WT/TPR/S/214 Trade Policy Review 
Page 34 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. The EC's trade regime has rema ined largely unchanged since its  last TPR in 2007.  The EC 
continues to improve customs administration in the Community through, inter alia , the 
implementation of various communication and inform ation exchange systems to support the creation 
of a paperless (electronic) customs environment.  The Modernized Customs Code aims to, inter alia , 
streamline and simplify customs procedures, it is sch eduled to be implemented by mid 2009 once its 
implementing provisions have been adopted. 
2. The EC's common tariff comprises ad valorem  (89.9%) and non- ad valorem  (10.1%) rates.  
The non- ad valorem  duties are specific (6.5% of all tariff lines), compound (2.8%), and mixed or 
variable (0.8%).  Non- ad valorem  rates apply on agricultural goods (WTO definition), many of which 
are also subject to tariff quotas.  The average app lied MFN tariff rate has decreased slightly, to 6.7% 
from 6.9%, with rates ranging from 0% to 604.3% (an ad valorem  equivalent calculated using data as 
at 15 January 2009) on isoglucose (HS 1702.40.10);  agricultural products still attract the highest 
rates.  The EC's wide network of preferential trad e arrangements, together with the large number of 
countries eligible for unilateral preferences, has conf ined the application of its exclusively MFN tariff 
to nine WTO Members, which accounted for some 28% of its total merchandise imports in 2007.  
Imports and locally produced goods (and services) are subject to VAT at the same rates;  these rates 
are not harmonized among EC Member States, alt hough minimum rates are set at the Community 
level.  Excise duties are levied on specific impor ted and locally produced goods such as alcohol and 
alcoholic beverages, manufactured tobacco, a nd fuels;  these rates are not harmonized. 
3. Import prohibitions and surveillance are maintained on, inter alia , security, technical, 
sanitary, phytosanitary, and environmental grounds.   The EC also controls/restricts trade under 
treaties and international conventions to which it is a signatory .  Import licences are required where 
products are subject to quantitative restrictions , tariff quotas, safeguard measures or for import 
monitoring and surveillance purposes.  During th e period under review the only non-agricultural 
products subject to quantitative rest rictions have been certain textile  products.  No changes were made 
to the EC legislation on trade remedies.  The EC  remains a leading user of contingency trade 
remedies; nonetheless, the number of contingency measures notified by the EC to the WTO has decreased since 2005. 
4. Harmonization of technical requirements (incl uding technical regulations, standards, and 
sanitary and phytosanitary measures) among Member  States is still ongoing.  There have been no 
major changes to the EC's regimes on export prohibiti ons, restriction, or licensing since its previous 
TPR.  An export authorization or licence is re quired for cultural goods and certain agricultural 
products, and for the control of exports of dual-us e items and technology.  The EC continues to 
provide export subsidies to a number of agricultu ral products.  Assistance and subsidies programmes 
(both at Community level and by Member States) notified to the WTO can be largely grouped as 
structural actions; the Common Agriculture Po licy (CAP); industrial programmes; and other 
programmes including assistance to SMEs, to joint- ventures, and to fisheries and aquaculture.  The 
two largest areas of expenditure in 2003-04 were agriculture and structural operations, which 
accounted for 44% and 33% of the EC's financial commitments respectively. 
5. Legislation on public procurement was enacted in  2004 to make the legal framework simpler, 
and more flexible, and to adpat it to the electronic era.  There have been no major changes to the 
competition regime in the EC.  The intellectua l property rights regime is governed by both 
Community-wide legislation and legislation of Memb er States.  The EC has an extensive body of European Communities WT/TPR/S/214 
 Page 35 
 
 
intellectual property legislation, which is often amended to harmonize protection in the Community 
and ensure a better functioning of the internal market .  A new legal framework for patent protection is 
expected to simplify the process of seeking protecti on.  Trade mark and plant varieties regulations 
have been amended, while legisl ation related to the term of pr otection for copyrights and related 
rights, and rental and lending rights has been cons olidated into a single law.  New regulations have 
been enacted to protect geographical indications for wines and spirits. 
(2) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures 
6. The Customs Code (CC) and its implementing provisions continue to govern the EC's 
customs procedures1, hence the procedures to import (and expor t) have not undergone major changes 
since the previous Review of the EC in 2007.  The CC applies uniformly throughout the customs territory of the Community to imports and exports of goods.  According to the CC, goods brought into 
the customs territory can be placed under various customs regimes.
2  A customs declaration is 
required except for goods to be placed into a free zone or free warehouses.  The customs declaration 
must, under normal procedures, be made in writing or  through a data processi ng technique and consist 
of the Single Administrative Document, accompanie d by pertinent/required documents (e.g. invoices, 
certificates of origin, health certificates, cer tificates of conformity and authenticity).3  Automatic 
import licences, required for statistical purposes for certain, mainly agricultural products, must be 
submitted with the import declaration (section (vi)(a)). 
7. The CC and its implementing provisions (CCIP) have undergone several revisions since their 
adoption in 1992 and 1993 respectively,  mainly to address security concerns4, and to take into account 
the accession of new Members.5  EC Regulation No. 648/2005 introduced a number of measures 
aimed at tightening security for goods entering or leaving the Community.  As a result, in 2007, a common risk management framework was put in place;   in 2008, the provisions for the Authorised 
Economic Operators (AEO) were implemented
6;  as of 1 July 2009, traders will have to provide 
customs authorities with electronic advance information on imports a nd exports.  Amendments to the 
CCIP also include the introduction of a comput erized export control system (section 3(i)).7 
8. In 2005, the Commission proposed the replacement of the 1992 CC with a Modernized 
Customs Code (MCC).8  The MCC Regulation entered into force on 24 June 2008.9  However, the 
MCC will only apply once its implementing provisions have been adopted;  these are scheduled to 
                                                      
1 Council Regulation (EEC) No. 2913/92, 12 October 1992 establishing the Community Customs Code 
(OJ L 302, 19 October 1992), applied since 1 January 1994, and Commission Regulation (EEC) No. 2454/93, 2 July 1993 laying down provisions for the implementation of the CC, as amended respectively. 
2 The customs regimes include the release of goods for free circulation; transit; customs warehousing; 
inward processing; processing under customs control; temporary admission; outward processing; exportation;  free zone or free warehouse; and re-exportation from th e customs territory of the Community.  The goods may 
also be destroyed or abandoned to the Exchequer. 
3 Article 61 of the Community Customs Code, Council Regulation (EEC) No. 2913/92, 
12 October 1992. 
4 Regulation (EC) No. 648/2005, OJ L 117, 4 May 2005. 
5 Information document  TAXUD/ 1661/2006 EN, 7 December 2006. 
6 The AEO is aimed at balancing the tighter security requirements and facilitating procedures for 
compliant traders. 
7 Commission Regulation (EC) No. 1875/20 06, OJ L 360, 19 December 2006. 
8 The proposal for replacement of the CC by the MCC is contained in COM(2005) 608 final, 
30 November 2005. 
9 Regulation (EC) No. 450/2008, OJ L 145, 4 June 2008. WT/TPR/S/214 Trade Policy Review 
Page 36 
 
 
enter into force on 24 June 2009 at the earliest, for implementation by 24 June 2013 at the latest.  The 
MCC provides for the computeriza tion of all customs formalities10;  streamlines and simplifies 
customs procedures;  aims to ensure the ba lance between "supply chain security" and trade 
facilitation,  and the harmonized application of customs controls by Member States based on a 
common risk management framework and an electronic system for its implementation;  promotes the 
concept of "centralized clearance"11;  and provides for the introduction of the single-window and 
one-stop-shop concepts.  The MCC is expected to facilitate trade and reduce costs by up to 
€2.5 billion per year.12 
9. Under the current CC (and the MCC), all imports n eed to be covered by an electronic customs 
declaration under the appropriate customs regime  and all accompanying/supporting documents have 
to be submitted electronically.  Goods are rele ased as soon as the customs declaration has been 
verified or accepted without verification.  Any decision taken by the customs authorities may be 
appealed.  Appeals are first taken to the customs authorities or a judicial authority or any other body designated for that purpose by the Member State,  and if necessary, subsequently, to a higher 
independent body, which may be a judicial au thority or an equivalent specialized body. 
10. Other initiatives to modernize and improve cu stoms procedures include the launching of 
Customs 2013, a new action programme;  a new cust oms blueprint initiative;  and the adoption of a 
decision on a paperless environment for customs and trade (Box III.1). 
11. The EC Customs Code, which is binding on a ll Member States and takes precedence over any 
conflicting national law, provides the basis for achie ving uniformity in customs matters; the Code and 
its implementing provisions lay down the rights and obligations of the customs authorities.  National 
customs legislation applies only where there is no EC regulation or in cases where the EC law allows 
for further specificity at the national level.  Nevertheless, the uniform implementation of common 
customs procedures by EC Member States has been a challenge, with limited interoperability between 
systems.
13  The administration by Member States of various EC customs laws and regulations, 
particularly in the area of valuation and classification, has raised concerns14, and this has been the 
subject of a WTO dispute.15  The EC is applying a mechanism that promotes the uniform tariff 
classification for goods imported into or exported from its customs territory, the Binding Tariff Information (BTI) system.  The BTI contains in formation on the tariff classification of a specific 
product that an economic operator intends to import or export. It is issued at the request of economic 
operators
16, by the customs authorities of individual Member States17, and is valid throughout the 
                                                      
10 Electronic declarations and proce ssing, already widely in use, beco me the rule in the MCC.  In 
exceptional circumstances, customs au thorities may accept paper-based entr y summary declarations provided 
that the same level of risk management is applied. Supporting documents are allowed to be lodged using an electronic data-processing technique. 
11 The centralized clearance allows  traders to l odge their electronic customs declarations at the 
customs office of the place where they are established and hold their records, irrespec tive of the entry or exit 
points of the goods.  
12 Europa Press Release MEMO/08/107, 22 February  2008.  Viewed at: http://europa.eu/rapid/pressRe 
leasesAction.do?reference=MEMO/08/107&form at=HTML&aged=0&language=EN&guiLanguage=en 
[16 June 2008]. 
13 The legal base for the classification is the Combined Nomenclature. Council Regulation (EEC) 
No. 2658/87, 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, 
OJ L 256, 7 September 1987. 
14 "Joint European Business, Trade and Industry Letter on EC Regulation 648/2005 to the Ministers of 
the Competitiveness Council", Brussels, June 2007.  Viewed at:  http://www.e ucommittee.be/Pops/2007/ 
CUST_JointIndustryLetter_Reg_648_220607.pdf. [16 June 2008]. 
15 WTO documents series WT/DS315. 
16 For the specific application form see European Co mmission online information. Viewed at: http://ec. European Communities WT/TPR/S/214 
 Page 37 
 
 
EC18, regardless of the Member State that issued it.   Ultimately, the uniform application of the EC 
customs legislation is ensured. 
12. According to recent audit by the European Cour t of Auditors, the BTI system is well-designed 
and adequately managed.19  However, the Auditors’ report highlights certain weaknesses:  
(i) difficulty for the Customs Code Committee, to  which classification issues between different 
Member States are referred for resolution, to adopt  measures ensuring the uniform application of the 
nomenclature within the time limits foreseen by the le gislation;  (ii) lack of specific legislative time 
limits to conclude consultations w ith other Member States concerning divergent BTI; and (iii) delays 
in updating the database.  As a result, various recommendations were made with respect to the 
resolution of classification disputes in the Committee, and the implementation of the BTI20;  the 
Commission has outlined the measures that s hould be taken to improve the BTI system.21 
13. During the period under review, cooperation with the EC's largest trading partners on customs 
matters has continued and emphasis was put on achieving mutual recognition of security standards.  A new customs cooperation and mutual assistance agr eement on customs matters was signed with Japan 
on 30 January 2008
22, and entered into force on 1 February 2 008;  and customs cooperation mainly in 
supply chain security, has increased with China.23  Negotiations with the United States are ongoing, 
with the aim of signing a mutual recognition agr eement on customs matters including supply chain 
security programmes  by 2009.  Customs cooperation has continued with Canada, India, Korea, and 
Hong Kong, China.  In June 2007, the World Cu stoms Organization (WCO) Council granted the EC 
rights and obligations akin to membership. 
                                                                                                                                                                     
europa.eu/taxation_customs/resource/documents/bti_application_form-en.pdf. 
17 The latest list of competent authorities was published in OJ C 126, 23 May 2008, p. 11. 
18 A BTI is generally valid for six years from the da te of issue unless it ceases to be valid earlier for 
specific reasons.  Towards the end of the validity period , an economic operator may wish to apply for a new BTI 
if he intends to continue importing or  exporting the product concerned. A total of 51,411 BTIs were issued in 
the EC in 2007,  46,106 in 2006 and 41,590 in 2005. For further background information concerning BTI, see European Commission online information. Viewed at: http://ec.europa.eu/taxation_customs/customs/customs_ 
duties/tariff_aspects/classification_goods/index_en.htm. 
19 Special Report No. 2/2008 concerning Binding Tariff Information, European Court of Auditors, 
Luxembourg, March 2008. OJ C 103, 24 April 2008, p. 1.  Viewed at: http ://eca.europa.eu/portal/pls/portal/docs 
/1/1279627.PDF [17 November 2008].  
20 Special Report No. 2/2008 concerning Binding Tariff Information, European Court of Auditors, 
Luxembourg, March 2008.  Viewed at: http://eca. europa.eu/portal/pls/portal/docs/1/1279627.PDF 
[17 November 2008]. 
21 For further details on recommendations made and on the measures to be taken, see:  Special Report 
No. 2/2008 concerning Binding Tariff Information, OJ C 103, 24 April 2008. 
22 OJ L 62, 6 March 2008. 
23 EXME07/20.11, 20 November 2007 and IP/08/166, 31 January 2008.  Viewed at:  
http://europa.eu/rapid/pressReleasesAction.do?refer ence=MEX/07/1120&format=HTML&aged=0&language=e
n&guiLanguage=en; and http://europa.eu/rapid/pressR eleasesAction.do?reference=IP/08/166&format=HTML 
&aged=0&language=en&guiLanguage=en [16 June 2008]. WT/TPR/S/214 Trade Policy Review 
Page 38 
 
 
 
Box III.1:  The EC's new cu stoms initiatives, 2007-08 
 
Customs 2013, a new action programme for customs, was adopted in 2007 to succeed the Customs 2007 
Programme.  Implemented since 1 January 2008, Customs 2013 supports the new security policy initiatives, the implementation of the Modernized Customs Code, the introduction of a pan-European paperless customs 
environment, and will also contribute to the development and management of the trans-European IT customs 
systems.    
In 2008, the European Commission published a revised set of Customs Blueprints.  These provide practical 
guidelines laying down criteria, based on the EC's best practice in 22 key areas, against which customs administrations can measure their own operational capacity vis-à-vis the blueprint standards and possibly plan 
reforms if there are gaps.
  
 A decision on a paperless environment for customs and trade was adopted at the beginning of 2008 pursuant to 
the Lisbon Agenda commitments and the pan-European e-Government action.  In particular, the decision aims 
to increase the competitiveness of companies doing busi ness in Europe.  It sets the basic framework and time 
limits for electronic customs proj ects.  The Commission and Member St ates are responsible for setting up 
secure, integrated, inter-op erable and accessible electroni c customs systems.  In addition, a common customs 
portal and integrated tariff environment are to be established and made operational by 2011 and 2013 
respectively.  Single access points should enable econ omic operators to use a single interface to lodge 
electronic customs declarations.    
In 2008, the European Commission launched a debate on the future evolution of the Customs Union.  The 
relevant Communication, which outlines common strategic objectives, enabling customs to evolve in line with 
international trade, has been adopted by the Council,  and has also been the basis for a Resolution of the 
European Parliament. 
 The EC has introduced a proposal to amendment the Customs Convention on the International Transport of 
goods covered by TIR carnets (TIR Convention 1975). 
 
Source : Decision No. 624/2007/EC of the European Parliament and the Council, 23 May 2007, OJ L 154, 14 June 2007; 
 IP/07/531;  European Commission online informati on, "Modernising customs procedures:  European 
 Commission welcomes adoption of Customs 2013 Progr amme by Council" (Customs 2003), 19 April 2007.  
 Viewed at: http://ec.europa.eu/taxation_customs /common/archive/news/2007/index_en.htm.  Customs 
 Blueprints: Pathways to modern customs, 18 April 2008. Viewed at:  
 http://ec.europa.eu/taxa tion_customs/resources/documen ts/common/publicat ions/infodocs/customs/customsblue 
 print_en.pdf [16 June 2008];  Decision No. 2004/387/EC , 21 April 2004 (OJ L 144, 30 April 2004, as corrected 
 by OJ L 181, 18 May 2004); Communication from the Comm ission to the Council, the European Parliament;  
 and Communication from the Commission to the Council, the European Parliament and the European Economic 
 and Social Committee – Strategy for the evolution of the Customs Union – COM(2008) 169 final, 1 April 2008. 
(ii) Tariffs 
(a) Common customs MFN tariff 
14. The EC 2008 tariff nomenclature, known as th e Combined Nomenclature, is based on the 
2007 HS System.  The EC's 2008 common tariff contains 9,699 lines at the eight-digit level.  The EC continues to apply several types of tariff:  ad valorem  rates, which are the most widely used (89.9%); 
followed by specific (6.5%); compound (2.9%);  a lternate duties with a minimum and a maximum 
(0.8%); and "per range tariffs", which vary according to given c.i.f. "entry price" ranges (0.6%).  In 
addition, seasonal tariffs apply to certain products, mainly agricultu ral goods.  Some agricultural 
products are also subject to tariff quotas (Chapter IV).  Ad valorem  tariffs are applied on the c.i.f. 
customs value. European Communities WT/TPR/S/214 
 Page 39 
 
 
15. The ad valorem  equivalents (AVEs) of non- ad valorem  tariffs have been calculated using 
average unit prices or "entry prices" of imports, where they exist.24  Entry prices apply to some 
agricultural products (e.g. tomatoes, cucumbers, c ourgettes, citrus fruits, grapes, apples, pears, 
apricots, peaches, cherries, plums, fruit juices, a nd certain wines) and vary according to the season.25  
Some 9,557 tariff lines were used in the tariff anal ysis, i.e. 142 tariff lines, with no import or entry 
price, are excluded.  The tariff lines excluded from the analysis are for agricultural products.  The 
results of the tariff analysis may only be taken as an estimate due to:  the exclusion of some non- ad 
valorem  (including variable) tariff lines mainly for agricultural goods;  the other shortcomings of 
specific duties, including the disparate levels of protection afforded to similar goods;  and to the 
exclusion (by the EC) of the GATT civil aircraft ag reement from the tariff.  The EC's specific tariffs 
are generally based on the weight of imported goods, with higher impact on relatively heavy and 
cheap goods than on expensive and light wei ght products within the same tariff line.26 Accordingly, 
the nominal tariff protection for the products (as measured by the ad valorem  equivalents) remains 
unstable, i.e. it varies with import prices, including fluctuations of exchange rates. 
16. The simple average applied MFN tariff is estim ated at 6.7% for 2008 (6.9% in 2006), with 
rates ranging from zero, to 604.3% (an ad valorem  equivalent) on isoglucose (HS 1702 40 10) 
(Tables III.1 and AIII.1).  Some 81.8% of all lines have rates ranging from zero to 10% (included) 
(Chart III.1).  The zero tariff rate applies to 25.3% of all lines (18.1% of WTO agricultural tariff lines 
and 27.1% of non-agricultural tariff lines), including wood, pulp, paper and furniture (75.4% of total 
tariff lines from the product group);  metals (53.9% );  and mineral products, precious stones, and 
precious metals (41.1%) (Table III.2).  Some 9.6% of  the lines bear rates of  less than 2% (nuisance 
rates) (Table III.1). 
17. The coefficient of variation of 2.1 (2 in 2006) depicts a wide dispersion of the rates, 
essentially in agriculture, mainly due to the imposition of non- ad valorem  tariffs and of high tariffs of 
17.9%, on average, on agricultural products (WTO de finition) and generally lower rates of 4.1% on 
average on non-agricultural products.  However, using the ISIC (Revision 2) definition, the difference 
between the average tariff for agri culture (9.3%) and for manufacturing (6.7%) is not so pronounced;  
mining and quarrying bear the lowest protection (0.2 %) (Table III.2).  All tariff rates above 100% 
relate to agricultural products (WTO definition) , and average protection above 30% continues to 
apply mostly to agricultural products (meat, dairy products, cereals, sugars) (HS Chapters 02, 04, 10 
and 17) (Table AIII.1).27 
                                                      
24 The AVEs are calculated as the ratio  of specific duties to import unit values, estimated by the ratio of 
import to import quantities/volumes.  The import data ar e from EUROSTAT (EU-27) as of 15 January 2009. In 
the absence of imports of certain items in 2007, the lines were not used in the analysis.  Moreover, for compound or alternate tariffs, only the ad valorem  components are used for the analysis. 
25 Annex 2 of Commission Regulation (EC) No. 1214/2007, 20 September 2007 amending Annex I to 
Council regulations (EEC) No. 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff. 
26 For details on the shortcomings of specific duties, see WTO (2000), Box III.1. 
27 The sole non-agricultural product with tariff protection higher than 30% is cinematographic products 
(HS 3706/10/99) with tariff protection of 40.2%. WT/TPR/S/214 Trade Policy Review 
Page 40 
 
 
Table III.1 
Structure of EC MFN tariffs, 2006 and 2008  
(Per cent) 
  2006 2008 U.R. 
1.   Bound tariff lines (% of all tariff lines) 100.0 100.0 100.0 
2.   Duty-free tariff lines (% of all tariff lines) 26.0 25.3 24.4 
3.   Non- ad valorem  tariffs (% of all tariff lines) 10.0 10.1 10.1 
4.   Tariff quotas (% of all tariff lines) 3.4 4.8 4.8 
5.   Non- ad valorem  tariffs with no AVEs (% of all tariff lines) 2.1 2.7 2.7 
6.   Simple average tariff rate 6.9 6.7 6.8 
 Agricultural products (WTO  definition) 18.6 17.9 17.9 
 Non-agricultural products (WTO definition)a 4.0 4.1 4.2 
 Agriculture, hunting, forestry and fishing (ISIC 1) 10.9 9.3 9.6 
 Mining and quarrying (ISIC 2) 0.3 0.2 0.3 
 Manufacturing (ISIC 3) 6.8 6.7 6.8 
7   Domestic tariff "spikes" (% of all tariff lines)b 5.6 5.3 5.6 
8.   International tariff "peaks" (% of all tariff lines)c 9.0 8.4 8.7 
9.   Overall standard deviati on of applied rates 14.0 14.1 14.2 
10. "Nuisance" applied rates (% of all tariff lines)d 9.4 9.6 9.7 
a Excluding petroleum. 
b Domestic tariff spikes are defined as those exceeding three times the overall simple average applied rate (indicator 6). 
c International tariff peaks are defined as those exceeding 15%. 
d Nuisance rates are those greater than zero, but less than or equal to 2%. 
Note: Calculations include AVEs, as available, ba sed on 2007 data in Eurostat (as of 15 January 2009) 
Source: WTO Secretariat estim ates, based on OJ L 286, 31 October 2007. 
(1.5)(0.6)(25.3)(56.5)
(11.4)
(2.4)(0.8)
01,0002,0003,0004,0005,0006,000
0 >0-10 >10-20 >20-30 >30-40 >40-50 >500102030405060708090100
The figures in brackets correspond to the percentage of total lines. They may not add to 100% due to non- ad valorem 
duties.
WTO Secretariat estimates, based on OJ L 286, 31 October 2007.Chart III.1
Breakdown of applied MFN tariff rates, 2008
Number of tariff lines
Note:
Sourc e:Percentage
Number of lines 
Cumulated percentage (right-hand scale)
 
 European Communities WT/TPR/S/214 
 Page 41 
 
 
Table III.2 
Summary analysis of EC MFN tariff, 2008  
 No. of linesa Applied 2008 rates 
Analysis   
No. of lines 
used  
Simple avg. 
tariff (%)  
Range 
tariff (%) Std-dev 
(%) CV Share of 
duty free 
(%) 
Total 9,699 9,557 6.7 0-604.3 14.1 2.1 25.3 
By WTO definitionb              
Agriculture 2,000 1,858 17.9 0-604.3 28.4 1.6 18.1 
  -Live animals and products thereof 323 253 24.3 0-204.2 28.2 1.2 13.6 
  -Dairy products 151 113 35.2 0-189.7 33.1 0.9 0.0 
  -Coffee and  tea, cocoa, sugar, etc. 293 284 17.5 0-604.3 38.7 2.2 12.3 
  -Cut flowers and plants 54 54 4.6 0-19.2 4.4 1.0 38.9 
  -Fruit and vegetables 428 428 15.6 0-280.9 20.4 1.3 7.0 
  -Grains 55 55 49.4 0-138.2 34.5 0.7 9.1 
  - Oil seeds, fats, oils and their products 164 163 8.2 0-161.9 19.6 2.4 33.5 
  -Beverages and spirits 271 255 17.6 0-243.1 29.6 1.7 20.3 
  -Tobacco 30 30 28.6 10-74.9 17.4 0.6 0.0 
  -Other agricultural products 231 223 7.2 0-91.6 15.8 2.2 50.2 
Non-agriculture (excluding petroleum) 7,658 7,658 4.1 0-40.2 4.1 1.0 27.1 
Fish and fishery products 386 386 10.6 0-26 6.5 0.6 13.7 
Mineral products, precious stones and 
precious metals 514 514 2.5 0-12 3.0 1.2 41.4 
Metals 1,022 1,022 1.7 0-10 2.2 1.3 53.9 
Chemicals and photographic supp lies 1,396 1,396 4.4 0-40.2 2.9 0.7 25.1 
Leather, rubber, footwear, and travel 
goods 285 285 4.8 0-17 4.7 1.0 18.9 
Wood, pulp, paper and furniture 456 456 1.1 0-10 2.2 2.0 75.4 
Textiles and clothing 1, 234 1,234 8.0 0-14.5 3.2 0.4 1.6 
Transport equipment 269 269 4.8 0-22 5.0 1.0 11.9 
Non-electric machinery 932 932 1.7 0-9.7 1.3 0.8 21.0 
Electric machinery 501 501 3.0 0-14 3.5 1.1 19.0 
Non-agricultural articles n.e.s. 663 663 2.5 0-13.9 2.0 0.8 25.2 
By ISIC sectorc        
Agriculture, hunting, forestry and fishing 565  559 9.3 0-139.7 13.8 1.5 34.5 
Mining and quarrying 124  124 0.2 0-8 1.2 4.9 93.5 
Manufacturing 9,009  8,873 6.7 0-604.3 14.2 2.1 23.7 
By stage of processing        
Raw materials 1,177 1,168 8.1 0-139.7 15.2 1.9 44.6 
Semi-processed products 2,903 2,897 5.0 0-604.3 13.2 2.6 31.0 
Fully-processed products 5,619 5,492 7.3 0-280.9 14.2 2.0 18.3 
a Total number of lines is listed. Tariff rates are based on a lower frequency (number of lines), since lines with no ad valorem  
equivalents may be  excluded.  
b 41 tariff lines on petroleum products are not taken into account. c International Standard Industrial Classification (Rev.2).   Electricity, gas and water are excluded (1 tariff line). 
Note: CV = coefficient of variation. 
Source : WTO Secretariat estim ates, based on OJ L 286, 31 October 2007. 
18. The EC tariff continues to show mixed escalation,  with average rates of 8.1% for the first 
stage of processing, 5.0% on semi-processed goods a nd 7.3% on fully processed goods.  At a more 
disaggregate (ISIC (Revision 2) two-digit) level,  the tariff structure has also remained broadly 
unchanged since the last Review of the EC, with mixed escalation in food, beverages and tobacco; 
wood products;  and chemicals and plastics;  a nd positive escalation in textiles and apparel;  non-
metallic minerals;  and fabricated metal industries (including machinery and equipment) (Table III.2 
and Chart III.2). 
19. The EC bound all its tariff lines in the WT O (Schedule CXL, which has not yet been 
certified) (Table III.1); 98.6% of tariff lines have the same applie d (autonomous) and bound WT/TPR/S/214 Trade Policy Review 
Page 42 
 
