RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/214 
2 March 2009  
 
(09-0999) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
EUROPEAN COMMUNITIES 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by the European Communities is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Re view Body on the Eu ropean Communities. European Communities WT/TPR/G/214 
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CONTENTS 
 
  Page 
 
I. INTRODUCTION 5 
II. KEY DEVELOPMENTS IN THE EC 5 
 (1) I NSTITUTIONAL DEVELOPMENTS  5 
 (2) D EVELOPMENTS IN THE INTERNAL MARKET AND CENTRAL POLICY AREAS  6 
 (3) E CONOMIC PERFORMANCE AND CHALLENGES AHEAD  8 
III. KEY DEVELOPMENTS IN THE EC'S TRADE POLICY (2007-08) 11 
 (1) I NTRODUCTION  11 
 (2) WTO  11 
 (3) C REATING THE RIGHT ENVIRONMENT FOR TRADE  14 
 (4) S ECTORAL POLICIES  15 
 (5) B ILATERAL AND REGIONAL TRADE RELATIONS  17 
 (6) S USTAINABILITY AND DEVELOPMENT  19 
 (i) Trade and sustainable development 19  (ii) Trade and development 21 
IV. LOOKING FORWARD 23 
 
 
 
     
 
    
 
    
 
     
 
  
 
 European Communities WT/TPR/G/214 
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I. INTRODUCTION 
1. This Trade Policy Review of the European Co mmunities (EC) refers to the period 2007-08, 
which was a time of several major anniversaries in the context of the Europ ean integration process. 
Rather than just looking back and celebrating past  achievements, these anniversaries were used to 
reinvigorate on-going efforts and la unch new initiatives in the various areas of EC activity, including 
trade policy, that aim to consolidate, and build  upon these significant earlier accomplishments as well 
as to respond to evolving priorities and the ever changing global environment. 
2. The EC is the largest actor in international tr ade, accounting for nearly a fifth of the global 
goods market and close to a third of the global ser vices exchange. This makes its trade policy one of 
the key instruments for the achievement of prosperity  in Europe. It also mean s that the rest of the 
trading world has a stake in what th e EC does in the trade field. Against this background, the EC aims 
to formulate and implement its trade policy in ways  that support sustainable development at home and 
abroad, and contribute to an open, balanced a nd well-functioning international trade regime. Its 
approach is thus characterized by a clear prioriti zation of multilateralism, while action at other levels 
is undertaken when and insofar it is compatible with, and can complement multilateral solutions. 
3. The single most important trade policy activity for the EC over the last years has been its 
participation in the DDA negotiations, where the EC continued to provide leadership and facilitate 
consensus. Other key trade-related developmen ts and achievements during the reference period 
addressed in this report include: progress in implem enting the Global Europe Strategy particularly, 
inter alia,  the renewal of our Market Access Strategy, the launch of negotiations on a new generation 
of FTAs and the move to a new level of engagement  with key bilateral partners; the new initiative on 
IPR enforcement; in the area of trade and developm ent, headway in EPA negotiations; the adoption of 
a revised GSP scheme for the period 2009-11; formulation of a EU Aid for Trade Strategy and the good progress achieved towards meeting the financia l pledges made with regard to trade-related 
assistance; further steps to consolidate the Si ngle Market; continued customs modernization; 
formulation of progressive new energy and climate change policies and adjustments made to the 2003 
CAP reform based on the "Health Check". 
II. KEY DEVELOPMENTS IN THE EC  
(1) I
NSTITUTIONAL DEVELOPMENTS  
4. 2007 marked fifty years since the signing of the Treaty of Rome, which established the 
European Economic Community (EEC), thereby setting the ground for an ambitious process of 
integration in Europe. In 1992, the European Economic Community was renamed the European 
Community (EC). The Maastricht Treaty introduced a new structure, the European Union based on 
three "pillars" (the European Community pillar, the Common Foreign and Security Policy and the 
Justice and Home Affairs cooperation). For its part, the European Commission celebrated its 50th 
anniversary in 2008.  
5. In January 2007, the European Union grew to  27 Member States as Bulgaria and Romania 
joined, completing the fifth and largest wave of enlargement which started in May 2004 with the 
accession of eight other Central and Eastern Eur opean Countries as well as Cyprus and Malta. 
Following the notification to WTO of the Accession of Bulgaria and Romania, the EC launched the 
necessary WTO procedures under GATT Article XXIV.6  and under GATS Article XXI with several 
WTO Members.  
6. Enlargement remains high on the agenda. Acce ssion negotiations are under way with Croatia 
and Turkey. Provided that Croatia fulfils all the necessary conditions, it should be possible to bring WT/TPR/G/214 Trade Policy Review 
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these to the final stage by the end of 2009. The former Yugoslav Republic of Macedonia has been 
granted the status of a candidate country, but ne gotiations have not yet begun. All other Western 
Balkan countries are potential candidates for EU membership. 
7. Four of the new Member States of the EU, whic h joined in 2004, have recently also adopted 
the Euro: Slovenia did so in January 2007, Cyprus  and Malta in January 2008 and Slovakia with the 
start of 2009. 
8. In March 2007, after a period of reflection and consultation, EU leaders committed to 
relaunch the internal institutional reform process, which had been put on hold due to setbacks in the 
ratification process of the 2004 draft EU Constitution.  This paved the way for the agreement on the 
Treaty of Lisbon, signed by the EU Member States on 13 December 2007.  
9. This new treaty would bring about a series of improvements, which also affect the area of 
trade policy, including optimized working met hods, more efficient decision-making processes, and 
enhanced democracy through a greater role for the European Parliament and national parliaments and 
more coherence in the EU's external activities. More  specifically, in some aspects of trade policy, the 
Lisbon Treaty gives the European Parliament the same degree of legislative power as held by the EU 
Council of Ministers, and requires European Par liament’s assent for all related international 
agreements. It extends the scope of the Common  Commercial Policy to include foreign direct 
investment and simplifies the provision of uniform protection of intellectual property rights throughout the Union. It furthermore strengthens the position of the EU as a global actor in two 
concrete ways: firstly, by introducing a single lega l personality for the Union which will enable the 
EU to conclude international ag reements and join internationa l organizations; and secondly, by 
integrating more closely the different  strands of external policy. In order to enter into force, the Treaty 
of Lisbon has to be ratified by all 27 Member St ates. By the end of 2008, the parliaments of 
25 Member States had already approved  the Treaty of Lisbon. 
10. On 30 June 2007, the Council of the World Customs Organization (WCO) decided to accept 
the request of the EC to join the WCO as of 1 July 2007. This decision grants to the EC rights and 
obligations on an interim basi s akin to those enjoyed by WCO Members. Full accession will be 
possible once an amendment to the Convention estab lishing a Customs Cooperation Council, allowing 
economic and customs unions to join is ratified by  the 174 current Members of the Organisation. The 
EC membership paves the way for the EC to c ontribute to, and influence WCO decision-making in 
key areas for EC, such as security, IPR, trade fac ilitation and capacity buildin g, Customs in the 21st 
Century as well as more traditional activities of the WCO in customs areas. 
(2) D
EVELOPMENTS IN THE INTERNAL MARKET AND CENTRAL POLICY AREAS  
11. In 2008, the EC celebrated the 40th anniversary of its Customs Union. Over the past four 
decades, customs have played a crucial role in allo wing the Single Market to function effectively. The 
EC is determined to continue improving the functioning of EC Customs with a view to modernising 
customs procedures, to ensure they  can face the challenges of the 21st century. 
12. Two key developments characterized the significant progress made in the field of customs 
procedures. The Modernized Community Customs Code (MCC) entered into force in June 2008, 
introducing a thorough reform of community custom s rules and procedures, making them simpler and 
electronic. The MCC will become operational once its implementing provisions are ready and applicable, and no later than June 2013. The Deci sion on a paperless environment for customs and 
trade, the so-called "Electronic Customs Decision" , was adopted in January 2008. The Decision aims 
at establishing secure, interoperable electronic cust oms systems for the exchange of the data to European Communities WT/TPR/G/214 
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improve and facilitate customs procedures by 20 14. This initial phase of the electronic customs 
initiative will be fully developed in  the framework of the implementation of the MCC. Both the MCC 
and the Electronic Customs Decisions are envisaged to benefit both traders and customs authorities, as they will significantly reduce the cost of doing business in the EC  and enhance the efficiency of 
customs services. 
