RESTRICTED
WORLD TRADE WT/TPR/S/30
20October 1997
ORGANIZATION(97-4508)
TRADE POLICY REVIEW
EUROPEAN UNION
Report bytheSecretariat
This report, prepared forthefourth WTO Trade Policy Review oftheEuropean
Union, hasbeen drawn upbytheWTO Secretariat onitsownresponsibility. The
Secretariat has,asrequired bytheAgreement establishing theTrade Policy Review
Mechanism (Annex 3oftheMarrakesh Agreement Establishing theWorld Trade
Organization), sought clarification from theEuropean Commission ontheEU'strade
policies andpractices.
Document WT/TPR/G/30 contains thepolicy statement submitted bytheEuropean
Union.European Union WT/TPR/S/30
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CONTENTS
Page
SUMMARY OBSERVATIONS
(1) TheEconomic Environment ix
(2) Recent Developments inTrade Policies ix
(3) Trade Policy byInstrument x
(i) Border measures xi
(ii) Measures affecting production andtrade xii
(4) Trade Policy bySector xii
(5) Outlook xiii
I. THE ECONOMIC ENVIRONMENT 1
(1) Introduction 1
(2) Recent Economic Developments 2
(i) Recent growth andemployment trends 2
(ii) Economic policies andconvergence 5
(iii) Theroadtoeconomic andmonetary union 6
(3) Trade andInvestment Patterns 8
(i) EUtrade patterns 8
(ii) Developments inMember States 11
(ii) Investment trends 11
(4) Outlook 12
II. RECENT DEVELOPMENTS INEUTRADE POLICY 14
(1) Overview 14
(2) TheInstitutional Framework 15
(3) TheAccession ofNew Member States 15
(4) TheSingle Market 16
(i) Implementation ofexisting measures andprogramme for1997 16
(ii) Economic impact 18
(iii) Remaining obstacles 20
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(5) External Relations 20
(i) TheEEA andEFTA 24
(ii) Central andEastern European countries 25
(iii) Agreements withMediterranean countries 27
(iv) Partnership andcooperation agreements 28
(v) ACP countries andSouth Africa 29
(vi) Arrangements inNorth America 31
(vii) Arrangements inLatin America 31
(viii) Agreements andarrangements inAsia 32
(ix) GSP 33
(x) Policy initiatives towards theleast-developed countries 34
(6) Participation intheWTO 35
(i) General policy orientation andpriorities fortheSingapore
Ministerial Conference 35
(ii) Information Technology Agreement 35
(iii) Dispute Settlement Body 36
(iv) Notifications 39
(7) Investment Policies 41
(i) MAI negotiation 41
(ii) Foreign investment policy intheCommunity andvis-à-vis
third countries 41
III. TRADE POLICIES AND PRACTICES BYMEASURE 44
(1) Overview 44
(2) Measures Directly Affecting Imports 44
(i) Tariffs andother trade-related charges 44
(ii) Customs cooperation 48
(iii) Quantitative restrictions, trade controls andsurveillance
measures 48
(iv) Trade sanctions andembargoes 51
(v) Trade defence instruments 51
(vi) Other trade measures 58
(vii) Local-content requirements 60
(viii) Rules oforigin 60
(ix) Recent developments inother import-related areas 62
(3) Measures Directly Affecting Exports 68
(i) Export promotion, financing andinsurance 68
(ii) Export controls andrestrictions 68
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(4) Measures Affecting Production andTrade 68
(i) Competition policy 69
(ii) Competition, deregulation andprivatization 71
(iii) Subsidies 72
(iv) Intellectual property protection 78
IV. TRADE POLICIES AND PRACTICES BYSECTOR 82
(1) Overview 82
(2) Developments inAgriculture 82
(i) Policy trends 82
(ii) Sectoral developments 88
(3) Manufacturing 92
(i) Overview 92
(ii) Adjustment intraditional industries 94
(iii) Performance intheelectronics industry 104
(4) Services 106
(i) Overview 106
(ii) Telecommunications services 107
(iii) Financial services 113
(iv) Transport 117
(v) Audiovisual services 123
REFERENCES 126
APPENDIX TABLES 129
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CHARTS
Page
I. THE ECONOMIC ENVIRONMENT
I.1 Output gaps inthelargest EUMember States 2
I.2 EU: External merchandise trade byregion, 1996 9
I.3 External trade bysector 10
