Note: Advance written questions by WTO Members and replies by the European Union are
reproduced in document WT/TPR/M/72/Add.1.WORLD TRADE
ORGANIZATIONWT/TPR/M/72
26 October 2000
(00-4412)
Trade Policy Review Body
12 and 14 July 2000
TRADE POLICY REVIEW
EUROPEAN UNION
Minutes of Meeting
Chairperson: H.E. Dr. Iftekhar Ahmed Chowdhury (Bangladesh)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE
EUROPEAN COMMISSION 4
III. STATEMENTS BY MEMBERS OF THE TRADE POLICY
REVIEW BODY 7
IV. REPLIES BY THE REPRESENTATIVE OF THE EUROPEAN COMMISSION
AND ADDITIONAL COMMENTS 30
V. CONCLUDING REMARKS BY THE CHAIRPERSON 39WT/TPR/M/72
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The fifth Trade Policy Review of the European Union (EU) was held on 12 and 14 July 2000.
The Chairperson welcomed the delegation from Brussels of the European Commission, led by
Mr. Hervé Jouanjean, Director, Directorate-General for Trade, as well as Mr. Roderick Abbott,
Ambassador and Permanent Representative to the WTO.
2. The Chairperson recalled the purpose of the Trade Policy Review Mechanism and the main
elements of the procedures for the meeting, and reminded delegates that there would be no discussantfor the meeting (WT/TPR/82).  The policy statement by the European Commission was contained in
document WT/TPR/G/72 and that of the WTO Secr etariat in document WT/TPR/S/72.  Written
questions submitted by the United States;  Peru;  Canada;  Switzerland;  Uruguay;  Argentina;
Hong Kong, China;  Japan;  Chile;  Australia;  New Zealand;  Brazil;  India;  Republic of Korea;
Thailand;  and Bolivia are reproduced in Annex I.  The European Commission has provided writtenresponses which form Annex II.  Annexes I and II to this document are reproduced in
WT/TPR/M/72/Add.1.
3. The Chairperson noted the stronger economic performance of the European economy since
the last review in 1997, of key importance to a vi tal global economy.  The Chairman also noted the
generally open character of the EU's market and its appropriately active leading role in the WTO.  Heanticipated a discussion on the evolution of the EU's multifaceted approach to trade policy, combining
multilateral, regional and bilateral approaches, as well as conditions of market access to the EU
market for goods and services.WT/TPR/M/72
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE EUROPEAN
COMMISSION
4. The representative of the European Commission (hereafter "Commission") noted the three
basic orientations of the EU's trade policy that were the subject of his opening statement to the TPRB.
Firstly, there was no substitute for a strong multilateral trading system since the multifaceted
commercial relations between countries could only prosper by respect for its rules.  Secondly, the
realization of the EU's global vocation in terms of trade required it to use the full potential of themultilateral trading system and to deepen its trading links with its partners around the world.  Thirdly,
the WTO needed to take on the challenges of the day or be disregarded and become irrelevant, and the
EU was therefore committed to a new round of multilateral trade negotiations.
5. With regard to the first orientation, the bedrock of the multifaceted trade policy of the EU was
respect and support for a strong multilateral trading system.  A system with strong rules and a soundinstitutional framework had to be preserved to ensure that the same basic rights and obligations
applied equally to all members, large or small.  A period of uncertainty on the role of the multilateral
trading system had followed the failure of Seattle, but this fundamental factor could not be
emphasized enough.  The multilateral trading system was the best guarantee against the threat of
unilateralism, which had proved its destructive potential for international trade, a matter on which themembership could not be complacent.  The system's importance went beyond trade, by contributing to
international stability and peace, and promoting essential democratic values such as
non-discrimination and equality.  The membership needed to continue to work towards the
reinforcement of the system.
6. A strong multilateral trading system also required respect for and implementation of
obligations, including the correct and timely impl ementation of the results of the Uruguay Round.
The WTO Agreements constituted a unique set of rights and obligations and the EU had implementedall its obligations.  Tariffs on industrial goods had been lowered substantially, thus allowing trading
partners virtually unfettered access to the EU's market.  The agreements reached on agriculture had
been implemented in good faith, making the EU th e world's largest importer of agricultural products,
of considerable benefit both to developed and developing country exporters.  Commitments on
domestic support and export subsidies to agriculture had also been implemented.  Markets for serviceshad been opened to foreign suppliers in important areas such as financial services,
telecommunications and distribution.  The protection of intellectual property rights remained of the
highest standard.
7. Faithful implementation of the results of the Uruguay Round was necessary for all Members,
and dispute settlement was a last resort.  If panels ruled that WTO obligations had been breached, theMember had to comply or accept the foreseen consequences.  The EU was determined to take this
course on all cases, including the difficult ones of bananas and hormones, on which considerable
effort had been made to find a WTO-consistent solution taking account of the interests of parties.
8. There were however very distinct limits on the extent to which dispute settlement procedures
could solve problems between Members or adapt the rules to new circumstances not foreseen at thetime of negotiation.  Dispute settlement could never and should never replace agreements negotiated
by governments representing their countries and ratified by parliaments.  Judiciary or quasi-judiciary
institutions could not decide the manner in which the WTO responded to the challenges of today's
world.  Governments needed to take the political decisions that were required and for this reason the
EU was convinced of the need to embark on a new round of trade negotiations.
9. The WTO needed to be enlarged to make it a de facto universal institution.  Croatia and
Albania had concluded the accession process, progress had been made with China, and efforts hadWT/TPR/M/72
Page 5
been made with the Russian Federation, Saudi Arabia and many other countries.  But universality also
required the WTO to deliver real and tangible benefits to citizens, who ultimately were affected by thedecisions taken by the WTO, and who provided its basic legitimacy.
10. With regard to the second orientation of the EU's trade policy, strong and multiple ties were in
place with trade partners around the world.  Preferential agreements had traditionally been maintained
with a number of countries and regions in the worl d.  In parallel with the EU's efforts at the
multilateral level, bilateral and regional trade liberalization would continue.  This orientation wasconsistent with the spirit and the letter of the WTO, which saw regional trade liberalization as
perfectly compatible and indeed mutually supportive of the multilateral trading system.  In the case of
the EU, the historical evidence was clear;  the integration of markets and economies, with the Internal
Market and the Euro, had not only increased trade between the EU and its partners, but had also led
the EU to become a driving force for the multilateral liberalization of services and efforts to eliminate
technical barriers to trade, for instance through Mutual Recognition Agreements (MRAs).  The next
enlargement of the EU would also be conducive to further trade liberalization for the benefit of all.
11. The EU's bilateral and regional relations underpinned the multilateral trading system.  Since
its last review in 1997, the EU's policy had evolved both in geographical and conceptual terms.  The
preferential agreements with developing countries had become more dynamic.  Those with the ACPcountries had the objective of becoming reciprocal in nature over time, resulting eventually in free-
trade agreements.  The agreements with the Mediterranean countries and the ACP countries also
encouraged trade liberalization between the partners by foreseeing regional free-trade areas.  The EU's
preferential policy had become more global through ambitious agreements concluded with Mexico
and South Africa, and negotiations launched in April 2000 with MERCOSUR and Chile.
12. The third basic orientation of the EU's trade policy was the need to launch a new round of
multilateral trade negotiations.  The basic logic for a broad-based or comprehensive round remainedas strong as ever, and grew stronger every day.  The WTO had to respond to today's challenges or be
left behind.  The need to harness globalization for the benefit of citizens and to achieve sustainable
development was as urgent as ever.  The EU was convinced that only a comprehensive negotiating
agenda that contained the priority issues of all Members would be acceptable to all Members, and
consequently believed that what could be achieved in the context of the negotiations on the built-inagenda alone was limited.  The EU had entered into those negotiations in good faith, but the scope for
progress remained modest.
13. Experience had shown that only a broad agenda provided room for the balancing and
trade-offs needed to reach a conclusion.  A round launched with an agenda containing the key
concerns of only some Members begged the question as to why other Members would agree toparticipate.  The challenges that had prompted the EU's proposal to launch a comprehensive new
round of negotiations remained the same, and could still only be solved, in its view, by such a round.
14. Four basic elements for a round had been identified by the EU and others in the past months.
The first was the further liberalization of access to markets for goods and services, across the board
and on the basis of predictable and non-discriminatory rules;  this had been a basic feature of earlierrounds and would remain so in a new round, in particular for the developing countries.
15. The second element was updating and improving WTO rules in response to globalization.
The pace of change in the globally integrating eco nomy was fast, and the issues such as investment
and competition, but also environment, needed to be addressed.  The EU's interest in these issues was
not, as had been misunderstood in some quarters, related to a desire to lengthen the time ofnegotiation.  Instead, the EU wanted a speedy conclusion of negotiations.  Governmental institutions
were falling behind by failure to appropriately address issues such as world-wide hard-core cartels,WT/TPR/M/72
Page 6
mergers and capital flows.  Investors needed stable and appropriate rules.  Trade thrived in stable
contexts for investment and fair competition rules, and there was no organization better placed thanthe WTO to accomplish the first steps to this end on an international level.  As for environment, the
discussion in some quarters still seemed to be confined to fears over green protectionism.  The EU
shared those concerns and rejected green protectionism, which was one of the reasons for which the
relationship between pursuing environmental objectives and respecting WTO rules needed to be
clarified, to ensure coherence in policy-making.
16. The third element was the better integration of developing countries in the global economy
and the WTO system.  From an organization in which activities for historical reasons mostly
responded to the needs of developed countries, the WTO had changed.  The GATT had integrated the
development dimension through concepts such as special and differential treatment and the
Generalized System of Preferences (GSP), which had been further expanded in the WTO.  Moreneeded to be done to take into account the development dimension, but the clock could not be turned
back and commitments of developing countries under the WTO agreements reduced.  Instead,
developing countries could be strengthened by impl ementation, in which key elements were increased
capacity building and technical assistance as well as improved market access for developing
countries.  The EU was committed to further improve market access for least developed countries(LDCs) and would soon take decisions to this effect.
17. The fourth element was measures to address the expectations of civil society both in the
developed and developing world.  The public expected their governments to try to ensure a positive
impact of globalization on their daily life, including working conditions, the environment, health,
social issues, and cultural diversity.  Solutions needed to be found that addressed these expectations,
indeed concerns, which existed in all countries, developed or developing, although expressed
differently, without permitting protectionism or the undermining of the trade rules.
18. With respect to the social issue, the EU was re solutely opposed to trade sanctions in the field
of labour.  Progress on the issue had been made at Seattle.  A dialogue on social development
involving various international institutions was needed and should begin immediately and
independently of the launch of a new round.  The EU had not asked for the issue to be included in the
agenda for a new round.
19. The EU's philosophy on a new round could thus be summed up as follows:  rather than
seeking to remove issues entirely from the negotiating agenda - which clearly would not lead
anywhere – all WTO Members needed to feel they had a stake in the result, hence the concept of a
global approach and a single undertaking.
20. With regard to the operation of the WTO, the last Ministerial Conference in Seattle had made
it clear that improvements were needed.  The working methods and structures of the WTO needed to
be enhanced in a pragmatic and incremental manner.  Internal transparency needed to be increased to
permit all Members to participate actively and mean ingfully in WTO processes.  Increased external
transparency was needed to reach out to civil so ciety.  The EU had thus taken steps to increase
transparency and raise awareness in relation to the WTO, and had engaged a dialogue with civilsociety on the aims and goals of a new round, in general and on specific areas.
21. The EU was a keen supporter of and participant in the Trade Policy Review Mechanism.  The
EU looked forward to hearing the comments of  its trading partners and the ensuing debate.WT/TPR/M/72
Page 7
III. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
22. Members congratulated the EU on its stronger economic performance and the deeper
integration it had achieved since its last review in 1997, notably by the introduction of the Euro.
Members noted the importance of the EU in world trade and its resulting leadership role in the
multilateral trading system. Members thus commended the EU for its commitment to the
strengthening of the multilateral trading system, re-affirmed in the Commission's opening statement.
Delegations looked forward to receiving the responses to the questions they had submitted to theCommission.
23. The representative of the United States noted that her country shared with the EU the world's
largest two-way trade and investment relationship, representing around one fifth of their respective
total trade for goods and one third for services, and one half of the other's foreign direct investment.
24. The EU and the United States shared a commitm ent to growth and prosperity through further
liberalization and the launch of a new round. The United States was counting on the EU's constructive
engagement in the mandated negotiations on agriculture and services.  They were working together to
build support for the launch of a new round by:  providing technical assistance and preferential tariff
initiatives to encourage greater participation in the system by LDCs;  increased attention to both
internal and external transparency in the WTO; and reinforcing the link between trade and theenvironment and addressing the relationship between  trade and labour, in cooperation with other
international institutions.
25. Differences between the United States and the EU however remained.  The United States was
one of the largest exporters of agricultural products in the world, and therefore had a keen interest in
the operation of the Common Agricultural Policy (CAP).  Her delegation invited the EU to provide
greater detail on CAP reform and the upcoming review scheduled for 2002.  The United States was
also concerned with ensuring third-country participation in EU regulatory decision-making, asforeseen by the transparency obligations of the TBT and SPS agreements.  The EU should allow
WTO Members and affected exporters a meaningful opportunity to comment on regulatory proposals
and consider the comments before a final technical regulation was promulgated and enforced.  The
United States was also concerned by the de facto  moratorium on new approvals of biotechnology
products since June 1999, and requested clarification on proposed revisions to Directive 90/220.
26. The United States strongly supported the goal of European integration and closer ties between
the EU and its neighbours.  Her Government was concerned, however, by trade diversion, particularly
with respect to the Europe Agreements conclude d with candidate countries for accession.  Another
concern was that the EU was strongly urging candidate countries to adopt its rules in advance of
accession, and to retain existing tariff rates, ra ther than implement the lower level of the
Common External Tariff (CET).  The same argument applied to services and agriculture, which was
particularly disturbing given the liberalization foreseen in the mandated negotiations and eventual
new round.
27. The United States had also noted the expansion of the EU's network of preferential trade
agreements beyond Europe, including agreements and ongoing negotiations in Latin America andAfrica.  Her Government invited the EU to provide more information on the services-related
components of these agreements, as well as the future coverage of sectors excluded from the
agreements (e.g. agriculture, services).  Furtherm ore, more than five years after its enlargement to
fifteen Member States, the EU had yet to provide a consolidated services schedule.  The United States
invited the EU to provide information on its efforts to combat counterfeiting and piracy on the EUmarket and to respond to written questions.WT/TPR/M/72
Page 8
28. The representative of Peru noted the written questions submitted to the Commission on which
it hoped to receive a reply, concerning in particular trade policy and sectoral policies, as well as the
EU's plans for the regulation of electronic commerce.
