world, is facing serious difficulties in gaining access to this market.
The Commission proposes recently a rice reform regime included in the MTR. However at
this stage it is only a proposal, consequently it is not appropriate to respond in this context.WT/TPR/M/102/Add.1
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QUESTIONS FROM NORWAY
Q227 As is the case within the European Community, Norway is deeply concerned about the
present levels of exploitation of important fish stocks in the Northeast Atlantic and in particular the
detrimental effects present fleet over capacity has on the sustainable harvesting of fish stocks. The
Commission’s Green Paper on the future of the CFP points, inter alia, to inadequate management
measures as well as substantial over capacity as major obstacles to sustainable fisheries.  In thiscontext, Norway notes that the European Commi ssion has proposed radical cuts in present fleet
subsidies.
Could the Commission indicate its views on the possible benefits of improved multilateral WTO
disciplines on fisheries subsidies, not only to bolster autonomous measures in this field, but also to
provide for a more level playing field for fishermen who are competing on the same markets?
In trade policy terms, the Community would li ke to maintain a coherent approach of the
current Agreement on Subsidies and Countervailing Me asures (ASCM) as regards all sectors falling
under its scope.  We must first examine whether the existing generally applicable rules are deficient
and, if so, improve the disciplines maintaining their application to all sectors.
In fisheries policy terms, the Community wishes  to emphasise that the fisheries negotiating
mandate straddles the trade (subsidies disciplines) and environment fields, thus providing an
opportunity for an integrated approach to the issue.
Q228 Para 45 indicates that in the view of the European Community, “ The Community has a
shortfall in fishery and aqua culture products and is a major importer of these products from non-
Community countries.  The structural aid has only a very small influence on this situation”.
Could the Commission elaborate on why the substantial amount of 3,7 billion Euros for the
period 2000 – 2006 is considered to be so insignificant as regards trade effects?
As stated in the Community’s notification document, (G/SCM/N/60/EEC) the objectives of the
structural measures in the fisheries and aquaculture sector are the following:
To contribute to achieving a sustainable balance between fishery resources and their
exploitation.
To strengthen the competitiveness of structures and the development of economically viable
enterprises in the sector.
To improve market supply and the value added to fisheries and aquaculture products.To contribute to the revitalisation of areas that depend on fisheries.
From the above it appears that not all the Community aid is directed to areas related to
trade.
In addition, the Community is in the process of reforming the Common Fisheries Policies.
Within the framework of this refo rm, the Commission has made proposals to redirect part of the funds
to the granting of aid to the sector to better accomplish the above mentioned objectives and more in
particular to achieve a sustainable balance between fishery resources and their exploitation.
On the trade effects of these subsidies, it s hould be emphasised that the Community’s imports
of fishery products have continuously increased in the last twenty years. Some fish exporting countries
(capture fisheries and aquaculture) have substantially benefited from this trend. Some of thosecountries have developed new markets in the Community for their products and have gained
substantial market shares
Q229 Norway is a major supplier of fish on the European Community market and takes a keen
interest in improvements of market access for fishery products in the ongoing WTO-negotiations.  In
spite of the fact that according to the Commission, about 70% of Community imports of fishery
products are free of duty, a number of important fish species, both unprocessed and processed, areWT/TPR/M/102/Add.1
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subject to substantial duty levels in the range of 10 – 25 %. Consequently, we do not share the view
expressed in para 54 that the import regime is “...generally open, by virtue of low tariffs...”
Could the Commission indicate it’s views of the importance of maintaining the present elaborate
and administratively complicated import regime for fish and fishery products as well as indicate
possible areas of further liberalization?
The full sentence of paragraph 54 that Norway partially quotes in its question reads as
follows:
“These new trade measures complement a regi me for imports of fishery products that is
generally open, by virtue of low tariffs (Table AIII.1), and the effects of preferences on
originating products granted under regional trade agreements (notably EFTA and the Cotonou
Agreement) and GSP”.Norway in the preamble of the question states that “In spite of the fact that according to the
Commission, about 70% of Community imports of fi shery products are free of duty, a number of
important fish species, both unprocessed and processed, are subject to substantial duty levels in
the range of 10 – 25 %”.
With regard to the above statement by Norway , it should be noted that the Community, as
mentioned in paragraph 54 of the Secretariat’s Report, operates a series of preferential trade
regimes in the same way as Norway does (GSP, tariff preferences for LDC’s and Free Trade
Agreements). Norway also benefits from a series of Community tariff preferences resulting from
Protocol 9 of the EEA Agreement and from bilateral trade arrangements.
The percentages mentioned by Norway in the introductory part of the question are MFN duty
rates applied to those countries that do not benefit from preferential trade regimes.
In its question, Norway qualifies the present Community’s import regime for fish and fisheryproducts as “elaborate and administratively complicated”
The Commission is of the view that the variety of duty rates applied on imports into the EU is not
a factor of complication as the Community, like Norway and other WTO Members, operates a series
of preferential import regimes that result in differentiated tariff treatment.
With reference to the non-tariff components of the Community’s import regime (technical
barriers), all the measures are made publicly available, are notified to the WTO and are similar to
those applied by other WTO Members. It should also be noted that most of the technical import
regulations applied by the Community are also appli ed by Norway, within the framework of the EEA
Agreement (see paragraph 31 of doc. WT/TPR/S/ 70 “TRADE POLICY REVIEW - NORWAY - Report
by the Secretariat”)
On the last part of the question, the Commission would like to stress that Community is ready
to engage in a comprehensive round of trade negotiations and more in particular as regards markets
access.WT/TPR/M/102/Add.1
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QUESTIONS FROM MEXICO
Q230 Paragraphs 39 to 44 of chapter III of the Secretariat's Report describe in part the form and
criteria for the establishment of technical regulations by the Community or member States.  In this
connection, (i) Could the EU indicate whether there are annual or regular programmes that list the
subject-matter to be regulated by the EU or its member States and where these are published?  (ii) If
such programmes do not exist, could the EU indicate  when it intends to adopt them or the reasons that
prevent it from doing so?  (iii) Could the EU inform us whether the development of a technical
regulation implies the preparation of a regulatory impact assessment as a prior requirement and, if this
is the case, whether the assessment can be consulted by nationals of WTO Member countries?
(iv) Could the EU explain whether there is any legal provision that obliges it or its member States to
revise the content of its technical regulations or standards on a regular basis?  (v) If this is not thecase, could the EU indicate when it intends to adopt such a provision or the reasons that prevent it
from doing so?  (vi) Could the EU confirm that na tionals of WTO Member Countries may participate
in the formulation, amendment or annulment of technical regulations both at the national or European
level and describe the procedure to be followed in order to obtain such a right or, if this is not
allowed, give the reasons why such participation is not permitted?
i) Details concerning planned legislation can be found in the annexes to the Commission Work 
Programme (please refer to web site:
http://europa.eu.int/comm/off/work_programme/index_en.htm )
ii) Not applicable
iii) Yes. The Commission adopted a “better regulation” package in June 2002. For further 
information, please refer to web site:http://europa.eu.int/comm/governance/whatsnew.htm
iv) No legal requirement, however legislation is under continuous review using a variety of
measures.
v) The advantages of using a legal instrument would first need to be demonstrated.
vi) All members of the WTO have the right to comment on proposed legislation in accordance with the provisions of the WTO/TBT Agreement
Q231 Paragraph 40 of chapter III of the Report by the Secretariat states that fulfilment of
requirements laid down in the regulations is established through conformity assessment procedures.
Could the EU indicate:  (i) Whether such procedures are general or are established for eachregulation?  (ii) How many conformity assessment procedures are in effect within the EU, what
products they cover and in what legal instrument(s) they are determined?  (iii) Whether such
procedures are subject to public consultation?
i) For new approach directives, conformity assessment is subdivided into modules, which 
comprise a limited number of different procedures applicable to a wide range of products. 
The modules relate to both the design phase of products, their production phase or both. 
There are eight basic modules, with a small number of variants. The modules may be 
combined with each other in a variety of ways in order to establish complete conformity 
assessment procedures for the specific sector in question.ii) In order to find more information on how the modules are used in practice, please refer to 
the Guide to the New and Global Approach on the following web-site address:
http://europa.eu.int/comm/enterprise/newapproach/legislation/guide/legislation.htm
The guide shows the applicable modules for each new approach directive.iii) The basic modules have been applied since the adoption of the Global approach, which 
dates back ten years. At that time consultation with stakeholders took place.WT/TPR/M/102/Add.1
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Q232 Paragraph 41 of chapter III of the Report by the Secretariat draws a distinction between "old
approach" and "new approach" regulations.  Could the EU explain what criteria are used to decidewhether a technical regulation is adopted using one or the other approach?
As the names imply, the new approach has been introduced more recently than the old
approach, and is used whenever feasible for new technical regulations. It should also be noted that
there is no systematic plan to convert all old approach sectors to the new approach.  Instead,legislative changes are considered on a case-by-case basis. Therefore as existing sectoral legislation
is assessed, application of the new approach would certainly be considered, and could be proposed if
considered appropriate.
Q233 In connection with "new approach" regulations , paragraph 41 of chapter III of the Report by
the Secretariat states that in general mandatory obligations are limited to essential requirements, while
leaving specific technical solutions to meet these requirements to the market, either through voluntary
standards or a manufacturer's own solution.  Could the EU indicate (i) What criteria are used to decide
that one or the other option should be used?  (ii) Whether nationals of other member States can take
part in formulating these voluntary regulations or the solutions proposed by manufacturers and, if so,what practical procedures have to be followed in this regard?
i) Essential requirements define the results to be attained, or the hazards to be dealt with, but 
do not specify or describe the technical solutions for doing so. The application of harmonised 
standards, which give a presumption of conformity to the essential requirements, remains 
voluntary in the field of new approach directives. The manufacturer has the choice.
ii) Since the European standards bodies do not claim to be INTERNATIONAL bodies, 
participation in their work on the elaboration of European standards is commonly limited to 
the national standards bodies of the European sphere (15 MS, EFTA countries and some 
candidate countries). This is done on purpose because otherwise the European 
standardisation system (by attracting as many participating countries as possible) would 
detract interest form the international standards bodies or even be in conflict with the international standardisation system operate d by the ISO, IEC and ITU.  This would 
potentially create confusion and hence, distort international trade.
However, as the European standards bodies and their national member are committed to
international standardisation they have cooperation agreements with the international bodies ISO,
IEC and the ITU. For instance, under the agreemen t between ISO and CEN there are provisions for
mutual representation at meetings of committees and working groups allowing for up to four
representatives being appointed to attend the meetings of technical bodies of the other organisation.
Q234 Paragraph 41 of chapter III of the Report by the Secretariat states that manufacturers must
affix the "CE" mark to their products to indicate compliance with the essential requirements of the
corresponding technical regulation or standard.  (i) Could the EU please describe the procedure to be
followed in order to obtain the "CE" mark?  (ii) Can enterprises outside EU territory obtain this mark
and, if this is the case, what procedure do they have to follow?  (iii) Can certification bodies located
outside EU territory be accredited or authorized to assess conformity and grant the right to affix the
"CE" mark?
i) The procedures for fulfilling the requirements of the new approach directives and the 
affixing of the CE mark are described in detail in the Guide to the New and Global Approach 
on the following web-site address:
http://europa.eu.int/comm/enterprise/newapproach/legislation/guide/legislation.htm
The Guide is available in all EC languages including Spanish.WT/TPR/M/102/Add.1
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ii) Manufacturers from outside the EU are subj ect to the same technical requirements as EU 
manufacturers when having products their products approved for being placed on the EU market. For third country producers without a manufacturing presence within the EC, an 
importer must be used. This is also explained in the Guide.
iii) Certification Bodies operating under the new approach must be established on the 
territory of one of the Member States, however sub-contracting arrangements between test 
and certification bodies allow certain tasks to be done in the third countries. See Chapter 6 ofthe Guide.
Q235 Paragraph 43 of chapter III of the Report by the Secretariat states that in February 2002 a
framework of general principles for food law was adopted.  Can the EU clarify what trade
implications this new legislation will have for third countries?
The draft of Regulation (EC) No 178/2002 of the European parliament and of the Council of
28 January 2002 laying down the general principles and requirements of food law , establishing the
European Food Safety Authority and laying down procedures in matters of food safety has been
notified as a proposal to the WTO for comments (G/SPS/N/EEC/110 of 8 February 2001 with anextended deadline of 26 May 2001). No comments were received from third countries.
Q236 Paragraph 44 of chapter III of the Report by the Secretariat states that "generally" technical
regulations by the Community or its member States are published for a period of 60 days for
comments.  Could the EU:  (i) Indicate under what circumstances and for what reasons a technical
regulation is NOT published for comments or under what circumstances and for what reasons the time
might be less than 60 days?  (ii) Describe the procedure governing the submission of comments byEU citizens and also Members of the WTO and their nationals?  (iii) How are replies conveyed to
those who have submitted comments?  (iv) What is the normal time-limit for entry into force of a
technical regulation or standard and what are the exceptions to this rule, as well as the circumstances
in which they apply?
(i) The concerned cases can be a) emergency procedures and b) no need for notification 
according to the provisions of the TBT Agreement (because a measure does not meet the 
necessary conditions  for notification).
(ii) Comments are distributed to the competent services, analysed and taken into consideration 
by the actors of the legislative procedure.(iii) The EC systematically replies to all comments received from third countries. Answers are 
sent to the TBT Contact Points and they are often discussed in the framework of the TBT 
Committee meetings.
(iv) This depends on the form of the legislative Act chosen (i.e. Regulation, Directive, etc) and 
allows sufficient time for adaptation of the concerned sector.
Q237 Paragraph 44 also indicates that the European standard-setting organizations and their
national committees have accepted the TBT Code of  Good Practice for the Preparation, Adoption and
Application of Standards.  Could the EU clarify wh ether all national standards-setting organizations in
its member States (i.e. the Spanish Standardizat ion Association (AENOR), the British Standards
Institution (BSI) etc.) have accepted this Code?
Mexico does not seem to be aware that the national committees of the European standards
organisations are the national standards bodies of the EU member states. And as stated in the EU
report, all of these national bodies which make up to European bodies  CEN and CENELEC have
accepted the TBT code of good practice.WT/TPR/M/102/Add.1
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Q238 Paragraph 46 of chapter III of the Report by the Secretariat states that, within 11 years, a new
system of registration, evaluation and authorization/restriction for new (post-1981) and existing (pre-1981) chemical substances called REACH will be phased in.  In this connection, could the EU
explain:  (i) Whether enterprises not located within its territory can be listed in this register?  (ii) What
impact the REACH system will have on current trade flows and on production costs for chemicals?
(iii) Why has it been decided to include all chemicals in the REACH system and not just a selective
number?  (iv) Whether it has evaluated the impact of the administrative work entailed by the REACHsystem for importers and exporters active in the European market?
The REACH system will apply equally to EU  manufacturers and importers of chemical
substances into the EU.
The European Commission is currently drafting the legislative proposals along the policy
lines announced in the White Paper.  Taking due account of the international commitments of the
European Community, it will in particular ensure that no discrimination will be established between
domestic and imported substances and that the forthcoming legislation will not create any
unnecessary obstacles to international trade.
The possible financial impact of the White Paper on business, including SMEs, has been
estimated in a Business Impact Study  undertaken by the Commission. Given the different scenarios
and assumptions about the implementation of the White Paper, costs may range between 2 and 7
billion Euros, with the most likely amount being 3.6 billion Euros  over the first 10 years, when
existing substances will be fed into the new system. Further information can be taken from
http://europa.eu.int/comm/enterprise/chemicals/conference/conference2/index.htm
All new and existing substances exceeding a production or import volume over 1 t per year
will be subject to registration under the REACH requirements. Industry will have to  provide  theinformation required  for each particular substance. Evaluation of all substances exceeding a
production or import volume of 100 t, authorisation of uses of substances with properties of very high
concern and possible restrictions will also normally be considered on a case by case basis.
Q239 Paragraph 48 of chapter III of the Report by the Secretariat indicates that all the EU's food
legislation is to be reviewed by 1 January 2007.  Could the EU confirm whether this legislation will
be submitted for public consultation and notified to the WTO Secretariat for comments by Members?
The Regulation (EC) No 178/2002 of the European parliament and of the Council of
28 January 2002 laying down the general principles and requirements of food law , establishing theEuropean Food Safety Authority and laying down procedures in matters of food safety provides that
the general principles of food law as established by the Regulation shall form a general framework of
a horizontal nature to be followed when new measures are taken. It is furthermore foreseen that
existing food law principles and procedures shall be adapted as soon as possible and by
1 January 2007 at the latest in order to comply with these general principles of Food Law.  TheEuropean Community will in accordance with the provisions of the WTO agreement on the
Apllication of Sanitary and Phytosanitary Measures (SPS Agreement) and/or the WTO Agreement on
Technical Barriers to Trade (TBT Agreement) notify changes in their sanitary or phytosanitary
measures  and technical regulations. However, since the general principles have already been
notified to WTO (G/SPS/N/EEC/110 of 8 February 2001 with an extended deadline of 26 May 2001),the notification of texts including these already notified general principles should not be a problem.
1. Q240 With regard to section (d) (paragraphs 63-66 of chapter III) concerning conformity
assessment, could the EU:WT/TPR/M/102/Add.1
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(i) Explain the procedure by which a foreign standard or conformity assessment is
recognized as an equivalent standard or procedure, and how many standards orconformity assessment procedures have been so recognized?
(ii) describe the procedure followed for accrediting bodies that conduct conformity
assessments of standards and technical regulations at the European, State and
municipal levels?
(iii) inform us of the circumstances under which assessment of conformity with technical
regulations may be conducted by accredited bodies and, in such cases, whether an
additional authorization by the government authority responsible for the body
concerned is required?
(iv) indicate whether a conformity assessment body (laboratory, certification body,
inspection unit, etc.) accredited in a WTO Member may carry out such assessment of
conformity with European, national or municipal technical regulations or standards?
and
(v) describe the procedure for assessing co nformity with standards or technical
regulations issued by EU member States or their local authorities?  and
(vi) inform us whether conformity assessment procedures at three levels (Community, 
national and local) are subject to public consultation and regular revision after they 
have entered into effect?
i) recognition of equivalency has to be done on a case by case basis and the application of this 
principle is still at a relatively early stage. For further information, please refer to the toolbox 
paper mentioned in paragraph 66. The following site address refers:
http://europa.eu.int/comm/enterprise/international/sec_2001_1570_en.pdf
ii) make reference to the Guide to the New and Global Approach on the following web-site 
address: http://europa.eu.int/comm/enterprise/newapproach/legislation/guide/legislation.htm
The Guide is available in all EC languages including Spanish.