II. RECENT DEVELOPMENTS INEUTRADE POLICY
II.1 State ofimplementation oftheinternal market directives bysector,
February 1997 17
II.2 Share ofintra-EU trade intotaltrade, 1985 and1995 19
II.3 External Trade: EU12-ACP, 1990-95 30
II.4 Leading traders inITAproducts, 1995 36
III. TRADE POLICIES AND PRACTICES BYMEASURE
III.1 Tariff escalation, 1995, 1997 and2000 46
III.2 Cumulation oforigin inEU'spreferential agreements 61
III.3 State aidintheEU(annual average) 73
IV. TRADE POLICIES AND PRACTICES BYSECTOR
IV.1 Tariffs onagricultural products (EU15), 1997 84
IV.2 Production 1992 and1995 andsubsidization 1993 and1996
byfarm sector 91
IV.3 Tariffs onmanufactured products (EU15), 1997 93
IV.4 Textiles andclothing imports bysource, 1991 and1995 96
IV.5 Situation inEuropean air-traffic competition, 1994 and1996 118
IV.6 Airlines withthelargest share oftake-off andlanding slots
atprincipal EUairports, 1995 120
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TABLES
Page
I. THE ECONOMIC ENVIRONMENT
I.1 Major features oftheEUeconomy byMember State, 1995 1
I.2 Overall performance oftheEUeconomy andgrowth rates in
Member States, 1992-96 3
I.3 Main economic indicators byMember State, 1994-96 4
I.4 Trade byEUMember States 12
II. RECENT DEVELOPMENTS INEUTRADE POLICY
II.1 Effectiveness ofsingle market measures inremoving barriers tothefree
provision ofservices within theEU(asperceived byeconomic operators) 21
II.2 EUpreferential trade agreements andWTO status 23
II.3 Progress towards theconclusion ofEuro-Mediterranean association agreements 28
II.4 Cases involving theEUand/or itsMember States under WTO dispute
settlement provisions 37
II.5 Principal notifications made inthecontext ofimplementing WTO
Agreements, September 1997 40
III. TRADE POLICIES AND PRACTICES BYMEASURE
III.1 Quantitative restrictions onsteel imports from CISrepublics, 1993-96 50
III.2 Anti-dumping actions, 1990-97 55
III.3 Summary oftheEU'smain commitments under theGPA 63
III.4 Status ofimplementation ofthepublic procurement directives, June 1996 65
III.5 Main applicable EUlegislation bymain category ofIPR 80
IV. TRADE POLICIES AND PRACTICES BYSECTOR
IV.1 Principal traded agricultural andfood products, 1997 85
IV.2 Transfers associated withagricultural policies, 1986-88 and1994-96 86
IV.3 Producer subsidy equivalents bymain product, 1986-88 and1994-96 90
IV.4 Changes intheunitproduction costs ofcoalinvarious Member States,
1991-94 100
IV.5 Production ofhardcoal, 1991-94 101
IV.6 Unitlabour costintheautomobile industry: aninternational comparison,
1980-95 102
IV.7 Average residential andbusiness telephone costs inmajor Member States, 1995 110
IV.8 Average peak international tariff rates foroneminute, 1993-96 111
IV.9 Alliances andmergers intheTelecoms market 111
IV.10 Main privatization measures inEuropean telecommunications inpreparation
forthe1998 liberalization 112
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APPENDIX TABLES
Page
AI.1 Leading merchandise exports bySITC category, 1993-96 131
AI.2 Leading merchandise imports bySITC category, 1993-96 132
AI.3 Merchandise exports bycountry andregion, 1993-96 133
AI.4 Merchandise imports bycountry andregion, 1993-96 134
AI.5 EUservices trade bysector, 1992 and1994 135
AIII.1 EUtariffs byISIC categories, 1997 and2001 136
AIII.2 Summary ofcurrent MRA negotiations oragreements bycountry/sector 139
AIV.1 Restrictions applicable toWTO Members affected byECsecond stage
ofintegration 140
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SUMMARY OBSERVATIONS
Introduction
1.Thisreview oftheEuropean Union 'strade
policies andpractices isan"interim" review,
asagreed in1996 bytheTrade Policy Review
Body. Ittherefore focuses principally ona
comprehensive survey ofdevelopments intrade
policy, andintheeconomy oftheEU,since the
previous review heldin1995; thecoverage of
sectors ismore selective than inprevious
reviews,concentratingonsignificant
developments inmajor areas.