29. The representative of Switzerland noted his country's long-standing and close economic
relations with the EU, reflected both in the magnit ude of trade flows and in close intergovernmental
cooperation, which were constantly being strengthened.  The EU was Switzerland's leading trade
partner, accounting for 60% of its exports and almost 80% of imports.  A new impetus tointergovernmental cooperation had been given by the seven bilateral agreements, endorsed by a large
majority of the Swiss population in a referendum on 21 May 2000, which would enter into force in
2001.  His Government intended to further deepen its cooperation with the EU.
30. Switzerland and the EU had a largely shared vision of the future of the multilateral trading
system.  His Government welcomed the EU's determination and commitment to launch a broad andbalanced round to adapt the WTO to current economic realities and reflect all the issues of concern to
WTO Members.  The EU, like Switzerland, had an active policy of regional cooperation, concluding
bilateral and regional agreements for entirely legitimate reasons.  The proliferation of such
agreements, although reducing the scope of application of the MFN principle, had not distracted the
EU from its multilateral objectives, as was evidenced by its commitment to multilateral liberalization,which was the best way to smooth the differences between MFN treatment and preferential regimes.
31. The representative of Canada noted the role played by the liberalization of economic policies
in the development of the EU over time, first on in ternal trade in goods, and more recently through the
internal liberalization of service sectors as the EU advanced towards the Internal Market.  The EU was
now preparing for its own enlargement, which coul d add more than a dozen new members and expand
the EU's population to over half a billion people.  As the EU grew, so would its influence on the
international stage, with important implicat ions for the international trading system.
32. Canada noted that the EU was its second most important trading partner after the United
States, with two-way trade at almost Can$50 billion in  1999 and stocks of foreign direct investment at
almost Can$100 billion.  Canada and the EU were working to enhance trade liberalization at both the
bilateral and multilateral levels.  The 1996 Joint Canada-EU Action Plan had set ambitious goals and
was matched by an impressive record of accomplishments.  The EU-Canada Trade Initiative of 1998had established new priorities for economic cooperation, resulting in an agreement on competition
policy, an MRA, and the launch of a business dialogue initiative.  Canada and the EU had also made a
Joint Statement on electronic commerce.  The Canada-EU Summit in Lisbon had led to a Joint
Statement on the WTO in which both sides pledged to work to build a consensus for a new round, and
Canada looked forward to working with th e EU and all WTO Members in this regard.
33. A number of issues on the Canada-EU bilateral trade agenda had wider implications and
addressed key systemic and sectoral trade policy matters.  In this respect, Canada called upon the EU,
as a strong supporter of a vital multilateral trading system, to implement DSB rulings and
recommendations.
34. As a traditional exporter of agricultural products, Canada was concerned by the EU's many
agriculture-related policies and practices, which continued to have an adverse impact on Canadian
farming interests.  The EU's very significant steps toward liberalization in a number of sectors were
welcome, but stood in stark contrast to the EU's Common Agricultural Policy.  Her Government
welcomed the Agenda 2000 reforms agreed in Berlin, and hoped that more ambitious reforms would
be pursued, encouraged by the mandated agricultural negotiations and in the context of a broaderround.  Canada believed that additional restraint should be applied to production subsidies and other
domestic support, and was seeking the elimination of export subsidies.  Canadian farmers wanted anWT/TPR/M/72
Page 9
opportunity to compete on the basis of quality products, not on the basis of the national treasury that
could afford the most subsidies.
35. Canada was closely monitoring the Intergovernmental Conference (IGC) which, although
focussed on internal EU issues, could have a futu re impact on third countries via budgetary questions,
particularly related to agriculture, especially given the link with enlargement.  Canada had also taken
a great interest in the EU's recent food safety diff iculties and the erosion of consumer confidence in
their food.  Her Government commended the EU on its plan to create an independent European FoodAuthority (EFA), but had concerns that certain EU regulations involving health, safety, and the
environment, had or threatened to have a negative effect on Canadian interests.  Her Government was
not alone in asserting that such measures should be based only on sound science and must be the least
trade-distorting possible in their application:  the SPS and TBT agreements called for nothing less.
This increasingly important area in trade required further international cooperation to address thedifferent approaches of WTO Members in order to avoid further high profile disputes that could
potentially damage the integrity of the multilater al trading system.  Cooperation could also address
concerns that some countries were taking unilateral actions in the name of food safety or
environmental protection as a pretence for measures whose real object was economic protection or
advantage.  The appropriate manner to address concerns of this nature, whether related to GMOs,hormone-treated meat, or other issues, was to develop a rigorous, science-based regulatory response
to potential health and environmental threats. Good governance demanded a rational science-based
approach to risk assessment and management, and courage would at times be required by lawmakers
and officials in the face of misinformed public opinion.
36. Canada had noted the Commission's statement in its report that the EU "continues to remain
an open economy fully committed to an open, equitabl e, and truly multilateral trading system".  Her
Government supported this objective, although several Canadian industries questioned the "openness"of the EU market.  For instance, Canadian wine producers had been unable to increase their exports to
the EU due to the existence of a restrictive regulatory framework and the Government's efforts to
negotiate improved market access had been unsuccessful to date.  Canada had also noted that, in spite
of the decline in the EU's average MFN tariff level applied to manufactured products, peaks remained.
A tariff on aluminum restricted Canadian market access at a significant cost to the competitiveness ofthe EU's industrial users.  Canada encouraged the EU to liberalize trade in this area, even if on an
interim basis, as it would benefit economies on both sides of the Atlantic.
37. Canada encouraged the EU and candidate countries to ensure that measures being
implemented in preparation for enlargement did not adversely affect third-country interests,
particularly prior to the potentially lengthy and complex Article XXIV:6 negotiations.  Canada alsonoted the important interface between the Internal Market and multilateral trade liberalization,
particularly in the context of efforts to launch a new round.  The EU's next enlargement loomed closer
still and its network of regional agreements continued to expand.
38. The broadening and deepening of the EU was both an opportunity and a challenge.  As
European integration proceeded, it was important for the EU to demonstrate that its attention was notentirely directed inward, and that the process of further integration and enlargement would not be at
the expense of the multilateral trading system.
39. The representative of India noted that most of the economic indicators of the EU were sound
and that the EU was implementing Agenda 2000.  His Government also noted the key priority given
by the EU to the full integration of developing coun tries, in particular the LDCs, into the multilateral
trading system.  His Government presumed these countries would be provided with increased
effective access to the EU market for products of interest to them, and would not be required toWT/TPR/M/72
Page 10
undertake deeper and broader commitments in the WTO, disproportionate to their level of
development or inconsistent with their own development.
40. India recognized the importance of the bilateral relationship with the EU, its largest trading
partner. The EU-India Summit in Lisbon, the first of its kind, had led to a Joint Declaration;  the two
partners resolved to build a new strategic partnership founded on shared values and aspirations
characterized by enhanced and multi-faceted cooperation.  The Declaration noted that the current
volume of bilateral trade and investment fell far short of its potential and that there was a need formuch greater collaboration between the EU and I ndia in strengthening industry and business links.
41. India had several concerns on the EU's trade policy regime.  The first was that the EU was the
most frequent user of trade defence instruments and a majority of cases initiated were against the
developing countries, including India.  In 1998, Indi a was the most targeted country, with 2.5% of its
exports to the EU subject to anti-dumping/anti- subsidy measures, compared with 0.3% of the EU's
imports from all origins.  His Government considered the excessive use of these instruments by its
largest trading partner to be very serious, especially due to the EU's persistent trade surpluses with
India.
42. His Government had expressed the concern on a bilateral basis to the EU authorities that
certain proceedings suffered from serious procedural and technical flaws in violation of the norms ofthe WTO and of the EU itself.  These included the unwarranted initiation of investigations when
Indian exports were below de minimis levels, the filing of complaints and initiation of investigations
without sufficient ground, and that certain complain ts were allowed to be voluntarily withdrawn
instead of being rejected by the authorities.  India had also noticed a tendency to club anti-dumping
and anti-subsidy complaints together on the basis of simultaneous complaints, which had a very
restrictive effect on exports.  In addition, textile products appeared to be specifically targeted for
anti-dumping actions;  India had faced the initiation of back-to-back anti-dumping proceedings on thesame products repeatedly on the basis of similar complaints, such as for example, three times on
cotton fabrics and twice on bed linen. Also, an anti-dumping investigation on imports of stainless steel
wires from India was initiated even prior to the pre-initiation consultation. India was of the view that
if the performance of an industry was not satisfactory in general and was on the decline, it was not
logical to expect that industry to perform well in a given region.  Finally, India had noted that theprovisions on S&D in the relevant agreements were not being applied to India by the EU investigating
agencies, and price undertakings were not being accepted from Indian exporters.
43. The second issue of concern to India was the EU's  slow integration of the textiles and clothing
sector into GATT 1994, a sector which played an important role in the economies of the developing
countries, including his country.  In the first stage of integration under the Agreement on Textiles andClothing (ATC), no product under restraint in 1990 had been included, while 23 categories had been
integrated in the second stage, but not a single one under quota for India.  Even though the EU had
integrated 33% of trade in textiles and clothing to date, very few quota restrictions had been removed.
The EU's annual cost of maintaining restrictions in the textiles sector was estimated at ECU 25 billion
in a recent report released by the Swedish Ministry of Foreign Affairs.  India hoped there would be acommercially more meaningful integration in the third stage of the integration process.   Incidentally,
India was surprised by the absence of a detailed examination of this sector in the Secretariat Report.
44. The third issue of concern to India was the EU's revised GSP scheme, which provided for
special incentives to countries demonstrating adhe rence to certain internationally recognized core
labour standards or to certain environmental standards.  The incentive for labour standards did nothave legal cover either under the ILO Constitution or the ILO Conventions or the ILO Declaration on
Fundamental Principles and Rights at Work, the latter  stating in its paragraph 5 that "labour standards
should not be used for protectionist trade purposes, and that nothing in this Declaration and itsWT/TPR/M/72
Page 11
follow-up shall be invoked or otherwise used for su ch purposes".  GSP treatment was to be given on a
non-reciprocal basis to eligible countries, and India viewed additional conditionalities as a violation ofthe scheme itself.  The incentives, the EU had usually argued, were not meant to be punishment to
those countries not following the standards, but it was obvious that a penalty applied to Members
unable to meet the conditions.
45. The fourth issue of concern to India was the EU's GATS commitments on the movement of
natural persons.  Already limited, such commitments were further circumscribed by time-consumingand cumbersome procedures.  Applying the economic  needs test took about five weeks while the
procedure for the grant of work permits took about another five weeks, requiring a total of ten weeks
for non-EU nationals to fill vacancies.  Additional requirements included social security payments,
even though temporary service providers were not eligible for benefits.
46. The GATS called upon Members to progressively remove restrictions on the movement of
service providers.  As Members were aware, India had achieved a high degree of competitiveness in
the IT and software sectors, but could not translate this advantage into positive results due to the
illiberal regimes governing visas and work permits in its export markets.  Even though several
Member States – Germany, the United Kingdom and Ireland – had announced certain liberalization
measures for the grant of visas, India considered that a more coordinated action was needed, andrequested the EC to consider measures that w ould permit an easier flow of IT and software
professionals from India.   In a general manner, I ndia also wished to hear from the EU how it was
implementing commitments on movement of natural persons under the GATS.
47. The fifth issue of concern was the trade diversion effects of regional trade agreements,
particularly in view of the enlargement of the EU.  While India recognized the right of Members to
enter into bilateral or regional preferential trading arrangements consistent with relevant WTO
provisions, it felt that it was important that the part ners to such arrangements ensured that they were
trade-creating and not trade-diverting.
48. India was concerned by the EU's system under Regulation 2322/97 of fixing standard import
values for the entry price of certain fruit and vegetables, instead of determining value under the
Agreement on Customs Valuation.  India had raised the matter since November 1998 in the Customs
Valuation Committee, requesting details of the syst em and the justification for departing from the
Agreement.  After a year, the EU had replied that such a system was indeed applied, but had not
addressed most of the factual and legal issues raised by India.  Most importantly, the EU had not
indicated whether it or the Member States had made any reservation to fix standard import values
under the Tokyo Round Code or under the Uruguay Round Agreement.  The EU had hinted at a
bilateral resolution of the matter on the last few occasions, but had not been forthcoming, and Indiainvited the EU to respond to the issue raised by his delegation.
49. Several bilateral issues were also of concern.  The first was the revision to the EU's rice
regime, to come into effect in September 2001, which would have serious implications for India's
basmati rice exports.  The new regime would replace the existing system of determining import duties
for rice based on the intervention price by a fixed tariff system.  As a result, India's exports of basmatirice would face an increased customs duty while imports of similar rice from certain developed
country sources would not be affected.  Basmati rice was India's most important agricultural
commodity export to the EU, and his Government invite d the EU to be sensitive to the implications of
a possible disruption to this trade.  Another matter was the adverse impact of seasonal tariffs on
flowers.  India had also taken note of the European Patent Office's revocation of a patent oninsecticidal properties of neem as a fungicide, and queried the EU's plans to ensure that such patents
were not granted in the future.  India also wished  to know whether the EU would instruct its patent
offices to insist on the disclosure on patent applications of the origin of biological material andWT/TPR/M/72
Page 12
associated traditional knowledge so that adequate information was available to them to understand the
applications better and also to address the issues relating to benefit sharing.  India also referred to itsbilateral requests to the EU on the issue of a separate quota for mushrooms and for increasing the
quota on sugar, and hoped that these requests would be considered seriously.
50. India had concerns regarding technical regulations and standards specified in its written
questions.  In addition, it had raised, on a bilateral basis, the issue of standards concerning aflatoxin
levels in groundnuts, milk, etc; and the presence of benzoic acid in the case of cooked shrimp.  Eventhough India had formulated its standards and sent them to the EU in 1999, these had not yet been
cleared.  Referring to problems of lack of harmoni zation of standards within EU Member States, India
also felt the need for harmonization of the EU standa rds with international standards;  India had raised
some of these issues in the SPS Committee.  India also referred to three other issues of bilateral
concern, namely denial of market access to meat from India due to SPS measures; denial of national
treatment for Indian shrimp; and market-access problems for Indian bicycles into France, keeping in
view the French stipulation since October 1995 that all bicycles sold in France had to be fully
assembled in France.  India hoped that the EU and the Member States would take appropriate steps to
remove these barriers.
51. India invited the EU to clarify certain measures in the income tax systems of the Member
States, which constituted in India's view export subsidies or subsidies contingent on the use a
domestic goods, both of which were inconsistent with the WTO Agreement on Subsidies and
Countervailing Measures.  These measures included, inter alia,  the income tax laws of France,
Greece, Ireland, Belgium, and the Netherlands, and were listed in India's written statement, which was
made available to the EU delegation and the Members of the TPRB.
52. India recognized that the EU was a major force in the WTO, and represented 15 developed
countries. The EU had traditionally expressed its support to developing countries.  The Commissionhad proposed immediate action in the WTO on improved market access to address implementation
concerns and a new approach to trade-related technical assistance.  India noted the EU's numerous
preferential trade agreements, of which it was not a beneficiary.  However, the fundamental question
was whether the EU's trade regime could be more liberal and less protectionist in sectors of vital
interest to developing countries, such as agriculture and textiles.  The benefits that wouldconsequently flow to developing countries and to least developed countries were superior to those the
EU currently made available to such countries through a complex system of preferences.  India
complimented the EU's growth performance, and invi ted the EU to appreciate the change that was
necessary in its trade policy regime for developing countries to attain a fraction of the similar growth
performance.
