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COM(82)470
Vol.1982/0158

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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM(82)470 final
Brussels,2August982
FOROFFICIAL USEONLY
FRENCHMEMORANDUM ONSTRENGTHENING THE
INSTRUMENTS OFTHECOMMONCOMMERCIAL POLICY
(Communication fromtheCommission totheCouncil)
COM(82)470final

FRENCHMEMORANDUM ONSTRENGTHENING THEINSTRUMENTS OFTHECOMMON
COMMERCIAL POLICY
TheCommissionwelcomesthepresentation bytheFrenchGovernmentofits
memorandum onthestrengthening ofthecommoncommercialpolicy.Itdoes
sohavingparticularly inmindtheconclusions oftheEuropeanCouncil
on29Junethatitwasofthehighestimportance "tomakesurethatthe
Community,inmanagingtradepolicy,actswithasmuchspeedandefficiency
asitstradingpartners".Forinordertobeeffectivethetrade
policyoftheCommunityneedstobesubjecttoperiodicreview;andit
isofequalimportancethattheMemberStatesaswellastheCommission
aresatisfiedthatthemeansattheCommunity'sdisposalinthisfield
areadequateandareeffectively used.
TheFrenchmemorandumreferstofurthermeasuresforexportpromotion
butessentially dealswithtwofields-linkedgenerallywith-.the
credibility oftheCommunity'sefficacityindealingwit-htradepolicy-
surveillance ofimportsintotheCommunityandthepossibility ofa
regulationequivalenttoSection301oftheUnitedStatesTradeAct1974,
%asamendedbytheTradeAgreementAct1979.Insofarasthefirst
pointisconcerned-tradepromotion-aseparatememorandumwillbe
submittedlater.Thisnoteconcentrates ontheothertwosubjects:
statisticalsurveillance andanArticle301typeaction.
Statistical surveillance
TheFrenchmemorandumurgesthattheCommunitysystemofstatistical
surveillanceofimportsshouldbestrengthened andsuggestsinparticular''
thattheCouncils+iouldenvisagearegularanddetailedexamination
oftheinformationflowingfromthisexercise,whichwouldensurethat
webetterappreciatedthecausesofthedevelopmentofimportsand
theirconsequences fortheEuropeaneconomy.

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4.Onthesethefollowingpointscanbemade:
a)Communitysurveillance ofimportsexistsatpresentinalimited
.numberofsectors-motorvehicles,televisionsets,television
tubesandcertainmachinetoolsfromJapan,textiles,steel,
andcertainotherareas,forexamplefootwear.
b)Thecollectionofthisdataleavesacertainamounttobedesired.
Thestatistical performance (sincewedependondatafromMember
States)variesbyMemberState;complications resultfromthe
confidential natureof.certaininformation whichwereceivefrom
MemberStates;theinformation wegetisslowtoarriveandnot
alwayseasytofittogether.Itisimportantthatgeneralagreement
isreachedthattheflowofinformation shouldbeimproved.It
mightbeagoodideafortheCommunitytohaveasystemforgathering v
datadirectfromfirmsandadministrations intheMemberStates.
%*
c)Theinformation securedisusedforindustrialpolicyappreciations .
Information onsectorsofparticularinterestasregardsimports
fromJapanisamajorinputintothecurrenthigh-levelgroup
workingonanindustrialandcommercialstrategytowardsthatcountry.
Andtheinformation receivedontextilesandonsteelismuchused
inthestudiesundertaken intheCommission onthefutureofthese
industrieswithparticularreferencetotheinternational agreements
beingconcludedinthesesectors.
d)UnderthenewprocedureofRegulation (EEC)No288/82theCommission's
servicescanatanytimeattherequestofaMemberStatesetin
motionall"thestepsforcarryingoutafullenquiry,ifnecessary.
5.ButtheessentialpointoftheFrenchmemorandum-asweunderstandit-
relateslesstotherefinementofstatisticalsurveysthantotheanalysis
andfollowupofthedatacollected.AndheretheCommissionagrees
withtheFrenchauthorities astothedesirability ofreportingperiodically