13. Since the launch of the Single Market programme 16 years ago, much has been achieved. By 
bringing down barriers to the free movement  of goods, services, capital and people, and by 
strengthening competition, the Single Market has ra ised Europe's output by well over 2% and created 
2.75 million additional jobs. During the period of review , important steps have been taken in order to 
further consolidate the Single Market. The Comm ission's Communication, "A Single Market for 21
st 
Century Europe", published in November 2007, sets out a number of initiatives and actions to 
improve the functioning of the internal market, in  particular to empower consumers, improve the 
environment for small businesses, stimulate innovation, improve the management of the Single Market and make the EC better equipped for globalization. Unde r this framework, the "Small 
Business Act" for Europe was adopted in June 20 08 and strives to place the needs of SMEs at the 
forefront of the EC's policy. It is based upon the "Think Small First" principle in policy-making and 
supports SMEs' growth. In early 2008, a new Post al Directive was adopted in order to fully 
accomplish the internal market of Community postal services. This new Directive represents the final 
step in a long reform process that has already seen large areas of EC postal markets open to 
competition. In the field of public procurement, in  November 2007, a Directive reviewing the rules on 
remedies was adopted. The new Remedies Directiv e improves the rights of rejected bidders. It 
introduces a mandatory ten days stand-still period betw een the award of the contract and its signature 
and it provides a mechanism to render ille gally awarded contracts ineffective.  
14. The Enterprise Europe Network was launched in 2008. It is aimed at providing a single point 
of contact for businesses seeking information about, or  participating in EC activities and stimulating 
innovation through information exchange and part nership. It is a key instrument of the 
Competitiveness and Innovation Framework Programme  (CIP), which focuses on supporting SMEs in 
their growth and innovation activities. Policy guidance for the Network is provided by the 
Commission's Directorate-General for Enterprise a nd Industry while the day-to-day management, 
including training, communication, information, contract management, quality  control and reporting, 
is in the hands of the new Executive Agen cy for Competitiveness a nd Innovation (EACI). 
15. The 2007 Spring European Council committed to transform Europe into a low carbon 
economy with secure, sustainable and competitive en ergy. It agreed ambitious targets to cut 
greenhouse gas emissions, increase energy efficiency and boost the use of renewable energy by 2020 (a 20% reduction in greenhouse gas emissions, a 20% share for renewables in final energy 
consumption and a 20% saving in future energy demand by 2020 compared to the baseline 
projection). The challenge ahead is to put the fra mework and instruments in place to deliver these 
targets and to build up international consensus for ambitious action within the UN framework. A 
number of Commission proposals were tabled duri ng 2007 and 2008 to address these challenges. The 
third internal energy market package presented by the Commission in September 2007 included proposals to further open up the EC's internal ener gy market. This was followed by the energy and 
climate package in January 2008, encompassing pr oposals on emissions trading and renewables as 
well as Carbon Capture and Sequestration.  Following a historic agreement reached by the European 
Council, this package was finally adopted by the European Parliament on 17 December 2008. A 
Strategic Energy Technology Plan was presented in November 2007 to accelerate the development and implementation of low carbon energy technologies.  Measures to improve the energy efficiency of 
consumer goods were also proposed.  WT/TPR/G/214 Trade Policy Review 
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16. A second Strategic Energy Review was pres ented on 13 November 2008 with a view to 
giving a new boost to energy security in Europe , further supporting the 20-20-20 climate change 
proposals fostering energy solidarity within Euro pe, and putting forward a new policy on energy 
networks to stimulate investment in more effici ent, low-carbon energy networks. In addition, a 
package of energy efficiency proposals aims to make  energy savings in key areas, such as reinforcing 
energy efficiency legislation on buildings and en ergy-using products, and enhancing the role of 
energy performance certificates as well as inspection reports for heating and air-conditioning systems . 
17. On 10 October 2007, the Commission tabled its pr oposal for an Integrated Maritime Policy 
for the EC, which was welcomed by the Europ ean Council on 14 December 2007. The Integrated 
Maritime Policy is aimed at enhancing Europe's capacity to face the challenges of globalization and 
competitiveness, climate change, degradation of the marine environment, maritime safety and 
security, and energy security and sustainability. This  policy is based on excellence in marine research, 
technology and innovation, and it is foreseen in the Lisbon agenda for jobs and growth, as well as the 
Gothenburg agenda for sustainability . During the first year of its implementation, a good number of 
major new initiatives have been put in place in ar eas as varied as border surveillance, sustainable 
tourism, maritime transport strategy, climate cha nge, marine and maritime research strategy, or 
maritime governance.   
18. The 2002 reform of the Common Fisheries Policy (CFP) included a "Community's Action 
Plan for the eradication of illegal unreported a nd unregulated (IUU) fishing". In October 2007 the 
Commission issued a Communication on "A new strategy for the Community to prevent, deter and 
eliminate IUU fishing" while at the same ti me tabling a proposal for a Council Regulation 
establishing a "Community system to prevent, dete r and eliminate IUU fishing". Council adopted the 
proposed regime in September 2008. The new regime puts in place a system intended to halt the import of fisheries products stemming from IUU fi shing activities into the Community market and 
improves the monitoring of landings in Community ports and of transhipments. The action by the 
Community, in line with the FAO's international plan  of action to fight IUU fishing, is targeted 
primarily at activities falling under the definition of  IUU fishing and causing serious damage to the 
marine environment, the sustainability of fish st ocks and the socio-economic situation of fishermen 
abiding by the rules on conservation and management of fisheries resources. 
(3) E
CONOMIC PERFORMANCE AND CHALLENGES AHEAD  
19. In 2007, the first part of the reference peri od for this review, the EC economy continued the 
strong uptrend of the previous year. Real output grow th in EC-27 reached 2.9% in 2007. It was driven 
primarily by strong private investment and favourab le global demand conditions. A great majority of 
countries that joined the EU in the most recen t enlargement (2004/07), performed well beyond the 
average, achieving growth rates of 6% or more. This  is consistent with their 'catching-up' process in 
terms of GDP per capita. Between 2006 and 2007 ov erall unemployment was brought down by more 
than a percentage point from 8.2% to 7.1%, even  if the range between the lowest and the highest 
recorded unemployment rate in individual Member States remained wide. 
20. EC-27 external merchandise trade (excluding intr a-EC trade) grew both in 2006 and 2007, by 
15.3% and 6% respectively. It reached a value of €2,642 trillion in 2007 wh ich represented 17.2% of 
the total world trade in goods, keeping the EC firmly  in the position of the largest global merchandise 
trader. The EC continued to run a trade deficit of about €153 billion in 2007.  
21. In 2007, the US remained by far the largest market for EC merchandise exports, absorbing 
about 21% of the total. In comparison, Swit zerland and Russia, which came second and third 
respectively among the major European export destin ations, took much smaller shares of between European Communities WT/TPR/G/214 
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7-8% each. However, on the import side, China in  2007 already overtook the United States as the 
main source of goods imports into the EC. It acc ounted for over 16% of all goods imported into the 
EC, while a little less than 13 % of imported merc handise came from the United States, Russia (just 
over 10%), followed by Japan and Switzerland (both approximately 5.5%) completed the list of top 
five EC’s import partners in 2007 which together were the source of as much as half of all its goods 
imports. China’s importance as a destination for EC g oods exports also rose furt her, as reflected in its 
5.8% share.  
22. Developing countries as a group increased their shar e in EC imports to 50% in 2007, entirely 
dominating imports in the textiles (more than three quarters of the total) and agricultural sector (about 
two thirds). The EC has continued to import more  agricultural goods from developing countries than 
all other WTO Members combined.  
