WORLD TRADE  
ORGANIZATION  WT/TPR/M/177 
30 April 2007 
 (07-1764) 
Trade Policy Review Body 
26 and 28 February 2007   
 
 
 
TRADE POLICY REVIEW 
 
EUROPEAN COMMUNITIES 
 
Minutes of Meeting
 
 
Chairperson:  H.E. Mr. Vesa Himanen (Finland) 
  
  Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF  
THE EUROPEAN COMMUNITIES 4  
III. STATEMENT BY THE DISCUSSANT 7  
IV. STATEMENTS BY MEMBERS 9  
V. REPLIES BY THE REPRESENTATIVE OF THE EUROPEAN COMMUNITIES AND ADDITIONAL COMMENTS 22
 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 32  
      
 
    
 
    
 
 
Note:   Advance written questions by WTO Members and the replies provided by the 
European Communities are reproduced in document WT/TPR/M/177/Add.1 and will be 
available online at:  http://www.wto.org/ english/tratop_e/tpr_e/tp_rep_e.htm.  WT/TPR/M/177 
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 I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The eighth Trade Policy Review of the European Communities was held on 26 and 
28 February 2007.  The Chairperson H.E. Mr. Vesa Himanen (Finland) welcomed the delegation of 
the European Communities, headed by Deputy Director General of DG Trade, Mr. Peter Balás, and 
the discussant Ambassador Claudia Uribe (Colombia).  As usual, the discussant would speak in her 
personal capacity and not as a representative of he r country.  In accordance with the established 
procedures, the discussant had made available, in ad vance, outlines of the main issues she intended to 
raise (document WT/TPR/D/153). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures for the meeting.  The report by th e European Communities was contained in document 
WT/TPR/G/177 and that of the WTO Secretariat in WT/TPR/S/177.  As indicated in 
WT/TPR/6/Rev.1, the Member under review should pr ovide written answers, by the beginning of the 
review meeting, to questions submitted at least two weeks before the meeting.  Questions posed 
subsequently should be answered, to the extent possi ble, before the start of the second session of the 
meeting.  Questions left unanswered at the end of the second session should be answered in writing no 
later than one month after the meeting.  Questions by the following delegati ons had been submitted in 
writing at least two weeks in advance of the meeti ng and had been transmitted to the delegation of the 
European Communities:  Ecuador;  Singapore;  New Zealand;  Switzerland;  Argentina;  Chile;  
Japan;  Thailand;  Mexico;  Australia;  Canada;  Brazil;  the United States;  Peru;  Honduras;  and 
Colombia.  Copies of these questions and of the an swers provided by the delegation of the European 
Communities were available in the meeting room.  Hong Kong, China;  Turkey;  Costa Rica; the 
Republic of Korea;  China;  the Separate Custom s Territory of Taiwan, Penghu, Kinmen and Matsu;  
Nicaragua;  Pakistan;  Bolivia;  and India ha d submitted written questions after the two-week 
deadline.  These questions had also been transmitted to the delegation of the European Communities;  
copies of these questions and of the answers provi ded by the delegation of the European Communities 
were available in the meeting room.  Copies of all advance questions, as well as the responses 
received from the delegation of the European Communities, are reproduced in 
WT/TPR/M/177/Add.1. 
3. The Chairperson noted, through the documentation prepared for this review, that economic 
growth in the European Communities had picked up since its last TPR, accompanied by 
double-digit growth rates for foreign trade.  Major institutional changes included the accession of 
two new Member States, Bulgaria and Romania, and the beginning of accession negotiations with 
Croatia and Turkey.  T he EC's MFN tariff had remained largely unchanged.  Nonetheless, the 
average applied MFN tariff had incr eased slightly, due to increases in ad valorem equivalents (AVE) 
of non- ad valorem tariffs.  Tariffs on non-agricultural goods were relatively low, but the level of 
protection and support for agricultural goods remained high, despite steps taken by the EC to reform 
its common agricultural policy.  In commercial servi ces, the EC remained the world's leading exporter 
and importer, although significant barriers to services trade had remained in place.  While the EC had 
remained one of the most active Members in the WTO, it continued to build on an extensive network 
of regional trade agreements.  A revised GSP scheme had entered into force.  Members would be keen 
to learn more about the EC's recently announ ced intention to launch new preferential trade 
negotiations, and about its negotiati ons on reciprocal Economic Partne rship Agreements with the ACP 
countries under the Cotonou Agreement. WT/TPR/M/177 
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE EUROPEAN 
COMMUNITIES 
4. The representative of the European Communities
 stated that the purpose of this trade policy 
review exercise was not to promot e the European Communities in th e most positive light, but to use 
this forum for some reflection on what the EC's st eps and measures had meant and would mean for its 
partners in the WTO.  
Accomplishments since the last EC TPR in October 2004 
 (a) Internal policies of relevance to trade   
5. At the time of the last TPR, the EU had just enlarged to 25 Member States;  the last two years 
had been a period of consolidation and of prepara tion for the next enlargement, of Bulgaria and 
Romania, on 1 January 2007. 
6. Economically, the indicators had shown marked improvements, in particular in 2006. The 
"catching up" process of the new Member States in terms of narrowing gr owth differentials and 
differences in GDP per capita was well on its way, even though there were still quite substantial 
discrepancies. Slovenia had adopted the euro on 1 January 2007. and the Lisbon agenda had been 
further refined in 2005, with a package of measures providing a new focus on growth and 
employment.  
7. The EC strongly believed that economic and so cial development had to go hand in hand, 
reinforcing each other. During the review period, the EC had undertaken measures both internally and 
in its trade policy to promote decent work and sust ainable development, as manifested, for example, 
in its "GSP+" incentive scheme. Another innovativ e measure was the setting up of the European 
Globalisation Fund, which, since January 2007, prov ided one-off, time-limited individual support to 
workers affected by redundancies resulting from trade adjustment.  
8. The point of departure for the EC's extern al relations was its Internal Market. The 
representative noted with some surprise that the S ecretariat's Report discussed in detail internal 
barriers to intra-EC trade in services, rather than  focusing on the openness of the services markets and 
the fact that the EC was the world's largest trader in services. The EC had taken a very important step 
internally with the adoption of the Services Dire ctive in December 2006. Once this directive was 
incorporated into the national legislation of its Member States and implemented, in 2009, the 
remaining legal and administrative barriers to the development of EC-wide services markets would be 
by and large removed.  The new opportunities offe red by the Services Directive would benefit the 
EC's partners, and even more so once th e ongoing DDA negotiations on services have been 
concluded;  the EC had offered significant further market access in these negotiations. 
9. All internal accomplishments over the last two years were intrinsically linked to the EC's 
trade policy. One obvious area was agriculture. The far-reaching reform of the Common Agricultural 
Policy had started in 2003 and was continuing. Th is reform aimed to increase the competitiveness of 
Europe’s farmers, while assuring them a stable income and eliminating trade distortions. Emphasis was on rural development and the observance of e nvironmental, food safety, and animal welfare 
standards. The internal reform had enabled th e EC to make far-reaching proposals in the DDA, 
conditional on equivalent steps by major partne rs. Only the WTO could ultimately deliver the 
consolidation of fundamental reform programmes of  farm subsidies in developed countries.  The 
competitiveness of agricultural producers everywhere  depended on further market access and reduced 
subsidization, but also on the ability to market high quality products with a specific origin that made 
them characteristic. Thus, results on geographical i ndications were of fundame ntal importance in the 
DDA.  WT/TPR/M/177 
 Page 5 
 
 
 10. Despite the EC's significant progress in recent y ears, the extent of its agricultural reform 
programme still seemed to be underestimated. The EC was using only a small portion of its Uruguay 
Round limits; in its conditional offer tabled in the DDA negotiations, it had proposed to go much 
further. The EC was already the world’s largest im porter and exporter of agricultural products. Major 
shares of its agricultural imports came from devel oping countries, and the EC received almost 60% of 
all agricultural exports from LDCs.  
(b) Trade policy 
 
11. The EC had continued to put its trade policy at  the service of its wider objective of achieving 
sustainable development. In its trade policy making,  it had carefully considered the economic, social, 
and environmental implications of its decisions. It  had continued to maintain an extensive dialogue 
with civil society and also used incr easingly sustainability impact assessments. 
12. The most important goal of the EC's trade policy over the past two years had been the DDA.  
The advanced stage of the DDA was to a high degr ee due to the EC's engagement. The EC had also 
continued and further strengthene d its bilateral and bi-regional tr ade relations but never to the 
detriment of the multilateral system. The EC had also maintained its engagement to not to enter into 
any new FTA negotiations as it was convinced that true development for all WTO Members could be 
achieved only in the multilateral context. Developmen t concerns were in nume rous EC submissions to 
the DDA;  and at the Hong Kong Ministerial, the EC had been instrumental in achieving the decision 
on duty-free-quota-free market access for LDCs. 
13. This commitment to development had been the gui ding principle of the EC's bilateral trading 
relations. The main aim of the Economic Partnership Agreements (EPAs) with partners in Africa, the 
Caribbean and the Pacific was to serve as a developm ent tool, promoting their gradual integration into 
the world economy.  
14. Over the years, the EC had continuously improved access for developing countries to its 
already quite open markets, both for industrial a nd agricultural goods. This included the far-reaching 
reform of its GSP, which entered into force in  2006. LDCs had free access under the EBA scheme. 
The majority of WTO Members had more privileged access to EC markets under the EC's preference schemes and bilateral agreements than under the MFN regime. However, the importance of MFN 
trade for the EC should not be underestimated. The EC received MFN treatment for over 50% of its 
exports, from all its major trading partners. 
15. The EC had continued to couple its trade policy measures with significant financial assistance 
to its partner countries, including trade-related a ssistance. The EC was a substantial donor of TRA 
atthe global level, and was committed to do mo re, as exemplified in its pledge to increase 
commitmentsto Aid for Trade, as well as those of its Member States, to €2 billion a year. 
Where was the EC going from here?  
16. The previous two years had been a period of internal reflection on trade. This had resulted in 
the refinement of the EC's trad e policy objectives, although the basic orientation had not changed.  
The main reason for this review was to better set th e EC's trade policy in the context of its overall 
focus on the Lisbon agenda, i.e. growth and compet itiveness, and to strengthen the link between its 
internal and external policies. The result was th e "Global Europe" concept, endorsed by the Council in 
November 2006.   This new "competitiveness agenda " was a strategy to create and strengthen new 
areas of growth, both through increased market access  abroad and stronger rules in new trade areas of 
economic importance, such as intellectual property ri ghts, services, investment, public procurement, 
and competition.  The EC was committed to keeping its own markets open, as Europe needs to import in order to be able to export. WT/TPR/M/177 
Page 6  
 
17. The WTO and the DDA remained the EC's key tr ade policy goal, the EC continued to work 
vigorously to successfully conclude the DDA negotiati ons as soon as possible. It had already put a lot 
on the table, not least in the area of agriculture; in  return, the EC expected equally ambitious offers 
from others, as well as appropriate contributions on  non-agricultural market access and services. It 
also continued to attach importance to the de velopment of rules guiding international trade. 
18. A new generation of bilateral free-trade agreemen ts with some of the EC's key partners had 
been foreseen. However, this would not lower th e EC's commitment to the WTO and the DDA:  the 
new negotiations were intended to complement th e DDA, building on its results, and not interfere 
with it. 
19. The EC had also planned to launch the next stage of its global strategy for protecting 
intellectual property rights and to renew its mark et access strategy focussing on non-tariff barriers. 
The EC would work further on ensuring better access  to major public procurement markets. The EC 
had been very measured in its use of trade defenc e instruments, with more restrictive conditions of 
application than other trading partners;  the Co mmission had also launched an analysis of these 
instruments. In parallel, the EC was looking forw ard to a substantive outcome of the ongoing rules 
negotiations in the DDA.  WT/TPR/M/177 
 Page 7 
 