The issue of accreditation is addressed in Chapter 6.
iii) Member States are responsible for the notification of notified bodies. They have the right to propose bodies operating under their jurisdiction which comply  with the requirements of the 
directives, which do not require accreditation as a mandatory requirement.
iv) Only if a MRA exists.
v) This question can be answered in detail by an examination of the notifications made by 
individual Member States. However, in principl e, in the non-harmonised area, the technical 
regulations are a Member State responsibility, although, needless to say, the provisions of the 
TBT agreement must be met.
vi) Yes. Community and national level legislation are both subject to public consultation.
Concerning the part of the question dealing with periodic revision please see a previous reply.
Q241  The Belgian Government has put before the European Commission draft legislation on
applying a so-called "eco tax" on non-reusable cont ainers for beverages.  The purpose of the proposed
measure is to compel exporters of beverages to send the containers back to the production site to be
washed and refilled or to pay the tax.  If the proposed measure is implemented, it would discriminate
against imported beverages of different types.  The greater the distance from the production site, the
greater the discrimination.  In addition, through various reductions in the so-called "excise" duties, the
impact of the eco tax would be different for different beverages and have a greater impact onWT/TPR/M/102/Add.1
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beverages such as beer.  Belgium, however, already has a recycling system (FOST PLUS) which,
according to the most recent figures, has been hi ghly successful, and it involves the major importers
of beverages.  In this connection, does the EU consider that the measure proposed by Belgium is
consistent with its WTO commitments?  If it is applied, what would be its impact on Community
imports of beverages?  Has the EU considered wh at the impact would be on Community exports of
beverages if third countries adopted measures similar to that proposed by the Belgian Government?
The EC considers that fiscal measures do not fall under the TBT Agreement.WT/TPR/M/102/Add.1
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QUESTIONS FROM THE USA
SUMMARY OBSERVATIONS
(2) Policy Developments
Q242 The Secretariat reports that good progress has been made on achieving the goal of fully
integrated securities markets by 2003 and financial markets by 2005 as part of the Financial Services
Action Plan.  Please provide additional details of this progress and explain what is still to be done in
fully achieving these goals.
Please refer to paragraphs 75 to 82 incl. of the Report by the Secretariat: Trade Policy
Review European Union, WT/TPR/S/102.
Q243 The Secretariat reports that progress has been slower in (1) opening the non-household
markets in electricity and gas to competition by 2004, (2) establishing cross-border electricity
interconnectivity of at least 10 percent of production capacity by 2005, and (3) opening postalservices currently reserved for the incumbent prov ider toward the prospect of full liberalization by
2009.  Please provide more detail concerning what has been done, what steps were planned that have
been delayed, and what steps remain to be taken on each of these issues in the immediate future.
On postal services:
In 1992 the Commission issued the ‘Green Pape r on the Development of the Single Market in
Postal Services.’  This provided an analysis of the sector and set out the main objectives of
Community policy for postal services. These were to  improve the quality of service and to implement
the internal market for postal services.
Towards these objectives, and in line with the principle of subsidiarity, the Postal Directive
97/67  set in place a limited harmonisation of EU postal services.
It established regulatory provisions including :
- The definition of a minimum universal service for all users comprising of at least one 
delivery and collection five days a week.
- A maximum reservable area of 350 grammes and five times the basic tariff of an item of 
correspondence.
- To safeguard the universal service, Member States could establish authorisation procedures, 
which may include individual licences and a compensation fund in the universal service area.
- That there should be reasonable and good access to the network, and that this access should 
be transparent and non-discriminatory.
- Member States were required to establish National Regulatory Authorities independent from 
the postal operators.
- That USPs should apply transparent and separated cost accounting principles and provide 
separate accounts for reserved and non-reserved universal services and non-universal 
services.
- That there should be Quality of service  targets for cross-border mail- 85% for delivery after 
three days, (D+ 3), 97%  for delivery after 5 days, (D+5) and that there should be harmonisation of technical standards.
- That Member States should ensure that adequ ate customer protection measures were put in 
place, for example in regard to complaints and redress procedures.
These provisions, mainly focused on principles and boundaries, established a Community
framework for Member States to adapt to their nat ional context. They have been largely implemented
in the Member States and the Postal Directive 97/67 has led to the following changes:WT/TPR/M/102/Add.1
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• A largely achieved implementation of a Community universal postal service;  In practice the
universal service exceeds the minimum requirements of the Directive in most Member 
States, for example 10 Member States have adopted a 20kg maximum  limit for parcels collection and  five have daily collection and delivery on six days a week.
• The maximum reservable area is implemented across the Community, with many Member 
States going further in opening their market, for example Sweden, which has no reserved 
area, Germany where the reserved area has been reduced to 200g, and 50g for direct mail, 
and the Netherlands, where it has been reduced to 100g.
• Implementation of additional safeguards for the universal service in some Member States.  
Authorisation systems are in place in 8 Memb er States and provisions for licencing in 9 
Member States.  Though  7 Member States have included provisions for a compensation 
fund, only one so far has plans to activate such a fund. 
• Good and reasonable access to national postal services has been more than achieved, with 
the independent consultants CTCon suggesting that there is possibly an over provision in the European postal access infrastructure, which has five times as many access points per 
square km as in the US.
• 14 out of the 15 USPs have now implemente d a transparent and clearly separated cost 
accounting system in accordance with Article 14 of the Directive.
• The quality of service standards set by nearly all the Member States now comply with 
Directive requirements.    
• Though the implementation of Directive requir ements for arrangements for customer 
complaints varies customers are adequately protected in Member States.
• The European Committee for Standardisation (CEN) has been developing European 
standards for the postal sector since 1996. On 14 January 2002, the first European standard
for measuring the quality of service (EN 13850) was adopted by the CEN.
• National Regulatory Authorities (NRAs) have been established in all Member States and, 
although full independence of the NRA from the postal operator is not applied in all Member States, some of the NRAs are dem onstrating clear independence and promoting 
competition in their Member States.
Application of the Postal Directive 97/67 has,  therefore, led to significant measures of
regulatory codification and harmonisation. Further, the Postal Directive has led to significantimprovements in the quality of service. 92.3% of Community cross-border priority mail was delivered
in D+3 in 2001 (compared with only 69.1% in 1996)
6.  The harmonisation of the USPs’ performance,
both cross-border and domestic, has mitigated the “frontier effect”. and quality of service
measurement standards being developed by  CEN should further enhance monitoring and
performance.
This first step towards the accomplishment of the internal market for postal services has also
provided the catalyst for rapid market developments which have included :
• The USPs have moved, from commodity service providers to a more business-oriented 
organisation and culture, to take advantage of new commercial opportunites. This trend towards the corporatisation of the USPs has led them to adopt new business strategies 
focusing on cost efficiency, profitability, diversification and expansion. The strength of this movement has varied across Member States and, arguably, those who have moved furthest 
along this route have enjoyed some first mover advantage. However, most USPs have now 
become commercial and profitable business organisations, even though levels of productivity 
vary;
                                                     
6 Source: UNEX results (International Post Corporation)WT/TPR/M/102/Add.1
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• Whilst there has been only limited competition in the mail market segment, the parcels and 
express markets are fiercely competitive.  However, the USPs have been able to increase their
share of the competitive market segments.
• The USPs’ movement, from commodity service operators to delivery service providers, has 
changed their activity portfolios, generally reducing their dependence on the mail market segment;
• Expansion (mainly into transport/logistics), product innovation and the use of outsourcing 
are blurring the traditional boundaries of the postal sector.
• The postal services market has continued, in general, to be characterised by growth in all 
market segments, and particularly in the direct mail segment.
These developments have carried clear benefits for postal customers, such as  increased
quality of service, increased efficiency, greater financial security for the USPs and greater innovation
in the sector. Further, as a result of these market changes, the USPs are generally now in a far
stronger position to cope with the demands of a more competitive market.
The Postal Directive 97/67 has also helped to create an expectation of further measures of
market opening, and this expectation has increased both the pace of national postal reform and that
of the restructuring of the postal sector towards concentration, efficiency and profitability.
However, the internal market for postal services remains unaccomplished and, to move
further towards this, the European Parliament and Council have recently agreed a new Postal
Directive,  Directive 2002/39.  This confirms the current universal service definition and adds further
elements on access conditions, where it requires that tariffs ‘shall take account of avoided costs’, and
customer redress procedures have been extended, as the Directive requires that ‘transparent, simple
and inexpensive procedures are drawn up for dealing with users’ complaints’ and that this principle
should also be applied to ‘beneficiaries of services’ outside the scope of the universal service or
inside the unversal service but not provided by the USP.
The Directive also requires two further steps of market opening, the first establishing a
reduced maximum of reserved services, of below 100g and three times the public tariff7 in 2003, and
50g and two and half times the price in 2006.  These steps will open a further 16% of USPs’ revenues
to competition.
Further, the Directive requires that in 2006 there should be a further study towards a
‘decisive step’  towards the ‘full accomplishment of the internal market  for postal services in 2009’.
These developments suggest that the journey towards the single market for postal services,
begun in 1992, is now nearing completion, and that as a result users are benefiting from better quality
of service and a more efficient universal service provision.
(3) Institutional Developments
Q244 The Secretariat reports that progress has been made on transparency, by adopting policies that
give all persons, regardless of nationality, access to documents of EU institutions on anon-discriminatory basis, and that the EU has made increasing use of public consultations.  Please
explain the legal status of these reforms, and make assurances that there will be means of
guaranteeing that such non-discriminatory access to documents and use of public consultations will be
maintained without exceptions.  Also, please describe other steps the EU will take to enhance the
transparency of its operations, such as prior public notification of upcoming actions and decisions byEU institutions and means of appeal to the general public.
                                                     
7 This refers to the public tariff for an item of co rrespondence in the first weight step of the fastest
standard category.WT/TPR/M/102/Add.1
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In the White Paper on Governance, the Commission put forward the idea to prepare a set of
minimum standards on consultation in the form of a c ode of good conduct as well as the idea of more
extensive partnership arrangements.
In 2001 the Commission approved a consultative document including proposals for such
minimum standards for consultation of interested parties (COM (2001)277 final) which will be
finalised in 2002 in light of the comments received.
II. Trade Policy Regime: Framework and Objectives
(1) General Framework
(iii) Transparency and Public Consultations
Q245 The Treaty of Amsterdam is supposed to enhance the transparency of the EU’s work by
making four specific improvements.  Could the EU please elaborate on these improvements,providing details of how these improvements have been manifested.
Scope extended to third-party documents
Under the previous system, applicants could only request access to documents drawn up by
the institution itself. Regulation 1049/2001 has abolished this authorship rule and applies to all
documents held by an institution, including those received from third parties.
A refusal to grant access to a document received from a third party must be based upon the
exceptions to the right of access provided for in the Regulation. When it is not clear whether a
document should or should not be released, the institution will consult with the author. However, the
author cannot veto the disclosure of his document if the institution is convinced that it should be
released.
The authorship rule has been maintained only for two specific cases:
Member States may request an institution not to release a document originating from them
without their consent.
So-called sensitive documents, i.e. documents originating from institutions, Member States,
third countries or international Organisations, classified as confidential or higher for public interest
reasons, are not released without the author’s consent.
Overriding public interest in disclosure
The new Regulation has introduced a public interest test for most exceptions to the right of
access. This means that the institutions have to balance the harm that would be caused by releasing a
document against the public interest in disclosure of its content.
No public interest test is performed when access is denied on one of the following grounds:
Protection of the public interest: public  security, defence and military matters,
internationalrelations, financial, mone tary or economic policy.
Protection of privacy and the integrity of the individual.
Document register
The Regulation contains an obligation to establish a public register of documents that should
be accessible in electronic form. The Council operates such a register since January 1st 1999. The
European Parliament and the Commiss ion opened their registers on June 3rd 2002, as requested by
the Regulation (Art. 11).
These registers are useful research tools. They can be accessed through the internet and
contain references of documents (number, title, date, author), enabling citizens to identify relevant
documents and to make specific request for access. As  far as possible, the full text of documents is
made available through these registers.WT/TPR/M/102/Add.1
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Deadline for reply
The deadline for reply has been reduced from one month to 15 working days. When dealing
with complicated requests, the institutions may extend the deadline with another 15 working days.
(4) External Trade Relations
(ii) Regional Trade Agreements
Q246 What percentage of EU goods and services  trade, on a value basis, is now conducted on a
preferential basis?  Please show the value of EU imports and exports for each preferential tradingpartner.
There have been a number of attempts to measure the actual extent of preferential trade at
world level and for the EC.  These are not always totally reliable, due to data insufficiencies, but they
do tend to suggest that the share of preferential tr ade in total EC trade is in fact less than the number
of preferential agreements to which the EC is a party would seem to suggest.
Sapir (1998) estimates that in 1996 roughly one third of EC trade in goods took place at MFN
rates, one third at preferential rates (including GSP) and one third at zero MFN duty (where tariff
preferences did not matter). In other words ar ound 70% of imports entered the EU market on an
MFN basis.
It is important to underline that these estimates are an upper bound since they are obtained
on the basis of the assumption that all dutiable im ports from trading partners covered by a RTA with
the EU enjoy preferential treatment in the EU, while an unknown proportion of dutiable imports from
EU RTAs partners is actually subject to MFN duties.
Q247 Please provide details on products either excluded from, or not yet incorporated in, recent EU
FTAs.  When and how is agriculture expected to be incorporated in the Euro-Mediterraneanagreements?
Information on FTAs concluded by the EU, including as regards their product coverage, is
submitted to the relevant WTO Committee, the Committee on Regional Trade Agreements, so as to
enable the Committee to conduct examinations of RTAs  in the light of relevant WTO obligations and
in accordance with its mandate.  The EU has subm itted full information on  its own FTAs in this
context, including as regards product coverage.
The Euro-Mediterranean agreements cover all sectors including agriculture and it is not
correct to imply that agriculture is not already incorporated in the Euro-Mediterranean agreements.
The extent of liberalisation of trade in agricultural products between the EU and individual Euro-
Mediterranean partners under these Agreements reflects the results of individual negotiations.
Typically, the agreements also establish an on-going process for the negotiation of progressiveliberalisation of trade in agricultural and fishery products.
Q248 What is the status of the EU’s negotiations on FTAs with Chile and Mercosur?  How will the
eventual agreements cover substantially all agriculture and services trade?  Will there be transition
periods for liberalization?  If so, for how long will transition periods last?
Negotiations for an Association Agreement with Chile, which incorporates an FTA foreseeing
a very high degree of liberalisation, were only concluded recently and the final text of the agreement,
including its annexes, are now being prepared for signature.  The parties will notify the FTA to the
WTO under the relevant provisions of GATT Article XXIV and GATS Article V in due course.WT/TPR/M/102/Add.1
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III. Trade Policies and Practices by Measure
(1) Measures Directly Affecting Imports(viii) Product regulations and standards
Q249 We remain concerned that the EU’s focus on internal transparency has compromised third
country opportunities to influence the development of technical regulations as foreseen by the
transparency obligations of the WTO TBT Agreement.  As the EU’s WTO notifications of its
regulations are made only after the EU reaches a "common position"internally, how can the EU arguethat its notifications are "made at an early appropriate stage, when amendments can still be introduced
and comments taken into account"?
In line with obligations under the TBT Agreemen t, the Commission notifies draft regulations
at an early apporpriate stage when comments can still be both made and taken into. In many cases,
this is following agreement on the draft regulation by the Commission. However, for some
regulations, it may take place at a different stage in the adoption process.
Q250 As the EU is aware, the United States and a large number of other WTO members registered
strong concerns at the last TBT Committee meeting with EC Commission Regulat ion No. 753/2002 as
regards the description, designation, presentation and protection of certain wine sector products .
The Regulation was only notified to other WTO members after  its adoption (G/TBT/N/EEC/15)
whereas the TBT obliges Members to notify proposals, provide a meaningful opportunity for
comment, and take those comments into account before adopting a final regulation.  Significant
questions and concerns were raised about the WTO compatibility of the substance of the Regulation,
including its restrictions on the use of descriptive and/or generic terms (e.g., "vintage," "ruby," etc.)
which have no specific connection with a geographical source or even a given class of goods and itsprohibition of the use of certain bottle shapes by all but EU producers.  We would appreciate
information from the EU on how it justifies this Regulation, particularly in light of the provisions of
TBT Article 2.  We would also appreciate information on why the EU failed to notify the regulation
as a proposal and denied WTO members their righ ts for an opportunity to comment prior to its
finalization.
Regulation notified under TBT Agreement on 10 June 2002 [ref. G/TBT/N/EEC/15].
Regulation enters into force on 1 January 2003.Deadline for written comments from WTO Members is 9 August 2002.
Take note of TBT obligation to take comments from WTO Members into account.
Q251 The U.S. is very concerned that EU approvals of new biotech products scheduled to resume in
October 2002 may be delayed until the Commission’s proposals on traceability and labeling and food
and feed are implemented, which could take many months.  How will the EU ensure that biotechapprovals will resume in October?
Commissioners Byrne, Wallstöm and Lamy have committed to make all efforts to re-launch
the authorisation procedure on application of the Directive 2001/18/EC, which should be transposed
into national laws for application by 17 October 2002.  This includes efforts to ensure adoption of a
number of implementing measures , namely guidance on risk assessment, monitoring and summary
formats for notifications, prior to 17 October 2002 such that the Directive is operational.
It should, however, be made clear that this commitment extends to an operational Directive.
Commitments cannot be provided on the part of Me mber States or notifiers.  According to the
Directive, for the procedure to re-start, notifiers must firstly submit information to a lead Member
States to either upgrade pending dossiers or provide a completely new notification (Article 35 ofWT/TPR/M/102/Add.1
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Directive 2001/18/EC).  Reliance is then placed on that Member State to evaluate the risk assessment
provided for the additional information, which is subs equently transmitted to the other Member States
for evaluation and ultimately approval.
The Commission has always pointed to the fa ct that the new procedure could commence on
application of Directive 2001/18/EC but would highlig ht that commitment is required from notifiers
and Member States for notifications to be approved.
Q252 Will the EU enforce its comprehensive traceability labeling requirement for products where
no biotech materials will remain in the food, such as in highly processed foods?
Traceability in the context of this proposal (notified under G/SPS/N/EEC/149 and
G/TBT/EU/6)  can be defined as the ability to trace GMOs and products produced from GMOs at all
stages of the placing on the market throughout the production and distribution chains facilitating
quality control, labelling, and also the possibility to withdraw products. The traceability requirementsare based on transmission and retention of relevant information for such products.
The effectiveness of traceability requires that the identity of GMOs contained within a
product can be established at its first stage of the placing on the market within the production or
distribution chain.
For products imported from third countries, in particular bulk shipments of commodity crops
that may contain an unknown mixture of GMOs operators importing such shipments into the
Community will have to specify the identity of thes e products, namely in terms of the GMOs that they
contain. If this information is not available from the exporter, then importers would have to determine
the identity of the GMOs in the product, which is likely to require sampling and analytical testing. The
Proposal, therefore, provides for the possibility of establishing guidance with respect to sampling andtesting of bulk commodities as a means to facilitate a common approach within the Community.