23. Its 27% share of the global trade in commerc ial services in 2007 illustrates that the EC 
continues to hold a solid lead position in the global services market. EC services trade performed 
strongly in 2006-07, amounting to €810.6 and €897. 6 billion respectively, representing an increase of 
10.7%. Exports were increasing faster than imports resulting in a surplus of €82.9 billion in 2007. EC 
services trade remained more con centrated towards other industriali sed economies. The United States 
was the main partner on both the supplying and the receiving side, followed by EFTA countries, 
Japan, China, Russia, and Canada. 
24. According to the latest available data, the EC is  the world's biggest investor and the principal 
host. FDI flows, both from and into the EC, were up significantly in 2006-07, from €443.9 to 
€739.1 billion, representing an increase by 66.5%. Excluding intra-EC flows, the EC accounted for 
43.7% of global FDI outflows and was the recipient of 32.4% of the global inward FDI in 2007. The 
main destinations of EC FDI outflows were the United States (€112.6 billion), Canada (€58.3 billion) 
and Switzerland (€34 billion), followed by Russia,  India, and Brazil. On the other hand, EC FDI 
inflows originated from the United States (€144. 5 billion), Switzerland (€28.6 billion) and Japan 
(€17.8 billion) followed by India, Canada and Brazil.   EC’s higher ratios of inward and outward FDI 
to GDP than most other developed countries are an indication of its comparatively greater openness to 
foreign investment and its willingness to invest abroad. 
Outlook following the escalation of the financial crisis  
25. In 2008, the economic picture in the EC, as in the rest of the world, deteriorated significantly. 
In the first half of the year soaring energy pri ces were a main factor behind the weakening growth. 
However, since the autumn of 2008 , it has been the escalating financial crisis that has been taking the 
major toll on the economy. As the financial turm oil hit hard European banking institutions, the 
financing conditions for firms and households tighten ed considerably. This, coupled with pronounced 
housing market corrections in several Member St ates and in the context of a general loss of 
confidence, weakened domestic demand at the same  time when external demand started to fade 
rapidly. Private investment has b een faced with a particularly sharp slowdown. As a result, the EC 
economy contracted by 0.2% in the third quarter of 2008 and ended the year in technical recession. In 
November 2008, the Commission forecast for GDP grow th in 2008 was cut to 1.4% (0.6 percentage 
points lower compared with the spring forecast). For 2009, it forecasted a standstill for the EC 
economies, after a contraction during the winter. Un employment rate is expected to increase over 
2009-10 by about one percentage point to 7.8%. On the positive side, inflation should have peaked in 
2008 and is expected to fall below 2.5% in 2009. A recovery of the economic activity is still expected 
to gather pace in 2010, with the Commission fo recast pointing to a growth rate of 1.1 %.  WT/TPR/G/214 Trade Policy Review 
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26. As regards trade, the data available for the fi rst three quarters of 2008 show a deterioration in 
the EC trade balance due to the acceleration of impor t growth as energy prices escalated in the first 
semester. Export growth held up well but started to weaken in the third quarter, partly due to the 
strength of the Euro. According to the Commissi on's November 2008 forecast, import growth in 2009 
will slow down sharply to 0.9% due to the pronou nced strong fall in energy and commodity prices 
and the weak domestic demand. Exports are also se t to slow down but by a lesser extent (1.5%). 
While the increase of net exports would contribute to  stabilizing GDP rates, an overall growth in trade 
flows - both imports and exports - will be important for the EC in order to reactivate its economy. The 
looming economic downturn we are currently experi encing makes the case for further market opening 
which can create new economic opportu nities and contribute to output creation.  Expansion of trade is 
an essential instrument in overcoming economic stagnation making it imperative to keep global markets open and avoid attempts to resort to protectionism.  
EC response to tackle the financial turmoil and the economic slowdown 
27. The EU reacted to the financial turmoil in a rapid and concerted manne r, involving all levels 
from national governments to the European Centra l Bank (ECB) and the Commission, in order to 
stabilize the financial system as well as to put in place more long-term measures that address the 
shortcomings in financial regulation exposed by th e crisis. In mid October 2008, European leaders at 
an emergency Summit in Paris agreed on a detailed pr ogram of action to be taken by Member States 
to restore liquidity, recapitalize the banking system  (including through govern ment's acquisition of 
shares in banks where appropriate) and protect saver s' deposits. A key element of the package was a 
set of common principles to underpin all national action which aim to ensure not only that it is 
effective and mutually reinforcing but also that gove rnment interventions are consistent with the EC 
legal framework, and do not distort competition or  produce undesirable impacts for other countries 
(including a temporary framework for state aid tackli ng the effects of the credit squeeze on the real 
economy). In turn, the ECB injected large amount of liquidity into the system as well as cutting interest rates while the Commission put forward prop osals for revised rules for the financial sector, on 
issues such as capital requirements, deposit guara ntee schemes, accounting and regulation of credit 
rating agencies. Subsequently, the EC moved on the broader economic front to formulate an equally 
well coordinated and comprehens ive policy package to put the real economy on the path of 
sustainable recovery. Based on a proposal by  the Commission, the European Council on 
12 December 2008 gave its approval to an econo mic recovery plan that combines short-term 
measures, including a targeted and temporary fisc al stimulus, to boost demand and help restore 
confidence with supply-side investment to yield higher growth in the long term. The package amounts 
to a total of €200 billion, equivale nt to 1.5% of the European GDP. 
28. In addition to its own decisive response and gi ven the global character of the crisis, the EC 
has consistently called for and provided leadersh ip for concerted global action to reform the 
international financial system, strengthen the inte rnational crisis management capacity, and address 
the global current account imbalances as well as to stimulate effectively the global economy in the 
short term. The crisis has opened a window of oppor tunity to restructure the global governance 
system, including the Bretton Woods institutions, so that they reflect the geopolitical realities of the 
21st century. Last but not least, recourse to protectio nism must be avoided. The right response to the 
current bleak economic outlook is to create new opportun ities for trade. In the EC's views, the crisis 
we are experiencing only makes stronger the case fo r keeping markets open and more specifically, for 
a rapid and balanced agreement on the DDA. European Communities WT/TPR/G/214 
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III. KEY DEVELOPMENTS IN THE EC'S TRADE POLICY (2007-08) 
(1) INTRODUCTION  
29. The Communication "Global Europe: competing in the world" adopted by the Commission in 
October 2006  marked the launch of the EC Global Eu rope strategy as an important step forward in 
the European trade policy. It argued that trade polic y can make a key contribution to jobs and growth 
in Europe by ensuring that its economy remains open and competitive in international trade. 
30. This agenda has already translated itself into c oncrete initiatives in virtually all areas of trade 
policy: the EC remains fully committed to WT O, including through active participation in DDA 
negotiations; free trade agreements negotiations ar e on-going with South Korea, ASEAN countries, 
and India; the market access strategy has been reviewed based on a new partnership with Member 
States and industry; an in-depth exercise has be en launched with the United States to tackle 
transatlantic obstacles to trade and investment; a vi sion for the EC relationship with China has been 
set out, and as a result a new partnership and coope ration agreement is being negotiated and a High 
Level Trade Mechanism is in place; a list of prior ity countries for intellectual property rights (IPR) 
enforcement has been published and new IPR dialog ues have been set up with these countries; the 
negotiation of the Anti-Counterfeit Trade Agreement, in  which the EC intends to play a key role, will 
set a new international standard for IPR enforcemen t; finally, a comprehensive review of the single 
market has been proposed to widen its regulatory reach outside the borders of the EC and ensure 
European citizens share the benefits of globalization through better standards, lower prices and greater 
choice. At the same time, in parallel with this  competitiveness-based "Global Europe" approach to 
trade policy, the EC has continued to use trade policy as an active tool to support development in 
partner countries and to promote coherence and mu tual supportiveness between trade policy and other 
areas of EU policy. 