 
(conventional) rates.  Where the applied (autonom ous) and the bound tariffs differ, the applied 
(autonomous) duty shall apply if it is lower (current ly applies to:  cinematographic film HS 3706 10 
99 and 3706 90 99).28   
0.05.010.015.020.025.0Chart III.2
Tariff escalation by ISIC 2-digit industry, 2008
Sourc e: WTO Secretariat estimates, based on OJ L 286, 31 October 2007.
All products
Food,
beverages
Textiles,
apparel
Wood products
Paper, printing
Chemicals ,
plastics
Non-metalli c
minera l
products
Basic meta l
products
Fabricated meta l
products
Other
manufacturin gNOT APPLICABLEAgriculture
MiningRaw materials Semi-processed Fully-processedNOT APPLICABLEPer cent
 
 
(b) Tariff preferences  
20. The Common Customs Code provides for the possibility of granting preferential tariffs 
unilaterally, or on a reciprocal basis, through tr ade agreements (Chapter II (5)(i)).  Under its 
preferential trade agreements (PTAs), the EC grants , on a reciprocal basis, duty-free access to imports 
of nearly all non-agricultural goods (with some excep tions, e.g. textiles and aluminium products);  and 
various tariff preferences (including preferentia l tariff quotas) on selected agricultural products.  
Tariff preferences are also provided under the EC's non-reciprocal preferential arrangements 
(Chapter II (5)(i)).   
                                                      
28 "The customs duties applicable to imported goods...shall be the conventional duties....  When 
autonomous rates of duty are lower than the conventiona l rates of duty, the autono mous ... are applicable." 
General rules concerning duties, Commission Regulation (EC) No. 1214/2007, OJ  L 286, 31 October 2007. European Communities WT/TPR/S/214 
 Page 43 
 
 
(iii) Other charges  
(a) Value-added tax (VAT)29 
21. During the period under review there have been several changes to the main VAT legislation 
at the EC level.  Since 1 January 2007, the ma in EC legislation on the VAT has been Directive 
2006/112/EC, which replaced the Sixth VAT Directive of 1977, as amended over the years, and 
brought together various provisions into a single piece of legislation.30  In addition, two other 
Directives amending Directive 2006/112/EC, one relate d to the place of supply of services, and the 
other on VAT refunds, were adopted by the EU Council of Ministers on 12 February 2008.31  These 
amendments were to ensure that the VAT on servi ces would accrue to the country where consumption 
took place, and established new procedures for VAT refunds to persons es tablished in another 
Member State.  Under the new rules on the place of supply of services, as of 1 January 2010 business-to-business supply of services will be taxed where the customer is situated, rather than where the 
supplier is located;  for business-to-consumer supply, the place of taxation will continue to be where 
the supplier is established.  Howeve r, exceptions apply to reflect the principle of taxation at the place 
of consumption.
32  Also as of 1 January 2010, the procedure for reimbursement of VAT, incurred by 
EC businesses in Member States where they are not  established, will be replaced by a new fully 
electronic procedure, to facilitate quicker refund.  Businesses will be paid inte rest if Member States 
are late in making refunds.  A new regulation on ad ministrative cooperation is aimed at improving the 
exchange of information between Member Stat es, which would be necessary to operate  the 
legislation.33 
22. The VAT base is largely harmonized across the EC, but rates, derogations, and procedures 
differ across Member States.  VAT on imports is assessed on the c.i.f value plus duties if any.  VAT on domestic products is assessed on the sale price.  The new legislation continues to allow for 
derogations in implementation at the national level, w ith variations in VAT application within the EC.  
On the basis of Article 395 of Directive 2006/112/E C, Member States may be authorized to derogate 
from the common VAT rules in order to simplify the procedure for charging the tax or to prevent 
certain types of tax evasion or avoidance.
34  The VAT rates applied continue to vary across Member 
States (Table III.3).  There appear to have been a few changes in the VAT rates levied since 2007: the 
"super-reduced" rate charged in Ireland has increased;   and a reduced rate has been introduced in 
Slovakia.  In addition, some Member States are still allowed to apply the zero rate of VAT to certain 
groups of goods (Table AIII.2).  Exports of goods from the Community to third countries are also 
zero-rated, as are intra-Community supplies of goods dispatched from one Member State to a taxable 
person (or registered trader) in another. 
                                                      
29 European Commission online information. Viewed at: http://ec.europa.eu/taxation_customs/taxation 
/vat/key_documents/legislat ion_recently_adopted/index_en. htm [4 August 2008]. 
30 Official Journal , Volume 49, 11 December 2007 .  Viewed at:  http://eur-
lex.europa.eu/JOHtml.do?uri=OJ:L:2006:347:SOM:en:HTML [4 August 2008]. 
31 Council Directive 2008/8/EC, 12 February 2008, Official Journal , 20 February 2008;  and Council 
Directive 2008/9/EC, 12 February 2008, Official Journal , 20 February 2008. 
32 These exceptions concern services such as restaura nt and catering services (as from 2010), the hiring 
of means of transport (2010/13); cultural, artistic, sportin g, scientific, educational, and entertainment services 
(2011), and telecommunications, broadcasting, and el ectronic services supplie d to consumers (2015). 
33 Council Regulation (EC) No. 143/2008, 12 February 2008.  
34 Derogations are authorized under: Council Decision s tacitly approved under the former Article 27(4) 
of Directive 77/388/EEC;  special measures that were ap plied by the Member States before 1 January 1977 and 
notified to the Commission before 1 January 1978 under Article 394, are still in fo rce.  In addition, on 
24 July 2006, the Council agreed through Council Directiv e 2006/69/EC to give all Member States the option of 
applying special rules to simplify the application of VAT or to counter tax avoidance and evasion. WT/TPR/S/214 Trade Policy Review 
Page 44 
 
 
23. The EC legislation allows for reimbursement of VAT incurred by businesses established in 
another Member State or outside the EC given the di fferences in the rate am ongst the Member States.  
In addition, in order to preserve Member States' VA T receipts in the country of consumption, rather 
than of sale, several special sc hemes continue to apply under the EC VAT system, to sales to 
consumers in another Member State.  These include:  intra-EC sales of new means of transport, 
distance selling, supplies to non-taxable legal pe rsons (e.g., government departments) and exempt 
taxable persons (e.g. small shopkeepers).  Howeve r, some of these exceptions apply as long as the 
transaction remains below a threshold defined by each Member State, subject to certain limits set out 
in EC legislation (Table III.4).35  Zero-rated goods and services vary according to Member country 
(Table AIII.2). 
Table III.3 
National VAT rates in the EC, 2006 and 2008 
 2006 2008 
  Rates   Rates   
Country Super 
Reduced  Reduced Standard Parking Super 
Reduced Reduced Standard Parking  
Austria  n.a. 10.0 20.0 12.0 n.a. 10.0 20.0 12.0 
Belgium n.a. 6.0 21.0 12.0 n.a. 6.0/12.0 21.0 12.0 
Bulgaria n.a. n.a. n.a. n.a. n.a. 7.0 20.0 n.a. 
Cyprus  n.a. 5.0/8.0 15.0 n.a. n.a. 5.0/8.0 15.0 n.a. 
Czech Republic  n.a. 5.0 19. 0 n.a. n.a. 5.0 19.0 n.a. 
Denmark  n.a. n.a. 25.0 n.a. n.a. n.a. 25.0 n.a. 
Estonia  n.a. 5.0 18.0 n.a. n.a. 5.0 18.0 n.a. 
Finland n.a. 8.0/17.0 22.0 n.a. n.a. 8.0/17.0 22.0 n.a. 
France  2.1 5.5 19.6 n.a. 2.1 5.5 19.6 n.a. 
Germany  n.a. 7.0 16.0 n.a. n.a. 7.0 19.0 n.a. 
Greece  4.5 9.0 19.0 n. a. 4.5 9.0 19.0 n.a. 
Hungary  n.a. 5.0 20.0 13.5 n.a. 5.0 20.0 n.a. 
Ireland  4.4 13.5 21.0 n.a. 4.8 13.5 21.0 13.5 
Italy  4.0 10.0 20.0 n.a. 4.0 10.0 20.0 n.a. 
Latvia  n.a. 5.0 18.0 n.a. n.a. 5.0 18.0 n.a. 
Lithuania  n.a. 5.0/9.0 18.0 12.0 n.a. 5.0/9.0 18.0 n.a. 
Luxembourg 3.0 6.0/12.0 15.0 12.0 3.0 6.0/12.0 15.0 12.0 
Malta  n.a. 5.0 18.0 n.a. n.a. 5.0 18.0 n.a. 
Netherlands  n.a. 6.0 19.0 n.a. n.a. 6.0 19.0 n.a. 
Poland  3.0 7.0 22.0 n.a. 3.0 7.0 22.0 n.a. 
Portugal  n.a. 5.0/12.0 21.0 n.a. n.a. 5.0/12.0 21.0 12.0 
Romania n.a. n.a. n.a. n.a. n.a. 9.0 19.0 n.a. 
Slovenia  n.a. 8.5 20.0 n.a. n.a. 8.5 20.0 n.a. 
Slovakia  n.a. n.a. 19.0 n.a. n.a. 10.0 19.0 n.a. 
Spain  4.0 7.0 16.0 n.a. 4.0 7.0 16.0 n.a. 
Sweden n.a. 6.0/12.0 25.0 n.a. n.a. 6.0/12.0 25.0 n.a. 
United Kingdom n.a. 5.0 17.5 n.a. n.a. 5.0 17.5 n.a. 
n.a. Not applicable. 
Note: Further reductions are applied in some regions of Austria, Greece, France, Italy, and Portugal.  
Source : European Commission (2008), VAT rates applied in the Member States of the European Community .  Viewed at: 
http://ec.europa.eu/taxati on_customs/resources/documents /taxation/vat/how_vat_works /rates/vat_rates_en.pdf. 
                                                      
35 For full details on exemptions by Members see European Commission online information, 
Derogations in force .  Viewed at: http://ec.europa.eu/taxation_ customs/resources/documents/taxation/vat/key_ 
documents/table_derogations/vat_index_derogations_en.pdf [8 September 2008]. European Communities WT/TPR/S/214 
 Page 45 
 
 
Table III.4 
VAT exemption thresholds in the EC, 2008 
(Euros and national currency) 
 Acquisitions by taxable 
personsa  Distance selling Small enterprisesb 
Country  National 
currency Euros  National 
currency Euros  
National 
currency Euros 
Austria   11,000   100,000   30,000 
Belgium   11,200   35,000   5,580 
Bulgaria 20,000 BGN 10,226  70,000 BGN 35,791  50,000 BGN 25,565 
Cyprus   10,251   35,000    15,600 
Czech Republic  326,000 CZK 
12,265  1,000,000 CZK 37,622   1,000,000 
CZK 37,622 
Denmark  80,000 DKK 10, 729  280,000 DKK 37,551   50,000 DKK 6,705 
Estonia  160,000 EEK 10,226  550,000 EEK 35,151   250,000 EEK 15,978 
Finland  10,000   35,000    8,500 
France   
10,000    
100,000    76,300 
27,000 
Germany   12,500   100,000    17,500 
Greece   
10,000    
35,000    10,000 
5,000 
Hungary  2,500,000 
HUF 9,850  8,800,000 HUF 34,671   5,000,000 
HUF 19,700 
Ireland   
41,000    
35,000    70,000 
35,000 
Italy   8,263   27,889    30,000 
Latvia  7,000 LVL 10,043  24,000 LVL 34,433   10,000 LVL 14,347 
Lithuania  35,000 LTL 10,137  125,000 LTL 36,203   100,000 LTL 28,962 
Luxembourg  10,000   100,000    10,000 
Malta   
10,000    
 
35,000    35,000 
24,000 14,000 
Netherlands   10,000   100,000    n.a. 
Poland  50,000 PLN 13,883  160,000 PLN 44,426   50,000 PLN 13,883 
Portugal   
10,000    
35,000    9,976 
12,470 
Romania 33,800 RON 9,367  118,000 RON 32,702   118,000 RON 32,702 
Slovenia   10,000   35,000    25,000 
Slovakia  420,000 SKK 
12,500  1,500,000 SKK 44,642   1,500,000 
SKK 44,642 
Spain   10,000   35,000    n.a.  
Sweden 90,000 SEK 9,526  320,000 SEK 33,869   n.a. n.a.  
United Kingdom  
64,000 GBP 87,098   
70,000 GBP  
95,264    
64,000 GBP  
87,098 
n.a. Not applicable. 
a See Article 3(2)(a) of Directive 2006/112/EC, as amended. 
b See Articles 284 to 287 of Directive 2006/112/EC, as amended.  This scheme is reserved for persons established within the 
territory of the country. 
Source : Council Directive 2006/112/EC, 28 November 2006. 
24. Imports and domestic supplies of certain goods for a specific purpose are exempt from VAT 
(e.g. goods for fuelling and provisioning of fighting ship s; the repair, maintenance, charter and hire of 
certain vessels; the supply of goods for fuelling and provisioning aircraft used by airlines on 
international routes).  Imports of, inter alia , tobacco, alcoholic drinks, perfumes for personal use by 
travelers entering the EC are exempt from VAT within certain limits.36  In the case of tobacco 
products, VAT and duty exemptions are subject to tw o different limits:  the higher limit applies to air 
travelers;  and Member States may choose which lim it to apply to all other travelers (Table III.5) 
                                                      
36 Council Directive 2007/7 4/EC, 20 December 2007. WT/TPR/S/214 Trade Policy Review 
Page 46 
 
 
Table III.5  
VAT and excise duty exemptions on imports (for personal use) from non-EC countries, 2008 
Excise product Amount 
Tobacco productsa, b Each Member State decides on the limit applicable: 
-  200 cigarettes or 40 cigarettesc; 
-  100 cigarillos or 20 cigarillosc;  
-  50 cigars or 10 cigarsc;  
-  250 grams of tobacco or 50 g smoking tobaccoc 
Alcoholic beverages -  a total of 1 litre of  alcohol and alcoholic beverages of an 
    alcoholic strength exceedi ng 22% vol, or undenatured ethyl 
    alcohol of 80% vol and overd; or  
-  a total of 2 litres of alcoho lic beverages of an alcoholic 
   strength not exceeding 22% vold  
-  a total of 4 litres of still wine, and  
-  16 litres of beer (only for VAT and excise duty) 
Fuel -  In any means of motor tran sport, the fuel contained in the 
   standard tank; and  
-  a quantity of fuel not exceeding 10 litres contained in a 
    portable container.  
Other goods (including perfume, coffee, tea,  electronic devices, etc.) -  Up to a va lue of €430 for air and sea travellers  
-  Up to value of €300 for other travellers  
The value on an individual item may not be split up.  The value of personal luggage (i.e . suitcases) and medicinal products 
for the personal needs of the traveller do not count.  
Member States may reduce the above limits to €150 for travellers 
under 15 years.  
a Allowances concerning tobacco and alcohol do not appl y in the case of travellers under 17 years of age. 
b Cigarillos are cigars of a maximum weight of 3 grams each. 
c Each amount represents 100% of the tota l allowance for tobacco products and any combination of those products must not 
 exceed 100%. Example: 100 cigarettes + 50 cigarillos = total allowance. d Each of these amounts represents 100% of the total allowan ce for alcohol and alcoholic beverages (see Article 9 (2) of 
 Directive 2007/74/EC). 
Source:  Information provided by the authorities. 
(b) Excise duties 
25. During the period under review, there has been  no major change to the EC excise duty 
system.  Excise duties continue to apply to alco holic beverages, tobacco products, and energy 
products (e.g. petrol and gasoline, electricity, natu ral gas, coal and coke).  All EC Members apply 
excise duties;  and the revenue accrues entirely to the Member States.   
26. For a given group of products, the taxation principles and base (i.e. the way the excise duty is 
specific and calculated, for instance per hl; per degr ee of alcohol; or per 1,000 pieces) and the scope 
of possible exemptions have been harmonized.  For each type of product, the minimum rates above which Member States can freely fix their own rates are established in the legislation.
37  Tobacco 
products and alcoholic beverages fo r personal use brought into the EC, are exempt from the duties (up 
to specific quantity).38 
                                                      
37 For more details on the different duty rates by Member State, see European Commission online 
information. Viewed at: http://ec.europa.eu/taxation_ customs/resource/documents/taxation/excise_duties/alcoho 
lic_beverages/rates/excise_duties-part_I_alcohol-en.pdf; http://ec.europa.eu/taxation_customs/resources/docu 
ments/excise_duties-part_I II_tobacco-en.pdf; an d http://ec.europa.eu /taxation_customs/resources/documents/ta 
xation/excise_duties/energy_products/rates/excise_duties-part_II_energy_products-en.pdf. 
38 For more details, see European Commission online information, "Travel Europe". Viewed at:  
http://ec.europa.eu/taxation_customs/common/travellers/w ithin_eu/index_en.htm;  and http://europa.eu/abc/tra 
vel/shop/index_en.htm#tobacco [27 November 2008]. European Communities WT/TPR/S/214 
 Page 47 
 
 
27. The base, rates, and structures of the excise dut y on alcohol and alcoholic beverages are set 
by Council Directive 92/83/EEC.  The directive defines the categories of alcohol and alcoholic beverages (i.e. beer, wine, fermen ted beverages other than beer and wine (for example, cider and 
perry), intermediate products (for example, port and sh erry) and ethyl alcohol (i.e. spirit drinks)).  The 
Directive also includes special provisions on reduced rates for small breweries and distilleries, for 
products with low levels of alcohol, and products of specifi c geographical regions.  Council 
Directive 92/84/EEC sets the minimum excise duty rates on alcohol and al coholic beverages.  
According to the Directive, the Commission shoul d review these minimum rates periodically.  In 
2006, the Commission made a proposal regarding the minimum rates, to take into account inflation 
since the directives were adopted in 1992.  No agreement has yet been reached amongst the Member 
States in this regard. 
28. Council Directive 95/59/EC of 27 November 1995 lays down the general principles 
governing taxation of manufactured tobacco (e.g. ciga rettes, fine cut tobacco intended for the rolling 
of cigarettes, cigars and cigarillos, other smoking tobacco).  In addition, Council Directive 92/79/EEC 
of 19 October 1992 (on cigarettes) and Counc il Directive 92/80/EEC of 19 October 1992 (on 
manufactured tobacco other than cigarettes) deal with the harmonization of the basis to apply the 
excise duties in all Member States, and set minimum excise duties.
39  The Commission made a 
proposal for amending these three Directives.  The proposal for a new Directive suggests a number of 
amendments to modernize and simplify the existing rules, make them more transparent and better 
integrate public health concerns.  The proposal is currently under negotiation in the Council and EP.   
29. The energy tax in the EC is regulated by Directive 2003/96/EC, in force since 1 January 2004.  
This Directive widened the scope of the EC's mi nimum rate system for energy products (previously 
limited to mineral oils), to all energy products includ ing coal, natural gas, and electricity.  As in the 
other instances, this legislation sets minimum excise duty rates, and is aimed at diminishing the differences in taxation at national levels and providing for a harmonized  taxation structure. It allows 
for  transitional periods for some Member States to comply with EU minimum rates (Chapter IV).
40 
30. On 14 February 2008, the European Commission adopted a proposal aimed at strengthening 
the fight against tax fraud and removing certain unnecessary obstacles to the movement of excisable goods within the EC. The proposal replaces the Exci se Directive of 1992 (Directive 92/12/EEC), and 
describes, in particular, the procedures for move ments of excise goods between Member States;  it 
will provide a legal framework for the use of a co mputerized system to monitor the movement of 
excisable goods under excise duty suspension (i.e. for which no excise duty has been paid yet).  This 
Excise Movement Control System (EMCS), which s hould be operational as of April 2010, will help to 
better tackle excise fraud by creating a faster and more efficient means of information exchange between excise authorities. 
(iv) Duty and tax exemptions and concessions  
31. There have been no major changes to the EC regime on duty and tax concessions during the 
period under review.  The customs code of the EC provides for customs duty relief on account of 
                                                     
 
39 These Directives were last amended by Council Directive 2002/10/EC, 12 February 2002 amending 
Directives 92/79/EEC, 92/80/EEC and 95/59/EC as regards the structure and rates of excise duty applied on manufactured tobacco;  and by Council Directive 2 003/117/EC, 5 December 2003, authorizing the French 
Republic to prolong the application of lower rates of excise duty to tobacco products released for consumption 
in Corsica, from 1 January 2003 to 31 December 2009. 
40 Council Directive 2003/96/EC, 27 October 2003. WT/TPR/S/214 Trade Policy Review 
Page 48 
 
 
special circumstances41; on re-imported Community goods; on products taken from the sea by 
Member State vessels;  and on goods re-exported af ter inward processing under the drawback scheme, 
or goods re-exported because they are defective, or do not comply with the terms of the contract.42 
Also under the CC, customs duties are suspended unde r various customs regime s, including: external 
transit; customs warehousing; inward processing; temporary importation; and free zones and free 
warehouses.  The recently approved customs code  (Modernized Customs Code) does not envisage 
substantial changes to these exemptions and concessi ons.  The main change will be the elimination of 
the drawback system.  VAT and excise duty exempti ons and refunds are also possible (section (iii)(a) 
above).  
32. The EC is a signatory to the Convention on Temporary Admission, hence goods imported 
under temporary admission are exempted from VAT.43  
(v) Customs valuation and rules of origin 
(a) Customs valuation44 
33. There have been no major changes in regards to  customs valuation since the previous TPR of 
the EC in 2007.  The EC had transposed the rul es set out in the WTO Customs Valuation Agreement 
directly into its customs legislation. 45  In 2006, a new simplified procedures for the valuation of 
certain fresh fruit and vegetables imported in cons ignment was introduced.  The Modernized Customs 
Code does not provide for any significant changes to  EC customs valuation rules, which remain in 
line with those of the WTO Agreement, but shoul d result in a simplification of procedures as all 
customs formalities will be computerized. 
34. Customs valuation matters at EC level are addressed by the Valuation Section of the Customs 
Code Committee.  Its tasks include examination of valuation issues, and it deals in particular with 
Member States' interpretations of the EC's customs valuation rules to ensure uniformity of treatment. 
It seeks to ensure a common approach  to amendments of the customs valuation rules;  prepared 
guidelines to the customs valuation rules;  and prepares a common EC position in the WTO and the 
World Customs Organization (WCO).  
35. In the EC, customs value is important not only for the calculation of customs duties, but also 
for the imposition of the VAT on imported goods, for the calculation of some tariff quotas that are 
contingent upon value where quotas are set in value for certain goods, and where appropriate for determining origin.  
                                                     
 
41 Regulation No. 918/83, amended by Regulation No. 274/2008, lists the goods that qualify for duty 
relief on account of special circumstances. 
42 CC Articles 124 to 128, and Articles 184 to 188. 
43 Council Decision No. 93/329/EEC, 15 March 1993. Under the temporary admission customs 
procedure, goods may be imported into the territory of  a member State for a specific purpose (with total or 
partial relief from import duties and taxes) and then re-exported within a specified period without having 
undergone any change. 
44 European Commission online information, "Value of declared goods".  Viewed  at: http://ec.europa. 
eu/taxation_customs/customs/customs_duties/declare d_goods/european/index_en.htm [10 June 2008]. 
45 The EC rules on customs valuation are established in Community Customs Code (Regulation (EC) 
No. 2913/92) (Articles 28 to 36) and its Implementing Provisions (Regulation (EC) No. 2454/93) (Articles 141 to 181a and annexes 23 to 29). European Communities WT/TPR/S/214 
 Page 49 
 
 
(b) Rules of origin 
36. The EC applies non-preferential and preferential rules of origin;  no changes have been 
introduced since 2007.  Non-preferential rules are used to apply all kinds of commercial policy 
measures (e.g. anti-dumping and countervailing duties,  trade embargoes, safeguard and retaliation 
measures, and quantitative restrictions, but also for some tariff quotas, for trade statistics, for public 
tenders, and for origin marking).46 
37. The EC preferential rules of origin may vary under each arrangement but there are common 
provisions on, inter alia , cumulation (i.e. bilateral, diagona l, regional, and full cumulation are 
possible), minimal operations, a general toleranc e rule, no-drawback rule, the principle of 
territoriality, and direct transport rule.47   
38. At present a draft Commission regulation on the reform of GSP rules of origin is under 
discussion in the Customs Code Committee.48  If adopted, it will change both the substance (in 
particular, the rules for determining what is suffi cient working or processing and regional cumulation) 
and the procedures (introduction of a system of stat ements on origin made directly by registered 
exporters) with the aim of making the rules si mpler and more "development-friendly", allowing 
beneficiary countries, in particular the least deve loped countries, to take greater advantage of the 
preferential.  Once agreed and adopted, the new rules on substance would be implemented as of 
1 January 2010 and the new procedural rules as of 2013.  According to a Commission Communication 
of March 2005, these new rules should progressive ly be extended to other preferential trade 
arrangements, subject to case-by-case negotiations.   
(vi) Import prohibitions, restrictions, and licensing 
(a) Import prohibitions 
39. Imports prohibitions and surveillance are maintained on, inter alia , security, technical, 
sanitary, phytosanitary, and environmental grounds.   The EC also controls/restricts trade under 
treaties and international conventions to which it is a signatory.  For instance, it imposes trade and 
economic sanctions in accordance with United Nations Security Council (UNSC) resolutions.  In this 
regard, during the period under review, the EC main tained import restrictions against Côte-d'Ivoire, 
Iraq, Iran, and North Korea;  import bans against Liberia were repealed in 2006 (timber) and 2007 
(diamonds).  The EC is a member of the Ki mberley Process and applies import prohibitions, 
according to origin on rough diamonds. 
(b) Quantitative restrictions and licensing  
40. During the period under review the only non-agricu ltural products that have been subject to 
quantitative restrictions by the EC have been certain  textiles originating in the People’s Republic of 
                                                      