53. India also wished to place on the record its concern regarding the non-nomination of
discussants for the EU's Trade Policy Review.  While thanking the Chairperson for his prompt written
response to India's concern in this regard and his assurance that the matter of the number of
discussants remained open and that no precedent was being created for future Trade Policy Reviews,
India considered the subject to be sufficiently serious to warrant a reference during the course of thecurrent trade policy review of the EU.  India pointed out that Annex 3 of the WTO Agreement stated
that the discussants shall introduce discussion in the TPRB on the Member under review, a legal
requirement that could not be dispensed with lightly .  Although the report to the third Ministerial
Conference had alluded to flexibility on the role and number of discussants, it was not meant to do
away with discussants altogether, but provide the opti on of just one discussant rather than two in the
case of reviews of Members whose trade policy regime was relatively simple and straightforward.
Since there was no clear consensus on the subject, the report was couched in non-specific terms, and
did not amount to a decision.  The presentations of discussants helped smaller delegations, especiallyWT/TPR/M/72
Page 13
those of developing countries including LDCs, to participate effectively in the discussion, and the
absence of discussants would hurt them.
54.  With reference to the Chairperson's written response to the effect that he had raised the issue
of discussants for the TPR of the EU in his introductory remarks during the TPR of Peru, India felt
that the practice in the TPRB of raising some important issues without giving adequate notice or
including them in the agenda created a lot of difficulties for delegations like India.  For the purpose of
the record, India stated that his delegation deeply regretted the absence of discussants at the TPR ofthe EU and trusted that the subject would be formally discussed in the TPRB to enable all delegations
to express their views.
55. The Chairperson acknowledged the correspondence exchanged with India on the matter of the
lack of nomination of discussants for the EU's Trade Policy Review.  The issue had been raised in the
TPRB at the Trade Policy Review of Peru in May to enable delegations to react.  His view had beenthat the keen interest aroused by the Review of the EU would lead to a large number of written
questions and interventions by delegations, which would be sufficiently comprehensive and searching
for the smaller delegations, obviating the need for a di scussant at this particular Review.  The EU had
had no problem with this arrangement.  However, his view remained open on the matter, no precedent
was being set, and the issue would be considered again by the TPRB in the light of the experience ofthe EU Review.
56. The representative of Argentina noted with interest the EU's proposed agenda for a new
round, on which many elements were also a priority for his delegation.  He noted, in particular, the
EU's concern with the need to harness globalization by addressing cartels, an issue raised by
developing countries in UNCTAD for over 25 years, however with no response.  He had also noted
the EU's agenda on social issues, the environment, and the greater involvement of civil society in the
WTO.  Developing countries had more modest ob jectives in the launch of a new round, focussed on
better market access and conditions for trade, and lower costs in terms of disciplines.
57. The Secretariat Report had stated that the EU had "a more open market for non-agricultural
products", although his Government noted that certain products were affected by above-average
tariffs, tariff escalation, quotas, anti-dumping measures, subsidies and numerous preferential trade
agreements and provisions.  The Secretariat Report had noted that the CAP absorbed US$50 billion in1999 or 45% of the EU's budget, and had "resulted in food prices for consumers that were higher than
on world markets" and "had certain negative effects on the environmental condition of rural areas",
and "externally, the CAP continued to have major implications on world markets for agricultural
products, in particular dairy products, cereals, meat and sugar" (page 88).
58. During the period under review, the CAP had been applied in a world economic environment
made more difficult by the Asian crisis.  The depressed prices of agricultural products had been
exacerbated by the EU's aggressive policy of subsidization in 1997, 1998, and 1999.  The OECD had
found that support for agriculture by its member countries had risen by close to 10% from 1997 to
1999, and represented an annual transfer to rural producers of 1.4% of the GDP of the richest
countries in the world.  In particular, the EU had raised its support to producers from US$95 billion in1986-88, the base period for the reduction commitments in the Uruguay Round, to US$114 billion in
1999, a rise of 20%.  Over this same period, the support received by each farmer had increased by
80%, from US$11,000 in 1986-88 to US$17,000 in 1999, which was more than twice the per capita
income of Argentina;  on a per hectare basis, producer support had risen from US$707 in 1986-88 to
US$831 in 1999.  The EU's total support to th e sector was some 35% of the OECD total.
59. A recent study placed the costs of the CAP to the world economy at US$75 billion annually,
two thirds in subsidies and higher prices paid by  EU consumers, and one third in lost production andWT/TPR/M/72
Page 14
earnings of other producing countries.  The global consequences were extremely serious.  For
Argentina, the CAP had cost some US$1.4 billion in forgone export earnings in 1999.  With respect to
products of export interest to Argentina, if the EU had not subsidized exports of wheat, the price per
tonne would be 4% higher, and on maize,  the tonne would be worth 9% more.
60. Argentina had noted the EU's statement that it had observed and implemented all its
commitments under the WTO Agreements, but his delegation considered that this was not the case for
agriculture.  On sugar, for example, a key commodity for many developing countries, including net-food importers and LDCs, the EU had exceeded its an nual limits for export subsidies, both as regards
budgetary outlay and volume, in 1997 and again in 1998.  The Secretariat Report had also highlighted
the implications on global markets of the EU's policy of self-sufficiency applied to primary
agricultural products, as well as the policy on tariffs.
61. In addition to the written questions it had submitted to the Commission, Argentina invited the
EU to reply to the following questions:
(i) the Secretariat Report had noted on page 55 the protective measure imposed by the
EU for 2000, at the request of Spain, on the import of garlic from China.,  Argentina
invited the EU to provide details of the measure, its justification and Spain's
complaint;
(ii) the Secretariat Report had noted on page 122 that "the liberalization of the
telecommunications market was extended to all foreign operators, with minor
limitations on market access and national treatment".  Argentina invited the EU to
provide details of the "minor limitations" on market access and national treatment;
(iii) the Secretariat Report had noted on page 133, with respect to air transport, that
"according to the Commission, European companies suffer from relative financial
fragility compared with their main competitors;  in recent years the Commission hasoperated a 'one-time-last-time' approach to State aid, which has paved the way for the
restructuring and privatization of many of the State flag-carrier airlines.  The
conditions attached to aid have been strictly monitored and enforced and the
Commission does not intend to permit further aid for restructuring purposes.  It is
estimated that from 1990 through 1996, flag carriers received support worth overUS$9 billion."  Argentina invited the EU to  clarify the "one-time-last-time" approach
and the conditions for granting such aid;  and
(iv) to provide details on measures to lower the currently high levels of piracy of trade
marks, copyright and computer software , audio-visual material, and clothing.
62. The representative of Uruguay noted with satisfaction the progress made by the EU since its
last review in 1997, including its institutional de velopment and strengthening, the reinforcement of
the integration process, the introduction of the euro, as well as the extension of preferential trade
agreements, notably with MERCOSUR countr ies, whose agreement was under negotiation.
63. Uruguay shared a number of the priorities of the EU on the strengthening of the multilateral
trading system and had worked with the EU to this end over the years.  However, Uruguay stressedthe discriminatory treatment of the agriculture sect or within the trading system, to a large extent due
to the existence of the CAP.  This policy was of great concern to Uruguay, as an efficient producer,
given the CAP's distorting impact on world markets, especially through export subsidies, domestic
support, and obstacles to access to EU markets.  The aim of his Government in the negotiations onWT/TPR/M/72
Page 15
agriculture, whether mandated or as part of a new round, was to place agriculture firmly within the
rules.
64. Trade between the EU and Uruguay had four distin ct characteristics:  very divergent interests,
disparity in the component of value-added in each country's exports, a recent and marked increase in
EU exports to Uruguay, and slow growth of th e EU's imports from Uruguay.  The EU had an
important role in Uruguay's external trade (about 20%), was its second-largest trading partner after
MERCOSUR, and the main source of investment a nd technical cooperation.  On the other hand, the
share of Uruguay in the EU's total imports had been 0.08% in 1998 and 0.07% in 1997.  Furthermore,
from 1993 onwards, the EU had developed a persistent surplus in its trade with Uruguay, which over
the last four years had amounted to US$915 million, a nd a similar situation prevailed in the EU's trade
with all Latin American countries and in its global trade.  His Government attributed this deficit in
part to the difficulties of access to the EU market, notably for bovine meat, citrus, and rice, as well asthe import regime of entry prices for fruit and vegetables.  Uruguay had noted with disappointment
the absence of a discussant.
65. The representative of Hong Kong, China noted the absence of a discussant, a matter on which
further reflection was necessary.  Hong Kong, China and the EU had unique historical ties and an
important bilateral relationship.  The EU was the third-largest trading partner, the third-largest marketand the third-largest supplier of Hong Kong , China, which in turn was the EU's 14
th-largest trade
partner, with bilateral trade at €46 billion.   The main items traded were clothing, cathode valves and
optical instruments from Hong Kong, China, and telecom equipment, cathode valves and textiles from
the EU, indicating a certain symbiosis.
66. With regard to textiles, his delegation was disa ppointed at the EU's slow pace of integration
of the sector under the first and second stages of the ATC, which had removed restrictions on only
0.4% of exports of Hong Kong, China, leaving over 90% of exports of textiles and clothing to the EUstill subject to quotas.  His delegation urged the EU to adopt a more liberal and comprehensive
integration programme in the third stage, including an equitable proportion of restrained and
non-restrained products, a balanced mix of sensitive and non-sensitive products, and a greater
emphasis on clothing products.  Hong Kong, China would be contributing substantially to a
submission that would be made to the Commission by  the International Textiles and Clothing Bureau
on the third stage.
67. The Commission and Euratex had issued a joint press release on 14 April 2000 entitled:  "The
Commission challenges other countries to open their textiles and clothing markets as a precondition to
wider access to the EU's own market", and Commissi oner Lamy had stated that textiles and clothing
trade must be "a two-way street".  Hong Kong, China had always offered a completely open andsubstantial market for EU exports, and invite d the Commission to increase access for exports of
Hong Kong, China to the EU.  On agriculture, Hong Kong, China was the world's 12
th-largest
importer of such products, but had only a limited export interest.
68. In almost all other respects, his delegation commended the EU for the liberalization
undertaken since the last review – often on an autonomous basis – and for its generally very open andliberal regime.  The EU was a genuinely integrated market, and was open to trade and investment in
most service sectors, with the exception of audio-visual services and certain elements of transport.
Member States were also among the most generous in providing funds and support for technical
assistance and capacity building for developing countries and LDCs in the WTO.  His delegation
invited the EU to complement such actions by co mmercially meaningful measures of market access
for exports of interest to these countries.WT/TPR/M/72
Page 16
69. The EU, although committed to the multilateral trading system, was also very occupied with
preferential trade agreements and arrangements.  Some 25% of the Government Report was devotedto explaining such initiatives.  The position of his delegation on the issue of RTAs was well-known,
and would not be repeated.  The Secretariat Repo rt had however noted that only eight WTO Members
had exclusively MFN treatment by the EU, of whic h Hong Kong, China, although offering the most
open market in the world to the EU's exports, was one.  Perhaps the acronym "MFN" should be
changed to "LFN".
70. Hong Kong, China greatly appreciated the EU's  efforts to launch a round of broad-based
negotiations at Seattle, on which the EU's ambition remained undiminished, and which was also an
objective of his delegation.  However, one reason for the failure in Seattle was that the scope of the
proposed round was too broad for the Membership, and his delegation urged the EU to moderate its
ambitions so that the WTO could proceed with its core activity of trade liberalization.  Failure to do sowould only result in continuing deadlock and possible marginalization of the WTO.  In this regard,
Hong Kong, China had noted with concern the references to non-trade issues in paragraphs 60 and 61
of the EU Report.  In the prevailing atmosphere of the WTO, it was difficult to see how a trade-
liberalizing round could be launched if non-trade issues such as labour and other social issues were
introduced.  If the EU considered that it was not politically feasible to have a round without suchissues, then a frank dialogue was needed on the priorities of the WTO.
71. In conclusion, his delegation had reached a very positive assessment of the EU's trade policy
regime and noted that Hong Kong, China and the EU shared many policy objectives in the multilateral
trading system.
72. The representative of Japan welcomed the EU's positive approach to trade liberalization and
domestic market deregulation since its last review and urged the EU to maintain the same basic
posture in the future.  His delegation also apprec iated the strong leadership and the commitment the
EU had shown to the strengthening and further deve lopment of the multilateral trading system.  Japan
supported the EU's view that further trade liberali zation could only be achieved in a comprehensive
round, conducted as a single undertaking and offering balanced benefits to all WTO Members.  Japan
also endorsed the EU's position that the WTO should enlarge its scope of activities to harness
globalization and remain relevant in a fast-changing world economy.  Japan shared the EU'sconfidence that a new round would be launched in 2000, which would shortly be confirmed at their
annual bilateral summit in Tokyo, and welcomed the EU's optimism on a launch in 2000.
73. Japan supported the EU in its approach to the agenda of the next round of trade negotiations,
which should cover further trade liberalization, as well as rule-making in agriculture, services,
investment, competition, trade facilitation and government procurement, and also improve disciplineson instruments of trade defence.  His Government  agreed with the EU that the built-in agenda
negotiations on agriculture and services would most efficiently be conducted in the context of a
comprehensive round.  He underlined his Government's view that the mandated negotiations on
agriculture and services should be based on Article 20 of the Agriculture Agreement and Article XIX
of GATS, respectively.  He added that Article 20 stipulated that the negotiation on agriculture shouldconsider non-trade concerns such as its multi-functionality.  Japan welcomed the EU's commitment to
continue CAP reform in spite of the difficulty and complexity of doing so, which was also the case of
agricultural reform in Japan.  His Government suppo rted the EU's position that the reform process and
necessary structural adjustment would serve to strengthen the multifunctional role of agriculture,
which Japan viewed as a legitimate concern.
74. Japan shared the EU's view that  the need to better integrate developing countries into the
trading system was one of the fundamental reasons for a comprehensive round, and welcomed the
EU's efforts to build capacity and confidence, on which work would continue with the EU.WT/TPR/M/72
Page 17
75. Japan had noted the movement towards the Internal Market and the process of enlargement,
which it hoped would contribute to the expansion of the global economy and the further developmentof free trade, and urged the EU to conduct these processes in a transparent and WTO-consistent
manner.  Japan shared the concern expressed by Hong Kong, China on the EU's numerous preferential
agreements and arrangements;  Japan was one of the eight WTO Members granted exclusively MFN
treatment.  Although his Government welcomed the EU's commitment to engage  in such initiatives in
conformity with the relevant WTO provisions and in particular Article XXIV of the GATT, Japan
would continue to closely follow the issue and urge th e EU to fulfill its commitment.  In this regard,
Japan commended the intention to make the new ACP-EU Partnership Agreement consistent with the
WTO by progressively eliminating preferential treatment for the ACP countries.  Japan would
monitor whether the similar commitment was made in  agreements with the Mediterranean countries,
East European countries and Mexico.