(2) WTO 
31. Considering our position as the world's largest exporter, the second largest importer of goods, 
the first trading power in services and the major source and host of world direct investments, the EU 
has a significant interest and also responsibility in  maintaining and strengthening a set of transparent 
and balanced rules for global trade. These considera tions are at the heart of the EC's commitment to 
the WTO and the current negotiations on the Doha Development Agenda and the EC has therefore 
continued to support the WTO as its primary trade policy vehicle since the last TPR in 2007. An improved set of multilateral rules and tariff reduction commitments should boost stability and 
business confidence and act as a deterrent against prot ectionism - a contribution that is only more 
significant in the current context of a global financial and economic crisis. 
32. This commitment to multilateralism was clearly demonstrated in our negotiation activity since 
the last report. Since the suspension of talks in 2006,  the EC has repeatedly underlined the benefits of 
a new agreement. A failure to conclude the Doha  Round would be significantly detrimental to the 
current global economic uncertainty and could cha llenge the credibility of the multilateral trading 
system. The EC has therefore remained flexible to ensure an agreement is re ached. The EC has played 
a constructive and proactive role in all areas of ne gotiation. Though the EC does have some remaining 
areas of difficulty, we accept current negotiating texts as the future frame for moving negotiations 
forward.  
33. The EC has actively contributed to progress in Non-Agricultural Market Access (NAMA) 
negotiations. The EC seeks meaningful liberaliza tion across all non-agricultural products, with 
particular focus on those sectors where high tariffs and non-tariff barriers prevail. Liberalization in WT/TPR/G/214 Trade Policy Review 
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non-agricultural products is key for the development dimension of the round since the large majority 
of exports from developing countries are manufactur ed products. An ambitious outcome in NAMA is 
beneficial also for South-South trade, as 70% of th e duties paid in this sector by developing countries 
(DCs) are paid to other DCs. The EC considers th at WTO Members should contribute to this initiative 
in accordance with their capacity: the most substa ntial contribution should be made by developed 
countries, but the more advanced emerging econom ies among the developing countries should also 
make a meaningful contribution, given both their increasingly important role in the world trading system and the importance of improved access to thei r markets for the development of South-South 
trade to the benefit of other developing countries. Ot her developing countries s hould be able to benefit 
from appropriate flexibility in response to their part icular development needs and challenges. The EC 
considers a good formula vital, and as a complement  it supports sectoral liberalization. In 2002, the 
EC tabled a proposal on tariff reductions for all WTO members on textiles, clothing, and footwear, 
and has more recently sponsored sectoral initiativ es for chemicals, machinery and, gems and 
jewellery. With regard to non-tariff barriers, a clear priority for the EC, a whole series of proposals for 
the elimination of export taxes, as well as for th e elimination of non-tariff barriers for electric and 
electronic products, textiles, clothing and footwear have been tabled. The EC  has been very successful 
with its proposal for a horizontal mechanism to  redress non-tariff barriers without escalating to a 
dispute settlement procedure, so much so that today over 100 WTO Members – mainly DCs – support 
it. 
34. The EC pursues a gradual liberalization of the gl obal trade in services, as liberalization of 
trade in services makes a very important contributio n to economic performance, long term investment 
and development. At the multilateral negotiations , the EC seeks the consolidation of existing 
liberalization as well as new market access for servic es providers. The EC’s approach is respectful of 
national public policy priorities such as public ser vices or cultural diversity and takes into account 
developing and least developed members' priorities. Services liberalization is essential to ensuring an 
overall balance with the two other central negotia ting areas (Agriculture and NAMA). Since the last 
EC TPR, the EC has been heavily involved in the negotiations and has continued to push for 
meaningful progress in this key economic sector. The EC was a driving force behind the 'signalling 
conference' held in Geneva in July 200 8 in the framework of the DDA negotiations. 
35. The EC has played a leading role in the agri cultural negotiations with the firm belief that 
further liberalization of trade in agricultural pro ducts is an important contribution to sustainable 
growth of the global economy. The EC's negotia ting position in the Doha Round is based on the 
reformed Common Agricultural Policy. Conditional on meaningful offers by our negotiating partners 
and a balanced outcome in all areas of the negotia tions, the EC has in particular shown its willingness 
to make substantial cuts in its agricultural tariffs based on a banded system for tariff cuts that will cut 
highest tariffs the most, to reduce trade distor ting subsidies by 70 % and possibly more, and to 
eliminate export refunds by the end of 2013 in tandem with the parallel elimination of other forms of 
export subsidies and establishment of disciplines on all export measures with equivalent effect. 
Furthermore, the EC seeks to facilitate the prot ection of geographical in dications through the 
establishment of a meaningful multilateral register  and the extension of additional protection of 
geographical indications for wines a nd spirits to geographical indicati ons for all products.  The EC in 
the course of 2008 also worked hard with the MF N banana exporting countries with the aim of 
concluding a comprehensive agreemen t on bananas, thus putting an end to this long standing area of 
dispute. Discussions drew upon the "good offices" process conducted by Director General Lamy in 
2008 . Regrettably, it was not possible to conclude an Agreement in the context of the Ministerial 
negotiations in July 2008, but the EC remains co mmitted to finding a lasting solution, acceptable to 
all interested parties, as soon as possible. European Communities WT/TPR/G/214 
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36. The EC has also participated regularly in negotiations on Trade F acilitation and would hope 
to find an agreeable solution that provides enhan ced technical assistance and capacity-building in this 
area and has been active in suggesting solutions acceptable to developing countries on the rules 
governing the aid. The EC will be working to upda te the rule-book that standardizes on a uniformly 
high level customs and border agency rules and pr actice relating to GATT Articles V, VIII and X for 
all WTO members. This streamlining may offer some of the biggest gains from the Doha Round, as it can dramatically reduce the cost of trading across borders. 
37. The EC's approach to the DDA has been to comp lement further market opening with stronger 
rules and disciplines. The EC has been an active participant in the Negotiating Group on Rules. The 
EC favours amendments of the Anti-Dumping Agreem ent so as to clarify existing rules and prevent 
protectionist abuse. Equally, the EC seeks to stre ngthen current rules of the Agreement on Subsidies 
and Countervailing Duties and disciplines on fisheries subsidies. Furthermore, the EC has continued 
to support the further clarification of exis ting rules on regional trade agreements.   
38. The EC maintains its strong commitment to e nvironmental protection and the fight against 
climate change in its trade policy, including through its work in the Committee on Trade and 
Environment and its Special Session; the EC promotes the liberalization of trade in environmental 
goods and services and seeks a clarification of the relationship between WTO and Multilateral 
Environmental Agreements (MEAs). 
39. The WTO Ministerial Meeting in Geneva in July 2008 ended without agreement despite 
progress on several areas including market access co mmitments. The EC worked intensively at the 
July ministerial, and contributed to make progress on many of the 20 gateway issues. The EC stepped 
up efforts to consolidate progress made in July, but  unfortunately a final agreement could not be 
reached in 2008. The EC will continue working tirelessly towards an early resumption of talks. 
40. In parallel with its committed participation in the DDA negotiations, the EC has paid full 
attention and has been engaging actively in all othe r negotiating and non-negotiating work within the 
various WTO bodies and committees. 
41. In a rapidly changing environment that poses ev er new challenges, the importance of full 
compliance and effective implementation of all WTO rules and agreements, including the plurilateral 
accords, cannot be overemphasized. In this regard, th e EC has been working to wards this end at home 
as well as in the relevant WTO committees. In the r ecent period, increased efforts have particularly 
gone into addressing emerging issues in areas such as TBT, SPS, TRIPS, and trade and environment. 
42. In the same vain, the EC has actively participat ed in the WTO's dispute settlement system, as 
a defendant, a complainant and as a respondent, with  preference given to negotiated settlements, 
whenever possible. Where the EC  has been the defendant, it has followed up on Dispute Settlement 
Understanding (DSU) Panel and Appellate Body rulings in a timel y fashion, in full awareness of its 
systemic responsibility as the largest trader in the international system. The EC remains committed to 
reviewing the procedural rules of the Dispute Settle ment Body in the Special Session of the Dispute 
Settlement Body, seeking clarity on a number of issues such as panel composition, sequencing, post-retaliation, transparency, third party right, amicus curae  and timeframes.  