46 The legal basis for the non-preferential rules of or igin is contained in Articles 22 - 26 of Council 
Regulation No. 2913/92 (CC), Articles 35-65 and Annexes 9 - 11 of Commission Regulation No. 2454/93 
(IPC).  Viewed at:  http://ec.europa.eu/taxation_customs/customs/customs_duties/rules_origin/non-preferential/article_410_en .htm [10 June 2008]. 
47 For the preferential rules sp ecific to each arrangement, s ee European Commission online 
information, "Preferential Origin – Ar rangement List".  Viewed at:  thttp://ec.europa.eu/taxation_customs/cust 
oms/customs_duties/rules_origin/preferential/article_779_en.htm#efta [10 June 2008]. 
48 European Commission online information, "Preferential Origin – New Developments". Viewed at:  
http://ec.europa.eu/taxation_customs/ customs/customs_duties/rules_origin/preferential/article_777_en.htm 
[10 June 2008]. WT/TPR/S/214 Trade Policy Review 
Page 50 
 
 
China, for which specific agreed levels  had been set until the end of 2007.49  On 1 January 2008, a 
double checking surveillance system (export licence and import licence) was put in place covering eight product categories originating in China
50;  the regime is to be phased out by 1 January 2009.  
Certain steel products originating in Russia and Ka zakhstan are subject to quantitative restrictions. 
41. The EC maintains bilateral trade agreements regarding textile products with the following 
non-WTO Members:  Belarus, Russian Federation, Serbia, and Uzbekistan;  however, only textiles 
originating in Belarus are subject to quantitative r estrictions.  On an autonomous basis, the EC 
continues to apply quantitative r estrictions on imports of textiles from the Democratic People's 
Republic of Korea.  The volume of the textile quotas is determined on a yearly basis and subject to 
licensing. 
42. The EC last notified its import licensing system to the WTO in 2008.51  Import licences are 
required for products subject to quantitative restric tions, safeguard measures or for import monitoring 
and surveillance.  Product coverage is defined in the EC legislation.   The system cannot be abolished 
without legislative approval; regul ations generally contain provisi ons relating to the duration and 
expiry of the licensing regime. 
43. The import licences are not subject to fees and are not transferable;  they constitute an 
authorization and have a fixed peri od of validity.  There is no pena lty for non-utilization of an import 
licence or portion of it.  However, when a secur ity is required for a licence covering agricultural 
products, the security is forfeited in whole or in part if imports do not take place, or are only partly 
carried out. 
44. Import licences for textile products subject to import quotas are not limited to domestic 
producers of like goods.  They are issued annually on a "first-come, first-served" basis.  An import 
licence is issued upon presentation of an export licence issued by the exporting country;  licence 
applications  must be presented on specific dates.  The licences are issued within a maximum of five 
working days of presentation (by the importer) of the original corresponding export licence.  The import licence is valid for six months. 
45. Import surveillance applies to certain textiles,  steel products, and to  agricultural products 
including cereals, rice, sugar, olive oil and table ol ives, milk products, beef and veal, fresh fruit and 
vegetables, processed fruit and vegetables, bananas and ethyl alcohol of agricultural origin.  These 
products are subject to automatic licences for statisti cal purposes, and to improve control of the origin 
of the products.   There is no direct relationship between th e granting of the required automatic licence 
and EC SPS requirements and regulations 
46. A double-checking system is in place for imports of certain textile and steel products:  the 
licence application procedure requires, inter alia , an export licence issued by the authorities of the 
country of origin.  The EC applies a dual licensing arrangement to imports of certain steel products 
from Russia and Kazakhstan.  Hence, to obtain an import licence in any of the Member states, the 
corresponding export document issued by the competent authorities of the exporting country must be 
provided. 
                                                     
 
49 Based on the Memorandum of Understanding with China, 10 June 2005, the EC maintained agreed 
levels for the imports of ten product categories in 2005, 2006, and 2007. 
50 WTO document G/LIC/N/3/EEC/11, 2 October 2008. 
51 WTO documents G/LIC/N/3/EEC/11, 2 October 2008, and G/LIC/N/3/EEC/11/Add.1, 
2 October 2008 European Communities WT/TPR/S/214 
 Page 51 
 
 
47. The EC maintains tariff quotas on 4.8% of tariff lines, mostly agricultural products 
(Table AIV.[tariff quotas]).  The agricultural tari ff quotas are managed through two methods:  first 
come-first served (at the border), and import licensing.  Licences may be issued on a pro-rata or an historical basis.
52  For agricultural products, the period of validity of import licences depends on the 
product;  general periods of validity are set in th e relevant regulations.  The validity of licences 
allocated in the context of tariff quotas also varies.  Validity may only be extended in case of "force majeure".  Several administrative organs can grant import licences for agricultural products.   
(vii) Contingency measures  
48. In 2007, some 0.73% of EC imports were  subject to contingency trade remedies.
53  During the 
review period, no changes were made to the EC le gislation on trade remedies;  their legal basis is 
provided by the WTO Agreements, which have been  transposed into EC legislation by Council 
Regulation (EC) No. 384/96 (the basic anti-dumping Regulation)54, Council Regulation (EC) 
No. 2026/97 (the basic anti-subsidy Regulation)55, and Council Regulations (EC) No. 517/94, 519/94 
and 3285/94 (the basic safeguard Regulations).56  EC contingency trade remedies are applicable to all 
imports from third countries except for memb ers of the European Economic Area (EEA).57  The EC 
operates a prospective system.58  If the combination of two measures (e.g. anti-dumping or 
countervailing measures with safegua rd measures on the same imports could lead to effects greater 
than "desirable", the Council may, upon proposal fro m the Commission: (i) amend,  suspend, or repeal 
existing anti-dumping and/or countervailing measures;   (ii) exempt imports from anti-dumping or 
countervailing duties; or (iii) adopt any ot her special measures deemed appropriate.59 
49. Institutions involved in the application of c ontingency trade remedies in the EC include:  
(i) the European Commission, in charge of initiating and conducting in vestigations, imposing 
provisional measures, proposing measures for adopti on by the Council, implementing and enforcing 
remedies, and conducting reviews; (ii) the Council of Ministers, responsible for adopting proposals 
for definitive anti-dumping and countervailing measures made by the Commission;  (iii) the Court of 
First Instance, which has jurisdiction over anti-dumpi ng and countervailing cases;  and (iv) the Court 
of Justice, which is the court of appeal for cases unde r the jurisdiction of the Court of First Instance, 
and for hearing safeguard cases to the extent that they can be challenged.60 
                                                      
52 More details on EC's agricultural tariff quotas are contained in WTO document G/LIC/N/3/EEC/ 
/Add.1, 26 September 2007. 
53 COM(2006) 877 final, Br ussels, 19 December 2006. 
54 OJ L 56, 6 March 1996, as last amended by Council Regulation (EC) No. 2117/2005, 
21 December 2005. 
55 Published in OJ L 288, 21 October 1997, as last  amended by Council Regulation (EC) No. 461/2004, 
8 March 2004. 
56 Council Regulation (EC) No. 517/94, 7 March 1994, OJ L 67, 10 March 1994, as last amended by 
Council Regulation (EC) No. 931/2005, 6 June 2005; Council Regulation (EC) No. 519/94, 7 March 1994, 
OJ L 67, 10 March 1994, as last amended by Council Regulation (EC) No. 427/2003, 3 March 2003; Council 
Regulation (EC) No. 3285/94, 22 Decem ber 1994, OJ L 349, 22 December 1994, as last amended by Council 
Regulation (EC) No. 2200/2004, 13 December 2004.  Proposals for codification of Regulations 3295/94 and 
519/94 are contained in COM(2008) 21 final, 25 January 2008, and COM (2008) 214 final, 24 April 2008, respectively. 
57 Non-EC members of the EEA are excluded, except  for products that fall outside the scope of the 
EEA (e.g. fish products).   
58 The duty rates found in the original investigation are applied to future imports and normally remain 
unchanged unless a party demonstrates that changes have occurred. 
59 Council Regulation (EC) No. 452/2003, OJ L 69, 13 March 2003. 
60 There are limited opportunities to challenge safeguard measures. WT/TPR/S/214 Trade Policy Review 
Page 52 
 
 
50. In December 2006, the Commission launched public  consultations on the EC's trade defence 
instruments.61  This identified a number of areas in which the EC trade defence practice could be 
reformed, and these were subsequently discussed among Member States, the European Parliament, 
and business stakeholders but no agreement has been reached.62 
51. As a result of the last enlargement, all con tingency trade remedies in force in the EC-25 
automatically apply to Bulgaria and Romania63; and any existing measures in the acceding countries 
against the EC-25 automatically lapsed.  The EC notified the relevant WTO Committees that, as from 
1 January 2007, its legislation on anti-dumping, anti- subsidy, and safeguards is applicable to the two 
new Member States, and that all previous national legislation lapsed on that date.64 
52. The number of contingency measures notified by  the EC to the WTO has decreased since 
2005 (Table III.6). 
Table III.6 
Contingency measures notified by the EC, 2005-08a 
a The statistics include the ten Member Stat es that acceded in 2004, and Bulgaria a nd Romania (1 January 2007).  None of these 
have initiated investigations/applied me asures individually during the period. 
Source : WTO Committees on Anti-Dumping Practices, Subsidies and Countervailing Measures , and Safeguards;  and 
 information provided by the authorities.  
(a) Anti-dumping (AD) measures 
53. AD measures  are the EC's most frequently used  trade defence instrument.  Proceedings may 
be initiated through a written complaint by any natura l or legal person, or any association not having 
legal personality, acting on behalf  of an industry; or upon the initiative of the Commission.65  
                                                      
61 COM(2006) 763 final, "Communication from the Commission, Global Europe, Europe's trade 
defence instruments in a changing global economy: A Green paper for public consultation"; Brussels, 6 December 2006. 
62 These relate mainly to questions of transparency , accessibility, and effectiveness.  Evaluation of the 
responses to the public consultation on Europe's trade defence instruments in a changing global economy, December 2006 - March 2007, Br ussels, 19 November 2007. 
63 In a notice published in OJ C 297, 7 December 2006, the Commission expressed its preparedness to 
review anti-dumping, anti-subsidy, and safeguard measures where any interested party so requests and submits 
evidence that the measures would have been significantly different if they were based on information including 
the new Member States.  It is estimated that the measur es resulting from an EC-27 an alysis would in most cases 
not be different from that based on EC-25 analysis, due to the very small imports of goods into the new Member 
States compared with those into the EC-25. 
64 WTO documents G/SG/N/1/EEC/1/Suppl.3, 7 February 2007, G/ADP/N/1/EEC/2/Suppl.8, 
7 February 2007, and G/SCM/N/1/EEC/2/Suppl.7, 8 February 2007. 
65 The Commission may initiate the investigation on its own initiative in special circumstances, on the 
basis of sufficient evidence of dumping,  injury, and a causal link.  In practice, almost all investigations result 
from the submission of a complaint.  2005 2006 2007 2008 
Anti-dumping     
Initiation of investigations 24 35 9 18 
Definitive measures 19 13 12 16
Countervailing     
Initiation of investigations 2 1 0  1 
Definitive measures 0 0 0 0 
Safeguards     
Initiation of investigations 2 0 0 0 
Definitive measures 1 0 0 0 European Communities WT/TPR/S/214 
 Page 53 
 
 
Complaints are examined by an Advisory Committee66 and in case of sufficient evidence, the 
Commission initiates an investigation within  45 days;  a notice is published in the Official Journal .67  
Investigations cover dumping and its injury simu ltaneously.  Questionnaires are sent to the parties 
involved, which are given at least 30 days to reply.   The investigation concludes with termination of 
the proceedings or with the adoption of a definitive measure.68  Anti-dumping measures can only be 
imposed if they are not against the wider interest  of the EC economy, which is determined by the 
European Commission by weighing the interests of consumers, "suppliers", "users", and the 
industry.69   
54. In case of provisional affirmative determination of dumping and its injury, provisional duties 
may be imposed by the Commission for six months and extended for a further three-month period; 
their amount must not exceed the dumping margin or be  less than the margin if such lesser duty would 
be adequate to remove the injury; or vo luntary undertaking offers may be accepted.70  Definitive AD 
duties are imposed by the Council and expire five y ears after their imposition or five years after the 
conclusion of a review of the measure.  Prov isional and definitive duties cannot be applied 
retrospectively.  Duties collected can be refunded if the importer can show that the dumping margin 
has been eliminated or reduced to  a level below the AD duty.  Wher e a temporary change in market 
conditions makes the continued imposition of such measures temporarily inappropriate, AD measures 
may be suspended for a maximum of one year and reinstated if necessary. 
55. Special rules apply to the determination of normal value in the case of imports from "non-
market economy countries".71  For anti-dumping investigations concerning imports from China, 
Viet Nam and Kazakhstan, and any other non-market economy that is a member of the WTO at the 
date of the initiation of the investigation, normal va lue is based on the prices paid or payable in the 
ordinary course of trade in that country, if it is s hown that market conditions prevail for the respective 
producer. 
56. According to notifications to the WTO by the EC, from July 2006 to June 2008, 36 new AD 
cases and 60 reviews were initiated, and one partial reopening.  On 30 June 2008, 131 definitive AD 
measures were in force:  45 applied to imports from China, 8 from India and Russia respectively, 
7 from Thailand, and 6 from Chinese Taipei and Ukraine, respectively.72  Most of the applied AD 
duties were ad valorem  and up to 77.6%;  the products concer ned were chemicals, bicycles, leather, 
footwear, lamps, lighters, lever arch mechanisms , strawberries, fish, steel products, sweet corn, 
                                                      
66 The Advisory Committee consists of representatives  of Member States and a representative of the 
European Commission as chairman. 
67 The notice indicates the product and countries concerned, gives a summary of the information 
received and states the period within which interested  parties may make themselv es known and present their 
views. 
68 Proceedings are terminated where the dumping is de minimis  or the injury is negligible. 
69 The public interest test applied by the EC has been deemed a useful factor in weighing the balance of 
interests in AD cases (COM(2006) 763 final, Brussels, 6 December 2006). 
70 Such offers are to be submitted by exporters and c oncern revision of prices or cessation of exports at 
dumped prices; they can be offered at any time but not befo re the provisional duties or after the definitive duties. 
71 Albania, Armenia, Azerbaijan, Belarus, Georgia, North Korea, Kyrgyzstan, Moldova, Mongolia, 
Tajikistan, Turkmenistan, Uzbekistan.  For imports from these countries, normal value is determined on the basis of the price or constructed value in a market-ec onomy third country, or the prices from such a third 
country to other countries, or where those are not possible, on any other reasonable basis, including the price 
actually paid or payable in the EC for the like product, du ly adjusted if necessary to include a reasonable profit 
margin.  The non-market economy treatment normally yields significantly higher AD duties.  For details, see 
Swedish National Boar d of Trade (2006). 
72 WTO documents G/ADP/N/153/EEC, 20 March 2007; G/ADP/N/158/EEC, 29 August 2007; 
G/ADP/N/166/EEC, 14 April 2008;  and  G/ADP/N/173/EEC, 22 September 2008. WT/TPR/S/214 Trade Policy Review 
Page 54 
 
 
ironing boards, compressors, alcohols, hand pallet tr ucks, plywood, plastic sacs and bags, polyester 
fabrics, electrodes, refrigerators, biodiesel, and be d linen.  During the period under review, 17 AD 
measures expired after the five-year  imposition period and 17 were rep ealed after being reviewed.  As 
at June 2008, 12 undertakings were in force.  According to EC data, from 1 January to 
10 October 2008, 14 new AD inves tigations were initiated,  provi sional duties were imposed in 
3 cases and definitive duties in 10 cases, and two i nvestigations were terminated without the 
imposition of  measures.73   
(b) Countervailing (CV) measures 
57. The procedure for countervailing investigations is  similar to that for AD investigations, in 
particular with regard to the determination of injury, the definition of Community industry, the 
initiation of a proceeding, the provisional and de finitive measures, and the termination of the 
proceedings.  Provisional CV duties may be impo sed for a maximum period of four months.  
Voluntary undertakings may be accepted to the extent that the country of origin and/or export agrees 
to eliminate or limit the subsidy or take other meas ures concerning its effects;  or where an exporter 
undertakes to revise its prices or to cease exports to  the area in question as long as they benefit from 
countervailable subsidies.   
58. From July 2006 to June 2008, 2 new cases and 11 reviews were initiated.   At 30 June 2008, 
eight CV measures were in force, six of which on imports from India.74  Most of these measures were 
ad valorem  duties ranging up to 53.3%, on chemicals, pharmaceuticals, textiles, and some electric 
systems.  Two undertakings were also in force and three CV measures were repealed following a 
review.75  According to EC data, from 1 January to 30 October 2008, two new CV investigations were 
initiated.76 
(c) Safeguards 
59. EC Regulation No. 3285/94 lays down the ge neral common rules for imposing safeguard 
measures and applies erga omnes  to all products, except for products  originated in certain third 
countries, some of which are not WTO Members, and for textile products.  EC Regulation 519/94 
applies to products originating in certain third countries.77  Regulation 517/94 lays down specific 
import rules for textile products from non-WTO Memb ers, and countries not covered by bilateral 
agreements or other specific EC rules78;  Regulation 3030/93 governs, inter alia , the imposition of 
safeguard measures on textile imports from countries that have bilateral agreements with the EC and 
                                                      
73 European Commission online information, "Anti- dumping, Anti-subsidy, Safeguard: Statistics 
covering the first 6 months of 2008.  Interim Report 2008/06". Viewed at: http://trade.ec.europa.eu/doclib/docs/2008/apr il/tradoc_138554.pdf. [27 November 2008]. 
74 WTO documents G/SCM/N/153/EEC, 1 March 2007;  G/SCM/N/162/EEC, 4 September 2007; 
G/SCM/N/170/EEC, 16  April 2008;  and  G/SCM/N/178/EEC, 19 September 2008. 
75 WTO document G/SCM/N/178/EEC, 19 September 2008. 
76 European Commission online information, "Anti- dumping, Anti-subsidy, Safeguard: Statistics 
covering the first 10 months of 2008.  Interim Report 2008/10".  Viewed at:  
http://trade.ec.europa.eu/doclib/docs/2008/a pril/tradoc_138554.pdf. [27 November 2008] 
77 Currently Armenia, Azerbaijan, Belarus, Ka zakhstan, North Korea, Russia, Tajikistan, 
Turkmenistan, Ukraine, Uzbekistan, and Viet Nam. 
78 The Regulation is used to apply quotas against North Korea. European Communities WT/TPR/S/214 
 Page 55 
 
 
the safeguard action against China79;  and Regulation 427/2003 allows the imposition of a transitional 
product-specific safeguard on imports originating in China.80  
60. Initiation of a safeguard case in the EC may onl y be requested by a Member State, or may 
take place on the EC's own initiative.  If, during the c onsultation procedure, it is apparent that there is 
sufficient evidence to justify in itiation, the Commission initiates an  investigation and publishes a 
notice in the Official Journal .81  Where deemed necessary to prevent injury to EC producers, the 
imports may be subject to retrospective or pr ior Community surveillance for a limited period.82  Under 
Regulation 3285/94, provisional safeguard measures ma y only take the form of an increase in customs 
duty, for a duration not exceeding 200 days;  th ey are imposed by the Commission.  Safeguard 
measures are imposed by the Commission or the Council, and can take any form.  Special 
requirements apply to the establishment of quotas.83  The maximum duration of a safeguard measure 
is eight years, including the period of any provisiona l measure, the original period of application, and 
any prolongation of the measure.  Developing c ountries are excluded from any safeguard measure 
where they account for less than 3% of imports, provided the collective share of WTO developing Members is not more than 9% of total Community imports. 
61. Products subject to a safeguard meas ure imposed under Regulations 3285/94 and  519/94 (i.e. 
imports originating in third countries) may require an  import authorization to enter the EC market.   
However, the Commission has never imposed such a requirement.  According to Regulations 3030/93 
and 517/94, imports of textile pro ducts are subject to surveillance or to annual quantitative limits.  
Agreed quantitative limits and products subject to surveillance under Regulation 3030/93 are 
administered through a double-checking system.
84 Regulation 427/203 lays down provisions for a 
transitional product-specific safeguard mechanism against China, under which safeguard and trade 
diversion measures which may be imposed until 11 December 2013.85  Provisional safeguard 
measures and definitive measures may, inter alia , take the form of customs duties and quantitative 
restrictions.  Both safeguard and trad e diversion measures may be reviewed. 
62. During the period under review, no new safeguard measures have been put in place.  The last 
safeguard measure was imposed in 2004, on an erga omnes  basis on citrus fruit, and lapsed in 2007.  
                                                      
79 OJ L 275, 8 November 1993, as last amended by Commission Regulation (EC) No. 502/2008, 
5 June 2008.  The Regulation applies to Belarus, China, Russia, Serbia and Uzbekistan.  
80 OJ L 65, 8 March 2003, as amended by Council Regulation (EC) No. 1985/2003, 
10 November 2003. 
81 Such notices summarize the information received, and specify th e periods for interested parties to 
make their views known in writing and to apply for an oral hearing by the Commission. 
82 Under Regulations 3285/94 and 519/94, unless otherwise provided , surveillance measures cease to 
be valid at the end of the second six-month period following the six months in which the measures have been introduced.  Surveillance is a system of  import licensing.  
83 The level of the quota should be no lower than the average level of imports over a representative 
period of at least three years.  Where the quota is allocated among different countries, each quota may be 
determined by agreement with  each country or by taking the level of imports over a representative period as a 
reference. 
84 Under the system, import authorizations must be i ssued against the presentati on of export licences in 
respect of all consignments of the relevant textile products. 
85 According to the Regulation, significant trade dive rsion exists when an action by China or another 
WTO Member, taken to prevent or remedy market disrupti on in that WTO Member's market, causes or threatens 
to cause an increase in imports of a product from Ch ina into the EC.  Trade diversion measures must be 
terminated not later than 30 days after the expiry of the action taken by the WTO Member involved against 
imports from China.  WT/TPR/S/214 Trade Policy Review 
Page 56 
 
 
Two surveillance measures are curre ntly applied to imports of footwear from China, and steel 
products on an erga omnes basis.86   
(viii) Technical regulations and other technical requirements  
(a) Technical barriers to trade (TBT) 
63. The EC technical regulations, standards, and conformity assessment procedures have not been 
harmonized in all sectors. In sectors where Member St ates can still legislate, the Mutual Recognition 
Principle applies.  Following this principle, a pr oduct that has been legally produced and marketed 
according to the legislation of one Member State can freely circulate throughout the Single Market without having to comply with any further le gislation or undergoing additional conformity 
assessment.  Some restrictions to this principle include the protection of human, animal, and plant 
health;  the protection of the envir onment;  and national security matters. 
64. At the Community level, the Commission may propose legislation on  technical regulations 
and assess their impact
87;  it is also responsible for drafting proposals for technical regulations.  A 
legislative act is adopted by Parliament and Council  and must be published in the Official Journal  of 
the European Union.  There are two types of regulations for industrial products:  those laying down 
detailed specific technical requirements ("old-approa ch" directives);  and those limited to the setting-
up of essential requirements ("new approach" direc tives) defined to meet health, safety, and 
environmental objectives, whilst the technical char acteristics of the products, indicating how these 
essential requirements should be met, are given in th e standards (voluntary), which are drafted by the 
stakeholders within the committees and following the procedures of the european standardisation 
organisations. 88 
65. Under the new-approach directives, the manufacturer placing a product on the Community 
market assumes responsibility for compliance with Community legislation. The manufacturer must 
affix the "CE" mark on the product symbolizing conf ormity of the product with the applicable EC 
requirements. Where a third-party certification is  required, conformity assessment of industrial 
products is carried out by bodies designated by Member States.  In some sectors, the EC accepts the 
supplier's declaration of conformity w ithout mandatory third-party intervention.89 
66. Member States are not permitted to restrict the marketing of "CE" marked products, unless 
there is evidence of non-compliance by the product.  Market surveillance is carried out by national 
                                                      
86 European Commission online information, "Anti- dumping, Anti-subsidy, Safeguard: Statistics 
covering the first 10 months of 2008", "full year 2007", and "full year 2006". Interim Reports 2008/10, 2007/12, and 2007/12. Viewed at: http://trade.ec.europa .eu/doclib/docs/2008/april/tradoc_138554.pdf, 
http://trade.ec.europa.eu/doclib/docs/2007/april/tradoc_ 134456.pdf, and http://trade.ec.europa.eu/doclib/docs/ 
2006/october/tradoc_128626.pdf. 
87 Article 95 of the EU Treaty. 
88 The "old approach" directives ap ply to motor vehicles, chemicals,  pharmaceuticals, cosmetics, legal 
metrology and pre-packaging, textiles,  footwear labelling, wood classifica tion, and crystal glass.  The "new 
approach" directives cover, inter alia , non-automatic weighing instruments and measuring instruments, low 
voltage equipment, electromagnetic compatibility, toys, machinery, lifts, noise emissions by outdoors equipment, emissions of pollutants from non-road mobile machinery engines, personal protective equipment, 
equipment and protective systems intended for use in explosive atmospheres, medical devices, gas appliances, 
pressure vessels, cableway installations, construction pr oducts, recreational craft, eco-design requirements for 
energy-using products, and radio and telecommunications terminal equipment (European Commission online 
information.  Viewed at: http://ec.europa.eu/enterpri se/newapproach/standardization/harmstds/reflist.html#na_ 
directives). 
89 For more details on the new-approach  directives, see WTO (2004 and 2007). European Communities WT/TPR/S/214 
 Page 57 
 
 
authorities and involves monitoring products for co mpliance, and remedial actions when they do not 
comply, including penalties for false or misleading declarations.  Under a safeguard clause procedure, the Commission may verify measures taken by national authorities that restrict the movement of "CE" 
marked goods.  For imports from third countries,  checks of compliance with the product safety 
requirements are carried out by Member State aut horities in charge of external border controls. 
67. At the Community level, standards (voluntary ) can be mandated by the Commission.  The EC 
standardization bodies (CEN, CENELEC, and ETSI) ha ve the option to accept or reject the mandate.
90 
These organizations have their own internal proced ures.  Once adopted, standards must be publicly 
available.  There are presently more than 15,000 European-wide (voluntary) standards. In the services 
sector, standardization is still limited, mainly because  of the heterogeneous na ture of services.  About 
80% of the work of the European standardization bod ies is undertaken at the request of industries and 
other stakeholders;  with the remainder follows  requests from the European Commission and EFTA.  
About 30% of the standards developed by CEN are id entical to ISO's, whilst the percentage is more 
than 60% in the case of CENELEC. Following a pro active improvement programme developed by the 
European standards organizations, the developmen t time of a European standard does not exceed 
3 years. 
68. Accreditation of conformity assessment bodies is carried out by Member States and is not 
regulated at Community level;  this has resulted in  different systems of accreditation among Member 
States.  In July 2008, a new regulation was adopted to establish common rules and structures for accreditation and market surveillance, in order to facilitate the internal movement of products; the 
regulation will enter into force on 1 July 2010.
91  Each Member State is to appoint a single national 
accreditation body, which must recognize the equivalence of the services of other national accreditation bodies that have successfully passed a peer review.
92  Member States can then no longer 
refuse certificates or test reports issued by a nother EC country designated conformity assessment 
body (CAB) on competence grounds.  The competent authorities of Member States are required to ensure that products that are not in compliance with harmonized legislation are not placed on the 
market or are withdrawn from the market.  The au thorities must take necessary measures, including 
destruction of non-compliant imported products, to prevent products that are not released for free 
circulation into the EC from being re-exported and then re-imported through other points of entry to 
the Community. 
69. Third-country conformity assessment bodies (CABs)  may take part in the EC's conformity 
assessment activities through mutual recognition agre ements (MRAs). The EC has negotiated MRAs 
with Australia, Canada, Israel, Japan, New Zealan d, Switzerland, and the United States.  The main 
areas covered in these MRAs are medical devices,  good manufacturing practice for medicines, telecommunication equipment, electrical equipment, and electromagnetic compatibility.  The broadest 
agreement, with Switzerland, covers: machinery,  personal protective equipment, pressure vessels, 
measuring instrument and prepackages, motor vehi cles, good laboratory practice, toys, construction 
plant and equipment, equipment for explosive atmosp heres, gas appliances, construction products, and 
tractors. 
70. Products not subject to harmonized technical re gulations include various types of foodstuffs 
(e.g. bread and pasta), furniture, bicycles, ladders , and precious metals.  On such products, the EC 
applies the principle of mutual recognition for purposes of the free movement of goods between 
                                                     