The European Commission would like to point out that it remains illegal to import GMOs or
genetically modified food (this includes highly processed foods) into the European Union that have
not received authorisation in accordance with current European Community law.  Operators are,
therefore, already obliged to ensure that unauthorised GMOs or genetically modified foods are not
imported into the European Community.
Q253 Certain member states have banned certai n EU-approved GM products. What are the EU’s
intentions for confronting these apparently illegal bans?
Where a Member State has justifiable reasons to consider that an authorised product
constitutes a risk to human health or the environment, it may under Article 16 of
Directive 90/220/EEC provisionally retsrict or prohibit its use or sale on its territory.  There arecurrently a number of ongoing Article 16 cases which need to be addressed.
Directive 90/220/EEC has recently been revise d.  The new Directive 2001/18/EC provides for
a more stringent regulatory framework and includ es provisions that address many of the concerns
raised by Member States in justification for their bans.  Emphasis has been placed on the application
of the new Directive on 17 October 2002 as the means to restart the authorisation procedure and it
would, therefore, be consistent to address  the Article 16 cases in this framework.
Q254 Under EU regulations, Member States have an  obligation to register approved GM varieties in
their national seed registers.  How does the EU ensure Member States are meeting this obligation?
Council Directives 70/457/EEC and 70/458/ EEC have established a Common Catalogue of
varieties of agricultural plant species and a Common Catalogue of varieties of vegetable species.
These Common Catalogues list all the varieties of seeds which are not subject in the EU and EEA toWT/TPR/M/102/Add.1
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marketing restrictions relating to the variety. The Common Catalogues are compiled on the basis of
the national catalogues of EU Member Sates and EEA countries.
In so far GMO varieties are concerned an amendment to the above mentioned Directives
introduced by the Council in 1998 (Directive 98/95/EC)  establishes that
- "Member States shall ensure that geneticall y modified varieties which have been accepted 
  are clearly indicated as such in the [national] catalogue of varieties."
- the common catalogues "shall clearly indicate those varieties which have been genetically  modified".
Q255 The EU organic regulations state that the EU organic logo may only be used on products
which consist of at least 95% EU-origin content.  How is this consistent with national treatment
requirements?
EC regulations provide that the EU organic logo can only be used on product produced in
line with EC organic production standards and control systems. Thus the EU logo can equally be
displayed on imported product recognised as meeting these conditions. There is no breach of national
treatment requirements.
Q256 We understand the EU is encouraging advance adoption of EU animal and food safety
standards by those countries negotiating accession to the EU.  In what specific areas is the EU seeking
such advance adoption, and which candidate countries are affected?
Candidate Countries must comply with the EU ac quis at the latest at the day of accession. In
order for this to work in practice we encourage the Candidate Countries to gradually bring their
legislation and administration in compliance with the acquis in advance of accession. This is the casein the veterinary field as in most other parts of the acquis.
(3) Measures Directly Affecting Production and Trade
IV. Developments in Selected Sectors
(1) Agriculture
Q257 The EU claims to be the largest importer of agricultural goods from developing countries.
What percentage of these imports are comprised of value-added goods?
In the period 1997-1999, the EC imported an average of US $ 35,5 billion of agricultural
products (WTO definition) from developing countries. This is more than the US, Japan, canada,
Australia, and New Zealand did together. There is no definition at the WTO level which permits to
distinguish basic agricultural products from processed products or value-added products.
Consequently, it is not possible to give an answer to your question concerning value-added goods.
(ii) Common Agricultural Policy (CAP)
(a) Overview
Q258 In addition to direct payments, does the Common Market Organizations (CMOs) provide
other types of support?
Yes. Actually each agricultural sector presents  some specificity. For further detail, please
refer to the WTO CoA notification on domestic support (G/AG/N/EEC/38 27/06/02). In addition, allinformation is provided for each OCM on the site of DG AGRICULTURE:WT/TPR/M/102/Add.1
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(http://europa.eu.int/scadplus/leg/fr/s04004.htm) .
Q259 Does the EU’s July 2002 proposal to the C ouncil for a mid-term review of certain regimes
anticipate proposals for other regimes, such as those for fruits and vegetables?
As recently announced by the Commissioner to the European Parliament there will be other
OCM reviews in 2003 eg. Tobacco, Olive oil, wine and possibly Fruit and vegetables.
Q260 Is the EU in a position to forecast the impact of its Mid-Term review proposals on EAGGF
expenditures?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Q261 What kind of constraints, if any, are placed on Member State expenditures on agriculture,
particularly those providing direct income assistance to farmers for specific commodities?
As Community agriculture is a common policy (CAP) all expenditure provided by Member
States must be notified to the Commission for prior agreement .
Q262 How does the $90.2 billion figure cited in Paragraph 7 for aggregate EU support to producers
in 2000 relate to the 40.4 billion Euro figure for CAP expenditures cited in Paragraph 3?
The figure of $90.2 billion refers in paragraph 11 (not paragraph 7) is OECD’s PSE estimate,
which equally contains consumer transfers.
Q263 Is the EU in a position to estimate what the impact of the EU’s mid-term review proposals
would be on the figures cited in Paragraphs 7 and 8?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Q264 In the mid-term review of its Common Agricultural Policy, the EU proposes the replacement
of headage payments (for beef production) with single income payments per farm based on historical
entitlements.  Other than these direct income payments, what other incentives exist to alleviate
intensive production?  What will the EU propose once the market situation has become more
balanced?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Q265 Under the Mid-term review of the Common Ag ricultural Policy, the EC lays out four options
for the dairy sector, but does not advocate any major change prior to 2008.   Does the EU expect
changes in its dairy policy prior to enlargement?
The Commission presents four options without indicative preference and it would have to be
discussed by the Member States in the following months. Anticipation of Agenda 2000 dairy sector
reform is not included in these options. Overall,  as Ministers have not adopted MTR proposal, it is
not appropriate to be discussed in this context.WT/TPR/M/102/Add.1
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Q266 How will the proposed concept of cross-compliance for domestic support affect the treatment
of imports?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Q267 The EU has indicated its desire to simplify import protection for rice and cereals through the
establishment of TRQ’s.  However, many traders have expressed the sentiment that compliance with
the administration of a TRQ is a rather complicated exercise.  Is the EU considering other alternativesfor the simplification of import protection for rice and cereals?  If so what are they or if not, why not?
The EC intend to unbind its import regime for cereals through the GATT Art XXVIII
procedure. In so doing it is the intention of the EC to replace the current system by a sound,
transparent and predictable import regime based on TRQ. The EC is of the opinion that TRQ can, and
indeed should, be managed in the simplest and most transparent possible ways.
Q268 What does the EU perceive to be the bigge st obstacle to the elimination of the use of
agricultural export subsidies?
Firstly, the EC has substantially reduced the use of export subsidies since 1995. Export
subsidies are becoming less and less significant, falli ng from 25% of the value of farm exports in 1992
to 5.2% in 2001. In 2001, export refund expenditure was €2.763 billions. Any policies by thirdcountries, which have the effect of further depressing world prices will make difficult to move away
from the use of export subsidies. Equally, other forms of subsidisation such as the abuse of food aid or
export credit programmes which are trade distorting (for example one WTO Member is the largest
provider, about 95% of the more trade distorting export credits), will also hamper these efforts.
(iii) Developments in Selected Subsectors
Arable crops
Q269 Can the EU provide figures on area for cere als and oilseeds since the time that the CAP
Agenda 2000 reforms were implemented?
Please consult two tables in annex for marketing year 2001/02. For other years, consult the
serveur EUROSTAT NEW CRONOS.
Q270 How does the EU anticipate that its Mid-Term review proposals would impact cereals and
oilseeds areas?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Q271 How does the EU anticipate that the Mid-Te rm review proposals would affect market access
for grains and rice?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.WT/TPR/M/102/Add.1
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Beef
Q272 Can the EU present new, peer-reviewed scientific evidence to support its current ban on
imports of U.S. beef from cattle which have been treated with approved growth promotants?
The newest peer reviewed scientific advice (with references) is available for everybody on the
European Commission homepage at : http://europa.eu.int/comm/f ood/fs/him/him_index_en.html
Q273 Paragraph 11 says that the discussion is underway to bring EU legislation banning the
production and imports of beef produced with growth hormones into compliance with the WTO rulingon the matter.  Please explain what is being considered to bring EU legislation into compliance.
At the end of the World Tr ade Organisation (WTO) Dispute Settlement, the WTO Appellate
Body concluded that the prohibition of imports of meat from hormone-t reated animals to the EU did not
comply with the requiremen t that such a measure should be based on a relevant assessment of the risks
to human health. As a consequence the European Commission imme diately initiated a complementary
risk assessment which was mandated to the Scientific Committee on Veterinary measures relating to
Public Health (SCVPH). The committee was asked to  evaluate the risks to human health from hormone
residues in bovine meat and meat products treated with six hormones (oestradiol 17 β, testosterone,
progesterone, trenbolone acetate, zeranol and melengestrol acetate) for growth promotion. The SCVPH
concluded in 1999 that no acceptable daily intake (ADI) could be established for any of the sixhormones evaluated. For oestradiol 17 β it concluded that there is a substantial body of evidence
suggesting that oestradiol 17 β has to be considered as a complete carcinogen (exerts both tumour
initiating and tumour promoting effects) and that the data available would not allow a quantitative
estimate of the risk. Since then  the SCVPH has continued to ta ke into account any new emerging
scientific data from any source, including the considerations of the United Kingdom's VeterinaryProducts Committee (1999), the Committee on Veterinar y Medicinal Products of the EC (1999), the
Joint FAO/WHO Expert Committee on Food Additives (JECFA).
In order to consider in particular data from third countries, an open call was published in 1999
requesting documentation from any interested party, in cluding the industry, to provide any relevant and
recent scientific data and information in their possess ion to be taken into account in the complementary
risk assessment. To close some of the evident  knowledge gaps the European Commission has moreover
commissioned 17 studies.
The EU proceeded as described to be sure t hat its decisions would always take account  of
scientific developments. An effort has been made to ensure that all scientific evidence considered has
been peer reviewed. However so far, none of the scientific information made available could convince
scientists to reverse their evaluation of the six hormones in question, so that they had to re-affirm
their advice in reviews. The last review was concluded as recent as April 2002.
The new legislative proposals of the EU have thus been based on the newest available
scientific opinions. Thus the measure is based on a scientific justification as requested in Article 3.3 of
the SPS agreement.
Q274 What measures does the EU intend to implem ent in order to encourage production of organic
beef?
There are no specific measures for organic beef, there is only general support under the rural
development agri-environment schemes for conversion to organic production .WT/TPR/M/102/Add.1
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Dairy
Q275 When does the EU plan to propose reforms to the dairy sector.  Is the EU in a position to
describe in a general way what the nature of future dairy reforms will be?
The Commission presents four options without indicative preference and it would have to be
discussed by the Member States in the following months. Anticipation of Agenda 2000 dairy sector
reform is not included in these options. Overall,  as Ministers have not adopted MTR proposal, it is
not appropriate to be discussed in this context.
Q276 Why does the EU not feel that "liberalization of the milk market on the same basis as for
cereals would, generally speaking, mean lower costs to consumers?"
As said above, four different options will be submitted to the Council. Ministers would discuss
about all of these approaches. Consequently, it is premature to be more precise at this stage.
Q277 Dairy producers in certain EU member stat es consistently exceed their production quotas
every year.  While a levy is charged to the member states involved, these member states are not
known to recoup the payments from producers.  Do es the EU include this member state subsidy to
producers in its notification?  How does this additional subsidy affect the EU's compliance with
production-limiting criteria for blue-box support?
In accordance with EC Regulation 1256/99, the milk levy is paid by producers to the
competent member state authorities and transferred to the EU budget. EU clearance of account
procedures foresee that any shortfalls in transfers from member states, including in respect of milk
levies, need to be recovered from the member state in question. There is therefore no addional
"national" support and consequently no effect on EU compliance with "blue box" criteria.
(3) Financial Services
(ii) Policy Developments
(b) Financial Services Action Plan (FSAP)
Q278 Mention is made of a mid-term review of the FSAP begun in early 2002.  When will this
review be completed, and will the results of the review be made public in some form?
Tthe mid-term review took place on 22 February 2002. The result is referred to in the 6th
Progess Report on the FSAP:
http://europa.eu.int/comm/internal_market/en/finances/actionplan/index.htm
(d) Insurance
Q279 How is reinsurance currently regulated by the Member States?   Does the EU have any plans
to extend the "single passport" to the reinsurance sector?
Reinsurance is currently regulated by the individual Member States. The institutions of the
EU are currently preparing legislation which will extend the "single passport" to the reinsurance
sector.
Q280 The Secretariat’s report notes that there is a proposed directive for insurance intermediaries.
Has the directive been approved by the Council and the European Parliament? Is the intent toWT/TPR/M/102/Add.1
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establish a single passport for suppliers of insurance intermediary services?  Will Member states
maintain some regulatory rights, as under the "general good" clause applying to the life and non-lifesector?
The institutions of the EU are currently preparing legislation covering insurance
intermediaries; it will extend the "single passport" to insurance intermediation. Member States will
maintain some regulatory rights, such as the "general good" clause.
Q281 The Secretariat report notes a proposed directive for occupational pensions. What is the
definition of "occupational pensions"? Has the directive been approved by the Council and the
European Parliament? Is the intent to establish a single passport for suppliers of occupational pension
services?  Will Member states maintain some regulatory rights, as under the "general good" clause
applying to the life and non-life sector?
The definition asked for is referred to as:  "institution for occupational retirement provision",
or "institution", it means an institution, irrespective of its legal form, operating on a funded basis,
established separately from any sponsoring undertaking or trade for the purpose of providing
retirement benefits in the context of an occupational activity on the basis of an agreement or a
contract agreed:
- individually or collectively between the empl oyer(s) and the employee(s) or their respective 
  representatives, or
- with self-employed persons, in compliance with the legislation of the home and host Member
  States and which carries out activities directly arising therefrom;
Legislation concerning institutions for occupational retirement provision is currently under
preparation; it will extend the "single passport" to such institutions; Member States will maintainsome regulatory rights such as the "general good" clause.
Q282 Does the single passport for the life and non-life sectors include cross-border supply issues
(cross-border from another country - not cross-border within the EU)?
No, the single passport for the life and non-life sectors does not include cross-border supply
from a third country.
Q283 How does the Directive relating to non-life insurance define a "large commercial risk"?  Is
this definition static or is it subject to change?
The definition of "large commerc ial risk " is included in the Article 5 of Second Council
Directive of 22 June 1988 (88/357/CEE), publish ed in the Official Journal No L 172 of 04.07.1988,
page 1. The definition is static.
Q284 Has the EU considering improving its cro ss-border insurance commitments, for which some
Member States do not take on commitments for Mode 1 supply of marine, aviation and transportinsurance?
Concerning the EU proposals to expand Mode 1 commitments for MAT, please refer to the
requests form the EC and its Member States as handed over to the US on 30 June 2002.
Q285 Are there any Member States that do not permit branching (direct - not internal branching) to
supply insurance? When foreign companies establish a branch in the EU (direct), is it still the caseWT/TPR/M/102/Add.1
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that the Member States retain the authority to regulate those branches according to Member
State-specific regulatory requirements?
All Member States permit direct branching from a third country; the conditions for such
branching, however, are still set by the authorities of each individual Member State.
(5) E-Commerce
Q286 How will the EU ensure that non-EU suppliers of digital products are treated in a
nondiscriminatory manner in the application of the VAT for electronic delivery of digital products?
VAT by its nature is a tax which always ensures neutrality between suppliers. For electronic
commerce, the recently adopted directive will remove the discrimination faced by EU businesses and
ensure that all operators are on a level playing field. In relation to the treatment of non-EU business,
there are no valid concerns on discrimination. There is nothing new in requiring non-resident
businesses to register and account for VAT in respect of taxable activities which they carry on withinthe EU. What is now being done is to extend this to suppliers of certain on-line services who have
heretofore been exempt and had an unfair advantage over European operators. Under these new
rules, no additional obligations will will be imposed on non-EU suppliers selling to business
customers in the Union (i.e., B2B sales which account for at least 90% of the market). When selling to
consumers, they can avail of a simplified registration scheme is more business-friendly than theexisting rules for non-EU businesses, which either involve establishment in the EU or registration in
each Member State.
Q287 If a non-EU supplier is subject to more one rous administrative and compliance requirements
than an EU supplier (e.g., the EU supplier calculates and collects one VAT rate - it's home market,
while a non-EU supplier must calculate and collect 15 different VAT rates - the destination market),how is that not discriminatory against a non-EU supplier of digital products?
As regards the charging and calculation of tax, in any Member State the non-EU supplier will
always be required to charge exactly the same rate as a local supplier so there can be no question of
discrimination. For B2B, tax compliance and administrative procedures will generally be handled by
the purchasing company under reverse charge provisions. Under the existing rules of the InternalMarket, an EU final consumer may however opt to buy from a supplier in another Member State
where the rate of tax applicable may be higher or  lower. Although it is impossible to predict the
overall significance of such differences, it is probable that it will either be neutral or insignificant -
tax rates are not the only factor in making a purchase decision and indeed high-taxing Member States
are sigificant providers of popular on-line content such as music. In practice, a non-EU supplier
making use of the simplified registration scheme provided for in the Directive will have administrative
and compliance obligations which are considerably lighter and simpler than those faced by acomparable domestic operator. Rate calculation is in any event usually an automated function and we
are not aware of this presenting any burden to business. Moreover, the provisions are temporary in
nature and will be subject to review in three years.WT/TPR/M/102/Add.1
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QUESTIONS FROM BRAZIL
Agriculture
Q288 With the proposals by the European Commission to reform the European Union’s Common
Agricultural Policy, presented early this month, this process seems to have gained new impetus.
According to the proposals under discussion, this reform might mean a greater transfer of resources torural development. This could mean that the es tablishment of new standards applied to European
agricultural producers in what refers to traceab ility, labeling, environmental and animal welfare
standards etc. might also be applied to imports. Could this trend lead to trade restrictions and technical
barriers? Could the EU provide any guidance on the proposals being considered?
As those are proposals from Commission and not EC measures, it is not appropriate to
respond in this context.
Q289 Will there be any increase in agricultural subsidies after the CAP is reformed and after the
EU’s enlargement is carried through? If so, for which sectors?
The EC will respect all its commitments, before and after accession of new Member States.
Q290 Are the agricultural subsidies granted by each member State individually, outside of the EU
budget, equally notified to the WTO? Could the EU provide information on the amount of subsidies
granted by each member state for each sector?
