establishing the position to be taken by the European Union within the Ministerial Conference of the World Trade Organization as regards an extension of the moratorium on customs duties on electronic transmissions and the moratorium on non-violation and situation complaints

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

The objective of this proposal is to allow the Union to join a consensus in the World Trade Organisation (WTO) on the adoption by the WTO Ministerial Conference of two decisions relating to (1) a moratorium on customs duties on electronic transmissions ("e-commerce moratorium") and (2) the application of subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 on "non-violation and situation complaints" to the settlement of disputes under the Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”).

The Union has always supported the extension of the "e-commerce moratorium" because e-commerce is a service and therefore it should not be subject to customs duties. Further, the moratorium provides significant economic benefits to the Union companies.

The TRIPS Agreement laid down a moratorium of five years from its entry into force in 1995 on the application of subparagraphs 1(b) and 1(c) of Article XXIII on non-violation and situation complaints to consultations and the settlement of disputes under TRIPS (Article 64 (2) TRIPS). During that period, no consensus was reached on the scope and modalities for non-violation and situation complaints pursuant to Article 64 (3) TRIPS.

After the initial five year period expired the WTO Ministerial Conference has continuously extended the suspension by consensus decision, pursuant to Article 64 (3) TRIPS, and it did so until its next session. The last extension of 11 December 2013 lasts until the Ministerial Conference in 2015. The WTO Ministerial Conference Decisions directed the Council for TRIPS to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to its next Session. The Decisions also stated that it was agreed that, in the meantime, Members will not initiate such complaints under the TRIPS Agreement.

So far no consensus was reached on scope and modalities.

The proposal provides that the Council authorises the Commission to take a position on behalf of the European Union within the WTO to join a consensus as regards the extension of the "e-commerce moratorium" on an indefinite basis (or at every Ministerial Confernce where the e-commerce moratorium is proposed for adoption ), and the extension of the moratorium on non-violation and situation complaints under TRIPS Agreement until the WTO Ministerial Conference takes a decision on the scope and modalities of the non-violation complaints.

•Consistency with existing policy provisions in the policy area and with other Union policies

The initiative is fully consistent with existing policy provisions. Similar decisions have been prepared for previous WTO Ministerial Conferences, including most recently for the 9th WTO Ministerial Conference in 2013.

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

Article 218(9) of the Treaty on the Functioning of the European Union (TFEU) provides that when a Decision having legal effects needs to be taken in a body set up by an international agreement, the Council, on a proposal from the Commission or the High Representative of the Union for Foreign Affairs and Security Policy, shall adopt a Decision establishing the position to be adopted on the Union’s behalf. The extension of the moratoria falls under this provision as the Decision is taken in a body set up by an international agreement (the WTO Ministerial Conference) affecting the rights and obligations of the Union.

The envisaged e-commerce moratorium relates to matters falling within the scope of the common commercial policy (Article 207 TFEU) and in particular, to obligations under the General Agreement on Trade in Services. Similarly, the envisaged moratorium on non-violation and situation complaints relates to matters falling within the scope of the common commercial policy, in particular to obligations under the TRIPS Agreement.

3.SCOPE OF THE PROPOSAL

Consistent with Article 218(10) TFEU, the European Parliament will be immediately and fully informed.

2015/0234 (NLE)

Proposal for a

COUNCIL DECISION