 
90 European Committee for Standardization (CEN );  European Committ ee for Electrotechnical  
Standardization (CENELEC);  and European Te lecommunications Standards Institute (ETSI). 
91 Regulation (EC) No. 765/2008, 9 July 2008 setti ng out the requirements for accreditation and market 
surveillance relating to the marketing of produc ts, and repealing Regulation (EEC) No. 339/93. 
92 Membership of national accred itation bodies in the European  Cooperation for Accrediation 
(European network of nationally recogni zed accreditation bodies) will be mandatory. WT/TPR/S/214 Trade Policy Review 
Page 58 
 
 
Member States:  goods lawfully marketed in one Me mber State should be allowed to be marketed in 
any other Member State, even when the product do es not fully comply with technical rules of the 
Member State of destination, except where the latter  can show that departure from this principle is 
strictly necessary for the protection of, for ex ample, public safety, health or environment.93  In such 
cases, the Member State of destination must, inter alia , demonstrate that its measure is the least trade-
restrictive.  The principle also applies to prod ucts from non-EC countries, provided that these have 
been legally imported and marketed in the EC Member  State of entry. It appears, however, that the 
application of the mutual recognition princi ple in non-harmonized areas is unsatisfactory.94  
Operators, in particular SMEs, are faced with obst acles to the free movement  of goods within the EC 
as a result of technical requirements imposed by Member States95, such as rules concerning the form, 
size, weight, labelling or packaging of products .  Trade barriers also result where a product 
originating in one Member State is subject to ma ndatory prior authorization procedures before it can 
be placed on the market of another Member State. 
71. An enhanced framework for mutual recognitio n will enter into force on 13 May 2009 with the 
aim of, inter alia , improving the internal movement of goods in non-harmonized areas.96  Mem ber 
States are required to establish Product Contact Po ints to provide information concerning national 
technical regulations and the application of the principle of mutual recognition.  The competent 
authorities will be obliged to inform operators a bout the technical or scientific grounds on which a 
specific product cannot be marketed in the Member  States concerned;  operators must also be 
provided with the opportunity to comment on the inte nded decision restricting access to the market.   
72. Under the TBT Agreement, the EC and its Me mber States notified the WTO of 140 measures 
in 2007 and 139 in 2008 (to 30 September) (Table III.7) .  A number of Members have raised concerns 
in the TBT Committee regarding technical regulati ons maintained or proposed by the EC or its 
Member States, which (could) act as unn ecessary barriers to trade in chemicals97, wine products, toys, 
seal products, organic products, energy-using products , lighters, electrical and electronic equipment, 
and electrical cables.98  
73. A new regime for the registration, evaluation,  authorization and restriction of chemicals 
(REACH regulation) entered into force on 1 June  2007;  though it is a complex regulation, it 
considerably streamlines previous EC legislation on chemicals.99  The European Chemicals Agency 
                                                      
93 On public order or protection grounds, Member States may impose additional requirements as far as 
the latter do not impede the free circulation of pro ducts, according to the Commission.  Moreover, Member 
States can set technical regulations in areas where there are no harmonized rule s or where free internal 
movement of products has not been reached (e.g. public health).  Info rmation on the requ irements in non-
harmonized areas can be obtained from the TB T enquiry points of th e EC Member States. 
94 Regulation (EC) No. 764/2008, 9 July 2008.  Official Journal . 
95 Regulation (EC) No. 764/2008, 9 July 2008.  Official Journal . 
96 Regulation (EC) No. 764/2008, 9 July 2008 laying  down procedures relating to the application of 
certain national technical regulations to products lawf ully marketed in another Member State and repealing 
Decision No. 3052/95/EC.  Ou tside the scope of mutual r ecognition of regulations are, inter alia , technical 
specifications for the public procurement of Member States and national emergency measures taken under the 
Rapid Alert System for Food and Feed. 
97 The three measures at issue are:  (i) a ban on the use of Deca-bromo diphenylether (deca-BDE) in 
electrical and electronic products placed  on the EC market;  ( ii) Draft Commission Dir ective amending Council 
Directive 67/548/EEC on dangerous chemical substances (including borates and nickel carbonates);  and 
(iii) Regulation for Registration, Evaluation, Authorisa tion and Restriction of Chemicals (REACH regulation). 
98 See WTO document G/TBT/GEN/74, 25 September 2008.  
99 Regulation No. 1907/2006, 18 December 2006 concerning the Registration, Evaluation, 
Authorisation and Restriction of Chemicals (REACH), establishing a European Ch emicals Agency, amending 
Directive 1999/45/EC and repealing Council Regulation (EEC) No. 793/93 and Commission Regulation (EC) No. 1488/94, as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, European Communities WT/TPR/S/214 
 Page 59 
 
 
(ECHA), established pursuant to the regulation, ma nages the technical, scientific, and administrative 
aspects of the regulation.  Member States must appoint one competent au thority (or more) to 
cooperate with the agency and the European Commission, and carry out responsibilities (such as 
substance evaluation) under the regulation; enfor cement is also under the co mpetence of the Member 
States. 
Table III.7 
Notifications of technical regulations by the EC and its Member States, 2000-08 
n.a. Not applicable. 
a Up to 30 September 2008. 
Source : Notifications by the EC and Member States to the WTO. 
74. The REACH regulation applies to the manufacture, importation, placing on the EC market, 
and use of chemicals by legal or natural persons.100  It requires them to, inter alia , register these 
chemicals (if manufactured or imported in a quant ity above 1 tonne per year) and assess the risks 
arising from their manufacture and use;  they are also responsible for the management of any risks 
related to the substances.  The regulation sets out procedures for th e evaluation of dossiers (checking 
that registration dossiers are correct and whether further testing is necessary), authorization, and 
restrictions of chemical substances.101  Some of the main trade con cerns raised in the TBT Committee 
include:  burdensome procedures, notably for SMEs  and developing countries, to ensure compliance 
with the new regime, and insufficient technical assistance provided by the EC; high registration fees;  procedures that might put non-EC manufacturers at a disadvantage vis-à-vis EC manufacturers; and the potential for non-uniform enforcement of the regulation among EC Member States. 
                                                                                                                                                                    
 
93/105/EC and 2000/21/EC.  The re gulation replaces over 40 existing EC  directives and regulations.  
Directive 2006/121/EC, 18 December 2006. 
100 In principle, the regulation applies to all chemical s, with specified exemptio ns, such as radioactive 
chemicals and waste; Member States may also exempt substances used for defence purposes. 
101 ECHA online information.  Viewed a t:  http://reach.jrc.it/about_reach_en.htm.  2000 2001 2002 2003 2004 2005 2006 2007 2008a 
Austria  0 0 0 0 0 0 0 0 0 
Belgium  19 26 11 1 0 0 2 1 0 
Bulgaria n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 0 
Cyprus  n.a. n.a. n.a. n.a. 0 0 0 0 0 
Czech Republic  n.a. n.a. n.a. n.a. 8 16 5 7 4 
Denmark  25 7 6 16 2 2 5 11 2 
Estonia n.a. n.a. n.a. n.a. 0 0 1 1 0 
Finland 5 3 5 0 2 0 5 5 10 
France  7 9 7 14 5 15 8 14 17 
Germany  0 0 0 0 2 0 0 1 4 
Greece  0 0 0 0 0 0 0 0 0 
Hungary  n.a. n.a. n.a. n.a. 0 1 2 1 0 
Ireland  0 0 0 0 0 0 0 0 0 
Italy  0 0 1 2 3 1 1 0 2 
Latvia  n.a. n.a. n.a. n.a. 0 0 0 0 0 
Lithuania  n.a. n.a. n.a. n.a. 1 1 1 2 2 
Luxemburg 0 0 0 0 0 0 0 0 0 
Malta  n.a. n.a. n.a. n.a. 0 0 0 0 0 
Netherlands  46 40 15 4 7 1 5 7 4 
Poland  n.a. n.a. n.a. n.a. 0 0 1 0 0 
Portugal  0 0 0 0 0 0 0 0 0 
Romania n.a. n.a. n.a. n.a. n.a. n.a. 10 25 46 
Slovenia  n.a. n.a. n.a. n.a. 15 9 13 12 4 
Slovakia  n.a. n.a. n.a. n.a. 1 3 0 2 0 
Spain  6 9 12 5 1 0 3 1 0 
Sweden 15 8 17 9 7 19 15 14 4 
United Kingdom 9 1 4 4 0 0 2 1 1 
EC 16 7 17 21 29 24 44 35 39 
Total 148 110 95 76 83 92 123 140 139 WT/TPR/S/214 Trade Policy Review 
Page 60 
 
 
75. According to the EC, REACH applies equally to  locally manufactured and imported products,  
and throughout the EC.  Efforts have been made to inform worldwide opera tors about the processes 
and obligations under REACH, and re ductions of up to 90% are foreseen for fees payable by SMEs. 
76. Under the EEA Agreement, certain EFTA Memb er States (Iceland, Norway, Liechtenstein) 
implement the corpus of European technical regula tions for trade in non-agricultural products, and in 
that area they participate in the internal market in the same way as  EC Member States.  An agreement 
with Switzerland makes similar provisions in a num ber of technical areas, though as Switzerland is 
not a member of the EEA, it is free to regulate as it wishes in other areas of trade in non-agricultural 
products.  The EC is negotiating or preparing to negotiate a number of agreements on conformity 
assessment and acceptance of industrial products (A CAA) with certain countries in the European 
neighbourhood.  The partner countries would adopt all or part of the European technical system for regulation and conformity assessment of industrial pr oducts, and would in turn be able to place their 
products that are covered by the Agreement on the EC market.  
77. At the meetings of the TBT Committee on 5- 6 November 2008, the EC raised 16 specific 
trade concerns in third countries.  WTO Member s raised 12 concerns on measures in the EC, for 
example on REACH (see above), classification of dangerous substances (nic kel), novel foods, and 
cosmetics. 
(b) Sanitary and phytosanitary (SPS)  
78. Regulation (EC) No. 178/2002 harmonizes the concep ts, principles, and procedures to be used 
by EC Member States in the adoption of national food safety standards.  Food safety activities cover 
the entire food chain, ranging from animal and plan t health to labelling of food products, and animal 
welfare.  Under the Regulation, the EC's food safety regime is based on five principles: (i) a high level 
of food safety at all stages of the food chain, fro m primary production to the consumer (farm-to-fork 
approach);  (ii) risk analysis as a fundamental component of food safety policy;  (iii) full responsibility of operators for the safety of pr oducts they import, produce, process, place on the 
market or distribute;  (iv) traceability of products at all stages of the food chain; and (v) the right of 
citizens to clear and accurate information from pub lic authorities.  The regulation established the 
European Food Safety Authority (EFSA), which operates as, inter alia , the EC's independent risk 
assessment body.  The EC's alert system has been strengthened and broadened to include feed (Rapid 
Alert System for Food and Feed).  Under this system, Member States are required to notify the Commission immediately about measures (requiring rapid action) they have taken to restrict the sale 
of products, product withdrawals or recalls of food or feed in order to protect human and animal 
health.
102  Special powers were given to the Comm ission to implement emergency measures to 
contain serious risks to human or animal health, or  to the environment in the EC (Article 53 of the 
regulation).   
79. During 1995-2005, the EC spent about €1 billio n on emergency meas ures against outbreaks 
of animal diseases: about two thirds were spen t on measures against Foot-and-Mouth Disease (FMD), 
followed by measures against Classical Swine Fever and Avian Influenza.103  All EC Member States 
are currently listed by the World Organization for Animal Health (OIE) as FMD-free without 
vaccination; the United Kingdom and Cyprus regain ed FMD-free status in 2008 (suspended following 
FMD outbreaks in 2007).  The incidence of BSE-cases in the EC has continued to decline further over 
                                                      
102 The Rapid Alert System for Food and Feed is a Commission system for the rapid exchange of 
information among Member States (third countries are also allowed to participate) in the event of a serious and 
immediate risk.   
103 Europa Press Release MEMO/07/365. Viewed a t: http://europa.eu/rapid/pressReleasesAction.do?re 
ference=MEMO/07/365&format=HTML&aged=1&language=EN&guiLanguage=en. European Communities WT/TPR/S/214 
 Page 61 
 
 
the past few years, while Bluetongue disease (a vi rus affecting ruminants) has increased.  The EC 
budget for the control or eradication of animal diseases and for zoonoses amounted to €187 million 
for 2008, with an increase for measures against Bluetongue disease.104  Since the last Review of the 
EC, outbreaks of Avian Influenza in wild and domes tic birds have occurred in a number of Member 
States.  About €4.4 million was made available in  2008 from the Community budget to support Avian 
Influenza  surveillance progr ammes by Member States.  
80. In 2007, the European Commission submitted pr oposals for a common animal health policy 
for 2007-13.105  The action plan is aimed at improving precautionary measures, disease surveillance, 
and controls and research, to reduce the inciden ce of animal diseases and minimize the impact of 
outbreaks.  For imports, a risk-based approach would target higher risk consignments 
(products/countries) and assist in the selection of containers to be examined.  Closer cooperation 
between customs and veterinarians is also envisag ed, as well as modernization of the EC's traceability 
system for live animals (from animal passports and national databases, to an EC-wide electronic 
identification system). 
81. The sale of food, whether of domestic or fore ign origin, is subject to strict sanitary 
regulations.  Imported food must comply with th e food legislation or, where applicable, meet the 
requirements specified in agreements between th e Community and the exporting country.  Processed 
foodstuffs that are not of animal origin can genera lly be imported without a sanitary certificate.  EC 
veterinary agreements with Canada, New Zealand, and the United States, and trade agreements with 
Chile, Mexico, and Switzerland also cover SPS issues.   
82. Food of animal origin (including fishery produc ts) is allowed entry into the EC only if it 
comes from approved establishments in countries on a EC list of eligible countries.  To be listed 
requires, inter alia , recognition by the European Commission of the competent veterinary authority in 
the third country, which must submit an applicati on for approval of the new establishments to the 
European Commission.  The European Commission do es not carry out inspections of each individual 
establishment.  However, it requires and verifies that  this authority is in a position to ensure, through 
inspection and controls, that relevant EC hygien e and health requirements are met throughout the 
production chain; it must also issue health certificat es required for imports into the EC.  A monitoring 
system must be in place to verify compliance with EC requirements on residues of veterinary 
medicines, pesticides, and contaminants.  For bovine meat, sheep meat, and goat meat, exporting 
countries must obtain a determination of their BSE-st atus from the OIE.  For exports of poultry and 
poultry meat to the EC, salmonella and avian infl uenza control/surveillance programmes must be in 
place.106  At approved border inspection posts, imports  are subject to documentary check, identity 
check, and a physical check, depending on the risk pr ofile of the product and the history of previous 
checks.107 
83. Imports of meat derived from animals treated with hormonal growth promoters, mechanically 
recovered meat, and the use of specified risk materi als (to reduce the risk of transmissible spongiform 
                                                      
104 Europa Press Release IP/07/1828. Viewed at: h ttp://europa.eu/rapid/pressReleasesAction.do?referen 
ce=IP/07/1828&format=HTML&aged=1&l anguage=EN&guiLanguage=en.   
105 European Commission online information. Viewed at: http://ec.europa.eu/food/animal/diseases/ 
strategy/index_en.htm. 
106 Approved countries must notify outbreaks of avian influenza and Newcastle disease within 24 hours 
to the EC Commission.  
107 European Commission online information.  Viewed at: http://ec.europa.eu/food/international/trade/ 
index_en.htm.  See also WTO documents G/SPS/N/EEC/308, 5 June 2007; G/SPS/N/EEC/320, 30 November 2007;  and G/SPS/N/EEC/323, 5 February 2008. WT/TPR/S/214 Trade Policy Review 
Page 62 
 
 
encephalopathy) are prohibited.  The use of antimicr obial treatment on food of animal origin is also 
prohibited.108 
84. A new system for pesticide maximum residue leve ls (MRLs) in food, which entered into force 
on 1 September 2008, consolidates the divergent natio nal lists of MRLs and MRLs harmonized at the 
EC level, with the aim of, inter alia , eliminating inappropriate technical barriers to trade.  After 
finalization of the harmonization process, the overall system is to be simplified;  500,000 national MRLs are to be replaced by 75,000 harmonized EC MRLs.  The new MRL regulation covers all 
agricultural products, including products of animal origin and processed pr oducts, intended for human 
consumption or feed use.
109  MRLs are specified for about 500 p esticides;  for non-specified (other) 
pesticides, a default MRL of 0.01 mg/kg applies.110  The European Food Safety Authority (EFSA) 
evaluates each new proposed MRL and based on  the EFSA's opinion, the Commission can issue a 
regulation to establish a new MRL or amend or remove  an existing MRL.  The regulation is enforced 
by Member States through national control programmes,  with inspections carried out by the Food and 
Veterinary Office of the Commission. Ecuador has raised a concern in th e SPS Committee regarding 
the proposed MRL for Ethephon in pineapple, and th e lack of MRLs for a number of pesticides 
commonly used in the production of cacao.111  
85. The EC's phytosanitary regime, established through Council Directive 2000/29/EC112,  covers, 
inter alia , the monitoring and control of pesticide residues, preventative measures against the 
introduction and spread of pests and plant diseases in the EC, and the control of internal movement of 
plants (including seeds). 
86. Imports of specified plants and plant products  (e.g. fresh fruit and vegetables) must be 
accompanied by a phytosanitary certificate, issued by the national plant protection organization of the exporting country.
113  Shipments are subject to a plant health check, involving a documentary, 
identity, and physical check, to ensure compliance with the EC's import requirements.  Reduced 
frequency health checks apply to certain products from specific countries of origin, based on risk 
profiling.114  A plant passport is required for the internal m ovement of plants and plant material.  In 
the period under review, the EC notified a num ber of emergency measures and other import 
restrictions on certain plants (Tables III.8). 
                                                      
108 Article 3.1 of Regulation 853/2004. 
109 Regulation (EC) No. 396/2005, 23 February 2005 on maximum residue levels of pesticides in or on 
food and feed of plant and animal origin and amending Council Directive 91/414/EEC.  Under Article 2.3 of the 
regulation, MRLs for pesticides do not apply to produc ts intended for export to third countries and treated 
before export, where it has been established by appropriate evidence that the third country of destination 
requires or agrees with that particul ar treatment in order to prevent the introduction of harmful organisms into its 
territory.  
110 The European Commission has established a database on MRLs applicable to each pesticide and 
agricultural product.  Viewed at:  http://ec. europa.eu/sanco_pesticides/public/index.cfm. 
111 WTO document G/SPS/R/49, 18 June 2008, paragraphs 21-23. 
112 Council Directive 2000/29/EC, 8 May 2000 on protec tive measures against th e introduction into the 
Community of organisms harmful to plants or plant products and against their spread within the Community. 
113 European Commission online information.  Viewed at: http://europa.eu/eur-
lex/en/consleg/pdf/2000/en_2000L0029_do_001.pdf#122,  Annex V, Part B. 
114  European Commission online information.  Viewed at:  http://ec.europa.eu/food/plant/organisms/ 
imports/recommended_products2008.pdf. European Communities WT/TPR/S/214 
 Page 63 
 
 
Table III.8 
(a)  Emergency SPS measures 
Products Description of measure WTO Document 
Isoprene [FL-01.049 (2-methyl-1,3-butadiene)] and food 
products containing this flavouring substance (ICS 
67.220.20) Delete from the register of allowed substances.  
These substances have been found to be 
carcinogens. G/SPS/N/EEC/324,  
27 February 2008 
Plants of the genus Pinus  L. and Coast Douglas fir 
(Pseudotsuga menziesii ), intended for planting, including 
seeds and cones for propa gation purposes (HS 0602 and 
1209.99.10) Suspension of import s.  To prevent the 
introduction and spread of Gibberella circinata Nirenberg & O'Donnell. This organism is the 
cause of "pine pitch canker". G/SPS/N/EEC/315,
 
1 August 2007 
Plants susceptible to red palm weevil ( Rhynchophorus  
ferrugineus  (Olivier)) Suspension of imports. G/SPS/N/EEC/314,  
1 August 2007 
Plants and live parts of plants , including seeds, of angel's 
trumpets ( Brugmansia Pers. spp .) and jasmine nightshade 
(Solanun jasminoides  (Paxton )) Suspension of imports.  To prevent the 
introduction and spread of Potato spindle tuber 
viroid (PSTVd). G/SPS/N/EEC/313,  
31 July 2007 
Source : WTO documents. 
(b)  SPS measures restricting imports 
Products Description of measure WTO Document 
Materials and articles in contact with food including 
catering containers and materials and articles in contact with drinking water (HS Codes: 3919, 3920, 3923, and 
3924; ICS number: 67.250) Suspension of imports as from 7 March 2010, 
if not complying with Directive 2002/72/EC, 
as amended. G/SPS/N/EEC/319/Add.1,
13 March 2008 
Fresh or chilled meat for human consumption of the 
following species: domestic bovine animals, including Bubalus bubalus and Bison bison (HS 0201); swine (HS 
0203); sheep and goats (HS 0204); pigs, solipeds (HS 0205); farmed and wild ruminants, suidea, and solipeds (HS 0208) Suspension of import s.  To prevent the 
introduction and spread of  foot-and-mouth disease, and achieve a high level of protection 
of health. G/SPS/N/EEC/308/Add.1,
2 January 2008 
Food colour E 128 Red 2G a nd any food containing this 
colouring Suspension of imports. This substance has 
been found to be a carcinogen. G/SPS/N/EEC/311//Add.1,
2 August 2007 
Plants of the genus Pinus  L. and Coast Douglas fir 
(Pseudotsuga menziesii ), intended for planting, including 
seeds and cones for propaga tion purposes, HS 0602 and 
1209.99.10 Suspension of import s.  To prevent the 
introduction and spread of Gibberella circinata 
Nirenberg & O'Donnell. This organism is the 
cause of "pine pitch canker". G/SPS/N/EEC/315,  
1 August 2007 
Plants susceptible to red palm weevil ( Rhynchophorus  
ferrugineus  (Olivier)) Suspension of imports. G/SPS/N/EEC/314,  
1 August 2007 
Plants and live parts of plants , including seeds, of angel's 
trumpets ( Brugmansia Pers. spp .) and jasmine nightshade 
(Solanun jasminoides  (Paxton)) Suspension of imports.  To prevent the 
introduction and spread of Potato spindle tuber 
viroid (PSTVd). G/SPS/N/EEC/313,  
31 July 2007 
Source : WTO documents. 
87. The legal framework with respect to geneti cally modified organisms (GMOs) covers,  inter 
alia, laboratory research with GMOs (Directive 1990/ 219);  the experimental release of GMOs into 
the environment (e.g. field testing) (Directive 2001 /18);  marketing of genetically modified seeds; 
marketing of food or feed containing, consisti ng or produced from GMOs (Regulation 1829/2003);  
and traceability and labelling (Regulation 1830/2003).115 
88. Genetically odified seed varieties (and other pl ant-propagating material) must be authorized 
for cultivation under Directive 2001/18 on the delibe rate release of GMOs into the environment or 
under Regulation 1829/2003 on genetically modified food and feed.  Authorization is only granted 
after a positive assessment by the EFSA, including the environmental risk assessment carried out by a 
competent national authority that no unacceptable risk s to the environment or human health is likely 
to appear.  So far only one "GM event" (MON 810 ma ize) is authorized in the EC for cultivation, 
                                                      
115 Regulation (EC) No. 1829/2003, 22 September 2003. WT/TPR/S/214 Trade Policy Review 
Page 64 
 
 
import, and processing.  MON 810 (and various varieties of this "event") are currently inscribed in the 
common catalogue for seed. 116 
89. Under EC Regulation 1829/2003, applications fo r authorization to market GM food and feed 
products in the EC are to be lodged with the EFSA through a competent national authority.  The 
EFSA is expected to give its opinion to the Commiss ion within six months, provided the application is 
complete and no further information is necessary.117  On the basis of the EFSA's opinion and any 
other "legitimate factors", the Commission shoul d submit a proposal granting or rejecting the 
authorization to the Standing Committee on Food Chai n and Animal Health within three months.  
Products derived from various genetically modified "events", including cotton, maize, oilseed, rape, 
soybean, sugar beet, and yeast and bacterial biomass ha ve been authorized to be used in  foodstuff or 
feed.118  Approval of other GMOs and their use for fo od or feed processing is pending;  there appear 
to be considerable delays in reach ing final decisions on GMO approvals.119 However, according to the 
Commission, the EC is looking for technical solutio ns that would limit trade disruption due to such 
time-lag without compromising its high level of protection. 
90. The EC has established traceability requirements for GM food and feed to facilitate the 
withdrawal of products in case of unforeseen adve rse effects on human and animal health, or the 
environment, and to facilitate labelling of GMOs.  Traceability applies to all stages of production and 
distribution of the product concerned.120  Operators are required to inform those receiving the product 
that it contains GMOs, and must keep informati on on the supplier and buyer of the product for five 
years.  Operators are also required to ensure that products containing, consisting of or produced from 
GMOs are labelled accordingly.  An exemption to the labelling and traceability requirements is 
foreseen for the adventitious presence and technica lly unavoidable presence (up to 0.9%) of products 
containing, consisting of or produced from authori zed GMOs.  The placing on the EC market of food, 
feed, and seeds that contain non-authorized GMOs is  prohibited.  It is in tended that conventional 
seeds must be labelled if they contain genetically mo dified seeds; establishment of threshold levels is 
pending. 
91. In April 2008, the Commission introduced compulsory certification on imports of rice from 
China, to prevent imports of rice products  contaminated with the unauthorized genetically modified "BT 63" rice.  The imports must be certified by China's competent authority  to ensure that the 
shipments contain no BT 63 rice.
121 
                                                      
116 This common catalogue is established on the basis of information received fr om the Member States 
and published in the Official Journal .  It lists varieties whose seeds are subject to no marketing restrictions 
within the Community.  Each variety must meet standards, notably pertaining to distinctness, uniformity, stability and, in the case of agriculture, value for cultivati on and its use, in order to be listed.  In the case of 
varieties of agricultural plant species, their satisfactory value for cultivation and use is based on yields, 
resistance to harmful organisms, behaviour with respect to factors in the physical environment, and quality 
characteristics. 
117 This can be extended if further information is  required. The EFSA consults with the relevant 
national competent authorities in giving its opinion.  
118 European Commission online information, "EC register of genetically modified food and feed".  
Viewed at:  http://ec.europa.eu/fo od/dyna/gm_register/index_en.cfm. 
119 DG for Agriculture and Rural Development (undated). 
120 Regulation (EC) No. 1830/2003, 22 September 2003. 
121 Europa Press Release IP/08/219.  Viewed at:  http://europa.eu/rapid/press ReleasesAction.do?referen 
ce=IP/08/219&format=HTML&aged=0&language=EN. European Communities WT/TPR/S/214 
 Page 65 
 