Member States do not allocate export subsidies.
Q291 Does the EU envisage any increase in agricultural import quotas after the EU enlargement?
For what products? Which criteria should apply?
The EC will respect all its commitments, before and after accession of new Member States.
Q292 A proposal that has recently been approved in the European Parliament establishes that
products whose composition contains a minimum of 0.5% of Genetically Modified Organisms be
subjected to labeling. Is there a scientific basis for establishing that limit at 0.5%?
The Commission proposed in the proposal for a Regulation on GM food and feed (notified
under G/TBT/N/EEC/6 and G/SPS/N/ EEC/149) that a threshold of a maximum of 1% (with the
possibility to establish lower thresholds in comitology) would be introduced for the adventitious or
technically unavoidable presence of unapproved GM material in food and feed which have at leastreceived a positive evaluation by the relevant scientific committee of the European Community.
The value of 1% is a compromise between the state of detection methods and the feasibility
along the production chain. The experiences with the 1% value have shown that the value of 1% is
implementable by Member States and control laboratories.
The European Parliament in its first reading has adopted an amendment reducing the
threshold to 0.5% and making it applicable only to material produced from GMOs authorised under
Community legislation.
The Commission has declared in Parliament  that it does not accept this amendment.
Q293 Could the EU provide some clarification on the way the recently created European Food
Agency will work? Brazil is particularly interested in knowing whether there is any relation ofWT/TPR/M/102/Add.1
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hierarchy or cooperation between that agency and the many technical committees that already exist
within the EU.
The
Regulation which provides the legal basis for the establishment of the European Food SafetyAuthority was formally adopted on 28
th  January 2002 and thus paved the way for the Authority
to start its operation as early as possible in 2002.
The European Food Safety Authority is a Community body with its own legal identity,
funded from the Community budget but operating independently of the Community institutions.It is not therefore managed by the Commission but  once selected by an Executive Director who
in turn will be answerable to a Management Board.
The primary responsibility of the Authority is to provide independent scientific advice on
all matters with a direct or indirect impact on food safety. The Authority has been given a wide
brief, so that it can cover all stages of food production and supply, from primary production to
the safety of animal feed, right through to the supply of food to consumers. It will gatherinformation from all parts of the globe, keeping an eye on new developments in science. It willshare its findings and listen to the views of othe rs through a vast network that will be developed
over time. As well as interacting with experts and decision-makers on many levels, EFSA willcommunicate directly with the public on its areas of responsibility.
Although the Authority’s main “customer” will be the Commission, it will be open to
respond to scientific questions from the European Parliament and the Member States and it canalso initiate scientific investigations on its own behalf. The Authority will carry out assessmentsof risks to the food chain and indeed can carr y out scientific assessment on any matter that may
have a direct or indirect effect on the safety  of the food supply, including matters relating to
animal health, animal welfare and plant health.  The Authority will also give scientific adviceon non-food and feed GMOs, and on nutrition in relation to Community legislation.
Scientific Committee and Panels
A Scientific Committee and several Scientific Panels will be responsible for the scientific
opinions of the Authority.
A Scientific Committee will be responsible for the general co-ordination necessary to ensure
the consistency in the scientific opinions of the different panels. This Committee will be composed
of the chairpersons of the scientific panels an d six independent experts who do not belong to any
panel.
The Scientific Panels will be composed of independent scientific experts selected following
an open call for expressions of interest and appointed by the Management Board. They will be
selected on the basis of criteria of competence,  knowledge, independence and experience. Members
of the Scientific Committee and Panels will not be employees of the EFSA.
The following 8 panels  will be established:
- Panel on food additives, flavourings, processing aids and materials in contact with food;
- Panel on additives and products or substances used in animal feed;
- Panel on plant health, plant protection products and their residues;
- Panel on genetically modified organisms;
- Panel on dietetic products, nutrition and allergies;- Panel on biological hazards (including TSE/BSE issues);
- Panel on contaminants in the food chain;
- Panel on animal health and welfare.
In accordance with the Regulation, until the Committee and Panels are established scientific
advice on matters falling within the competence of the Authority will continue to be provided by the
existing scientific committees established by Commission Decisions supported by Commission civilWT/TPR/M/102/Add.1
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servants. However, once the Authority is operational the above Committee and panels will replace
those currently managed by the Commission. In this way the responsibility for the provision ofscientific advice to support the legislative programme will be transferred to the Authority.
Q294 What are the criteria on which the European Food Agency bases its decisions? If those
decisions are based on scientific criteria, then why is voting — and not unanimous decisions —
required?
The European Food Safety Authority is a risk assessment and communication body and will
be responsible for the provision of scientific advice on all matters with a direct or indirect impact on
the safety of the food and feed supply. The EFSA does not take legal decisions but provides scientific
advice and scientific information. The scientific opinions are developed through discussion of leadingindependent scientists who are members of the Scientific Committee and 8 panels. These opinions are
adopted by a majority of the members of each Scientific Committee and Panels and minority opinions
are always recorded. Even if in practice most scientific opinions are consensual because they express
the state of the scientific knowledge, a voting system  has been provided for in order to ensure that
minority opinion are always recorded..
Q295 The European Commission has recently approved a regulation that changes the maximum
level of residues for dimetoate in cereals and products of vegetal origin at a lower level than that
established by the Codex Alimentarius as acceptable daily intake. No scientific explanation was
given. This rule seems to be incompatible with many provisions of the WTO Agreement on Sanitary
and Phytosanitary Measures, particularly articles 2.2 to 2.4, 3.2, 3.3, 5.1 and 6.1. Could the EU
provide a scientific explanation for that decision?
The Commission will shortly adopt a directive reducing the MRL for dimethoate in many
products of plant origin to the lower limit of analytical determination (LOD). This follows a scientific
assessment indicating a risk to the health of c onsumers from ingestion of dimethoate residues in
foods. All types of foods were examined, includi ng cereals and citrus. For foods where intake was
acceptable, the MRL was not changed. Where an MRL was not acceptable and where it was
necessary to reduce it then a good agricultural practice consistent with a reduced MRL was looked
for. Where this was found, the MRL was reduced. Where no good agricultural practice could be
found, the MRL was set at LOD. MRLs set at L OD can be reviewed at any time and increased to
levels safe for consumers on the basis of new da ta submitted by any interested parties. The MRLs
being set will apply to produce produced in and imported into the Community. A copy of the draft
regulatory text can be made available to interested parties. The proposed measures have been notified
in SPS and all comments revceived have been considered.
Q296 It also seems inconsistent with the principles of the SPS Agreement that the level of tolerance
to dimetoate for citric fruits be different and inferior to that established for similar products, such as,
inter alia, cherries, olives and onions. What are the reasons for that difference in treatment?
MRLs are established on the basis of good agricultural practice. There are different GAPs for
citrus, cherries, olives and onions and it is not surprising that different MRLs should be establishedfor each. For cherries, olives and onions, the data specific to these crops was considered.
Q297 The European Commission has recently approved Regulations 1149 and 1150/2002, which
increased the quotas for imports of high quality bovine meat (“quota Hilton”) from Paraguay (1,000
ton) and Argentina (10,000 ton more, per one year). Which were the criteria for defining such tariff
quotas?WT/TPR/M/102/Add.1
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Sugar
Q298 In May 1999, after political agreement was reac hed within the Berlin European Council, the
Agricultural Council adopted specific regulations setting out the reform of the CAP. However, sugar
was not included in the reform. When, in the last Trade Policy Review of the European Union, Brazil
asked about the prospects of sugar being included in the reform, the EU answered that it was “actively
considering the issue”. Is there any possibility that this might take place in the near future?
The EC extended its current regime until 30 June 2006. However, the Commission will
present a report to the Council in 2003.
Fisheries
Q299 The EU intends to implement in the near future a new common fishing policy, which aims,
among other objectives, at recovering the communitarian stocks by means of a reduction in the aid
provided for fishing. Is there any mechanism in st udy that will prevent European fishing fleets from
making up for that difference by means of fishing in extra-EU waters, where they can cause the samedepletion of fishing resources as has been observed in EU fishing zones?
The Community sees to it that its fishing vessels operate outside Community fishing waters in
a manner which is fully consistent with the releva nt provisions of the UN Convention on the Law of
the Sea (UNCLOS). In this context, and in pursuance of the co-operation and conservation
requirements enshrined in UNCLOS, the Community participates in a series of Regional Fisheries
Organisations that regulate fishing activities for a variety of species in their respective areas ofcompetence.
The management of fish surplus resources inside third country waters is a major concern for
the Community. The fishing activities of Community fishing vessels are monitored through a series of
tight measures (detailed catch recording and reporting, the presence of observers, reports of vessel
movements, the regulation of fishing gear, etc). Community fishing vessels respect domestic rules
applicable in the waters where they operate.
In the framework of the reform  of the Common Fisheries Policy, the Commission is proposing
a series of actions in the area of international fisheries. These proposals will include:
- An Action Plan to eradicate illegal, unreported and unregulated fisheries (IUU) (already
presented).
- An Action Plan to improve, at the regional  and sub-regional levels, the evaluation of stocks
that are accessible to Community fishermen outside  Community waters.
- An integrated framework for fisheries partn erships at national and/or regional level.
The EU also intends to promote partnership ac tions with third countries in order to put at
their disposal the necessary financial means for the implementation of a sustainable management of
the fish resources in their waters.
Steel Sector
Q300 The Commission initiated a safeguard investigation on 21 steel products on 27 March 2002,
and took provisional action on the same date on 15 steel products in response to the US safeguard
action on imports of steel (p.37). Two categories of steel products exported by Brazil are subject to
the EU’s quotas: “tin mill products” (category 9) and “alloy merchant bars and light sections”
(category 13). However, the market share of Braz ilian exports in the amount of EU’s imports has
declined for the two categories in the last years. The EC confirmed that in case of adoption of
definitive measures, “…the Commission will give careful consideration to Brazil’s request”. Is there
any decision regarding the adoption of definitive measures?WT/TPR/M/102/Add.1
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There is no decision on the adoption of definitive safeguard measures yet. As soon as one will
be made, Brazil will be informed and consul ted as according to relevant EU and WTO rules.
Phthalates in Toys
Q301 The Commission adopted, on 7 December 1999, the Decision 1999/815/CE, requiring
Member States to prohibit the placing on the market of toys and childcare articles containing
phthalates and destined to children under three years of age. No convincing scientific explanation was
given for that. The validity of the decision was initially limited to three months. However, through
decisions by the Commission, that measure has been successively prolonged by periods of three
months. Could the EU inform if there are new developments in this regard? When does the EU intendto suspend the prohibition?
The Decision has been prolonged for 10  consecutive 3-month periods with the last one
expiring on the 20th of August 2002.  The 11th prolongation is now being prepared.  The
prolongation for the decision is deemed necessary to ensure a high level of protection of small
children because of the continued health concerns associated with the use of these phthalates in soft
PVC toys intended to be put in the mouth. At the same time the prolongation of the Decision banning
these phthalates is needed to allow sufficient time for discussions in the Council over the Commission
proposal to amend Directive 76/769/EEC (the Limita tion Directive) which will implement the ban on
a permanent basis.WT/TPR/M/102/Add.1
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QUESTIONS FROM BRAZIL II
Agriculture
Q302 According to the Commission, what would be the impact of the accession to the EU of new
members from Eastern Europe on the Common Agricultural Policy? What are the steps envisaged for
their full integration to the CAP?
The Commission's thinking on this issue is basically laid down in its issues paper
"Enlargement and Agriculture: Successfully integrating the new Member States into the CAP" of
30.1.2002. This document as well as the relevant press release is available on the AGRI web-site
under enlargement. As regards the economic impac t of enlargement there are two studies, also
available on the web-site. The most recent one of March 2002 analyses the impact of various
enlargement scenarios on the candidate countries agri sectors.
Q303 What criteria does the EU use to levy specific or ad valorem tariffs on a given product? How
about seasonal tariffs? Why is orange juice subject to specific seasonal and ad valorem tariffs besidesbeing subject to a minimum price policy?
The use by EC of specific duties or of ad valorem duties and the reasons of the existence of
some seasonal tariffs result from the negotiatin g process of the Uruguay Round and of the former
GATT rounds of negotiation. Orange juice is not subject to seasonal tariffs and to a minimal price
policy. Moreover, the fact that there is a WTO quota for orange juice has to be pointed out .
Q304 Besides stricter sanitary rules, the reform of the CAP is expected to prioritize the adoption of
stricter legislation on environmental and animal protection at the expense of focusing, as it does now,
on the production of surplus agricultural commodities. How would that change influence the
concession of subsidies to third countries regarding production to be exported to the EU, as is the case
with sugar in ACP countries and India?
As those are proposals from Commission and not EC measures, it is not appropriate to respond
in this context.
Government procurement
Q305 With regard to the legal framework for public biddings in the EU, are there any “eco-
labeling” or “eco-audit” requisites in the EU rules for government procurement by its bodies? Are
there “social clause” requisites in such rules?
The public procurement directives do not contain any explicit reference to environmental
protection or any specific provision on the pursuit of social policy goals.
However, the existing environmental rules and the rules in the social field (either Community
legislation or national legislation compatible wi th Community law) are binding upon contracting
authorities.
Any specific additional conditions relating to environmental or social considerations must be
compatible with the Treaty rules, notably the prin ciples of non-discrimination and equal treatment.
Thus, any reference to “eco-labeling” must be related to the subject of the contract, only indicative of
the level of protection required and any equivalent solution must be accepted.
The EU Commission has issued two interpretative communications on the possibility to
consider those criteria in public procurement:WT/TPR/M/102/Add.1
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- Interpretative communication of the Commission on the Community Law applicable to public 
 procurement and the possibility for integrati ng environmental considerations into public 
procurement (COM(2001)274 adopted by the Commission on 4 July 2001).
- Interpretative communication of the Commission on the Community law applicable to public 
 procurement and the possibilities for integrating social considerations into public procurement 
(COM(2001)566 adopted by the Commission on 15 October 2001).
Q306 What is the current state of the negotiatin g process on government procurement between the
EU and Canada? Is it being negotiated under the aegis of the WTO (Agreement on Government
Procurement) or by means of purely bilateral talks?
The EU and Canada are both Parties to the GPA.  Frequent contact takes place between both
delegations at the GPA committee or bilaterally a bout the functioning and review of the GPA. There
are not specific bilateral negotiations out of the context of the WTO.
Q307 Are there any “buy-local restrictions” in the agreements on government procurement signed
by the EU? Should the answer be in the affirmative, how are such rules implemented vis-à-vis thenational treatment clause? How broad are those measures? Do they aim at providing some sort of
incentive for any sector in particular? Is there any link between those clauses and the protection and
incentive to small and medium enterprises?
The agreements concluded by the EU usual ly provide for equal treatment and non-
discrimination. There are not specific provisions about local preferences or incentive or protection to
small and medium enterprises.
Q308 A project has been sent to the European Parliament that should unify all the EU Council
Directives that deal with government procurement — namely Directive 92/50/EEC on the
coordination of procedures for the award of public service contracts; Directive 93/36/EEC on the
coordination of procedures for the award of public supply contracts; and Directive 93/37/EEC on thecoordination of procedures for the award of public works contracts. Has this unification already been
approved? Should the answer be in the affirmative, under what legal document has it been done?
What changes are there to the disciplines on technical specifications?
The process is still ongoing.
Reference document: Modified proposal for a Directive of the European Parliament and of
the Council on coordination of procedures for the award of public supply contracts, public service
contracts and public works contracts, COM(2002)236 of 6th May 2002.
With regard to changes to the disciplines on technical specifications, a greater flexibility has
been introduced which is reflected in the possibil ity to specify technical requirements in terms of
performance, whereas in the current legislation re ference has to be made to detailed technical
specifications (ie standards); this change is compatible with GPA ( art VI) which states that
"technical specifications shall where appropriate be in terms of performance..."
Q309 How does the “competitive dialogue” between a contracting authority and the different
bidders work in the light of Directive 97/52/EC, which establishes that contracting authorities may
seek or accept advice which may be used in the preparation of specifications for a specific
procurement, provided that such advice does not have the effect of precluding competition?
The "competitive dialogue" does not have the effect of precluding competition, as any
interested supplier has the possibility to participate in the call for competition. To the extent that
companies participating in the competitive dialogue assist a contracting authority in the definition ofWT/TPR/M/102/Add.1
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its specifications, they do it in an equal footing with their competitors which also participate in the
competitive dialogue. In general, according to th e EU legislation, a company helping a contracting
authority to define its specifications cannot participate in the subsequent award procedure based on
such specifications to the extent that this would be to the detriment of fair competition.
Q310 How are concessions dealt with within the European system of government procurement?
Although "concessions" are distinct from "gover nment procurement" under EC law, article 3
of Directive 93/37/EEC provides for a "lighter" regime for concessions of public works: works
concessions are essentially subject to the public procurement advertising rules; the authority granting
the concessions must observe the rules of the Treaty, notably the non-discrimination principle.
Q311 Does the European legislation foresee any case in which countries that are not members of the
EU or of the WTO Agreement on Government Procur ement may take part in an international tender?
Should the answer be in the affirmative,  what legal document establishes that?
The question of market access for suppliers from third countries is dealt with by self-executive
international agreements by the EU.
Q312 What system of classification of goods, services and public works is used in the agreements
on government procurement kept by the EU?
References to services are often made in relation to the Universal List of Services, as
contained in document MTN.GNS/W/120 and United Nations CPC (Central Product Classification).References to construction services are made in the sense of section 5 of the CPC. In case there are
references to goods, the classification system us ed is the HS (Harmonised System) and if necessary,
completed by other subdivisions of the Combined Nomenclature (CN) as contained in
Regulation 2658/87.
Q313 Is the information on government procurement — such as internal legislation, statistics,
publication of future tenders and the results of past tenders — by the EU central unit and the
members’ sub-central units available on the internet?
The relevant information can be found on the following sites:
- SIMAP (Système d’Information pour les Ma rchés Publics - http://simap.eu.int): EU 
  legislation, public procurement policy, EU procurement opportunities.
- TED database (Tenders Electronic Daily - http://ted.eur-op.int): on-line version of the 
 Supplement S to the Official Journal of the European Communities containing, i.a., call for 
 tenders, contract awards and information notices.
Q314 In document WT/TPR/S/102 it is stated (paragraphs 67 and 68) that expenditure on
government procurement in the EU rise up to 16% of the EU’s GDP, or over 1,350 billion euros in
2000. Nevertheless, only 15% of that amount (205 billion euros) is open to competition and advertised
in the Official Journal. Is it correct to conclude that 85% of all government procurement in the EU is
currently closed to foreign competition, even to suppliers from other EU member states? In what
sources, other than Official Journal, should the entities advertise their tenders? What kind of goods,
services and public works are statistically the ones most excluded from foreign competition?