76. Japan had a concern on labour and employment policy in the EU.  Considerable time was
required for non-EU nationals working for non-EU firms to obtain or renew their work visas,
hampering the smooth employment and placement of employees in these firms.  Undue burdens were
placed on employers with respect to social security payments, as well as practices concerning
dismissal, transfer, working hours, and remuneration.  Japan hoped the EU would improve theefficiency of its internal market not only through the better functioning of its goods, services, and
capital markets, but also by further opening its internal market to the activities of non-EU firms.
77. In conclusion, Japan welcomed the EU's basic posture on trade policy and its commitment to
abide by WTO rules, encouraged the EU to deploy further efforts to this effect, and supported and
shared its position on the early launch of a comprehensive round of negotiations.
78. The representative of Chile stated that his Government shared many of the views of the EU
contained in its opening statement on the principles on which the multilateral trading system should
be based and on the need for an early launch of a comprehensive round of multilateral negotiations.
79. The EU was Chile's main trading partner, accounting for one quarter of exports and one fifth
of imports.  Trade had amounted to US$7 billion in 1999, with a surplus for Chile, and European
investment in Chile exceeded US$15 billion.  Also important was the commonality of principles,
which was the basis for the negotiation on a political and economic association agreement, the lastround of which had been successfully concluded in Brussels two weeks before.
80. At the same time, Chile noted that most of its disputes occurred with the EU, and views
diverged in key areas such as the CAP and the EU's policy on fishery subsidies.  Agricultural
subsidies produced surpluses that had to be disposed of, with adverse effects on Chile's economy.  For
example, Greece's production of canned peaches had reached record levels, affecting global markets,and eliminating competitors such as Chilean agro-indus trial firms.  The EU's s ubsidies to the fisheries
sector not only distorted international trade but also had a serious impact on the environment because
they resulted in excess fishing capacity and led to overexploitation of marine resources.  This
overexploitation affected highly migratory species not normally found within the territorial
jurisdiction of the country granting the subsidies.  Subsidized EU fishing fleets were operating on thelimits of the exclusive economic zones of third countries such as Chile and had helped reduce the
biomass, obliging countries to take measures to safeguard species from extinction.
81. The representative of Australia noted his country's stake in the development of sound
economic and trade policies in the EU, its largest economic partner, taking into account trade in goods
and services, and investment flows.  The latter had been the most dynamic aspect of the economicrelationship;  the EU was Australia's largest source of foreign direct investment and the second-largest
destination for Australian investment abroad.WT/TPR/M/72
Page 18
82. Australia therefore had a strong interest in seeing policies and practices put in place in Europe
that would ensure long-term and sustained econo mic expansion.  His Government welcomed the
recent trend towards stronger economic growth in th e EU and endorsed calls within the EU for greater
emphasis on microeconomic reform in the Member States.  Decisive action on this front would
benefit EU producers and consumers, and also make an overall positive contribution to global
economic growth prospects.  Given the EU's pos ition as one of the world's three major economic
centres, it was also important for the EU to adopt and implement trade policies that supportedincreasingly open markets and expanded trade.  Such policies were not only consistent with and
reinforced the domestic economic policy directions in the EU, they were also essential to global trade
and investment growth prospects, especially for developing countries.
83. Australia acknowledged that the EU's record  on trade reform and open markets had a number
of positive aspects, but noted that there were some areas where there was cause for concern.  The firstwas the EU's policy on preferential trading arrangements, and the implications of this policy for the
effectiveness of the multilateral trading system.  Given the trade volume covered by current and
prospective arrangements, Australia was concerned about the potential for distortion of trade and
investment flows to the detriment of other countries.  Australia had welcomed the EU's positive
attitude towards efforts to launch a new round, and shared this objective.  However, there was a riskthat a continuation of the EU's expansive approach to preferential trading arrangements could
undermine the multilateral trading system.  Australia hoped that in approaching such arrangements in
the future, the EU would consider the potential impact on the WTO system, and ensure that such
arrangements include sensitive sectors, such as agriculture, and embrace undertakings to reduce trade
restrictions for third parties.  This was a defining feature of Australia's comprehensive free-trade
agreement with New Zealand, which Australia considered to be a model for preferential trading
arrangements.
84. Australia was also concerned that the EU had yet to tackle fundamental reform in its most
change-resistant sector, and strongly encouraged the EU to swiftly and decisively reform its
agricultural sector in a market-oriented direction.  Australia recognized the social and environmental
pressures in the sector and respected the EU's po licy objective of retaining a non-competitive element,
but rejected completely the notion that the adjustment costs associated with these policies should betransferred to other competitive trading nations and to developing countries, notably by export
subsidies.  Australia was aware that substantial internal forces were likely to create pressure for
reform of the EU's agricultural sector, notably en largement and its associated budgetary implications,
as well as the need to meet Uruguay Round reduction commitments.  The EU thus had a timely
opportunity to assert its firm commitment to achievi ng liberalization of world agricultural trade, a
target that was important in terms of equity and basic fairness given the benefits reaped by the EU
from trade liberalization both at home and abroad.
85. Fundamental reform of the EU's agricultural sector would not be easy, but the best way to
ensure a competitive European agricultural sector able to take advantage of commercial opportunities
on growing world markets was through the adoption of market-oriented policies and support limitedto decoupled, non-trade-distorting measures.  Australia recognized the legitimate public policy
concerns surrounding the food safety issue in the EU, but would be concerned if addressing these
issues led to the introduction of new complexities in the world agricultural trading environment or the
replacement of one set of restrictive measures with another.  Australia also placed a high priority on
the issues of bio- and food safety, but was equally concerned that a dilution of the scientific input todecision-making on the acceptability of products or the insertion of non-trade concerns could run
counter to the overall objective of liberalization.
86. Although Australia had long-standing and legitimate grievances on the EU's agricultural
policies, there were also a number of areas on the international trade policy agenda where AustraliaWT/TPR/M/72
Page 19
shared the EU's perspective, and placed a high value on the work being done together to achieve
results in areas of common interest, such as services and industrial tariffs.  Australia was committed tocontinuing this cooperation and addressing differences in a constructive and productive climate.
87. The representative of New Zealand noted the progress made by the EU since its 1997 review
in reducing certain non-tariff barriers to trade and restrictions on market access for services sectors,
notably telecommunications.  His delegation also noted the comparatively open nature of the market
for non-agricultural products.  The EU played a critical role in world trade and global economicgrowth, and its recent rates of growth had served to  reinforce its role as a key market for exporting
countries like New Zealand.  The EU had acknowledged the role of open markets in contributing to
economic success and job creation, and New Zealand welcomed the EU's advocacy of a new round of
negotiations, and its commitment to address the problems faced by developing countries.
88. His delegation noted the paradox between the objectives outlined in the EU's opening
statement and the reality of its trade policy regime in several important sectors.  The EU had one of
the most highly protected and subsidized agricultural sectors of all WTO Members, maintained quota
restrictions on textiles and clothing, applied relatively high tariffs with significant tariff escalation on
fish products and had been slow to liberalize several key services sectors.  Further liberalization
would benefit EU Member States and third countries.  For example, a proposal supported byNew Zealand and other WTO Members called for a substantial reduction in subsidies on fishery
products, benefiting consumers, producers, and the environment.
89. New Zealand welcomed the adjustments made to the CAP, notably the movement away from
price support.  Direct payments under supply-limiting programmes were however still
production-distorting and trade-distorting, and only marginally less so than the policies required to be
reduced under Aggregate Measure of Support comm itments, and the EU was encouraged to adopt
non-trade-distorting agricultural support policies.  His delegation had also noted the continued high
level of support provided under the CAP, amounting to €45 billion in 1999, which had again reached
the historical highs of 1986-88.  A recent study placed the costs of the CAP to the world economy at
US$75 billion annually.  As had already been noted by other delegations, the future enlargement of
the EU seemed to provide both an opportunity and an  imperative for the EU to do better in this area,
and his delegation invited the EU to describe th e interaction between enlargement and CAP reform.
90. New Zealand had noted the modest nature of the EU's reduction commitments for export
subsidies made in the Uruguay Round.  The complete elimination of all forms of subsidization had
been proposed by the Cairns Group and would be a major – and overdue – contribution by the EU to
the international trading system.  His delegation hoped the EU would reduce trade barriers on imports
of products of importance to many developing countries, which, although benefiting from preferenceson the EU market, were disproportionately affected by the protection of agriculture and textiles and
clothing.  Developments in these sectors would cont ribute to the integration of developing countries in
the multilateral trading system.
91. The Secretariat had commented on the complexities of the EU's border regime, in particular
for agricultural products.  His delegation therefore welcomed the EU's support for the tradefacilitation initiative launched in Singapore in 1996, although New Zealand favoured a broader
approach addressing complexities in the trade regi me, whose benefits were recognized by the EU in
its own submission on trade facilitation to the Coun cil for Trade in Goods (G/W/122).  His delegation
believed that far too much unnecessary regulation affected trade in agricultural products, although the
EU was to be commended for reducing market-access impediments by MRAs on conformityassessment.WT/TPR/M/72
Page 20
92. New Zealand recognized the significant contribution that could be made by preferential
trading agreements to the multilateral trading system , especially when liberalization allowed countries
to introduce competition to sectors that had previously been protected.  His delegation therefore
invited the EU to provide details on the integration of difficult sectors such as agriculture into its
preferential arrangements in the future.  More generally, his delegation was interested to hear how the
EU regarded the balance between its objectives under bilateral and plurilateral agreements, and
further negotiations under the WTO.  His delegation had noted the observation of the EU'srepresentative, which they also endorsed, that th ere was no substitute for the multilateral trading
system.
93. New Zealand welcomed the EU's liberalization of certain services sectors, in particular
telecommunications, but noted that the pace of liberalization differed between sectors.  His delegation
hoped the EU would support further services liberalization in a new round, and looked forward toworking with the EU to progress areas of common interest, such as the air transport sector.
94. The representative welcomed the EU's commitment to the launch of a new round and the EU's
recognition that liberalization could have advantages for all concerned, exporters and importers.  The
breadth and depth of the agenda would have to be  agreed by all WTO Members and would need to be
manageable.  This did not exclude seeking a mandate for a "broad-based and balanced" agenda as setout in the 1998 Geneva Ministerial Declaration.  His Government hoped a new round would lead to a
commitment by the EU to liberalize its own market, particularly in the key sectors for New Zealand of
agriculture, forestry, fisheries, and services.
95. The representative of Brazil noted the EU's leading position among his country's trading
partners:  30% of its exports went to the EU and 30% of its imports originated in the EU.  The EU
market was, according to the Secretariat Report, by and large an open one.  The EU was also the
world's single largest importer of agricultural products, a position that carried responsibilities.
96. The representative was concerned by what appeared to be, in the opening statement of the
Commission, a questioning of the central role of the dispute settlement procedures in the multilateral
trading system, and invited the Commission to clarify this point.  The EU had also stated its good
faith implementation of commitments under the Agriculture Agreement, and that only a negotiation
with a broad-based agenda could bring considerable results to the negotiations mandated underArticle 20.  However, implementation under the Agriculture Agreement and the mandated
negotiations were not conditioned on new arrangements or rounds, and therefore invited the
Commission to clarify this point, noting however Brazil's support for a broad-based round.  The
representative also noted the EU's outstanding notifications to the WTO of its domestic support
commitments in 1997, 1998 and 1999.  Brazil shared the concerns of other speakers on theimplications for the multilateral trading system of  some of the EU's preferential agreements and
arrangements, and in particular of the agreements concluded with candidate countries for accession.
97. The representative of the Republic of Korea no ted the EU's solid commitment to multilateral
trade liberalization in recent years, which was desirable given the stature of the EU within the trading
system.  Trade relations between the EU and his country had flourished.  Exports to the EU were
US$18 billion in 1999 or 14% of its total exports, while the EU represented 12% of total imports.  The
EU's stock of foreign direct investment in Kor ea was US$15 billion in 1999, amounting to 32% of the
total.  His country's FDI in the EU was less subs tantial but growing, and totalled US$2.5 billion in
1999, amounting to 8.5% of Korea's outward FDI.
98. One issue of concern to his Government was the EU's peak tariffs and tariff escalation on
certain products of export interest, notably textiles and clothing, electrical home appliances and
automobiles, on which the EU was invited to detail  its plans for liberalization.  Another matter ofWT/TPR/M/72
Page 21
concern was the dramatic rise in the number of anti-dumping investigations initiated by the EU, to 86
in 1999 compared with 29 in 1998, including nine cases against Korea.  In a number of cases theforeign companies had not been found in breach of the anti-dumping regulation, which illustrated the
potential for abuse by domestic interests and use as an import barrier.  Following such a finding,
certain EU companies had again filed the same complaint against the same foreign companies, often
in a very short period of time and sometimes during the same month of the initial finding, a practice
known as "chain complaints".  His Government urged the EU to be more vigilant in operating itsanti-dumping regime, given that the repetitive and unwarranted initiations of anti-dumping
investigations were burdensome not only for ex porters but also for importers as they created
distortions in their business operations.
99. Korea was also concerned by the EU's "anti-absorption" and "anti-circumvention" procedures.
The concept of absorption could only be arbitrarily defined, and circumvention was defined in theregulation in a broad and complex manner, which could lead to companies being targeted that were
not engaged in circumvention.  The two procedures were not covered by the Anti-dumping
Agreement, and Korea believed that using them was contrary to the spirit of the WTO.
100. The EU's conformity assessment procedures had proved to be lengthy in certain cases,
delaying market access to new products, especially when a notified body was required to assessconformity.  This aspect of the problem could be partially remedied if the EU were to expand the
number of MRAs on conformity assessment beyond the current group of five, and his Government
invited the EU to conclude an MRA with Korea.
101. As a net food importing country, his Governme nt understood the EU's agricultural policies to
be a component of their rural policies, leading to a multifunctional role for agricultural policy
including environmental aspects and rural development.  The EU was the largest importer of
agricultural products from developing countries.  The right of countries to pursue rural policies inwhich agriculture played a key role should be recognized.
102. The representative of Thailand noted the EU's leading position among his country's trading
partners with the value of bilateral trade averaging about US$15 billion in recent years.  Trade had
however declined by 18% during the Asian financial crisis, although recovery was taking place.
103. The representative urged the EU to undertake progressive and meaningful reform in the
agricultural sector.  His Government was also concerned by the three-fold increase in initiations of
anti-dumping investigations, which would lead to a rising number of measures in force;  15 products
exported by Thailand were presently subjected to anti-dumping measures, undermining the efforts of
its enterprises to recover from the Asian crisis.  Thailand's views on the EU's trade policy regime were
also reflected in the statement by ASEAN.
104. The representative of the Czech Republic comp limented the EU for the leadership it had
displayed in furthering the multilateral trading system and for the significant progress it had made
towards European economic and political integration.