-3-
ondevelopments insectorssubjecttosurveillance .Ittherefore •
proposestofollowupthatsuggestionandinstructthedepartments
concernedtocollaboratewiththeMemberStates'expertsonaregular
reviewoftheconclusionsofsuchtrade,industrialandeconomic
policyreports.ThustheCouncilwill,wherevernecessary,beina
positiontoexaminethesituationandwillreceivewhateverCommission
proposalsarecalledfor.
Section301
6.AnnexedisananalysisofthetextofSection301oftheUSTradeAct
1974/1979. .
7.Insummary,theprocedureenvisagesthepossibilityofapetitionfor
actionbyanyoneconcernedandamaximumof45daysfortheUnited
StatesRepresentative forTradeNegotiations (USTR)todecidewhether *
ornottoproceed.If'itisdecidedtoproceed,informalconsultations -
possiblylaterformalconsultations -areheldwiththethirdcountry
**
concerned.Theseconsultations mayresolvetheproblem.Iftheproblem
isnotresolved-seventotwelvemonthsafterinitiationofthe
«
investigation -asubcommittee oftheUSTRthenmakesarecommendation
tothePresidentandifnecessarytoCongressforappropriate action.
Thisappropriateactioncouldembracewithdrawaloftariffconcessions
orothercountermeasures .
8.HowfararetheseproceduresrelevantandusefulinaCommunitycontext0
ItmustfirstbesaidthatArticle301isessentially aninternal
procedure,whichdoesnotaddanythingtoUnitedStatespowersunder
theGATTfordealingwiththirdcountries.Butbytheseprocedures two
objectivesarefulfilled.Thefirstisthatacertainpressureis
maintainedonthetradingpartnersoftheUnitedStatesinthesenseof
anobviousandconstantthreatagainsttradepracticeswhichcouldbe
heldtobeagainstUnitedStatesinterests.Inthe.secondplaceit

-4-
doesshowindustrythattheUnitedStatesauthoritiesareonconstant
alerttodefendUnitedStatesbusinessinterests.Italsogivesthe
Presidentthisdefensivepossibility,whereasundertheConstitution
itisamatterforCongress.
However,itshouldbenotedthat:
-todateveryfewcaseshavebeendealtwithunderSection301;25
inallsincethelegislation wasintroducedin1974,anaverageofwith
threeayear,tobecompared/thethirtyorsoanti-dumping enquiries
eachyearintheUnited.States,andaboutfortyintheCommunity;
-nodirectretaliatory measureshaveeverbeentaken.However,itis
i
clearthatinsomecasesthelodgingofacomplainthasexerted
pressuretoputanendtothepracticescomplainedof.
9.TheCommissionsharesinfulltheFrenchGovernment "*sconcernthatthe^
Communityshouldhaveeverymeansofdefendingitsinterestsas
effectively asitsmaincompetitors do.
Inthisconnection,itwoulddrawattentiontothetradepolicymeasures
undertakenbytheCommunityinrecentyears,andinparticular :
-theincreasingrecoursetoanti-dumping proceedings,towit:
3proceedings openedin1975
14proceedings openedin1977
48proceedings openedin1981
-thefactthateverycomplaintlodgedbyEuropeanindustryregarding
subsidizedexportsfromthirdcountrieshasresultedinthespeedy
initiationofananti-subsidy investigation ;fivesuchinvestigations
havebeencompleted