 
 III. STATEMENT BY THE DISCUSSANT 
Introduction 
 
20. The discussant  (H.E. Mrs. Claudia Uribe) noted that when the European Economic 
Community was adopted by six States on 25 March 1957, the objective was to unify Europe and 
generate economic well-being;  50 years later, in 2007, the results were apparent. The EC had grown 
in terms of number of Members, and its internal  discipline had supported the development of its 
Members and neighbours. 
21. The European Union was a unique and particularly dynamic project. No other regional 
integration scheme had achieved such good results.  Its members and its institutions had constantly 
taken up new challenges, such in th e Lisbon Strategy which was seeking to convert the region into the 
world's most competitive and dynamic economy by 2010. 
22. Over the past three years, the EC economy had shown a considerable recovery and it held an 
important role in the world economy. The positiv e growth climate had helped create new jobs.  
Unemployment had dropped to 7.8% in the EC and 7.5% in the Euro-zone in July 2006, the lowest 
rates of the decade.  Nevertheless, unemployment continued to be high.  Inflation had been under 
control thanks to improvements in productivity an d international competition. Imports and exports 
had grown strongly, which showed the dynamics of the external sector. 
23. The most important development during the peri od under review was the consolidation of EC 
enlargement. Nevertheless, the economies of some members, old as well as new, required 
improvements.  One of the characteristics of EC tr ade policy was its broad network of regional trade 
agreements.  The EC was the largest user of GA TT Article XXIV, which ge nerated major tensions 
between regionalism and multilateralis m. She asked about the EC's vision of the economic impact of 
its trade policy on third countries, in terms of trade deviation and other effects. 
24. The European Council had adopted economic re forms and intended to adopt policies that 
would respond effective to globalization.  Refe rring to the European Globalization Fund, she noted 
that €500 million per year were intended to benefit workers in the EU, particularly in regions and 
sectors that had suffered from radical changes in world trade.  In this regard, she asked the 
Commission to further explain the concept of radi cal changes and whether it also took into account 
future changes such as those resulting from the conclusion of the Doha Round. 
25. The institution of this Fund was undoubtedly positive, particularly for the Doha Round, 
because the EU had sectors which were not very expo sed to international competition.  She asked the 
EC to explain the strategy for the use of the Fund and whether there were es timates for its use for 
different sectors, particularly agriculture. 
26. A customs agreement had been signed with the United States to extend and intensify trade 
operations on a reciprocal basis, giving equal treatme nt to ports and operators in the United States and 
the EC.  She asked the Community to share with Members the usefulness of this agreement and how 
trade between the two economies had benefited, as well as whether new negotiations were planned. 
27. The use of the purely MFN tariff for only nine Members of the WTO showed the importance 
of regional trade negotiations and unilateral preferences.  While generally tariffs were low in the 
industrial sector, tariff peaks still affected the comp etitiveness of the industry.  Agriculture continued 
to benefit from the highest tariff protection. Add itionally, this sector was characterized by complex 
non ad-valorem  tariffs;  a complex system of quotas, wh ich reduced transparency in the customs 
regime;  tariff escalation;  and tariff peaks. On th is point, she asked whether the EC intended to make 
unilateral reforms to its tariff structure as an add itional step or as a part of the Lisbon Strategy. WT/TPR/M/177 
Page 8  
 
28. The EC's well known competition legislation a nd authority was in charge of promoting 
competition and preventing violation of competition regulations. Referring to recent statements by the 
Commission, she asked whether the EC's competiti on policy aslo had the objective of regulating the 
subsidies the Commission granted to business activities. 
29. The EC's Service Directive was adopted during the review period. Given the importance of 
services in the EC's economy it was no surprise that the EC had set as an objective the elimination of 
any barriers to the domestic services market. Nevertheless, challenges of harmonization remained because service providers were subject to  regulation in the importing country. 
Legislation duality  
 30. The presence of dual legislation, at the EC and national level, increased complexities for 
those engaged in foreign trade. Although some of standards were intended to protect health and 
environment, their coexistence implied a heav y burden for exporters and constituted excessive 
protection for community producers. She asked whether the Commission had plans to harmonize these dualities.  
Sectoral policies 
 
31. The EC was the only WTO Member to date that had decided to make an impact on world 
agriculture by eliminating export subsidies by 2013, with or without the Round.  In 2004, total development aid granted by the EC and its Member  States to the developing world was €43 billion;  
total support for agriculture was €48 billion;  and total exports by ACP countries to the EC were 
€28.4 billion. 
Aid for trade and trade facilitation 
 
32. It was agreed in 2006 that aid for trade was an  essential complement for the conclusion of the 
Doha Round and that there would be a mechanism to rationalize this aid.  This had been a friendly 
topic in the negotiating process, but it generated expectations that w ould be difficult to satisfy.  The 
EC had a fundamental role in the development of th is topic, and the European Council had offered to 
increase funds for this purpose to €1 billion per year .  However, the amount offered as support or aid 
for trade contrasted with the la rge sums earmarked for the domestic market.  As this was not a 
discussion on resources, but rather on the quality of ai d, she asked the EC to share its vision on aid for 
trade. 
Trade policy challenges  
 
33. The EC faced the challenges of:  reducing th e unemployment rate, reducing considerable 
regional imbalances, continuing with the reform  of its agriculture policy, increasing global 
competitiveness through a number of measures including tariff reductions, implementing the services 
directive on the domestic market, overcoming remain ing barriers to foreign investment, implementing 
a policy for innovation, research, and development as stated in the Lisbon Strategy, and taking 
advantage of resources in aid for trade to also promote the conclusion of the Doha Development Round. 
34. The EC was not perfect but was unquestionably a strategic partner for all WTO Members.  
The EC had its own identity and with the promo tion of good governance, with good practices, with 
the development of human wellfare, and with its tr ade policy, its had signed the best peace treaty in 
history.   WT/TPR/M/177 
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 IV. STATEMENTS BY MEMBERS 
35. The representative of Ecuador  stated that the EC had become one of Ecuador's major trading 
partners. The EU was a major supplier of prim ary commodities and capital goods. Although bilateral 
trade flows had increased, certain EC initiatives in the area of sanitary and phitosanitary measures had 
had a negative impact on trade.  The additional bene fits created by the GSP+ were unilateral, without 
any guarantee over time. For this reason, Ecuador att ached particular importance to the negotiation of 
an Association Agreement between the EU and the Andean Community. He agreed with the EC that 
coherence should be maintained in the Doha Round by implementing a policy to achieve prosperity, 
social justice, and sustainable development.  In this context, Ecuador had encouraged the EU to 
satisfy the international convention on the protection of immigrant workers and their families.  When 
the EC enlarged to 25 members in 2004, Ecuador  had negotiated and signed a concession agreement 
with regard to services;  this constituted an im portant precedent for negotiating compensation with 
regard to the recent accession of Romania and Bulgaria. 
36. In the area of agriculture, Ecuador encouraged  the EU to submit up-to-date notifications and 
to reduce subsidies.  Furthermore, there had been  an increase in agricultural quotas, some of which 
had not been used. He wished to know why these unused quotas were still maintained.  As regards 
domestic support for banana producers, since the impl ementation of the new banana regime of the EC 
in 2006, Ecuador had paid more  than US$130 million in additional tariffs. He asked why support for 
the community banana had increased. 
37. With regard to preference erosion, he noted that  this was a natural effect of the liberalization 
process and sought information on the EC's approach to  this problem.  Referring to the reform of the 
common fisheries policy, the European Fisheries Fund, instituted in 2006, might lead to an increase of 
overcapacities and he asked about the reasons for th e proposed increase of de minimis thresholds in 
the fisheries subsector. 
38. The representative of Brunei, speaking on behalf of ASEAN  noted that the EC’s basic trade 
regime had remained largely unchanged. Despite some positive developments in agriculture, there 
was still room for improvement and he looked forwar d to further improvement by the EC in this 
crucial sector.  Services played an important role  in the EC’s GDP and employment.  The EC had 
undertaken steps to review its GSP scheme and the Cotonou Agreement:  this was a significant step as 
it paved the way for enhanced liberalization of tr ade in both agricultural and non-agricultural goods 
and services. He hoped that the proposed new rules of origin criteria for exports under the GSP would 
continue to promote cross-regional trade.  
39. ASEAN noted with concern the entry into for ce of the REACH scheme in 2007, which could 
adversely effect chemical imports into the EC. He  looked forward to more information from the EC, 
and invited the EC to consider providing diffe rential fees for the registration of products 
manufactured in or imported from developing countr ies.  ASEAN recognized the EC’s long-standing 
commitment to the multilateral trading system.  Ho wever, the EC’s own internal process was complex 
and he urged the EC to further strengthen transparen cy in its trade policies that affected developing 
countries, through a process of prior information as well as bilateral consultations, to allow sufficient 
time for developing countries to ad just accordingly.  The EC and its  individual member States were 
leading contributors to the WTO Doha Global Trust Fund for technical cooperation.  ASEAN also welcomed the recent announcement by the EC to la unch new preferential trade negotiations based on 
the market potential of new PTA partners.  AS EAN was pleased to note that it was one of the 
groupings identified as a potential partner, along with  several other members and regional groupings. 
40. The representative of New Zealand
 stated that, like the EC, his country was considering ways 
to maintain economic dynamism and prosperity in the face of global change.  New Zealand was 
committed to sustainable economic growth, which in cluded seeking optimal access for its products in WT/TPR/M/177 
Page 10  
 
all markets.  Like the EC, New Zealand strongly advocated further multilatera l trade liberalization, 
while at the same time strengthening trade relati onships through bilateral and regional agreements.  
New Zealand had a diverse services trade with th e EU, from education to engineering services, and 
the EU was New Zealand's second-largest direct  investment partner.  He appreciated the 
Commission's constructive approach in the amendm ent of their mutual recognition agreement on 
conformity assessment.  He welcomed the EC's i ndispensable role in the multilateral system to 
advance trade liberalization.  The EC was also st rengthening trade relationshi ps through bilateral and 
regional agreements with trading partners.  He commended the EC's on-going efforts to reform its 
common agricultural policy, most recently with th e European Commission's proposal to establish a 
single common market organization for all products.  
41. The recent CAP reforms had been far-reaching a nd were heading in the right direction. 
Reduction or elimination of expor t subsidies and tariffs on agricu ltural imports would benefit EC 
consumers, improve resource allocation, and significan tly contribute to the development of the global 
economy.  He expected EC fisheries to change in or der to reflect the need fo r a sustainable approach, 
not only in their own waters, but also internati onally.  He remained of the view that adopting ad 
valorem  rates would provide more transparency and prevent effective rates of protection from 
increasing.  New Zealand agreed with the EC about  the importance of policy coherence for trade and 
growth;  however, it meant that the offer of duty-free and quota-free access needed to provide 
liberalized market access for all products.  He al so agreed with the EC about the significance of 
services and of the EC's key stake in the GATS negotiations.  The adoption in 2006 of the amended 
Services Directive had been a welcome development.   
42. The modernization of the EC's Customs' code was of great interest: improved data-sharing 
between Member States was a welcome development for the EC's trading partners. He urged the EC 
to continue to take into account the interests a nd rights of its trading partners, even on issues that 
appeared to have minimal external relevance. He congratulated the EC on its enlargement to 27 
member States and noted that this would contribute  to increased trade flows and economic growth.  In 
this context, he was looking forward to c onducting and successfully completing Article XXIV:6 
negotiations with the Commission regarding appropriate modification of the EC's WTO 
commitments. 
43. The representative of Switzerland
 recalled the legal foundations of  trade relations between the 
EC and Switzerland.  Their affinities led almost na turally to a shared outlook on overall trade policies 
and their development. This was the case for ag riculture where their a pproach respected the 
multifunctional role of that sector.  
44. However, such close cooperation quite naturally gave rise to certain problems. One related to 
safeguard measures on several steel products, which th e EC had adopted in order to avoid a distortion 
of trade flows.  While he coul d understand why the EC had taken these measures, he was concerned 
by their effects and that they had not yet been ab rogated.  Another concerned trade in textiles and 
clothing:  the existing restrictions affected produc ts that had a fairly high-priced Swiss component.  
However, he also pointed out that trade relations  between Switzerland and th e EC were very good and 
that there was no major bilateral trade problem.  He welcomed the close and active cooperation with 
the EC in areas such as mark et access for industrial products, services, trade facilitation and 
geographical indications. 
45. The representative of Argentina  congratulated the EC for its enlargement to 27 members and 
added that it was one of Argentina's main trading partners. An ambitious and balanced conclusion of 
the Round was important to consolidate the reform pro cess in international trade that had begun in the 
Uruguay Round. However, it was worrying to see the growing number of substantial tariff increases, 
including to prohibitive levels, on agricultural pr oducts of considerable interest for developing 
countries. High border protection and domestic support had isolated  some products from competition 
and had generated surpluses.  The 2003  CAP reform represented an effort in the right direction, but it  WT/TPR/M/177 
 Page 11 
 