105. The EU was playing a key role in promoting a comprehensive new round, supported by a
large number of countries, including his own.  The round had not yet been launched, however, anddifferences remained among the WTO Members.  Further clarification from the EU on investment and
competition and on sensitive issues like environment, consumer protection and others was
indispensable to convince those Members who were still hesitant or who raised systemic objections to
a new round.  Another prerequisite was improved di alogue with the United States and other Quad
countries;  the EU and its partners had taken initiatives to demonstrate their shared commitment totrade liberalization and to strengthening the multilateral trading system.WT/TPR/M/72
Page 22
106. The EU had a generally open and liberal trade policy, which, except in some areas, had been
applied across the board, and which was in compliance with its Uruguay Round and otherWTO commitments.  The EU remained fully committed to implementing the dispute settlement cases
in which it had encountered serious difficulties.  The EU's attachment to basic WTO values and
principles had been proved on a number of occasions, for example, during the Asian crisis when
important pressures for protectionism in some sectors were resisted.  Such pressures could reappear,
in particular as a consequence of the merchandise trade deficit that emerged in 1999, which couldincrease in 2000.  His Government was confident, how ever, that the EU woul d deal effectively with
such pressures and would not resort to new measures restricting imports.
107. The EU had made progress towards European economic and political integration.  The euro
had been launched in 1999, complemented by the Stability and Growth Pact.  Initiatives had been
taken to complete the Internal Market and a new strategy agreed to improve internationalcompetitiveness. Agenda 2000 contained the Union's commitment to continue and deepen CAP
reform and also provided the financial framework for 2000-06, prepared in anticipation of EU
enlargement.  Another step would be taken by th e institutional reforms that would result from the
IGC.
108. The Czech Republic had also made progress towards its accession.  All chapters had been
opened for negotiation, including agriculture, and 13 chapters had been closed, including on the free
movement of goods, customs union, and external relations.  His Government was confident that this
progress would pave the way for accession of the Czech Republic and other countries as of
1 January 2003.  Further agricultural trade liberalization under the Europe Agreement had entered into
force on 1 July 2000, and a Protocol on Conformity Assessment and Acceptance had recently been
concluded.
109. The representative of Hungary commended the EU's significant progress on the Internal
Market since its last review in 1999, including by the introduction of the euro, and the liberalization of
financial services and telecommunications.  The EU's economic growth had risen, reaching 2.3% in
1999, with inflation at an historical low, and growth was expected to exceed 3% in 2000 and 2001.
His delegation also commended the EU for being fully committed to an open and rule-based
multilateral trading system, responsive to changes in the world economy.  Of particular note was thatthe EU had kept its vast market open during the Asian crisis and absorbed worsening trade balances.
110. Hungary shared the EU's view that multilateral, regional, and bilateral trade liberalization
efforts could be mutually supportive.  The Europe Ag reement was in full conformity with the relevant
provisions of the WTO, in particular with Article XXIV of the GATT.  Hungary, like the EU, was
however ready to work on the clarification of WTO rules related to regional trade agreements.  Hisdelegation also commended the EU for its leadership role in efforts to launch a new comprehensive
round in the WTO, and shared the view that only such a round, forming a single undertaking, would
offer a balance of benefits to all WTO Members.  His Government also shared the view that the built-
in agenda negotiations would most efficiently be concluded in the context of a broad-based round, and
that basic rules on investment and competition were necessary to demonstrate the responsiveness ofthe WTO to changes in the world economy.
111. Hungary's present and future ties with the EU were of great political and economic
importance.  Accession to the EU would have a trade-creating effect, of benefit to the enlarged EU
and to all WTO Members.  Trade relations had intensified, with Hungary's exports to the EU up by
20.3% annually between 1997 and 1999, the highest rate of growth achieved by a WTO Membertowards the EU.  The annual value of bilateral trade was close to US$40 billion.  Two thirds of
Hungary's exports to the EU consisted of machiner y and products of the automotive industry, and this
trade would be facilitated by the Protocol on Conformity Assessment and Acceptance.  FurtherWT/TPR/M/72
Page 23
agricultural trade liberalization under the Europe Agreement had entered into force on 1 July 2000.
EU Member States accounted for well over 50% of th e US$20 billion in FDI received to date, and his
Government was happy with these developments.
112. Hungary was of the view that the TPRB shoul d conclude the review by acknowledging the
firm commitment of the EU to an open and ru le-based multilateral trading system, which was
responsive to the challenges of the world economy, and appreciate and recognize the important, active
and constructive role played by the EU in the WTO.
113. The representative of Brunei Darussalam, speaking on behalf of the ASEAN member
countries of the WTO, noted the key developments in the EU's economic environment since its last
review in 1997, including the introduction of the euro.  ASEAN was also pleased to note the process
of closer economic cooperation following the creation of ASEM in 1996.  ASEAN was concerned,
however, by the sharp drop in the share of Asia in the EU's trade following the Asian crisis, and urgedthe EU to continue efforts to promote trade with Asian countries.
114. The EU's GSP scheme had enabled most countries in Asia to improve the competitiveness of
their exports, and was understood to be autonomously granted.  However, in order for the GSP not to
divert from the goal authorized under the Enabling Clause, and to be consistent with the Clause, its
benefits must be extended on a generalized, non-reci procal, and non-discriminatory basis.  Thus, GSP
should not be related to other non-trade issues, a comment that concerned the EU's special incentive
arrangements for countries demonstrating adherence to certain internationally recognized core labour
standards or to certain standards set by the International Tropical Timber Organization.
115. Although the overall level of the EU's tariffs wa s low, products of export interest to ASEAN
such as textiles and clothing and agriculture were subject to peak tariffs, tariff escalation, and quotas.
The EU's first and second stage integration of textiles and clothing into GATT 1994 had lifted quotas
on 12 of the 52 product categories restricted in 1990, affecting only a handful of developing countries.ASEAN hoped for improvements in the third stage of the integration process, but noted that no
pre-conditions, in terms of reciprocal market access by developing countries, should apply.
116. ASEAN was concerned by the new technical regulations and standards that imposed onerous
compliance conditions on exporting partners, and were susceptible of nullifying the market-access
commitments made in the Uruguay Round.  For example, the Directive on Waste from Electrical andElectronic Equipment made producers responsible for the recovery and disposal of waste materials.
The use of dedicated vessels for the transport of palm oil, and unreasonably high residue limits on
food items were other examples of arbitrary standards that acted as disguised restrictions on trade.
ASEAN was also concerned by the implications of the growing concern with food safety in the EU
for market-access conditions for imported food products.  ASEAN urged the EU to review thedirectives that were hindering bilateral trade.
117. The representative of Mauritius noted the EU's leading role in his country's trade, absorbing
70% of exports and a major source of imports.  Mauritius had signed the ACP-EC Partnership
Agreement, which was of crucial importance to the sustainable development and integration of the
ACP into the global economy and the multilateral trad ing system.  In this context, Mauritius attached
great importance to the maintenance of non-reciprocal trade preferences during the transition period,
taking into account the special development needs and the vulnerability of certain countries.
118. Mauritius agreed with the EU that preferential trade arrangements and agreements reinforced
its links with the rest of the world, and strengthened the multilateral trading system.  His Government
also noted the EU's conviction that the integrati on of developing countries in the world economy had
to be a key priority of the WTO, including through improved market access, a new approach toWT/TPR/M/72
Page 24
technical assistance to better target assistance to the needs of recipients and enhance cooperation
among donors.  Mauritius also shared the view of  the EU that the new approach should address
capacity building in a broader sense, supply-side constraints, and the ability to trade.  Developing
countries had difficulty in making use of trade opportunities, and capacity building measures should
thus complement enhanced market access to increase benefits from international trade.
119. Like the EU, his Government attached importanc e to food safety.  Mauritius invited the EU to
provide technical assistance to enable countries such as his to raise standards to address theseconcerns.  His Government was particularly interested in technical assistance for human resource
development, infrastructure, logistics, investment, and technology transfer to meet approved
standards.  With regard to agriculture, Mauritius attached a high priority to its multifunctional role to
address the problems of food security, rural devel opment, social exclusion, including environmental
and ecological concerns.  Given the specificity and vulnerability of small island States such asMauritius, his Government believed that flexibility should apply to their policies for the sector.
120. The representative of Colombia noted the importance of the economic relationship with the
EU, the second leading destination for exports and the first source of foreign direct investment.  In
1999, Colombia's exports to the EU were around US$1.9 billion, down 22% from 1998, due to the
lower price of coffee and reduced sales of coal, which together accounted for 58% of Colombia'sexports to the EU.   During the same period, Colombia's imports from the EU dropped 35% to
US$1.9 billion, due to the domestic recession.
121. The pattern of trade continued to be the export from Colombia of primary commodities in
exchange for the import of transport equipment and material.  His country has not been able to
diversify its exports towards products with higher value-added due to the EU's tariff peaks and tariff
escalations, and due to SPS measures and technical barriers to trade, which in some instances were
being applied as disguised protectionist measures, concerns that Colombia intended to raise with therelevant WTO Committees.  Colombia however recognized the benefits made available by the EU
under the special GSP scheme for Andean countries, which they hoped would be preserved.
122. Three aspects of the EU's trade policy were of particular concern to his Government.  The
first was the CAP, which distorted international markets for agricultural products and had a negative
effect on the exports of developing countries.  The second was the scant progress made by the EU toestablish a new banana import regime that would be consistent with the WTO and meet the objectives
of the four main suppliers, i.e. a tariff quota based on a representative historical period. The third
aspect was the EU's commitment to launch a new round, whose initiation and success would depend
on the way in which the concerns of developing countries were met on the implementation of the
WTO Agreements, especially the provisions on special and differential treatment;  improved internaltransparency within the Organization;  and the final settlement of outstanding issues regarding the
transitional periods in certain agreements.
123. The representative of Poland noted the Europe Agreement between his country and the EU,
which constituted the legal framework for bilatera l economic relations.  In 1999, the EU was Poland's
leading trading partner, and Poland was the EU's fourth most important export market and ninth
leading origin for imports.  The pattern of bilatera l trade had shifted in the previous decade, with a
substantial increase in the share of processed products in Poland's exports, due in part to investment in
restructuring and modernizing the Polish economy, of which 60% was of EU origin.  A positive
impact on trade was anticipated from the reform of agriculture contained in Agenda 2000.
124. Membership in the EU was the basic strategic goal of Poland's trade policy.  In the context of
the negotiations on Poland's accession, the transposition of the acquis was advancing, and Poland was
integrating with the economies of the 15 Member States.  A considerable trade deficit had developed,WT/TPR/M/72
Page 25
however, in Poland's bilateral tr ade with the EU, which his country hoped to reduce.  Consequently,
Poland had supported the EU's efforts to launch a new broad-based round.  Poland had madecontributions on trade and investment as well as trade and competition, and shared the views of the
EU in other areas.  His country continued to s upport the EU's position on a new round, and subscribed
to the view that a wider scope of activities would permit the WTO to respond to the many challenges
of the globalized world economy and give a development dimension to the new round.
125. The representative of Iceland noted the importance of the trade relationship between his
country and the EU.  In 1998, Iceland's exports to the EU had been US$1.2 billion, 65% of the total,
while its imports from the EU had been US$1.3 billion, 55% of total imports.  The relationship rested
on the European Economic Area Agreement (EEA), which provided for free movement of goods,
services, capital, and people.  The EEA had made Iceland, Norway and Liechtenstein participants in
the Internal Market, and the adoption and implementation of all relevant regulations had been smooth.
126. One area of anomaly or asymmetry was fisher y products.  The EEA/EFTA countries granted
tariff-free trade to fishery products on their market, while the EU excluded certain fishery products
from the agreement and limited tariff reductions for others.  Given the close ties and the level of
integration with the EU, it seemed paradoxical that Iceland's access for fish products was better to
other markets, but the issue was under review bilaterally, and Iceland hoped for rectification beforelong.
127. At the WTO, Iceland had sided with the EU on a number of important issues.  Iceland was a
strong supporter of launching a comprehensive round of multilateral trade negotiations with a single
undertaking, and also subscribed to the other two ba sic orientations of the EU's policy elaborated by
the Commission representative in his opening statement. As regards agricultural policy, Iceland
supported the EU's view that non-trade concerns shoul d be fully considered when negotiating further
trade liberalization in this field.  Iceland had also supported the EU's position on intellectual propertyrights, trade and competition, trade and investment, and trade facilitation, among others.
128. Iceland and the EU were not on the same track, however, with respect to the negotiation of
rules on trade-distorting and environmentally harmful fishery subsidies.  His Government was
however confident in the text that emerged from Seattle on the issue, which did not have any formal
or legal status, but contained elements that could be a basis for consensus with the EU.  Icelandinvited the EU to provide details on its objectives for fishery subsidies for the period 2000-06, noted
in the Secretariat Report on pages 75 and 76, in particular whether a reduction was being
contemplated and, if so, the implications for the capacity and size of the EU's fleet.
129. The representative of Mexico noted the EU's low-inflation economic recovery, accompanied
however by only a modest drop in the unemployment ra te, and invited the EU to provide details on its
employment strategy.  Mexico had noted the higher level of liberalization attained by the EU on
non-agricultural products than on agricultural products, with simple average tariff levels of 4.2% and
17%, respectively, in 1999.  Access for agricultural products was provided, however, under tariff
quotas.  In this regard, his Government had no ted the Commission's proposal to modify the banana
regime to achieve conformity with WTO obligations by a tariff-only regime in 2006, but hoped for ashorter transitional period.
130. Mexico welcomed the reduced market price support for cereals, dairy products and meat
under the CAP reform agreed in 1999.  However, his Government urged the EU to find ways of
ensuring the competitiveness of its agricultural producers on world markets without resorting to
subsidies.  With regard to services, the EU's polic ies still had certain structural problems, as noted by
the Secretariat in its Report, although the EU was to be commended for the measures taken with
regard to financial services and telecommunications.  With respect to intellectual property rights, hisWT/TPR/M/72
Page 26
Government noted the efforts at harmonization of Member State regimes and the creation of certain
EU-wide instruments, which Mexico hoped would simplify the regime in accordance with the
objectives and provisions of the TRIPS Agreement.
131. Mexico noted the EU's large number of preferential agreements and arrangements, and his
Government's support for the Commission's view that  these were complementary to the multilateral
trading system.  Mexico also supported the EU's position on the need to strengthen the system by the
launch of a new round with a comprehensive agenda, with a single undertaking, although hisGovernment did not endorse the inclusion on the age nda of non-trade issues, such as labour rights.
132. The representative of Norway noted the participation of his country in the Internal Market
through the EEA, implementing the policies of th e EU in a large number of areas.  The EU was
Norway's single most important trading partner, accounting for two thirds of imports and three
quarters of exports.  The EU was also the single most important origin of foreign direct investment inNorway and the most important destination for Norwegian investment.