 
92. Authorization and use of novel foods and food ingredients in the EC were harmonized by 
Regulation (EC) No. 258/97 adopted in 1997.122  The EC is revising its novel food legislation with the 
aim of, inter alia , establishing a centralized proce dure for assessment (by the EFSA) and 
authorization (by the Commission).123  For "traditional food" from third countries, which is considered 
as novel food under the current Regulation, safety as sessment and management are to be introduced 
based on the history of safe food use in the country  of origin.  A number of Members have raised 
concerns in the SPS Committee regarding the defi nition and recognition of "traditional food" from 
third countries in the proposed regulation.124  Developing countries in partic ular have complained that 
the proposed regulation would unreasonably hinder trad e because it would impose on the suppliers the 
burden of proof that traditional or ethnic products or  extracts are safe, and require historical evidence 
of safe consumption over a large area, although the products could be consum ed in small localities. 
93. The EC notified a total of 25 new or modi fied measures in 2007, and 13 in 2008 (to 
10 October).  Three of the notifications in 2007 concerned emergency actions, whereas only one 
emergency action was notified in 2008 (Table III.8).  In addition, the EC submitted a large number of 
addenda each year, providing a dditional information on prev iously notified SPS measures.125  
94. The EC and its Member States are members of the Codex Alimentarius Commission, the 
International Plant Protection Convention and the OIE (Member States only). 
(ix) Government procurement  
95. In 2006, public procurement in the EC corresponded to 16% of EC GDP, the same as in 
2004.126  The EC public procurement regime aims to increase competition and transparency, and to 
create opportunities to purchase better quality and valued services. The bodies that carry out the 
various public procurement functions  are centralized, semi-centralized or decentralized depending 
upon the Member State.127  In general, the core procurement f unctions (e.g. policy making, drafting of 
legislation, and international coordination) are centralized, while other functions (e.g. capacity 
building, publication, and dissemination of information) are undertaken by a broad spectrum of bodies, at both central and decentralized levels of public administration.
128 
96. Public procurement in the EC continues to be regulated by:  Directive 2004/18/EC on the 
coordination of procedures for the award of public wo rk contracts, public supply contracts, and public 
services contracts;  and Directive 2004/17/EC c oordinating the procurement procedures of entities 
operating in the water, energy, transport, and postal services sectors (the Utilities Directive).129  
                                                      
122 Novel food is defined as "food that has not been used for human consumption to a significant degree 
within the Community before 15 May 1997"; genetically modified food is no longer within the scope of novel 
foods. 
123 European Commission online information.  Viewed at: http://ec.europa.eu/food/food/biotechnology/ 
novelfood/COM872_novel_food_proposal_en.pdf. 
124 WTO document G/SPS/R/49, 18 June 2008. 
125 Some Latin American countries have complained about the EC decision to notify proposed changes 
to the novel foods regulation as a TBT measure, rather than as an SPS measure, stressing the underlying food 
safety objective of the novel foods regulation. 
126 Commission Staff Working Document SEC(2008) 2193, 25 June 2008. 
127 Centralized in Bulgaria, Cyprus, the Czech Rep ublic, Estonia, Hungary, Latvia, Lithuania, Malta, 
Poland, Romania, and the Slovak Republic; semi-centra lized in Austria, France, Germany, Ireland, Italy, 
Luxembourg, Slovenia, Sweden, and the United Kingdom;  and decentra lized in Finland and Portugal . 
 128 OECD (2007).  
129 The relevant procedures, award criteria and procurement methods under these two directives are 
described in detail in WTO (2007).   WT/TPR/S/214 Trade Policy Review 
Page 66 
 
 
During the period under review, the public pr ocurement remedies directives were revised130, and a 
directive on public procurement relating to defen ce and security was proposed.  Commission Decision 
2005/15/EC sets the rules on the applicability of procedures to establish whether certain utilities activities (e.g. transport services, postal services, and exploration or extraction of coal, gas, oil or 
other solid fuels, and ports and airports) are exposed to competition.
131  
97. The directives apply to all public procurement above specified threshold values, expressed in 
euros and if necessary, are revised every two years (Table III.9).132  These thresholds are similar to 
those submitted by the EC under its GPA commitments.133  Procurement below these thresholds is 
regulated by national legislation (see below), however it must follow the basic principles of the EC 
Treaty (transparency, non-discrimination, and equa l treatment).  Both Directives stipulate detailed 
rules/methods for estimating value of contracts134;  an artificial split-up into smaller lots represents an 
infringement of EC law. 
98. The procedures to award contracts have not changed since the previous TPR of the EC in 
2007.  Under Directive 2004/18 (public work contracts, public supply contracts, and public services contracts), open, restricted, negotiated (with /without prior notice), and competitive dialogue 
procedures may be used.  The authorities choose when  to use the open and restricted methods;  there 
are no specific criteria to choose when the different methods are to  be used.  However, the Directive 
provides for an exhaustive list of cases justifying us e of the negotiated procedure with a prior public 
notice (e.g., in exceptional cases, when the natu re of the purchase does not allow prior overall 
pricing), and without prior public notice (e.g. when, for technical or artistic reasons, the contract may 
be awarded only to a particular operator).
135  Competitive dialogue is to be used when the contract is 
particularly complex and cannot be awarded under the open or restricted procedures under specific 
circumstances.136  Contracts for utilities (Directive 2004/17) may be awarded under the open137, 
restricted138, or negotiated procedure with prior notice.   The utilities Directive allows procuring 
                                                      
130 Directive 2007/66/EC amending Council Directives 89/665/EEC and 92/13/EEC with regard to 
improving the effectiveness of review procedures concerning the award of public contracts, OJ L 335, 20 December 2007. 
131 During the period under review, a number of d ecisions were adopted, establishing the applicability 
of Article 30 of Directive 2004/17/EC to the supply of electricity and gas or to certain services, or exempting 
services and other activities in different Member States from the application of that Directive.  For further 
details, see Decisions 2007/422/EC, 2007/169/EC, 2007/564/EC, 2007/706/EC, and 2008/383/EC. 
132 Corresponding values of the EC thresholds in natio nal currencies (other than euros) are contained in 
a Communication from the Commissi on published in OJ C 301, 13 December 2007; and WTO document 
GPA/W/299/Add.4, 21 January 2008. 
133 WTO document GPA/MOD/EEC/2, 17 November 2006. 
134 Article 9 of Directive 2004/18/EC, and Article 17 of Directive 2004/17/EC. 
135 Article 40 (3) of Directive 2004/17. 
136 A contract is deemed to be "particularly comp lex" where the procuring entities cannot objectively 
define the technical means capable of satisfying their needs or are not objectively able to specify the legal and 
financial make-up of the project (Article 29 of the Directive 2004/18/EC). 
137 Under the open procedure, all interested bidders may submit tenders. 
138 The restricted procedure is a two-stage method where the contractors express their interest following 
publication of the contract notice, but only those invited by the local authority may submit tenders after a "screening" process.  This procedure consists of two stages: the selection of suitable bidders and evaluation of 
tenders.  At the first stage, the only criteria that may be used are to select prospective bidders with economic and 
financial standing or technical knowledge or capability.  The number of providers invited to tender must be sufficient to ensure genuine competition. European Communities WT/TPR/S/214 
 Page 67 
 
 
entities discretion to choose amongst these procedures.  The Utilities Directive provides for list of 
cases justifying use of the negotiated procedure without prior notice. 139 
Table III.9 
Minimum public procurement thresholds, mid-2008a 
(Euros)b 
n.a. Not applicable. 
a Threshold amounts do not include VAT. 
b Corresponding values of the EC thresholds in national currenc ies other than euro are contained in a Communication from the 
Commission published in OJ C 301, 13 December 2007; and WTO document GPA/W/299/Add.4, 1 January 2008. 
c Where the estimated total value of the contract or the frame work agreements intended for award over the following 12 months i s 
equal to or higher than €750,000,  contracting authorities or the European Commi ssion must publish a prior information notice on  
the buyer profile. 
d Contracts that are subsidized at more than 50% by the contr acting authorities involve either civil engineering to build hospi tals, 
facilities intended for sports, recreation a nd leisure, school and univers ity buildings, and buildings used for administrative 
 purposes or the services connected to the aforementioned types of projects.  
e Specific sectors refer to fields of research and development,  telecommunications (CPC Reference No. 752), hotel and restauran t 
services, transport by rail and waterway, provision of personnel, vocational training, investigation and security, legal, healt h and 
social, recreational, cultu ral and sporting services. 
f Utilities include water, energy, transport,  postal and telecommunications services. 
Source : Commission Regulation (EC) No. 1422/2007, 4 D ecember 2007, amending Directives 2004/17/EC and 
 2004/18/EC. 
99. Procurement above the stipulated thresholds mu st be advertised in the Supplement of the 
Official Journal  (S series), which is published throughout the EC and is available in electronic format, 
freely accessible on the TED (Tenders Electronic Daily) website.140  During 2004-06, procurement 
published in the Official Journal represented between 2.7% and 3.3% of GDP.  In 2005, the value of 
procurement published, as a percentage of total proc urement, ranged from 6.7% to 49.6% in different 
Member States (Table III.10).   
100. The number of contract award notices published on the TED rises annually.  However, not all 
of the results of the tenders have been posted in  the TED database. The Commission has made efforts 
to increase the publication rate of contract awar d notices; from 1 January 2008 to 21 October 2008, 
83% of the award notices were published.141 
101. In 2006, public procurem ent in the EC was estimated at €377 billion, €83 billion were spent 
on supplies, €95 billion spent on services and, approxi mately,  €200 billion  on construction works.  
The Commission estimated that, €264 billion were awarded under open proce dures (70%), €68 billion 
under restricted procedure (18%) and €45 billion  un der negotiated procedures (12%).  In 2007, calls 
for tender were mainly under the open procedur e (73%), followed by the negotiated (16%), and 
restricted (11%) procedures.  The Commission is currently establishing a methodology to monitor 
                                                      
139 A call for competition has to be made in accordance with Article 42 of Directive 2004/17. 
140 The Supplement to the Official Journal  advertises over 1,000 tender s each day; supply and public 
works contracts worth  €377 billion are published by public authorities in the EC each year.  TED online 
information.  Viewed at:  http://ted.europa.eu/ [5 July 2008]. 
141 Information provided by the authorities.  Supplies Services Works 
Public contracts, other than for utilities    
EC GPA contracting authorities  133,000c 133,000 c 5,150,000 
Other public sector cont racting authorities 206,000 c 206,000 c 5,150,000 
Contracts subsidized at more than 50% by the contracting authorityd n.a. 206,000 5,150,000 
Service designs contests    
  Central government authorities n.a.  133,000 n.a.  
  Other authorities n.a.  206,000 n.a.  
  Specific sectorse n.a.  206,000 n.a.  
Utilitiesf    
All sectors, except service design contests  412,000 412,000 5,150,000 
Service designs contests n.a. 412,000 n.a. WT/TPR/S/214 Trade Policy Review 
Page 68 
 
 
cross-border procurement, including from non-EC origins, however, it is extremely difficult to 
identify the exact nationality of successful suppliers/ service providers, thus no data are available on 
the amount of procurement from non-EC origin. 
Table III.10 
Selected procurement indicators, 2004-06a 
  
 
Value of procurement published in 
the OJ as a percentage of GDP  Value of procurement 
published in the OJ as 
a percentage of total 
public procurement b  
Defence procurement 
expenditure in 
percentage of GDP b Security 
procurement 
expenditure in 
percentage of GDP b 
 2004 2005 2006 2004 2005 2004 2005 2004 2005 
Austria 3.28 1.98 1.67 19.58 10.75 0.3 0.4 0.4 0.4 
Belgium 2.53 2.30 2.42 16.02 14.17 .. .. .. .. 
Czech Republic 0.36 2.67 5. 14 .. 13.10 0.8 1.2 0.6 0.6 
Cyprus 1.26 3.51 4.40 .. 31.32 0.9 0.9 0.5 0.4 
Denmark 2.73 2.21 2.95 16.66 15.53 0.8 0.8 0.4 0.4 
Estonia 2.71 7.05 7.33 .. 37.53 1.0 1.0 0.9 1.0 
Finland 2.89 3.29 3.06 17.28 20.18 1.0 1.0 0.6 0.6 
France 2.76 2.98 3.44 16.25 16.93 0.8 0.8 0.3 0.4 
Germany 1.17 1.61 1.65 7.46 9.95 0.5 0.5 0.5 0.5 
Greece 3.73 4.78 5.52 35.22 49.59 1.6 1. 4 0.1 0.1 
Hungary 1.28 6.77 6.82 .. 36.87 .. 0.6 0.4 .. 
Ireland 3.34 2.59 3.31 27.72 19.61 0.1 .. 0.5 .. 
Italy 2.35 2.67 3.03 15.61 18.71 0.5 0.6 0.4 0.4 
Latvia 1.79 9.76 13.82 .. 58.97 0.5 0.5 0.6 0.6 
Lithuania 2.43 3.58 4.25 .. 27.38 0.6 0.6 0.5 0.5 
Luxembourg 3.10 2.46 1.39 18.45 17.61 0.0 0.0 0.3 0.4 
Malta  0.22 1.05 1.80 .. 6.50 0.4 0.3 0.3 0.3 
Netherlands 1.75 1.62 2.33 7.42 6.73 0.6 0.6 0.7 0.6 
Poland 2.57 7.62 5.23 .. 47.81 0.4 0.4 0.6 0.6 
Portugal 2.49 2.14 1.91 15.85 14.12 0.4 0.4 0.3 0.2 
Slovenia 1.61 3.22 5.12 .. 22.33 0.0 0.0 0.5 0.5 
Slovakia  2.70 6.31 3.05 .. 27.75 0.6 0.9 0.7 0.7 
Spain 2.98 4.30 4.20 21.57 31.10 0.5 0.5 0.4 0.4 
Sweden 3.33 3.19 3.07 18.95 17.80 1.2 .. 0.5 .. 
United Kingdom 4.63 3.56 4.68 .. 20.51 1.7 1.7 1.0 1.0 
Total 2.65 2.93 3.27 .. 17.74  .. .. .. .. 
.. Not available. 
a Data on public procurement are available 12 mont hs after the end of the reference period. 
b Data are not available for 2006. 
Source : Eurostat (undated), Public procurement advertis ed in the Official Journal .  Viewed at:  
 http://epp.eurostat.ec.europa. eu/portal/page?_pageid=1996,45323734&_da d=portal&_schema=PORTAL&screen=
 welcomeref&open=/economy/gov/gov_oth&language =en&product=EU_MAIN_TR EE&root=EU_MAIN_TREE
 &scrollto=576;  Commission Staff Working Document (undated), "Annex to the Proposal for a Directive of the 
 European Parliament and of the Council on the coordina tion of procedures for the award of certain public works 
 contracts, public supply cont racts and public service contracts in the field of defence and securityViewed at 
 http://ec.europa.eu/internal_marke t/publicprocurement/docs/de fence/impact_asse ssment_en.pdf;  and information 
 provided by the authorities. 
102. Public procurement below the thresholds of th e procurement directives, which constitutes the 
majority of the contracts  (around 84% of total EC-27 public procurement in 2004142, and over 90% in 
some Member States) 143, falls under the competence of Member States.  Below the thresholds there is 
no obligation for procuring authorities to follow the ru les stipulated in the EC directives.  However, 
awards must comply with the basic principles of transparency and non-discrimination and equal 
treatment, which are inscribed in the EC Trea ty.  An interpretative communication from the 
                                                      
142 GHK and Technopolis (2007).   
143 Europa Press Release IP/06/1053, 24 July 2006. European Communities WT/TPR/S/214 
 Page 69 
 
 
Commission sets out guidelines on how to comply with these principles in the areas of advertising, 
contract award procedures, and review procedures.144 
103. Review and remedies systems for public procur ement (regulated at the Community level) are 
established as minimum requirements, on the basis of the EC remedies directives145, the EC Treaty, 
and the case law of the European Court of Justice.  The remedies directives lay down a common 
framework, which guarantees uniform application of th e review procedures.  This framework is then 
adapted according to  the judicial and/or administrative systems of each Member State.146  In addition, 
a national remedies and review system may cover contr acts outside the scope of the directives, such as 
contracts below their thresholds of application, and service concessions. 
104. The new Directive 2007/66/EC on remedies supplem ents and amends pre-existing directives 
on procurement remedies.  It requires public aut horities to observe a minimum "standstill period" of 
ten calendar days before concl uding a public contract, thus providing the opportunity for rejected 
bidders to start an effective review procedure.  If that period is not respected, the directive requires 
national review bodies to render the contract ineffect ive.  The directive also seeks to combat illegal 
direct awards of public contracts, which are the mo st serious infringement of EC procurement law.  A 
specific review mechanism is provided for cont racts, based on framework agreements and the 
dynamic purchasing system147, where speed is crucial; for such contracts, Member States may choose 
to replace the standstill obligation by a post-contractua l review procedure.  Member States have until 
20 December 2009 to bring their laws, regulations , and administrative procedures into compliance 
with the directive.  Its implementation may lead to a greater number of challenges to tendering 
procedures and award decisions. 
105. Defence procurement accounts for a large share of EC public procurement, with combined 
defence budgets of Member States wo rth about €170 billion (Table III.10).148  Currently, procurement 
in the domain of defence is covered by the EC public  procurement rules, except for contracts subject 
to Article 296 of the EC Treaty on the right to not disclose information related to "essential security interests".  Article 296 has been frequently widely in terpreted by the contracting authorities, hence EC 
rules have not always been correctly applied
149, and the application of procurement rules on defence 
lacks uniformity.150  Given that Directive 2004/18/EC, appli cable to these defence contracts does not 
                                                      
144 "Commission Interpretative Communication on the Community law applicable to contract awards 
not or not fully subject to the provisions of the Public Procurement Directives", OJ C 179/02, 1 August 2006. 
145 These directives (Directives 89/665/EEC, 92/13/EEC, 2007/66/EC) regulate the substance of the 
procurement review and remedies system s of Member States.  However, there are no requirements as to whether 
the review is to be conducted through ordinary, special, or administrative courts or the type of law in which the review and remedies system is to be enshrined. 
146 Commonalities and differences relate to ins titutional frameworks, legal frameworks regulating 
scope and procedures, and review culture.  For further details, see OECD (2007d). 
147 A "framework agreement" is an agreement between one or more contracting entities and one or 
more economic operators establishing the terms of the contracts to be awarded during a specific period, in 
particular with regard to price and quantities.  A "d ynamic purchasing system" is an electronic process for 
making regular purchases.  Both concepts were introduced in 2004 by EC Directives 2004/17/EC and 
2004/EC/18. 
148 COM (2006) 1555, Bru ssels, 7 December 2006 
149 The case law of the Court of Justice has developed a restrictive interpretation of the possibility of 
using this derogation; however, many Member States tend to use Article 296 to exempt almost all defence and sensitive procurement from internal market rules. 
150 Differences relate to th e publication of contract notices, the potential for non-publication, the criteria 
for selecting suppliers, tendering procedures, and the basi s on which contracts are awarded.  For further details, 
see Green Paper, Defence Procurement, COM(2004) 608 final, Brussels, 23 September 2004.  In some Member WT/TPR/S/214 Trade Policy Review 
Page 70 
 
 
take into account some special features of defen ce contracts, and in order to reduce the misuse of 
Article 296151, the EC adopted:  (i) an Interpretative communication in 2006, to clarify the conditions 
for the use of Article 296 and to provide guidan ce to national awarding authorities as to whether 
procurement contracts can be exempted from EC rules152; and (ii) a proposal in 2007 for a new 
procurement directive adapted to the specificities of defence.153  
106. Member States must comply with the provisions of the EC procurement directives, which 
should be transposed into national legislation.  The Commission may open infringement proceedings 
for non-compliance with the Community law.  In the domain of public procurement, the Commission 
referred (in March 2007) seven Member States to the European Court of Justice over their continued 
non-communication of national measures impl ementing Directives 2004/17/EC and 2004/18/EC.154  
The Commission has also started infringement proceedings concerning the implementation of remedies directives in three Member States.
155  Misapplication and/or incorrect transposition of public 
procurement rules account for 7% of total infringements in the EC.  As at 30 April 2008, there were 92 infringement cases, down from 96 in July 2007 a nd 113 in 31 October 2006.  Public procurement 
directives were transposed in all but one Member State as at 13 May 2008.
156 
107. The EC is a signatory to the plurilateral Government Procurement Agreement (GPA) 
concluded under the WTO;  all the EC Member s States provide national treatment for goods or 
suppliers from the GPA signatory co untries.  Pursuant to the accession of Bulgaria and Romania to 
the EC, modifications were introduced into the EC's Appendices to the GPA, effective 
1 January 2007157, and amendments were made to the respective EC directives.158  During the period 
under review, the EC submitted one notification to the Committee on Government Procurement 
concerning its new thresholds.159  The EC plays an active role in the work on the GPA; in 
February 2008, the EC tabled its revised offer.  Through bilateral negotiations, the EC seeks access to 
non-EC procurement markets, in particular those of fast-growing economies. 
                                                                                                                                                                     
States  (like the United Kingdom), defence procurement is not regulated at all and is handled on a case-by-case 
basis.  
151 The case law of the Court of Justice has developed a restrictive interpretation of the possibility of 
using this derogation;  however, many Member States use Article 296 to exempt almost all defence and 
sensitive procurement from internal market rules. 
152 COM (2006) 779 final, Brussels, 7 December 2006, "Interpretative Communication on the 
application of Article 296 of the Treaty in the field of defence procurement".  The communication is a 
non-legislative measure and does not modify the existing legal framework; it only concerns defence 
procurement by national authorities in the EC and does not deal with defence contracts with third countries 
(which continue to be governed by the WTO Government Procurement Agreement). 
153 COM (2007) 766 final, Brussels, 5 December 2007, "Proposal for a Directive of the European 
Parliament and of the Council on the coordination of procedures for the award of certain public works contracts, 
public supply contracts and public service contracts in th e fields of defence and security". Viewed at: http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2007:0766:FIN:EN:PDF. 
154 The deadline for complying with the provisions of both directives expired on 31 January 2006.  
Europa Press Release IP/07/361, 21 March 2007. 
155 Infringement proceedings may be opened agains t a Member State where the European Commission 
considers that internal mark et rules are not properly applied; such procedures provide for a dialogue between the 
Commission and the Member State concerned.  Only the Co urt of Justice can rule definitively that a breach of 
Community law has occurred (Europa Press Release IP/08/1038, 26 June 2008).  
156 European Commission online information, "Internal Market Scoreboards", No. 1 bis 
(December 2006), No. 16 (July 2007),  and No. 17 (July 2008). Viewed a t: http://ec.europa.e u/internal_market/ 
score/docs/score15bis/score15bis_en.p df;  http://ec.europa.eu/internal_mar ket/score/docs/score16_en.pdf;  and 
http://ec.europa.eu/internal_market/score/docs/score17/score17_en.pdf. 
157 WTO document GPA/90, 11 December 2006. 
158 Council Directive 2006/9 7/EC, 20 December 2006. 
 159 WTO document GPA/W/299/Add.4, 29 January 2008.  European Communities WT/TPR/S/214 
 Page 71 
 
 
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Registration and documentation  
108. There have been no major changes to the export procedures stipulated in the EC Community 
Customs Code.160  All Community goods intended for e xport are to be placed under the export 
procedures.  Community goods declared for export are subject to customs supervision from the time 
of the acceptance of the customs declaration until th ey leave the customs territory of the Community.  
The electronic export declaration requires the use of  the data included in the Single Administrative 
Document (SAD), as well as other documents, in cluding the certificate of origin necessary for 
preferential treatment in importing countries (when a pplicable), and licences for products covered by 
the Common Agriculture Policy (CAP).  Amendmen ts have been introduced mainly to improve 
security.  Traders must provide Customs with adva nce information on goods taken out of the EC 
territory.   However, as of 1 July 2009, the Authori zed Economic Operator (AEO) programme, which 
entered into force on 1 January 2008, should allow AEOs to benefit from less customs controls.  
(ii) Export taxes, charges, and levies 
109. In general, the EC does not apply taxes, charges or levies on exports.  Export levies may be 
imposed if the EC price falls below world-market  level to ensure that a regular supply of goods 
remains within the EC;  in  practice, these are rare. 
(iii) Export prohibitions, restrictions, and licensing  
110. There have been no major changes to the EC's regimes on export prohibitions, restrictions, or 
licensing since its previous TPR.  Export restricti ons are allowed on grounds of public morality, the 
protection of health and life of humans, animals and plants, and national cultural treasures.  The 
restrictions are under the competen ce of both the Commission and Member States.  The regimes also 
provide for measures to prevent a critical situati on arising from a shortage  of essential products. 
111. Export prohibitions are adopted by the Community and its Member States as part of the 
Common Foreign and Security Policy (CFSP) and to implement UN Security Council Resolutions.  The export of arms may also be subject to prohi bition as part of EC sanctions against certain 
countries. In particular, arms embargoes are in pl ace against Burma (Myanmar), Côte-d'Ivoire, China, 
Congo (D.R.), Iraq, Iran, Lebanon, Liberia, North Korea, Sierra Leone, Somalia, Sudan, Uzbekistan, 
and Zimbabwe 
161  The export of dangerous chemicals is s ubject to controls established in Council 
Regulation 304/2003. 
112. An export authorization or licence is required for the export of cultural goods and certain 
products under the CAP, and for the control of ex ports of dual-use items and technology according to 
provisions set out in Regulation 1334/2000.162  The list of products subject to the special control under 
                                                      