 
 was premature to assess all its results.  The EC was an important importer of agricultural and fisheries 
products, however this should not be measured in abso lute terms but in terms of specific restrictions 
that remained and that hampered the form ation of prices based on supply and demand.  
46. Faithful observance of trade disci plines was essential for the credibility of negotiations of new 
multilateral rules in the Doha Round.  He encourag ed the EC to comply with the Doha mandate 
without making exorbitant market access demands on developing countries for industrial goods.  He 
asked what types of state-aid were given to th e manufacturing sector and how the competitiveness of 
this sector was being promoted.  On non- ad valorem  tariffs he asked if the EU could report on the 
methodology to calculate AVEs.  
47. The representative of Chile  said that the EU was a very important trading partner and an 
important source of foreign direct investment in Ch ile.  Their healthy bilateral relationship had been 
strengthened by the Association Agreement in for ce for four years. Multilaterally, the EC and Chile 
had shared interests in many areas of the Doha Round negotiations, such as services, NAMA, rules, 
and trade facilitation, but also some di fferences, particularly in agriculture. 
48. He welcomed the recent approval of the Services Directive and appreciated the reform of the 
CAP, in particular the decoupling of payments and production.  He urged the EC to complement this 
reform with a more aggressive cut in the levels of its border protection in the context of the Doha 
Round.  He was following with particular interest th e reform process of the common fisheries policy.  
49. Chile was not against the fundamental principl es of REACH;  however, this registry could 
possibly affect access for Chile's exports to the European market. Chile was watching carefully to 
ensure that its implementation was in full conformity with the Agreement on Technical Barriers to 
Trade.  With regard to IPR enforc ement, Chile was dissatisfied with th e EC's approach i.e. to set up a 
blacklist of countries. He requested more information on the EC's strategy for the negotiation of bilateral and sub-regional agreements. He welcom ed the accession of Bulgaria and Romania, but 
urged the EC to take into consideration the legitimate interest of other WTO Members.  
50. The representative of Japan
 congratulated the EC for its r ecent expansion, hoping that this 
would increase trade and business opportunities for a ll. He hoped that EC would take the necessary 
measures to conclude GATT Article XXIV and GA TS Article XXI negotiati ons expeditiously and 
sufficiently. He understood the necessity for the EC to require, under the Prospectus and 
Transparency Directives, compan ies from third countries, which had made or would make public 
offerings or listings within the EU to prepare th eir consolidated financial statements in accordance 
with International Financial Repor ting Standards (IFRSs) or equivale nt standards.  However, he 
underlined that Japanese accounting standards were  equivalent to IFRSs.  He hoped that the 
equivalence decision by the EC would be issued as soon as possible. 
51. Referring to the taxation of IT products, he believed that the EC's classification was not 
consistent with the Information Technology Agreemen t (ITA) and urged it to take steps to remedy the 
situation.  Harmonization of the patent systems coul d help expedite patent acquisition, reducing costs, 
and bring about legal stability. On the DDA, Japan respected the EC for taking positive steps on many 
fronts and hoped to continue to cooperate with EC to bring a bout an ambitious and balanced 
conclusion of the DDA. Japan was also interested in  cooperating with the EC in line with the Lisbon 
agenda, as well as "Global Europe- competing in the world", announced in October 2006, and hoped 
that the interests of non-EC enterprises would be secured.   
52. The representative of Mexico  said that EC and Mexico were linked by a system of agreements 
that covered all aspects of bila teral relations. The basis of th is relationship was the Economic 
Partnership, Political Coordination and Cooperation Agreement, which ha d entered into force in 2000.  
The EU was Mexico's second largest trade partner,  and Mexico was one of the main importers of WT/TPR/M/177 
Page 12  
 
European goods amongst the emerging markets.  Foreign direct investment played a very important role in the bilateral relationship. He was convinced  that a regional liberalization agreement carried out 
in accordance with the rules of the WTO cons tituted an important step towards multilateral 
liberalization;  the only way in which regional agr eements could be efficient was to base them on a 
solid multilateral system.  He emphasized the role to  be played by the EC as a negotiator and the 
flexibility required.  
53. Obstacles to trade were still substantial in impor tant areas.  In agriculture, for example, the 
elimination of export subsidies and a substantial reduction of tariffs would be beneficial not only for 
European consumers but also for the world ec onomy.  He expressed concerns about the REACH 
system and its possible impact on trade flows.  He also raised concerns about false tequilas, noting 
that the best and indeed the only, tequila was Mexican.  
54. The representative of Australia
 congratulated the EC on the forthcoming 50th anniversary of 
the signing of the Treaty of Rome.  The EC was Au stralia’s largest trading partner and the largest 
source of foreign investment.  Australia had a deep interest in the evolution of the Common Agricultural Policy. He welcomed the reforms that  had taken place, but remained disappointed that 
the CAP continued to take up so much of the EC’s  common budget and that the EC did not adequately 
expose its agriculture to internationa l market forces.  He urged the EC  to take the opportunity of the 
Round and the forthcoming CAP "Health Check Revi ew" and Financial Pers pectives Review to 
maintain the reform agenda.  In the area of agri cultural export competition, the EC had foreshadowed 
an important contribution in the phase out of export subsidies.  Australia remained concerned about 
EC border protection for agricultural products:  the EC  needed to do more in the area of agriculture 
market access, where studies had consistently show n that the greatest benefits flow to developing 
countries. 
55. Australia praised the EC’s support for the multila teral system, and urged it to pursue RTAs in 
a manner that supported the multilateral trading system .  He appreciated the efforts that the EC had 
made to comply with adverse dispute settleme nt outcomes.  While Australia had finished 
Article XXIV:6 consultations with  the EC others still had not.  He recognized that there were 
legitimate public policy concerns relating to issues such as food safety and environmental protection, 
and acknowledged the generally transparent way in which the EC had developed and adopted 
measures affecting trade.  However, there were problems in the decision-making process and in the 
execution of policies.  Concerning REACH, he was uncertain about how this would turn out, how it 
would affect trade, and how consistent it would be with the EC’s WTO obligations. 
56. The representative of Canada
 recalled the importance of bilateral trade relations and 
commended the EC for the considerable progress it had achieved since 1995 in the process of enlargement.  Progress had been made within the EC to achieve an internal market on services 
through the Services Directive, and he was looking forward to receiving periodic updates from the EC 
regarding the implementation of this Directive. He also looked forward to continued discussions on 
the issue of counterfeit and pirated goods and we lcomed the EC Directive on the enforcement of 
intellectual property rights. Canada was satisfied wi th the compensation negotiations with respect to 
the new member States, recently concluded pursuant to Article XXI of the GATS. The recent accession of Romania and Bulgaria had had a serious  economic impact on Canadian exporters. Thus, 
he was looking forward to fruitful negotiations with the EC under GATT Article XXIV:6 and the 
commencement of GATS Article XXI negotiations to compensate Canadian exporters for any loss of 
market access they had incurred. 
57. Canada was concerned about common custom s procedures and practices, which were not 
always consistent from one member State to a nother.  Another cause for concern was a recent 
development pushing for a ban on the import and use of seal products at the member State and EC 
levels. The proposed Belgian and Dutch measures to ban the importation of seal products were 
inconsistent with the EC's obliga tions under the WTO Agreement. He  was pleased that the European  WT/TPR/M/177 
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 Commission had recognized that there was no conserva tion threat to the seal population, and called on 
the EC not to adopt bans on imports of seal pr oducts. A number of significant regulatory impediments 
had also marked the Canada-EC relationship which,  in some instance, had led to Canada initiating 
WTO dispute settlement proceedings. Canada was en couraged by the progress that had been made on 
strengthening regulatory cooperation. He agreed with the European push for urgency as it was 
imperative in the DDA negotiations to demonstrate signs  of concrete progress.  He encouraged the EC 
to show flexibility with respect to agricultural ta riffs. Canada was encouraged by the EC's various 
reform initiatives and the development of more market-oriented policies. 
58. The representative of Brazil  congratulated the European Communities for the 50th anniversary 
of the Treaty of Rome on 25 March.  Brazilian-Eu ropean trade and investment had been growing 
significantly.  However, there remained much scope  for expansion. He noted that some important 
agricultural products remained subject to tariffs of  several hundred per cent, many tariffs were very 
complex, there was widespread use of non- ad valorem  tariffs, and there was also the special 
safeguard.  The extent and pace of agricultural reform were clearly insufficient. Brazil would be 
looking closely at the operation of the recently approved European Agricultural Fund for Rural 
Development in light of the EC's obligations unde r the Agreement on Agriculture and the results of 
the DDA.  
59. Brazil had concerns about tariff escalation and the EU standard on biodiesel.  There was also 
marked concern about  transparency regarding subsidies.  EC notifications to the Committee on 
Agriculture were unjustifiably late;  he encouraged  the EC to provide and update notifications as soon 
as possible. He praised the publication of the Green  Paper on the "European Transparency Initiative" 
and was looking forward to concrete outcomes in th e current year.  Brazil had  concerns about the 
falsification of Cachaça and about the registrati on of general names of Brazilian biodiversity as 
commercial trade marks.  
60. He welcomed the accession of Bulgaria and Romania, but stated that Brazilian export 
interests to both countries had been severely affected .  He urged the EC to start consultations with 
Brazil with a view to redressing this situation.  He  welcomed the EC's issuance of a regulation, in 
May 2006, on compulsory licensing of pharmaceutical products for countries with public health problems, and expected the EC to take a more positive approach to the need to update the TRIPS 
Agreement to reflect conc erns about piracy of biodiversity.  Hi s Government was concerned about the 
EC Enforcement Survey 2006, which was h eavily based on anecdotal information.  
61. The representative of the United States
 congratulated the EC on the 50th anniversary of the 
signing of the treaty of Rome.  The EC was the United States' biggest trading partner, both in goods 
and in services; its trade and investment flows dir ectly influenced the United States' economy and the 
welfare of its citizens. As always, a large and complex relationship generated its share of trade 
disputes but these represented a minor share of trade flows.  Continued cooperation between the European Communities and the United States was of critical importance to the trading system.  An 
important element of this cooperation was putting the Doha negotiations on a path to a successful, 
strong outcome.  As one of the EC’s remaining MF N-only trading partners, the United States closely 
followed the EC trade agenda related to curre nt and future preferential agreements.   
62. He hoped that through the DDA, the EC woul d make commitments to reduce agricultural 
subsidies significantly and address its high tariffs to provide market access opportunities to other 
WTO Members.  Excessive sanitary and phitosanitary restrictions as well as more traditional market 
access barriers in agriculture created enormous burdens  for U.S. exporters.  Real new trade flows in 
agriculture would remain difficult to achieve wit hout a transparent regulatory regime based on risk 
assessments and consistent across member States.  Th e United States urged the EC to comply with the 
recommendations and rulings of the DSB in the Biotech  Products dispute, and to work to resolve their 
long-running beef hormone dispute. WT/TPR/M/177 
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63. It was important that the EC allowed WTO Me mbers and affected exporters a meaningful 
opportunity to comment on regulatory proposals, a nd took those comments taken into consideration, 
before a final technical regulati on was promulgated and enforced.  He was concerned about regulatory 
approaches such as REACH, which imposed enor mous implementation burdens on industry, and 
looked forward to hearing how the EC intended to  ensure that the implementation of REACH and 
other regulatory initiatives did not unnecessarily impede market access.  The United States was also 
concerned about the consistency and transparen cy of the EC’s customs administration across 
27 member States, and about effective adherenc e to market-opening commitments such as the 
Information Technology Agreement.  He applaude d the European Commission’s efforts to address 
internal barriers and looked forward to hearing how it intended to address remaining scientifically 
unjustified barriers to the free flow of goods at the Community and Member state levels. 
64. The representative of Peru
 hoped that his country, as member of the Andean Group, would 
soon conclude an association agreement with the EU.  Agriculture, in particular sanitary and 
phitosanitary measures, was a particular concern fo r Peru.  The procedures for authorization of new 
food products was time-consuming and costly.  He enquired about measures adopted to remedy this 
situation, which was to the detriment of the export interests of several developing countries, 
particularly Peru and other Andean community countries.   
65. The representative of Honduras  welcomed the economic results registered in the member 
States of the EC.  He noted, however, the persistent obstacles to trade, particularly in agriculture, 
which significantly reduced trade opportunities, sl owed growth, and prevented other members from 
benefiting from the multilateral trading system.  H onduras had been affected by these restrictions in 
agricultural trade and urged the EC to comply with  its commitments and obligations as Member of the 
WTO. In addition, he noted that the Commission had refused to recognize the rights of Honduras as a substantial supplier of bananas pursuant to Articles XXIV and XXVIII of GATT. 
66. The EC was Honduras' third most important tr ading partner.  Honduras benefited from EC 
preferences granted under the GSP +, which had made  it possible to increase the volume of trade.  
However, he hoped that the relationship would be strengthened through the negotiation of an 
economic association agreement.  Honduras recogni zed the EC's important role in bilateral 
cooperation, in areas such as local development, d ecentralization, education, and the sustainable 
management of natural resources. 
67. The representative of Colombia
 stated that the EC was the second most important destination 
for Colombian exports and the second supplier of impor ts.  However, its complex tariff structure and 
the diversity of customs procedures created a climat e of uncertainty.  The high level of protection, 
domestic support, export subsidies, the Common Ag ricultural Policy, and sanitary and phitosanitary 
measures were serious export barriers for Colomb ian products.  Colombia would follow the CAP 
reforms closely, particularly concerning the reduction of production-distorting subsidies and 
improvements in market access.  Colombia wished to  consolidate its trade relations with the EC by 
giving them a greater degree of certainty.  To that end, Colombia wished to conclude negotiations of 
an association agreement. Investment was al so of priority importance for Colombia. 
68. Concerning bananas, various international inv estment treaties were under negotiation.  Access 
to the European market for Latin-A merican countries was restrictive and discriminatory;  this affected 
producers in regions with very low income a nd created public order difficulties where banana 
production was the main source of employment.  Thus, Colombia called upon the EC to reduce its 
banana tariff as soon as possible.  In the case of bana nas, the EC had notified its intention to modify 
its concessions, but so far had not notified any su ch modification. EC Regulation 258/97, on novel 
foods, affected the export of traditional exports that did not have a consumer history in the EC market 
after May 1997.  He trusted that the EC would provide Colombia with technical and financial 
assistance to ensure that EC authorities had the sa me trust in these products as Colombian authorities.  WT/TPR/M/177 
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 69. The representative of Hong Kong, China  pointed out that the EC was a strategic trading 
partner for many WTO Members and that there had been substantial and growing cooperation between the EC and Hong Kong, China in many areas,  particularly in trade.  She welcomed the EC’s 
affirmation of its full commitment to multilateral liber alization through the DDA;  the EC’s efforts in 
maintaining a relatively low level of tariffs for non- agricultural products were encouraging.  However, 
the EC's tariff structure remained complex and he encouraged it to further reduce its tariff rates and 
simplify the structure.  The EC remained a leadi ng user of anti-dumping measures:  amendments to 
anti-dumping legislation in 2004 had changed the treat ment of abstentions from being considered as 
negative votes to positive votes in the Eur opean Council’s decision procedures.  
70. He also congratulated the EC on the successful completion of its fifth round of enlargement, 
and hoped that this would create further trading opport unities for all. In this context, he noted that 
automatic extension of anti-dumping measures would adversely affect market access to the EC's new Member States and was incompatible with WTO requirements.  He called on the EC to further 
harmonize national standards and techni cal regulations.  With regard to services, he noted that the list 
of MFN exemptions of the EC and its Member St ates should remain unchanged.  Both the EC and 
Hong Kong, China were staunch supporters of the mu ltilateral trading system and shared the goal of 
pursuing further liberalization of trade in servi ces. Hong Kong, China appreciated the EC’s active 
participation in the market access, services, and ru le-making negotiations and would continue to look 
to the EC for leadership in this regard. Barriers to trade in services remained both at the intra-EC level 
and vis-à-vis third countries:  efforts by the EC to address these distortions would boost the overall competitiveness of the economy. Hong Kong, China enc ouraged the EC to consider binding its more 
liberal regime in transport and logistics-rela ted services in its next services offer.   
71. The representative of Turkey
 noted that the EC's positive economic performance had been 
due mainly to private investment and exports. The main positive impact of the growth rates had been 
on the labour market, with a strong upturn in employment growth. The EC was committed to 
increasing its competitiveness through internal and ex ternal market opening, as adopted within the 
Lisbon Strategy.  The successful recent enlargement of the EC would not only pave the way for increasing its competitiveness but also stimulate the EC 's global role as an engine for world economic 
growth.  The EC pursued trade liberalization th rough multilateral, regiona l, and bilateral trade 
negotiations, while the priority was given to multilatera lism. In this regard, the EC had a crucial role 
for the completion of the DDA:  further essential steps needed to be taken in the negotiations by all 
major players. 
72. At the multilateral level, the EC's commitment to  sustainable development could be seen in its 
GSP scheme. The EC's technical and financial assi stance and the aid for trade initiative were also 
worth mentioning.  Turkey and the EC had deep -rooted relations that dated back to the 1963 
Association Agreement and the establishm ent of the customs union in 1995. 
73. Following the decision taken by the European Council in 1999 to recognize Turkey as a 
candidate country, Turkey had been a part of the enlargement process and the customs union was extended to cover the whole "acquis communaut aire".  The 2004 Decision by the Copenhagen 
European Council reaffirmed that accession ne gotiations would be opened once the so-called 
"Copenhagen Criteria" were fulfilled, and accessi on negotiations had begun  in October 2005.  
74. The representative of Korea
 appreciated the EC's pivotal role in the global economy and 
welcomed the recovery of the EC economy since 2006. He also appreciated the leadership role of the 
EC in promoting an open and fair multilateral trad ing system and looked forward to continued strong 
leadership by the EC, especially at this critical junc ture of the DDA negotiations.  The EC had always 
been one of the Korea’s most important trading part ners, and they had been working closely to move 
forward the DDA negotiations with the firm convi ction that the multilateral trading system was 
indispensable for further enhancing the well-being and prosperity of people in both economies.  He WT/TPR/M/177 
Page 16  
 