The figures presented paragraphs 67 and 68 and table III.5 refer to procurement advertised
in the Official Journal of the EC, in accordance with the provisions of the EC Directives on
Government Procurement and which are, notably, a bove the thresholds applied in the GPA. Much ofWT/TPR/M/102/Add.1
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the remaining procurement is advertised, according to the internal rules of EU Member States, in
national official journals or local newspapers or through a variety of procurement web sites.Therefore the fact that 15% of EU procurement is published in the Official Journal of the EC should
not be interpreted as meaning that the rema ining 85% is not being advertised at all.
There are several areas where traditionally there has been less competition. These have
included electricity, water and telecommunication services that are now opening up (as noted in
paragraph 72) to greater competition. Other areas where there is likely to be less cross bordercompetition will be smaller (below threshold) construction services and certain health and social
services.
Q315 According to a draft Directive presented by the EU, defense procurements, as well as
procurements under the harmonized thresholds defined in it (goods and services – 130,000 euros forcentral entity and 200,000 euros for sub-central entities, public works – 5,300,000 euros) are not
submitted to the commitments agreed on that Directive. When procuring by tender, do European
entities direct those procurements to local (national) suppliers? If a supplier from another EU state
becomes interested in a tender not covered by the Directive, can it present its bid anyway? Would it
be considered? Are those excluding criteria the same in the EU Procurement Agreements with thirdparties? In the same way European countries reserve a substantial market share for their local
suppliers in the EU directive, does the EU reserv e any market share for their regional suppliers when
negotiating with third parties?
Under-the-threshold contracts are subject to the rules of the EC Treaty, notably:
 - the national treatment principle;
 - the principle of non-discrimination;
- right of establishment;
- freedom to provide services.
Free Trade Agreement EU-Mexico (government procurement)
Q316 How does the EU interpret the phrase "rules used in normal commercial operations", since
Article IV of the WTO Agreement on Government Procurement establishes that rules of origin are
subject to the results of the harmonization programme of the aforementioned rules (yet to be finished)
as well as to negotiations on trade in services?
Rules of origin under the FTA between Mexi co and the EU are interpreted by a Special
Committee on Customs Co-operatio n set up by the Joint Council.
Q317 How is the ban on technology licensing dealt with in the “offsets” in cases of government
procurement in which a public entity contracts the development of a technology or in which thecontract signed establishes that a technology shall be developed in the execution of that contract?
According to the EU - Mexico FTA, procuring entities cannot impose or seek offsets. Any
condition imposed by procuring entities on local content, licensing of technology counter-trade or
similar is banned.
Q318 Article III (8) of GATT 1994 does not consider the application of laws, regulations and
requirements on government procurement to be discriminatory, as long as products are not purchased
with a view to commercial resale or with a vi ew to the production of goods for commercial sale. On
the other hand, the WTO Agreement on Subsidies establishes in its article 1 (a) iii that purchase of
goods by governments is a subsidy, but in its article 8 considers subsidies for industrial technology,
regional development and the adaptation of existing facilities to new environmental requirements asWT/TPR/M/102/Add.1
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non-actionable subsidies. How are those provisions compatible with the prohibition, in the Free Trade
Agreement with Mexico, of “offsets” related to incentives to local development or to the improvementof the situation of the balance of payment by means of local content requisites, the granting of
licenses for the use of technology, investment and compensated trade?
Purchase of goods by governments may be fall under the definition of a Subsidy when a
benefit is thereby conferred (Art. 1 (b). Nothing in the FTA between the EU and Mexico preventsgovernments to provide goods or services (previously purchased through appropriate procurement
process) as a non-actionable subsidy for the purposes contemplated in Article 8 of the Agreement on
Subsidies and Countervailing Measures. What the prohibition of offsets in the FTA intends is to avoid
procuring entities imposing additional requirements to its principal purchasing needs.
Q319 In the agreement signed with Mexico, the EU makes an exception to enterprises that
participate in “competitive markets”. How can such enterprises be defined?
The EC considers that state ownership over a company is not the relevant criteria for
applying or not procurement rules, but the existence of effective competition in a given sector. Ascriteria to measure competition in each sector are diverse, there is not an overall definition. The EC
reports regularly of the degree of liberalisation in key sectors such as energy, telecom, transport and
others.
With regard specifically to telecommunication s, the EC legislation on public procurement
foresees the exclusion of this sector from the application of the public procurement rules, thus
reflecting the existence of a "competitive market", when following criteria are fulfilled:
- other entities are free to offer the same service,- in the same geographical area,
- and under substantially the same conditions.
(Article 8 of Directive 93/38/EEC)
The European Court of Justice has dealt with those criteria in the Case C - 392/93 -
26.03.1996 British Telecom I, in which is stated that "the criterion laid down by Article 8(1) of thedirective, namely that "other entities are free to offer the same services in the same geographical area
and under substantially the same conditions", is to be verified as a matter of law and of fact, having
regard in particular to all the characteristics of the services concerned, the existence of alternative
services, price factors, the dominance or otherwise of the contracting entity' s position on the market
and any legal constraints."
Intellectual property
Q320 In document WT/TPR/S/102/ it is stated that the European Commission has proposed to
harmonize its legislation on software patents. Article 10 of the TRIPs Agreement establishes thatcomputer programs shall be protected as literary works under the Berne Convention. Isn’t there some
degree of inconsistency between certain EU members’ legislation and the TRIPs agreement?
The Community and its Member States already protect computer programs as literary works
and have done so since 1992 even prior to the adoption of the TRIPS Agreement. The relevantmeasure is Council Directive 91/250 on the legal protection of computer programs. There is no
inconsistency between protecting computer program s as literary works and harmonising practice as
regards the patentability of inventions which are implemented wholly or partially through the
execution of computer software, as the specific subject matter of what is protectable under copyright
law would be different from that of patent law.WT/TPR/M/102/Add.1
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Q321 Paragraph 147 of the same document is about resale rights of authors of resold works of art. A
European Directive recognizes this right for as long as the copyright protection period lasts for thewhole life of the author plus seventy years, should there be any heirs. The EU claims it is the only big
art market to recognize that right and states its intention to work for international recognition of resale
rights in order to ensure a level playing field in the art market. In Brazil, Law 9.610 also recognizes
the rights over resale, but only insofar as it relates to  an increase in the price of a work of art. Has the
EU considered other countries’ legislation before stating its interest in making that disciplineuniversal? Should the answer be in the affirmative, which points have been considered inadequate in
other countries’ legislation in relation to the European Directive?
The artist's resale right is recognised in Article 14ter of the Berne Convention for the
Protection of Literary and Artistic Works as a non-obligatory author's right. In order to put forward aproposal for a Directive on the resale right for the benefit of the author of an original work of art, the
European Commission made an analysis, both economic and legal, of the art market affected by the
artist's resale right. This analysis took into consideration not only the Community but also the world
art market. The Commission found that more than 60 countries outside the EU recognise the artist's
resale right, at least in principle. It seems appropriate to reflect on the means to extend the resaleright also to other countries and to make it obligatory under the Berne Convention. The Directive on
the artist's resale right envisages in its Article 7(1) the possibility to grant the resale right to authors
who are nationals of third countries based on reciprocity.
Q322 There is a project in the European Union to create and develop a Communitarian patent
system. Does it mean the European Union considers the international harmonization of national patent
laws to be feasible as a rule? Is there any European interest in supporting initiatives for the creation ofan international patent? If not, what would be the EU’s difficulties with accepting an international
patent?
The EU is currently working on the establishment of a Community patent system. The
Community patent, a unitary title of law valid in  all MS, would be enforceable before a Community
patent jurisdiction which would decide on infringement and invalidity actions and have a Community
wide effect. However, such a system would not be concerned with the harmonisation of the national
patent laws of EU Member States but would rather create a supra national patent within the legal
framework of the EU. Accordingly, the work on the Community patent system is not linked to any
project designed to achieve an international  harmonisation of patent law.
Nevertheless, the EU does support the work currently being done under the auspices of
WIPO.   The EU is involved in the PCT reform proce ss, as well as in the negotiations on the SPLT
(Substantive Patent Law Treaty). These exercises could in the future lead to a new patent law
architecture.
Technical barriers
Q323 The Report by the Secretariat quotes the following statement by the European Commission:
"[International standards] may be seen as beneficial in some instances, but they may be perceived as
little advantageous or even as threats in others" (WT/TPR/S/102, page 44). Does the EuropeanCommission seek to justify in those lines the creation of technical standards even though they may be
incompatible with international rules? Are those international rules not a sound basis for the
formulation of technical standards by the EU?
Unfortunately, as pointed out earlier to the secretariat, this quote is out of context. The
statement does not represent the Commission's view but is rather a description of public concern
described in the quoted document. The thought being developed is the following. There is, however,WT/TPR/M/102/Add.1
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widespread concern among the public on the appropriateness, use and limitations of international
standards for political and ethical  reasons or due to cultural  diversity. [...] Whilst international
standards may be seen as beneficial in some instances, they may be perceived as little advantageous
or even as threats in others. Different national standards or not having a recognised standard at all
could also reflect differences in risk perception, individual tastes or distinctive markets.
This statement should not distract from our general policy that internationally traded goods
need international standards and that European stakeholders are interested in collaborating withtheir trading partners to facilitate market access and economic integration through the use of
international standards and the creation of standards-receptive economic and legal conditions.
Generally, regional or national standards should be aligned to the greatest possible extent to
international standards, but the value of national and regional standards as stepping-stones to
international standardisation should also be recognised.
The fact that some European technical standards differ from international ones is rather
founded in the right of every sovereign country to define the level of protection it deems appropriate
to meet legitimate objectives, subject to the requirement that they are not applied in an arbitrary or
discriminatory manner.
Q324 In document WT/TPR/S/102, chapter III, paragraph 19, it is stated that “through a common
system of notification and information for imports from and exports to third countries, the EU
controls the trade of certain chemicals that are banned or severely restricted on account of their effects
on human health and the environment. Which are those products and what are the criteria adopted for
their selection?
The chemicals are those listed in Annex I of Regulation 2455/92 implementing voluntary
FAO/UNEP arrangements on prior informed consent (PIC), now subsumed in the Rotterdam
Convention. These chemicals are banned or severly restricted under other Community legislation
(e.g. Directive 76/769, 79/117, 91/414) in order to protect human health and the environment.
Q325 In document WT/TPR/S/102, chapter III, paragraph 51, it is stated that many products are
subject to rules of labelling. How does the EU exercise control on the conformity of such products
with the labelling requirements? Is the control don e at the consumption or at the entrance of the
product in the Communitarian territory? Is there an y documentation involved in the process? If so,
which?
Labelling requirements for chemicals are laid down in Directive 67/548 on dangerous
substances and Directive 1999/45 on dangerous preparations. Control of conformity with such
requirements is the responsibility of the competent authorities of the Member States. It can be carried
out both at the entrance into the EU and within its territory.
Q326 As indicated in document WT/TPR/S/102 (p age 40, paragraph 46), the White Book, approved
by the European Commission, establishes a new Communitarian policy for chemicals — REACH
("Registration, Evaluation and Authorization of Chemicals"). What is yet to be done so that the new
regulation can enter into force and when does the EU intend to notify the new rules to the Committee
on Technical Barriers? How can this new legal framework be based on the so-called “precautionaryprinciple” if such principle is not a part of WTO rules?
The European Commission is currently drafting the legislative proposals along the policy
lines laid down in the White Paper.  Once presented by the Commission, the Council of Ministers and
the European Parliament will have to adopt the proposals in co-decision. This procedure normally
takes 2 - 3 years. Taking due account of the international commitments of the European Community,
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domestic and imported substances and that the fo rthcoming legislation will not create unnecessary
obstacles to international trade. The "precautionary principle" is enshrined in the Treaty of theEuropean Union and therefore one of the underlying principles of the EU environment policy and
legislation.
Q327 Still with reference to REACH, the White Book’s rules seem to constitute a complex
regulatory system that can be of very difficult implementation. Furthermore, it creates obstacles toabout 9% of the world trade, and its distortive  effects could affect the global markets of many
products. Thus some points in the project should be fu rther clarified in light of the following aspects:
(a) an increase in costs; (b) an increase in the num ber of tests in animals that has not been authorized
by WTO rules; (c) an eventual ban on imports; (d) arbitrary discrimination; (e) precautionary
principle; (f) a disproportional impact on small and medium enterprises; (g) access to confidentialinformation; (h) possible export difficulties for developing countries. How are the regulatory
obligations of REACH compatible with TBT and other WTO agreements?
(a), (f): The possible financial impact of the White Paper on business, including SMEs and
importers, has been estimated in a Business Impact Study  undertaken by the Commission. Given the
different scenarios and assumptions about the impl ementation of the White Paper, costs may range
between 2 and 7 billion Euros, with the most likely amount being 3.6 billion Euros  over the first 10
years, when existing substances will be fed into the new system. Further information can be taken
from: http://europa.eu.int/comm/enterprise/chemicals/conference/conference2/index.htm
(b): An increase in the number of test animals that has not been authorised by WTO rules
It has been incorrectly assumed  that the Commission would propose  a (re-) testing
programme for the 30,000 substances covered by REACH. This is not the case. The White Paperproposes a staggered approach to collect the necessa ry information on chemical substances to enable
appropriate risk reduction measures where needed. Testing should only be the last resort, if industry
cannot make the information available.
Information could come from existing inform ation held by industry, from abroad (OECD,
ICCA (= International Council of  Chemical Associations), USA, Canada, etc.), be it results from
testing (in vitro and in vivo), QSAR, analagous substances. In some cases there may be a good case
for no information being required at all. The Commission is currently considering measures to avoid
double testing of the same substance by different producers, including international producers.
It is important to recall that
- An estimated 20,000 "existing" substances between 1 and 10 tonnes per year per manufacturer will generally only require in vitro testing. This represents 2/3 of the estimated 
30,000 "existing" substances in the EU, and will considerable reduce testing costs, time and 
animals;
- The testing of substances above 100 tonnes for long-term effects, which is quite intense in 
costs, animals and time, will be tailor-made. For each such substance industry will have the 
opportunity to provide the evidence how testing can be reduced to a minimum;
- Testing requirements could be reduced for substances used exclusively in industry under 
rigorous containment.
It is true that only few in vitro tests are currently available for regulatory purposes, but
substances between 1 and 10 tonnes need to be registered only by 2012. The European Centre for theValidation of Alternative Methods (ECVAM) of th e Commission's Joint Research Centre (JRC) has
prepared an inventory of alternative testing methods. It is provided for publication in June 2002 and
shows the current status of alternative tests for human health effects required by EU chemicals
legislation (but not for the environmental effect s!). It also gives recommendations for further
development and validation of alternative tests and strategies.
The Commission will continue to encourage the development of alternative methods. Under
the current 5th Framework Programme for Resear ch and Technological Development (1998 - 2002)WT/TPR/M/102/Add.1
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the Commission is supporting more than 29 research projects aiming at the development of in vitro
alternatives. This represents a Community contri bution of about 35 million Euro. Under the sixth
multi-annual Framework Programme, which is now u nder preparation, the Commission will continue
to stimulate the refinement, reduction and replacement (3 Rs) of animal testing methods. It is
important to note that every year about 10 million la boratory animals are used in the EU for research
and scientific purposes.
(c):  Eventual ban on imports: See answer to question 42.(d),(e): Arbitrary discrimination, Precautionary Principle: See answer to question 44.
(g ): Access to confidential information
The White Paper proposes to protect confidential information, including by appropriate 
property rights for test data. Public availability is only proposed for non-confidential 
information.(h): Possible difficulties for developing countries
The White Paper considers that “Developing countries are mostly importers and not
exporters of chemicals. The testing requirements in the EU will ensure that imported chemicals,
which constitute the large majority of chemicals used in these countries, have been evaluated. This
benefit will by far outweigh the potential economic effort, such as for testing, required by chemical
companies located in developing countries when manufacturing chemicals for export to the EU.”
Nevertheless it may be considered that the new chemicals system may require capacity
building in Developing Countries. Provisions for capacity building in the area of chemicals are
included in international conventions, such as the PIC (= Rotterdam Convention on Prior Informed
Consent for Certain Hazardous Chemicals and Pest icides in International Trade) or the POPs
Convention (= Stockholm Convention on Persistent Organic Pollutants). Capacity building appears
to be dealt with under the EU development policy rather than under a specific legislation such as thefuture EU chemicals legislation which we are developing.
Electronic commerce
Q328 What is the EU’s understanding of the defini tion of “place of permanent establishment” in e-
commerce? How should the theme “jurisdiction” be dealt with in the WTO Work Programme?
Place of establishment is to be determined in conformity with the case law of the European
Court of Justice, i.e., looking at the actual pursuit of an economic activity through a fixed
establishment for an indefinite period of time; this is not necessarily the place at which the technologyused by an information society service provider is located.
Q329 Does the EU intend to develop, in the future , a unified and harmonized system similar to the
"Safe Harbor" mechanism, which will allow a greater number of trade partners to share personal data
of consumers?
The EU is not intending to develop systems si milar to the safe harbor mechanism, that was
specifically designed for the US situation, to s hare personal data on consumers. The EU is however
studying possible means to allow compliance with all European legislation on transfers to third
countries using global instruments.
Q330 Regarding paragraph 12 of WT/TPR/S/102, co uld the EU provide more information on the
new framework for e-commerce? Is it possible to have a copy of the e-Commerce Directive
(paragraph 55) and the e-Signatures Directive? How are foreign suppliers treated by those directives?
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E-signature: OJ L013 of 13 December 1999. The issue of foreign suppliers was already
addressed in the WTO Seceretariat report: the e-commerce directive being internal market legislationonly applies to suppliers established within the internal market, i.e. foreign (in the sense of third
country) suppliers are not treated in any way by the directive.
Q331 The text related to e-commerce mentions a "legal framework for e-commerce; a regulation on
jurisdiction and the enforcement of judgments in civil and commercial matters, with application to
relations between e-merchants in one country and customers in another; protection of copyright and
neighbouring rights in the information society; and the indirect taxation of services delivery by
electronic means” (paragraph 105). A copy of the Directives would help understanding the subject.
Could the EU provide more information on the “indirect taxation of services delivered by electronic
means"? The decisions affecting transfers of personal data to non-EU third countries are said to havebeen “the source of friction” with them (also in paragraph 105). What kind of “friction” has been
caused?
The EU has taken decisions on the adequacy of the data protection level of Switzerland,
Hungary, US safe harbor and Canada (PIPEDA act). These decisions are exclusively based on thelevel of protection offered on the countries in questions but have indirectly consequences for the trade
with these countries, which is normally the reason for friction.
In the EU, the protection of personal data in ensured by Directive 95/46 of 24
th October 1995.