160 Regulation (EC) No. 648/2005, 13 April 2005, and Regulation (EC) No. 1875/2006, 
18 December 2006. 
161 For an updated list of countries subject to embargo, see Europa online information. Viewed at:  
http://europa.eu.int/comm/external_relations/cfsp/sanctions/measures.htm. 
162 Dual-use products are items, including software and technology, that can be used for both civil and 
military purposes. They can also be items for use in connection with the development, production, handling, 
operation, maintenance, storage, detection, identification or dissemination of chemical, biological or nuclear 
weapons; or the development, production, maintenance or storage of missiles capable of delivering such weapons. WT/TPR/S/214 Trade Policy Review 
Page 72 
 
 
the dual-use regime is set out in Regulation 1334/2000 (last amended by Regulation 1183/2007). 163  
The export of software or technology by electronic media, fax or telephone (intangible transfers) is 
also subject to authorization under the dual-use regime.  Member States can also adopt national 
legislation to extend controls or implement contro ls according to limited possibilities defined by the 
Regulation.164  Applications for export licences are submitted to the competent authorities;  they (i.e. 
applications) are regularly published in the Official Journal , of the Member State where the exporter 
is established.165  Member States can also indi vidually decide to facilitate exports procedures of any of 
the items listed in the Annex I of the Regulation 1334/2000 as last amended.  
113. A licence is compulsory for the exportation of cultural goods outside the customs territory of 
the Community to ensure uniform checks  on exports of certain cultural objects.166 
114. Export licences are required to export g oods covered by the CAP from the EC 
(Chapter IV(2)).167  If an export licence is required, it must be presented at the time of exportation.  
The procedure to applying for a CAP export licence is similar to that used for import licences.  The 
export licence is required in order to claim a refund on agricultural goods eligible for export subsidies 
(section (iv) and Chapter IV(2)) and for  exporting sugar, cereals, and rice.  
(iv) Export subsidies 
115. The last notification from the EC on its expor t subsidy commitments and budgetary outlays 
covered the marketing years 2005/06 and 2006/07.168  The products eligible for export subsidies 
include:  wheat and wheat flour, coarse grains, rice, rapeseed, olive oil, sugar, butter and butter oil, 
skim milk powder, cheese, other dairy products, b eef meat, pig meat, poultry meat, eggs, raw tobacco, 
alcohol, and "incorporated products" (Chapter IV(2)). 
116. The EC provides export subsidies through vari ous programmes:  export refunds, sales of 
stocks, and producer financing.169  The Common Agricultural Policy provides for the possibility of 
granting export refunds.  The purpose of expor t refunds is to cover the difference between 
Community prices and international trade prices in order to enable exports to be effected at 
international trade prices.170  The refund is the same for the whole EC;  a differential may be applied 
according to destination or time (months of delivery) .  The amount of the refund is fixed periodically 
by the Commission;  it is paid to the exporter.171  During the period under review, export refunds have 
been paid for: sugar, cereals (the export refunds were discontinued in December 2007), beef and veal, 
fruit and vegetables (under the reformed CMO in th e sector, effective from 2008, export refunds have 
been abolished), eggs, pork, rice, wine (export refunds abolished as of  2008), and poultry meat.  
Export refunds for dairy products were set at zero in 2006 and 2007. 
                                                      
163 Council Regulation (EC) No. 1183/2007, 18 September 2007. 
164 Examples of such measures were published in the OJ C 188, 25 July 2008. 
165 The latest publication was in OJ C 188, 25 July 2008. 
166 Council Regulation (EEC) No. 3911/92, 9 Decem ber 1992 on the export  of cultural goods. 
167 For full details on goods subject to export licensing under the CAP, see HMRC online information, 
"CAP Exports".  Viewed at:  http://customs.hmrc.gov .uk/channelsPortalWebApp/channelsPortalWebApp.portal 
?_nfpb=true&_pageLabel=pageImport_ShowContent&id=HMCE_CL_000175&propertyType=document#P130
_12158 [26 August 2008]. 
168 WTO document G /AG/N /EEC/57,  25 November 2008. 
169 WTO document G /AG/N /EEC/57,  25 November 2008. 
170 WTO document G/SCM/N/155/EEC, 21 November 2007. 
171 WTO document G/SCM/N/155/EEC, 21 November 2007. European Communities WT/TPR/S/214 
 Page 73 
 
 
(v) Export finance, insurance and guarantees  
117. During the period under review, there were no changes to EC rules on export credits, 
insurance and guarantees.  Export credits, insurance,  and guarantees are granted at the State level and 
are based on OECD guidelines.  The EC has been a party to the OECD arrangements on guidelines for 
officially supported export credit since 1978. 
(vi) Export promotion and marketing assistance  
118. The EC provides assistance to promote agricultu ral products and food on the internal market 
and in third countries.  This includes public relations, promotional or publicity campaigns, 
participation in events and fairs, in particular, those that highlight the advantages of consuming EC 
products, especially in terms of quality, hygiene, fo od safety, nutrition, labelling, animal welfare or 
environmental friendliness of their production.  The EC finances this assistance with an annual budget 
of approximately €50 million, to an amount not exceeding 50% of the total cost of the approved 
programme;  the remainder is financed by the pr ofessional/inter-branch organi zations that proposed 
the programme and by the Member St ates where the products originate.172  
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Assistance and other incentives 
119. The EC last notified its assistance and subsidies programmes to the WTO in 2007.173  
Subsidies are granted both at Community level and by Member States.174  The notification covers the 
subsidies granted during 2003 (€102 billion) a nd 2004 (€111 billion).  The EC assistance and 
subsidies programmes be largely grouped in four major categories:  the structural actions; the 
Common Agriculture Policy (CAP);  industrial programmes; and other programmes including 
assistance to SMEs, to joint-ventures, and to fish eries and aquaculture.  The two largest areas of 
expenditure in 2003-04 were agriculture and stru ctural operations, which accounted for 44% and 33% 
of EC's financial commitments, respectively.   Research took 4% of total expenditure.  
(a) Structural actions 
120. The EC's structural actions (including through the Structural Funds and the Cohesion Fund) 
are intended to strengthen the economic and social  cohesion of the Community, in particular by 
reducing disparities in the levels of development of  the various regions and the backwardness of the 
least favoured regions.  The main structural funds  are:  the European Regional Development Fund 
(ERDF), the European Social Fund (ESF), the Euro pean Cohesion Fund, the European Agricultural 
Fund for Rural Development (EAFRD), and the Financ ial Instrument for Fisheries Guidance (FIFG), 
which assists in the restructuring of the fisheri es subsector.  The Cohesion Fund is intended to 
contribute to projects in the fields of environment and transport infrastructure, with an annual budget 
of around €10 billion (€ 69.5 billion for 2007-13).175 
                                                      
172 Regulation (EC) No. 1071/2005 lists the themes and products that can be covered by the promotion 
measures in the EC, and Regulation (EC) No. 1346/2005 refers specifically to third countries, describing the 
procedures for presenting proposals and for managing the programmes (WTO document G/SCM/N/155/EEC, 
21 November 2007). 
173 WTO document G/SCM/N/155/EEC, 21 November 2007. 
174 For subsidies granted by individual Me mber States, see WTO document series 
G/SCM/N/155/ECC/Add.1 – Add.27. 
175 Eligibility is reserved for Member States whose per capita GDP is less than 90% of the EC average. WT/TPR/S/214 Trade Policy Review 
Page 74 
 
 
121. The objectives of the structural funds (ERDF, ESF, EAFRD, and FIFG) are:  (i) development 
and structural adjustment of the regions whose deve lopment is lagging behind (GDP of less than 75% 
of the EC average); (ii) the economic and social conversion of areas facing structural difficulties, and (iii) the adaptation and modernization of Member  States’ education, training, and employment 
policies and systems.
176 
122. The revised Regulations concerning the ERDF stru ctural funds were adopted on 5 July 2006, 
and cover the period 2007-13. 177  The commitments in 2007 amounted to €27.2 billion.  ERDF aid is 
normally in the form of grants or loans used to co-finance:  investment leading to the creation or 
maintenance of jobs;  infrastructure;  and th e development of local business initiatives and the 
activities of small and medium-sized enterprises.   
123. The European Social Fund (ESF) was set up to improve the employment opportunities for 
workers and to help raise their living standards.  Over the period 2007-13, some €75 billion will be 
distributed to the EC Member States and regions in the form of grants for vocational training, 
employment aids and aids for self-employm ent, and development of new employment 
opportunities.178   
124. The EC also supports rural development for countries applying for accession.  During 
2000-06, SAPARD was the rural development pre- accession instrument used to assist the ten 
countries that became new Members of the Europe an Community.  The programme has elapsed in 
seven of the new Member States, and assistance is  currently being finalized in Bulgaria, Croatia, 
Latvia, and Romania.  Under a new pre-accession instrument implemented by the Commission, the 
rural development component, IPARD, is used to finance rural development programmes in the three 
new official candidate countries Turkey, Croatia, and FYROM.  The aim of the SAPARD and IPARD 
programmes is to support acceding countries in their preparations for implementation and 
management of the CAP, and to contribute to the sustainable development of the agriculture sector 
and rural areas in these countries.  
125. The objective of the Accompanying Measures of  the Rural Development Programmes of the 
European Agricultural Fund for Rural Developmen t (EAFRD) are to provide grants:  for early 
retirement from agricultural activity;  to compen sate for income foregone  and additional costs 
resulting from implementing agri-environment commitment s;  for afforestation of agricultural land;  
and to compensate for loss in productivity due  to climatic or geographic limitations.  
(b) Support to agriculture and fisheries 
126. The Common Agricultural Policy was reformed in 2003-05 by the introduction of a new 
system of Single Farm Payments (income support)  in which the link between support and production 
was cut (decoupling).179  Since then, the Single Payment Scheme (SPS) has replaced most of the 
                                                      
176 These structural actions must conf orm strictly to the Community's rules on the provision of state aid 
(Article 87 of the EU Treaty). 
177 Regulation (EC) No. 1080/2006 of the European Parliament and of the Council of 5 July 2006 on 
the European Regional Development Fund and repealing Regulation (EC) No. 1783/1999, OJ  L 210, 
31 July 2006.  Europa online information. Viewed at:  http://europa.eu/scadplus/leg/en/lvb/g24234.htm, 
[1 August 2008]. 
178 European Commission online information, "What is the ESF?". Viewed at: 
http://ec.europa.eu/employment_social/esf/d iscover/esf_en.htm [31 August 2007]. 
179 All farmers, whether or not they produce from their land, must abide by the condition of cross-
compliance, i.e. the respect of standa rds to be established by the Member  States for keeping land in good 
agricultural and environmental condition. European Communities WT/TPR/S/214 
 Page 75 
 
 
previous direct aid payments to farmers;  however, some of the animal premiums and arable aid 
payments were - at the choice of Member States - maintained.  Thus, agricultural support under the 
CAP still includes export refunds, direct aiding, and interventions in agricultural markets through 
price supports and assistance for storing and processing products (Chapter IV(2)).  
127. In order to "stabilize" agricultural mark ets, the CAP still provides product specific 
intervention and aid.  Overall, support measures have been modified in the context of the CAP reform 
with a switch towards using income sup port measures as opposed to other types. 
128. Decoupled direct payments include:  the Singl e Payment Scheme (SPS) (2003), an income 
support scheme for farmers;  and the Single Ar ea Payment Scheme (SAPS), a simplified support 
scheme for farmers in the new Member States.180  Other aid schemes 181, still coupled, are available 
for farmers producing arable crops, protein crops, ri ce, milk, sheep meat and goat meat, and beef and 
veal, for durum wheat, nuts, energy crops, starch potatoes, olive oils, seeds, grain legumes, cotton, 
sugar, tobacco, and hops, as well as for farmers maintaining olive groves. 
129. Market interventions for agricultural products in  the EC take various forms, including price 
interventions (i.e. setting basic prices, minimum pri ces, and reference prices) for most cereals, dairy 
products, certain meats, paddy rice, potatoes, suga r, and unginned cotton;  production refunds (for 
potato starch, paid to manufacturers);  a system of production quotas (for potato starch, sugar, and milk);  aid for private storage (dairy products, some  meats, table wines, an d grape must);  aid for 
processing agricultural products (dairy products an d certain fruits and vegetables); assistance for 
withdrawing produce from the market (certain fr uits and vegetables);  compensatory aid and 
supplementary aid granted to regions that have e xperienced severe market circumstances (bananas);  
production aid (fibre flax and hemp); and assistance to encourage the formation of producers’ organizations (fruits and vegetables).  
130. The EC also provides aid for the promotion of ag ricultural products and food in the internal 
market and in third countries.  
131. The sustainable development and structural ad justment of the fisheries and aquaculture 
subsector are supported through the Financial Instrument of Fisheries Guidance (FIFG) (structural 
measures in the fisheries and aquaculture subsect or).  The aid is specifically granted for the 
restructuring of fishing fleets, aquaculture, pro cessing and marketing circuits, port facilities, and to 
contribute to the revitalization of areas that depend upon fisheries.  There is also a CMO in Fishery and Aquaculture Products that provides financ ial compensation, carry-over aid, autonomous 
withdrawal and carry-over, and private storage aid to members of the CMO, and compensatory 
payment for the tuna industry.  
(c) Support to industry 
132. The EC grants assistance for research through the Seventh Framework Programme (FP7) of 
research and technologic development, aimed at strengthening the scientific and technological bases 
of Community industry, and encouraging the de velopment of its competitiveness.  The activities 
under the  framework programme relate to funda mental research, industrial research or pre-
competitive development.  Financi ng of product development is exclude d.  The FP7 targets small and 
medium-sized enterprises (SMEs) through other sp ecific programmes (e.g. ca pacities programme).  
The aim is to strengthen the innovation capacity of SM Es and their contribution to the development of 
new technology-based products. 
                                                     
 
180 SAPS is a decoupled support scheme; there ar e payments per ha of agricultural land.  
181 Title IV of Regulation 1782/2003. WT/TPR/S/214 Trade Policy Review 
Page 76 
 
 
133. A common Research Fund for Coal and Steel (RFCS) was created in 2002, dedicated to 
research in the coal and steel industries.182  The Community finan ces accompanying measures 
designed to complement and/or coordinate research  activities related to this  programme, and supports 
preparatory actions such as the dissemination of r esearch results, promotion of the use of knowledge 
gained, and the support of training and mobility of researchers.  
134. In addition, Member State assist ance to the hard coal industr y has been provided in the EC 
since 2002, following the establishment of a dedicat ed legal base which includes:  aid for the 
reduction of activity, aid to access coal reserves, and aid to cover exceptional costs.  Overall aid to the 
coal industry granted is to follow a downward trend resulting in a significant reduction.  In addition, 
aid must not result in lower coal prices in the EC than those prevailing in third countries, and aid must 
not distort competition in the internal market. 
(d) Other support programmes 135. EC enterprise policy focuses on fostering the competitiveness and innovation capacity of 
European businesses by establishing a dynamic enterp rise environment; and ensuring that businesses 
have access to markets and to finance.  The EC u ses various  instruments to foster competitiveness 
and promote innovation.  A key in strument to support enterprises is the Entrepreneurship and 
Innovation Programme (EIP) under the Compe titiveness and Innovation Framework Programme 
(CIP).  Other sources of financing include the stru ctural funds and the European Investment Bank.
183  
In addition, numerous initiatives and funds to support the creation of new businesses are available at 
the national and regional levels. 
136. The CIP (2007–13) has an overall budget of €3.6 billion184;  its objective is to foster the 
competitiveness of European enterpri ses, in particular small and medium-sized enterprises (SMEs).  
The three specific programmes under the CIP are the Entrepreneurship and Innovation Programme 
(EIP), the ICT Policy Support Programme (ICTPSP) , and the Intelligent Energy-Europe Programme 
(IEE).  An interim evaluation of the specific programmes is currently taking place and will be completed by end December 2009.   
137. Through the Multiannual Programme for Enterpri se and Entrepreneurship, the EC provides 
assistance to enterprises, in particular SMEs.  The programme focuses on enhancing the growth and competitiveness of business;  promoting entrepreneurship; simplifying and improving the administrative and regulatory framework for busin ess;  improving the financial environment for 
business, especially SMEs;  and giving busin ess easier access to Community support services.  
138. The programme provides for financial instruments,  as well as the Euro Info Centres Network, 
and the exchange of best practices in regard to SMEs.  The financial instruments, managed by the 
European Investment Fund, are schemes targeted specifically at improving the financial environment 
for businesses, especially SMEs. They bridge the gaps  normally left in the financial markets by:  
                                                     
 
182 Council Decisions 2003/76/EC, 2003/77/EC and 2003/78/EC, 1 February 2003, published in the 
Official Journal,  5 February 2003 (OJ L 29/22, OJ L 29/25, OJ  L 29/28).  For programme-related documents 
and the information package, see CORD IS online information.  Viewed at:  http://www.cordis.lu/coal-steel-
rtd/home.html.  
183 These include the Business to Europe (B2Europe) initiative, and the Enterprise Europe Network, 
which replaces the Euro Info Centre and Innovation Relay Centres; and the network of Organizations for Promotion of Energy Technologies.  The EC cooperates with its partners on industrial policy by establishing 
different forms of exchange, including industrial roundtables and industrial cooperation. 
184 The CIP decision (1639/2006/EC) was adopted by the European Parliament and the Council on 
24 October 2006 and entered into force on 29 November 2006. European Communities WT/TPR/S/214 
 Page 77 
 
 
investing in funds providing risk capital to smal ler businesses,  providing debt finance for small 
companies, and providing seed capital.  Though so me of the assistance is aimed at promoting access 
to new markets, the number of SMEs capable of pa rticipating in international activities is small. 
139. Assistance is also offered to SMEs through th e Joint European Venture (JEV) Programme, set 
up to provide grants to SMEs for setting-up new tr ansnational joint ventures within the EC.  The 
impact of this programme on trade has been neglig ible, since the export capacity of the SMEs is not 
taken into account when providing the grants. 
(ii) State-trading and state-owned enterprises  
140. During the period under review, the EC has made no notifications to the WTO with regard to 
state-trading enterprises within the meaning of GATT Article XVII.  However, state-owned 
enterprises with monopolies or exclusive rights still ex ist in certain Member States in trading and in 
distribution of alcoholic beverages (Finland and Sw eden), gas (Greece), and electricity (Luxemburg) 
(Table III.11).185 
Table III.11 
Public monopolies in EC Member States, 2007 
Country Sector 
Austria Postal service for pieces up to 100g 
 Radio and television broadcasting 
Belgium Telephone, telegraph, and postal services 
 National railways 
 Construction and operation of airports 
Bulgaria .. 
Cyprus .. 
Czech Republic Railway transport 
Denmark Postal service for letters up to 50g 
 Radio and television broa dcasting at national level 
Estonia Estonian Post (exclusive right to deliver le tters up to 50g until 31 December 2008, and to issue postage 
stamps) 
 Eesti Energia (owner of transmission network) 
 Provision of pilotage services reserved to a company founded by the state AS Esti Loots 
 Eesti Loto (exclusive right to arrange lotteries) 
 Railway infrastructure 
Finland Rail transport services 
 Football pools, state lotteries with money prizes and totaliser 
 Trade and distribution of liquor 
France a Atomic energy 
 Railway passenger transport 
 Coal mines 
 Retail sale of tobacco is state cont rolled through commercial intermediaries 
 Gunpowder and explosives 
 Collection, transport and distribu tion of letters and parcels up to 50g and with a postage not exceeding 2.5 
times the base tariff 
Germany b Telecommunication (licence required for mobile co mmunication sector, due to limited resources)  
 Inland waterways 
 Employment services (labour exchange) 
 Lotto 
Greece Rail transport 
 Import and distribution of gas 
 Lotteries 
Hungary Public utility wholesale of electricity; supply of electri city in the public utility syst em; operation of the transmiss ion 
system of the electricity grid 
 Public utility wholesale of natural gas; supply of natural gas in the public utility system; distribution of natural gas  
through distribution pipeline networks 
 Scheduled passenger road transportation by bus 
 Rail transportation of passengers 
Ireland Postal services 
 Table III.11 (cont'd) 
                                                      
185 Finland and Sweden have been allowed to maintain this structure on health grounds. WT/TPR/S/214 Trade Policy Review 
Page 78 
 
 
Country Sector 
 Telecommunication services 
 Water, electricity, gas, distribution 
 Railways 
Italy Postal services and telecommunications 
 Distribution of electricity, gas, water, and nuclear energy 
 Railways 
Latviac Energy (the energy company Latvenergo not allowed for privatization)  
 Postal services (collecting, sorting,  transportation, and delivery of domest ic and international postcards, letters, 
printed matter and small parcels up to 50 within the te rritory of the country; and circulation of postage 
stamps and other printed prepayment orders 
Lithuania Minting of coins (only Lithuanian mint is authorized) 
 Exclusive rights of the State Post Office to install lette r collection boxes, issue postage  stamps, deliver pensions, 
allowances, and other state or Soci al security foundation benefits  
Luxembourg Postal services 
 Telecommunications (infrastructure, basic services) 
 Import of electricity and natural gas 
 Railways (infrastructure) 
Malta .. 
Netherlands Postal services for letters up to 50g 
 Transmission system operation and dist ribution system operation of electri city and gas grids, gas and water 
 Railway passenger services provided by Dutch Railways 
Poland .. 
Portugal Postal communications 
 Production and distribution of water for public use 
 Basic sanitation 
 Rail transport (exploited as a public service) 
 Operation of sea and air ports 
Romania .. 
Slovenia Postal services for pieces up to 50g  
 Telecommunications in respect to th e fixed line segment of the market 
 Rail transport 
 Obligatory pensions 
 National lottery 
Slovak Republic .. 
Spain Certain postal services 
 Distribution of electricity (high tension) and gas in rural areas 
 Railways 
 Nuclear-waste disposal industries 
Sweden Television and radio broadcasting 
 Mail distribution 
 Football pools, state lotteries w ith money prizes and horse betting 
 Import and sale of alcoholic beverages 
 Retail sale of pharmaceutical products 
United Kingdom .. 
.. Not available. 
a Production (mining) of solid fuels/imports  of coal abandoned from 31 December 2007 
b Postal policy in Germany is characterized  by a step-by-step opening up to competiti on on letter mail services: maximum weight f or 
reserved services has been 50g per letter since 2006; the excl usive licence under the Postal Act for conveying letters up to 
100g expired on 31 December 2007. 
c The electricity market is being opened gradually: competition is  possible in the markets for production and sale, but limited i n 
transmission and distribution. 
Source: OECD (2007), National Treatment for Foreign-Controlled Ente rprises, List of Me asures Reported for 
 Transparency , Investment Divisi on, Directorate for Financial and Enterprise Affairs, 11 July.  Viewed at: 
 http://www.oecd.org/ataoecd/57/46/38273182.pdf. 
141. In addition to these monopolies, enterprises with  different degrees of state ownership (20%-
100%) operate in all Member States in various sector s, mainly services and utilities (Table AIII.3).  
The size and scope of the public sector remain quite  heterogeneous among EC Member States.  State-
owned companies are subject to the same legi slation as privately owned companies and face 
competition from private companies; however, in certa in instances, they are not subject to bankruptcy 
law and may obtain state subsidies. European Communities WT/TPR/S/214 
 Page 79 
 
 
142. There is no specific EC legislation to regulate state-owned enterprises but the EC competition 
rules apply. 
(iii) Competition policy and regulatory issues 
143. During the period under review, there were no ma jor changes to the EC's competition regime, 
including on anti-trust issues, mergers, monopolies, and state aide. Articles 4, 16, 36, 73, and 81-89 of 
the EC Treaty provide the fundamental competition pr inciples. Pursuant to Article 4, EC Member 
States are required to adopt economic policies "in a ccordance with the princi ple of an open market 
economy with free competition". In general, competit ion policy in the EC seeks to enforce regulations 
on anti-competitive practices, enhance compet itiveness throughout the EC, and address 
anti-competitive problems in liberalized sectors. In particular, enforcement is focused on eliminating 
cartels and abuses of dominant position.  Efforts ar e being made to enforce regulations on mergers 
that have cross-border implications, and to rectify decisions that lead to incompatible state-aid.  
(a) Anti-trust 144. EC basic anti-trust legislation remains unchanged.
186  The Treaty prohibits anti-competitive 
agreements between undertakings that ma y affect trade between Member States187, except for those 
exempted as being beneficial, on balance,  to economic efficiency and consumers.188 The exemption 
applies automatically to any agreement satisfying the relevant criteria. Therefore, the Commission no 
longer grants individual exemption; it can grant bl ock exemptions (Article 81(3) of the Treaty).  
145. Enforcement of EC anti-trust regulations is carried out by the Competition DG in 
coordination with national competition authorities, in the framework of th e European Competition 
Network (ECN).  Article 15 of Council Regulati on No. 1/2003 lays down the procedural rules for 
such coordination, requiring Member States to transmit to the Commission copies of judgements by national courts applying Articles 81 and 82;  this in formation must be available online.  In addition, 
Article 11 requires national authorities to inform the Commission at least 30 days before adopting a decision under Articles 81 and 82.  The ECN holds regular meetings on competition policy issues. 
146. In 2006, the Commission adopted new guidelines on the method used to set fines on 
undertakings that have infringed Articles 81 or 82 of the Treaty.  Under these guidelines, fines are 
based on a percentage of up to 30% of the yearly  sales of the product concerned in the relevant 
market.
189  The Commission may increase the fine up to 100% for repeat offenders.190  A  r e v i s e d  
leniency notice on immunity from fines and reducti on of fines in cartel cases was also introduced at 
                                                      
186 Anti-trust legislation is governed by the EC Treaty and Council Regulation No. 1/2003, 
16 December 2002, as amended by Council Re gulation No. 411/2004, 26 February 2004. 
187 No definition of these undertakings is provided in the Treaty;  however, the term is understood to 
encompass a wide range of legal forms, including companies, partnerships, cooperatives, nationalized industries, 
and other kinds of public corporations, and individuals engaged in the production and distribution of goods and 
services. 
188 Article 81(1) of the Treaty prohibits agreements tha t: (i) directly or indirectly fix purchase or selling 
prices or any other trading conditions;  (ii) limit or control production, markets, technical developments, or 
investment;  (iii) share markets or sources of supply;  (i v) apply dissimilar conditions to equivalent transactions 
with other trading partners;  and (v) make the conclusion  of contracts subject to the acceptance by other parties 
of further obligations unrelated to the subject of the co ntract.  Article 82 prohibits, as incompatible with the 
common market, the abuse of a dominant position, without exception. 
189 Under the 1998 Guidelines, the starting point of the fine was based on a lump sum, depending on 
the degree of gravity of the infringement, to which a 10% increase was added per year of infringement. 
190 Europa Press Release IP/06/857, 28 June 2006. WT/TPR/S/214 Trade Policy Review 
Page 80 
 
 
the end of 2006.191  In 2008, the Commission introduced a simplified settlement procedure to settle 
cartel cases, under which parties may choose to acknow ledge their involvement in a cartel and their 
liability;  in return the Commission could redu ce the fine imposed on the liable parties.  The 
Commission also published a 2008 White Paper on antitrus t damages actions to ensure more effective 
antitrust damage claims.192  
147. On 10 January 2007, the final report on the el ectricity and gas markets enquiry was adopted. 
It concluded that many energy markets: (i) remain too highly concentrated; (ii) are characterized by a 
high degree of vertical integration, notably ther e is insufficient unbundling of network and supply 
activities; (iii) lack cross-border integration and cr oss-border competition; and (iv) lack transparency. 
As a result of theses findings, the Commission put forw ard, in September 2007, a proposal for a third 
electricity and gas liberalization package (Chapt er IV(4)). The Commission has also focused, in 
cooperation with NCA, on foreclosure and collusion (market sharing) cases in the electricity and gas markets.
193  
148. On 10 January 2007, the Commission published the final report of its inquiry into European 
retail banking markets covering payment cards and (non-card) payment systems, and current account 
and related services. It confirmed that market s remain fragmented along national lines, limiting 
consumer choice and leading to higher costs. High de grees of variation in prices, profit margins, and 
selling patterns between Member States indicate pers isting regulatory or behavioural barriers to 
competition. 
149. During the last few years, the Commission h as taken further steps to sanction abuses of 
dominance and significant hard-core cartels, focusi ng on network industries that are considered as key 
for EC competitiveness. In this regard, for example, the Spanis h incumbent telecoms operator 
Telefónica was fined €151.9 million for abu se of its dominant position during 2001-06.194  
150. The total number of new anti-trust cases rose from 109 in 2005 to 131 in 2006, and fall to 93 
in 2007.  The Commission initiated 22 cases in 2005,  50 in 2006, and 33 in  2007;  while 244 cases 
were closed in 2005, 121 in 2006, and 216 in 2007.  In 2007, the Commission issued eight decisions, 
fining 41 undertakings €3,334 million (€683 m illion in 2005 and €1,846 million in 2006). 
(b) Mergers 
151. The EC's regulation on merger control seeks to  avoid a situation in which competition is 
significantly impeded, in particular by the creation or strengthening of a dominant position, as a result 
of mergers and acquisitions.195  Under the Merger Regulation, the Commission assesses proposed 
concentrations on the basis of whether a dominan t position is created or strengthened, or more 
generally whether they significantly impede compet ition.  In general, the Commission only examines 
mergers where the parties have a combined worldwide turnover of €5  billion and each party has a  
Community-wide turnover of €250 million. Howeve r, it will also examine mergers where the 
                                                      