noted with interest the EC’s recent initiative to re view the effectiveness of its current contingency 
trade remedies.  He hoped that this review would result in a more predictable and transparent trade 
remedy system and was interested in hearing more about its outcome.  
75. Korea was concerned that, as part of its strategy  for the enforcement of IPR in third countries, 
the EC had included Korea in category 3 of the list of  priority countries/regions.  He requested the EC 
to take a more prudent approach, based on statistics and data gathered in a fair and transparent way, 
and to eventually remove Korea from this list. The EC’s newly adopted REACH regulation was also 
of concern as some of its elements seemed to discr iminate against non-EU countries. He hoped that by 
establishing REACH Implementation Projects (RIP s), the EC would respond positively to the 
concerns of non-EU countries and their chemical  industries. He noted with concern that the 
Commission had proposed to revise a Directive to  include the civil aviation sector into the EU 
Greenhouse Gas Emission Trading Schemes (ETS), rega rdless of the nationality of the carriers.  He 
urged the EC to limit the scope of its legislation to intra-EU flights, while pursuing a multilateral 
consensus in the international arena th rough bodies such as the ICAO or the UNFCCC. 
76. The representative of China
 noted that the European econom ies had achieved a remarkable 
performance since the beginning of 2005. Growth  appeared broad-based, with domestic demand 
gaining momentum, and had also contributed to a strong upturn in employment.  China and the EC 
were important trading partners  and the improved prospect of economic growth in the EC and 
continued strong growth in China would undoubtedly c ontribute to a further increase in bilateral trade 
and investment flows.  He raised concerns over the increasing use of SPS, TBT and anti-dumping 
measures, which negatively affected trade between the EC and other WTO Members.  There had been in sufficient improvement of the situation over the past four years and in some cases it had become 
even more burdensome. 
77. The EC had promulgated a series of directives and regulations that greatly increased the 
number of standards applied in the 27 member States. As a result, the costs of compliance by 
enterprises, both inside and outside the EC, had incr eased rapidly. In this regard, China welcomed the 
recent proposals to dismantle these barriers, which, if implemented, could facilitate the EC’s trade 
with other Members.  The increasing use of anti-du mping actions by the EC on China’s exports was 
another issue of great concern. The inappropriate c hoice of an analogue country, the failure to disclose 
crucial information in some cases, and the impr oper determination of the dumping margin for new 
exporters were all sources of concern. China hope d that, these problems would soon be satisfactorily 
resolved with the Sino-EC traditional practice of seeking resolutions through consultations. 
78. The representative of Chinese Taipei
 noted that the EC appeared to be a good example of how 
to successfully achieve peace and prosperity through ec onomic integration.  The EC had continued to 
build up a wide network of regional trade agreem ents while pursuing a policy of enlargement.  
Chinese Taipei was one of only nine WTO Members to  which the EC continued to rigidly apply MFN 
tariffs.  He firmly believed there were opportun ities to improve this situation for the mutual 
advantage. He expressed concerns about the EC's regulations relating to ch emicals (REACH). While 
the EC’s legislative initiative in this respect ha d the legitimate aim of ensuring a high level of 
protection for health and the environment, he wished  to see the same level of attention paid to the 
participation of interested parties in the rule-mak ing process, and to ensuring that the measures would 
not be more restrictive than necessary.  The EC’s l eadership role in the current round of negotiations 
had been widely appreciated:  the EC had made sever al contributions of substance, such as its duty-
free, quota-free (DFQF) initiative for least developed countries, and its move to eliminate all trade-
distorting export practices by 2013.  Such actions had been powerful forces in driving the negotiations 
forward.  Chinese Taipei hoped that the EC would co ntinue to take a strong lead and steer towards an 
ambitious outcome for the Round.   
79. The representative of Nicaragua  congratulated the EC on the recovery of its economy. 
Foreign investment, export growth, and budget policies had been central in this recovery and had led  WT/TPR/M/177 
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 to a decline in unemployment.  The accession of new members, Bulgaria and Romania, had opened up 
new opportunities and challenges.  Obstacles to trad e both in the agriculture sector and in services had 
an impact not only on consumers but also on global  economic growth, in particular in developing 
countries.  In the same way, the increase of MFN tariffs on some agricultural products did not correspond to the liberalization model that had been promoted, in particular by the multilateral trading 
system:  unsurprisingly, the issue of bananas was of particular concern to Nicaragua.  She welcomed 
the planned negotiation of an association agreement between Central America and the EC, which would strengthen the economic, po litical, and social relationship. 
80. The representative of Pakistan
 welcomed the recent accession of Bulgaria and Romania to the 
EC. He wished the EC luck with its new reforms,  including reformulation of the Lisbon Strategy and 
the 2003 reform to the Common Agricultural Policy (C AP).  He added that the EC was Pakistan’s 
single largest trading partner, but more recently thei r bilateral trade had not kept pace with the growth 
in international trade. There was a common percep tion in Pakistan that the EC trade policy had 
recently shifted, treating similarly placed countries differently. In addition to tariff peaks on products 
of export interest to Pakistan.  Pakistan's comp etitive exports were repeatedly subjected to anti-
dumping duties. Except for short periods, bed-linen  exports had been subjected to anti-dumping 
investigation or anti-dumping duties for the last 14 years.  Stringent and frequently changing regulations on TBT and SPS measures were also am ong the main factors hampering Pakistan's trade 
with the EC Member States. Its business community  was finding it increasingly hard to obtain visas 
for business trips. He hoped that the EC would re flect on the difficulties it was creating for some 
low-income developing countries; and, in terms of Article 131 of the Treaty of Nice, would revert to 
the objective of harmonious development of world trad e. On the Doha front, Pakistan appreciated the 
EC's recent interest to push the talks toward s conclusion. Given the political will and the EC’s 
leadership role, the EC could get the job done expeditiously. 
81. The representative of Bolivia
 stated that trade with the EC had developed in bilateral and 
interregional areas within the Andean Community, w ith trade and cooperation aspects to bring about 
political and economical strengthening.  Bolivia's trade balance with the EC was negative and was 
concentrated in 20 products.  Bolivia participat ed in this transparency exercise and attached 
particularly importance to the negotiation of the as sociation agreements initia ted between the Andean 
Community and the EC.  The progress in building up  and consolidating the single market of this 
important trade block of 27 Member countries was admirable, and he understood that every effort 
would be made to comply with the Millennium De velopment Objectives.  He noted the EC's firm 
commitment to continue trade liberalization at th e multilateral level and strengthen multilateral rules, 
as these were the only guarantee for stability fo r enterprises and genuine development for WTO 
Members.  He hoped, therefore, that this comm itment would be reflected  in market access for 
non-agricultural products, and based on commitments that would enable developing countries, in 
particular small economies, to have the necessary pol itical space to ensure their industrialization.  He 
also hoped that the EC's services offer in mode 4 would not only be based on the temporary admission 
of qualified personal, but also on the admission of in dividuals with lower leve ls of qualification given 
the general interest of devel oping countries in this regard. 
82. The representative of India  congratulated the EC on the accession of Bulgaria and Romania. 
This expansion was a remarkable development in creating a large single market, but it also posed 
challenges to the EC’s trade partners.  India-EC re lations had developed subs tantially when the India-
EC Cooperation Agreement on Pa rtnership and Development w as signed. Economic ties had 
expanded and they had worked closely to strengthe n the multilateral trading system, and to pursue a 
constructive dialogue on trade and investment a nd economic cooperation. The India-EC Summit in 
Helsinki, the High Level Trade Group had called for a broad-based bilateral trade and investment 
agreement.  The EC was one of India's major trade and investment partners: the rapidly growing flows 
of two-way trade and investment reflected the strengt hening of bilateral ties.  The EC was also one of 
the largest sources of FDI for India;  but the flow of FDI was not a one way process.  There was still WT/TPR/M/177 
Page 18  
 