43. In line with our commitment to move towards universality of WTO membership and with the 
aim of ensuring that countries join the WTO on balanced terms, the EC  has been closely and 
constructively involved in the on-going WTO accession processes, not ably those of its neighbouring 
countries and countries from the Western Balkans (w hich are also potential candidates for accession 
to the EC), but also the accession processes of the LDCs. WT/TPR/G/214 Trade Policy Review 
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(3) CREATING THE RIGHT ENVIRONMENT FOR TRADE  
Market Access Strategy 
44. The Market Access Strategy is  an essential component of th e Global Europe Strategy and a 
significant contribution to the Lisbon Agenda for gr owth and jobs. It was initially launched in 1996 
with the purpose to provide a framework for removi ng tariff and non tariff barriers to trade in goods, 
services, intellectual property and investment as well as to supply EC exporters  with information on 
market access conditions in third countries. In April 2007, a renewed Market Access Strategy was 
adopted and it was implemented as "Market Acc ess Partnership", which is built on a stronger 
partnership between Commission services, Member States and business to deliver market access. 
Under this renewed framework, several measures ha ve been taken: establishment of a reinforced 
Market Access Advisory Committee; setting-up of Wo rking Groups in Brussels and of Market Access 
Teams in key export markets; continuation of th e free on-line Market Access Database, including 
information on trade barriers and a new Complaint Register for trade barrier reporting; and new communication tools for increasing transparency. 
Protecting intellectual property rights 
45. Innovation is a vital tool for maintaining comp etitiveness, growth and employment in the EC. 
That is why the Commission has iden tified investing in knowledge and innovation as one of four key 
priorities in the 2008 to 2010 cycle in the renewed Lisbon strategy. A strong industrial property rights system is a driving force for innovation, stimula ting R&D investment and facilitating the transfer of 
knowledge from the laboratory to the marketplace. In this regard, on 16 July 2008 the Commission 
adopted a Communication on an industrial property strategy for Europe. The Communication 
provides a horizontal strategy across the field of  different industrial property rights and includes 
initiatives on enforcement, innovation support for sma ll and medium-sized enterprises, and the quality 
of industrial property rights. It proposes two main courses of action: firstly, helping SMEs to better 
exploit their property righ ts, and secondly, better protecting rights by stepping up the fight against 
counterfeiting and piracy. It complements the 2007 Communication on the patent system, which set 
out a way forward towards the adoption of a Co mmunity patent and an integrated EU-wide 
jurisdiction for patents. These Communications  were supported by a Council Resolution of 
25 September 2008 on a comprehensive EU anti-c ounterfeiting and anti-piracy plan, which requests 
the Commission to take actions. 
46. As regards the enforcement of intellectual propert y rights, the strategy and the actions aim to: 
i) implement customs initiatives to combat counterfe iting and piracy at the borders and outside the 
EC; ii) increase awareness and strengthen cooperation between EC Member States and with stakeholders; iii) improve cross-border enforcement; iv ) enforce IPR in third countries, through closer 
cooperation and regular dialogue; and v) contribu te to the creation of the plurilateral anti-
counterfeiting trade agreement (ACTA). In this context, a European counterfeiting and piracy 
observatory is to be set up.  
47. The EC actively promotes the implementation of  effective standards for IP protection and 
enforcement world-wide. The EC continues its pursuit of the full implementation of the standards set 
out by the WTO TRIPs Agreement. In parallel,  the EC negotiates and implements bilateral 
agreements with partner countries, which include substantial IP provisions. The EC also provides 
technical cooperation to a significant number of devel oping countries in this field. In line with the 
above-mentioned new strategy, the EC is currently  negotiating a proposed anti-counterfeiting trade 
agreement (ACTA). This agreement aims to provi de a high-level international framework that 
improves the enforcement of IPR. This goal is pur sued through three primary components of ACTA: European Communities WT/TPR/G/214 
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(i) international co-operation; (ii) enforcement practices; and (iii) lega l framework. The three 
components represent EC's belief that cooperation am ongst our trading partners is a key element in 
combating the proliferation of IPR infringement s such as counterfeiting and piracy as is the 
establishment of enforcement laws and practices th at promote strong intellectual property protection. 
Trade in energy and raw materials  
48. Securing reliable and undistorted access to raw materials is increasingly becoming an 
important factor for the EC’s competitiveness a nd hence, crucial to the success of the Lisbon 
Partnership for growth and jobs. As enshrined in Gl obal Europe, the goal of the EC's trade policy is an 
open global market completely free of all distortions on trade in energy and raw materials. To this 
end, the Commission proposed the launch of the European Raw Materials Initiative in 
November 2008. This initiative aims at setting up an integrated raw materials strategy based on three 
pillars: (i) ensure access to raw materials from international market s under the same conditions as any 
other country; (ii) set the right framework conditions  within the EC in order to foster sustainable 
supply of raw materials from European sources; and (iii) boost overall resource efficiency and 
promote recycling to reduce the EC’s consumption of primary raw materials and decrease the relative 
import dependence.  
(4) SECTORAL POLICIES  
Agriculture 
49. The 2003/04 reforms marked a new phase in th e European agricultural sector, introducing 
decoupled direct payments via the Single Payment Scheme and strengthening the Rural Development 
policy. Under the Single Payment Scheme aid is no longer linked to producti on (decoupling); farmers 
receive the same amount of aid regardless of what  they produce; as a consequence, production is 
adjusted to suit market demand. The Single Payment Scheme is designed to guarantee stable incomes 
for farmers. In addition to the Single Payment Sc heme, farmers may still receive aid under other 
specific support schemes (direct payments) linked to the area under crops or to production, depending 
on whether the Member State concerned decided to implement such schemes. These other aid 
schemes have only a minor impact on EC agricultur al expenditure. In general, to receive direct 
payments, farmers must meet certain standards conc erning public, animal and plant health, as well as 
the environment and animal welfare. Where farmers fa il to meet those standards, direct payments are 
reduced or even withdrawn completely for the y ear concerned. Finally, farmers may receive support 
within the framework of the 'rural development po licy' which supports protection of the environment 
and rural landscapes; it aims at enhancing growth, j obs and innovation in rural areas. The EC's rural 
development policy is about meeting challenges f acing rural areas, and unlocking their potential by 
maintaining the countryside and offering the pe ople who live and work there with sound economic 
and social environment. 
50. The CAP reform process continued further w ith reforms in the sugar (2006), fruits and 
vegetables (2007), cotton (2006 and 2008), and in th e wine sectors (2008). All these changes reinforce 
the market orientation of the Common Agricultura l Policy and increase the global competitiveness of 
EC agriculture. The EC is among the top agricultural exporters in the world, exporting mainly high value products. It is also the world's biggest agricu ltural importer, remaining by far the largest market 
for developing countries. 
51. On 20 November 2007 the Commission adopted the Communication "Preparing the Health 
Check of the CAP reform". The aim of the 'Health -Check' was not to launch a new major reform, but 
to assess the implementation of the 2003 CAP refo rm, and to introduce those adjustments to the WT/TPR/G/214 Trade Policy Review 
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reform process that were deemed necessary in orde r to further simplify and modernize the policy. In 
May 2008, the Commission proposed a series of  regulations, which formed the basis for a 
compromise agreed by the EU Council of Ministers (Agriculture) on 20 November 2008. Among a range of measures, the Health Check, as agreed by th e EC Agriculture Ministers, abolishes arable set-
aside, gradually increases milk quotas ensuring that they are not extended beyond 2015, and converts 
market intervention into a genuine safety net. With the exception of some animal premia, the 
remaining coupled payments of earlier reforms will  be decoupled and also included in the Single 
Payment Scheme. Furthermore, Member States agreed to reduce the direct payments to farmers and to 
transfer the money saved this way to the Rural Development Fund. These cha nges will allow an even 
better response to the new challenges and opportuniti es, including climate change, the need for better 
water management, the protection of biodivers ity, and the production of green energy.  
