COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 11.03.1998 
COM(1998) 125 final 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL, THE EUROPEAN PARLIAMENT 
AND THE ECONOMIC AND SOCIAL COMMITTEE 
THE NEW TRANSATLANTIC MARKETPLACE 

TABLE OF CONTENTS 
A. RATIONALE 
1. INTRODUCTION 1 
2. THE POLITICAL DIMENSION 3 
3. THE ECONOMIC BENEFITS 5 
B. TRADE POLICY CONSIDERATIONS 
4. RELATIONSHIP WITH THE MULTILATERAL SYSTEM 6 
5. WTO COMPATIBILITY 7 
6. RELATIONS WITH THIRD COUNTRIES 8 
C. ENVIRONMENT 
7. ENVIRONMENTAL CONSIDERATIONS 10 
D. COMPONENTS OF THE NTMA 
8. FREEING TRADE IN GOODS OF TECHNICAL BARRIERS 11 
9. TARIFF ELIMINATION 15 
10. SERVICES 16 
11. GOVERNMENT PROCUREMENT 19 
12. INTELLECTUAL PROPERTY 20 
13. INVESTMENT 22 
14. OTHER POSSIBLE COMPONENTS 23 
E. OTHER ASPECTS OF THE INITIATIVE 
15. IMPLICATIONS FOR EU COMMON POLICIES 25 
16. INSTITUTIONAL ASPECTS 27 
F. CONCLUSION 27 
ANNEX: KEY ECONOMIC FIGURES 28 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL, THE EUROPEAN PARLIAMENT AND THE 
ECONOMIC AND SOCIAL COMMITTEE 
THE NEW TRANSATLANTIC MARKETPLACE 
A. RATIONALE 
1. INTRODUCTION 
The economic relationship between the EU and the US is of vital importance to both. 
In 1996 two way trade in goods and services amounted to more than 355 bn ECUs. 
The EU and the US account for around 19% of each other's total trade in goods. It is 
estimated that high technology products account for 20% of the two-way trade flow. 
In 1995 EU-US trade in services accounted for over 38% of total bilateral trade. The 
EU is by far the biggest investor in the US accounting for 59% of total foreign direct 
investment (FDI) by 1996. At the same time 44% of US FDI is in the EU. Further 
details are in the Annex. 
Through progressive rounds of multilateral negotiations, and bilaterally since the 
adoption of the New Transatlantic Agenda (NTA) in 1995, we have achieved progress 
in lowering remaining barriers to trade and investment. But, as the Commission's 
annual reports on United States Barriers to Trade and Investment illustrate, significant 
obstacles remain. 
The main reason is that the regulatory framework for EU-US trade and investment in 
goods and services has not kept pace with new market developments. While tariffs on 
industrial products have been substantially reduced, "peak" tariffs remain in some 
sensitive sectors. These are particularly numerous on the US side. But the main 
problem is non-tariff barriers. These gain increasing significance with the growing 
importance of EU-US trade in sophisticated manufactured goods and in services, as 
well as growing foreign direct investment. These areas of activity are subject to a 
range of domestic regulations and standards, reflecting among other things legitimate 
social concerns about protection of public health and safety or the environment. 
The EU and US business communities have frequently identified these regulatory 
issues as their main concern. Since the rules often diverge widely they can act as 
hidden barriers. They increase costs for European and American consumers and 
business. They also lead to delays in exploiting new economic and technological 
opportunities, and can hinder the creation of competitive jobs. They therefore impede 
economic advance. In short, these are now among the most serious issues affecting 
Transatlantic trade and investment. 
In addition, there has recently been an increase in the number of difficult trade 
disputes between the EU and the US. Many of the recent problems are different from 
traditional trade disputes in that they have their roots in the sort of problems described 
above. Despite our great efforts we have not so far been able to establish an effective 
mechanism to prevent them. As a result, they require a substantial investment of time 
and effort, damage European and US economic interests and have a disproportionately 
large negative political impact. 
The question we should address is whether we can do more, and more effectively, to 
facilitate EU/US trade in goods and services and at the same time to avoid or resolve 
these problems, while ensuring that our high level of protection of public health and 
the environment is maintained and can be further developed autonomously. Under the 
NTA we have made some progress through a modest 'step-by-step' approach to 
resolving individual problems and promoting liberalisation in particular sectors. But 
the protracted negotiation leading to the 1997 Mutual Recognition Agreement showed 
that this approach is slow and can produce only limited results. 
For this reason the Commission has given careful thought to whether we should now 
pursue a new, more comprehensive and ambitious approach to making a reality of the 
New Transatlantic Marketplace (NTM), which has from the start been one of the key 
objectives of the NTA. 
Any such proposal should meet all the following requirements: 
i) it should address the real barriers to EU-US trade and investment; 
ii) it should bring economic benefit to the EU and the US commensurate with the 
effort involved; 
iii) it should not damage, and should indeed promote our objectives in the future 
multilateral negotiations within the WTO, to which we are committed; 
iv) it should not lead to the creation of new trade obstacles to third countries or 
reduce their access to EU and US markets. Nor should it weaken their support 
for multilateral liberalisation; 
v) it should be ambitious, capture political interest, but be technically achievable; 
vi) it should be consistent with and should not jeopardise the agreed multilateral 
rules of the WTO and other international fora (e.g. OECD, WIPO etc.); 
vii) it should serve to enhance the broader political relationship between the EU 
and the US; 
viii) it should benefit consumers and should preserve our high level of protection 
for health, safety, consumers or the environment; 
ix) it should not impede the further development of the Community acquis. 
Any proposal in this area should serve to stimulate further multilateral liberalisation 
through deeper liberalisation and a firmer set of rules at the bilateral level, which 
could later be extended to other partners. Bilateral liberalisation should also focus on 
those impediments in EU and US trade where the multilateral route cannot offer early 
and effective solutions. 
Having considered all these factors, the Commission proposes that a negotiation 
should be launched for a New Transatlantic Marketplace Agreement (NTMA) to 
achieve the following objectives: 
d 
i) a widespread removal of technical barriers to trade in goods through an 
extensive process of mutual recognition and/or harmonisation, promoting both 
consumer and business interests; 
ii) a political commitment to eliminate by 2010 all industrial tariffs on a MFN 
basis, through multilateral negotiations, provided that a critical mass of other 
trading partners do the same; 
iii) a free trade area in services, bearing in mind the criteria and requirements 
established by the Council; 
iv) liberalisation beyond multilateral or plurilateral agreements in the areas of 
government procurement, intellectual property and investment. 
The individual elements of this proposal are considered in detail in section D. 
We should also pursue strengthened bilateral co-operation in areas such as: trade 
facilitation, customs procedure simplification, SME partnerships, sustainable 
development and the environment (taking into account ongoing bilateral and 
multilateral initiatives). In certain of these areas (e.g. customs, competition and 
science and technology) existing agreements already provide a framework for such a 
cooperation. The NTM Agreement will be pursued within the broader framework of 
the New Transatlantic Agenda. The NTA Action Plan will continue to be pursued. 
A number of general methodological conditions should be clearly established. Before 
a negotiation begins, there should be a clear understanding with the United States on 
which areas are covered and which are excluded. In conducting the negotiation, the 
EU would give due consideration to factors affecting competition, including state 
aids. It should be clear from the start that an Agreement should be binding on the 
federal states. Nor should it weaken existing EU agreements with other third 
countries. 
The initiative should take the form of a single comprehensive agreement. This might 
seem to be harder to achieve than the present step-by-step approach in terms of 
negotiation and ratification. On the other hand, it would have the considerable 
advantage of giving greater certainty of the implementation of the agreed 
commitments, including where necessary, through domestic legislative changes. 
Perhaps .more important, the dynamic which multi-issue, multi-sector negotiations 
engender should make it possible to address some entrenched and long-standing 
barriers which at present appear intractable in isolation. 
This is not a proposal to create an internal market with the US, but it would allow the 
EU to take advantage of the unique experience we have gained from the completion of 
the Internal Market and to adapt some of the principles underlying it to the different 
EU-US context. 
2. THE POLITICAL DIMENSION 
The proposal is more than a trade policy initiative. It is also an important initiative for 
the EU's broader policy towards the United States, and should be considered in that 
light. Since the end of the Cold War we have taken a number of steps to restructure 
and refocus the EU's links with the US, which remains our most important and 
complex external relationship, and to reinforce US support for European stability. 