since1977;threeledtoarrangements withtheexportingcountry
concerned,oneresultedintheintroduction ofacountervailing duty
1andthefifthinafindingthatexportswerenotbeingsubsidized .
Afurtheranti-subsidy investigation hasjustbeeninitiated;apart
fromtheprecedingcases,theCommissionhasreceivednoapplications .
-protectionforcrisisindustriessuchastextilesandsteel,in
theformofarrangements negotiated bytheCommissionwiththird
countries.
10.Havingsaidthat,theCommissionagreeswiththeFrenchGovernment
thatCommunityprocedures maysometimesleadtoineffectiveness in
thelegitimatedefenceofourcommercialinterests.Inpartthis
weaknessisinherentintheverystructureofaCommunityoften
sovereignstates,whoseparticulartradeinterestsdonotalwaysquite
coincide.Thisproducesaweaknessinthedecision-making process
whichputsusinanunfavourable positioninrelation.tQourmain
tradingpartners.WhentheCommunityisconsidering countermeasures ,
theidentification oftheproblemandevenadecisioninprincipleto
actiseasierthanagreeingpreciselyonwhatcountermeasures areneeded
Forinstance,inarecentcaseaffectingEEC-Australia relationsitwas
agreedthatcountermeasures underArticleXIXmightbetaken.Itproved
however,verydifficultformonthsonendforagreementtobereachedon
theexactnatureofthesemeasures.Assoonasanylistofproductsis
producedallMemberStateswillfindreasonsforrejectingsomeorall
oftheproposalsadvanced.Andthisclearlydoesnotimprovethe
credibilityoftheCommunityinsofarasthirdcountriesareconcerned.
11.Whatisneededtherefore,intheCommission'sview,issomechangein
decision-making procedureswhich,toquotetheEuropeanCouncil's
conclusionsof29June,would"makesurethattheCommunityinmanaging
tradepolicyactswithasmuchspeedandefficiencyasitstrading
partners".
Onepossiblewayofspeedingupthedecision-making procedurefortrade
policymeasuresotherthanthose.underthecustomaryinstruments (anti-
dumping/anti-subsidy,safeguards)wouldbethefollowing:
1
Asixthcasewassettledbeforetheinvestigation evenstarted.

-wheneveracomplaintisLodged(asregardse.g.retaliatorymeasures
underGATT,etc.),theCommissionwillsubmitproposalstotheCouncil
withinagivenperiod;
-theCouncilinturnwillthenhavetocometoadecisionwithina
givenperiod;
-ifadecisionisnottakenwithintheprescribedperiod,theCommission
proposalwillbedeemedtohavebeenadopted.
Adecision-making procedurealongtheselineswouldhelpspeedup
considerably theimplementation ofcommercialpolicymeasures,and
increaseitsefficiency.
Thatstillleavesthequestionoftheextenttowhichitmightalsobe
agoodideatoincorporateintotheCommunitymachineryelements
comparabletotheSection301complaintsprocedure.
«*
TheCommissionfindstheFrenchGovernment'ssuggestionherevery
interesting .
«
Toboosttheeffectiveness ofCommunitytradedefencesaformalprocedure
couldbeenvisagedwherebyinterestedparties(Communitymanufacturers ,
manufacturers' associations andsoon)couldlodgecomplaintswiththe
Commission.Complaints,whichwouldhavetocompriseevidenceofthe
existenceofabnormalpracticesandofinjury,couldthenbeassessed
bytheCommission andsubsequently examinedbyanadvisorycommittee
composedofMemberStates'representatives (similartotheoneonanti-
dumpingmeasures).Oncethecommitteehadbeenconsulted,formal
proceedings couldbeopenedandtheexportingcountrynotified.
However,itshouldbeborneinmindthat:
-aformalcomplaintsprocedureisalreadyavailabletomanufacturers
andassociations todealwithdumping,subsidyorsafeguardcases.
Therrfbstimportantareas,therefore,aresatisfactorily coveredby
existingCommunityrules,

-7-
-inothercases(e.c}.foreigncompetition onnon-Community markets,
unjustified importrestrictions inthirdcountriesetc.),Community
firmscanalsoLaythematterbeforetheCommissioneitherdirectlyor
throughtheirnationalgovernment.Sofar,however,itmustbesaid
thatCommunityindustryhasmadelittleuseofthisfacility,
-increasingly,theCommissionitself,inconjunctionwiththeMember
Statesandindustriesconcerned,hasbeentakingtheinitiativein
complaining ofcertaincommercialpracticesfollowedbytrading
partners.SofartheCommission'smostnoteworthystepinthisdirection
hasbeenitscomplaintaboutJapanesetradepracticesunder
ArticleXXIIIofGATT.
Insum,theCommission -feelsthattheCommunityalreadyhasatitsdisposal
arangeofcommercialpolicyinstruments allowingeffectivedefencewhere
needed.
Themainthingisthat:
-theCommunityshouldwieldtheseinstrumentsasdeterminedly asits
competitors do;
-itshouldbepreparedtodefenditslegitimateinterestsvigorously
andtenaciously ;.
-itshouldattackallrestrictive,discriminatory orunfairpractices
onthepart-ofthirdcountries,eitherinbilateralnegotiations or
withinthe6ATTframework.
TheCommissionispreparedtostepupitsowneffortsinthisdirection,
inparticularbyconsideringwhetheraformalcomplaintsprocedure
comparabletothatinSection301shouldbeintroduced.
Itcannothopetosucceedinthis,however,unlessfullsupportis
forthcomingfromMemberStates'governmentsandbusinesscircles.