Manufacturing 
52. The manufacturing sector is an integral part of  the EC economy and an engine for its growth. 
In 2005, it generated €6,323 billion in turnover, of which 15% were exports, and it employed 
34.6 million people. Specific policies in this sector focus on creating better framework conditions for 
manufacturing industries in the EC so that they attr act investment and job creation, and ensure that 
business can compete openly and fairly. In respec t of EC strict competition policy, measures 
involving state-aid would only be approved if consis tent with the requirements of a level-playing field 
where competitive co mpanies succeed. 
53. In parallel with efforts on the external front to open up international markets, the current 
priority areas of the EC enterprise and industria l policy on the internal front include: promoting 
entrepreneurship, for example through better acc ess to funding and support networks; flexible 
regulatory framework that facilitate s access to the single market; simplification of the regulatory and 
administrative environment; promoting competitiv e performance by encouraging businesses to adapt 
to structural change and maintaining a high and c onsistent level of producti vity growth; promoting 
innovation; and improving skills. Increasing attention al so goes into fostering consistency with energy 
and environmental policies. 
54. EC tariffs for industrial products are among the lo west in the world. The EC average level of 
customs duty protection amounts to around 3.9% on i ndustrial goods, 2.4% in trade-weighted terms 
(taking into account MFN rates).
1 However, the effec tive average industrial tariff is much lower 
because imports from many of the EC's suppliers of industrial products enter the EC preferential rates 
under the terms of bilateral agreements, the Gene ralised System of Preference (GSP) or tariff 
suspension regimes. Furthermore, low non-tariff barr iers also contribute significantly to making the 
EC economy one of the most open to trade. 
Services 
55. Services are the largest economic sector in the EC, accounting overall for close to 70% of its 
GDP and for a similar – and rising – proportion of employment. The EC Treaty establishes the central 
principles governing the internal market for servi ces: the freedom for EC  companies to establish 
themselves in other Member States, and the freedom  to provide services on the territory of another 
Member State other than the one in which they are established. In so far as the market integration for 
services is still less than complete within the EC, significant efforts have been underway to remove 
the remaining regulatory and administrative obstacles to trade in services between Member States 
within the framework provided by the Directive on Services in the Internal Market (the "Services 
Directive" No. 2006/123/EC) adopted in December  2006 and other sector-specific legislation and 
                                                      
1 World Tariff Profiles 2008, WTO (2008). European Communities WT/TPR/G/214 
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initiatives. Since the last TPR of the EC, notable  progress has been achieved particularly in the 
financial services, telecommunications and postal services. 
56. The EC holds firmly the position of the world' s leading exporter and importer of commercial 
services. In 2007, it accounted for over a quarter of global services exports as well as imports. The 
latter reflects the degree of openness of its trade regime in services. The EC and its Member States 
have undertaken major scheduled commitments unde r the GATS in practically all major service 
categories. The EC and its Member States have also entered into commitments on the protocols for the telecommunication and financial services sectors.  MFN exemptions are maintained in compliance 
with Article II. 
57. In recent years, further trade openness in servi ces beyond the multilateral commitments made 
in the WTO has been provided through bilateral negotiations with differe nt countries and regions. 
These have been based on a platform that comb ines trade in services and establishment in both 
services and non-services sectors under one set of provisions and often some provisions on further liberalization in the telecommunications, financ ial services or postal and courier services, which 
enable trade liberalization while preserving each  partner's right to regulate its market.  
(5) B
ILATERAL AND REGIONAL TRADE RELATIONS  
58. In parallel to its firm commitment to the mu ltilateral system, the EC has pursued ambitious 
complementary trade liberalization at both regional and bilateral levels. EC has consistently defined 
its own RTAs in ways that ensure they compleme nt the multilateral trading system, and that make 
them a stepping stone rather than a stumbling block for further multilateral trade opening. In 
accordance with its Global Europe strategy, the EC has decided to aim at a new generation of WTO-
compatible FTAs that extend beyond present agreem ents and build towards future multilateral 
negotiations. The Global Europe Communication ma de the case for launching new competitiveness-
driven, comprehensive FTAs pursuing far-reaching tr ade liberalization. The EC thus seeks FTAs 
which are WTO compatible, comprehensive in scope and deep in terms of level of commitment, in 
both goods and services. Particular emphasis is pl aced on tackling regulatory and non-tariff obstacles 
to trade. FTAs also address areas such as intell ectual property rights, inv estment and government 
procurement. They are, moreover, designed to promote sustainable development, and therefore 
include high environmental and labour standards. Apart from trade agreements that fall under the 
Global Europe Strategy, bilateral and regional agr eements with less developed countries and regions 
seek to respond to their development needs, to support their sustainable development and their 
integration into the global trading system. 
Regional trade agreements 
59. Negotiations on RTAs between the EC and the Republic of Korea and members of ASEAN 
were launched in May 2007. Negotia tions with India were launched in June 2007. Several rounds of 
negotiations have taken place, ai ming to conclude fully-fledged FTAs, covering trade in goods and 
services, rules, as well as legal and institutional issues.   Negotiations on EC- Korea have made 
substantial headway and may conclude in the upcoming months. Meanwhile, EC-India and 
EC-ASEAN negotiations continue to make progress but at a slower pace.  
60. The EC launched negotiations for a region-to-regi on Association Agreement with the Andean 
Community (CAN) and with Central American c ountries (Costa Rica, El Salvador, Guatemala, 
Honduras, and Nicaragua) in 2007. These agreemen ts comprise of three components: political 
dialogue, cooperation and trade. They aim to re inforce the political and economic stability of each 
region, foster sustainable development, enhan ce regional integration and establish an ambitious, WT/TPR/G/214 Trade Policy Review 
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WTO-compatible free trade area.  Negotiations with  the CAN were opened in June 2007, but were 
interrupted after three rounds in June 2008 due to apparent divergences among the CAN members on 
certain trade issues. In turn, negotiations with Central American countries continue making progress 
with a view to concluding negotiations in 2009.  Negotiations for an EC-Mercosur Association 
Agreement are currently at a standstill, pending th e satisfactory conclusion of the DDA negotiations. 
61. The EC and the African, Caribbean and Pacific countries (ACP) have been working together 
in order to put in place Economic Partnership Agreements (EPAs). These development friendly 
agreements create a new WTO-compatible basis fo r EC-ACP trade relations, following the expiration 
of the Cotonou trade preferences and their waiv er in December 2007. EPAs aim at progressively 
removing barriers to trade and enha ncing cooperation in all areas re lated to trade, in support of 
development and poverty eradication in the ACP coun tries. They are intended to provide a transparent 
and predictable framework for trade in goods and services to facilitate re gional trade as well as 
enhanced investment flows. Accompanying trade-rela ted assistance will help to mitigate adjustment 
costs and strengthen the competitiveness of the ACP. Since fostering regional integration is at the heart of the ACP's own development strategy, the EC has been negotiating region-to-region 
agreements. By December 2007, negotiations were  concluded on a comprehensive EPA with the 
Caribbean region as well as on a number of interi m agreements covering trade in goods with other 
ACP regions and countries. The CARIFORUM-EC EPA was signed on 15 October 2008 and it 
represents a milestone as regards North-South trad e and development agreements covering services, 
investment and trade-related rules. Negotiations  towards full EPAs with the other regions are on-
going. 
62. Trade relations between the EC and the ne ighbouring Mediterranean countries are governed 
by the Euro-Mediterranean Partnership. The objectiv e of a fully fledged Euro-Mediterranean regional 
FTA by 2010 remains the key trade component of  the Euro-Mediterranean economic relations. The 
EC has concluded Association Agreements with ev ery Mediterranean country involved in the Euro-
Mediterranean Partnership, except for Syria, with whom the Agreement is expected to be concluded 
in 2009.  Since the last EC TPR, there have been on -going negotiations in the fields of services and 
establishment, agriculture and dispute settleme nt.  The Seventh Euromed Trade Ministerial 
conference in July 2008 gave new impetus to furthe r strengthening trade and investment relations up 
to and beyond 2010. The EC la unched negotiations for a Framew ork Agreement with Libya on 
13 November 2008. This agreement represents a m ilestone in EC-Libya relations. It includes 
negotiations for an FTA covering trade in goods, trade in services and establishment, as well as 
regulatory cooperation. The EC continues to negotia te a comprehensive FTA with the States of the 
Gulf Cooperation Council, on a regional basis. Si gnificant progress has been made on a good number 
of chapters, pending the final resolution of some outstanding issues.  