133. Norway endorsed the view of the EU that an open and strong multilateral trading system was
the best guarantee against the threat of unilateralism.  While participating in regional trade agreements
that covered most aspects of their economic ties, both Norway and the EU were strongly supportive of
a solid multilateral framework for trade.  They shared the view that the strengthening of the
multilateral trading system, as well as the ongoing built-in agenda negotiations, would be most
efficiently carried out within the context of a broad-based round.  Norway appreciated the activities of
the EU to maintain and broaden the support for a round, as emphasized in the EU's opening statement.
134. His Government appreciated the positive participation of the EU in the WTO, where it often
shared the same views. Although Norway did not part icipate in the CAP, it e ndorsed the EU's view of
the importance of securing non-trade concerns, such as food security, rural diversity, and
environmental protection.  Cooperation had also been close on the fuller integration of developingcountries in the multilateral trading system, addressing environmental concerns and competition
policies.  In areas where the EU and Norway shared the same legislation, such as government
procurement, they had a common interest in prom oting compatible rules in a multilateral context.
135. Norway had a strong interest in economic developments within the Union, notably economic
and monetary union, on which the EU was invited to provide an evaluation to date and its likelyimpact on growth.  Furthermore, Norway invited th e EU to provide details on the European Common
Aviation Area, noted on page 30 of the Secretariat Report.
136. The representative of Bolivia noted that the EU was one of his country's main trading
partners, accounting for 22% of exports and 15% of imports.  Bolivia mainly exported primary
products to the EU and imported manufactures.
137. His Government had noted the EU's objective of more fully integrating developing countries
in the trading system, including by measures to improve market access.  Bolivia invited the EU to
comment on the application of this priority in the light of Article 10:2 of the SPS Agreement.  Bolivia
was also concerned by the decline of developing country exports of agricultural products to the EU,
from 30.5% in 1990 to 28% in 1998, and invited the EU to detail measures to reverse the decline.
138. Bolivia had noted the statements made in the Secretariat Report, to the effect that the CAP
accounted for 45% of the EU budget, raised consumer prices for food above world market levels, and
harmed the environment, and invited the Commissi on to comment on how it reconciled the CAP with
such adverse effects.  The Commission was also invited to comment on how it reconciled the CAP
with its advocacy of sustainable development, when the policy was prejudicial to developingWT/TPR/M/72
Page 27
countries, leading to worsening poverty, especially of rural populations.  Finally, Bolivia was
interested by the implications on the CAP of Article 6 of the Treaty on European Union, whichrequired environmental protection requirements to be integrated into the definition and
implementation of EU policies to promote sustainable development.
139. The representative of Pakistan noted that the EU was his country's single largest trading
partner.  His delegation was concerned by the EU's minimal integration of textiles and clothing under
the ATC, with quotas lifted on only 5.4% of imports restricted in 1990.  This integration lackedprogressivity, contrary to the objectives of the ATC.  Pakistan invited the EU to respond to the
question as to why its integration was not progressive.
140. Agriculture was another area of high concern to his delegation.  Export subsidies and a high
level of domestic support continued to distort international agricultural markets, as well as harming
domestic production of Pakistan and its exports.  Despite the EU's commitments in these areas, thecurrent levels of support had reached the previous historical highs set in 1986-88, obviously flouting
the Agreement on Agriculture.  The EU was invited to respond to the question as to how long these
distortions would continue to undermine his country's competitiveness and production in the sector.
141. Another area of serious concern to Pakistan was the impediments to the movement of natural
persons in the form of economic needs tests, visa restrictions, licensing requirements, and lack ofmutual recognition of qualifications.  These impediments were compounding the limitations in place
on the movement of natural persons under the EU's commitments on mode four of the GATS.
Pakistan hoped the EU would take concrete a nd meaningful steps to redress this problem.
142. Pakistan shared India's views on the matter of the appointment of a discussant for the EU's
Trade Policy Review, and thanked the Chairperson for his clarification.  However, Pakistan wished to
place on record the view that a precedent should not be created.
143. The representative of Bangladesh noted that his country, currently an LDC, enjoyed an
important trade relationship with the EU, which accounted for almost 40% of its trade.  His
Government appreciated the EU's trade policy outlined by the Commission, but noted difficulties at a
practical level.  The EU's lowering of industrial tariffs was not of substantial benefit to a large part of
the membership, particularly LDCs, as their industrial output was meagre, and this was also true of
the EU's liberalization of service sectors, such as telecoms or financial services.  In contrast, the EU'sposition on the movement of natural persons was restrictive and anti-market in spirit.
144. The Commission, in its opening statement, had commented on the limits to the application of
dispute settlement to accommodate what it claimed were the aspirations of citizens, giving rise to
serious concerns on the part of his Government.  Bangladesh viewed the WTO as an operationally
rules-based system, and believed in the rule of law at both the domestic and multilateral levels.  TheEU's position on various preferential arrangements and enlargement was also clear, but practical
difficulties had been noted by his delegation and others, in particular with regard to trade diversion
and even the contraction of trade.
145. Bangladesh appreciated the EU's strong commitment to a new round and its recognition that,
in order to be useful, it would need to be acceptable to all, to which end his delegation was awaitingpractical steps.  Bangladesh strongly supported the goal of improved market access for goods and
services in the new round, but the EU had yet to provide tariff-free and quota-free market access for
all LDC exports, and was urged to deal positively and urgently with the matter.  The EU had also
stated that the provisions on special and differential treatment, technical assistance, and capacity-
building would be enhanced in the new round to facilitate the integration of developing countries.Bangladesh noted, however, that the Integrated Framework, committed by the WTO Membership forWT/TPR/M/72
Page 28
LDCs at Singapore, was still unimplemented.  The EU needed to build the confidence of LDCs that
they too could gain from the multilateral trading system.
146. Bangladesh shared the EU's concern on the need for reform in the structure and functioning of
the WTO.  Participation of all Members was vital to give them a sense of ownership.  Transparency of
the WTO could also be improved by understandable and implementable rules.  His Government had
noted with concern the strong trend towards reciprocity in the EU's trade policy found in the
Secretariat Report.  The Secretariat had also reported on a number of impediments to market access inthe EU, which his delegation hoped would be removed with respect to the products of interest to
LDCs.
147. The representative of Ecuador noted the far-reaching nature of European integration, a model
for his country and its partners in regional trade agreements.  His delegation hoped the agriculture
sector would be fully integrated into GATT 1994, but disagreed with the notion of multi-functionality.This was a strategy to continue the exaggerated levels of protection in the sector, which were having
an adverse impact on exports of developing countries, as noted by Argentina.
148. Ecuador recognized the importance of the EU in  its trading relations and the unfettered access
for many of its exports to the EU.  His Governme nt was dismayed, however, by the absence of full
implementation by the EU of the rulings and recommendations of the DSB in certain cases,particularly with regard to bananas.  It was at odds with the EU's vision of the multilateral trading
system in its opening statement, and was causing serious injury to Ecuador's economy.  Ecuador was
also interested in the EU's response to the question raised by Brazil regarding the Commission's
comment in the opening statement on the limits of the dispute settlement system.
149. The representative of the Slovak Republic noted that the major development in the EU since
its last review had been the preparations for widening and deepening the Union.  Negotiations on
accession had been opened with all candidate countries, six in 1998 and the remainder inFebruary 2000.  Her country was in the latter group and, to date, the negotiations on six chapters had
been provisionally closed, in particular on external economic relations.  The EU was being prepared
for enlargement by reform of its institutions, the CAP, and structural operations.
150. The EU was the largest trading partner of the Slovak Republic, accounting for 59% of its
exports and 51% of its imports in 1999, with bilateral trade valued at US$12 billion.  The EUaccounted for 75% of total FDI in the Slovak Republic.  Under the Europe Agreement, trade in
industrial products would be fully liberalized by the end of 2000, and further agricultural trade
liberalization had entered into force on 1 July 2000.  The Slovak Republic supported the EU's position
on the need to launch a broad-based round which could bring benefits to all Members.
151. The representative of Malaysia endorsed the statement of ASEAN, and wished to make
several additional comments.  The EU was one of Malaysia's most important trading partners, and her
Government welcomed the EU's commitment to improve market access for developing countries.
Market access issues that were of concern to Malaysia included the high tariff levels on products of
export interest, including processed palm oil and palm kernel oil (4-14%), processed tropical fruit (18-
21%), cocoa products (8-17%), plastic and rubber footwear (17%), and the tariff discriminationbetween tropical timber (10%) and coniferous timbe r (7%).  Malaysia invited the EU to describe its
intentions to reduce such tariffs and improve market access.
152. Several Malaysian products had been subject to anti-dumping actions;  stainless steel
fasteners had been subject to a countervailing duty as well as an anti-absorption duty even though the
latter were not part of WTO provisions.  Malaysia also considered the timber-purchasing policy at thesub-federal level to be discriminatory because the Member States required certification of tropicalWT/TPR/M/72
Page 29
timber products but not of products from temperate or boreal timber forests.  A maze of regulations
affected Malaysia's exports of meat, poultry, and fishery products.  Malaysia urged the EU, in draftingregulations, to take into account the difficulties of developing countries and to ensure that measures
were taken to enhance their capacity and capability to meet the standards.
153. The representative of Paraguay noted the importance of the relationship of his country with
the EU, which accounted for 21% of its ex ports, second to MERCOSUR.  His Government
appreciated the technical assistance provided by the EU, based on its experience of integration;  it wasof particular benefit in view of the integra tion currently being undertaken in the context of
MERCOSUR.  Paraguay was of the view that a perman ent dialogue should be maintained to allow the
countries involved to appreciate and find solutions to the difficulties or problems that would arise.
154. Paraguay shared the views expressed in the statements made by Argentina, Brazil and
Uruguay, which were also members of MERCOSUR.   In addition, his Government had noted the
contradiction between the EU's general policy of trade liberalization and its application in certain
sectors such as agriculture, which would hopefully be resolved in favour of further liberalization.  His
country had a fully liberalized trade regime, across all sectors, including financial services.
155. Paraguay objected to the ACP-EU Partnership Agreement, which was discriminatory and
contrary to the rules of the WTO.  Although his Government believed that facilities should be grantedto developing countries, the EU should either gr ant them to all developing countries or compensate
those outside the Partnership Agreement.  For the future, Paraguay anticipated the development of the
trade relationship between the EU  and MERCOSUR, based on the agreement signed in 1995 aimed at
free trade, which was accorded the highest priority by his Government.
156. The representative of Jamaica noted the importance of the trade relationship with the EU, one
of her country's three largest markets.  Jamaica's economic well-being was closely linked to the EU's
trade policies and practices, and welcomed the EU's commitment to facilitating the integration ofdeveloping countries into the multilateral trading system, through regional and other preferential
trading arrangements.  Such arrangements aided in strengthening weak economies, helped them to
achieve greater competitiveness, and strengthened the multilateral trading system.
157. Jamaica welcomed the ACP-EU Partnership Agreement, which was built on a historical
relationship, but also looked to the future by providing for change in the decade ahead.  HerGovernment welcomed the EU's emphasis on the development dimension.  Jamaica did not share the
implied view that the imbalances in the WTO Agreem ents should not be revisited, but fully shared the
emphasis on capacity building, technical assistance, and improved access to markets as key to
addressing the situation of developing countries.
158. The representative of Guatemala noted the importance of the trade relationship with the EU,
which accounted for a substantial share of exports and imports.  His Government urged the EU to
deepen the liberalization of its agricultural policies, which was a priority sector for Guatemala's
economic development, and give full attention to the mandated negotiations.  Increased market access
for Guatemala's products would result from the elimination of export subsidies and domestic support,
and from increasing and implementing special and differential treatment.  Guatemala also endorsedthe statement of Ecuador on the need for a prompt establishment of a new WTO-consistent regime for
the import, sale, and distribution of bananas.WT/TPR/M/72
Page 30
IV. REPLIES BY THE REPRESENTATIVE OF THE EUROPEAN COMMISSION AND
ADDITIONAL COMMENTS
A. ECONOMIC ENVIRONMENT
159. The representative of the European Commission drew attention to the document transmitted
to the Secretariat, which contained the answers to the written questions the Commission had been able
to answer in the available time;  outstanding questions would be answered in due course (Annex II).
He intended to devote his remarks to certain issues that merited further debate.
160. The representative welcomed the attention given by various delegations to the improved
economic performance of the EU.  Good medium-term growth prospects were expected to help reduce
unemployment rates.  The EU was encouraging labour market flexibility, although the fundamental
contribution to improving the context for economic operators was being made by harmonization and
deregulation.  The representative also welcomed the attention given to the introduction of the euro.
161. With regard to the comments on dispute settlement in the Commission's opening statement,
on which certain delegations had invited clarification, these procedures were the foundation stone of
the WTO.  In the Uruguay Round, the EU had sought procedures that were binding, a characteristic
which continued to be necessary for the implementation of commitments by WTO Members.  The EU
was itself pursuing the full implementation of rulings and recommendations, although significantdifficulties had occurred in certain cases.  The two-tiered system of the panel and the Appellate Body
was functioning well.  However, certain rulings had prompted the EU to reflect on the role of dispute
settlement in an organization that claimed to be "member-driven".
162. According to Article 3:2 of the DSU, the dispute settlement system served "to preserve the
rights and obligations of Members under the covered agreements, and to clarify the existing
provisions of those agreements in accordance with the customary rules of interpretation of public
international law".  The dispute settlement system wa s not intended to be a substitute for action by its
Members.  Thus, Article IX:2 of the Marrakesh Agreement Establishing the WTO stated that "the
Ministerial Conference and the General Council shall have the exclusive authority to adopt
interpretations of this Agreement and the Multilater al Trade Agreements".  In other words, only the
WTO Members could interpret their obligations.
163. The EU was thus inviting the Members to reflect upon the role of dispute settlement on the
course of action available to Members when they considered the Appellate Body to have exceeded its
mandate.  In the case of environment, for instance, panels and the Appellate Body were not
empowered to dictate to Members, who had to assu me the responsibility for defining the applicable
obligations, for instance through a new round.
164. With regard to the EU's policy on regional trade agreements, commented upon by a number
of delegations, the Secretariat Report had noted that the EU applied exclusively MFN treatment on
imports from eight WTO Members only.  This was due primarily to the large number of developing
countries benefiting from preferential treatment on the EU market, which did not however extend
preferential treatment to imports from the EU on their market, but applied MFN treatment.
Preferential treatment was granted to imports from the EU only by the WTO Members with whomfree-trade-area or customs union agreements had been implemented, notably in Central and
Eastern Europe, the Mediterranean, Mexico, and South Africa.  The EU's interest in the MFN clause
thus went well beyond eight WTO Members.  Furt hermore, the scope of preferences under the GATS
was limited and was non-existent in the case of the TRIPS Agreement.  The EU's trade relations with
most of its partners was therefore based on the MFN principle.WT/TPR/M/72
Page 31
165. With regard to the operation of GSP, the supp lementary preferences provided by the EU to
countries adopting labour or environmental standards were perfectly consistent with the EnablingClause.  No discrimination occurred, no reciprocity was required, but a positive incentive obtained,
available to all countries under the GSP scheme.  To date, only one country – Moldova – had obtained
supplementary preferences, for its labour standards, and the application made by the
Russian Federation was still under examination.  The EU had also made better treatment available, in
the general framework of GSP, to countries that combated drug production and trafficking, anobjective which should be widely endorsed by the membership of the WTO.