Tradepolicycanbecomemoreeffectiveonlyif:
-theCommunitytakesamuchmoreconsistentstandindefenceofits
tradinginterests;
-thedecision-making machineryinthisfieldisimproved.
Thesearetheconsiderations theCommission wouldoffertheCouncil
regardingtheFrenchGovernment'smemorandum onstrengthening the
instruments ofthecommoncommercialpolicy.

ANNEXTOTHECOMMISSION COMMUNICATION ONTHEFRENCHMEMORANDUM
NOTEONSECTION301
1.Summary
Followingthepresentation bytheFrenchGovernmentofamemorandum on
strengthening theinstruments ofthecommoncommercialpolicy,the
CommissionhascarriedoutananalysisoftheUSSection301andhas
investigated whetheritmightbeworthwhiletointroduceprovisions
alongsimilarlinesintheCommunityrules.
Itappearsfromtheanalysis,assetoutbelow,thatSection301isan.
essentiallyinternalinstrument,whichdoesnotconferanyadditional
right,whetherundertheGATT,theGATTcodesoranyotherinternational
agreement.Nevertheless,ithastobeadmittedthatSecttofi301does
givetheUSAdministration additionalmeansofdissuasionandofexerting
pressurevis-a-visthirdcountriesaswellasthepossibilityofdefusing
andchannellingthepressuresexertedbyitsindustrybygivingthe
latterarightofcomplaint.
Itisclear,however,thatthisprocedurehasthedrawbackofreducing
themarginofmanoeuvrethattheAdministration hasforassessingand
decidingonthedesirability ofbringinganactionundertheGATT.

-2-
2.Description,objectives anduseofthesystemintheUSA
2.1.Description
Section301givestheUSGovernment,oncepresentedwithacomplaint,
thepowertotakeanyappropriate andpracticable measure:
-intheeventofthefailurebyaforeigngovernmenttorespect
atradeagreement (e.g.GATTCodesonsubsidiesandcountervailing
duties,standards,governmentprocurement,etc.)
-againstanyact,policyorpracticeofaforeigngovernment :
.whichisincompatible withatradeagreementorwhichcancels
outinanyotherwaythebenefitsresultingfromthesaid
agreement (e.g.quasi-subs-idiessuchasrestrictions onthe
exportation ofrawmaterialstherebypromoting.exportsof
processedproducts);
«
.whichisunjustifiable ,unreasonable ordiscriminatory or
reducesUStrade(e.g.deflectionoftraderesultingfroma
voluntaryrestraintagreementbetweentwothirdcountries).

-3-
2.2.Ana_L^sis
At.theinternallevel,whatSection301doesistotransferpower
totheexecutivefromCongress,whichbyvirtueoftheUSConstitution
normallyhasjurisdiction over"theregulationofcommercewith
foreignnations".Obviously,thistransferofpowersisapre­
conditionforeffectiveactioninthisfield.
InexternaltermsSection301,byreferringnotonlyto"unjustifiable "
(i.e.illegal)butalsoto"unreasonable "practicesseemstogo
beyondthescopegiven-theUSAunderGATTandothertradeagreements.
Fromthestandpointofinternational law,however,itisclearthat'
nocountrymaywithdrawfrominternational obligations byitsown ,
unilateralact.Itcan,ofcourse,stillactunilaterally infields
notcoveredbyinternational agreements.Inthatregard, -
Section301merely"makesexplicitthefreedomofactionofany
government wherethatfreedomisnotrestrictedbyinternational
**
obligations .
Inproceduralterms,throughtherighttocomplaintandtherightto
ahearingenshrinedinitsSection301setsupaninternalchannel
givingdirectaccesstothePresidenttothosedirectlyaffected
bythepracticesofforeigncountries.
2.3.§ummar;£_of_the_Section_301_grocedure_i n_the_USA
Acomplaintcanbesubmittedbyanyinterestedparty.TheUnited
StatesTradeRepresentative (USTR)thenhas45daystodecide
whethertoopenanenquiry.
IntheeventoftheopeningofaSection301procedure,theUSTR
mustholdconsultations withthethirdcountryconcerned/Atthis
stage,theUSTRhasafairlywidemeasureofdiscretionenablinghim
toterminatetheenquiryifhecanshowthattheconsultations have
managedtoresolvetheproblem.Attheendoftheenquiryorthe
disputesettlementprocedureundertheGATT,theUSTRmustpresent
hisrecommendation tothePresidentwithinaperiodofbetweenseven
andtwelvemonthsdependingonthegovernmentpracticebeing