The Directive harmonises Member States’ data protection laws with a view to ensuring the free
movement of personal data within the EU while ensuri ng that the privacy of individuals enjoys a high
level of protection. Without the Directive, different national approaches to data protection would
create barriers within the EU’s internal market  and the free movement of personal information would
be impaired.
The Directive also establishes rules designed to ensure that data is only transferred to non-
EU countries when its continued adequate level of protection is guaranteed.  Without such rules, the
high standards of data protection established by the Directive would quickly be undermined.  One
means by which such “adequacy” can be determined is through a decision by the Commission basedon a country’s domestic law. The effect of such a decision is that data can flow to that third country
without any further safeguard being necessary.
In looking at how non-EU countries deal with privacy, the Commission will first compare the
rules with those of the directive and then establish whether the criteria laid down by the group of the
data protection commissioners are met. See to that extent the paper ` Transfers of personal data to
third countries: Applying Articles 25 and 26 of the EU data protection directive´ adopted by the
Article 29 Working Party in July 1998
(http://europa.eu.int/comm/internal_mar ket/en/dataprot/wpdocs/wpdocs_98.htm).
Competition Policy
Q332 According to the report by the Secretar iat (p. xiii), the Commission proposed a new
instrument to react against unfair competition from subsidized third-country airlines. Could the EU
better explain this new instrument and outline its components in further detail?
The EC has been at the forefront of the establishm ent of the ICN as well as negotiations in the
WTO on a framework agreement on competition. Th e EC considers the ICN initiative and a WTO
agreement as complementary in nature rather than alternatives. The ICN is currenlty composed of
more than 65 competition agencies from countrie s which already have a domestic competition law
and enforcement authority. The EC notes in particul ar that the ICN is aimed at developing non-
binding best practices and guidelines for selected competition issues, and, more generally, fostering
mutual understanding of competition regimes. Th e ICN also closely cooperates with otherWT/TPR/M/102/Add.1
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international bodies working in the same fiel d (such as WTO, UNCTAD and OECD), as well as
private sector representatives. On the other hand, negotiations in the WTO, set to start after the 5thMinisterial, would most likely focus on (i) reaching agreement on certain binding core principles to
be included in domestic competition laws; (ii) es tablishing inclusive modalities for international
cooperation among enforcement authorities; and (iii) ensuring an enhanced and better coordinated
approach to technical assistance and capacity-building. The EC remains firmly committed to bring
the process forward with regard to both the IC N and the WTO and is encouraged by the increase in
suppport for both."
Subsidies
Q333 The EU has decided to continue the existing framework for state aid in the air transport sector
in order to "react against unfair competition from subsidized third country airlines" (WT/TPR/S/102,
p. 60). In another sector, the Commission has concluded that the depressed state of prices for ships
was due to the low prices offered by shipyards in the Republic of Korea, and has decided to adopt a
"defensive" system of support for certain types of ship for the duration of the WTO proceedings
(WT/TPR/S/102, p. 63). Is there not a contradiction between these facts and the purpose ofstrengthening the multilateral trading rules, in the context of the EU’s trade policy?
We refer to the reply given to Korea on shipbuilding.
Anti-Dumping Measures
Q334 In relation to the implementation of rulings adopted by the DSB in dispute settlement
proceedings on anti-dumping and countervailing measures imposed by the EU, it is stated in the
report by the Secretariat (WT/TPR/S/102, p. 49) that "such ‘dispute’ measures may be repealed or
amended, or other special measures may be adopted as appropriate to implement legal interpretations
developed in the ruling. However, there is to be no retroactive effect, as the EU has argued that DSB
rulings have only a prospective nature".
Q335 Could the EU explain if, in case the “ruling”  in dispute makes reference to, for instance, the
methodology for the calculation of the dumping margin adopted in a particular investigation, whether
it would proceed to a review of the measure based on the evidence gathered in the course of that
investigation or whether the review of the adopted measure would be carried out based on theappropriate new evidence for a different period other than the one covered in the original
investigation?
Firstly the EC wishes to underline that th e implementation of a recommendation by a
Panel/Appellate Body should be distinguished from  the subsequent review of such measures. When
implementing the findings of a Panel/Appellate Bo dy, for example with regard to the methodology
used for the dumping calculation, the EC may revise the measures in question by correcting the
methodological error concerned on the basis of the data used for the original investigation. However,
the use of old data may not always be appropriate. Indeed, implementation of Panel/Appellate Body
rulings is often a complex task and in particular with regard to measures not subject toPanel/Appellate Body rulings, but which use the sa me methodology; it may be more appropriate to
collect a complete set of information for a more updated period.
Q336 About 40% of anti-dumping investigations are terminated without measures being taken
(WT/TPR/S/109 p.49). Could the EU indicate, with rega rd to those investigations, the percentage that
resulted in negative determination of dumping as well as the percentage that resulted in negative
determination of injury?WT/TPR/M/102/Add.1
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Q337 As indicated in the same paragraph of the report by the Secretariat, “in cases where measures
are taken, a number of exporters from more than one WTO Member are generally involved”. Could
the EU indicate the percentage of investigations terminated without measures being taken in which
there were cases of accumulation of imports?
Q338 Could the EU indicate, for the period 1999- 2001, the percentage of "sunset reviews" which
have concluded with the decision against the extension of the measure?
The type of detailed statistical information requested by Brazil in these questions is not
readily available. However, should Brazil wish so, the EC is prepared to conduct an analysis and
provide the data requested by a later date.WT/TPR/M/102/Add.1
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QUESTIONS FROM MALAYSIA
Q339 The goal of monetary policy and fiscal restraint in the EU is price stability.  However, this
could bring about risks of slower economic grow th, continued high unemployment and lower trade
growth.  Given the strengthening of the euro recently, does the EC envisage a more relaxed monetary
policy and thus higher growth in 2002?
The design of EMU combines a single monetary policy conducted by the European Central
Bank (ECB) with decentralized fiscal policies determined at the national level. The Treaty assigns
monetary policy the primary goal of maintaining pr ice stability. Decades of practical experience in
Europe and elsewhere and a large number of economic studies suggest that monetary policy will
contribute most to raising growth prospects over th e longer term by maintaining price stability in a
lasting way. There are several ways in which price stability – in the sense of avoiding both prolonged
inflation and prolonged deflation – contributes to achieving high levels of economic activity and
employment:
• price stability allows changes in relative prices to be more easily observed, since they are not 
obscured by fluctuations in the overall price level. This contributes to a more efficient 
allocation of resources.
• by reducing the “inflation risk-premium” associated with holding assets over the longer term,
monetary policy can improve the allocative efficiency of capital markets and raise the incentive to invest.
• the credible maintenance of price stability will make it less likely that individuals and firms 
will divert resources from more productive uses in order to hedge against inflation.
• price stability reduces the real costs entailed when inflation exacerbates the distortionary 
impact of tax and social security systems.
With monetary policy assigned the primary objective of price stability, there is a greater role for national fiscal policies in adjusting to country-specific developments. The Stability and 
Growth Pact sets out the medium-term objective for Member States’ fiscal policies of having 
budgetary positions that are “close to balance or in surplus”. The aim is to allow for fiscal 
discipline, which will facilitate the ECB’s task of maintaining price stability, whilst permitting
Member States the necessary room for manoeuvre to cope with normal cyclical fluctuations, respond to country-specific developments and undertake needed structural reforms.
Whilst the recent appreciation of the euro will contribute to the objective of maintaining price
stability, the issue of whether or not monetary policy should be changed is entirely one for the
ECB. The independence of the ECB is guaranteed by the Treaty.
As far as growth prospects for 2002 are concerned, a recovery is already underway. Growth 
in the euro area and the European Union is expected to strengthen in the second half of this 
year as past interest rate reductions and the working of automatic fiscal stabilizers take effectagainst the background of an improved international environment.
Q340 Para 19 of the Secretariat’s Summary Observations noted that nine WTO members are subject
to exclusively MFN treatment in all product categories.  What does this mean and how does it differ
from other preferential trade agreements?
This statement by the WTO Secretariat is fo unded on the observation that imports from nine
WTO Members (Australia, Canada, Chinese Taip ei, Hong Kong China, Japan, Korea, New Zealand,
Singapore and the United States) are subject to ex clusively MFN treatment on import into the EU,
while imports from all other WTO Members benefit from preferential access to the EU market,whether under regional trade agreements or under the specific preferential trade regimes that are
detailed in the body of the Secretariat report.  In re lation to this statement, it should also be noted - as
indeed has been pointed out by the EU in previous TPRM exercises - that many of the countriesWT/TPR/M/102/Add.1
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benefiting from preferential access to the Community market do so on a non-reciprocal basis, for
example under the GSP.  Accordingly, EU exporters to these countries are subject to MFN marketaccess conditions.
Q341 Para 2 of the Secretariat’s Summary Observa tions noted that the continued commitment of the
EU to the WTO and the multilateral trading system will be critical to the success of the Doha
Development Agenda.  How does this commitment square off with continued high tariffs onagricultural goods and processed products, frequent resort to anti-dumping actions, and imposition of
stringent standards that could become significant barriers to trade.
The current level of the EC protection is not higher than the average level of protection of
other developed countries. Moreover, a big majority of DCs do not face tariff escalation/tariff peakson the EC market, as it is already very open to them (GSP, EBA, ACP, MED). The benefits for LDCs
and a lot of other DCs (ACP, MED) will be much greater if other developed countries and the
wealthiest developing countries follow the lead of the European Union in the field of preferential
regimes for DCs.  Such approach could also permit to solve the main problems of tariff escalation
and tariff peaks, which impede most of the developing countries’ exports to developed countries andwealthiest developing countries.
Q342 The proposed EU regulation on waste of electronic and electrical products shifts the
responsibility of waste disposal to producers and importers.  While proper waste disposal is necessary,
it is questioned whether such a system is not more trade restrictive than necessary.  A disparate waste
disposal system incurs more costs than a centraliz ed system.  In addition, small-scale producers would
be most affected by this measure, as they have to contribute to costly disposal systems that do notmaximize economies of scale.  What does the EU intend to do to mitigate the costs of such a system
on small-scale producers?
In the TBT Committee, work is progressing well on the development of a technical assistance
programme. The EU agrees that there is a need to develop further and, more generally, enhancebilateral, regional and multilateral efforts.  At regional and bilateral level, the European Commission
runs many TBT technical assistance programmes. This is also true of the Member States. We are
ready to consider requests to address identified priorities / needs, including the possibility to help
developing countries adapt to new or modified technical regulations.
It should also be noted that the large number of notifications referred to in this question also
reflects the European Community’s commitment to discharge the transparency obligations imposed
under the TBT agreement.WT/TPR/M/102/Add.1
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QUESTIONS FROM CHILE
STANDARDS AND TECHNICAL REGULATIONS
Q343 What importance does the EC attribute to harmonizing its intra-Community technical
regulations and in relation to international standards?
The EU has attached great importance to the harmonisation of technical regulations for many
years. The Treaty which establishes the European Community includes a Chapter on the
approximation of laws of the Member States (see Articles 94-97). These Articles have provided the
legal basis for the harmonisation of technical regulations and have resulted in a large number of
Directives helping to create a large internal market in most product sectors. In addition, theapplication of Directive 98/34/EC prevents the emer gence of diverging national technical regulations
and standards.
The EU also attaches great importance to the use and development of international standards.
Internationally traded goods need international standards. European stakeholders are interested in
collaborating with their trading partners to facilitate market access and economic integration throughthe use of international standards and the creation of standards-receptive economic and legal
conditions. Generally, regional or national standards should be aligned to the greatest possible extent
to international standards, but the value of national and regional standards as stepping-stones to
international standardisation should also be recognised.
Q344 Regarding commitments under the WTO's TBT Agreement, is there a regular or planned
revision of technical regulations within the EC so as to ensure that they are not maintained longer thannecessary within the meaning of Article 2.3 of the TBT Agreement?  If no such plan already exists,
can private individuals request revision of these documents?
Yes, this is an ongoing and continuous process. The Communication from the Commission to
the Council of Laeken (5 December 2001) on "Simplifying and Improving the RegulatoryEnvironment" sets the objective of reducing the volume of existing EU legislation, if possible, by at
least 25% by January 2005. This goal is in line with the proposals of the White Paper on European
Governance of 25 July 2001 to "launch a high-profile programme to review and simplify Community
legislation adopted before 2000." It is also in line with the Communication from the Commission on
the Codification of the Acquis Communautaire of 1 November 2001, which indicates that thecodification of the entire acquis should be completed by the end of 2005.
TRADE PROTECTION INSTRUMENTS
Q345 Since the entry into force of the WTO Agreements, the European Communities had not
applied any safeguard measure until the beginning of this year, when the WTO was notified of the
initiation of an investigation and the adoption of provisional safeguard measures on certain steel
products.  Does this imply a change in Community trade policy with regard to the use of trade
protection instruments?
Chile rightly recalled that since the entry into force of the WTO Agreement on Safeguards,
the EC had not made any use of the safeguard instrument until the recent steel case. Indeed, the EC
has repeatedly expressed its position on this matter, in particular in the context of several WTO
dispute settlement procedures, that recourse to this instrument must be truly exceptional in nature and
limited to emergency situations. The EC would recall that the Appellate Body has fully endorsed thisposition. The EC considers that such an emergency situation has indeed occurred as a consequence of
the blatantly protectionist actions taken by the United States earlier this year. Therefore, its decisionWT/TPR/M/102/Add.1
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to impose provisional safeguard measures is perfectly coherent and does certainly not imply any
change in its commercial policy as regards the use of trade defence instruments.
Q346 regime concerns the implementation of rulings adopted by the DSB in dispute settlement
proceedings initiated by third countries on anti-dumping and countervailing measures imposed by the
EU", and then explains the European Communities' position that the decisions of the WTO's Dispute
Settlement Body are only of a prospective nature and, consequently, are not retroactive.  Does this"complementary" nature mean that the European Communities take as their own anti-dumping policy
the decisions of the DSB in cases in which they have taken part as an interested party, a principal or a
third party, or does it also cover cases in which they have no direct interest?
While in a technical sense the ruling of a Panel/Appellate Body must only be implemented by
the party which legislation or practice was found to be incompatible with the WTO rules, nothing
would prevent other WTO members from adapting their own legislation or practice as a result of such
ruling. This may be appropriate in particular if a member considers that the findings of the
Panel/Appellate Body have a general scope and affect its own legislation or practice. However, it
should be clear that there is no legal obligation to do.
The EC has opened the possibility to implement rulings of the DSB even in cases where they
are not a concerned party by adopting Council Regulation (EC) No 1515/2001 which states in its Art
2: "the Council may also take measures in order to take into account the legal interpretations made in
a report adopted by the DSB with regard to a non-disputed measure, if it considers this appropriate."
That also explains the use of th e word "complement" in Para 78.WT/TPR/M/102/Add.1
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QUESTIONS FROM INDIA
Preferential Trade agreements and arrangements
Q347 Both the Government and the Secretariat Reports take note of various initiatives by the EU in
entering into a plethora of preferential trade arrangements with some of its selective trading partners.
To name a few, EU has been linked to all the ten Central and Eastern European Countries by EuropeAgreements. EU has concluded bilateral association agreements with 8 Mediterranean countries. The
Free Trade Agreement with Mexico has already been in force since 1July, 2000.EU has already
established a Customs Union with Turkey. The negotiations for establishing regional trade association
with Mercosur are on. Besides, negotiations for accession of more European countries into EU are
also progressing. Although the Government Report asserts that ‘in right circumstances’ these regionalinitiatives strengthen the multilateral system. India is, however, convinced that these arrangements
lead to a significant trade diversion away from the countries not party to such agreements.
We are encouraged to note from the Government report (Para 51) that one of EU’s negotiating
objectives for the Doha Work programme is to ensure  ‘quiet strict’ rules defining the entering into of
RTAs and also their WTO compatibity.  We would like to know from EU what measures they arecontemplating to ensure that the trade of non-party countries and especially the developing countries
among them does not suffer due to the preferential trade arrangements of EU?
The EU welcomes the inclusion within the DDA of negotiations to clarify and improve the
disciplines and procedures applying to regional trade agreements under existing WTO provisions,
while taking into account their developmenta l aspects.  The EU has made a submission
8 to the
Negotiating Group on Rules outlining its initial position in relation to this aspect of the work of theNegotiating Group and identifying a number of issues  that merit discussion and analysis during the
course of the negotiations. This list of issues includes the question of closer alignment of the
disciplines imposed on parties to FTAs with those imposed on parties to Customs Unions, particularly
in respect of the obligations of GATT Article XXIV: 5 concerning the implications of individual RTAs
for non-parties.  Any clarification of WTO rules in this area should indeed reflect the principle thatcloser regional integration take place without raising barriers to the trade of other parties.
Q348 Has the EU made any study or assessment of the likely effect on its trading partners and
especially the developing countries of its enlargement plans?
Enlargement  will bring overall benefits also for third countries. From an economic point of
view, enlargement will increase the size of the single market, where third countries will be faced with
a single tariff and a single set of trade rules and administrative procedures. From a political point of
view, enlargement will increase political stabili ty throughout Europe, and enable the EU to tackle
more effectively problems such as international organised crime.
Q349 Article XXIV of GATT 1994 although permits derogation of MFN principle also requires the
countries party to a preferential trade arrangement to ensure that the trade of non-party member
countries is not adversely affected on account of  such an arrangement. Is there any system  in place in
EU to objectively assess this aspect?
Article XXIV of the GATT 1994 indeed sets out the conditions which any regional agreement
(FTA or Customs Union) must satisfy. In its ne gotiations for regional agreements, the EU always
aims to ensure that WTO requirements are satisfi ed, including those relating to GATT Article XXIV:5.
                                                     
8 Submission on Regional Trade Agreements by the European Communities and their Member States, 5
July 2002 (circulated in TN/RL/W/14 of 9 July)WT/TPR/M/102/Add.1
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The issue of the compatibility of any proposed new initiative with the relevant WTO
disciplines is therefore typically a question which wi ll be addressed during the course of negotiation
and at the conclusion of any new regional agreement.  Of course, the compatibility of any regional
trade agreement, including those concluded by the EU, with the relevant WTO provisions can only be
definitively confirmed when the agreement has been notified and examined under the relevant WTO
provisions.
Q350 The Enabling Clause which constitutes the legal basis for the GSP schemes envisages that
such preferences have to granted in a ‘generalized, non-reciprocal and non-discriminatory ‘ way.
Linking the benefits to non-trade issues such as environmental and labour standards as well IPR rights
and the fight against the drug curtail the benefit under the scheme and introduce elements of
discrimination and reciprocity into the GSP scheme. Specifically linking the GSP scheme to corelabour standards is very much against the spirit of the Singapore Declaration and also the Doha
Declaration on the issue  Would EU clarify why they have linked their GSP scheme to non-trade
issues?