166. With regard to enlargement, the state of the negotiations had been clarified by the statements
made by the Czech Republic, Hungary, Poland, and the Slovak Republic.  Certain Members had
raised the issue of the adoption of the EU's policies by the candidate countries prior to enlargement.
The adoption of the acquis communautaire  was required of new Members upon their accession.
Given the vast body of legislation involved, it was unreasonable to expect its adoption overnight, and
a progressive transposition was therefore taking place in the current pre-accession phase.  This also
avoided transitional periods after accession, which would limit the full enjoyment of the benefits of
the Internal Market.
167. Certain delegations had also encouraged the candidate countries to align their tariffs on the
EU's CET prior to accession.  The representative noted the Article XXIV:6 negotiations that would
take place upon enlargement.  The new Members would significantly reduce their tariffs on a number
of products, but slight increases would occur on others .  If autonomous tariff reductions were to take
place prior to enlargement, the EU and the candi date countries would need credit for the eventual
Article XXIV:6 negotiations.
168. Certain delegations had raised the matter of shared competencies between the EU and its
Member States in matters covered by the WTO.  The Commission noted that the EU and each of itsMember States were Members of the WTO.  The EU had competence over all the matters covered by
the WTO;  its competence was exclusive for trade in goods under Article 133 of the EU Treaty and
for certain matters in services, but was shared with  the Member States over other matters in services
and on intellectual property rights protection.  The capacity of the EU to negotiate and undertake
international obligations was not impaired by these internal matters.  Ruling 1/94 of the EuropeanCourt of Justice had established that no area was reserved for the exclusive competence of the
Member States.
169. Regarding an enhanced package of market-access concessions for LDCs, the EU had made
the commitment to improve on existing access.  About 99% of imports from LDCs already entered the
EU duty free, on a trade-weighted basis, with ta riffs assessed on 7-8% of tariff lines.  The
Commission intended to propose to the Council the liberalization of virtually all imports, covering
99.9% of imports, leaving in place only a few restrictions.
170. Regarding transparency in the WTO, the EU was very much in favour of a substantial
increase in this regard.  Considerable progress had been made by the Secretariat and a major effort
had been made to establish a more effective dialogue with representatives of civil society.  The EUhad itself put into place a structured framework for such a dialogue, which was not, however, a
substitute for EU decision-making, based on the founding treaties of the EU.  The Commission
considered that much more needed to be done, notably with respect to ensuring agreement on the
early derestriction of documents to respond to the expectations of the public at large in terms of the
external transparency of the WTO.  The Commission also favoured greater transparency in theinternal workings of the WTO to ensure full partic ipation in decision-making by all Members.  The
Commission considered it desirable to more effectively involve citizens in the work of the WTOWT/TPR/M/72
Page 32
through representatives of civil society, and of parliamentarians, on which proposals would shortly be
made to the membership.
171. The Chairperson opened the floor to delegations wishing to comment on the remarks of the
Commission's representative.  All delegations co mmended the EU for the tremendous effort made to
provide responses to the substantial volume of written questions received, and looked forward to
receiving replies to questions that remain ed outstanding at the time of the meeting.
172. The representative of Argentina noted with interest the EU's invitation to reflect upon the role
of dispute settlement in a member-driven organiza tion.  Argentina shared the EU's concern on greater
transparency in the internal workings of the WTO and was also interested in pursuing the idea of
greater parliamentary involvement in the work of the WTO.
173. The representative of India disputed the EU's view of the non-discriminatory and
non-reciprocal nature of the special incentive arrangements available under the GSP scheme to
countries adopting certain labour or environmental standards.  Although perhaps non-reciprocal, India
wished to repeat that the incentives were discrimina tory with respect to countries unable to follow the
standards, and which were consequently unable to benefit from the supplementary preferences.
174. With respect to the comments of the EU's repr esentative on the role of dispute settlement in
the WTO, India considered that the problem could not be solved by a new round.  The panels,Appellate Body and Dispute Settlement Body were not entitled to interpret the agreements, but this
was what they did, and the Members were helpless due to their inability to forge a consensus on
interpretative issues, as had been amply demonstrated in the bananas case.  Further thinking was
required on this issue by the EU and the other major players in the system.
175. India also noted the considerable advances made on the derestriction of documents since the
entry into force of the WTO.  Decision WT/L/160 of 18 July 1996 had shifted a large number of
documents to the category of unrestricted ab initio , estimated by the Secretariat to account for 75% of
the total, while 22% of documents were eventually derestricted.  It was important to avoid the
impression of a secretive organization, and proposals were under review to expand the scope of
derestriction, but the process would require more time.
176. The representative of the United States appreciated the comments of the representative of the
Commission on the issue of transparency, notably on the derestriction of documents, and also on the
issue of enhanced market access for LDCs.  However, he wondered whether the EU's comments on
dispute settlement implied that the review of th e DSU would be left to a new round or whether the
implementation of rulings and recommendations was being left to a new round, noting that the rights
and obligations negotiated in the Uruguay Round reflected a balance that would be upset if
implementation were to be postponed to a new negotiation.
177. The representative had also noted the EU's request for credit in Article XXIV:6 negotiations
from autonomous tariff cuts by candidate countries, but understood the negotiations to concern
breaches of tariff bindings.  Issues of credit were not involved, and the tariff reductions could
consequently be made by candidate countries before their accession.
178. The representative of Australia invited the EU to respond to his delegation's question on the
systemic issue of regional trade agreements, and sought clarification on the location of responses to
several written questions on agricultural policy and geographic BSE in the extensive document
provided by the Commission.WT/TPR/M/72
Page 33
179. In response to the comments of Members of the TPRB, the representative of the European
Commission stated that a consolidated version of the written questions and answers thereto would be
provided to delegations in due course.  With respect to the comment from the United States on dispute
settlement, the representative noted that his comments did not refer to the DSU Review nor to the
implementation of rulings and recommendations of the DSB.  On the latter issue, the EU was moving
ahead as speedily as possible.  On the DSU Review, a text had been ready for Seattle, but it was
unclear when the review process would start again and on what basis.
180. His comments on dispute settlement had instead concerned the relationship between the
decisions of the Appellate Body – as the governing body of judges – and the desires of WTO Member
governments, in whom the decision-making authority was vested.  How were decisions to be taken by
the Members?  His view was that the Members should not allow judiciary or quasi-judiciary
institutions to take decisions that should rightly be taken by politicians.  For example, the relationshipbetween the WTO Agreements and multilateral environmental agreements should be addressed by the
Members rather than waiting for the Appellate Body to interpret or enlarge the scope of a provision in
the WTO Agreements.  In some cultures, the role of the judge was to fill the void, while in others the
judge could decide that competence was lacking.  There was substance here for reflection by the
Members to improve the operation of the WTO.
181. The representative of Hungary intervened to clarify a response by the Commission to a
question from the United States on the status of the candidate countries' bilateral investment treaty
obligations with non-EU countries upon accession.  The response stated that the principle was that
any treaties or any provision thereof that was not fully compatible with the acquis  was to be modified
or denounced.  The representative noted, however, that bilateral investment treaties, which concerned
the protection and encouragement of investment, we re unlikely to contain provisions incompatible
with the  acquis .  Furthermore, it was the practice of Member States to preserve bilateral investment
treaties or agreements on the avoidance of double-taxation or on economic cooperation.
B. TRADE POLICIES BY MEASURE
182. The representative of the European Commission referred to the EU's plans for tariff
liberalization, raised by several delegations, notably with respect to tariff peaks and tariff escalation.
The EU was seeking the launch of a new comprehe nsive round of negotiations whose agenda would
include market access in all its aspects.  The Secretariat Report had noted the low level of the EU's
average tariff on non-agricultural products, at 4.2%, among the lowest for WTO Members;  the EU
was expecting its trading partners to reduce their tariffs, and recalled its proposal to harmonize tariffs
within bands (G/C/W/138).  The EU was also intere sted in a reduction in the sometimes substantial
gap between bound and applied rates.  These market access issues would be dealt with in a new roundof negotiations.
183. With regard to technical regulations and standards, the EU had elaborated "new approach"
directives to complete the Internal Market.  The technical content of these directives was based, as a
matter of principle, on the work of international standard-setting bodies.  This work was also the basis
for the activities in European standard-settin g bodies, notably CEN and CENELEC.  When no
international standard existed and the EU was requir ed to legislate, regulations were elaborated in
conformity with the TBT Agreement, which require s that these not be more trade-restrictive than
necessary to fulfill the objective, taking account of the risks non-fulfilment would create.
184. Since Seattle, the WTO Membership had initiated the second triennial review of the
TBT Agreement under its Article 15, to be concluded by the end of 2000, to which the EU had made acontribution on implementation, technical assistance (important in particular for developing
countries), notifications, international standardization, conformity assessment, regulatory bestWT/TPR/M/72
Page 34
practice, and labelling (G/TBT/W133).  To the extent that these issues could not be fully dealt with in
the context of the triennial review, they would form  part of the agenda of the next round.  Members
would thus have the opportunity to reinforce the rules to improve cooperation on TBT and to clarify
the objectives of regulation such as health, consumer safety, protection of the environment, or the
issue of unnecessary trade-restrictiveness.
185. With regard to SPS measures, the EU noted the attention devoted to the issue by the
authorities of the EU since the creation of the common market, to harmonize standards and foster thefree movement of goods, while maintaining a high level of protection of health.  Existing EU
regulations were developed by the EU and the Member States and the measures were applied to all
products placed on the market without distinction of origin.  The evaluation of risk was carried out by
the Scientific Committee of the Commission, based on the principles of sound science, which formed
the basis of Commission proposals for legislation to the Member States and to the EuropeanParliament, if applicable, and in consultation with representatives of civil society.
186. With regard to the precautionary principle, it was applied by the EU to cases where relevant
scientific evidence was insufficient, in accordance with Article 5:7 of the SPS Agreement, as part of a
strategy of risk management.  The Commissi on had issued a communication on the subject
(COM(2000)1), which placed the precautionary principle in a structured approach to risk assessmentand risk management.  The Commission was of the view that a regulatory decision was fundamentally
a political one when the scientific evidence was insufficient to definitively assess risk.  The
Commission's communication however established objective criteria to guide the application of the
precautionary principle.  The EU had actively participated in the discussions on the principle in
international fora, notably the OE CD and the Codex Alimentarius.
187. With regard to the contentious matter of anti-dumping, the increased number of anti-dumping
investigations was due to a higher number of compla ints by European enterprises.  One explanation
for the increase was the effects of the Asian crisis.  On steel, for example, a severe decline in demand
on Asian markets had led to a search for alternative ma rkets, leading to a rise in exports to the United
States and the EU at prices below cost, to which enterprises had responded by initiating complaints.
In this regard, the representative thanked delegations that had drawn attention to the fact that, despite
the Asian crisis, the EU had maintained open markets and had not changed its trade policy stance.The number of cases opened by the EU on imports from Asian countries had risen sharply from eight
in 1998 to 49 in 1999, during which period the United States had increased the number of cases
initiated on the same countries from 46 to 56.  This increase simply reflected a higher number of
complaints filed by industry.  The Commission underlined that the increase did not represent a change
of its policy, but was the result of special circumstances.  The Commission was not in any mannerpromoting recourse to anti-dumping procedures by enterprises, but received and processed complaints
filed by enterprises under its regulation, which contained strict criteria to determine the existence of
dumping and injury.
188. The Chairperson opened the floor to delegations wishing to comment on the remarks of the
Commission's representative.
189. The representative of Argentina noted the Commission's response on risk assessment when
the scientific evidence was insufficient, according to which a regulatory decision was fundamentally a
political one, but wondered how the precautionary principle could be applied in a manner that
safeguarded the interests of third parties.
190. The representative of Chile invited the Commissi on to clarify, in the light of the comments
made on the involvement of civil society in trade policy matters, whether assessments had been made
on the impact of anti-dumping measures on the EU's social welfare.WT/TPR/M/72
Page 35
191. The representative of Brazil noted the Commission's response on SPS measures.  His
delegation wished to know the position of the Commission when Member States applied requirements
additional to those imposed by the EU.  His delegation also invited the Commission to clarify whether
the countries provisionally classified by the Scientific Steering Committee of the Commission as
"BSE-free" would be exempted from the application of the decision prohibiting certain risk materials
from 2001.
192. The representative of Japan noted the Commission's response on anti-dumping, which
explained the surge in investigations by the impact of the Asian crisis.  His delegation wished to point
out, however, that the Commission had also self-in itiated investigations, on which he urged the
Commission to exercise greater self-discipline and ensure the evidence was sufficient.
193. The representative of Canada noted that exporters of pandelis borealis  shrimp, of which
Canada was the sole supplier, were not enjoying the full benefit of access under a quota negotiated
under Article XXIV:6 on the occasion of the previous enlargement of the EU.  His delegation had
hoped to obtain data on imports by origin under tariff quotas from the Commission in order to
substantiate its claims, but noted with disappointment that the data were not available.  He looked
forward to a bilateral resolution of the matter.
194. The representative of India reminded the Commission of questions in his delegation's
intervention on the first day of the meeting, which were additional to those already submitted in
written form.  He looked forward to a response from the Commission on minimum entry prices for
fruit and vegetables, and back-to-back anti-dumping investigations.
195. The representative of the United States noted the Commission's response to its written
question on efforts to harmonize customs procedures to advance trade facilitation, given that the EU's
common customs legislation was administered by the customs authorities of each of the 15 Member
States.  Her delegation had hoped the Commission would provide additional details on programmes toharmonize customs procedures.
196. With respect to TBT, her delegation had noted the response of the Commission, according to
which notifications were made at an appropriately early stage, when amendments could still be
introduced and comments taken into account.  Th e United States wished however to draw the
Commission's attention to the perception, at the very least, of a problem in this area for thirdcountries.  By the time the notification by the EU or by a Member State had reached the WTO, the
process of adoption of a regulation appeared so advanced that there was little scope for comments to
be reflected in the final outcome, which undermined the spirit of the TBT Agreement.
197. The Commission had provided a response to a written question by the United States on the
pan-European system of cumulation of origin.  The United States clarified its concern that inputs werecounted towards the content requirements even when they originated in countries that were not linked
by a preferential agreement, but which were parties to the system, which was consequently
discriminatory with respect to third countries.  The United States also welcomed the Commission's
explanation of the economic basis for changing the treatment, through the removal of drawback
eligibility, of certain Members in relation to other Members that were participants in the pan-European system, but noted that its question had concerned the legal basis for the change.