191 The Commission's leniency policy offers incentives to cartelists to report their illegal activities. The 
2006 Notice follows 1996 and 2003 versions. The Co mmission received 20 applications for immunity and 
11 applications for a reduction of fines under the 2006 Notice from the date of its introduction to the end of 
2007 (DG Competition, 2008). 
192 COM(2008) 165, 3 Apr il 2008, "White Paper on Damages Ac tions for Breach of the EC Antitrust 
Rules". 
193 DG Competition (2008).   
194 DG Competition (2008).  
195 The main regulation governing merger control in the EC is Council Regulation No. 4064/89, 
21 December 1989.  It was revised by Council Regula tion No. 139/2004, 20 Janu ary 2004, implemented by 
Commission Regulation No. 802/2004, 7 April 2004.  For further details, see WTO (2004). European Communities WT/TPR/S/214 
 Page 81 
 
 
combined worldwide turnover is €2.5 billion and wh ere the following three conditions are fulfilled:   
(i) the parties' combined turnover exceeds €100 million in at least three EC Member States;  (ii) each 
party has a turnover of €25 million in the same th ree EC Member States; a nd (iii) the individual 
Community-wide turnover of each party exceeds €100 m illion. Transactions that fulfil either of these 
two tests are exempt from review by the Commission if each party to the transaction realises more 
than two thirds of its turnover in a single EC Me mber State.  Mergers must be approved by the 
Commission before they are put into effect.  Most  cases are approved within the initial scrutiny period 
of 25 days.  
152. On 10 July 2007, the Commission adopted its consolidated jurisdictional notice under the 
Merger Regulation. It covers, in one document, a ll issues of jurisdiction relevant for establishing the 
Commission's competence under the Merger Regulati on, and replaces the four previous notices dating 
back to 1998.196  On 28 November 2007, the Commission also adopted Guidelines on the assessment 
of non-horizontal mergers under the Merger Regulation.197  The guidelines established by the EC for 
horizontal mergers have not changed198;  and the specifications for the determination of the relevant 
market for purposes of merger regulations re mained unchanged.  The Commission adopted on a 
Revised Remedies Notice on 22 October 2008, to clar ify its position with regard to remedies in 
merger cases.199 
153. The number of mergers notified to the Commission reached an all-time high of 402 in 2007 
(356 in 2006 and 313 in 2005).200  The Commission took 396 final decisions in 2007 (308 in 2005 and 
352 in 2006), of which 368 were cleared in the fi rst phase without conditions , and ten were adopted 
after second-phase investigations. One transaction, a horizontal merger involving a proposed takeover 
by Ryanair of Aer Lingus, was prohibited.201  
(c) State aid 
154. The State Aid Action Plan (SAAP), launched in 2005, is implemented on the basis of four 
principles: less and better targeted state aid; greater emphasis on economic analysis; more effective 
procedures, including better enforcement, higher  predictability, and enhanced transparency; and a 
shared responsibility between the Commission and Member States.202 In this regard, in 2007, the 
Commission adopted a new method for setting referen ce and discount rates more aligned with market 
principles, as the specific situation of the co mpany or project is taken into account.  
155. In 2006, the EC adopted new guidelines on regional aid provided by its Member States 
(national regional aid) during 2007-13; they c over regional aid for investment, operations (in 
exceptional circumstances), and creation of new sm all enterprises.  The Commission aims to assist 
Member States in better targeting state aid so that it is used in accordance with the objectives set out 
in the Lisbon Agenda.  Member States do not ha ve to notify regional aid schemes to the Commission 
                                                      
196 European Commission online information. Viewed at: http://ec.europa.eu/comm/competition/mer 
gers/legislation/draft_jn.html. 
197 Non-horizontal mergers include vertical mergers, such as th e acquisition of a supplier by a 
customer, and conglomerate mergers, which concern co mpanies whose activities are co mplementary or related. 
198 For a description of the horizontal guidelines, see WTO (2004). 
199 Commission Notice on remedies acceptable under C ouncil Regulation (EC) No. 139/2004 and under 
Commission Regulation (EC) No. 802/2004, not yet published in the Official Journal . 
200 Europa online information. Viewed at: http://europa.eu.int/comm/competition/mergers/cases/. 
201 DG Competition (2008).  
202 DG Competition (2007).  WT/TPR/S/214 Trade Policy Review 
Page 82 
 
 
if the schemes comply with the  General Block Exemption Regulation.  In 2007, the Commission 
approved the regional aid maps covering 2007-13. 203 
156. At the end of 2006, the Commission also adopted the new State aid framework for research, 
development and innovation (R&D&I).204  New risk capital guidelines were also adopted in 2006, 
allowing Member States to improve access to finance for SMEs; they cover risk capital measures for investment in SMEs in their early and expansi on stages.  In August 2008, the European Commission 
adopted a General Block Exemption Regulation (G BER), which allows Member States to grant 
certain aid without first notifying the Commission.
205  The Regulation authorizes aid in favour of 
SMEs, research, innovation, regional development, tr aining, employment, and risk capital.  It also 
authorizes environmental protection aid, aid measures promoting entrepreneurship, aid for newly created small businesses in assisted regions, and m easures tackling problems such as difficulties in 
access to finance faced by female entrepreneurs.  The GBER reduces the administrative burden for 
public authorities, the beneficiaries, and the Commission, and consolidates into one text and 
harmonizes the rules previously in five separate Regulations.
 206 
157. In addition, a new de minimis  regulation exempts small subsidies from the obligation to be 
cleared by the Commission in advance:  aid up to €200,000 granted over three fiscal years will not be 
regarded as state aid.  This Regulation constitutes one  of the cornerstones of the State Aid Action Plan 
designed to simplify the state aid rules, to refine  the economic analysis, and to allow the Commission 
to concentrate its enforcement on the most distortive cases. 
158. De minimis  regulations adopted for the agriculture sector in 2007 raise the ceiling for small 
amounts of aid in the sector to € 7,500 per beneficiary over any period of three years and the 
maximum total per Member State to 0.75% of the value of agricultural output. 
159. In 2007, de minimis  regulations for fisheries were updated, and in July 2008, the Commission 
adopted a new Block Exemption Regulation for the fi sheries subsector, which is not covered by the 
GBER.207  It includes all categories of aid covered by the European Fisheries Fund, with the exception 
of aid for investments in the fleet and aid for sust ainable development of fisheries.  The Regulation 
declares certain types of aid compatible with the common market without prior notification, on condition that they comply with the relevant conditions established under the European Fisheries 
Fund (EFF) and that they do not exceed the threshold of a total amount of aid of €1 million or a total 
amount of eligible costs per project of €2 million.  Also in July 2008, the Council adopted a regulation  
instituting a temporary specific action aiming to promote the restructuring of the European 
                                                     
 
203 The new guidelines are described in WTO (2007). 
204 OJ C 323, 30 December 2006, "C ommunity Framework for State ai d for Research and Development 
and Innovation". 
205 Commission Regulation (EC) No. 800/2008, 6 August 2008 declaring certain categories of aid 
compatible with the common market in application of Article 87 and 88 of the Treaty (General block exemption 
Regulation). Europa Press release IP/08/1110, 7 July 2008. 
206 Commission Regulation (EC) No. 800/2008, 6 August 2008 declaring certain categories of aid 
compatible with the common market in application of Article 87 and 88 of the Treaty (General block exemption 
Regulation). Europa Press Release IP/08/1110, 7 July 2008. 
207 Commission Regulation (EC) No. 736/2008, 22 July 2008 on the application of Articles 87 and 88 
of the Treaty to State aid to smal l and medium-sized enterprises active in the production, processing and 
marketing of fisheries products, OJ L 201, 30 July 2008, p. 16; see also Europa Press Release IP/08/1088, 2 July 2008. European Communities WT/TPR/S/214 
 Page 83 
 
 
Community fishing fleets affected by the economic crisis.208  This specific action provides for 
additional measures within the framewo rk of the EFF until the end of 2010. 
160. In October 2007, the European Commission a dopted a notice on the implementation of 
decisions ordering Member States to recover unlawful and incompatible state aid.  The notice provides guidance to Member States as to how to achieve a more immediate and effective execution 
of recovery decisions.  In order to clarify and simplify the state aid rules, in 2008 the European 
Commission also adopted a new notice on state aid in the form of guarantees.  The text sets methodologies for calculating the aid element in a gua rantee, and provides simplified rules for SMEs, 
including predefined safe-harbour premiums and single premium rates for low-amount guarantees. 
161. On 13 October 2008, the Commission published guidance on how Member States can best 
support financial institutions in th e current financial crisis, while respecting EC state aid rules 
(Article 87(3)(b) of the Treaty).  EC state aid rules require that measures taken do not result in 
disproportionate distortions of competition, fo r example by discriminating against financial 
institutions based in other Member States.  In ot her requirements, measures must be limited in time 
and foresee adequate contributions from the private sector.
209  
162. There were 778 state aid notifications in 2007 (922 in 2006);  and the Commission took 
629 final state aid decisions (710 in 2006).  In most cases, the Commission approved the measures without a formal investigation, concluding that 87% of the cases were found compatible with state aid 
rules.  In 2006, €66.7 billion (up from €63.8 billion in 2005) were granted throughout the EC-25 in state aid (excluding aid to railways), representing about 0.6% of GDP. Germany granted the highest 
amount of aid (€20.2 billion), followed by France ( €10.4 billion), and Italy (€5.5 billion). Sector-wise, 
58% of state aid was channelled to manufacturing ac tivities, 24% to agriculture and fisheries, and 7% 
to services. There are wide differences in sectoral allocation of state aid across Member States (Table III.12). 
Table III.12 
(a)  State aid in the EC, 2006 
Country Total aid as % of national 
GDP  % of total aid by sectora  Total aid  
 Excluding 
railways Excluding 
agriculture, 
fisheries and 
transport  
M S A F C T OM  (€ million)  
Austria  0.90 0.60  19 37 32 0 0 1 11  2,309.8 
Belgium  0.39 0.28  70 2 25 0 0 3 0  1,225.1 
Cyprus  0.76 0.48  27 36 35 0 0 2 0  110.6 
Czech Rep.  0.66 0.51  73 4 22 0 0 1 0  754.8 
Denmark  0.59 0.46  77 3 10 4 0 7 0  1,288.8 
Estonia  0.41 0.08  14 6 79 1 0 0 0  54.1 
Finland 1.53 0.35  22 1 74 0 0 3 0  2,552.3 
France  0.58 0.41  65 6 23 0 0 5 0  10,388.7 
Germany  0.87 0.69  66 3 20 0 11 1 0  20,219.3 
Greece  0.26 0.15  49 8 37 1 0 5 1  556.1 
Hungary  1.57 0.93  55 1 34 0 3 7 0  1,407.4 
Ireland  0.57 0.28  38 12 48 2 0 0 0  988.2 
Italy  0.37 0.26  60 9 21 1 0 8 0  5,511.1 
Latvia  1.80 0.15  8 0 67 0 0 25 0  291.3 
Lithuania  0.54 0.23  35 7 58 1 0 0 0  128.3 
Luxembourg 0.32 0.13  29 12 59 0 0 0 0  109.5 
          Table III.12 (cont'd) 
                                                      
208 OJ L 202, 31 July 2008; see also Europa Press Releases IP/08/1120, 8 July 2008, and 
MEMO/08/493, 8 July 2008. 
209 OJ C 270, 25 October 2008, "Communication from the Commission — The application of State aid 
rules to measures taken in relation to financial institutions  in the context of the current global financial crisis". 
Europa Press Release IP/08/1495, 13 October 2008. WT/TPR/S/214 Trade Policy Review 
Page 84 
 
 
Country Total aid as % of national 
GDP  % of total aid by sectora  Total aid  
 Excluding 
railways Excluding 
agriculture, 
fisheries and 
transport  
M S A F C T OM  (€ million)  
Malta  2.29 1.77  74 3 19 0 0 4 0  115.0 
Netherlands  0.35 0.24  65 3 23 1 0 8 0  1,864.9 
Poland  0.85 0.45  46 0 46 0 7 0 0  2,310.4 
Portugal  0.93 0.91  13 85 1 1 0 0 0  1,450.1 
Slovenia  0.83 0.48  47 4 42 0 6 0 0  253.9 
Slovakia  0.51 0.45  86 2 11 0 2 0 0  223.2 
Spain 0.50 0.39  49 8 18 1 22 2 0  4,879.0 
Sweden 1.15 0.94  79 3 12 0 0 5 0  3,515.3 
United Kingdom 0.22 0.16  60 5 21 0 0 5 7  4,215.4 
             
EC-25 0.58 0.42  58 7 24 0 5 3 1  66,722.6 
EC-15 0.56 0.41          61,073.5 
10 new M.S. 0.91 0.52          5,649.1 
 
(b)  State aid in the EC, 2007 
Country Total aid as % of national 
GDP  % of total aid by sectora  Total aid  
 Excluding 
railways Excluding 
agriculture, 
fisheries and 
transport  
M S A F C T OM  
(€ million)  
Austria  0.37 0.30  44 12 18 0 0 1 25  1,006 
Belgium  0.33 0.27  77 4 12 0 0 6 0  1,077 
Bulgaria 1.35 0.09  6 0 93 0 0 0 1  391 
Cyprus  0.40 0.24  22 36 23 0 0 18 0  107 
Czech Rep.  0.73 0.60  79 3 17 0 0 0 0  938 
Denmark  0.62 0.51  77 6 8 2 0 6 0  1,405 
Estonia  0.24 0.07  19 9 65 7 0 0 0  37 
Finland 1.16 0.35  28 2 66 0 0 4 0  2,079 
France  0.52 0.37  59 11 25 0 0 5 0  9,798 
Germany  0.67 0.58  67 2 12 0 14 1 0  16,229 
Greece  0.32 0.24  73 1 20 4 0 0 0  729 
Hungary  1.42 0.87  58 0 20 0 3 18 0  1,434 
Ireland  0.59 0.32  35 20 41 3 0 0 0  1,093 
Italy  0.33 0.25  64 5 15 2 0 7 5  5,096 
Latvia  1.02 0.21  21 0 30 1 0 48 0  204 
Lithuania  0.63 0.18  24 4 69 0 0 2 1  177 
Luxembourg 0.20 0.13  48 16 36 0 0 0 0  72 
Malta  0.79 0.59  73 2 18 0 0 7 0  99 
Netherlands  0.41 0.24  54 4 34 0 0 7 0  2,316 
Poland  0.60 0.41  62 0 31 0 6 0 0  1,849 
Portugal  1.31 1.30  9 1 1 0 0 0 0  2,138 
Romania 1.17 0.24  12 0 77 0 8 2 1  1,426 
Slovenia  0.56 0.34  36 6 39 0 9 0 11  188 
Slovakia  0.50 0.41  79 2 11 0 1 8 0  273 
Spain 0.51 0.41  58 8 13 3 15 3 0  5,371 
Sweden 0.93 0.88  88 5 5 0 0 0 1  3,100 
United 
Kingdom 0.31 0.25  
42 3 11 0 0 7 5  
6,185 
             
EC-27 0.53 0.40  57 5 20 1 5 4 1  64,816 
EC-15 0.51 0.40  58 5 17 1 5 3 2  57,694 
EC-12 0.81 0.43  48 1 40 0 4 6 1  7,123 
a M:  manufacturing;   S:  services (including tourism, finan ce, media and cultural services); A:   agriculture;  F:  fisheries;   C: coal; 
T:  transport, excluding railways;  and OM:  other non-manufacturing. 
Note: Due to rounding of figures, the percentages of total aid by sector do not generally add up to 100. 
Source : European Commission – Competition – Sate Aid Control – Studies and reports.  Viewed at: 
 http://ec.europa.eu/comm/competition/state_aid/studies_re ports/stat_tables.html [17 June 2008];  and information 
 provided by the authorities.  European Communities WT/TPR/S/214 
 Page 85 
 
 
(iv) Intellectual property rights (IPR) 
163. There was no major change to EC intellectual property legislation during the period under 
review.210  The IPR regime in the EC is governed by both Community-wide legislation and legislation 
in the Member States. Member States' legislati on takes into account Community legislation and 
commitments under international agreements, including the European Patent Convention.  The EC or 
the Member States are parties to  the World Intellectual Property Organization, conventions and 
treaties (e.g. Trademark Law Treaty, the Hague Agreement, Madrid Protocol, and the Berne 
Convention, and the WTO TRIPS Agreement (Table  AIII.4).  The EC has an extensive body of 
intellectual property legislation, which is often am ended to harmonize protection in the Community to 
ensure a better functioning of the internal mark et.  Differences between the national laws governing 
the terms of protection are bound to hinder the fr ee movement of goods and provision of services. 
(a) Industrial property 
164. On 16 July 2008, the Commission adopted a Communication on an industrial property rights 
strategy for Europe.211  The Communication provides a horizontal and integrated strategy across the 
spectrum of different industrial property rights,  and includes initiatives on enforcement (calls for 
robust enforcement against counterfeiting and piracy ), innovation support for sm all and medium-sized 
enterprises.  It complements the 2007 Communicati on on the patent system, which calls for the 
adoption of a Community patent and an integrated EC-wide jurisdiction for patents.212 
165. The EC aims to create a single system for the protection of industrial property rights 
(Community trade marks, designs, and patents) w ith Community-wide effect through the filing of a 
single application. 
Trade marks 
166. Trade mark protection is regulated under Council Regulation No. 40/94, as amended;  the last 
amendment was in 2006.213  Any signs represented graphically, particular words, including personal 
names, designs, letters, numerals, or the shape of goods or their packaging may be protected as 
Community trade marks, provided that these sign s distinguish the particular goods or services 
(Article 3).  Trade marks are obtained through regist ration and can be register ed by any natural person 
(Articles 5 and 6).  The registration fee is €230.214 
167. The Community trade mark has effect throughout the EC;  it is registered and administered 
centrally by the Office for Harmonization of the Inte rnal Market (OHIM).  Applicants may file an 
application either directly at the OHIM or at a national office, which must then forward the 
application to OHIM.  National trade mark system s exist alongside and in parallel to the Community 
trade mark system.  The Community law relating to trade marks does not replace the laws of the 
Member States; the Community trade mark regulation does not govern all questions and expressly refers at times to national law.  For example, co mpetence for infringement actions is given to national 
courts, which Member States must designate.  
                                                     
 
210 See WTO (2004), for further details on EC legislation on IPRs.   
211  COM (2008) 465 final, 16 July 2008, "An Industrial Property Rights Strategy for Europe".  Viewed 
at:  http://ec.europa.eu/internal_market/indprop/docs/rights/2008_0465_en.pdf. 
212 COM (2007) 165 final, 3 April 2007, "Enhancing the patent system in Europe".  Viewed at: 
http://eur-lex.europa.eu/LexUriServ/LexU riServ.do?uri=COM:2007:0165:FIN:EN:PDF.  
213 Council Regulation No. 40/94, 20 December 1 993 on the Community trade mark, amended by 
Council Regulations Nos. 3288/94, 807/2003, 1653/2003, 1992/2003, 422/2004, and 1891/2006.  
214 For other fees, see Commission Regulation (EC) No. 2246/2002, 16 December 2002, as amended by 
Commission Regulation (EC) No. 877/2007, 24 July 2007. WT/TPR/S/214 Trade Policy Review 
Page 86 
 
 
168. For a trade mark to be registered, the conditions of filing need to be examined:  if the trade 
mark application is satisfactory and a date of filing has been granted, a Community search is established;  if the conditions for application have been fulfilled and the search is satisfactory, the EC 
trade mark application must be published (Article 40).  This is to allow any natural or legal person and 
any group or body representing manufac turers, producers, suppliers of services, traders or consumers 
to submit to the Office written observations (Article  41).  Registration may be refused mainly because 
the sign does not conform to the definition of a protectable trade mark but also because, inter alia,  the 
sign is against public policy, contrary to principles of morality, deceives the public, and/or contains a 
geographical indication. 
169. The proprietor of the trade mark has exclusive ri ghts to its use, and is entitled to prevent all 
third parties from using it without his consent.  Comm unity trade marks can be transferred.  The rights 
conferred start on the date of publication of registrati on of the trade mark (Article 9), and are valid for 
ten years (renewable for an indefinite number of te n-year periods) from the date of filing of the 
application (Article 46).  Trade marks may be revo ked if within a continuous period of five years, 
they have not been put to "genuine use" (i.e. normal commercialization) in the EC (Articles 50 and 
56).  Trade mark infringement is dealt with under national laws. 
170. The EC is evaluating the overall functioning of the Community and national trade mark 
systems, analysing the impact of the systems on st akeholders in order to review the system and 
enhance cooperation between the OHIM and national offices.
215  It is preparing for accession to the 
Singapore Treaty on the Law of Trademarks of 2006. 
171. The OHIM registered 88,273 trade mark applications in 2007 (Table III.13), 14% more than 
in 2006.  Applications are up 50%, compared with 2004 and the average registration time is down by almost one third.  Around 14% of the Community trade mark applications come under the Madrid 
Protocol, via WIPO;  more than 50% of applica tions in 2007 originated from Germany (17%), the 
United States (16%), the United Kingdom (10%) and Spain (8%).
216  
Table III.13  
Statistics on trade marks and designs, 2000-08 
 2000 2001 2002 2003 2004 2005 2006 2007 2008a 
T r a d e  m a r k s           
   Applications 57,390 48,918 45,243 57,714 58,996 64,822 77,506 88,273 66,050 
   Registered trade marks 34,766 38,539 35,897 34,313 34,445 59,752 61,495 68,077 60,622 
   Opposition to trade marks 11,500 12,879 9,802 9,939 10,721 17, 375 14,108 16,468 13,681 
   Cancelled and surrendered 53 93 104 144 141 147 295 259 259 
D e s i g n s           
   Single applications .. .. .. 5,004 6,864 8,388 8,626 9,269 7,013 
   Multiple applications .. .. .. 5,471 7,187 8,429 9,002 9,944 7,555 
.. Not available. 
a Up to 30 September 2008. 
Source : Office for Harmonization of the Internal Market online in formation. Viewed at: http://oami.europa.eu/ows/rw/res 
 ource/documents/OHIM/statistics/ssc009- statistics_of_community_trade_marks_2008.pdf; and http://oami.europa 
 .eu/ows/ows/rw/resource/docume nts/OHIM/statistics/ssc 007-statistics_of_commu nity_designs_2008.pdf  
 [30 September 2008]. 
 