63. Turkey is linked to the EC through a customs union since 1995 and it is a candidate country 
since 1999. Turkey also participates in the Euro-Med iterranean Partnership. The EC's relations with 
the Western Balkans are governed by the Stabilis ation and Association Process. There are two 
Stabilisation and Association Agreements (SAA) in force, with the former Yugoslav Republic of 
Macedonia and Croatia. SAAs were signed as well with  Albania, Montenegro, Serbia, and Bosnia and 
Herzegovina. As part of the broader SAA, FTAs have  entered into force with Albania, Montenegro, 
and Bosnia and Herzegovina, whic h place particular focus on liberalizing trade in goods, aligning 
rules with EC practice and protecting intellectual property. 
64. Russia is one of the EC's key trading partners, trade relations with which have been governed 
by a Partnership and Cooperation Agreement si nce 1997. Negotiations for a new Agreement were 
launched at the EU-Russia summit in June 2008 a nd the first round of negotiations took place in 
July 2008. This agreement envisages strengthening  and deepening trade and economic relations, as European Communities WT/TPR/G/214 
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soon as Russia becomes a WTO Member. To this end,  the EC continues to strongly support Russia in 
its accession process. On 18 February 2008, the EC launched FTA negotiations with Ukraine.  This 
FTA will form part of the New Enhanced Agreem ent which aims for closer economic and political 
cooperation between both neighbour ing economies. The EC is linked to Armenia, Azerbaijan, 
Georgia, Kazakhstan, Kyrgyzstan, Moldova, and Uzbekistan through Cooperation agreements. Two 
feasibility studies have been completed on a futu re free trade agreement with Georgia and with 
Armenia, and another one has been launched for an FTA with Moldova. 
Other important bilateral activity 
65. The US remains to be EC's largest trading a nd investment partner. Both economies continue 
to strengthen economic ties both at the WTO and th rough bilateral channels. At the EC-US Summit 
on 30 April 2007, the Framework for Advancing Tr ansatlantic Economic In tegration between the 
United States and the EC was signed. This framework  included the establishment of the Transatlantic 
Economic Council (TEC) which oversees, guides and accelerates the implementation of work designed to closer integrate the EC and the Unite d States economies and identify key areas for further 
convergence. This initiative has offered a useful platform for regular cooperation in a number of 
areas, namely barriers to investment, innovation a nd technological development, intellectual property 
and other regulatory issues. EC-Canada relations have gone through a particularly intensive phase 
over 2007 and 2008, notably with regard to the co llaborative work, now completed, on a joint study 
assessing the impact of a closer economic partnershi p. In October 2008, it was agreed to undertake a 
review of the form and content of a possible new b ilateral economic agreement. In parallel, substantial 
progress has been made on an ambitious EC-Canad a air transport agreement, designed to produce 
significant economic growth and create new jobs by  expanding investment opportunities in the sector 
and reinforcing regulatory cooperation. The ne w agreement was initialled in November 2008.  
66. China continues to be the second largest trading partner for the EC. In line with the objectives 
set out in Global Europe, negotiations on a comp rehensive Partnership a nd Cooperation Agreement 
(PCA) started in January 2007. The High Level Economic and Trade Dialogue Mechanism was 
launched in April 2008 with a view to strengtheni ng dialogue between the European Commission and 
the State Council of China. This mechanism aims at  addressing issues of mutual concern, especially in 
the areas of investment, market access and intellect ual property rights protection, and other strategic 
issues related to trade. Japan is a strategic partne r of the EC. Bilateral m eetings are based on the 2001 
Action Plan, which sets out four main objectiv es for cooperation, including fostering trade. 
Furthermore, the EC and Japan actively particip ate in each others' reform processes through the 
Regulatory Reform Dialogue.  
Autonomous preferences 
67. As described above, many developing countries are linked to the EC on a contractual basis. In 
addition to this, or, for those developing countries who do not have agreement with the EC, the EC's 
Generalised System of Preferences (GSP) offers  generous access to 176 developing countries and 
territories to the EC's market on an autonomous basis. A new Regulation was adopted on 22 July 2008, extending the GSP scheme for the period from 1 January 2009 to 31 December 2011. 
(6) S
USTAINABILITY AND DEVELOPMENT  
(i) Trade and sustainable development  
68. In the EC, mainstreaming sustainability with its  social and environmental dimension in all 
relevant policies is a basic requirement set out in  the Treaty, guided since 2006 by the renewed EU 
Sustainable Development Strategy. Given the wide ranging effects that trade policies and agreements WT/TPR/G/214 Trade Policy Review 
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can have on the economy, employment, social cohesi on, and environment, the EC is concerned with 
ensuring that all its trade measures are supportive of  sustainable development both at home and in our 
partner countries.  
69. One basic tool to ensure coherence between tr ade liberalization and sustainable development 
developed by the EC, are the trade Sustainability Impact Assessments (SIAs). These studies, carried 
out by independent contractors once trade negotia tions are already on-going, assess the potential 
economic, social and environmental impacts of trad e agreements in the EC as well as its negotiating 
partners. They use a broad set of indicators and in volve wide consultation of stakeholders, such as 
private sector associations, trade unions, NGOs and civil society at large.  Their purpose is to inform 
policy makers on the optimal form of trade opening to be undertaken, as well as on possible 
accompanying measures to help maximise the po sitive effects and/or mitigate any negative 
consequences of the future agreements. The SIAs ar e thus not intended to question the desirability of 
trade liberalization per se, but rather  to enable that it is done in a sustainable way. The EC currently 
applies SIAs to all major multilateral, regional or bilateral trade negotiations. Over the period 2007-08 
the budget for the SIA programme amounted to more than €1.5 million.  
70. The EC grants additional autonomous trade preferences under the GSP+ arrangement as an 
incentive to vulnerable developing countries to ratif y and effectively implement internationally agreed 
standards on sustainable development and good g overnance. Building on this, the EC has included 
provisions and commitments on implementing soci al and environmental standards and creating 
mechanisms for wider stakeholder involvement in its  contractual bilateral ag reements, be they PCAs, 
FTAs or EPAs and irrespective of whether the partners  are developed countries or not. In parallel, the 
EC continues to be devoted to multilateral acti on to ensure that trade rules are supportive of 
sustainable development. The EC’s interest in multilateral solutions in this regard has been 
demonstrated, inter alia , in its ambitious stance in the DDA ne gotiations on Trade and Environment 
and on the social sustainability side in its support fo r appropriate special and differential treatment for 
developing countries across the key negotiating areas of  the DDA as well as its calls for increased 
cooperation between the WTO and the ILO.  
71. Over the last years, climate change has emer ged as the single most important sustainable 
development challenge facing policy makers, requiring also a careful c onsideration of the interaction 
between climate and trade policies with a view to en suring that they reinforce each other. The EC has 
been in the frontline in the fight against climate change both at the domestic level as well as on the 
international stage. Domestically, the EC has de veloped a robust policy with some of the most 
aggressive carbon emissions reduction targets unde rpinned by a strengthened Emissions Trading 
System (EU ETS). In parallel, on an international le vel, the EC is a leading player in the climate 
change negotiations under the Un ited Nations Framework Conventi on on Climate Change (UNFCCC) 
to agree on a new post-Kyoto climate regime. 