198. In response to the comments of Members of the TPRB, the representative of the European
Commission stated, with respect to those of Indi a, that a response had been provided on minimum
entry prices for fruit and vegetables.  On back-to-back anti-dumping investigations, India was familiar
with the EU's position, on which proposals had been made in preparation for Seattle.  With respect to
the comment by Canada on access for its shrimp under the quota, the EU was prepared to delveWT/TPR/M/72
Page 36
further into the matter in order to respond to th e issue raised.  The representative had also noted
Japan's comment on the Commission's self-initiated investigations.
199. In response to the comment by Argentina on the precautionary principle, the representative
wished to further clarify the position of the EU.  It was the responsibility of the public authorities to
set the levels of health and safety protection to be provided to citizens, and this principle had not been
challenged by dispute settlement panels.  It was also the responsibility of the public authorities to
ensure that decisions in this area be taken on a sound basis, and not for protectionist purposes.  Giventhe significant exporting interests of the EU on foodstuffs, the EU was not favourable to
interpretations that would erect barriers to trade.  Indeed, Article 5:7 of the SPS Agreement clarified
that measures adopted in the presence of insufficient scientific evidence could not be indefinitely
maintained, and the search for definitive evidence had to proceed to a conclusion.
200. Regarding the comment by Chile on anti-dumping, studies had indeed demonstrated the
adverse effect on consumer welfare of higher prices paid by consumers due to the imposition of anti-
dumping duties.  However, there were also studies demonstrating the adverse effect on employment
of unfair competition, which also affected consumers.
201. With respect to the U.S. comment on the application of customs procedures, the issue was
undoubtedly of a similar nature between Genoa and C openhagen as between two ports of entry in the
United States.  In spite of identical laws and regulations, there was scope for a certain variation in
application, which was the result of the functioning of bureaucracies.  The representative had noted
the comment on problems arising from the operation of the TBT Agreement, which the Commission
had generally tried to resolve, although certain situations had been difficult.  With respect to the
comment on the pan-European system of cumulation, the benefits of the system were only available to
countries providing each other the same preferen tial treatment.  Furthermore, drawback had been
eliminated to remove an element of discrimination that would otherwise apply to inputs sourcedinside the zone covered by the system.
202. In response to the comment by Brazil, the Commission noted that the matter of the
classification of countries as "BSE-free" was still under consideration, and the Commission was
proceeding in accordance with the standards of the International Office of Epizootics, and would
apply these on a non-discriminatory basis as to origin.
C. S
ECTORAL MEASURES
203. The Commission's representative noted that the free-trade agreement with Israel, described as
being in force on a provisional basis in the Secretariat Report, had definitively entered into force on
1 June 2000.
204. With regard to agriculture, during the first day of the meeting, a number of delegations had
welcomed the EU's reform of the CAP, although en couraging further steps in this direction.  This
reform was based on the Berlin agreement on "Agenda 2000", reached in March 1999, and involved a
further shift away from market price support.  The prices of cereals and beef would drop by 45% and
35%, respectively, which would have a substantial effect on world market developments, of benefit to
developing country exporters, however, he noted the dominant role of multinational enterprises in thistrade.  In 2002, the Commission would submit a report to the Council on the evolution of expenditure
on agriculture, accompanied if necessary by proposals.
205. A number of delegations had noted the importance of agriculture in the EU budget, at 45% of
the total.  The EU's budget, at 1.27% of EU GNP, represented only a fraction of combined
government expenditure by the 15 individual Member States and was devoted, as a matter of course,WT/TPR/M/72
Page 37
to policies of EU competence.  The CAP in partic ular had been and remained a pillar of the EU,
although its share in the budget had substantially declined.  Certain delegations had also commentedon the EU's implementation of Uruguay Round commitments on support.  The AMS had remained at
around US$20 billion and expenditure on export subsidies was at 60% of the financial commitment in
this area.
206. The representative noted the leading role of the EU market for developing country exporters
of agricultural products.  Argentina, for example,  exported agricultural products worth €3.2 billion to
the EU, compared with exports of €594 million to the United States.  The EU market was therefore of
considerable commercial significance to Argentina, although it was understandable that Argentina
was eager to sell even more to the EU.
207. With regard to textiles and clothing, the the Council had adopted on 12 July 2000 the third
stage of the integration programme under the ATC, to cover 18% of imports in the sector in 1990.The product categories selected for integration currently accounted for 21.9% of imports in the sector,
and would result in the elimination of 35 bilateral quotas on imports from WTO Members, accounting
for 20% of outstanding quotas.  This programme confirmed the will to liberalize in the EU-  The
representative also noted the continued interest of the EU in improving access for its textiles and
clothing exports in third-country markets.
208. With respect to the tariff regime for textiles and clothing, the EU's rates could not be regarded
as "exceptionally high".  Average applied tariffs were 0.7 % for raw materials, 5.3 % for yarns and
fibres, 6.3 % for fabrics and 11.9 % for clothing (a total average of 9 %).  These tariffs were subject to
Uruguay Round reduction commitments.  Furthermore, some 40% of the EU's imports of textiles and
clothing, representing €24 billion, entered the EU free of duty.  In relation to the EU,  developing
country exporters of textiles and clothing products maintained much higher average levels of tariffs
on imports, up to 40% on clothing, and there were consequently significant efforts that could be madeto open markets to EU exporters.
209. With regard to services, the representative of the Commission welcomed the attention given
by a number of delegations and by the Secretariat Report to the EU's significant liberalization efforts
in the sector.  This liberalization had benefited third-country suppliers of services on the EU market,
and had been reflected in GATS commitments.  On banking services, for example, the concept of the"single passport" permitted an institution established directly in a Member State to operate in all other
Member States.  The EU was the world's leading exporter of services and consequently had a
significant stake in the outcome of the mandated negotiations on services.  The representative also
noted that efforts to submit a consolidate schedule for the EU-15 were continuing.
210. The Lisbon European Council in June 2000 had confirmed the priority attention to be given to
the development of e-commerce, which played a central role in the "new economy".  Its development
provided a supplementary impetus to services liberalization since the two were complementary.  On-
line ordering of goods went hand-in-hand with the delivery of products through transportation
services, which could be impeded by significant barriers.  The EU was looking forward to the
resumption of work in the WTO on e-commerce, which was to be considered shortly by the GeneralCouncil.
211. The Chairperson opened the floor to delegations wishing to comment on the remarks of the
Commission's representative.
212. The representative of Argentina noted with interest the comments of the EU on the CAP,
recalling that the EU's policies on agriculture were  well-known from a number of sources, such as the
OECD.  It was natural that his country, which had a comparative advantage in the sector, was both aWT/TPR/M/72
Page 38
leading exporter of agricultural products and intent upon securing, as a priority objective in the WTO,
improved market access.  Although the EU was the leading destination for Argentina's exports ofagricultural products, his country had a substantial trade deficit with the EU, which was furthermore
an important supplier of services.  The bilateral economic relationship, in terms of exports and
imports on both sides, was thus very substantial.
213. Argentina also drew attention to the large number of dispute-settlement proceedings initiated
by the EU.  Implementation in these cases had created difficulties for his Government, because ofcommitments made to the IMF or World Bank in relation to structural adjustment programmes.
Argentina recognized the right of the EU to procee d on issues of its own interest, although costly for
Argentina.  Likewise, his delegation had the ri ght to pursue issues of fundamental interest.
214. The representative of India noted that the Agriculture Agreement and the ATC were excellent
illustrations of the Mayan philosophy of illusion.  The Agriculture Agreement, for instance, was
intended to foster fair and market-oriented trade in agriculture by reducing the subsidies of major
players.  Instead, subsidy levels had gone up, although perhaps classified in boxes of a different hue.
With respect to the ATC, which was intended to remove quota restrictions, the integration programme
had mainly concerned product categories that were not previously restricted, fostering the illusion of a
liberalization where there was none.  In particular, no product subject to quota restriction whenexported by India had been integrated to date and this was also likely to be true of the third stage.
215. His delegation had also noted the comments of the EU on the relative magnitude of the tariffs
of developing country exporters of textiles and clothing products.  Such a comparison between
developed and developing countries had no relevance as such, nor was it relevant to the ATC and
could not justify the EU's restrictive policy on the sector.  India understood – and this had been
confirmed in the General Council by the EU's repr esentative – that the liberalization of the EU's
textiles and clothing regime under the ATC was to proceed without requirement of reciprocal market-
opening by developing countries.  Furthermore, th e meeting of the TPRB was devoted to a review of
the EU's trade policy regime, and not that of other countries, whose policies in any event gave scant
comfort to delegations concerned by the policies of the EU.
216. The representative of the European Commission stated that, with regard to the comment by
Argentina, the dispute settlement proceeding initiated by the EU concerned that country's anti-
dumping regulation, which could be resolved by greater respect for procedural requirements.  With
respect to the comment by India, the representative had made reference to the anti-dumping initiations
of the United States, not because the EU wished to establish a comparison in any respect, but to
observe the existence of a parallel trend that helped explain the trend in the EU.  More generally, the
representative had welcomed the dialogue between th e EU and its trading partners on its agricultural
policy, a subject of great sensitivity, which helped de-dramatize the issue and thus contributed to
progress.  Regarding the integration of textiles and clothing, the representative noted that the
liberalization of the tariff regimes by developing  countries, notably that of India, would be of
substantial benefit both to themselves and to EU exporters.WT/TPR/M/72
Page 39
V. CONCLUDING REMARKS BY THE CHAIRPERSON
217. The Chairperson noted the very informative discussions on the trade policy regime of the
European Union.  He was pleased to note the large number of delegations – representing developed
and developing countries, including least developed – that had submitted questions and made
statements to assist the process of review, drawing on the extensive documentation prepared for the
exercise.  He also thanked the Commission for its statements and the efforts it had made to provide
detailed answers to the many questions it received, some on short notice.  This very high level ofparticipation had permitted a comprehensive collective review of the trade policy regime of the
European Union, which was known to be a market of key interest to all Members.  Several key
elements had emerged to which he would draw attention in his remarks.
218. The improving economic environment in the EU was of great importance to the WTO
membership.  Many developing country delegations had noted the singular importance of the EU as adestination market for their exports.  A number of delegations had also stated the importance they
attached to the health of a market where their enterprises had located to manufacture goods or to
supply services to EU consumers.  There had been a consensus that the recovery of economic activity
had been assisted by the deeper integration of the Single Market, brought about by the advent of the
euro and further deregulation, in particular of service sectors.  The EU had been encouraged to makefurther progress towards the Single Market, including by reducing non-transposed directives, which
would make a contribution to sustaini ng the EU's growth in the future.
219. There had also been a wide appreciation of the leading role of the EU in the WTO.  The EU
had been commended on the generally broad scope of its commitments and the attention it gave to its
notification obligations.  On dispute settlement however the EU had been urged to speedily resolve
the outstanding implementation problems in the bananas case.  Divergent views had been heard on the
EU's multi-faceted approach to trade policy, combining multilateral with regional and bilateralinitiatives.  There had in particular been inte rest on the nature of the commitments exchanged on
agricultural products and services in the recently concluded agreements with South Africa and
Mexico, as well as a number of comments on th e Partnership Agreement of Cotonou.  It had been
noted that the EU imports on an MFN basis only  from eight WTO Members;  the EU's own exports
benefitted from MFN treatment in the markets of WTO Members except for the 17 non-EU Memberswith which free trade or customs unions were in place.  There was no better testimony to the EU's
commercial interest in the bedrock principle of MFN.
220. Comments had also been made on the planned enlargement of the EU to countries in Central
and Eastern Europe.  Members were following the Intergovernmental Conference with interest, in
particular with regard to the competencies of the EU and of the Member States over policies in trade-related areas, which directly affected the modus operandi  of the EU in the WTO.  And a number of
Members that were exporters of agricultural products had a keen interest in further progress on
Agenda 2000, beyond the agreement reached last year in Berlin, to reconcile the operation of the
Common Agricultural Policy with the advent of new members.  In the period ahead, leading up to
accession, third counties had hoped the candidate countries would maintain open markets and avoidthe adoption of policies –whether in agriculture, other products or service sectors –that adversely
impacted on their conditions of market access.  Finally, upon accession itself, the need to minimize
trade diversion had been underscored.
221. It was also fair to say that, while Members appreciated the generally open character of the EU
market, there remained a number of specific concerns regarding the conditions of access to the EUmarket.  The EU had received a number of comments on the above average tariffs and quotas in the
textiles and clothing sectors.  The disappointing pace of integration of the sector under the first and
second phases of integration under the ATC had been mentioned.  Hope had been expressed that theWT/TPR/M/72
Page 40
EU would do more to lift restrictions in the thir d phase.  The operation of the CAP had also been of
concern, both in terms of limiting market access on the EU market and the spill-over effects on worldmarkets of the heavy use of export subsidies.  Concerns had been raised with respect to the
complexity and protective effects of the import regime for agricultural products.  The operation of the
EU's anti-dumping and anti-subsidy instruments had also been of concern, including the rising
incidence of such measures and their effect on exports of developing countries.  There had been a
number of remarks to the effect that technical regulations and standards, as well as SPS measures, andconformity assessment procedures, had become a more significant aspect of market access, in some
instances a barrier, and that policies to ensure a hi gher level of food safety in the EU might develop in
the same direction.
222. With respect to market access on services, several delegations had indicated their interest in
better conditions of access for natural persons, both in terms of making existing GATS commitmentson temporary movement of business persons more effective, as well as broadening the scope of the
EU's commitments on such movement.  The EU had also received a number of questions on its plans
for regulatory harmonization in the sectors of financial services, telecommunications and
transportation.  And a number of Members had vi ews on the policies the EU is elaborating on
electronic commerce.  With respect to the protection of intellectual property rights, there had beenconsiderable interest among the membership on plans to develop a EU-wide framework on patent
rights.
223. The Chairperson also drew the attention of the members to the stimulating discussion that had
taken place on the future of the organization, a process in which the EU was playing a key role.  The
Commission had stated that the EU advocates a wider scope for the remit of the WTO, encompassing
investment, competition policy, environment and dial ogue on issues of social concern.  The EU also
advocated a more open and transparent institution.  These changes, the EU had argued, would betterenable the organization to harness the process of globalization and make it work for the citizens of its
Members.
224. On some of these points, however, the Chairperson had noted divergent views.  Several
delegations had urged the EU to focus its attention on the negotiations on the built-in agenda, rather
than await the outcome of consensus-building on a new round.  On agriculture, there had been supportfrom some quarters for the EU's approach of multifunctionality, while other delegations had favoured
an exclusively market-oriented agricultural policy.  A number of delegations had firmly rejected
integrating a social dimension – or indeed non-trade concerns more broadly - in the conduct of trade
policy, whether in the WTO or through the GSP.
225. The Commission had also stated that another co mponent of the EU's vision of the future of
the WTO was a better integration of developing countries into the multilateral trading system, by
devoting resources to technical assistance and capacity-building, and enacting market-opening
initiatives for the least developed among them.  In this respect some delegations had urged upon the
EU the need for duty-free and quota-free access for all products originating in LDCs.  The
Chairperson had detected a wide appreciation for the EU's support for a WTO that is more inclusiveof developing countries, to assist their integration into the world economy, and facilitate their
development.
__________