Another key objective is to deter the American tendency towards unilateralism, which 
has included the adoption of unacceptable extraterritorial legislation such as the 
Helms-Burton and d'Amato Acts. We should continue firmly to oppose action of this 
sort. An early comprehensive settlement of our differences arising from the Helms-
Burton and D'Amato Acts, based on the April 1997 Understanding, remains 
necessary. 
The New Transatlantic Agenda of 1995 established a habit and pattern of co-operation 
and joint action between our administrations at all levels and on many issues. It has 
been invaluable in this regard, and has enabled us to achieve a number of tangible 
results including the Mutual Recognition Agreement of 1997 and other agreements. 
However, the NTA as it now stands has not been able to engage the highest level of 
political attention on both sides of the Atlantic, and is not sufficiently dynamic to 
deliver major political and economic results, although it has delivered useful ones. 
The time is ripe to consider whether a more ambitious, comprehensive approach is 
required. 
The proposal to create a New Transatlantic Marketplace reducing barriers to trade and 
investment was an integral part of the NTA, but has not yet been developed in a 
coherent manner. This initiative takes up that challenge, building on the steady 
development of the EU's relationship with the US and on the dramatic growth of our 
economic relations, notably in services and investment. It is designed to use an 
economic instrument to give a much broader impetus to the overall political 
relationship; to produce important economic benefits; and to provide a new 
mechanism and stronger incentives to prevent and resolve disputes between us. 
The timing for such an initiative is good. The European Union has established a 
leading role in international trade policy. Our economy is set to grow strongly. We 
stand on the threshold of the Single Currency, and we have behind us the experience 
gained from building the Internal Market. The broader international context is also 
favourable: Europe at present is a strong and stable partner for the United States. 
At the same time, this initiative has benefits going beyond the bilateral political and 
economic relationship with the United States. For reasons discussed below (section 
4), it will promote achievement of our objectives in future multilateral trade 
negotiations. 
It also gives the EU an opportunity to pursue proactively our own clear policy 
objectives in promoting the interests of European citizens and advancing important 
values of European society. It should be pursued in a manner which preserves and 
further enhances our high standards of consumer protection, health and safety. It 
should not affect internal EU policy making on the provision of services of general 
economic interest, as recognised in the relevant EC Directives and the Amsterdam 
Treaty. The macroeconomic growth predicted (see section 3) would bring potential 
for significant job creation in the EU. In ways such as these, the NTMA will enable 
us to respond to some of the uncertainties arising from global economic liberalisation. 
It would also lay the basis for better and more effective EU-US dialogue and co­
operation on issues like sustainable development and environmental protection, 
including at the multilateral level. 
3. THE ECONOMIC BENEFITS 
Macroeconomic studies, including studies carried out at the request of the 
Commission, suggest that the removal of existing tariff and non-tariff barriers to 
Transatlantic trade in industrial goods and in services would have positive macro-
economic effects for both partners. For the EU, it could add some 125 billion ECU 
(over 1%) to annual national income, broadly commensurate with the effects of the 
Uruguay Round. Another 25 billion ECU annually would be added if the initiative 
achieved a wide multilateral elimination of industrial tariffs. At the micro-economic 
level, it would mean greater economies of scale, reduced costs for producers and 
consumers and less uncertainty for EU and US firms. 
A bilateral elimination, on a preferential basis, of all industrial tariffs between the EU 
and the US is not part of this proposal. The average level of tariffs prevailing in both 
economies is already low, though major gains remain to be made in sectors where 
'peak' or significant tariffs remain. These gains will be well worth having, but much 
greater gains will accrue from the elimination of industrial tariff barriers on an MFN 
basis involving a broad range of other countries, on the model of the ITA agreement. 
This would have the added advantage of addressing the recent difficulties which 
European firms have experienced in key mid-income country markets. 
Still larger benefits accrue once non-tariff barriers are addressed, as a result of many 
factors, including increased efficiency, larger scale economies (for instance when, 
through the mutual recognition or harmonisation of technical requirements, 
production lines can be unified), more transparent procedures, lower costs of 
complying with different standards, better intellectual property protection, less 
intellectual property litigation, greater trade, investment and procurement 
opportunities (the last estimated at 35-40 bn USD). In some sectors, benefits to be 
gained by Small and Medium-sized Enterprises (SMEs) are likely to outweigh those 
expected by large companies, with significant employment benefits. Overall, the 
realisation of a freer Transatlantic Marketplace will improve the conditions and 
opportunities for business on both sides of the Atlantic with a beneficial economic 
impact on industry, consumers and the EU and US economies as a whole. The 
economic aspects of the proposal will be the subject of further examination in 
accordance with the requirements established by the Council. The Commission will 
now proceed to produce the requisite more detailed impact studies as a further 
contribution to discussion in the Council of these proposals, and indeed their further 
elaboration. 
B. TRADE POLICY CONSIDERATIONS 
4. RELATIONSHIP WITH THE MULTILATERAL SYSTEM 
Further liberalisation in the form of comprehensive multilateral negotiations 
conducted within the framework of the WTO remains the central trade policy 
objective of the EU. The proposed NTMA is carefully designed to promote this 
objective, whilst in itself delivering major economic and political benefits for the two 
partners. The underlying principle is that each part of the NTMA should encourage 
and facilitate broader international liberalisation. 
The proposed tariff initiative is explicitly and exclusively multilateral; the EU and the 
US will make a joint commitment that, in future multilateral negotiations, they will 
eliminate all industrial tariffs by 2010 if a critical mass of trading partners (understood 
in terms of volume of trade and/or numbers of countries) do the same. A bilateral 
preferential deal is thus ruled out. 
In the area of technical barriers to trade, the multilateral rules recognise the possibility 
of bilateral recognition of equivalence of the parties' certification systems. This is an 
area of trade where full mutual trust in a partner's capacity to fully protect high levels 
of product safety is of paramount importance, to maintain common protection 
unaffected by trade rules. For this reason, the prospects for multilateral progress in 
the foreseeable future are limited. Nevertheless, more rapid progress can be made 
between two major economies with similar degrees of economic and technological 
development as well as similar public policy objectives. Rather than becoming 
obstacles to other partners, common standards will provide easier market access to the 
two largest trading entities in the world. 
In services, the intention of the NTMA is to promote both a successful and WTO-
compatible bilateral arrangement but also to enable the EU to prepare the ground for 
successful multilateral negotiations in services, due to start in the year 2000. 
There are several ways in which a NTMA in services could support the multilateral 
approach: 
• The demonstration effect that differing regulatory approaches can indeed be 
bridged between major trading partners, and therefore are politically and 
technically capable of being bridged more widely. 
• The incentive effect whereby EU and US enjoyment of a liberalised preferential 
area for services will attract strong interest from other trading partners for 
participation in the process (thereby offering a stepping stone towards wider 
liberalisation of various regulatory barriers among trading partners). Our ultimate 
objective would be that the liberalisation achieved in the NTM would be matched 
multilaterally. 
• The creation of models for future WTO rule-making, for example by moving from 
hybrid to negative listing, i.e. everything is liberalised unless subject to a specific 
exemption in a schedule. 
• The exploration of ways in which partly or completely excluded areas in the 
current GATS could be tackled bilaterally and therefore opened up on a 
multilateral basis. 
These effects outweigh any possible concern that a bilateral initiative could weaken 
support for further liberalisation in GATS. On the contrary, the NTMA should enable 
us to go further and faster than we would otherwise have been able to in achieving EU 
objectives in these negotiations. 
More generally, and in the areas of government procurement, intellectual property and 
investment in particular, the NTMA approach should be'both to pursue full 
compatibility with multilateral rules and - at the same time - to seek "better" rules 
and/or "deeper" liberalisation with respect to the existing WTO framework as well as 
in new areas not yet fully covered by it, so as to serve as a model for future WTO 
rule-making. Such a policy stance would emphasise the leading role of the 
Transatlantic partners in underpinning and further developing the multilateral trading 
system. In each area the "best practice" in terms of liberalisation should be sought, so 
as to achieve not only the largest economic benefits bilaterally but also a 
demonstration effect vis-à-vis other trading partners. 
5. WTO COMPATIBILITY 
The NTMA described in this Communication would be fully WTO-compatible. In 
the tariff area the initiative is fully compatible since it is foreseen on a MFN basis. 
The MFN principle applies in general also in the area of technical requirements. 
WTO Members are not entitled to maintain differing technical specifications for 
products originating from different countries, nor to require different procedures of 
conformity assessment. This latter requirement implies that where a country does not 
regulate safety of a product at all, or where it is satisfied with a suppliers' declaration 
of conformity , it has to extend this treatment to all WTO Member countries. 
