WRITTEN QUESTION E-0794/96 by Dominique Souchet (EDN) to the Commission (3 April 1996)

Subject: WTO world conference

One of the main aims of the forthcoming Euro-Asian summit will be to prepare the first WTO world conference, to be held in Singapore in December 1996.

The issue of social clauses is to be raised, even though the Asian countries want it to be dealt with briefly. Commissioner Sir Leon Brittan recently indicated that he considered it necessary to revive the debate on respect for social clauses, while taking care not to give offence to Asian countries by imposing a social diktat.

Sir Leon Brittan has stated that the European Union does not intend to make its trade relations dependent on emerging countries' respect for minimum social clauses and that it is not a question of challenging the low wage level which represents a justified advantage for these developing countries.

How, in these circumstances, does the Commission intend to tackle the competitive disparities which penalize access by our manufacturers to Asian markets?

Is the creation of a European database designed to give our undertakings a clear picture of remaining customs barriers with Asia and the best means of surmounting them not a totally inadequate initiative, bearing in mind the urgency of the situation facing our labour-intensive industries, which will be required to shed more than 850 000 jobs in the coming 13 years in the textiles and clothing sectors alone if nothing is done?

Is it not necessary to take a much more resolute line with a view to restoring fair competition by demanding substantive negotiations on the social clauses, making European anti-dumping procedures more effective and introducing additional customs duties for Asian products whenever necessary?

Answer given by Sir Leon Brittan on behalf of the Commission (29 May 1996)

The Commission put forward 'a market access strategy for the European Union' in a communication of 14 February 1996. ((COM(96) 53. )) What it proposed was not merely the creation of a database, but a systematic approach to dismantling barriers to the Community's trade and external investment, involving coordination of the protagonists.

Adopting such a strategy naturally presupposes that the Community will fulfil its multilateral and bilateral obligations; otherwise, it will face dispute settlement procedures possibly culminating in demands for compensation or even retaliation by its trading partners, which could seriously damage Community exports and employment.

The proposed introduction of additional customs duties for Asian products originating in member countries of the World Trade Organization (WTO) would constitute a breach of Article 1 of the General Agreement on Tariffs and Trade (GATT), which makes customs tariffs subject to the 'most favoured nation' clause. The same principle applies to countries with which the Community has bilateral agreements based on granting 'most favoured nation' status.

Moreover, the fact that a country's low wage level gives it a competitive edge does not in itself constitute dumping under Community legislation, which must also adhere to the Community's obligations under WTO agreements. In cases that do call for antidumping action, the Commission sees to it that the legislation is firmly enforced.

With regard to trade and social clauses, the Commission believes that the debate should be pursued with all the countries concerned in a multilateral forum and, to this end, proposed in its communication that the Singapore ministerial conference set up a WTO working party on the subject. In the Commission's view, the debate should cover respect for certain basic standards set out in the International Labour Organization conventions, including freedom of association and free collective bargaining, the abolition of forced labour, non-discrimination in employment and an end to child labour. The Commission has made it clear that it has no wish to challenge the comparative advantage derived by developing countries from low wage costs, which would in any event jeopardize all hopes of successful multilateral discussions.

Moreover, the notion that the Community should promote respect for basic social rights has already been put into practice internally as a feature of the Generalized System of Preferences (GSP) scheme adopted by the Council in December 1994.