-4-
challenged.ThePresidenthascompletediscretionindeciding
whethertofollowtherecommendation orignoreit;however,his
decisionmustbetakenwithin21days.Ifhedecides ,toact,the
Presidentmayintroduceanyretaliatorymeasurethatappearsappropriate
tohim,includingwithdrawingthebenefitofanagreementfromthe
countryinquestionorintroducingtraderestrictions .
Since1975,approximately 25caseshavebeendealtwithunder
Section301,eightofthesebeingagainsttheCommunity(7agricultural
casesand1steelcase).Nodirectretaliatorymeasurehasever
been"taken.Ontwooc-casions,thePresidentrecommended,andobtained
fromCongress,theincorporation inUSlegislationofmeasures
similartothosethathadbeenthesubjectofacomplaintunder ,
Section301.
ν
Onanumberofoccasions,thebilateralconsultations andthe
consultations initiatedintheGATTfollowingthesubmissionofa'
**
complainthaveconstitutedsufficientmeansofexertingpressurefor
thethirdcountryconcernedtoeliminatethepracticesdeemedto«.
becausinginjury.
3.Shouj.d_the_Communi^_ha ve_an_2nstrument_simUar_to_Section301?
Admittedly,Article113o-ftheEECTreatygivestheCommunitythe
samepowersasthePresidentoftheUnitedStates.Theinteresting
point,however,isthatthosepowersweredelegatedtothePresident
bythebodyonwhichtheywereconferredbytheUSConstitution,
thatis,Congress.
InsomefieldstheCommunityhasalreadyacquiredinstruments allowing
effectiveactioncomparabletothatunderSection301.
Asregardstheapplication ofcountervailing dutiesinthecontextof
theprocedureprovidedforinPartIoftheCodeonsubsidies (usual
courTtervailingdutyinvestigations ),machinerysimilartoSection301
wouldaddnothingtothepossibilities availableunderRegulation
(EEC)No3017/79.

Asregardstheapplication ofanti-subsidy countermeasures (whether
affectingtheinternalmarketortheconditionsofcompetition in
thirdcountrymarkets)undertheprocedureprovidedforinPartII
oftheCodeonsubsidies (settlementofdisputes/ArticleXXIII),a
Section301typeinstrumentwouldaddnothingtothepossibilities
currentlyavailabletotheCommunityundertheGATTagreements .
Asregardstheapplication ofcountermeasures undertheprovisionsof
aGATTcodeotherthanthatonsubsidies,theanalysisleadstothe
sameconclusionaswiththepreviouspoint.
Lastly,asregardstheapplication ofcountermeasures inresponseto
practiceswhichareinjurioustotheCommunity'sinterestsbutare
notexplicitlycoveredbyaninternational agreement,amechanism
comparabletoSection301,whileitwouldnotconferanynewpower
orrightontheCommunity,couldincertaincircumstances both
increasethecredibility andpowerofpersuasionoftheCommunity
vis-a-visitspartnersandalsoincreaseit.sinternaleffectiveness .
TheonlyconditionisthattheCommunityshouldhavethewilland♦
couragetoprovideitselfwithadecision-making systemworthyof
thenameincontrasttotheslownessandshortcomings ofthe
presentsystem.