However, two areas for bilateral (non-MFN based) co-operation exist and the NTMA 
will make full use of them. 
First, mutual recognition. Where WTO Members require an independent verification 
of a product, or mandate a government agency to verify compliance, Members may 
bilaterally recognise the competence of their respective certification bodies. The 
WTO/TBT agreement explicitly recognises this right, while requiring "positive 
consideration" to recognise other Members that could demonstrate equivalent 
competence. Second, harmonisation. All Members are free to determine the 
specifications that products must meet, within certain general rules. Nothing prevents 
two countries from harmonising such specifications, provided that these are applied to 
other Members in a non-discriminatory manner. 
In the area of services the NTMA will comply with the GATS requirements, which 
are similar to those established under Article XXIV of GATT. Article V (Economic 
Integration) of GATS sets forth several conditions which would need to be met, in 
particular: substantial sectoral coverage (in terms of a number of sectors, volume of 
trade affected and modes of supply); no increase in the overall level of barriers to 
trade in services originating in other GATS Members within the respective sector; and 
the elimination of substantially all discrimination (through the elimination of all 
existing discriminatory measures and/or the prohibition of new or more 
discriminatory measures). The "substantial coverage" condition requires that, in 
principle, all service sectors are adequately covered (although there is some scope for 
interpretation as to whether this includes sectors not presently covered in the GATS, 
such as air transport and maritime transport, or where appropriate MFN exemptions 
have been listed). The 'substantial coverage' condition also requires that provisions 
on investment (commercial presence mode of supply) and also on the supply of 
services implying the temporary movement of certain categories of physical persons 
(including key personnel) be included as well. 
As for mutual recognition in the services area, article VII of the GATS specifically 
provides for the conclusion of agreements for the mutual recognition of education, 
qualifications or ability to provide services. Furthermore, the Annex on Financial 
Services allows mutual recognition of prudential measures, facilitating the 
establishment and provision of financial services. The scope for removing technical 
and legislative barriers to trade could be examined for several services sectors, such as 
regulations governing bank branches, securities regulations and the licensing of 
professionals. Article VII requirements (and a similar requirement in the Annex on 
Financial Services) to give adequate opportunity for similar agreements with other 
countries would, however, need to be observed. 
With regard to government procurement, WTO rules are to be found in the plurilateral 
Government Procurement Agreement (the GPA). The question of MFN treatment 
should be considered within the specific context of the GPA agreement which, on the 
one hand, imposes an MFN treatment between contracting parties and on the other 
hand, allows contracting parties to limit this by inserting "General Notes" in 
Appendix 1 to the Agreement which reintroduce bilateral relations based on 
reciprocity between two or more parties. Whilst an NTMA initiative in procurement 
would not encounter WTO compatibility problems, commitments undertaken by 
either party might, in some cases, involve extending EU-US bilateral concessions to 
EEA partners and, depending on the areas involved, to other GPA contracting parties. 
In the intellectual property area, for the NTMA to be WTO compatible, any 
modifications to domestic legislation would have to be applied by the two Parties in 
compliance with the national treatment and MFN provisions contained in the TRIPs 
Agreement. 
In the investment area, other than in services (see above), there are no WTO 
obligations affecting this proposal. 
6. RELA TIONS WITH THIRD COUNTRIES 
The NTMA will not involve the creation of any new barriers with the rest of the 
world. Moreover, it is designed to encourage and facilitate wider multilateral 
liberalisation, and the elements of the Agreement which provide for bilateral 
liberalisation would not necessarily remain exclusive to the EU and the US. It is also 
designed to permit extension to those third countries who are willing and able to 
match the commitments. While the impact on third countries, including in particular 
countries preparing for accession to the EU, is a factor to be borne constantly in mind 
during negotiation, overall there is likely to be a net positive and dynamic effect, 
which can be illustrated for each NTMA component, referring to different groups of 
third countries. 
Tariff liberalisation 
On tariffs, the conditional commitment to reduce industrial tariffs to zero would be on 
a strictly MFN basis, to be realised only by 2010. The NTMA as such will thus not 
have any effects on third countries in this area. However, once such a multilateral step 
would be taken, there will be a net positive effect on third countries. Those third 
countries which will join such a conditional EU-US offer and undertake similar 
commitments will provide the necessary 'critical mass' to turn the elimination of 
industrial tariffs into a reality. They will gain enhanced access to EU and US markets, 
and to each others' markets. At the same time they will open their own markets to EU 
and US industrial products, which would be a clear sign of their economic advance 
and the completion of a global process of reduction of industrial tariffs, which began 
in fact with the first Round after the creation of GATT in 1947. 
Those third countries which are not in a position to submit such commitments, and 
this is likely in practice to be the case exclusively for the least developed countries, 
would benefit from greatly enhanced market access at zero tariffs not only to EU and 
US markets but also to neighbouring mid-income developing countries which 
undertook similar MFN tariff elimination commitments, without having to give up 
their national tariff protection. 
These effects should be considered alongside the reduction of preferential market 
access currently enjoyed by ACP countries under the Lomé Convention, and any 
increase of competition in the Community market. The EU and US should also 
reaffirm their commitment to ensure that less developed countries secure a share in 
the growth in international trade commensurate with the needs of their economic 
development, with a view to their smooth and gradual integration into the world 
economy, as well as their commitment to address trade and development issues in the 
WTO. Further economic analysis, to be conducted before firm commitments are 
made in WTO multilateral negotiations, should cover the impact of the proposed 
elimination of industrial tariffs on the less developed countries, including the 
consequences of increased competition, the extent to which they will have to open 
their own markets, and the extent to which they will enjoy increased access in other 
markets. 
Free trade area in services 
On services, as indicated above, the NTMA would fully meet GATS rules and would 
be designed to be widened to the maximum extent possible into multilateral 
/V 
liberalisation. The dynamics of the transatlantic services market should render it 
attractive to join the more ambitious NTMA services commitments on a reciprocal 
basis by countries who were in the past rather reluctant to join in multilateral 
liberalisation initiatives. There will be every reason for third countries to seek to 
match the NTMA bilateral liberalisation commitments because the EU and the US 
would in return bind their matched offers in the liberalisation package emerging from 
the GATS 2000 talks. The NTMA would not, in respect of any Member outside the 
agreement, raise the overall level of barriers to trade in services within the respective 
sectors or sub-sectors compared to the level applicable prior to such an agreement 
(GATS Article V(4)). Furthermore, third country services suppliers can benefit as, in 
accordance with GATS Art.V(6), a company incorporated and engaged in substantive 
business operations in the EU or US would be entitled to benefit from an EU-US FTA 
in services regardless of the ownership of its capital. 
Technical barriers to trade 
As regards the area of technical barriers, the EU is free under the WTO-TBT code to 
conclude mutual recognition agreements and to accept technical regulations of other 
countries as equivalent. The impact on third countries varies according to the degree 
of regulatory convergence which has been agreed with other countries. The countries 
most concerned are those which either apply the acquis communautaire of the Internal 
Market (e.g. Turkey, ÈFTA Members of the European Economic Area) or those who 
are committed to introduce Internal Market rules as part of the pre-accession strategy 
for candidate countries (CEECs, Cyprus). These countries should benefit most from 
the NTMA since their products would be produced according to those EU standards 
which would in future be recognised as being equivalent by the US or be harmonised 
in the transatlantic marketplace. Other third countries could eventually join the 
NTMA mechanism covering technical barriers, provided these countries were willing 
and able to undertake the same comprehensive regulatory commitments. This 
challenge would be particularly relevant for other major trading partners, who 
maintain hitherto substantial regulatory trade barriers. 
C. ENVIRONMENT 
7. ENVIRONMENTAL CONSIDERA TIONS 
All commitments under the NTMA should be implemented consistent with health, 
safety and environmental objectives and should aim at ensuring a high level of 
protection. This is a fundamental legal and political requirement which results 
directly from the provisions of the EC Treaty. Regulatory convergence in areas 
relating to health, safety and the environment should therefore be based on a high 
level of protection and should in no way lower of hamper the further development of 
the acquis in this area. 
To ensure the possibility for the parties to maintain, establish and implement effective 
domestic policies and measures to ensure a high level of health, safety and 
environmental protection, the Agreement should include a specific safeguard 
^7 
mechanism for certain measures in these areas which would otherwise be inconsistent 
with the Agreement. This safeguard mechanism could take the form of a general 
exception clause following the precedent of GATT Article XX and GATS Article 
XIV. 