                                                      
215 COM (2008) 465 final, 16 July 2008, "An Industrial Property Rights Strategy for Europe".  Viewed 
at:  http://ec.europa.eu/internal_market/indprop/docs/rights/2008_0465_en.pdf. 
216 Office of Harmonization of the Internal Market (2007). European Communities WT/TPR/S/214 
 Page 87 
 
 
Industrial Designs 
 
172. Protection of industrial designs is regulated in  the EC by the Design Directive 98/71/EC and 
Council Regulation No. 6/2002.217  A Community design confers a unitary right that applies 
throughout the EC.  Designs can be protected th rough registration (available from April 2003) and 
without it (in effect from March 2002).  The Design Di rective only refers to registered designs and 
operates in parallel to national systems of registered designs in force in each Member State.  National 
laws related to industrial designs have to a large ex tent been harmonized with the Designs Directive;  
the eligibility criteria and duration of protection are the same as for the registered Community 
designs.218  Many Member States also pr otect unregistered design rights under their national law, even 
if these are not covered by the Directive.  Given the widely varying practices among Member States, the protection of "component parts of complex products",  in particular spare parts for cars, is left to 
Member States' discretion in the Directive. 
173. Community design rights are directly enforceab le in each Member State and are obtained 
upon application to the OHIM for registration (registered Community design) or automatically by way 
of publication of the design (unregistered Community  design).  Registered designs have a longer 
duration of protection (one or more periods of fi ve years, up to a maximum of 25 years), than 
unregistered designs (three years after they are pub lished) and a different type of protection.  
Registered (or unregistered) designs are exhauste d once the product has been put on the Community 
market by the holder of the Community right or with the consent of the rightholder.   
174. The right to the Community design is vested in the designer or his successor in title.  Designs 
may be protected if they are novel and have indi vidual character.  The Community design confers 
protection to any design that produces a differe nt overall impression on an informed user.  A 
Community design confers on its right holder the exclusive right to use it and to prevent any third party not having her/his consent from using it.  For an unregistered Community design, the contested use must result from copying the protected design:  infringement only occurs if the protected design 
has been copied.  The unregistered Community design  provides useful, short-term protection for items 
of short market duration.  
175. Registration of eligible designs is made with in one year of the design first being made 
available to the public.  Applications may be made  in national intellectual property offices, in the 
Benelux design office, or directly at the OHIM.  Detailed rules for application and procedures for 
registration are contained in Commission Regulation No. 2245/2002
219, while fees are specified in 
Commission Regulation No. 2246/2002. 
176. Protection of a registered design right does not affect any other intellectual property rights 
over the product (i.e. unregistered design rights, trad e marks, patents and utility models, civil liability 
or unfair competition).  National courts are competent for infringement actions;  appeals are examined 
by the Board of Appeal.  Appeals against Board decisions may be brought  before the Court of Justice, 
which has the jurisdiction to annul or  to alter a contested decision.  
177. As in previous enlargements, Community trad e marks and designs registered and applied 
before the accession of Bulgaria and Romania to the EC were automatically extended to the territories 
                                                      
217 OJ L 3, 5 January 2002, as amended. 
218 Directive 98/71/EC, 13 October 1998 on the legal protection of designs, OJ L 289, 28 October 1998.  
The directive aims to approximate the national provisions of  laws (in Member States) that most directly affect 
the functioning of the internal market, while provisions  on sanctions, remedies, and enforcement are left to 
national law. 
219 OJ L 341, 17 December 2002, as amended. WT/TPR/S/214 Trade Policy Review 
Page 88 
 
 
of these new Member States as from the date of accessi on, in order to have equal effect throughout the 
Community.220 
Patents 
 178. Patent protection is granted under the 2007 revi sion of the European Patent Convention (EPC) 
of 1973.  The revised European Patent Convention, in effect since 13 December 2007, provides a new 
legal framework that is expected to simplify the pr ocess of patent protection.  The revision appears to 
have marginally changed substantive patent la w, while introducing a number of refinements in 
procedural practices. 
179. There continue to be three methods for filing patents in EC Member States:  through the 
national procedure, with the competent national author ity; through the unitary procedure, available at 
the European Patent Office (EPO), in order to obt ain a European patent; and through the international 
procedure, available under the Patent Cooperation Treaty (PCT).   
180. European patents (different from Community pa tents) are granted by the European Patent 
Organisation.  European patents are granted for any inventions, in all fields of technology, provided 
that they are new, involve an inventive step and are susceptible of industrial application.  Exceptions 
to patentability are inventions whose commercial expl oitation would be contrary to the public order or 
morality, plant or animal varieties, and methods for treatment of the human or animal body by surgery 
and therapy.  Patent applications can be filed by an y natural or legal person, or by multiple applicants, 
in any language (which eliminates th e need for translations during the application stage) as long as 
they are then subsequently translated into one of the three working languages of the EPC (English, 
French, or German).  The right to a European pate nt belongs to the inventor or his successor in title.  
In line with the Patent Law Treaty, the requireme nts for obtaining an official filing date for a 
European patent application have been simplified significantly.  Protection is only granted in the EPC 
contracting states designated in the patent aplication.   The term of the European patent is 20 years 
from the date of filing of the application, and can  be extended through the supplementary protection 
certificate for pharmaceutical or plant protection products for a period not exceeding five years, under 
the same conditions as those applying for national pa tents.  Infringements of the European patent are 
dealt with by national law. 
181. The Commission continues to seek to harm onize areas where differences in national 
legislation impede the functioning of the internal market.  The creation of a single Community patent 
continues to be a key objective since it would make  the fight against counterfeiting more effective.
221 
182. Requests for a European patent filed with the EPO or with Member States' patent offices rose 
from 135,400 in 2006 to 140,700 in 2007.222  First-time applicants to the EPO originating in European 
Patent Convention Member States (as opposed to firs t-time applicants for pate nt protection at national 
level) represented around 14% of all direct patent applications to EPO.223  Around 28% of the 
applications filed related to medical science, electrical communication techniques, and computing.224  
183. On 27 May 2006, the EC adopted Regulation No. 816/2006 on compulsory licensing of 
patents relating to the manufacture of pharmaceutic al products for export to countries with public 
                                                      
220 OJ L 157, 21 June 2005. 
221 COM (2007) 165 final, 3 April 2007, "Enhancing the patent system in Europe".  Viewed at: 
http://eur-lex.europa.eu/LexUriServ/LexU riServ.do?uri=COM:2007:0165:FIN:EN:PDF.  
222 European Patent Office (2007), p.17. 
223 European Patent Office (2007), p. 18. 
224 European Patent Office (2007), p. 24. European Communities WT/TPR/S/214 
 Page 89 
 
 
health problems.  With this Regulation, the EC  has created a legal basis for the granting of 
compulsory licences for export purposes, as forese en by the WTO General Council Decisions of 
30 August 2003 and 6 December 2005.225  On 19 November 2007, the EC accepted, on behalf of the 
European Community, the Protocol amending the TRIPS Agreement226, and on 30 November 2007, 
the EC deposited its instrument of acceptance with the WTO Director-General. 
Plant varieties 
184. Plant varieties are granted protection under Re gulation No. 2100/94, which was last amended 
in 2008.  The amendments related mainly to the entitlement to file an application.227  Implementing 
Regulation No. 1239/95 was amended to introduce electronic communication in proceedings before 
the Community Plant Variety Office (CPVO) to fa cilitate the payment of fees and charges to the 
CPVO.  
185. Plant varieties that are distinct, uniform, stable , and new may be protected.  With respect to 
the protection of plant varieties, applicants in Memb er States may use either the national system or the 
unitary procedure available at the CPVO.  The holde r of a Community plant variety right, is entitled 
to the multiplication, propagation, sale, marketing, import and export of this variety. Any of these acts 
in respect of the variety constituents and the harv ested material of a protected variety require the 
authorization of the holder.  However, farmers may use some protected varieties for propagating 
purposes on their own holding:  with  the exception of those growing less than an equivalent of 92 
tonnes of cereals or 185 tonnes of potatoes per harvest 228, then must pay an equitable  remuneration to 
the right holder229 (i.e. in general about 50% of the amounts charged for the licensed production of 
propagating material, but this may vary according to the production method and to the agreements 
between breeders and farmers associations). 
186. Protection is granted after the CPVO undertak es and deems its formal, substantive, and 
technical examination of the application satisfactory.   Plant varieties are protected for 25 years, vine 
and tree species, for 30 years.  Protection may be extended for five years.  Plant variety rights are 
transferable and compulsory licensing may be gran ted on grounds of public interest.  However, a 
compulsory licence may not be granted by Memb er States on a Community plant variety right.  
Compulsory licences may only be granted by the Administrative Council.230  Office and Council 
decisions may be appealed. 
187. Varieties that are protected by a Community pl ant variety right cannot at the same time be 
protected by a national plant variety right.  Acti ons for infringement may be brought by the holder and 
the right holder must be reasonably compensated in case of infringement.  Members should ensure 
that penalties for infringement of a Community plant variety right are equivalent for infringements of 
the corresponding national right.  
                                                      
225 Europa Press Release IP/06/550, 28 April 2006. 
226 Council Decision 2007/768/EC, 19 November 2007, OJ L 311, 29.11.2007, p.35 
227 Council Regulation (EC) No. 15/2008, OJ L 8, 11 January 2008.  Viewed at: 
http://www.cpvo.eu.int/documents/lex/2008R15/EN2008R15.pdf. 
228 According to Council Regulation (EC) No. 2100/94, 27 July 1994 on Community plant variety 
rights, small farmers are defined as farmers who do not gr ow plants on an area bigger than that needed to 
produce 92 tonnes of cereals; and in the case of other pl ant species, farmers must meet comparable criteria. 
Viewed at: http://eur-lex.europa.eu/LexUriServ/L exUriServ.do?uri=CELEX :31994R2100:EN:HTML. 
229 According to Council Regulation (EC) No. 2100/94, 27 July 1994 on Community plant variety 
rights, "equitable" is defined as "sensibly lower than the amount charged for the licensed production of 
propagating material of the same variety in the same area; the actual level of this equitable remuneration may be 
subject to variation over time."  
230 The Administrative Council is attached to  the Community Plant Variety Office.  WT/TPR/S/214 Trade Policy Review 
Page 90 
 
 
188. Community plant variety protection is granted through the CPVO.  The CPVO received 2,162 
applications from January to Se ptember 2008, 2,977 applications  in 2007 and 2,735 in 2006, and 
granted 2,616 in 2007 and 2,289 in 2006.231  Most of the applications and titles corresponded to 
ornamental varieties (around 61% of a ll applications and 60% of all titles).232  Fees relating to 
technical examinations of plant varieties payabl e to the CPVO were increased substantially on 
1 January 2009 by 14-93% for the agricultural group, 5-43% for the ornamental group, around 15-18% for the vegetable group (for some species in this group, fees have been lowered by up to 
8.5%), and 5-51% for the fruit group; examination fees range from €1,160 to €2,500.  The annual fee 
has been set at a flat rate of €300 per variety and per year of protection.
233  Fees were increased to 
ensure the financial stability of the CPVO. 
(b) Copyright and related rights  
189. During the period under review, the EC consolidated  and codified the legislation related to the 
terms of protection of copyrights and related right s (including performers' rights) and rental and 
lending rights.234  Protection varies according to the type of wo rk and, in some instances, is left to the 
national legislation, as in the case of certain  photographs (Table III.14).  In July 2008, the 
Commission proposed an amendment to Directive 2006/ 116/EC on the term of protection of copyright 
and related rights, aiming to extend protection for producers and performers of phonograms to 
95 years after lawful publication or lawful comm unication to the public, and to introduce a uniform 
method of calculating the term of protecti on applying to co-written musical works.235  
190. Copyright holders have the exclusive right to authorize or prohibit the reproduction of their 
work, with some exceptions.  For instance, reproducti ons are allowed if they are transient and are an 
integral and essential part of a technological pr ocess; or if their sole purpose is to enable: 
(a) transmission in a network between third parties by  an intermediary, or (b) a lawful use of a work 
or other subject matter to be made, and have no  independent economic significance.  Exceptions and 
limitations to the rights may be provided by the Member States, inter alia , when teaching, for the 
benefit of people with a disability, for the use by  the press and in political speeches, and on grounds of 
public security.  Members must provide legal protec tion against the circumvention of any effective 
technological measure used to prevent infringement  of the rights of a copyright holder.  The 
manufacture, importation, distribution, sale, rental, or advertisement of any device used to facilitate 
circumvention of an effective t echnological measure is prohibited. 
191. The EC also protects authors who are not Commun ity nationals.  When the country of origin 
of a work (in the sense of the Be rne Convention) created by such an  author is not an EC Member 
State, the work is protected until the expiry of the term of protection in the country of origin of the work. However, the term of protection may not ex ceed the term of protection set out in the EC 
Directive.  EC Member States may also protect the related rights of rightholders who are not Community nationals, in which case the harmonized te rm of protection applies;  however, the term 
may not exceed the term of protection in the country  of which the rightholder is a national, nor may it 
exceed the harmonized term of protection.  Limitations to the term of protection are subject to 
                                                     
 
231 CPVO (2006) and (2007). 
232 CPVO online information.  Viewed at:  http ://www.cpvo.eu.int/default. php?res=1&w=1024&h=602 
&lang=en&page=ocvv/statistiques.htm. 
233 Commission Regulation (EC) No. 572/2008, OJ L 161, 20 June 2008.  Viewed at: 
http://www.cpvo.eu.int/documents /lex/2008R572/EN2008R572.pdf. 
234 Directives 2006/115, 12 December 2006;  and 2006 /116/EC, 12 December 2006. 
235 COM (2008) 464 final, Brussels, 16 July 2008.  Viewed at: http://eur-lex .europa.eu/Lex UriServ/Lex 
UriServ.do?uri=COM:2008 :0464:FIN:EN:PDF.   European Communities WT/TPR/S/214 
 Page 91 
 
 
Member States' international obligations, which may re quire that they protect rightholders that are not 
Community nationals for a longer period. 
Table III.14 
Term of protection of copyrights and related rights, 2008 
Type of work Terms of protection 
Authors' right  Life of the author plus 70 year irrespec tive of the date the work was lawfully made available to 
the public.   
In the case of joint authorship the term should be  calculated after the deat h of the last surviving 
author. In the case of anonymous or pseudonymous works, 70 years after the work is lawfully made 
available to the public. 
If the pseudonym does not leave any doubt as to th e identity of the author, then protection is for 
the life of the author plus 70 y ear irrespective of the date the wo rk was lawfully made available 
to the public. 
Work published in volumes Protection runs from the time  the work was lawfully ma de available to the public. 
Works that have no t been lawfully 
made available to the public within 70 
years from their creation Protection should be terminated. 
Cinematographic or audiovisual 
works Protection expires 70 years after the death of the author.a. 
Performers Protection expires 50 years after the date of the performance. However, if a fixation of the 
performance is lawfully published or  lawfully communicated to the public within this period, the 
rights expire 50 years from the date of the firs t such publication or the first such communication 
to the public, whichever is the earlier. 
Producers of phonograms Protection expires 50 years after the fixation is made. However, if the phonogram has been 
lawfully published within this period, the rights expire 50 years from the date of the first lawful 
publication. If no lawful publi cation has taken place, and the phonogram has been lawfully 
communicated to the public within this period, the said rights shall expire 50 years from the date 
of the first lawful communication to the public. 
Producers of a filmb Protection expires 50 years after the fixation is ma de. However, if the film is lawfully published 
or lawfully communicated to the public during this period, the rights shall expire 50 years from 
the date of the first such publication or the fi rst such communication to the public, whichever is 
the earlier. 
Broadcasting organizations Protection expires 50 years after th e first transmission of a broadcast whether transmitted by 
wire or over the air, including by cable or satellite. 
Photographsc Life of the author plus 70 years no matter when it was lawfully made available to the public.   
In the case of joint authorship, the term should be  calculate after the death of the last author. 
In the case of anonymous or pseudonymous works, 70 years after the work is lawfully made available to the public. 
If the pseudonym does not leave any doubt as to th e identity of the author then protection is for 
the life of the author plus 70 years no matter when  the work was lawfully made available to the 
public. 
a The principal director of a cinematographi c or audiovisual work is considered the au thor.  The author of the screenplay and/o r the 
 author of a dialogue are designated as co-authors. 
b The term "film" designates a cinematogr aphic or audiovisual work or moving imag es, whether or not accompanied by sound. 
c Photographs are protected under Community law only if they are the author’s own intellectual creation.  Member States may 
provide protection fo r other photographs.  
Source: Directive 2006/116/EC, 12 December 2006. 
192. Appropriate sanctions and remedies for copy right infringements are provided by Member 
States.  Each Member State must take measures to ensure that righthold ers whose interests are 
affected by an infringing activity can bring an actio n for damages and/or apply for an injunction and, 
where appropriate, for the seizure of infringing materi al as well as of devices, products or components 
relating to effective technological measures.  
193. The EC and Member States ar e actively involved in the ongoing negotiations on the proposed 
WIPO Treaty on the protection of broadcasting orga nizations (WIPO Broadcasters' Treaty) against 
signal theft on an international level. WT/TPR/S/214 Trade Policy Review 
Page 92 
 
 
(c) Geographical indications  
194. Community-wide rules exist for the protection of geographical indications.  Geographical 
indication (GI) protection is provided in the EC  under regulations covering:  wines (Regulation 
No. 479/2008)236, spirits (Regulation No. 110/2008)237, and agricultural and foodstuff products 
(Regulation No. 510/2006).238  The EC has a registration system for wines, spirits, and agricultural 
products and foodstuffs protected by designation of  origin (PDO), and for protected geographical 
indications (PGIs).  Regulation No. 110/2008 applies to all spirits placed on the EC market, produced 
in the EC for export, and to the use of ethyl alco hol and/or distillates of agricultural origin in the 
production of alcoholic beverages;  it provides for a non-discriminatory procedure for the registration, 
compliance, alteration, and possible cancellation of  third-country and EC GIs.  The registration 
system for wine, as provided for by Regulation (EC) No. 479/2008, will apply from 1 August 2009. 
195. In 2006, the EC's system for protecting names of agricultural products – protected designation 
of origin (PDO), protected geographical indica tion (PGI) and traditional speciality guaranteed 
(TSG)239 – was modified by, inter alia , clarifying that it was open to names from third countries.  The 
system was also opened to direct applications or  objections to the European Commission, by producer 
groups in third countries (i.e. producers are no longer required to pass through their national 
authorities).240  The Commission is the final arbiter in case of failure of a conciliation procedure 
between parties.  Registration of PDOs and PGIs  conveys exclusive marketing rights, which are 
enforced by Member States.  Non-complying products must be withdrawn from the market.241  The 
EC's register for agricultural products and foodstuffs  contains over 818 PDOs and PGIs, including one 
third-country name (Café de Colombia).242  The wine and spirits GIs register contains 2,127 names 
(1,800 for wines and 327 for spirits).  There are tw o third-country names in the wines and spirits 
register:  Vale dos Vinhedos (Brazil)  and Napa Valley (the United States). 
196. For agricultural products and foodstuffs, there is a Community-wide system of examination 
and registration.  Associations of producers and/ or processors working with the same agricultural 
product or foodstuff, or other natura l or legal persons, are entitled to apply for registration for GIs.  
Applications for GIs of products of EC origin are sent to the relevant Member State.  If the EC 
Member State (or the relevant aut hority in the third country) consider s that the application meets the 
requirements for registration, it transmits it to th e European Commission, which verifies whether the 
conditions are met. For GIs of products of non-EC orig in the application is sent either directly to the 
European Commission or to the authorities of the country in which the geographical area is located, 
which transmits it to the European Commission. Th e application requires an accompanying document 
                                                      
236 OJ L 148, 6 June 2008, in force as of 1 August 2009. 
237 OJ L 39, 13 February 2008. 
238 This regulation was amended to take account of the accession of Bulgaria and Romania.  The two 
countries had one year (after accession ) to introduce the legislation necessary for the registration of geographical 
indications and designations of origin; existing national protection could continue during that period (Council 
Regulation No. 1791/2006, 20 November 2006, OJ L 363 , 20 December 2006.  Detailed rules of implementation 
of Regulation No. 510/2006 were laid down in Regu lation No. 1898/2006, 14 December 2006).  Regulation 
No. 1898/2006 was amended in July 2008 with regard to the symbols used on the label or packaging of products 
with names registered as protected geographical indications or protected designations of origin. 
239 Used for products linked to a particular met hod of production, e.g. Mozzarella cheese (Italian 
tradition). 
240 Objections to applications can be submitted to the European Commission by Member States, third 
countries or individuals with a legitimate interest. Co uncil Regulation (EC) No. 510/2006, 20 March 2006, and 
Council Regulation (EC) No. 509/2006, 20 March 2006. 
241 European Commission (2007e). 
242 European Commission online information. Viewed at: http://ec.europa.eu/agriculture/quality 
[24 November 2008]. European Communities WT/TPR/S/214 
 Page 93 
 
 
containing the name and description of the product;  the definition of the geographical area; factors 
relating to the geographical area; details of labellin g; name and address of the inspection body;  the 
link to the specifications;  and the name of the applicant group. Third-country applications must also include the specification, including methods of prepara tion, and proof that the name is protected as GI 
in the country of origin.  If the Commission is sa tisfied with the application, it publishes its positive 
conclusions in the Official Journal  and, if no objections are raised (by interested parties from the EC 
or third countries) within six months of publica tion, the product is entered in the Community's 
register.  If any objection has been raised, the Co mmission invites the objector(s) to find an amicable 
agreement before it takes a decision whether to gran t the GI.  The recently adopted regulations for 
wines and spirits have established a simila r system of registration and protection. 
(d) Enforcement 
197. Commission Regulation No. 1891/2004 of 21  October 2004 lays down provisions to 
implement Council Regulation No. 1383/2003, which c oncerns IPR enforcement at the EC's external 
borders.  It established, inter alia , definitions of who may represent the holders of a right, as well as 
proof of ownership of an IPR;  it also set time li mits and procedures for the exchange of information 
between Member States and the Commission.
243  During the period under review, there were no 
changes in EC's IPR enforcement legislation, apart from the amendment to Commission Regulation 
No. 1891/2004 to take into account the recent enlargement.244 The 2004 Directive on the civil 
enforcement of IPR has been implemented in almo st all Member States (Sweden and Luxembourg are 
still in the process of adoption). In 2009, the Comm ission will draw up a report on the application of 
this Directive, including an assessment of the eff ectiveness of the measures taken. The proposal for a 
Directive to combat intellectual property offen ces adopted by the Commission in April 2006, is 
pending in the Council.245 
198. In 2007, 79 million counterfeit a nd pirated articles were seized  (38% less than in 2006 
(128.6 million articles), as lesser quantities of co unterfeit cigarettes and CDs/DVDs were seized).  
Infringement cases in 2007 were up 17% over 2006 an d 64% over 2005.246  In 2006, German customs 
alone confiscated about €1.2 million worth of counterfeit goods.247  However, differences in the 
implementation of criminal procedures and penalties appear to create discrepancies in the level of protection available to right holders.  The Commi ssion is also considering procedures to strengthen-
border enforcement of IPRs.
248   
                                                      
243 Council Regulation No. 1383/2003 concerning customs action against goods suspected of infringing 
certain intellectual property rights and the measures to be taken against goods found to have infringed such 
rights (OJ L 328 , 30/10/2004, pp. 0016 – 0049). 
244 Commission Regulation (EC) No. 1172/2007, OJ L 261, 5 October 2007.  Viewed at: http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:261:0012:0023:EN:PDF. 
245 More information on the proposals is contained in WTO (2007), and Europa Press Release 
IP/06/532, 26 April 2006.  Europa online information. Viewed at: http://europa.eu/rapid/pressReleasesAction.do 
?reference=IP/06/532&format=HTML&ag ed=1&language=EN&guiLanguage=en. 
246 European Commission online information, "Taxation and Customs Union". Viewed at: http://ec.eu 
ropa.eu/taxation_customs/customs/customs_controls/coun terfeit_piracy/combating/index_en.htm and http://ec. 
europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy/statistics/counte
rf_comm_2005_en.pdf. 
247 Europa Press Release MEMO/08/299, Brussels, 13 May 2008.  Europa online information.  Viewed 
at http://europa.eu/rapid/pressReleasesAction.do?ref erence=MEMO/08/299&format=HTML&aged=0&langua 
ge=EN&guiLanguage=en. 
248 COM (2008) 465 final, 16 July 2008, "An Industrial Property Rights Strategy for Europe".  Viewed 
at: http://ec.europa.eu/internal_market/indprop/docs/rights/2008_0465_en.pdf. WT/TPR/S/214 Trade Policy Review 
Page 94 
 
 
199. Improved cooperation between customs and indust ry has enabled Customs to better target 
suspected shipments and to recognize counterfeit goods.  In 2007, 80% of the interventions by 
Customs were at the request of i ndustry (10,000 applications filed by  industry in 2007, compared with 
7,000 in 2006).  Customs mainly intercepted counte rfeit cigarettes (35% of all seizures) and clothing 
(22% of seizures);  seizures increased in medici nes (a 51% increase compared with 2006), electrical 
equipment, cosmetics and persona l care products (a 264% increase from 2006), toys (a 98% increase), 
foodstuff and computer equipment (a 62% increase each).249  IPR infringements in 2007 concerned 
trade marks (91.7% of all cases), patents (5%), c opyrights and related rights (1.9%), and design and 
model rights (1.2%).250 
200. Enforcement in the 12 Member States that acceded to the EC in 2004 and 2007 produced 
significant results:  procedures in these countries accounted for 18% of the total number of procedures, and the number of articles intercepte d more than doubled from 2005 to 2007 to some 
24.2 million articles (31% of EC total).  In 2007, most of the counterfeited and pirated articles were 
seized in Bulgaria, Poland, Romania, Latvia, Malta, the Czech Republic, Slovakia, and Hungary.
251  
In order to strengthen the enforcement of IPRs, the Commission continues to work with Member 
States to improve intelligence networks, and to include the private sector. 
201. The EC is determined to continue its fight against counterfeiting and piracy, unilaterally, and 
through also bilateral, regional,  and multilateral agreements, including the establishment of efficient 
dispute settlement systems.252  The EC is a major participant in the negotiations for a plurilateral Anti-
Counterfeiting Trade Agreement (ACTA), with three key components: (i) international cooperation, 
principally between customs and enforcement agenci es; (ii) enforcement practices; and (iii) legal 
framework.253 
202. The EC and the United States cooperate to comb at counterfeit;  for instance, a joint customs 
operation called "Infrastructure", which took place at the end of 2007, resulted in the seizure of over 
360,000 counterfeit integrated circuits bearing over 40 different trade marks.254  Discussions on the 
development of an Action Plan on IPR Custom s Enforcement between the EC and China are 
ongoing.255  Enforcement activities and cooperation are be ing reinforced with a number of priority 
                                                      
249 Europa Press Release IP/08/757, 19 May 2008.  Viewed at: http://europa.eu/rapid/pressReleasesAc 
tion.do?reference=IP/08/757&format=HTML&aged=0&language=en&guiLanguage=en. 
250 European Commission online information, "Report on the Community Customs Activities on 
counterfeit and piracy, Results at the European border – 2007". View ed at: http://ec.europa.eu/taxation_customs/ 
resources/documents/customs/customs_contro ls/counterfeit_piracy/statistics2007.pdf. 
251 European Commission online information, "Report on the Community Customs Activities on 
counterfeit and piracy, Results at the European border – 2007".  Viewed at: http://ec.europa.eu/taxation_customs 
/resources/documents/customs/customs_cont rols/counterfeit_piracy/statistics2007.pdf. 
252 European Parliament (2008). 
253 For more information, see Europa Press Release IP/07/1573, 23 October 2007. Viewed 
at:http://europa.eu/rapid/pressReleasesAction.do?ref erence=IP/07/1573&format=HTML&aged=0&language=en
&guiLanguage=en); European Commission online information, "Fact Sheet: Anti-Counterfeiting Trade Agreement", Brussels, 23 October 2007. Viewed at: http ://ec.europa.eu/trade/issues/sectoral/intell_property/fs23 
007_en.htm) and http://ec.europa.eu/trade/issu es/sectoral/intell_proper ty/acta_en.en.htm.  
254 For more information, see Europoean Commission online information, Taxation and Customs Union 
DG Press Release, 22 February 2008. Viewed at:  http://ec.europa.eu/taxation_customs/resources/documents/co 
mmon/whats_new/EC_US_joint_operation_en.pdf. 
255 Europa Press Release MEMO/08/310, 19 May 2008 .  Viewed at:  http://europa.eu/rapid/pressRelea 
sesAction.do?reference=MEMO/08/310&format=HTML&aged=0&language=en&guiLanguage=en. European Communities WT/TPR/S/214 
 Page 95 
 
 
countries, such as, China, Russia, Turkey, Israel, and Thailand.256  Moreover, detailed IPR clauses, in 
particular on enforcement, are included in sev eral trade agreements concluded by the EC. 
203. In September 2008, the Competitiveness Counc il adopted a Resolution on a comprehensive 
European anti-counterfeiting and anti-piracy plan, to step up the fight against counterfeiting and 
piracy.  The Commission's ambition is to build a robust legal framework by demonstrating a more 
practical and "zero-tolerance" approach to counte rfeiting.  The plan envisages: (i) the setting up of a 
European counterfeiting and piracy observatory wi th a view to enabling a regular assessment and 
analysis of counterfeiting and piracy phenomena; ( ii) dissemination of information to those involved 
in combating these phenomena; (iii) development of actions to raise awareness and drawing up 
operational guides; (iv) design of anti-counterfeiting customs plan for the years 2009 to 2012, making 
a survey of customs law and an evaluation of th e improvements needed to the legal framework; 
(v) setting up of a network for the rapid exchange  of information on counte rfeit products and services; 
(vi) promoting coordination between institutions involved; (vii) encouraging public/private-sector 
partnership to combat counterfeiting and pira cy; and (viii) setting up the protection of IPR 
internationally and promoting th e inclusion of measures on IP R in bilateral and multilateral 
agreements concluded by the EC.257  
204. A recent study on the effects of counterfeiting on the EC's small and medium-sized 
enterprises recommended a fundamental change in  public and corporate attitudes towards IPR 
protection and enforcement within the EC (includi ng a public "zero tolerance" approach towards IPR 
infringement, resistance to IPR infringements, and putting in place support measures targeted at 
SMEs), reduction of Community trade mark regist ration fees for SMEs, lobbying for the introduction 
of a Community patent, creation of a databank of original products, development of IPR training programmes, establishment of a "help-desk", and introduction of court-cost insurance schemes.
258 
                                                      
256 For more information, see European Commission  online information.. Viewed at: http://ec.europa. 
eu/trade/issues/sectoral/intell_property/index_en.htm. 
257 Council Resolution on a comprehensive European anti-counterfeiting and anti-piracy plan, Brussels, 
25 September 2008. Viewed at: http://ec.europa.eu/taxation_customs/resources/documents/common/whats_new/ 
20080926_en.pdf.  
258 Technopolis (2007).