EU may also inform whether all developing c ountries are eligible for the benefits under the
Special Arrangements to combat drug production and trafficking under the EU-GSP scheme?  Whatare the criteria adopted for inclusion of countries under this arrangement?
Does EU perceive drug trafficking regime as being generalised and non discriminatory?  Is
there any provision under the scheme to ensure that all similarly placed countries are included under
this regime?  Is this scheme open to all countries to seek inclusion in accordance with transparent
criteria?
We would like to know whether this special arrangement/reward for countries for combating
drug production and trafficking leads to trade diversion and discrimination against other developingcountries?
Can EU clarify whether there is any provision under the GSP scheme for countries adversely
affected through trade diversion by the GSP scheme to seek compensation?
Has any assessment been made with regard to the impact of the special arrangements under
the drug trafficking clause in the GSP Scheme on countries, which are not covered under this specialwindow?
Are the special arrangements under the drug trafficking regime consistent with the WTO?  If
not, does EU intend to obtain waiver from WTO for introduction of the special arrangements for
certain countries under the GSP Scheme?
The above questions raised by India have already been discussed in bilateral consultations
between India and the EC under Article XXIII of the GATT in the context of the DSU.  Discussions
are still ongoing.  The questions have all been answered.  Therefore, we believe that repeating the
exercise here serves no purpose.  Furthermore, if we were to give detailed replies in the context of the
TPRM, the confidential character of these consultations would be seriously undermined.  It shouldalso be recalled that according to the texts, the Trade Policy Review Mechanism is not intended to
serve as a basis for the enforcement of specific  obligations under the agreements or for dispute
settlement procedures.  Having said that, the EC wishes to stress that it is convinced of the full
consistency of its entire GSP scheme with the WTO provisions.
Agriculture
Q351 In Para 38 of the Summary Observations ,t he Secretariat notes that the funding for CAP
continues to represent the single largest expenditure; 44% of the total budget of 93 billion Euro.
Keeping in view the ongoing efforts for the enlargement of EU, additional burden on the EU
agricultural subsidy bill is expected.   Moreover, as noted by the Secretariat in Para 46 of the
Summary Observations, the decline in the  support to agricultural producers is basically attributable toWT/TPR/M/102/Add.1
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world market price and currency fluctuations rather than ‘any significant policy change’.  In the light
of Doha Mandate which envisages ‘reduction of  with a view to phasing out’ all trade distortingagricultural subsidies, will EU explain its plan to dismantle the agricultural subsidy regime?
Firstly, the EC has substantially reduced the use of export subsidies since 1995. Export
subsidies are becoming less and less significant, falli ng from 25% of the value of farm exports in 1992
to 5.2% in 2001. In 2001, export refund expenditure was €2.763 billions. The EU is ready to negotiatefurther reductions on the condition that all forms of export subsidisation (export credits, abuse of food
aid, unfair practices of state trading enterprises) will be disciplined. At this stage, we cannot be more
specific on either the subsidy reduction percentage or the implementation period. This will depend on
the WTO negotiations.
Q352 In accordance with the UR negotiations the import of rice into EU is subject to a margin of
preference scheme under Head Note VII. We will like to know from EU whether they have any plan
to modify the present arrangement for the rice import from India?
A proposal to modify the EC import regime for rice through GATT Article XXVIII procedure,
is presently under examination. The intention of the EC is to replace the current system by a sound,
transparent and predictable import regime based on TRQs. The EC is of the opinion that TRQs can,
and indeed should, be managed in the simplest and most transparent way possible.
Q353 India has bilaterally requested EC on  several occasions to restore its original quota of
25,000 mt of white sugar, deriving from the Commonwealth Sugar Agreement. When can India
expect restoration of full quota?
The EC considers that this question is a bilateral issue, which is not relevant to the TPRM
exercise.
Q354 In the allocation of quota for mushrooms, it has been observed that EU has been allocating
quotas to countries who do not have the capacity to  fulfill even half of their quota. Although India is
the third largest supplier of mushrooms to EU, it has been placed in the ‘others ‘ category and
consequently entitled to very limited quota. Although the quota allotted to many of the quota holding
countries is not fully utilized, it is also not distributed to other countries.  Under the Agreement on
Agriculture, WTO Members are obliged to administer TRQs in such a manner that the quota gets fullyutilized.  The Members are bound to maintain entire TRQ even if reallocation becomes necessary.
This position has been upheld in the banana dispute case against the EU.  EU is requested to clarify
whether it intends to address such anomalies in its TRQ system for mushrooms.
The EC paper on Disciplines on tariff quota administration which has been distributed to
other Members by the WTO Secretariat gives the position of the EC on this subject.
Trade Remedial Measures
Q355 Para 27 of the Secretariat Report notes that EU is the second most frequent user of anti-
dumping measures. Moreover, they are also initiating anti-subsidy investigations, many times in
conjunction with the anti-dumping measure for the same product, against trading partners. It may be
noted that it is not only the definitive anti-dumping/countervailing duties that affect the trade but even
the rumour of initiation of such an investigations affect the trade of the concerned country. Defending
an anti-dumping/countervailing investigation also involves heavy expenditure. There is ,therefore, an
urgent need to put in place a mechanism to safeguard the interest of developing countries in ensuringWT/TPR/M/102/Add.1
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their market access into the investigating countrie s. We would like to have EU’s comments on this
issue.
The EC shares India’s view that the anti-dum ping and anti-subsidy instruments should not be
abused for protectionist purposes. However, the EC wishes to underline in the strongest possible
terms that investigations are only initiated on the basis of sufficient evidence in line with the
applicable WTO rules and in conformity with strict EC legislation.
Furthermore we point out that the EC goes beyond WTO rules in requiring the Community
interest test before measures can be applied. The fact that 40% of investigations are terminated
without any measures being taken can be considered as proof of the thoroughness of investigations.
The fact that not every initiation automatically leads to anti-dumping measures is indeed in the very
nature of the investigation.
As regards India’s question to put in place a mechanism to safeguard the interest of
developing countries in ensuring market access into the investigating countries, it is not clear what
type of mechanism is being referred to.
Moreover, it should be recalled that the current rules do not in any way prevent market
access and are in full compliance with the WTO rules.
Q356 India is concerned that the European Union is resorting to anti-dumping  measures  without
giving due regard to obligations under Article 15 of the Agreement on implementation of Article VI
of the GATT 1994, which requires special consideration to be given by developed countries to
developing countries, and constructive remedies being explored before applying anti-dumping duties
on developing country WTO members. India would like to know the number and percentage of cases
against exporters from developing countries in which the EU explored constructive remedies, natureof such remedies explored and the final outcome.
When considering the application of anti-dumping measures, the EC always gives special
regard to the situation of developing countries, in  accordance with Article 15 of the Agreement on
Implementation of Article VI of the GATT 1994. It explores the possibility of constructive remediesbefore applying anti-dumping duties where they would affect the essential interests of developing
countries. To this end, the EC informs co-operating exporters in the disclosure letter of its willingness
to explore constructive remedies, including unde rtakings, and examines any remedy that may be
identified or offered. It should be noted, however, that, depending on the circumstances of the case, it
may in practice not be possible to accept an undertaking or other remedy, in particular in situationswhere monitoring of an undertaking is not feasible.
As regards statistical data, the EC confirms that, in accordance with its obligations as a WTO
member, it explores constructive remedies in all cases concerning developing countries where anti-
dumping duties are considered. Undertakings are the main type of remedy envisaged in this context.In addition, attention may be drawn to the fact that the imposition of a duty in a lesser amount thanthe dumping margin should also be seen as constructive remedy. Therefore, developing countries
benefit from the general application of a lesser-duty-rule by the EC.
Q357 The WTO Anti-dumping/ SCM Agreements prescribe guidelines for designating  the
"domestic industry".  However, instances have been noticed wherein the evaluation of the domesticindustry for injury purposes has been confined to those producers who supported the petition seeking
initiation of the investigation. In certain cases the injury analysis was conducted in respect of
producers who accounted for even less than 50% of the production of the like product. Recently, a
WTO DSU panel has held that an injury determination based on 53% of the domestic producers was
not adequate. We request the EC to clarify how it s injury determination based on an analysis of
producers accounting for less than 50% of the domestic production is in accordance with obligationsWT/TPR/M/102/Add.1
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under Article 4.1 of the Anti-Dumping Agreement, 16.1 of the SCM Agreement and  also the finding
of the above mentioned panel .
The EC determines the domestic industry for the purpose of the injury determination in
accordance with Article 4.1 of the Anti-Dum ping Agreement and 16.1 of the SCM Agreement.
According to this provision, the te rm “domestic industry” refers to the domestic producers as a whole
of the like products or those of them whose collective output constitutes a major proportion of thetotal domestic production. Producers which are relate d to exporters or importers or are themselves
importers of the allegedly dumped products may, however, be excluded from the notion of domestic
industry.
The EC notes that the two aforementioned agr eements do not contain an explicit definition as
to what constitutes a major proportion of the domes tic industry. The EC would appreciate it if India
specified the Appellate Body report to which it referred in its question.
As regards the anti-absorption procedure in the EC  legislation, from the point of view of the
WTO rules, this procedure is only a form of revi ew under Article 11.2 of the Anti-dumping Agreement,
whose object is to reassess the export price in accordance with Article 2 of the Anti-dumping
Agreement.
Around 40 % of the anti-dumping investigations in itiated by the EU are terminated without
any measures being taken. Investigations are only initiated on the basis of sufficient evidence in line
with the applicable WTO rules and in conformity with strict EC legislation (Article 5 of Regulation
(EC) No 384/96 of 22 December 1995).
Q358 Could EU explain the methodology followed by it in admitting the review applications in AD
cases, with particular reference to those cases, which had previously been found by theDSB/Appellate Bodies of the WTO to be inconsistent with the AD Agreement?  How does EU justify
the initiation of review proceedings closely on the heels of adverse verdict in such cases by the
Appellate body?
Q359 Would the EU clarify as to whether and how the text of Article 11.3 of its "Basic AD
Regulation", by permitting such request of review based on dumping margins that are ‘higher’ than
those found in the previous investigations, is consistent with the text of Article 11.2 of the Anti
Dumping Agreement of the WTO?
The question concerning the admissibility of review applications in cases which had
previously been found to be inconsistent with  the Anti-dumping Agreement seems to concern an
ongoing dispute between India and the EC. We therefore refrain from commenting in detail.
In any event we note that the implementation of a recommendation by a Panel/Appellate Body
is an issue which does not preclude the subsequent review of such implementation measures. There is
in our view a fundamental distinc tion to be made between such implementation, on the one hand, and
the subsequent review of anti-dumping measures, on the other. From a methodological viewpoint,
there is no link between both concepts.
As concerns the procedure for the review of anti-dumping measures, the EC considers that
nothing in Article 11.2 of the Anti-dumping agreement indicates that this procedure is only allowed in
view of a reduction or abolishment of a duty. This view is also confirmed by the fact that inaccordance with Article 6.11 (iii) of the Anti-dumpi ng agreement, the domestic industry is one of the
interested parties that can request such review.
Tariff/Taxation issues
Q360 In Para 25 of Summary Observations, the WTO Secretariat notes that the average tariff on
agricultural products is 4 times higher than that on non-agricultural products. It further notes that theWT/TPR/M/102/Add.1
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evidence of tariff escalation remains, in particular on processed products. Agricultural exports are of
great importance to developing countries.  We would lik e to know from EU about its plan to eliminate
these tariff peaks and escalation.
A big majority of DCs do not face tariff escalation/tariff peaks on the EC market, as it is
already very open to them (GSP, EBA, ACP, MED). The benefits for LDCs and a lot of other DCs
(ACP, MED) will be much greater if other developed countries and the wealthiest developingcountries follow the lead of the European Union in the field of preferential regimes for DCs.  Such
approach could also permit to solve the main problems of tariff escalation and tariff peaks, which
impede most of the developing countries’ exports to developed countries and wealthiest developing
countries.
Q361 In Chapter III, Para 11, the Secretariat Report notes  that the range of applied tariffs for
agriculture products is from 0 to 470.8% and on non-agricultural products is from 0 to 36.6%.  We
would like EU to indicate as to what parameters are taken into account for setting tariffs?
The calculation of the Community’s specific duty rates into ad valorem equivalents is purely
technical and automatic. No account has been taken of the fact that reliable price data is needed to
convert specific duties into ad valorem equivalents. Such reliable data does not exist in many cases
for various reasons (imported quantities and/or quality of imported products are not always
representative ; absence of world price…). Another important issue which should be underlined is the
difficulty to estimate the duties for processed products, which often include various components in
variable quantities, which are themselves subject to different duties (data on how much raw materials
are required for producing a particular processed product does not exist). Morever, no account hasbeen taken, neither of quantities being imported under tariff quotas (with low duty rates), nor of any
preferential duty rates. Consequently, in particular for the reasons listed above it is clear that the
results do not give a reliable picture of the Community’s level of tariff protection or tariff incidence.
Labour
Q362 Belgium has proposed draft legislation in February 2002, which would provide seals to
products that have been made in compliance with the 8 ILO basic conventions.  The social seal is
intended to inform the consumer about the quality of the production processes. While recognizing the
fact that this measure is proposed to be adopted on a voluntary basis, India is concerned about this lawas it links social concepts with trade and thus ignores the Singapore Ministerial Decision of the WTO
that clearly provides that ILO is the competent body to set and  deal with the labour standards. The
proposed Belgium legislation seeks to usurp the role  of ILO as inter Governmental agency overseeing
the adherence to core labour standards. This law would also go against the concept of like product
defined in Article III of GATT and apply a non-product related PPM to discriminate between likeproducts. Although to be applied voluntarily, it will    influence  consumer behavior and thus affect
the market access of countries whose products do not carry the seal    We would request EU to
respond to these concerns.
We do not share the view that the Belgium (voluntary) label is a problem.
The WTO has closed the case after a second notification by Belgium. In the second
notification Belgium clearly demonstrated that the label is voluntary and that it is non discriminatory
as also Indian companies can apply.
We do not agree with India alleging that Belgiu m legislation seeks to usurp the role of the
ILO as an intergovernmental agency overseeing the adherence to core labour standards. Belgium has
simply used the ILO standards as a reference scheme.WT/TPR/M/102/Add.1
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Gats /  movement of natural persons
Q363 Specifically in the health services sector, there are major restrictions in EU countries in the
form of economic needs test.  In United Kingdom for example, the number of beds and use of heavy
medical equipment is limited on the basis of a health plan.  The needs test is in function of the degree
of specialization, their capacity and equipment.  The criteria are fixed, arithmetical rules or formulae
designed to calculate the needs in function of the population, age scale, death rate and geographicalspread.  Does EU propose to remove such ENT or al ternatively, does it propose to make the criteria of
ENT more specific?
Any modification to the schedule of the EU, as reported in the question from India, is a matter
for the present negotiations according to article XIX. The EU and its Member States will be open toclarify the application of ENT in the area of health services where requested.
(I) standards (labelling & marking)/certification
Q364 European Union (EU) members have widely different standards, testing and certification
procedures for some products.  The member states of EU issue rapid alerts against the export
consignments of such exporters whose consignments are found to be affected by microbiological or
chemical contamination. The procedure of such control measures varies from one member state to
another. Apart from the variation in the control procedures, which puts the exporters to difficulty, the
procedure for withdrawal of the control measures is also not uniform. Even if the originating country
withdraws the control measures, the measures put in place against the exporter in other member
countries remain in force for an indefinite period. This seriously affect the access of exportingcountries.    We would like to hear from EU whether they intend to harmonize the varying checks and
procedures methods?
The Commission is preparing proposals on officil feed and food controls that aim to ensure
that results of official sampling and analysis ar e obtained on the basis of common principles. The
proposal introduces in particular requirements for laboratories to implement methods of analysis that
are validated in accordance with internationally accepted protocols (CEN/ISO). The laboratories that
are designated to analyse official samples shall in addition operate in accordance with Good
Laboratory Practices (GLP) and be accredited in accordance with the relevant international
standards established for that purpose.
Q365 To be able to meet the SPS requirements of various EU member countries, there is a need to
have access to not only the common EC norms but also the specific additional norms of the member
countries.  It is felt that there is dearth of information and lack of transparency on the diverse
procedural norms and regulations of the EU member states relating to specifications as well asmethods of sampling, inspection and test.  This appears to be one of the reasons for difference in
results at the exporting and importing end.  These need to be clearly laid down by the EU member
States for various parameters being tested and made available transparently as well as in an easily
understandable form to the exporting countries so that these could be taken into consideration by
industry as well as the Competent Authority during inspection and certification to avoid variation inresults which may be the cause of rejection at th e importing ports.  How does EC propose to improve
such access to common EC norms and specific additional norms of individual member countries?
The proposal on official feed and food controls referred to above relies, as regards methods
of sampling, inspection and testing, on international standards to which all have access.WT/TPR/M/102/Add.1
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Q366 EC does not accept Health Certificate issued retrospectively, which at times, is necessitated
on account of unavoidable circumstances.  The Codex guidelines for ‘generic official certificateformats, production and issuance of certificates’ provide for issuance of certificates on retrospective
basis if agreed by the competent authorities of the importing and exporting country.  Does EC propose
to change its regulations to permit acceptance of health certificate retrospectively in some genuine
cases?
The proposal on official feed and food controls referred to above will contain procedures that
may allow to fix special conditions with regard to official certification. These procedures may be used
to lay down more specific rules on the reliability of certification, including the time of certification.
Q367 Indian exporters of grapes, gherkins, etc. face a major problem of export to EU on account of
different pesticide residue levels followed by different Member states of EU, despite the fact that
there are EU wide harmonised levels prescribed by the EC as well as Codex levels.  This is resulting
in a situation where the Indian exporters are able to trade with only some of the EU countries. India
would request EU to comment on this observation.  It would also like to know whether EU proposes
to harmonise pesticide residue levels?
The Commission has a programme of work on th e gradual harmonisation of all pesticides
maximum residue levels (MRLs). Where MRLs are harmonised, they apply throughout the Community
and for both domestic and imported produce. Wher e they are not yet harmonised, then the Member
States may set MRLs at the national level. Full details of the MRLs and the programme of work are
available on the Internet site of the Commission.
Q368 It is reported that pesticide residue level for Indian tea are fixed by using made tea and on the
basis of the lowest limit of detection as per the efficiency of the analytical equipment rather than on a
realistic system of residues in the brewed tea that is consumed.  The most important point to note is
that pesticides residue in the made tea do not get fully dissolved in the brew that is finally consumed.
It would therefore be realistic if the maximum residues levels (MRLs) are fixed after taking intoaccount the toxicity data. Moreover, it has also been reported that MRLs fixed by EU are different
from the ones fixed by Germany.    Does EU propose to have a system of analysis based on residue in
the brewed tea and also to harmonize the residue levels?