The environmental dimension needs to be taken into account throughout the 
negotiating process. Bearing in mind the recommendations of the OECD made in 
1993, it could also be appropriate to review the environmental impact of the NTMA, 
allowing parties to identify potential environmental effects and to devise effective 
policy responses. 
It should also be noted that the lack of US participation in several multilateral 
agreements (for example the biodiversity convention, and the Basle Convention and 
the Kyoto Protocol under the Climate Change Convention) can distort 
competitiveness and causes substantial asymmetry between EU and US international 
obligations in the field of environment. Full US participation in these conventions is 
therefore highly desirable. 
D. COMPONENTS OF THE NTMA 
8. FREEING TRADE IN GOODS OF TECHNICAL BARRIERS 
Technical barriers still hamper Transatlantic trade 
Differences of law, procedure and practice on both sides of the Atlantic at present 
cause many technical barriers to the free movement of goods. 
Barriers typically arise from a divergence in obligations concerning: 
• information and labelling of goods; 
• technical specifications or performance requirements relating to goods and their 
packaging; 
• specifications concerning tests and test procedures with which goods must 
comply; 
• any declarations or certificates that have to be provided; 
• accreditation of bodies entitled to carry out tests or issue certificates; and 
• marking of goods to indicate their conformity with requirements. 
Technical specifications agreed by standards bodies, or arising de facto from the 
practices of major market players, are also a potential source of trade barriers, where 
voluntary compliance with them brings marketing advantages. 
Such divergence, whether it arises at the regulatory or other levels, may reflect 
different positions as regards the desirable level of security, the means used to achieve 
that level, and the method chosen to demonstrate conformity with the requirements. 
Nevertheless, there is no unavoidable reason why such legitimate differences should 
act as barriers to trade. 
What should an NTMA achieve in this respect 
The key to barrier-free trade is to achieve a climate of public confidence in the safety 
and security of products placed on the market, on either side of the Atlantic. Where 
the EU and the US share similar concerns and aims regarding the protection of public 
health, safety, consumers and the environment, this should be achievable. The NTMA 
should work towards this goal by developing a framework for convergence of law, 
procedure and practice involving the various legislative and regulatory bodies, as well 
as for the application of the principle of mutual recognition. 
To this end, and taking due account of the need to preserve our high level of 
protection for health, safety, consumers and the environment, the NTMA should aim 
to create conditions in which goods legally marketed in the territory of one party can, 
as far as possible, move across the Atlantic and be marketed in the territory of the 
other without facing further formalities or duplicate requirements. 
The regulatory structures of the parties are the guarantee of the integrity of their 
domestic markets. Without them, those markets could not be maintained. Therefore 
the NTMA cannot avoid facing the issue of convergence. Yet the prize is great enough 
to justify the effort involved. 
It is essential to ensure that the NTMA is implemented in a way consistent with the 
fundamental requirements concerning protection of human, animal and plant life or 
health and the environment laid down in the EC Treaty. To this end, all measures 
under the NTMA aimed at removing technical barriers to trade in goods relating to 
these areas should at least maintain our existing high level of protection.. It should 
furthermore be recognised that both the EU and the US maintain all the rights, granted 
to them under the WTO SPS-Agreement, including to establish a level of sanitary and 
phytosanitary protection which is higher than the level resulting from international 
health standards. There should be provision for the possibility to take specific 
safeguard measures when necessary. 
How can these objectives be pursued 
An appropriate combination of convergence of law, procedure and practice and of the 
application of the principle of mutual recognition (which, moreover, are 
complementary and not mutually exclusive) will have to be found for different 
categories of goods. The aim of an NTMA should be to seek the most ambitious and 
trade liberalising such combination, while meeting the requirements in sensitive areas 
set out in the previous paragraph. The EU should also be able to develop further its 
levels of protection in these areas, while taking into account the differences that may 
exist in regulatory approaches and traditions. 
Convergence of law, procedure and practice is the key to ensuring that similar public 
policy concerns are not pursued through radically different and sometimes 
incompatible means, thus giving rise to avoidable and undesirable barriers to trade. 
Convergence can be achieved in different ways, and notably through regulatory co­
operation and through harmonisation. 
Jlk 
To the extent that those public policy concerns are already being pursued through 
different means on the two sides of the Atlantic, there is room for acceptance of such 
alternative means to achieve them, insofar as the levels of protection which are to be 
achieved are equivalent. This can be achieved through different techniques or a 
combination of them, such as mutual recognition of technical requirements; mutual 
recognition of conformity assessments; or resort to a supplier's declaration of 
conformity. 
The public confidence needed to guarantee success to the NTMA means that effective 
implementation of commitments on both sides will be crucial* This will require co­
operation between regulatory authorities at the appropriate level, covering such issues 
as consultation and administrative co-operation, a commitment to implement the 
necessary legislation and an effective dispute settlement system. 
In which sectors/products can this be pursued 
The parties will need to identify early in the negotiating process a sufficient number of 
candidate sectors/products to produce eventually a balanced and mutually interesting 
result. In order to be credible to the business community, there would also need to be 
an early and sufficient reduction of any unnecessary or duplicate regulatory burden on 
business, through a critical mass of concrete commitments. Longer-term actions 
would be developed on the basis of these. 
The search for convergence and mutual recognition can be pursued as a priority in 
those industrial sectors/products where there is an important existing interest to 
Transatlantic industry, such as télécoms, chemical products and motor vehicles. In a 
number of these sectors, work is already under way in international fora, such as the 
International Telecommunications Union for télécoms equipment, the International 
Conference for Harmonisation for medicinal products, or the UN-ECE for motor 
vehicles and tyres. Effective implementation on international standards is another 
way forward towards a higher level of convergence. Whereas the necessary 
arrangements are in place in Europe, the use of international standards is insufficient 
in the US. In still other areas there may be scope for building on existing mutual 
recognition of tests and certificates, and upgrading the level of agreement to a higher 
level of liberalisation. 
A number of agriculture-related issues which fall outside the WTO agreement could 
be dealt with in the context of the NTMA. In this respect, the soon to be adopted EU-
US Veterinary Equivalency Agreement offers the most suitable framework to 
intensify and deepen mutual efforts to arrive at more convergence in the area of 
veterinary issues while at the same time maintaining each sides' high level of health 
protection. Extending the scope of the Veterinary Agreement to cover questions like 
animal welfare, phytosanitary issues or other questions relevant in the trade of food 
could be foreseen. 
The field of biotechnology is highly sensitive. This should not discourage us from 
addressing it under the NTM. Systems for facilitating the exchange of scientific 
siC 
information relating to such products would be a first step to build confidence and to 
promote the greatest possible common approach between the EU and US. 
9. TARIFF ELIMINATION 
Tariff barriers remain an obstacle both to Transatlantic trade and to trade between the 
EU and its other trading partners. 
For industrial tariffs, although the average level of industrial tariffs in OECD 
economies is low, a variety of tariff peaks remain. The most effective way to remove 
these tariffs is on a multilateral basis. However, it has often been necessary in the past 
for a number of WTO members to show leadership within the multilateral system by 
offering to reduce their tariffs on an MFN basis if the largest possible critical mass of 
others follow suit, so as to minimise the risk of free riding and maximise the 
liberalising effect and the economic benefits for the EU. This happened during the 
Uruguay Round, where there were a number of Quad initiatives for tariff reductions, 
and on the Information Technology Agreement (ITA). The NTM would build on that 
approach by offering a conditional political commitment to work toward the 
elimination, by 2010, of all industrial tariffs on a MFN basis. The two Parties could 
agree to go to zero provided a critical mass of trading partners joins. This condition 
would need to be spelled out, either in terms of broad geographical coverage or as a 
percentage of world trade (as was done in the IT A). The commitment would only turn 
into an actual tariff elimination if a critical mass of countries in addition to the EU and 
US were prepared to make those reductions. However, the prize of zero industrial 
tariffs would be an attractive reason for trying to achieve that critical mass. 
Such an initiative would play directly into comprehensive tariff negotiations during 
the next global WTO negotiations. It will serve our joint interests in achieving 
meaningful tariff reductions from third parties within a set timeframe. This is in 
addition to the benefits of removing remaining tariffs between the EU and US. 
Fish and fish products are not industrial products in the strict sense. While these 
products are not excluded from the NTMA in principle, the specificity and sensitivity 
of the fisheries sector may require a selective approach and the current Council debate 
on the Commission Communication on the Future of the Market in Fisheries Products 
in the European Union1 will have to be taken into account. 