tremendous scope for increasing both trade and invest ment.  Indian exporters continued to suffer on 
account of NTBs and SPS issues, as well as market  access. India sought the dismantling of these non-
tariff barriers so as to increase access to the European markets for Indian exporters. 
83. The opportunities in trade in services were hindered by issues relating, inter alia , to mode 4, 
domestic regulations, territorial requirement to  set up business, residence requirements, and 
discriminatory tax treatment. He urged the EC to take steps to address these  issues expeditiously.  
India and the EC had reiterated their commitment to a rules-based multilateral trading system and sought a positive and balanced outcome of the Doha Round.   
84. The representative of Guatemala
 stated that the EC was an important trading partner, 
bilaterally and regionally as well as in the multilatera l context.  As such, the EC should be firmly 
convinced of the need to continue multilateral lib eralization and to strengthen multilateral rules on 
trade policy. In addition to support the multilateral tr ading system, the EC had also intensified trade 
relations with other WTO Members by means of re gional trade agreements including the so-called 
association agreement. In this respect, he was pleased  that the traditional approach of bilateral trade 
relations between the EC and deve loping countries, based on unilateral preferences, were now moving 
towards more predictable and efficient schemes su ch as regional trade agreements. Nevertheless, he 
urged the EC to ensure that these agreements ha d sufficient coverage for products and sectors of 
interest to developing countries. 
85. Although the EC's enlargement process had ma de it possible for free trade flows amongst its 
Member States, he regretted that this also create d obstacles to trade generated for third countries, 
including small economies such as Guatemala. Thus , Guatemala was concerned that the enlargement 
process had not been a complement but rather a threat to the multilateral system. The economic 
importance of bananas and sugar for its economy had forced Guatemala to continue insisting that the 
EC took effective account of its interest.  Guatemal a attached great importance to all areas of the 
Doha negotiations, and liberalization of trade in ag riculture, services, trade facilitation, rules, as well 
as measures related to special and differential treatme nt in favour of developing and least developed 
countries would be fundamentally important to the success of the Round.  Negotiations on agriculture 
were of primary interest for his country and as the EC ranked first in world trade in agriculture, and 
was the largest importer of agricultural goods from developing countries, it should speed up and 
deepen its commitments for trade liberalization in  agriculture in the ongoing multilateral negotiations. 
86. The EC played an important role in trade in  services as it ranked first as exporter and importer 
of services. He urged the EC to continue efforts to consolidate a single market in services, as this 
would be beneficial for its own suppliers and for its trading partners.  Part of the reforms that the EC 
was implementing and would take in the future should  also take into consideration benefits not just 
for intra-EC trade but also for the rest of the world, in particular for developing countries.  He therefore urged the EC to continue to deepen its actions  in this area.  He thanked the EC for its  aid for 
trade programmes for developing and least developed countries. 
87. The representative of El Salvador
 congratulated the EC on  the accession of Bulgaria and 
Romania at the beginning of 2007.  He noted that the EC's trade policy was intended to reduce or phase-out obstacles to international trade, contribut e to sustainable development, and take advantage 
of the opportunities provided by globalization.  The EC was an active player on the multilateral front, 
and had made a number of proposals that reaffi rmed its interest in improving market access for 
non-agricultural goods;  it was one of the most active players in the WTO's dispute settlement 
mechanism.  The EC had made a number of proposal s on intellectual property rights.  He pointed out 
that El Salvador had an agreement for cooperation and technical assistance with the European patent office;  this was a technical and friendly relationshi p providing them with important benefits for their 
industrial property office. He also reported that  the EC was developing cooperation ties with the 
region and El Salvador was benefiting from this.  Fo r El Salvador the strengthening of its discussions 
with the EC, towards an association agreement (e.g. political dialogue, c ooperation programmes, and  WT/TPR/M/177 
 Page 19 
 
 
 trade agreements) were all positive.  El Salvador h oped to obtain results that were beneficial and 
would result in new and real trade and investment  opportunities that would bring better standard of 
living for its people. 
88. The representative of Benin  noted that this session was of great importance since there had 
been a number of changes in the EC's economic and trade activities due to the enlargement.  As a key 
trading partner for mainly developing countries a nd LDCs, the EC had undert aken support measures 
at various levels in order for such countries to be fully integrated in international trade, to promote 
their development, and to fight povert y. He encouraged the EC to con tinue and increase the aid to this 
group of countries, particularly for the poorest and most vulnerable amongst them.  He also encouraged the EC to continue its efforts and initia tives so that together with other WTO Members an 
appropriate solution could be found to the cotton question.  He reiterated the African producing 
countries' invitation to the EC to participate at  the High Level Consultation of the WTO on Cotton, 
planned in Geneva for 15 and 16 March 2007. This  meeting would provide an opportunity for WTO 
Members to consider together approaches for solvin g the problem in terms of trade and development. 
89. The representative of the Dominican Republic
 congratulated the EC for the accession of 
Bulgaria and Romania in January 2007.  It was impor tant to highlight the positive results of the EC, 
including its economic recovery, which had also led to reactivation of employment.  Another 
macroeconomic aspect that could be considered an  achievement was that despite the high petroleum 
prices the inflation rate had been maintained stable.  The EC had a decisive role to play in the Doha 
Round and its successful conclusion. She believed th at it was important to improve and enlarge the 
EC's GSP scheme. She also welcomed the EBA initiative for LDCs. 
90. The EC's financial contribution for development assistance, including trade-related financial 
assistance and aid for trade was important.  The Dominican Republic had benefited from these programmes.  The main transformation had taken pl ace in agriculture but further reforms were still 
needed.  The ad valorem  equivalents of non- ad valorem  tariffs applied to agri cultural products were 
excessive;  the number of agricultural products subject  to tariff quotas was also considerable;  and the 
level of assistance and export subsidies for agricultura l products were still very high.  The EC had an 
important trade negotiating agenda with different countries and groups of countries, but at the same 
time attached great importance to the multilateral trading system, including the negotiations of the present WTO Round. 
91. EPA negotiations were under way between the EC and the ACP countries;  thanks to the 
conclusion of these negotiations the Dominican Repub lic would pass on to a regime of reciprocal 
preferences that would take into account the asymme tries in the levels of developments of the 
different partners involved.  She noted that in the ongoing multilateral negotia tions the EC had played 
an extremely active role, making proposals in all aspe cts of the Round.  She urged the EC to continue 
its active role in the Doha Round. 
92. The representative of Norway
 commended the EC for its economic performance during the 
period under review. Real GDP growth had picked up, unemployment had fallen, inflation remained 
under control, and both exports a nd imports had shown healthy grow th rates. The Agreement on the 
European Economic Area (EEA) constituted the main framework for cooperation between Norway 
and the EC.  He congratulated the EC on its r ecent enlargement which contributed to regional 
stability, economic growth, and social cohesion:  they had not been able to negotiate an extension of 
the EEA Agreement to include Bulgaria and Roma nia in time for the EC enlargement but he was 
confident that they would be able to do so shortl y.  Norway appreciated the EC's active participation 
in the multilateral trading system and agreed that a strong multilateral trade regime, anchored in the 
WTO, was best for all.  Norway  cooperated closely with EC in many areas of the Doha Round 
negotiations, and looked forward to  continuing doing so. Regarding the far-reaching reform of the 
CAP, which would lead to less trade-distorting fo rms of support, he underscored the importance of WT/TPR/M/177 
Page 20  
 
non-trade concerns, and the role that the maintena nce of a viable agricult ure sector played in 
addressing these concerns. 
93. He noted two issues on which Norway and the EC  did not necessarily agree.  Firstly, Norway 
had systemic concerns with the EC's trade remedies cases. The EC did not pay sufficient attention to the right of interested parties to a "reasoned and adeq uate explanation" of the investigating authorities’ 
determinations. This illustrated the need to cl arify and improve the current WTO Anti-Dumping 
Agreement under the Doha negotiations.  Secondly, Norway was concerned by the declaration of the 
European Parliament calling on the European Co mmission to implement a ban on trade in seal 
products throughout the EC.  He was of the firm opinion that GATT Article XX could not be applied 
to justify trade restrictions on seals. The fact that seals were not listed under the Convention on 
International Trade in Endangered Species was importan t in this context, and to ban imports of seal 
products would set a dangerous precedent for trade in  animal products that were harvested in a 
sustainable and humane manner. 
94. The representative of Jamaica
 noted the EC's significant impact on the global economy and its 
important role in helping to shape the multilatera l trading system. This prominence in the world 
economy had been further reinforced by the recent enlargement of the EC and through continued 
efforts at consolidating internal institutional, economic, and regulatory mechanisms to meet the 
challenges and opportunities created by its enlargement.  The EC continued to play an active role in 
the WTO through its strong commitment to multilate ralism and recognition of its responsibility for 
contributing to a stable rules-based multilateral tradin g system;  it continued to play an important and 
constructive role in seeking to advance the DDA.  The EC was well placed to seek to influence the 
negotiations in order to ensure that the developm ent dimension was sufficiently filtered throughout all 
areas under negotiation. 
95. He commended the EC for its continued co mmitment to facilitating the integration of 
developing countries and LDCs into  the multilateral trading system through increased market access 
opportunities. The EC maintained an extensive system  of regional trading arrangements;  these had an 
important role in the EC's trade policy.  Jamaica was a major tradi ng partner of the EC, previously 
under the Lomé Conventions and now under the Cot onou Agreement. There was further scope for 
deepening and widening the bilateral commercial a nd economic relations. Jama ica congratulated the 
EC on its internal consolidation efforts and its lead ership in the WTO, and in the Doha negotiations 
specifically. 
96. The representative of Uruguay  highlighted the EC's key role for the launch of the DDA in 
November 2001. The backbone of the EC continued to  be the services sector, with a share of over 
77% in GDP and employment, while manufacturing and agriculture contributed 20% and 2%.  In 
several WTO disciplines and issues,  Uruguay shared common positions with the EC, and they would 
continue to work together to achieve their objec tives and ensure the strengthening of the multilateral 
trading system.  However, on some issues of f undamental importance to her country, such as 
agriculture, they had very major differences of a pproach and position. Serious difficulties persisted 
with regard to access for certain very important products, as well as on a broad range of processed 
products. The agricultural mandate adopted in Doha  was ambitious, and appr opriate to meet the 
serious deficiencies and limits in the sector worldwide.   She hoped that the objectives reflected in this 
mandate would be met, thus reducing the unfair discr imination in the sector since the creation of the 
GATT.  The liberalization and reform of the agri culture sector was essential and irreversible, and she 
trusted that the EC, which had a fundamental role to pl ay in this process, would be able to carry it out.  
The EC's trade barriers remained substantial in a few, but important, areas notably in agriculture, and 
the reduction or elimination of export subsidies a nd tariffs on agricultural im ports would benefit EC 
consumers, improve resource allocation, and signifi cantly contribute to the promotion of the world 
economy.  WT/TPR/M/177 
 Page 21 
 