Maximum levels for pesticides residues (MRLs) in tea are set on the basis of data on residues
arising after good agricultural practice has been followed i.e. the authorised conditions of use of a
pesticide on the crop. The levels that are set apply to the dried leaves i.e. the produce moving in
international trade. This is consistent with the practice of the Codex Alimentarius Commission. The
MRLs have to be protective of the consumer and wh en a dietary intake assessment is done for tea, on
a pesticide by pesticide basis, the partitioning of the residues between the leaves (not consumed) andthe beverage itself (consumed) is taken into account. The fact that, for some pesticides, residues
remain fully on the leaves is not a valid reason to increase the permitted MRL (for the reason given in
the first sentence).
Q369 EU has a regulation fixing the percentage of use of benzoic acid as an additive at 0.2% in the
case of cooked shrimps.  On the other hand, cooked crangon and crangon vulgaries which are of
European variety shrimps enjoy a maximum level of 0.6%.  This puts exports of shrimps from India
and other Asian countries at a disadvantage.  India has presented evidence to show that average size
of species found in Indian waters is comparable to  the EU varieties.  Does EU propose to revise
percentage fixed for benzoic acid as additive for Indian shrimps?WT/TPR/M/102/Add.1
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The position of the European Commission on the use of benzoic acid in cooked shrimps has
been unchanged since the adoption of the Directive 95/2/EC on food additives other than colours andsweeteners. The use of benzoic acid is permitted as a preservative in cooked Crangon crangon and
Crangon vulgaris varieties at a level of 6000 mg/kg due to hand peeling of these small-size shrimps.
Benzoic acid is permitted in other cooked shrimps at a level of 2000 mg/kg, as it has been estimated to
suffice in order to preserve these products for a reasonable time.
The Member States of the European Union have monitored food additive intake in their
respective countries. In October 2001, the Commi ssion adopted a report on dietary intake of food
additives in the European Union (COM(2001) 542 final). In the conclusions of this report, the
Commission requested the Member States to carry out more detailed intake estimation for certain
additives based on actual food consumption data combined with the actual usage levels of the
additive. This was due to potential exceeding of the acceptable daily intake (ADI) allocated to theadditive. This request includes benzoic acid and benzoates (ADI 5 mg/kg b.w). In addition, the
Scientific Committee on Food is currently re-evaluating the safety of benzoates.
The Commission is waiting for the above-mentione d information from the Member States and
the opinion of the Scientific Commitee on Food before it can initiate any action on this particular food
additive.
Q370 Presently, EU has a Directive 76/768/EEC gove rning the laws of the member states relating to
ingredients of the cosmetic products.  EU now propos es to amend the directive with a view to ensure
labelling of the cosmetics in a manner that 26 of specific ingredients declared as allergens cannot be
used.  The amendment would require labelling of the 26 ingredients on all cosmetics and toiletry
products when level exceed 10 ppm in stay-on products (i.e., lotions, perfumes) and 10 ppm in rinse-
off products (shampoos).  16 of the alleged allergens occur naturally in more than 150 essential oils,which are mixtures of many components.  India is concerned that this could eliminate the use of
essential oils by the manufacturers.  India’s view is that essential oils should be considered as single
entities and be exempt from the proposed directive.  The proposed thresholds are far too low to allow
significant use of natural oils.  India would request EU to respond to this observation.
In regard to the concerns raised by India with  respect to the proposed labelling requirements
for 26 fragrance ingredients, the European Commission would like to respond as follows:
By way of initial comment, the European Commission would like to state that the above-
mentioned issue is currently under discussion in the context of the 7
th amendment to Directive
76/768/EEC. Given the fact that this legislation is subject to the co-decision procedure, a conciliation
phase was initiated at the beginning of July. To date, a final outcome of the legislative process cannot
be predicted and may still take some more months.
The current labelling requirements for cosmetic products already provides the listing of
cosmetic ingredients on the products, with the exception of perfume and aromatic compositions and
their raw materials, which are referred to by the word "perfume" or "flavour". The ingredients must
be identified by their INCI name, which is mo re comprehensible for consumers than the chemical
name. In order to improve consum er information, a labelling scheme for fragrance ingredients with a
well-recognised potential to cause contact allergies is proposed.  This labelling system will allowconsumers to avoid products containing certain ingredients they are sensitive to.
The Commission Directives are based on the scientific opinions given by the Scientific
Committee on Cosmetic products and Non-Food Pr oducts intended for the Consumer (SCCNFP).
With regard to the 26 fragrance ingredients mentioned by the Indian government, the Scientific
Committee has made no specific derogation for essential oils.
The proposed labelling system will mention the ingredient without any other reference as to
the effects of its utilisation.  The concentration as proposed in Amendment 28 (second reading of theEuropean Parliament) is a threshold level for th e provision of providing information (10 ppm for
leave-on products and 100 ppm for rinse-off products).  It has to be pointed out that the foreseenWT/TPR/M/102/Add.1
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threshold levels do not constitute a usage limit of fragrance ingredients in cosmetic products.
However, the labelling will indicate the name of the potential allergen(s). The amendment does notintend to ban the marketing of the 26 fragrance ingredients, but to provide an appropriate labelling to
enable the consumer to make informed choices.
Hence either no or only a very limited effect on the marketing of cosmetic products is to be
expected.  One has to assume that the potential eco nomic ramifications can be considered negligible.
The Commission is presently in the process of notifying the Council's common position on the
7
th amendment to Directive 76/768 to the TBT Committee.
Q371 As a result of EU’s directive on conformity to CE certification marking, electronics hardware
including instruments are required to conform to EU’s Certification on the product/products before
they are imported into EU countries.  Compliance to this directive entails completion of a lot offormalities and additional costs on the product(s).  Besides, this is a time-consuming procedure.  All
these extra costs tend to erode the competitiveness of Indian electronics exporters to EU countries.
Can EU give the rationale for these measures?  Does it propose to simplify the procedures?
Electronic products, which fall in the scope of the Low Voltage Directive - LVD (73/23/EEC,
amended by 93/68/EEC) and the directive on Elec tromagnetic Compatibility - EMC (89/336/EEC,
amended by 92/31/EEC and 93/68/EEC), have to comply with the essential requirements (ER) of these
directives when placing on the European market.
One way to reach compliance with the requirements of these directives is to apply the
relevant European harmonised standards to the products. Most of the European harmonised
standards are transposed from the international IEC standards without any changes. Having applied
the relevant European harmonised standards the manufacturer can fill out the declaration ofconformity (self-declaration) and affix the CE marking on the product. The manufacturer of electronic
products is not obliged to have his product certified by a third party.
Very useful information can be found on the following websites of the European commission:
a) The Low Voltage Directive
http://europa.eu.int/comm/enterprise/electr_equipment/lv/index.htmb) Guidelines on the application of Directive 73/23/EEC
http://europa.eu.int/comm/enterprise/electr_equipment/lv/guides/index.htm
c) Electromagnetic compatibility
http://europa.eu.int/comm/enterprise/electr_equipment/emc/index.htm
d) Guidelines on the application of the Directive 89/336/EEChttp://europa.eu.int/comm/enterprise/ele ctr_equipment/emc/guides/emcguide.htm
e) Guide to the Implementation of Directives Based on New Approach and Global Approach
http://europa.eu.int/comm/enterprise/newapproach/legislation/guide/legislation.htm
f) List of New Approach Directives and references of harmonised standards
http://europa.eu.int/comm/enterprise/newapproach/standardization/harmstds/reflist.html
Q372 As there is no  agency or department in EU  that is recognized by the Ministry of Health as
responsible to accept applications from manufacturers requesting UK MCA authorities to visit and
certify facilities. Today pharmaceutical manufacturers have to approach regulatory consultants or
distribution companies to assist them in arranging UK MCA certification which is time consumingand expensive and also acts as market access barrier.  India would like to know whether EU has any
plans to establish any agency or department responsible to accept applications from manufacturers
who file requests to UK MCA authorities to visit and certify facilities?
The obligations for the manufacture and import of medicinal or veterinary medicinal
products are explicitly laid down in EU pharma ceutical legislation. The import of pharmaceutical
products is only possible if a company in an EU Member State has a Marketing Authorisation for aWT/TPR/M/102/Add.1
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certain product coming from a third country. Interested companies or other parties are invited to visit
the following website (http://www.pharmacos.eudr a.org/F2/eudralex/index.htm). Here they can find
the current pharmaceutical legislation.
It is not planned to establish any centralised agency or department responsible for accepting
or giving advice on applications from third countries. It should also be noted that for European
applicants to receive a Marketing Authorisation, they also have to contact either the responsible
authority in their Member State (national MA) or in several Member States, or the EMEA (EuropeanAgency for the Evaluation of Medicines in London) in the case of centrally authorised medicinal
products. The procedures are exactly the same for European applicants. If a European company does
not have a person with appropriate knowledge on their own staff, they have to approach specialised
consultants too. This is the normal way of business and has nothing to do with market barriers.WT/TPR/M/102/Add.1
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QUESTIONS FROM THAILAND
Secretariat Report (WT/TPR/S/102)
TRADE POLICIES AND PRACTICES BY MEASURE
Paragraphs 42-48 Page 25 (Preferential trade agreements and arrangements - GSP)
Q373 The EU’s revised GSP scheme has caused great concern among some Members as to its
diversion from the goal authorized under the Enabling Clause.  To be consistent with the Clause, GSP
benefits must be granted on a generalized, non-reciprocal and non-discriminatory basis.  However, the
EU provides special incentives to countries demonstrating adherence to certain internationally
recognized core labour standards or to certain environmental standards, both of which are non-traderelated issues.  Furthermore, special trade preferences are provided for certain products originating in
ACP countries and countries that combat drug pr oduction and trafficking, while other developing
country Members are excluded from these preferential treatments.
In light of the above, we would like to hear the EU’s view on this issue, especially with regard to
the generalized and non-discriminatory basis of the Enabling Clause.
The EC wishes to indicate that the GSP is  an autonomous regime granted on a non-reciprocal
and non-discriminatory basis in full conformity with our WTO obligations.
Supplementary Questions
Classification of CN code for frozen salted chicken meat
Q374 In regard to the Commission Regulation (EC) No. 1223/2002 dated 8 July 2002 concerning
the classification of certain goods in the Combin ed Nomenclature, we would like to seek the EU’s
clarification as to the classification of the product which is described in the Annex to the said
Regulation.  The product of concern is salted chicken cuts, frozen and impregnated with salt in all
parts, having a salt content by weight of 1.2% to 1.9%.  Our questions are:
a) What is the rationale for the Regulation?
b) The basis or reasoning for using such a specific percentage of salt content to 
distinguish between salted chicken und er CN code 0210 and CN code 0207 14 10.
c) Did the EU have prior consulta tion with interested parties?
We are of the view that frozen salted chicken, no matter what the percentage of salt content
would be, after being defrosted, it is the same product as the unfrozen salted chicken, which retains its
essential character.  However, when defrosted, it would have a different characteristic, especially intaste, when compared with that of plain frozen chicken.
The objective of the regulation 223/2002 of 9 July is to ensure an uniform application of the
Combined Nomenclature. The product in question is not salted chicken meat but chicken meat frozen
for long term conservation. The method of conservation of the product is freezing and not salting. Thepercentage of salt is to low to ensure the conservation. The addition of salt does not alter the
character of the product as frozen meat of heading 0207. Consequently, the above measure is WTO
compatible.WT/TPR/M/102/Add.1
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Generalized System of Preferences
Q375 Under the EU’s Generalized System of Preferen ces scheme, the criteria used in the graduation
mechanisms to identify the ‘graduation’ for each  sector are based primarily on the computed values
for the Development Index (DI) and Specialization Index (SI).  However, we cannot develop a clear
conception of how such criteria are based on a logically validated basis as they lack clear reasoning in
the assignment of the range of numerical values of DI as follows:
Development Index (DI) Threshold for the SI
= or > -1.0 100%
< -1.0   and  = or > -1.23 150%
< -1.23 and  = or > -1.70 500%
< -1.70 and  = or > -2.00 500%
Can the European Union please explain in a logistically meaningful and clear context how the
range of values of the Developmental Index is established?
Some GSP beneficiary countries have reached, in certain sectors, a level of competitiveness
which enables them to face international competition without the benefit of preferential treatment.
Such sectors qualify for graduation if they meet certain criteria.
Graduation does not apply to LDC’s nor to countries which account for less than 2 % of
imports of the products of the sector concerned from all beneficiary countries. Graduation does not
apply to countries whose development index is lower than –2.
The development index refers to the level of a beneficiary country’s industrial development
and its participation in international trade. It is measured by a formula based on the ratio between
the per capita income and the value of manufactured exports, which compares that country’s data to
those of the EU. The formula used for calculati ng a country’s development index is explained in
Annex II of the Regulation (CE) no 2501 of 10 December 2001.
Sectors may qualify for graduation under two different provisions: the so-called lion’s share
clause and the specialization index. The lion’s share clause compares the imports from a beneficiary
country in a given sector to those from other bene ficiary countries. Where imports from one country
account for more than 25 % of EU imports from al l beneficiary countries in the same sector, that
country qualifies for graduation in that sector.
The specialization index compares the imports fr om a beneficiary country in a given sector to
those from the same country in all other sectors. Where a given sector’s share exceeds certain
thresholds, the country qualifies for graduation in that sector. Thresholds vary according to a
country’s development index. They are specified in Annex II of the Regulation.
As less developed countries tend to be speciali sed in a smaller number of sectors, they would
qualify for graduation more easily. This, however, would be incompatible for their needs. Thresholds
are therefore higher for countries with a lower development index (and vice versa). They were
established taking into account the typical situation of countries having reached  different levels of
development.
Anti-dumping and safeguard measures
Q376 Exports of pipe-fittings from Thailand to th e European Union are subject to two trade defence
instruments applied by the EU, i.e. the ‘quantitative undertaking’ under the anti-dumping measure and
"tariff quotas" under the provisional safeguard measure.  In our opinion, the application of these two
remedial measures to the same products at the same time can be considered ‘double protection.’
While it may be disputed that the two measures are applied to differing causes, no one could argueWT/TPR/M/102/Add.1
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that applying both at the same time is tantamount to remedying the same injury.  Can the
European Union please clarify the rationale for the simultaneous application of these two measures toThailand’s pipe-fitting exports?
In the EC’s view, ‘double protection’ implies gi ving a higher level of protection to domestic
producers than is necessary through the simultaneous application of two or more trade defence
measures.
At present, no safeguard additional duties are payable on pipe fittings subject to the EC
provisional safeguard measures. Safeguard additional duties are only payable on those imports to the
Community in excess of tariff quotas based on traditional imports plus 10%. The generous level of
these tariff quotas is reflected in the fact that, as at 15 July 2002 (more than half way through the
duration of the measures), only 27% of the tariff quota established for pipe-fittings had been utilised.
In the event that a situation arises in which double protection would in fact occur, the
Commission has undertaken to resolve the matter to  ensure that domestic producers are not given a
higher level of protection than is necessary.
Q377 In regard to the above question, we further would like to register our concern pertaining to the
provisional safeguard measure applied on steel imports.  In our view, the EU’s provisional safeguard
measure and the initiation of an investigation is not justified on the grounds of: 1) increased
quantities, as the statistics on steel imports into the EU for the period 1999-2001 does not provide
clear evidence for the purported increase; 2) failure to ensure the existence of the causal link between
the injury and increased imports; and 3) the case for increased imports was not one of an unforeseen
development.  We would appreciate clarification fr om the European Union on the justification of the
measure.
The European Communities made considerable efforts to carry out detailed enquiries prior to
the imposition of provisional safeguard measures to ensure that it fully complied with the stringent
standards laid down in WTO rules. The investigati on is currently ongoing to determine whether, for
each product,  the provisional measures should be confirmed and whether definitive measures arerequired.
 The European Communities consider that there is clear evidence of an existing recent
increase in imports in relation to the fifteen steel products in respect of which provisional safeguard
measures have been adopted. Import data in relation to each product for the period 1997 to 2001 is
provided in Annex 1 to the regulation imposing provisional safeguard measures ((EC) No 560/2002).
On the basis of its preliminary enquiries prior to the adoption of provisional measures, the
European Communities consider that there is a cl ear causal link between the injury which was found
to have occurred and the threat of serious injury, on the one hand, and increased imports on the
other. In particular, recitals (38) to (43) of regulation EC No 560/2002 set out the basis on which the
European Commission reached its preliminary determination that a causal link was established.
On the basis of its preliminary enquiries prior to the adoption of provisional measures, the
European Communities consider that increased imports arose as a result of the increased use of trade
defence instruments by the US in the steel sector  in recent years culminating in the announcement of
US safeguard measures. In this regard, we note that whilst US imports of steel products fell by 33%
between 1998 and 2001, imports of steel products to th e Community grew significantly. Recitals (12)
to (16) of Regulation (EC) No 560/2002 set out the unforeseen developments on which the provisional
measures are predicated in greater detail.WT/TPR/M/102/Add.1
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QUESTIONS FROM CHINA
EU Enlargement
Q378 China is taking note of the on-going enlargement process of EU. We hope that an expanded
EU should facilitate free trade and avoid adverse effects on its trade relations with any other WTO
members. We would like to ask EU to explain its plan on how to offset the negative effects to its
trading partners as a result of the enlargement.
Recalling the previous enlargement of EU, some compensatory issues remain unsettled
between certain WTO members and the EU because their market access to EU was seriously damagedas a result of EU’s last enlargement. We hope these issues can be addressed without any further delay
on the side of EU.
Thirteen countries have expressed their interest to join the EU, twelve of which are currently
engaged in accession negotiations. Not only will Enlargement of the EU secure peace and stability inthe region, it will also reap significant economic benefits for the new Member States, for the EU as a
whole, but also for third countries.
In the run-up to accession, the Association Agreements, which link candidate countries to the
EU, already provide for free trade in industrial products and a significant liberalisation of trade in
agricultural products between the candidate countries and the EU. It is therefore expected thatenlargement will not lead to significant modifications of current trade patterns between the EU and
the candidate countries. Consequently, the trade-diverting effect is not expected to be significant, and
existing trade patterns with third countries will therefore also not be altered significantly.
Businesses around the world will be able to benefit from increased opportunities, notably
through the alignment of new Member States to the EU's external tariff as of their day of accession tothe EU, which will lead to an overall reduction in tariffs in the region for both industrial and
agricultural products. An enlarged single market, with a single set of rules, standards and
certification, will simplify trade relations.
Within the WTO/DDA, the EU is committed to in crease market access including in all areas.
The candidate countries will also be bound by these commitments.
Upon EU enlargement, there will be an exami nation in the WTO under GATT Article XXIV in
order to verify whether trade has become more restrictive for other WTO members. In line with GATT
rules, China may submit a request for compensa tion if it considers that enlargement has led to
breaches of GATT bindings for products of interest. The EU will discharge its obligations.
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