Regarding agriculture a WTO process is already under way in Geneva (Analysis and 
Information Exchange, A.I.E.) to prepare the resumption of negotiations on 
agriculture which are scheduled to start at the end of 1999. The negotiations will 
shape future trade in agriculture. As the WTO Agreement on Agriculture is already 
fairly comprehensive, covering internal support, subsidisation and market access 
(including tariffs), and future negotiations can be expected to at least mirror such an 
approach, a parallel process in an NTM context would not be helpful. Furthermore, it 
must also be borne in mind that not only are there fundamental structural differences 
between agriculture in the US and the EU; domestic policies of the two parties are 
also radically different. Complete free trade would therefore be difficult, if not 
impossible, to imagine, without a degree of prior harmonisation of our respective 
See COM(97)719 final, 16.12.1997. 
-R I. 
policies, which is likely to be unacceptable to either side This is why agricultural 
tariffs and subsidies cannot be included in the NTM negotiation. 
10. SERVICES 
A Free Trade Area (FTA) for services would be an ambitious liberalisation initiative. 
It would need to meet GATS rules, covering "substantially" all services sectors (as 
defined in the GATS) including sectors such as telecommunications, financial 
services, business and professional services and transport. We should aim at the 
elimination of all restrictions to the right of establishment, either immediately or, for 
the most difficult areas, over a transitional period. As regards cross-border services, 
the objective should be to establish clear obligations to liberalise such trade. The 
services element of the NTMA would combine two main approaches to achieve 
effective liberalisation: 
• Liberalisation of market access on the basis of host country control: Substantially 
all restrictions to market access and to national treatment should be eliminated 
within a certain period, for all the covered sectors. For some highly regulated 
sectors progress may be particularly difficult on cross border services and the 
NTMA would concentrate on the right of establishment of a commercial presence. 
The agreement would in principle apply to all modes of delivery (including in 
particular cross-border services and consumption abroad). 
• Elimination of regulatory obstacles on the basis of mutual recognition: Taking 
into account the importance of non-discriminatory regulatory barriers in certain 
sectors and also for certain cross-border transactions, the agreement would 
envisage the mutual recognition of qualifications, regulations and other 
requirements. 
i) Elimination of restrictions to market access and to national treatment 
An NTMA would aim at eliminating remaining restrictions on national treatment and 
market access (both through establishment in the form of subsidiaries, branches, or 
representative offices; cross-border provision of services; and purchase/consumption 
of services abroad) scheduled by both partners in GATS. It would be based - unlike 
the Internal Market, and with the exception of cases where mutual recognition for 
regulations is achieved - on the application of host country rules and host country 
control. As regards the US, it should bind both the Federation as well as the States, 
and should offer a degree of market access similar to that offered by the EU. It would 
result in benefits for EU industry in the US, such as: 
a. New public procurement possibilities, in particular for the highly competitive EU 
construction services sector, and equal access for the subsidiaries of EU companies 
to public funded research programmes in the US. 
b. More opportunities to provide on a cross-border basis banking, securities and 
certain insurance services (such as large industrial risks) into the US, and a 
substantial relaxation of current rules that prevent EU financial conglomerates from 
4 
establishing, for instance, banking and insurance operations in the US. The EU 
and US should continue to support IOSCO. 
c. Greater certainty of access to the US maritime transport services sector, where the 
EU industry has a strong position. Other objectives would include the phase out of 
the different obligations for US Government-owned or financed cargoes to be 
carried on US-flag commercial vessels, and other restrictions, but it must be 
recognised that these are sensitive issues. 
d. Elimination of nationality restrictions and non-transparent licensing procedures at 
State level for professional services, and in particular for certain legal and medical 
services, as well as other restrictions regarding a number of business services such 
as personnel placement services; 
e. Ensuring non-discriminatory access of European operators to provide satellite-
based telecommunications services in the US, including satellite personal 
communications services (S-PCS) and one-way satellite transmission services. 
Elimination of the remaining restrictions to direct ownership in US 
telecommunications services (limitation to 20 % of direct foreign shareholding for 
radio licenses) and coverage of postal services, without undermining internal EU 
policy making on services of general economic interest. 
f. Access to the energy services sectors through opening the possibility for the 
establishment and acquisition of companies, mainly in the areas of transmission 
and distribution of gas and electricity, including facilities supplying ancillary 
services, and in the context of recently adopted EU directives. 
g. Elimination of remaining restrictions in other sectors such as quality services 
(testing, inspection and certification) and environmental services. 
For the majority of sectors effectively "covered by the GATS, this should pose no 
particular problem. A wide sectoral coverage and a high degree of liberalisation 
should contribute to the achievement of an overall balance and to increase the 
attractiveness of such a deal. However, it must be recognised that some areas are 
particularly sensitive. In the audio visual sector, the exception which the EU secured 
in the Uruguay Round, by combining MFN exemptions and the absence of 
commitments on national treatment and market access in the GATS agreement, must 
be fully preserved and therefore excluded from the NTMA negotiations. 
The NTMA will not impact on the current aviation discussions (June 1996 Mandate) 
aimed at establishing a common aviation area and which will develop in parallel. This 
involves substantial expansion of the air transport services open to airlines of both 
sides. It covers market access in a wide sense, through the conclusion of an open 
market agreement ensuring equal access to each other's market and inter alia lifting 
US restrictions to foreign ownership of US carriers. 
An NTMA could also provide a useful opportunity to improve some of the features of 
GATS. For instance, the adoption of a negative listing system (everything is 
liberalised except for what is listed) as a method of securing liberalisation 
commitments as well as increased transparency; and, possibly, the introduction of 
W 
generic rules for investment and the movement of people (in particular service 
providers, intra-company transferees, business visitors and key personnel). The 
NTMA could also break new ground by including in the liberalisation process sectors 
which are so far excluded from the GATS basic rules (maritime transport) or which 
have not been subject to much attention in the past (e.g. energy services), for which 
liberalisation in the EU is recent. 
In addition, the national treatment provisions should fully apply to the public 
procurement of services, which are provided either on a cross-border basis or on the 
basis of a local establishment: at present, Article XIII of GATS excludes the 
application of the national treatment and most favoured nation provisions to the public 
procurement of services. This is an area where the EU has already opened its market 
on a generally non-discriminatory basis, and where considerable new business 
opportunities could be created for EU service suppliers because of the present 
existence of significant US discriminatory laws and practices based on different Buy 
America provisions. 
ii) Mutual recognition of regulations 
The agreement should make use of the opportunities provided for by the GATS to 
conclude agreements for the mutual recognition of qualifications, licenses, or 
regulations and other requirements concerning the provision of services in certain 
sectors. In many services sectors, it is domestic regulation that now constitutes the 
main barrier to foreign businesses or individuals. The sectors that lend themselves 
most to MRAs are professional services, educational and training services, and 
financial services. 
In the few areas where they have been concluded so far, MRAs in the field of 
qualifications have been carried out between professional bodies responsible for 
governing the different regulated professions. The situation in the EU, with at least 
fifteen authorities responsible for governing each profession, and the US, where often 
every state has its own authorities, means that mutual recognition in any of the 
professional areas is complex. For instance, recent negotiations between the UK and 
US accountancy bodies have proved difficult because there are many authorities 
seeking recognition in each other's territory. The splintered responsibilities in this 
sector might make it ripe for the two transatlantic partners to try to set up a framework 
of binding rules within which the responsible authorities (including professional 
bodies) could achieve mutual recognition. Taking into account the differences in 
education and training between and within both the EC and the US, a model which is 
close to the EC's General System of mutual recognition of qualifications would 
provide flexibility to require aptitude tests or adaptation periods in case where there 
are substantial regulatory differences. A network of administrative cooperation, 
applicable to all regulated professions covered by the agreement, could oversee the 
functioning of the system and help solve problems. The WTO Guidelines for Mutual 
Recognition Agreements or Arrangements in the Accountancy Sector could also be 
used as a model. 
