WRITTEN QUESTION E-2073/99

by Agnes Schierhuber (PPE-DE) to the Commission

(12 November 1999)

Subject: Cartels and WTO compatibility

1. Is the OPEC oil cartel compatible with the WTO rules?

2. If so, what positions will the EU adopt at the WTO Millennium Round in opposing the market-distorting measures taken by the OPEC countries?

3. What view should be taken of the impact that government export organisations in New Zealand, Australia and Canada to which or through which products must be sold (dairy boards, wheat boards, etc.) have on world trade, and how are they compatible with the WTO?

4. What view should be taken of the impact on world trade of such measures as export credits, internal transport subsidies and the fact that US states have different licensing procedures, and how are they compatible with the WTO?

Answer given by Mr Lamy on behalf of the Commission

(22 December 1999)

1. and 2. The problem of the compatibility of the Organisation of petroleum exporting countries (OPEC) with World trade organisation (WTO) rules has never arisen in practice. While the Community considers

that future negotiations on competition should include commitments by governments to treat cartels as a serious breach of competition law, it should be noted that government mandated restrictions do not normally fall within the scope of such competition law disciplines. Of course, any such government mandated restriction has to be in conformity with the existing framework of WTO rules.

3. In order to be compatible with WTO rules, state trading enterprises (STEs), such as those operated by New Zealand, Australia and Canada for certain agricultural commodities, have to respect the provisions laid down in General agreement on tariffs and trade (GATT) Article XVII. In defining its approach to the new round in relation to agriculture, the Community has indicated that the operation of STEs should be examined, and in particular when the various forms of export support are addressed.

4. The rules for export credits Arrangement on guidelines for officially supported export credits have been fixed in a forum which has almost all Organisation for economic cooperation and development (OECD) countries as members (e.g. Turkey and Mexico are not members). The point of view has always been that those most interested in a strong discipline in this field, are probably those countries that give export credits and export credit guarantees on insurance rather than those that primarily receive the credits. The rules cover sales of capital goods on credit terms of two years or more. In September 1994 it was, however, agreed that negotiations on credit terms for agricultural products would start as soon as the Uruguay round was in place.

Article 10§2 of the Uruguay round agreement on agriculture foresaw the development of internationally agreed disciplines to govern the provision of export credits, export credit guarantees or insurance programmes, as part of the Marrakech deal on export competition commitments. Despite this provision, it has proved impossible to reach, during the implementation period of the Uruguay round, an agreement on such disciplines for agricultural products at the OECD, due to resistance from the United States. Therefore, the Community has indicated in its mandate for Seattle that the issue of export credits to agriculture also needs to be taken up in the framework of WTO as an example of non-implementation, when addressing export competition measures for agricultural products.

As far as internal transport subsidies are concerned, to the extent that these relate to agriculture, they would need to respect, and be notified under the relevant provisions of the agreement on agriculture. However, it should be recalled that one of the more important schemes in this respect, the so-called Crow Rate operated by Canada, which was a form of export subsidy, has now been withdrawn.