 
 97. The representative of Morocco  welcomed the EC's positive ec onomic results in terms of GDP 
growth, thanks to strong direct private investme nt and exports. Morocco also appreciated the EC's 
measures in favour of promoting the multilateral trad ing system and its important role in the DDA.  
As the largest importer and exporter of services, the EC was determined to promote negotiations 
within the framework of the GATS so as to bene fit developing countries for the temporary admission 
of qualified workers. The EC's approa ch deserved support and appreciation. 
98. He welcomed the adoption, on 12 February 2007, by the Council Ministers of the EC of a 
regulation increasing from 7,329 to 8,619 the number  of pharmaceutical and chemical products 
benefiting from exception of duties when imported in to the EC.  He welcomed the active commitment 
of the EC favouring South-South integration at th e Euro-Mediterranean level;  the Agadir Agreement 
was the most ambitious expression of this. The Kingdom of Morocco and the EC had excellent 
relations, which would enable his country to progress and achieve the status they envisaged.  The EC 
contributed to ensuring shared prosperity with its neighbours. 
99. The representative of Nigeria  noted that the EC remained one of the most active Members of 
the WTO dispute settlement mechanism. He theref ore welcomed the EC's commitment to it and the 
rulings on the GSP. The EC had launched a review of  its patent policy in January 2006, focused on, 
inter alia,  the possible introduction of an EC patent.  He  welcomed the adoption of the EC Regulation 
on compulsory licences for exports to countries with  low capacity or insufficient production. The EC 
was negotiating to reverse the decline of exports  from ACP countries.  The EC was an important 
Member of the WTO and would have to make a great  sacrifice and show full flexibility to ensure a 
positive outcome in the Doha negotiations. 
100. The representative of Burkina Fasso  noted his support for the delegation of the EC and his 
country's desire to strengthen the long and multi -form cooperation with the EC. The accession in May 
2004 of ten new Member States and more recently  of Romania and Bulgaria had been catalyzing 
elements for the progress towards the integration of  a broader and stronger EC.  He welcomed the 
fundamental principles that the Commission had ta ken for its new strategic objectives for 2005-09 
(prosperity, solidarity, and secu rity for an enlarged EC).  
101. He also made reference to the cotton issue,  which Burkina Fasso and three other Members 
had been concerned with for some time.  He referr ed to the Europe-Africa Forum of 5 and 6 July 2004 
in Paris where the EC and Africa attempted to fi nd a durable solution to the difficulties encountered 
by African cotton producers. Unfortunately, these di fficulties remained and he hoped that, as soon as 
possible, they would see an end to subsidies that were trade distorting. He welcomed the High Level 
Meeting on cotton to be held on March 15 and 16  and he counted on the active and high level 
participation from the EC in order to find a solu tion to the development and trade aspects of this 
matter. The EC was a privileged partner and Burkina Fasso was grateful for the support it had given to 
developing countries through development aid.  His re gion was currently in negotiations with the EC 
to conclude EPAs. WT/TPR/M/177 
Page 22  
 
V. REPLIES BY THE REPRESENTATIVE OF THE EUROPEAN COMMUNITIES AND 
ADDITIONAL COMMENTS 
102. The representative of the European Communities
 was struck by the Discussant's closing 
remark, echoed also by others, that the EC was probably the most successful example of a Community that promoted peace, security, and prosperity for its people;  the EC being the biggest 
contributor to peace in the last fifty years. It was very rewarding to hear this as the EC celebrated the 
50
th anniversary of the signing of the Treaty of Rome. 
I. Economic environment 
 
103. The EC was well aware of the great challeng es it faced with the revised Lisbon Strategy, 
including the reform programme for competitiven ess and economic growth, and was ready to face 
them. 
104. The EC was aware that differences and ine qualities still existed among  the economies of old 
and new Member States;  however, the trend was positive.  Referring to questions related to WTO 
compensation obligations for both goods and services,  he stated that the EC-10 enlargement and the 
recent EC-2 enlargement were overwhelmingly po sitive for its partners. On GATT Article XXIV:6 
and the EC-10 enlargement, the EC had scrupulously  followed WTO provisions for the recognition of 
negotiating rights; it was in the process of doing the same regarding the EC-2 enlargement. Similarly 
to the previous enlargement exercise in 2004, the EC would also carry out the necessary arrangements 
under the GATS. The successful consolidation of the EC's GATS schedule in 2006 provided an 
important precedent in this respect.  
105. He took note of the numerous comments made  concerning the ongoing consolidation of the 
EC Internal Market. In this context, it had been widely recognized that the recently adopted Services 
Directive would address many of the remaining obst acles to the liberalization of services in the EC. 
He was pleased to hear that the European business environment was considered to be highly attractive 
for foreign direct investments from WTO Members, including fro m large emerging economies, like 
India. This was due, inter alia,  to the EC's market’s size, its transparent investment climate, and its 
level of IPR protection.  
106. Regarding the new Globalization F und, in particular the question of what it would be used for 
and whether it would also apply to the agriculture sect or, he stated that all sectors were eligible for 
this support, which would amount to € 500 million per year. Eligibility criteria for this assistance were 
very strict; the Fund was intended for redundant workers, who had been employed, whereas most 
European farmers were self-employed. The Globa lization Fund reflected the fact that although 
globalization was overwhelmingly beneficial for so ciety, measures were necessary to mitigate any 
negative effects. 
107. The discussant  stated that enlargement had raised  widespread concerns among Members 
because their opinions on the impact of enlarg ement were probably different from the EC's 
perception. She asked the EC to el aborate further on this issue.  
108. The representative of the United States  asked the EC to explain how preferential agreements 
that required lower levels of liberalization fro m the EC's developing country partners ensured 
enhanced economic development for the developing c ountry partners. Third-country products meeting 
new criteria could access the EC market on the same  basis as a supplier from a Member State: she 
asked whether the EC's EPAs ensured that third-c ountry products meeting this criteria could also 
access the markets of the partner in the agreemen t on the same basis as Member State products or 
whether origin restrictions applied. Regard ing the Euro-Mediterranean free-trade area, and 
enlargement, she was interested in the EC's views on a timetable for reaching agreements with WTO 
Members on GATT Article XXIV:6, as well as with r espect to services. She believed the EC should  WT/TPR/M/177 
 Page 23 
 
 
 notify a revised Schedule reflecting consolidated  tariff quotas, and requested an update on these 
issues. 
109. The representative of th e European Communities , regarding to the question related to the 
up-coming EPA negotiations, explained that these negotiations had not yet ended and the final 
outcome, including on market access commitments, wa s not known;  however, it was clear that there 
would be a high level of asymmetry in the timing and extent of the liberalization. He saw a clear link 
between liberalization and economic development.  Many of the problems in the ACP countries were 
deep structural problems;  they needed time a nd strong assistance in order to be competitive under 
liberalized circumstances. There wa s a need for a more nuanced view regarding the level extent, and 
speed of liberalization for the ACP countries;  which clearly differed from some of the EC's new 
free-trade agreements being negotiated for inst ance with emerging economies in Asia. Concerning 
Article XXIV:6 negotiations, the EC would try to co mplete these negotiations during the first half of 
2007 but there might be some difficult issues for the EC that needed more time. The consolidation of 
schedules was ongoing and the EC would try to make th e necessary changes in their Schedule rapidly.  
II. Trade policies 
 
(1) Objectives/general approach  
110. There had been an overwhelmingly positive assess ment of the EC's contribution to the WTO 
in all its aspects, including appreciation of its contributions and role in the DDA. Development 
concerns were very important in this context,  including in relation to preference erosion. 
111. He was glad that the EC's new bilateral FTA agenda seemed to have  been well understood. 
The DDA and bilateral FTAs were mutually reinfo rcing and complementary not exclusive. The EC 
appreciated the support expressed by  some future FTA partners. 
112. While trade diversion could, in principle, be a threat, in reality it was not. The EC's own 
experience with enlargement showed a major reduction of barriers to trade of the new Member States; 
this had significant positive results for all its trad ing partners. Figures showed that EC trade was 
growing multilaterally in parallel to their preferen tial trade. Moreover, new FTAs also had a trade-
creating effect, especially amongst neighbours in re gion-to-region FTAs who had previously traded 
less with each other.  
113. Several Members had recognized the EC's efforts to comply with rulings of panels and the 
Appellate Body. The EC believed that the WTO's mechanism represented one of its greatest assets.  
114. Many of the beneficiaries of the EC's devel opment assistance and trade-related assistance had 
expressed their appreciation.  The Commission a nd the EC Member States were committed to 
increase overall trade-related assistan ce to at least €2 billion per annum. They were working on the 
internal strategy to put this commitment into ope ration, with a focus on effectiveness, monitoring, and 
implementation capacity. 
(2) Individual issues 
 
115. On the MFN tariff regime, there seemed to be a general impression that the EC's applied 
tariffs had been increasing. This was a purely ma thematical phenomenon.  In the case of specific 
duties which were broadly applied to agricultu ral products, as prices decreased, AVEs inevitably 
increased. This also meant that now that commodity  prices were higher, for example, for cereals, 
AVEs would decrease.  WT/TPR/M/177 
Page 24  
 
116. He shared the concern for simplicity and transpar ency as to tariff structure; however, he did 
not share the view that ad valorem  duties by definition better served this purpose than specific duties. 
However, he did see some limited scope for simplifi cation of the tariff structure in the framework of 
the DDA.  
117. One delegation had mentioned that trade facilita tion could be the most important outcome of 
the DDA. In this context, there was some con cern that the EC had 27 customs administrations. 
However, he assured Members that this was not a problem, since the EC was a single customs territory subject to common rules, and a pane l had upheld its position that there was uniform 
application across the EC. 
118. One Member suggested that the EC had increased the use of SPS and TBT over the last years. 
However, the EC states that these served legitimat e purposes. He believed that the EC's approach 
reflected its actual stage of development: as sci ence advanced, more risks were recognized, and 
awareness and expectations incre ased. These needed to be addressed in a non-discriminatory manner, 
treating domestic products and imports equally. The EC believe d that there was a sound scientific 
basis for its regulatory choices. 
119. More than any other WTO Member, the EC used  international standards wherever possible. 
Many of the examples raised concerned areas where the EC was harmonizing national standards at the European level, replacing multiple national measures . One case mentioned was the EC's decision to 
only allow child-resistant cigarette lighters on the mark et;  he was surprised that a measure aimed at 
protecting children was contested and considered a tr ade barrier.  In addition to health, protection of 
the environment was an important issue for the EC.  
120. Many Members had expressed particular worri es about the EC's new chemicals policy, 
REACH, which aimed to balance social, econom ic, and environmental aspects of sustainable 
development. The new REACH system set high standards for protection of health and the 
environment, while safeguarding the competitiveness  of enterprises and improving their potential for 
product innovation. He was confident that REACH w as in full compliance with the EC's international 
obligations; it treated all chemicals the same way wh ether they were produced inside or outside the 
EC. The requirements had been designed to take  into account the specific risks derived from 
substances, and were the least burdensome measu res that would achieve the objectives sought to 
protect human health and the environment.  
121. The EC recognized the need for clear guida nce for economic operators to ensure the 
consistent, cost-effective, and smooth operation of  REACH. Guidance material for manufactures and 
importers was currently being prepared with particip ants from trading partners in stakeholder experts 
groups.  
122. In the context of discussion on standards, he not ed with interest the concerns about the EC's 
decision-making procedures.  The EC had also sup ported the inclusion of such procedures into the 
new Agreement on Trade Facilitation, which was currently under negotiation in the DDA. REACH 
was a good example: for its finalization, the most ex tensive stakeholder consultation ever carried out 
had resulted in a revised proposal.  
123. The WTO Secretariat's Report pointed out that  harmonization of TBT and SPS standards at 
EC level had not been completed.  This was true. However, as the drawing up of technical regulations 
and standards was an ongoing process, it could never be complete. The principle of mutual 
recognition was to a considerable extent able to  cope with the remaining divergences in the 
regulations among Member States. SPS measures in re lation to imports were substantially harmonized 
at EC level, at 99%. This included import requireme nts for nearly all agricultural products as well as 
import conditions for all major animal and plant diseases.   WT/TPR/M/177 
 Page 25 
 