In the financial services sector examples where mutual recognition of regulations and 
possibly home country supervisory control (probably combined with additional 
market access elements) could be explored and form a balanced package for both 
sides could be: 
a. The conditions for the operation of branches. A greater convergence of 
regulations and strengthening of co-operation and exchange of information 
between EU and US regulators and supervisors and could enable the 
establishment of bank branches without endowment capital requirements or 
lending or other operational limits based on the branch capital. The agreement 
could include the ability to operate branches in more States (in particular, the so-
called inter-State de novo branching). Similar facilities could be provided for in 
the insurance and securities areas, where there are particular difficulties in 
establishing branches in the US. The EC's financial services directives - as well 
as Article 59.2 of the Treaty of Rome- contain specific provisions allowing for 
negotiations leading to granting third country branches the freedom to provide 
cross-border services within the EU; 
b. The mutual recognition of mutual funds for cross-border marketing between the 
US and the EU - a long-standing EU request from the EU asset management 
industry, as well as the mutual recognition of prospectuses in particular in cases 
of public offers of securities and for the listing of securities in a stock exchange; 
c. The exemption from the application of detailed US regulations and jurisdiction to 
trade in securities by US residents in non-US securities markets; 
d. An additional relaxation of rules restricting EU financial conglomerates from 
having banking and non-banking financial subsidiaries in the US, for instance to 
avoid cases where the affiliation under a single holding company of a bank and 
an insurance company may lead to compulsory divestment of either the banking 
or the insurance operations in the US; 
e. Further regulatory cooperation on payment systems with a view of establishing a 
transatlantic payment instrument. 
f. There is scope for strengthening the process of co-operation and exchange of 
information between supervisory authorities, for instance regarding the 
consolidated supervision of financial groups 
11. GOVERNMENT PROCUREMENT 
Procurement accounts for between 10 and 15% of combined GDP and any serious 
effort to create an NTMA should therefore address this sector. The inclusion of 
government procurement in the NTMA should result in the extension of full national 
treatment between the parties. 
The NTMA provides an opportunity to completely liberalise the two respective public 
procurement markets in a way which is fully consistent with WTO rules, without 
creating new trade obstacles to third countries. The NTMA should go beyond what is 
li 
laid down in the Government Procurement Agreement (GPA) in order to extend 
market access. It should not be necessary to impose common detailed procedural rules 
as existing national rules provide for the necessary levels of transparency and legal 
recourse in procurement once extended to the other party. 
For the EU, at "above threshold"2 levels, this would not present specific difficulties as 
the market is already open. At "below threshold" levels, it would suffice for the EU to 
commit itself to an exchange of national treatment and a guarantee of fair and 
transparent treatment of all suppliers and service providers from both parties. For the 
US, it would require, de jure, disapplying all federal "Buy American" preferences for 
EU goods, and extending exemptions for SMEs and minority enterprises to cover EU 
companies. 
Access to US electronic procurement systems (by which a large majority of SME 
preferences in particular are operated) and the application of preferences at sub-federal 
level would also need to be addressed. In addition, the question of the interpretation of 
the application of the security exception in defence-related procurement could be 
addressed to ensure an even-handed approach. 
In particular, the NTMA should address the following: 
a. eliminating exceptions from national treatment in areas, already covered by 
commitments under the WTO Agreement on Government Procurement and the 
EC-US agreement of 1995.3 
b. completing geographic and entity coverage.4 
c. elimination of existing sanctions.5 
12. INTELLECTUAL PROPERTY 
In the area of patents, the US is the only country in the world which continues to use 
the anachronistic first-to-invent system. The rest of the world follows the first-to-file 
approach. It is obvious that a system which relies on the uncertain moment of the 
invention is extremely demanding in terms of evidence for all inventive activities and 
creates the potential for extensive and highly costly litigation. Furthermore, the 
coexistence of different systems leads to interface problems. The issue has been 
discussed for many years. Its importance is highlighted by the fact that it has figured 
for years on top of the TABD agenda and that the TABD has recommended a change 
2 The EC Directives apply to procurement contracts which have a value higher than the threshold set 
out in the Directives. Below threshold procurement is regulated by member states. 
3 US exemptions include a number of Buy American and related requirements, local preferences 
applied at both federal and sub-federal level, and small and minority set-asides. The US also maintains 
a cargo preference - an obligation to use US flag vessels when importing certain products procured by 
US. 
4 At present only 39 out of 50 States and 5 out of 24 large cities are covered. 
5 In May 1993, US imposed sanctions on the EC under Title VII for discriminating against US telecom 
equipment businesses. EC imposed equivalent countermeasures. Both remain in force and are 
counterproductive to Transatlantic business. 
to adopt the first-to-file approach in the US. No progress has been achieved up to 
now. 
As recommended by the TABD, measures should be taken to significantly reduce the 
high costs of obtaining and enforcing patents. The problem of high litigation costs is 
of a general nature in the US, but turns out to be particularly burdensome in the area 
of patents, mainly because of extensive pre-trial discovery procedures and, to some 
extent, the trial of patent cases before a jury. Alternative ways of settling disputes 
should be examined, without changing the system as such. An estimate or study on 
litigation costs should be carried out, since it is difficult at present to quantify costs in 
absolute figures in the absence of systematic, reliable and mutually agreed statistics. 
Based on the results of such a study, the objective should subsequently consist of 
progressively reducing the costs. 
Today, if an inventor applies for a patent at the European Patent Office (EPO) and the 
US Patent and Trademark Office (USPTO), such patent applications concerning the 
same invention are completely examined by both offices. This implies that full search 
reports to find out the relevant state of the art are made twice, with the associated 
costs for the applicants. Discussions have already been initiated among the offices 
concerned to improve the exchange of information on technical matters related to 
patents. Contacts should be intensified to reach some degree of acceptance or even 
mutual recognition of parts of the patent procedures, such as search reports. 
A number of shortcomings exist in the area of government use without the consent of 
the rightholder, which, in practice, is similar to compulsory licences. While some 
issues were already addressed in the Uruguay Round, others are still waiting for a 
satisfactory solution. The aim should be to proceed as for any other compulsory 
licence. A full patent search should be carried out and the patent holder be informed 
prior to any government use, except in cases of national emergency. Such use should 
only be permitted after efforts by the government to obtain authorisation from the 
rightholder on reasonable commercial terms have not been successful, within a 
reasonable period of time. 
The limitations of the internet domain name system are giving rise to legal battles 
involving national right holders sharing the same trademark. Companies are rapidly 
becoming aware of the great value of easily memorable internet domain names. 
Trademarks are territorial, yet names registered under the domain name system are 
both unique and international. In this context, trademark holders should be provided 
with the same rights and dispute settlement mechanisms as they have in the physical 
world. Questions of competent jurisdiction should also be addressed. 
In the area of geographical indications, it would be desirable either to eliminate 
altogether or, at least, to reduce the number of indications, which US producers can 
continue to use under the grandfather/generic use provisions of TRIPs (Article 24 par. 
4 and 6), such as, for example, Vermouth, Chablis, Champagne, Chianti, Porto or 
Sherry. This would contribute to considerably improving the situation of EC 
rightholders. Bilateral negotiations are underway, but progress is extremely slow. 
The legal protection of databases requiring substantial investment is currently the 
subject of multilateral negotiations in WIPO. The Berne Convention and TRIPs 
provide copyright protection for creative databases, but not as regards databases 
which are not « original » in the copyright sense. The EU and the US should continue 
their bilateral dialogue in order to agree on a common approach to the WIPO 
negotiations, securing a mutually acceptable outcome at the multilateral level as the 
ultimate goal. Community legislation already offers a higher level of protection.6 It 
also provides for the possibility of concluding bilateral agreements on a reciprocal 
basis with countries offering a comparable protection to EU database makers.7 The 
fulfilment of this condition by the US through the adoption of legislation by Congress 
would lay down the basis for the conclusion of a bilateral agreement, securing a 
higher level of protection for EU database makers in the US. 
There is scope to improve the protection of textile and clothing designs. The objective 
should consist of reviewing existing unsatisfactory procedures to ensure a higher level 
of protection through easy, cheap and short procedures. So far, designs are protected 
by copyright law, offering an easy access to protection, but making litigation more 
difficult. Design patents grant better protection, but are less attractive from an 
economic point of view, since they imply considerable costs and are time-consuming. 
The details for a concrete proposal still have to be elaborated, depending on the 
precise definition of interests by EU industry. 
On artists ' resale rights (droit de suite) the Community should continue its regular 
contacts with the US Administration with a view to reinforcing this right in the 
multilateral framework of WIPO. Following the future adoption of a Community 
Directive harmonising the artists' resale right, the adoption by the US of an equivalent 
system would further the establishment of free trade in relation to the twentieth 
century art market. 
Finally, taking into account the sensitivity of the subject matter concerned, any 
broadening of the scope of possible negotiation in the area of intellectual and 
industrial property rights would require further reflection. 