2.Thereview takes place inatransitional
period ofpolicy development intheUnion itself.
Major changes areinpreparation, such as
further enlargement, themovement towards
economic andmonetary union, andreforms in
keysectors suchasagriculture andservices.
Suchdevelopments arelikely tohaveastrong,
although notyetquantifiable, impact onthe
Union andthemultilateral system; thereport
istherefore anattempt tovisualize thedirections
ofpolicy movements andassess theirpotential
effects onthesystem.
(1)TheEconomic Environment
3.Economic growth intheEUhas, on
average, beenrelatively modest (around 2per
cent) since the1995 Trade Policy Review,
reflecting theimpact ofthesharp slowdown of
mid-1995 tomid-1996. Confidence has
strengthened since thesecond halfof1996,
leading toprojections ofrealGDP growth of
around 2.5percentfor1997. While some
Member States (Ireland andFinland) continue
toshowhigher-than-averagegrowth
performance, cyclical developments among the
larger economies have become more
synchronized. Average growth intheUnion as
awhole hasbeentooweak toallow significant
improvement inunemployment, although
performance ofMember States inthisregard
varies widely. Fiscal andmonetary policies
haveshown greater convergence, resulting in
morestable exchange rateswithin theEuropean
Monetary System.4.Exports, stimulated bybuoyant world
markets, havebeenthemaincontributing factor
toeconomic growth. While exports of
manufactures havebeenincreasingly oriented
towards fast-growing markets inAsia and
modern-technology products, concerns remain
about therelatively highconcentration ofEU
trade inmedium-technology products and
towardscertainlow-growthgeographicalareas.
Trade inservices, oneoftheEU'sstrongholds,
hascontinued tobenefit from international
liberalization, technical progress andstrong
demand fortechnology-based services.
5.Preparations fortheintroduction ofa
single currency (theeuro) have intensified,
driving theconduct ofmacroeconomic policies
inmost Member States. The planned
introduction oftheeurorepresents anewstep
ineconomic integration within theEUandis
alsolikely tobeamajor factor governing the
EU'sexternal trading relations inthecoming
years. Elimination ofexchange raterisks
within theeurozoneshould havedirect benefits
onintra-EU trade; however, bothintra- and
extra-Communitytradeshouldbenefitfromlower
transactions costs, greater transparency ofthe
single market, andfurther predictability and
security oftrade.
(2)Recent Developments inTrade Policies
6.Atthetimeoftheprevious review, the
completion ofthesingle market programme and
theconclusion oftheUruguay Round dominated
theEU'sagenda. Inthelasttwoyears,
priorities haveshifted towards preparations for
theintroduction oftheeuroandthereform of
Community institutions inview offuture
enlargement. AttheEuropean Council in
Amsterdam, theHeads ofState orGovernment
agreed, interalia,onarevision ofArticle 113
oftheTreaty ofRome, opening thedoor(subject
tounanimous agreement bytheCouncil) to
possibleextensionoftheCommission'sexclusive
competencetoconcludeinternationalagreements
forcertain types ofservices andintellectual
property.
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7.Thebasic objectives oftheEU'strade
policy have not changed substantially.