 
 124. While the EC's standards and requirements were  wholly legitimate, they could pose problems 
for developing countries. This was why it would c ontinue to carry out certain programmes to help 
representatives from developing countries understand a nd meet certain of the EC's standards. For 
REACH, the Chemicals Agency, which would become operational in mid 2008, would provide technical and scientific support to importers, incl uding through technical assistance and capacity 
building, as well as through training and making available information.  EC had also carried out 
several projects on SPS. 
125. The EC was one of the major users of trade de fence instruments, but its relative share was 
gradually decreasing. In the EC's anti-dumping proceedings, it did not use zeroing; it applied the lesser duty rule and took into consideration the over all Community interest, including the interests of 
users and consumers. The ongoing analysis (Green  Paper) of its trade defence instruments was 
without prejudice. 
126. Some Members had referred to the issue of market economy status for anti-dumping 
purposes. The EC applied strict technical criteria; as  soon as these were fulfilled, this status could be 
granted.  One delegation had men tioned safeguard measures on steel; this was a misunderstanding, as 
the EC had no safeguard measures against any WTO Member. 
127. Some Members had referred to State aids granted by the EC Member States. It was very 
important to highlight that very stringent rules ha d been applied since the founding of the EC, and the 
aid could only be provided by the Member States after the Commission had declared it compatible with such rules. The EC's rules were fully compatible with its ob ligations under the WTO Agreement. 
In addition to being strict, the EC's system was also transparent to the largest extent possible: all state 
aid cases were published on the Internet and thereby all information was easily accessible to the wider 
public.  
128. In response to concerns raised with regard to  IPR, he stated that the importance of IPR 
protection for many countries, and not just the EC , was obvious. The EC's Global Europe strategy 
also devoted much attention to this point: as the EC industries moved up the value chain, a number of 
activities were increasingly being taken up by deve loping countries. The EC intended to produce 
goods and services with an added intellectual pr operty component, which remained its major 
competitive advantage. 
129. The EC dealt with the problems of counterfe iting and piracy multilaterally, plurilaterally, and 
bilaterally, as appropriate.  The EC's 'enforcement in itiative' should be seen in this light;  it was not a 
'Black List', rather an evaluation of the situa tion and a call to address these problems in a non-
confrontational manner. The EC wished to work wi th the countries concerned to solve the problems, 
thereby helping them to be taken off the list. 
130. Reference had also been made to compulsory  licences for medicines. The EC had been and 
continued to be one of the major supporters of easi er access to drugs for developing countries. It had 
introduced the necessary legislation to comply w ith the requirements under the TRIPS Agreement, 
which he hoped would be used as originally inte nded, namely for major epidemics like malaria and 
HIV.  
131. The discussant
 believed that the issue of preferenc es raised by the Commission should be 
linked to the issue of aid for trade and trade fac ilitation.  Creating national strategies and making trade 
an engine for development and growth were issues on which donors should collaborate and EC 
policies on other issues were very coherent but in some respects harmonization was required. 
Concerns about the application of the new REACH programme for the chemical sector needed to be 
looked at, and EC needed to be very careful to avoid protectionist measures for domestic industries. WT/TPR/M/177 
Page 26  
 
132. The representative of Argentina
 asked the EC to explain what kind of changes had been 
introduced to the mutual recognition agreements curr ently in force. With regard to SPS measures he 
asked the EC to explain the general lines of the European Commission's policy on animal health for 
2007. With regard to measures directly affecting ex port subsidies, he asked the EC to explain the 
market reforms, and indicate which products woul d benefit from these subsidies as a result of such 
reforms.  On competition policy, he asked the EC to indicate any efforts, measures or steps being 
taken on mergers with transboarder implications. He also asked the EC to clarify the conditions for 
granting aid according to the guidelines for 2007-13. Commenting on the issue of ad valorem  tariffs, 
he noted a contradiction in the argument concerning agriculture vis-à-vis  industrial products. This 
issue needed to be resolved under para graph 48 of the Hong Kong Declaration. 
133. The representative of Chinese Taipei  commented that concerning REACH his authorities 
would be very much looking forwar d its implementation. Regarding the statement that the EC did not 
use zeroing in the anti-dumping investigation, there were several cases in which the EC was still using 
zeroing. 
134. The representative of Japan  stated that, regarding taxation on information technology 
products, his country firmly believed that the pres ent EC classification was not consistent with the 
ITA. The EC's response did not contain concrete  argument on this matter and hoped that bilateral 
discussions would continue in a more construc tive manner. Regarding REACH regulation, his 
government did not share the EC's view.  He requ ested more complete an swers to these questions 
during the next TBT Committee meeting, and he hope d that the EC would give serious consideration 
to Japan's concerns in implementing the REACH regulation. 
135. The representative of the United States  asked why Article 19 of the proposal to modernize the 
EC's customs code dealt with administrative pena lties.  The EC had provided very little detail on how 
it would go about establishing a common framework. She asked the EC to elaborate on how the Community procedure had been used to establish the common framework. She also asked what the 
EC was doing to address situations such as biotech approval or approval of the use of entire 
macrobiotic treatments for use on poultry.  On IPRs, she asked the EC to provide complete 
implementation status for all member countries including new accessions.  
136. The representative of China
 welcomed the continuous expansion of the EC but was facing 
some problems because the EC had maintained so me more restrictive measures against China's 
exports such as anti-dumping measures and quantitative  restrictions.  The EC had said that its TBT 
and SPS measures were taken to protect human and an imal health and China recognized the legitimate 
objective of the measures, but was concerned about th e way they were implemented. He urged the EC 
to consider scientific basis as well as adverse effects on trade flows.  China had seen anti-dumping 
measures as one of the major obstacles for EC trad e:  the EC's use of third country prices had an 
important effect. For example, US and Japanese prices were sometimes used in determining dumping margins, and this was not appropriate. Also of con cerns was the insufficient disclosure of information 
regarding the identity of complainants, and the insu fficient time allowed to notify before the initiation 
of investigations.  On customs evaluation he rai sed the issue of uniform application of customs 
administration measures among EC Member States. He asked how the EC would ensure the consistency of its measures with the WTO Agreement.  
137. The representative of Brazil
 had an additional question concerning REACH:   small and 
medium-size European enterprises would be granted allowances so that they could afford additional 
costs generated by the programme.  He asked whet her developing countries would have access to this 
same allowance. 
138. The representative of the European Communities  recognized that preference erosion was a 
real problem because of its trade effects for a number of products that were important especially for  WT/TPR/M/177 
 Page 27 
 
 
 small and vulnerable developing countries.  This i ssue would be looked into and a just and fair 
solution sought under the DDA. 
139. On the question from Argentina related to MRAS, he  explained that they were modified if the 
other party made changes.  Regarding Argentina's que stion on exports subsidies, they were not used at 
all anymore for a number of products (olive oil, ra ps oil, cotton).  Concerning most other products, the 
EC was only using a small percentage of the allo wed level.  The EC was looking forward to an 
agreement under the DDA that would ensure that all forms of export subsidiza tion would stop, both in 
the EC and in its trading partners by 2013.  On the specific point made on ad valorem  tariffs, the 
characteristics of agriculture and industrial production  were quite different a nd could not be compared 
directly.  Concerning the reference made to paragraph 48 of the Hong Kong Declaration, he 
confirmed that the EC was looking forward to a high level of new market access possibilities for 
industrial products, comparable to what it was ready to offer in agricultural products as a result of the 
DDA.  
140. Regarding the request for further details about  the REACH, the EC delegation was ready to 
have detailed discussions during the next TBT Comm ittee meeting on REACH.  He also took note of 
Chinese Taipei's view on the use of zeroing in anti-dumping. 
141. On the issue of taxation raised by Japan, the re presentative indicated that the EC was ready to 
continue its dialogue with Japan, but they had a di fference of views because, in the EC's opinion, the 
ITA definition did not apply to consumer electronics.  
142. Concerning the questions raised by the Unite d States, he confirmed that under the new 
approach criteria there was no differentiation in the treatment of products according to origin.  
Concerning the comment and question on the use of sanitary and phitosanitary measures he was 
convinced that the EC's SPS measures were based on science, although scientific views in the United 
States could be different in some of the cases.  He did not foresee any reason for changing the EC's present policies.  Regarding the reference made to the regulatory process, whic h could also apply to 
the GMO issue, on which the implementation of  the panel decision was under active discussion 
between the EC and other parties to the panel, th e EC intended to find ways to comply with the 
decisions of the panel.  
143. Concerning China's comments on enlargement, the EC had followed a procedure during the 
previous enlargement where it reviewed existing anti-dumping measures;  the same would be done 
this time for individual measures upon request . Concerning the memorandum of understanding 
between the EU and China on textiles, he confirmed that the EC had modified the volumes in line 
with the accession of Bulgaria and Romania to reflect  traditional trade plus extra growth possibilities. 
On TBT, he was glad that China agreed with the need to protect human, animal and plant health. He 
also understood that there were concerns about the de tails of implementation, and the EC was ready to 
look at this issue.  He confirmed that there were  no differences in TBT re quirements for imported or 
domestic products.  On anti-dumping, the use of th ird country markets depended on the products and 
the characteristics of trade.  The EC tried to find ma rkets as close as possible to the characteristics of 
China, but this was not always technically possible.  
III. Sectoral policies 
 
144. A number of Members had encouraged the EC to  continue its reduction of subsidies, opening 
up its market to imported agricultural products.  Th e EC was ready to do this as part of the DDA 
negotiations, where it also expected others to partic ipate in a balanced manner.  Several delegations 
took a static view of the EC's agricultural policy while the dynamic and long-term effects of the 2003 
CAP reform were more profound. Others, however, appreciated the EC's efforts and the unilateral 
measures taken in the context of the reform of the CAP. The future of EC agricultural policy was not WT/TPR/M/177 
Page 28  
 
based on surpluses. On the contrary, production w as set to decline in many sectors and exports 
expected to decrease, creating new opportunities for its partners to export to the EC.  This would all 
be reflected in a notification currently under preparation.  
145. Reference was made to the size of the EC's domestic support. It was important to compare 
these figures on an equal basis:  EC spending on agriculture was distributed between 13 million 
farmers while there were only 2 m illion farmers in the United States.  
146. Geographical indications (GIs) were a mean s of promoting quality products and rural 
development, protecting producers against unfair competition, and consumers against misleading 
information. This was an opportunity for farmers ar ound the world, not a restriction. One Member had 
raised the issue of the protection of tequila;  this was already ensured by the EC under a bilateral 
agreement:  he hoped that following a positive DDA outcome, there would be multilateral protection 
for tequila. 
147. On bananas, he said that the EC had moved to  a tariff-only regime from 1 January 2006 with 
a new applied tariff of €176 per tonne;  this al so took enlargement into account.  Negotiations 
following the EC-2 enlargement had just been opene d;  negotiating rights had been recognized for two 
banana suppliers. The EC had always been and remained committed to ma intaining access to the EC 
market for all banana supplying countries.  Recent import statistics confirmed an increase of 10% in 
imports of bananas of MFN origin compared with  2005. Those data gave no reason to believe that 
such access was not maintained. 
148. The EC had always attached high priority to co tton, particularly the situation of producers in 
the least developed countries.  This subsector had been significantly reformed by the EC in 2004 with 
an important shift towards non-trade-distorting expenditure.  Cotton imports to the EC faced no 
import duties and there were no export subsidi es. The EC would be present at the High Level 
Conference on Cotton in Geneva on 15 and 16 March. 
149. A number of delegations had referred to EC 's Common Fisheries Policy. The general 
direction of reform was to achieve a sustainable ba lance between fleet capacity and fishing resources. 
Regarding the proposal to increase the level of de mi nimis for fisheries state aid, this should be seen 
in the wider context of the EC's rules for state aid and efforts to focus on the most distortive types of 
aid. In any event, no aid should be granted that served to increase capacity or for the purchase and 
construction of fishing vessels. 
150. The vital importance of the services sector for the EC was well known. On the basis of the 
commitments included in its GATS schedule, the EC services trade regime was one of the most 
liberal, and it was ready to move even further: in the DDA negotiations, it had made substantial and 
ambitious offers in key areas like mode 4, and c ontinued to encourage other Members to follow its 
example.      
151. The representative of the Europ ean Communities hoped to have addressed all concerns and 
confirmed that all outstanding wr itten questions would receive written replies in due course.  
152. The discussant
 said that 90% of Members' concerns on the EC's trade policy were on 
agriculture.  She asked whether the subsidies reform and tariff reduction in this sector was being done 
through unilateral decisions for reasons such as competitiveness or because of lack of budgetary 
resources. She added that agriculture would decide a large part of the future of the Doha Round. On 
the banana issue, she noted a lack of coherence be tween the two replies given by the EC.  The EC had 
played an important role in the cotton issue, which,  like the banana issue, had not yet been resolved 
yet and remained on the table.  She noted that in  response to a recent query from a journalist she had 
stated that the EC had shown discipline and unity.   WT/TPR/M/177 
 Page 29 
 