13. INVESTMENT 
On investment it is important to maintain an ambitious approach to develop a 
Multilateral Agreement on Investment (MAI) whose key features are MFN and 
national treatment. This agreement would cover market access and protection for 
investment in both goods and services, as well as for financial assets. As things stand, 
it would not provide, for preferential "treatment" within free trade areas (as mentioned 
earlier the interface between a FTA in services and the MAI would thus need to be 
explored). At the end of that negotiating process, an evaluation should be made of 
what has been achieved and of what more might be done with the US. 
6 EU database makers are guaranteed a sui generis protection under Article 7 of Directive 96/9/EC of 
11 March 1996 which had to be implemented by 1 January 1998. 
7 See Article 11 par. 3 in conjunction with recital 56 of the Directive. 
u 
For example, this might include: 
a. a strong investor-to-state and state-to-state dispute settlement procedure, which is 
the backbone of every bilateral investment treaty. 
b. improved national treatment (e.g. in-state treatment and access to publicly funded 
research and development programmes). 
c. the so-called new issues (such as temporary entry, stay and work of investors and 
key personnel, senior management and boards of directors, employment 
requirements, performance requirements, privatisations, investment incentives and 
corporate practices). 
14. OTHER POSSIBLE COMPONENTS 
i) Trade and labour 
The adoption of core labour standards throughout the world is a shared priority. As a 
minimum, the EU and US should implement fully the existing ILO conventions in our 
respective legal systems. In addition as part of the NTM there should be further 
dialogue between our social partners and greater co-ordination with a view to 
adopting a common position in discussions on these issues in all multilateral fora. 
ii) SMEs and Enterprise Policy 
In the context of the New Transatlantic Marketplace we should promote mutually 
beneficial partnership activities based on practical initiatives with emphasis in fields 
such as improving business environment, access to risk capital, enhance 
entrepreneurship, access to innovation and training and benefiting from trade 
liberalisation opportunities. 
iii) Electronic Commerce 
The NTMA should pay particular attention to the liberalisation of cross-border 
services when they are provided by electronic means. International trade in electronic 
commerce raises a number of questions that, to some extent, go beyond those which 
in the past have been given more relevance in the context of "traditional" trade in 
services. Traditionally, liberalisation of services has put great emphasis on the market 
access of economic operators and on national treatment. Electronic commerce 
requires to go a step further and to place the emphasis on the need for free circulation 
of services. 
Electronic commerce may in many instances not only consist in the provision of 
services across borders but also in the simultaneous provisions of such services to a 
number of different countries. Thus, the electronic provision of one single service 
will have to comply with a multitude of national regulatory standards. As a result, we 
can expect that the major trade obstacles that electronic commerce will face are those 
resulting from regulatory divergences and from legal uncertainty. These obstacles are 
not 'per se' discriminatory and therefore the problems they create may not just be 
solved by the application of the national treatment obligation. 
If the NTMA is to effectively liberalise services provided electronically, it will have 
to consider (beyond the opportunities already provided by the GATS) the need for 
mutual recognition of regulatory standards and, in certain cases, for harmonisation of 
legislation. In addition, the NTMA would have to consider ways to improve the 
transparency and legal predictability of the rules applicable to electronic commerce. 
There is a need to extend discussion on the different aspects of electronic commerce 
to all regions of the world and in a multilateral context, in order to co-ordinate and 
strengthen the activities of the various international fora and to involve as many 
countries as possible as well as the private sector. The Commission recently proposed 
the creation of an 'International Charter on Global Communications'.8 
iv) Data Protection 
In the Joint EU-US statement on Electronic Commerce of 5 December 1997, both 
sides have recognised that the effective protection of privacy with regard to the 
processing of personal data on global information networks needs to be ensured. 
In the EU the privacy of individual as regards the processing of their personal data 
and the free flow of such data is secured by the Data Protection Directive. The 
Directive requires inter alia that Member States shall only allow personal data to be 
transferred to third countries where its adequate protection is ensured. In order to 
avoid existing differences in levels of protections causing disruption to the free flow 
of personal data, it would be desirable to agree to substantive provision as to the 
nature of guarantees necessary to secure an adequate level of protection. 
v) Competition 
With regard to the possible inclusion of competition policy in the NTMA, a 
distinction must be made between anti-trust and state aid. 
On anti-trust, EU and US have successfully developed co-operation in the framework 
of the bilateral agreement on competition policy of 1991. In 1998, this bilateral co­
operation will be strengthened by the conclusion of the EU-US agreement on the 
application of positive comity in the enforcement of competition law. EU-US co­
operation on anti-trust matters will be further developed at its own pace and on its 
own merits, outside the scope of the NTMA. 
Regarding state aid, the US has no control and authorisation procedures similar to the 
ones provided for by Articles 92-94 EU Treaty. The Commission should examine 
before the NTMA negotiation whether there is a need to negotiate disciplines on state 
aid as an element in avoiding distortions of competition. 
8 Communication from the Commission of 4 February 1998 on 'Globalisation and the Information 
Society - The Need for Strengthened International Co-ordination', COM 98(50) final. 
?£ 
vi) Taxation 
Given the growing influence of preferential tax regimes on the location of capital, the 
EU and US should address the issue of harmful tax competition. EU Ministers have 
given a strong signal of determination to tackle this, both within the EU and beyond, 
in the agreement of 1 December 1997. This includes in particular a code of conduct 
on business taxation and action to ensure a minimum of effective taxation of savings 
income. In both cases Member States have undertaken to promote the establishment 
of equivalent measures in third countries. 
E. OTHER ASPECTS OF THE INITIATIVE 
15. IMPLICATIONS FOR EU COMMON POLICIES 
As regards the Common Commercial Policy the NTMA does not envisage the 
preferential removal of tariffs. It could instead result in the total elimination on a 
MFN basis of industrial tariffs, if sufficient reciprocity from third countries were 
forthcoming. The NTMA is aimed at reducing costs for businesses, facilitating trade, 
increasing market opportunities and improving economic efficiency. In this respect it 
is fully consistent with the general goals of the EU Industry Policy as contained in 
Art. 130 of the EC Treaty. 
In the area of trade in goods, the main policy concerned is the Internal Market, in 
particular as regards the free movement of goods. EU policy in this area is based on 
the strict limitation imposed by the Treaty in Articles 30-36/EC on the scope for 
Member States to restrict the free movement of goods. Such restrictions, as interpreted 
by the case law of the European Court of Justice, are confined to a list of imperative 
requirements (such as public health, safety, consumer protection and the environment) 
and are subject to restrictive conditions (such as proportionality). Where Member 
States impose technical requirements in accordance with these principles, free 
movement of goods is maintained by the mutual recognition of laws, supported if 
necessary by approximation of these laws at Union level. This means that a product 
legally placed on the market of one Member State should be accepted on the market 
of another, without having to meet further requirements. There are a number of 
mechanisms aimed at preventing the emergence of new barriers, such as the 
Information Directive 83/189 and Council Decision 3052/95. In the light of the 
importance that the EU attaches to the Internal Market and to its progressive 
introduction in the CEECs (Central and Eastern European countries), any external 
initiative needs to be compatible with those objectives. 
This is not a proposal to extend the Internal Market to the US. However, the 
principles of convergence and of mutual recognition of law, procedure and practice, 
set out in this Communication as the means to reach the Union's objective of freeing 
Transatlantic trade in goods from technical barriers draw upon elements of the 
Internal Market approach. The process of convergence is likely to require some 
change in EU law, procedure or practice. The same would obviously apply on the US 
side. 
2? 
Bilateral convergence should be pursued in close connection with wider international 
co-operation, in line with long-standing EU policy and the recommendations of the 
WTO-TBT (Technical Barriers to Trade) Agreement. Insofar as the development of 
international standards would be involved, mainly in the International Standards 
Organisation (ISO) and the International Electrotechnical Commission (IEC), the 
necessary arrangements are in place for their adoption by the European 
standardisation bodies CEN (Comité Européen de Normalisation), CENELEC 
(Comité Européen de Normalisation Electrotechnique) and ETSI (European 
Telecommunications Standards Institute). Overall, therefore, the results of agreeing 
international standards under the New Transatlantic Marketplace should be 
manageable within the existing structures. 
As far as mutual recognition is concerned, a Mutual Recognition Agreement (MRA), 
covering a number of industrial sectors, was initialled between the EU and the US in 
1997 and is scheduled to be formally concluded and implemented in 1998. This MRA 
only concerns mutual recognition of conformity assessments and provides for goods 
produced on one side of the Atlantic to be tested and certified there, to the technical 
requirements of the other side. Implementation and enforcement of this Agreement 
will necessitate close co-operation with the Member States' authorities. The legal 
relationship between the MRA and an NTMA will need to be clarified. 