Internally, theCommunity hasfocused on
consolidation ofthesingle market rather than
ondeveloping newpolicy directions. Attention
isbeing paid tothedepth andscope of
transposition ofEUlegislation intonational
laws, andtoenforcement inareas such as
government procurement, environment and
intellectual property.
8.Externally, theEUismaintaining its
multi-stranded approach, combining bilateral,
regional andmultilateral policies. Bilateral
priorities include thestrengthening ofeconomic
linkswithneighbouring countries through the
acceleration ofthepre-accession strategy for
Central and Eastern European countries
(CEECs) and theBaltic States, and the
conclusion ofanewgeneration ofassociation
agreements with Mediterranean countries,
progressively introducing reciprocal freetrade.
TheCEEC accession process hasbeentaken a
stepfurther byarecent Commission proposal
("Agenda 2000") toadmit tomembership
Cyprus, theCzech Republic, Estonia, Hungary,
Poland andSlovenia. "Agenda 2000" also
provides afirstevaluation oftheconsequences
ofenlargement fortheEUandtheselected
countries, andcalls forfurther reforms in
various areas ofpolicies suchasagriculture,
structural funds andtheCommunity budget.
9.Other initiatives included thecompletion
ofthemid-term review ofthefourth (andlast)
LoméConventionandtheinitiationofdiscussion
todetermine thestructure ofpost-Lomé
arrangements; newframeworks forrelations
with North America, MERCOSUR orAsia;
negotiationsontradeliberalizationwithMexico,
Chile andSouth Africa; theconclusion ofnew
Partnership andCooperation agreements with
former Soviet Union (FSU) countries; and
progress towards theremoval ofnon-tariff
barriersinbilateraltradewiththeUnitedStates,
inthecontext oftheNewTransatlantic
Dialogue.
10.These measures, strengthening European
integration both intheSingle Market andthrough thenetwork ofregional andbilateral
agreements, arelikely tohave increasingly
significant effects onoutsiders, andonthe
multilateral system asawhole, notonlythrough
suchsteps astheextension ofduty-free access
onanFTA basis, andaccelerated quota
liberalization fortextiles andclothing products
from preferred sources, butalsothrough the
adoption oftheEUtrading regime byits
partners andtheirparticipation innewsystems
of"diagonal" cumulation oforigin. Already,
intheperiod 1985-95, theshare ofintra-EU
trade inmanufactures rosefrom54to68per
centoftotalexports fromtheCommunity asthe
Single Market advanced; inthesame period,
intra-EU flows rosefrom41to59percentof
totalCommunity FDI.
11.Atthesame time, however, theUnion
engaged firmly intheprocess ofUruguay Round
implementation andpromoted theuseofWTO
dispute settlement procedures. Italsomade an
important contribution tothesuccess ofthe
Singapore Ministerial Conference andwasat
theforefront ofrecent GATS and ITA
negotiations. Multilateralism isthusfirmly
embedded intheEU'spolitical agenda.
(3)Trade Policy byInstruments
12.Byandlarge, thelasttwoyears have
confirmed theEU'ssteady progress towards a
more liberal external trade regime, under the
combined effects ofWTO implementation in
areas suchastariff reductions orthegradual
elimination ofnon-tariff barriers, enlarged
m.f.n.commitmentsthroughtheITAandthenew
agreement ontelecommunications services, and
thecompletion oftheSingle Market. Inan
increasing number oftopics, such asthe
harmonization ofstandards ortheliberalization
ofservices, thesingle market process and
multilateral liberalization havebeenmutually
supportive, resulting inmarket access
improvement fornon-EU suppliers. Onthe
other hand, inareas such asgovernment
procurement, thelackofimplementation of
single market directives may have adverse
consequences onexternal suppliers.
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(i)Border measures
13.While many oftheEU'strading partners
benefitfromfree-tradeareaorotherpreferential
treatment, most imports stillenter atm.f.n.
rates. TheUnited States andJapan arestillthe
mostimportanttradingpartners,supplyingsome
20and9percentofexternal imports in1996.