 
 153. The representative of Argentina  asked about changes to the fish eries policy:  he wished to 
know which products were c overed by the new TRQs, and the volumes of such quotas.  He also asked 
what instruments were used or would be used  by the European Fisheries Fund to ensure the 
competitiveness and viability of these subsector opera tors. On manufacturing, he asked the EC for 
details on the new industrial policy and the measure s adopted.  He asked if these policies complied 
with the principles of the WTO and requested more specific explanations of the seven initiatives in 
the new industrial policy.  He also asked which me asures were used to increase innovation and R&D;  
which industries were receiving export subsidies for manufactured goods;  and whether such subsidies 
were intended to be phased out and if not why not.  Concerning the REACH system for chemicals, he noted that there was a distinction between new and existing substances, which would not be subject to 
the same testing requirements.  He asked the EC  what criteria it used to determine whether a 
substance was new.  On the burden of proof, he ask ed the EC to explain why this burden fell on the 
applicant.  Argentina also wished to know how th e EC determined the amount of chemical substance 
contained in chemicals that were marketed, and whet her importers were obliged to declare content;  if 
there was an additional cost for the registration of substances, and whether the EC could supply 
specific information on costs to an applicant in the registration process. He had concerns regarding the 
new regulatory framework for chemicals under REACH.   He asked when the new system would enter 
into force, what would be the cost of registrati on for applicants from developing countries, and what 
support measures would be taken to assist producers and importers in order to comply within the 
requirements under REACH.  On services, he asked th e EC to explain what type of permits would be 
justified under the concept of general interest and if the EC intended to take measures to harmonize 
accounting standards amongst members. He noted that the EC had not fully liberalized cabotage on all 
modes of transport.  He asked what type of state support was given to the manufacturing sector and about any modifications to the custom system.  He requested the EC to answer the question regarding 
agricultural subsidies in each Member State.  
154. The representative of the United States
 made a brief comment on the discussion about 
subsidies for farmers.  He agreed in some senses with the EC;  however, the important thing was not 
the number of farmers they were competing agai nst but how much the subsidization of production 
affected conditions of competition. Nonetheless, he  welcomed the EC's statement of commitment to 
make its contribution through the ag riculture negotiations under the DDA. 
155. The representative of Colombia  referred to the new banana import regime. He took note of 
the EC policy decision to combine Article XXV III negotiations with the new consolidated bound 
tariff for bananas in 2007, and of the EC's reply regarding the EC-10 enlargement and the negotiation 
of a new banana regime.  Article  XXIV:6 negotiations had been on the agenda for some two years, 
and Colombia wished to receive compensation just  like Australia, Canada, and the United States as a 
result of the injury to their exports.  Colombia found the new banana regime  inconsistent with the 
WTO;  whether or not imports increase did not le galize discrimination.  Unfortunately, the banana 
dispute had not been solved and Colombia appealed to the EC to work to find a solution together as 
soon as possible.  
156. The representative of the European Communities  stated that on the issue of discipline and 
unity, the Commission hoped for this under all circ umstances;  Member States sometimes have 
diverging interests, e.g. as concerns the DDA.  Concerning agriculture, he explained that the 2003 CAP reform was not linked to the DDA;  it was a un ilateral reform.  On the banana issue, he noted 
that the EC had taken GATT Article XXVIII and Article XXIV.6 into account.  The EC-2 
enlargement was new, and would have to be reflect ed in the upcoming negotiations.  The EC wished 
to have a negotiated solution to this long-standi ng issue, and hoped a solution could be found.  On 
cotton, the EC hoped to find an ambitious and equ itable outcome, given its importance for a number 
of African producing countries.  WT/TPR/M/177 
Page 30  
 
157. Some of the questions raised by Argentin a would need more time because they were 
technical, such as on the EC's new fisheries policies,  quotas, and tools.  Concerning questions related 
to the manufacturing sector, the Report of the Secret ariat very faithfully reflected the character and 
the intention of what could be called the EC's new industrial policies.  The Report clearly spelled out 
the major features, such as improvement of the IPR framework and reducing counterfeiting;  energy 
and environment;  tackling of access barriers in partner countries;  simplifying legislation;  and 
research and development.  There was no questi on about the WTO consistency of these industrial 
policies. He also confirmed that market access for rail transport, including the right of cabotage, had 
been fully opened on 1 January 2007.  Concerning th e question about export subsidization in each of 
the EC Member States, he said that there must  have been some misunderstanding because export 
subsidies were provided only at the Community level and were based on the limits under the EC's 
Uruguay Round commitments.  
158. He took note of the US view that domestic subsid ization was to be looked at in the context of 
the production value. This was partly true but the goa l of the agricultural reform process to move into 
green box subsidies included income support, and under these circumstances the number of farmers 
would immediately become quite an important factor for the level of subsidization. 
159. The representative of the United States
 noted that many countries shared its concerns about 
the need to improve agricultural market access in the EC, as well as the need to reduce trade-
distorting domestic subsidies and to eliminate expor t subsidies.  The United States hoped that through 
the DDA, the EC would make commitments to si gnificantly reduce the gap between its subsidy 
reduction commitments and those of other WTO Member s, and to address its high tariffs, in order to 
provide market access opportunities to other WTO Me mbers.  He shared the concern expressed by 
others that the EC seemed to be moving backward in its Common Fisheries Policy.  He hoped that the 
WTO negotiations on fisheries subsidies would offe r the EC opportunities to more forward in this 
regard.  In the area of sanitary and phitosanita ry measures, he urged the EC to implement a 
transparent regulatory regime based on risk assess ments and consistent across Member States.  
Improvements were also warranted in the EC’s process for notifying regulatory proposals.  He 
encouraged the EC to ensure that implementati on of REACH and other regulatory initiatives did not 
unnecessarily impede market access.  He also exp ected adherence to market opening commitments 
made by the EC under the ITA.   
160. The representative of th e European Communities  was surprised with what he considered an 
across-the-board closing statement by the United States.  He indicated that this was not usual practice 
in TPRs and the Chairman about his intentions in this regard. 
161. The Chairman  explained that this was his first mee ting as Chairman of the TPR body, and he 
would make his own closing statement.  
162. The representative of China  requested some clarifications on trade in services.  His delegation 
had raised the issue of quotas associated with vi sa requirements to enter the EC, and the complex 
procedures to obtain work permits in the EC.  He added that even though the EC had made 
commitments in services, these would be much less meaningful if movement of people was restricted by the difficult process of obtaining a visa to enter the EC and getting a work permit.  He urged the 
EC to consider this issue seriously.  Services a nd trade in services were constituting an increasing part 
of international trade and of domestic production.  This was why further liberalization on trade in 
services was being negotiated in the Uruguay Round a nd the Doha Round.  He encouraged the EC to 
fully consider the requests by developing countries in the Doha Round. 
163. The EC
 response was that such requirements were  not incompatible neither with the GATS 
itself nor with the EC services commitments under the GATS.  WT/TPR/M/177 
 Page 31 
 
 
 164. The representative of Argentina , commenting on procedure, and the issue of whether it was 
valid to have closing remarks, stated that closi ng remarks should not be forbidden as long as they did 
not offend the Member under review.  A new practice c ould be established if it  was the desire of all 
WTO Members.  He asked the Chairman to cons ult on this issue in th e future because it was 
something that should be freely agreed by WTO Members. 
165. The Chairman  noted that the TPR was based on questions  and answers and that this procedure 
had been followed.  He had encouraged Me mbers to participate as much as possible.  
166. The representative of th e European Communities  said it was not the EC's practice to make 
this kind of closing statement, but his delega tion would be ready to discuss the process and maybe 
find a new practice applicable fo r all TPRs and all Members. 
167. Regarding the question raised by China on visa re quirements, he said that the requirement for 
having visas and the visa procedures were fully legi timate under the rules of the GATS;  he was not 
aware of any particular situation where China' s rights under the GATS would have been nullified 
through application of visa requirements.  Visa requi rements were often burdensome, not just in the 
EC.  He was interested in hearing of any specific cases and situations where China thought that, apart 
from the fact that a visa was required, its rights were undercut or nullified. WT/TPR/M/177 
Page 32  
 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
168. This eighth Trade Policy Review of the Eur opean Communities (EC) has allowed us to 
improve our understanding of its tr ade and related policies and their developments since its previous 
Review in 2004.  We owe this to the active partic ipation of Deputy Director General of DG Trade
, 
Mr. Peter Balás, and his delegation.  Our thanks are also due to our discussant, Ambassador 
Claudia Uribe, for her insightful contribution to our discussions, and the engagement of many 
delegations. 
169. Members welcomed the EC's recent positiv e overall economic performance following the 
economic slowdown in 2001-03.  They hoped that th e recovery would be sustained given the positive 
impact this might have on unemployment and the l ong-term sustainability of public debt within the 
EC, and on the world economy in general.  Member s recognized the EC's continuing commitment to, 
and active participation in the WTO, including  the DDA negotiations. They expressed appreciation 
for the EC's substantial contribution to technical cooperation, and for its non-reciprocal preferences to 
developing countries. Nonetheless, several Members ra ised concerns about the EC's already extensive 
network of preferential trade agreem ents and its decision to launch ne w negotiations that could further 
complicate its regime and divert trade;  the EC was exhorted to ensu re that its RTAs are 
complementary to the multilateral trading system. 
170. Members commended the EC on its liberal trade regime for non-agricultural products. 
Nevertheless, some Members indicated that despite an increase in the exposure of farmers to world 
market signals due to the implementation of th e 2003 Common Agricultural Policy (CAP), mainly 
through the decoupling of payments from producti on, agriculture remains protected by a complex 
tariff structure, high tariffs, tariff quotas (with unfilled quotas), and benefits  from high levels of 
domestic support and export subsidies. They argu ed that the reduction or elimination of such 
measures, through the further liberalization of the CAP, would benefit EC consumers, improve 
resource allocation, and contribute to global economic  growth. Several Members also showed interest 
in the EC's specific regimes on, inter alia , tobacco, olive oil, cotton, bananas, and sugar. 
171. Various Members raised concerns about the ac tive use of contingency trade remedies by the 
EC; its regime on technical barriers to trade and SPS measures, particularly the new REACH system 
for chemicals; its state aid and subsidies programme s; its classification of ITA products; and about the 
lack of harmonization within the EC in areas, such as  internal tax rates and standards.  Other issues of 
interest to Members included th e EC's enlargement to 27 members; its new legislation on public 
procurement; the European Globalization Fund;  business regulation and competition policy; 
protection of intellectual property rights; the dismantli ng of the remaining barriers to trade in services 
both at the intra-EC level and vis-à-vis  third countries; and its regimes on, inter alia , fisheries, energy, 
financial services, telecommunications, and transport. 
172. Members appreciated the responses provided by the EC delegation, and look forward to 
receiving written answers to any outstanding questions. 
173. In conclusion, the active involvement of a larg e number of Members in this Review reflects 
the key role that the EC plays in the multilateral trading system. Members have shown appreciation to 
the EC for maintaining its market largely open as it is the world's leading exporter and the second-
largest importer of goods, and the first exporter a nd importer of commercial services.  It seems that 
the main area where many Members would like to  have the EC's positive and prompt response is 
agriculture.    Members encourag e the EC to pursue its trade liberalization policy, both on goods and 
services, on a multilateral basis;  in particular, liberalization of agriculture would, inter alia ,  reinforce 
its support for developing countries. 
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