In general terms (and more in particular where more than just conformity assessments 
are concerned) mutual recognition of law, procedure and practice will require close 
scrutiny of the regulatory approach followed on either side of the Atlantic, taking full 
account of public policy objectives. The impact of any differences of approach in this 
respect between the EU and the US (for instance as regards the use of preventive 
requirements, compared with resort to producer's liability) will need to be considered. 
The objective of this will be to maintain public confidence that the requirements of 
protection of health, safety, the consumer and the environment, which are at the 
foundation of the Internal Market, are not impaired. 
In the area of trade in services, the NTMA should focus firstly on liberalisation based 
on national treatment and - unlike in the case of the Internal Market - the application 
of host country rules, and on the elimination of restrictions to market access. This 
will imply that within the EU, as of course within the US, remaining restrictions on 
the right of establishment in any form of commercial presence (subsidiaries, branches, 
representative offices, etc.) will have to be eliminated in full conformity with GATS 
rules. 
The NTMA would not alter the rules governing the functioning of the Internal 
Market, nor imply its extension to the US. US firms will benefit from the Internal 
Market rights only once they meet the non-discriminatory criteria established by the 
EC directives (applicable in the same way to EC companies), except in those cases 
where under the NTMA we voluntarily agreed to mutual recognition or 
harmonisation. Third countries companies, once incorporated in Europe, already 
enjoy the benefits of the single market. The general principle that the benefits of the 
n 
internal market are limited to institutions incorporated in the EU and subject to 
harmonised internal market rules would not be altered. 
While US companies wishing to enter the EU market would find it easier, they would 
still need to comply with the rules prevailing in the Internal Market which have to be 
followed by every company wishing to operate in the EU (and which could 
progressively approximate in some areas thanks to regulatory co-operation in the 
NTMA framework). They would also need to comply with rules applicable in each 
Member State where no harmonised regulations at Community level exist. The full 
respect of the public policy objectives pursued by Internal Market regulations and 
national legislation would therefore be preserved. 
Progress in the area of Mutual Recognition (of qualifications, regulations and other 
requirements, supervisory practices, etc.) could result in partially granting benefits 
allowed under the Market to US companies and service providers without the need to 
be subject to the relevant EU rules, but with the equivalent US regulations. This 
would need to be done in such a way that neither imbalances the Internal Market nor 
distorts conditions of competition. In exchange, EU companies would get equivalent 
access to the US market. 
This means that, as the functioning of the Internal Market would not be altered, 
implications for EU common policies would mainly consist of what could flow from 
increased competition in the EU market in the different services sectors, and of the 
need to take advantage of increased market access opportunities for EU companies in 
the US. 
16. INSTITUTIONAL ASPECTS 
Institutional structure 
In order to ensure the effective realisation of the NTM and its proper functioning, and 
taking into account the need to preserve the EU's internal procedures, it will be 
necessary to create some new institutional structures. What exactly these should be 
will become clearer as the negotiation progresses. Their articulation with existing 
NTA structures and other existing EU-US arrangements will need to be carefully 
considered. It may be appropriate to establish: 
• a joint committee structure (either building on existing structures, or adapting 
them) which would oversee the implementation of the Agreement; 
• a mechanism for the efficient settlement of disputes; 
• a consultative body bringing together EU and US parliamentarians. 
Scientific Cooperation 
It may also be appropriate to establish a scientific consultative body, involving the 
widest possible exchange of scientific knowledge in the regulatory process, in 
particular, by bringing together scientists from both sides of the Atlantic. 
»1 
The prevention of disputes 
One aim of the NTM is to prevent trade disputes arising. The Joint Committee would 
play an important role here. At a minimum, dispute prevention should be based on: 
• clarity of the parties'legal obligations under the Agreement; 
• fostering public transparency and support through a structured dialogue, or 
separate dialogues among interested parties (including consumers, labour and 
business); 
• reliance on voluntary standards whenever this is possible without compromising 
public policy concerns; 
• increased regulatory cooperation through notification and consultation procedures 
between the parties' public authorities at all appropriate levels when new laws or 
regulations are being considered; 
• day-to-day administrative co-operation between enforcement and supervisory or 
monitoring authorities on both sides of the Atlantic. 
Domestic implementation of commitments 
The benefits of the NTMA for EU and US citizens and firms rest on effective 
implementation by the parties in their respective legal orders of the commitments 
undertaken in the Agreement. In turn, these domestic law obligations will be 
enforceable by each party's jurisdiction. 
The resolution of disputes arising under the agreement 
In the event of disputes between the parties arising nevertheless, in spite of the 
bilateral and domestic mechanisms described above, there would be a need for an 
effective bilateral mechanism for resolving such disputes. While the precise 
institutional nature of such a mechanism would inevitably depend on the kind of 
obligations it would eventually have to deal with, it should at a minimum: 
• not foreclose the possibility of a consensus-based resolution of the dispute; 
• be based on objective elements; 
• provide legal certainty to the parties (and ultimately to their citizens and firms) as 
to the extent and content of the rights and obligations under the Agreement; 
• be carried out within a reasonably short time-span so as to enhance such legal 
certainty; 
• provide assurances that the outcome will be accepted and enforced by the parties. 
Relationship with WTO dispute settlement 
The above mechanism should be structured in a way which ensures the continued 
integrity and effectiveness of the WTO dispute settlement mechanism. Nor should it 
in any way curtail the right of the parties to resort to WTO dispute settlement. The 
exact relationship between the two mechanisms will depend largely (albeit not 
exclusively) on the relationship between the substantive rights and obligations for the 
parties under the WTO and the NTMA respectively. 
F. CONCLUSION 
The Commission requests the Council to proceed to an early in depth discussion of 
this proposal. 
The Commission will submit draft negotiating directives to the Council for a New 
Transatlantic Marketplace Agreement covering the elements described above. 
"31 
Annex 
KEY ECONOMIC FIGURES 
From an economic viewpoint, the Transatlantic partners enjoy a high degree of 
integration. The EU and the US are each other's single largest trading partner (taking 
goods and services together), and each other's most important source and destination 
for foreign direct investment (FDI). Their economic relationship is characterised by a 
high degree of intra-industry, intra-firm trade and trade in intermediate products. 
Transatlantic firms are increasingly using new and innovative ways of doing business, 
including by means of electronic commerce. 
In 1996 two way trade in goods and services amounted to more than 355 bn ECUs. 
The EU and the US each account for around 19% of each other's total trade in goods 
which in 1996 amounted to 227 bn ECUs. The trade relationship is not only large in 
size, but it is also substantially balanced. Transatlantic trade is concentrated in 
sophisticated high-téchnology products. It is estimated that the latter products 
account for 20% of total EU-US merchandise trade. 
The area of trade in services appears particularly dynamic. Transatlantic trade in 
services figures show that while in 1985 EU-US bilateral trade in services accounted 
for 32% of total bilateral trade, by 1995 this figure had risen to over 38% of total 
bilateral trade. In 1996 the combined cross-border trade in services reached 128 bn 
ECUs. This remarkable increase still leaves considerable scope for trade growth 
given the fact that thé services sector has become the largest and fastest growing part 
of both economies. In fact, services currently account for more than 66% of total 
value added in the EU economies on average, and more than 70% in the US, and for 
comparable shares of employment. In comparison, the share of services in world 
production amounts to above 50%. As a consequence, the EU and the US are the 
world leaders in services trade, accounting for 47% of world exports in services. 
The importance of the EU-US investment relationship is demonstrated by the level of 
FDI stocks, with each of the two sides being the other's largest investor. By 1996 
cross investment stocks between the EU and the US on a historical-cost basis reached 
720 bn USD, by far the largest investment relationship in the world. EU investment 
in the US was valued 372 bn USD and the US investment position in the EU was 
estimated to reach 348 bn USD. The EU therefore is by far the biggest investor in the 
US accounting for 59% of total FDI stock by 1996. At the same time 44% of US FDI 
stock was located in the EU. As with the bilateral trade relationship, investment 
stocks are both balanced and substantial. They have also been growing very quickly 
over the past few years, doubling between 1989 and 1996. The service sector plays an 
increasing role as destination of FDI, with a yearly average share of cross border 
investment flows in services of total FDI in the period 1992-1995 close to 50%, 
although the main beneficiary of EU investment in the US is still the manufacturing 
sector. 


ISSN 0254-1475 
COM(98) 125 final 
DOCUMENTS 
EN 06 11 10 09 
Catalogue number : CB-CO-98-173-EN-C 
ISBN 92-78-32309-8 
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