14.In1997, thesimple average m.f.n. tariff
across allproducts stood at10percent.
Reflecting Uruguay Round commitments,
average m.f.n. tariffs onindustrial products
havecontinued todecline, from6percentin
1995to4.9percentin1997. Some highduties
persist inthetextiles, automobile andconsumer
electronics sectors. Further tariff reductions,
aspartoftheUruguay Round andtheITA,will
result inanaverage m.f.n. industrial tariff of
under 3percentbytheturnofthecentury.
15.Asaresult oftheWTO Agreement, allEU
agriculturaltariffsarebound,againsttwo-thirds
previously. Asinmany WTO Members,
reflecting thetariffication ofprevious variable
levies and import restrictions under the
Agreement onAgriculture, average rates are
higher thanforindustrial products; thesimple
average m.f.n. tariff foragricultural products
wasestimated at20.8percentin1997, down
from 25percentin1995. Thetariff profile
shows peaks forcereals, meat andmeat
products, dairy andpoultry, sugar andtobacco
products.
16. Under the Single Market, access
conditions have improved foravariety of
"sensitive" products. Trade restrictions
previously maintained byMember States have
beenabolished or,inafewcases (thebanana
regime, the"carconsensus" withJapan and
certain restrictions onproducts fromnon-WTO
Members) converted into Community-wide
quotas. Most ofthese restrictions are
scheduled tolapse attheturnofthecentury,
orshortly thereafter, asaresult ofWTO
Agreements orunder bilateral arrangements.
Progress hasbeenrecorded inthelasttwoyears
withtheremoval ofmostgrey-area measures
(except oncars) andtheintegration intotheGATT ofasecond listoftextiles andclothing
items.
17.Fears thatthegradual dismantling of
voluntary export restraints (VERs) would
translate intoasharp increase inanti-dumping
measures havenotbeenconfirmed. Theuseof
contingency measures stabilized between 1992
andmid-1996. However, theEUremains the
second most important userofanti-dumping
procedures. While thelasttwoyears haveseen
anincrease inthenumber ofmeasures inforce,
affecting inparticular textile products, the
number ofinitiations hasdiminished. Other
trade-defence instruments available under WTO
provisions, e.g.,safeguards andcountervailing
actions, arebeing usedonlymarginally.
18.In1996, theEUintroduced a"Market
Access Strategy" aimed atachieving better
access tothird-country markets through amore
focused, systematic andcoordinated useof
available trade instruments. According tothe
Commission, thestrategy isnotintended to
create newtrade instruments orjeopardize the
Union 'sobligations under theWTO. Todate,
themainconcrete stephasbeenthecreation of
adatabase compiling information onexisting
"obstacles" outside theEU. TheCommission
intends toprepare reports identifying priority
countries andlisting theirtrade barriers.
19.Recent changes inrules oforigin are
related totheharmonization ofthese rules
among European countries andthecreation of
asingle territory forthedetermination oforigin
between theEEA, EFTA andCEEC countries
(inall,28countries). Thenewsystem islikely
toencouragethefurtherdevelopmentofoutward
processing andassembly operations within the
enlarged region, inparticular inthetextiles,
clothing andautomobile industries.
20.Efforts towards theharmonization of
standards andtechnical requirements inthe
Single Market, which haveintensified inthelast
two years, have been mirrored atthe
international levelbytheconclusion ofmutual
recognition agreements (MRAs) with the
UnitedStates,Australia,CanadaandNewZealand.
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(ii)Measures affecting production andtrade
21.Astraditional protection attheborder is
gradually reduced, internal obstacles totrade,
resource allocation andcompetitiveness become
more apparent. Government assistance toEU
economies remains sizable, intheorder of
ECU 100billion ayearforState aidprovided
bytheMember States, inaddition tootherforms
ofinvestment incentives andgrants provided by
local authorities, andCommunity subsidy
programmes.Theopeningofpublicprocurement
(which accounts for12percentoftheUnion 's
GDP), while benefiting fromanimproved EU
andinternational framework, hassofarhad
limited effect; and despite gradual
liberalization, thesurvival ofmonopolistic
structures incertain service markets maintains
highcosts foruserindustries andconsumers.