72. There is a high awareness within the EC on th e need to safeguard and support such direct 
efforts to mitigate and adapt to climate change with  complementary trade policies. At the global level, 
the most important contribution of trade policy coul d be the liberalization of trade in environmental 
good and services, which is why the EC has been par ticularly persistent in seeking a concrete and 
substantive result under this part of the DDA nego tiations. While prioritizing the multilateral path, the 
EC has also been pursuing early liberalization of  environmental goods and services in its FTAs under 
negotiation. Further trade policy tools that may be si gnificant with regard to climate change objectives 
and which the EC is examining closely include cer tification of natural r esource based products and 
voluntary/private labeling. European Communities WT/TPR/G/214 
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(ii) Trade and development  
73. The EC has continued to be guided by the 2005 European Consensus on Development and to 
pay great attention to integrating development con cerns in its trade policy at the multilateral and 
regional/bilateral level as well as in our autonomous trade initiatives. The EC and its Member States 
are actively engaged in the provision of Aid for Tr ade. In international discussions as well as through 
its own practice of trade agreements and developm ent cooperation, the EC has also been a leading 
advocate of the importance of making trade a cent ral tenant of developm ent strategies, and of 
enhancing coherence between trade and othe r policies for sustainable development. 
74. At the multilateral level, in the context of  the DDA, the EC has continued to engage 
constructively with developing countries to reach su itable solutions to their particular realities and 
needs, and consistent with the principle of diffe rentiation. EC proposals across all negotiating areas 
have consistently considered the development aspect  and often include explicit provisions for special 
and differential treatment. Beyond the DDA and the WTO, the EC has participated actively in 
discussions on trade and development in other inte rnational fora such as the United Nations and 
UNCTAD.   
75. In its bilateral relations, the EC has consiste ntly taken due consideration of development 
aspects. EU seeks to respond to th e needs of developing countries, to support their sustainable 
development and their integration into the global trading system. Efforts to assist the developing 
countries in achieving growth, alleviating poverty a nd improving social equality within a framework 
of sustainable development have to be undertaken through a range of policy tracks, including trade 
policy.  In this context, the EC continues to be fully committed to put trade at the service of 
development. The EPAs are a case in point. Making  trade work for development means weighing the 
needs of every developing economy carefully, and tailoring policies that reflect different vulnerabilities - and different actual and potential st rengths. Progressive market opening and stronger 
multilateral rules can support development and also  stimulate domestic reform process, including 
diversification and creation of new trade opportunities.  
76. The EC's GSP scheme has continued to be the mo st comprehensive in scope of all developed-
countries autonomous preference regimes, covering 6,400 products originating in 176 developing 
countries and economies in transition. Beyond the standard GSP, an even more generous "GSP+" 
arrangement has been available since 2006 to de veloping countries that qualify as vulnerable, 
provided that they also ratify and effectively impl ement internationally agreed  standards in the areas 
of human and labour rights, environment and good go vernance. Meanwhile, all LDCs have continued 
to be included in the "Everything but Arms" initia tive (EBA), the EC’s duty free and quota free 
(DFQF) market access scheme for LDCs. With the cu rrent coverage of the EBA, the EC is already 
fully implementing the goal of DFQF market acces s for products from the LDCs established at the 
Hong Kong Ministerial in December 2005. Rice a nd sugar imports from LDCs, which are currently 
still subject to duty-free tariff quotas, will be fully liberalized by October 2009. 
77. In 2007, the value of preferential imports under these three GSP tracks continued on an 
upward trend. The overall worth of imported goods u nder the scheme totalled €57 billion, which is an 
increase of 12% over 2006 and represents a nominal dut y saving for exporters in beneficiary countries 
of €2.5 billion. GSP+ beneficiaries saw a rise in th eir exports to the EC of 10% in 2007 on top of a 
15% rise in 2006.  GSP+ preferences are also of real economic  value to the beneficiary countries:  in 
2007 there was € 4.7 billion worth of trade under this scheme, with a nominal duty loss (compared to 
standard GSP rates) for the EU of over €357 million.   WT/TPR/G/214 Trade Policy Review 
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78. For the 2009-2011 period, a new GSP regulation was adopted on 22 July 2008. While this 
regulation ensures a continuity of the guiding principles, it introduces a number of technical 
adjustments, either to si mplify the language or to take account of evolutions in relevant trade data 
over the most recent period. The net effect of these adjustments made in January 2009 represents 
additional preferences to beneficiaries of an approxi mate net value of at least €160 million in terms of 
nominal duty loss to the EC. 
79. The EC and its Member States have been among the leading players within the Aid for Trade 
agenda and moving decisively to put Aid for Trad e into practice. Based on the recommendations of 
the WTO Aid for Trade Task Force, the EC adopted a joint Aid for Trade Strategy in 
15 October 2007, through which it intends to honour its pledge on increasing Trade Related 
Assistance (TRA) made at the Hong Kong WTO Ministerial, as well as achieve broader improvements in both the quality and quantity of its Ai d for Trade. The EU has put in place a range of 
specific activities to implement the Strategy, includin g as regards active participation in work in WTO 
and OECD to improve monitoring of globa l Aid for Trade flows and effectiveness. 
80. The European Commission, using Community fu nds, is the world’s largest donor of trade-
related assistance, having provided €940 million of such support in 2006. The Member States in this 
field contributed an additional €640 million. Tota l EU TRA in 2006 therefore was €1.6 billion. The 
EU is on track to meeting its Hong Kong pledge to  provide €2 billion in such assistance by 2010 (€1 
billion each by the Commission and Member States).  The EU is also the largest provider world-wide 
of Aid for Trade, providing €7.3 billion in 2006 (€2. 6 billion by the Commission, €4.7 billion by its 
Member States).  Provisional data available at the time of writing of this report indicates that TRA 
provided by the European Commission was already above €1 billion in 2007 while total Aid for Trade 
provided by the Commission increased to more than €3.26 billion. It should be stressed that these 
increases, delivered via existing channels of devel opment cooperation, did not come at the expense of 
other sectors but rather in the context of a growing overall Official Development Assistance (ODA). In terms of activities financed in the trade area, th e EC assisted developing countries across the whole 
spectrum of trade policy and regulation and trade development categories, while making sure that the 
distribution of available funds corresponded as clo se as possible to their own priorities and demands. 
For instance, a substantial and growing part of TRA was allocated for technical assistance to help 
beneficiaries meet European technical and phytosanitary standards. 
81. On the multilateral side of Aid for Trade, the EC and several Member States have been 
closely engaged in work on enhancing the Inte grated Framework on Trade Related Technical 
Assistance for the LDCs. With the enhancement pro cess now largely completed, they remain involved 
as important donors, in some cases as donor facilitato rs on the ground and by participating in the 
Enhanced Integrated Framework (EIF) governing body . Furthermore, there is a commitment to using 
the EIF as a guiding tool for bilateral assistance, in  accordance with the joint Aid for Trade Strategy. 
82. Finally, the European Commission has also been regularly improving and updating its Export 
Helpdesk. This is an online, user-friendly service to  facilitate market access for developing countries 
to the EC. The database includes relevant informat ion required by exporters interested in supplying 
the EC markets, such as, inter alia,  import requirements, import tari ffs, customs documents, rules of 
origin and trade statistics. It also serves as an in terface between importers a nd exporters. The statistics 
on the use of this free on-line information service demonstrates its growing importance. From 2004 
(the year of its launch) to 2008, the number of  daily hits increased from 1,500 to more than 
10,000 hits. European Communities WT/TPR/G/214 
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IV. LOOKING FORWARD 
83. The EC's highest trade priority remains th e conclusion of the Doha Round.  It is 
unquestionable that an ambitious, balanced and co mprehensive outcome will deliver substantial new 
trade opportunities for all WTO members. This woul d be the right response to the global economic 
crisis which only strengthens the case for keeping ma rkets open for trade and avoiding reversals to a 
protectionist stance.  
84. The EC will continue to play its leadership  role in promoting trade liberalization and 
developing a trading system of benefit to all. In  this regard, the EC will continue to participate 
actively in the work of the WTO, while pursuing regional trade agreements which are catalyst for 
multilateral liberalization, encouraging sustainabl e development and supporting the advancement and 
integration of developing countries in the multilatera l scene. This is at the heart of the "Global 
Europe" policy framework.  
85. The EC is determined to continue upholding th e multilateral trading system, which is a global 
public good that will help us lay the framework fo r long-term economic prosperity and stability. The 
EC believes that the transparency pillar is of utmo st importance for the good functioning of the WTO, 
while the dispute settlement pillar remains central for ensuring stability to the global trading system. 
 
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