Many ofthese issues arebeing addressed
through anactive competition policy.
22. TheCommission continues toreview and
monitor State aidintheCommunity. The
complex anddifferentiated system reflects the
large number and wide variety ofaid
programmesavailable.TheEUauthoritieshave
been seeking tonarrow thescope ofsector-
specific exemptions inareas such assteel,
textiles andservices. There wasanincrease in
State aidgranted in1992-94 over1990-92;
more recent statistics arenotyetavailable.
23.The WTO Government Procurement
Agreement (GPA) became partoftheEUregime
onitsentry intoforce. TheUnion has
undertakentoaligncertaindirectivestotheGPA
toensurecoherenceandsimplify
implementation. While thesingle market
legislative framework inthefieldofgovernment
procurement isnowinplace, notalldirectives
haveyetbeenfullytransposed intonational laws
andtheireconomic impact has,todate, been
relatively minor.
24.Thelasttwoyears have seen rapid
development inthenumber ofcompetition policy
cases, reflecting therise ofcross-border
mergers, acquisitions andstrategic alliances
bothwithin theEUandattheinternationallevel. These pose new challenges for
competition authorities, andtheUnion has
therefore been seeking toadapt itsown
framework and todevelop international
cooperation. Bilateral negotiations between the
EUandtheUnited States todeepen the1991
AgreementonCooperationinCompetitionPolicy
ledin1997 toanagreement strengthening the
application ofthe"positive comity" principle
inenforcement oftheirrespective competition
laws. TheEUhascontinued toargue infavour
ofthedevelopment ofacompetition policy
framework atthemultilateral level, andis
strongly supporting theWTO workprogramme
clarifying theconnection between trade and
competition policy.
(4)Trade Policy bySectors
25.Theperiodhasbeenoneofimplementation
ofWTO Agreements andofdeepening ofthe
Single Market, notofmajor regulatory change.
Generally, internal andexternal processes are
contributing tocreating amore open,
competitive marketplace. However, theSingle
Market isyetfarfrombeing completed, albeit
more advanced inindustry thaninservices.
26.Inagriculture, favourable market prices
have facilitated theimplementation ofCAP
reform andfulfilment ofWTO commitments,
gradually increasing thesector 'sexposure to
competition. Average tariffs havefallen, but
high out-of-quota duties continue toprotect
sensitive areas. Aspects oftariff quota
administration,theuseofspecialsafeguardsand
export subsidies havebeenofconcern toother
WTO Members. Asaresult ofreduced
intervention prices andinternational price
trends, mainly linked tochanges inthecereals
andsheepmeat sectors, in1996 there wasan
8.7percentreduction intheproducer subsidy
equivalent (PSE) ofsupport andaone-third
reduction intheconsumer subsidy equivalent
(CSE). Financial transfers toagriculture have
continued togrow buttakeasmaller share of
theEUbudget. Changes havealsotaken place
inthemanner inwhich assistance isprovided,
with amovement towards direct payments.
Farm incomes have continued torise, in
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particular forproducers ofcereals andmeat
other thanbeef,helped byhighworld prices and
thechanging patterns offarmsupport.
27.Budgetaryconsiderations,inparticularthe
impact offuture enlargement toCentral and
Eastern European countries, seem likely to
impose further constraints onfarmsubsidies.
Measurestoaddresstheseconcernsandprepare
forthesecond phase ofnegotiations under the
WTO Agreement onAgriculture arecontained
intheCommission 's"Agenda 2000" proposals,
which emphasize theadoption ofmore market-
oriented measures, withlessreliance onprice
support mechanisms andexport subsidies,
reduction inintervention, andafurther shiftto
direct income support.
28.Ingeneral, manufacturing hasbenefited
fromcontinuedreductionsoftariffandnon-tariff
barriers. WTO implementation intextiles and
clothing, theintroduction oftheITA,andsingle
market measures, arereinforcing thistrend and
increasing theexposure ofprotected industries
tointernational competition.
29.Nevertheless,structuralweaknessesremain
inkeysectors suchasautomobiles orcertain
segments oftheelectronics industry. Surveys
point toinsufficient product andgeographical
specialization, declines inmarket shares anda
certain lossoftechnological advantages. In
theseindustries,thepersistenceofacombination
ofhigh tariffs, State aid and market
fragmentation mayhaveretarded adaptation to
newmarket trends, demands andtechnologies.
30.Conscious oftheneedtoreduce costs in
input services, theEUhasmade theremoval of
restrictions totrade inservices amajor policy
objective. Theapproach hasbeensteady and
determined, butthespeed ofthereform has
necessarilybeenconditionedbypoliticalfactors.
Inthelasttwoyears theCommunity has
continued toprogress towards liberalization in
some keyservices areas, forexample through
preparationsforfullliberalizationoftheinternal
market inairtransport and, particularly,
telecommunications. Thisinternal impetus has
been backed byaconsistent approach tomultilateral negotiations; ingeneral, theEU
hasbeenadriving force behind recent GATS
negotiations, making substantial offers or
commitments anddevoting considerable energy
totheencouragement ofother participants to
dolikewise.
31.TheCommunity anditsMember States
havealsoundertaken toopenupcertain "core"
public services such aselectricity, gasand
postal services, although insomeinstances with
longtransition periods. Insuchareas, theneed
isoften seentomaintain abalance between
market opening andtheprovision ofassured
public services. Thus, intelecommunications
liberalization, theEUauthorities have paid
particular attention tothedefinition ofa
universal service atanaffordable price.
(5)Outlook
32.Importprotection,otherformsofassistance
andtheuseofcontingency measures remain of
importance incertain sectors. However, asa
result ofthecombined effects ofthesingle
market process andtheimplementation ofthe
WTO Agreements, theEU'strade policies and
practices havegenerally evolved inafavourable
direction. Thenearelimination ofVERs and
reduced reliance ontariff and non-tariff
measures, combined withtheobservance of
WTO rules anddisciplines, areincreasing the
opennessandpredictabilityofthemarket.These
tendencies provide encouraging evidence that
themultilateral framework ofrules and
disciplines constitutes animportant -and
growing- point ofreference intheelaboration
oftheUnion 'spolicies.
33.TheSingle Market process hasstimulated
internalcompetition,sometimeswithbenefitsfor
third-country suppliers. Theintroduction ofthe
single currency, budgetary limits, theprospect
offurther enlargement, and international
negotiations ornewagreements inkeyeconomic
sectors suchasfinancial services arelikely to
maintain pressures forfurther economic and
trade reforms.
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34.Theenlargement oftheUnion andthe
expansion oftheEU'spreferential network of
free-trade agreements arebound togivesome
concern tom.f.n. trading partners inrelation
topotential trade diversion. There arealso
concerns about thesystemic effects intheWTO.
Atthesame time, itisclear thattheEUis
reassessing indepth both thepattern ofits
free-trade area relationships and their
relationshipswiththeWTOAgreementsandwith
m.f.n. partners. Indeed, themultiplicity of
forms ofeconomic cooperation andlevels of
tradepreferencehasledtheCouncilofMinisters
tocallformore careful consideration ofthe
WTO conformity ofpreferential agreements as
wellasclarification ofWTO rules onregional
trading agreements.35.Overall, theinterface between thesingle
market process andexisting ornewWTO
commitments appear tobeworking together to
thebenefit ofboththeUnion anditstrading
partners, andthiscanbeusefully carried
forward. Atthesame time, there arealso
lessons tobedrawn forthedevelopment ofthe
multilateralsystemfromtheprocessofEuropean
integration andtheevolution ofitsdisciplines
andstructures.
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