COMMUNICATION FROM THE COMMISSION to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - The Global Challenge of International Trade: A Market Access Strategy for the European Union
Date: 1996-02-14
Institutions: European Commission
Subjects: World Trade Organisation, common commercial policy, international trade, liberalisation of trade, market access

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  14.02.1996 
COM(96) 53  final 

COMMUNICATION  FROM THE COMMISSION 

TO THE COUNCIL, THE EUROPEAN  PARLIAMENT, 
THE ECONOMIC AND SOCIAL COMMITTEE 
AND THE COMMITTEE OF THE REGIONS 

The Global Challenge of International Trade: 
A Market Access Strategy for  the European  Union 

14 February  1996 

The Global Challenge of International Trade: 
A Market Access Strategy for  the European  Union 

1.  Introduction:  The  Need  for  a Market  Access  Strategy 

2.  The  Objectives  of  a Market  Access  Strategy 

3.  The  Policy  Instruments  Available 

(i)  The  multilateral  level 
(ii)  The  bilateral  level 
(iii)  Flanking  policies 

4.  Steps to  Establish  A  Concrete  Market  Access  Strategy 

(i)  The  Bilateral  agenda 

(a)  The  identification  of  trade  barriers 
(b)  How  to  eliminate  those  barriers 
(c)  Finding  greater  coherence  between  the  different  approaches 

(d)  Improving  co-ordination  between  different  actors 

(ii)  The  Multilateral  agenda 

(a)  Consolidating  the  Uruguay  Round  acquis 
(b)  Further  market  opening  actions 
(c)  The  new  areas  of  liberalisation 

5.  Conclusions 

14.02.1996 

Communication  to the  Council,  the  European  Parliament,  the  Economic  and 
Social  Committee  and the  Committee  of  Regions 

The Global Challenge of International  Trade: 
A Market Access Strategy for  the European  Union 

1. 

Introduction:  The  Need  for  a Market  Access  Strategy 

1.  Much of the prosperity of the European Union depends on foreign  trade and  investment. 
The  1993-1994  economic  recovery  has been  led by  steady  export  growth.  The  Union  has an 
open  economy  where  many  jobs  depend  directly,  and  even  more  indirectly,  on  exports.  It 
accounts  for  one  fifth  of  world  trade  in  goods.  And  direct  investment  by  Europe  in  third 
countries  accounts  for  over  one  third  of  foreign  direct  investment  worldwide.  The  stock  of 
foreign  direct  investment  in  Europe  amounts  to  460  bn  $,  and  foreign  investment  supports 
directly millions of jobs in the Union. It is for this reason that the common commercial  policy 
is a keystone of the EC Treaty, and that a wide range of actions and instruments to  implement 
it have  been  put  in place. 

2. 
This  openness  of  the  European  economy  to  international  competition  enables  firms  to 
find goods and services for intermediate consumption and to finance themselves under the best 
conditions world-wide, thus enhancing their international  competitiveness and creating jobs in 
Europe.  It  also  facilitates  greater  variety  of  supply  for  consumers  and  therefore  innovation. 
However,  market  opening  is  likely  to  be  accompanied  in  the  years  ahead  by  increasingly 
competitive  pressures  from  imports  on  the  Community  market  and,  as  in  the  past,  by  the 
problems  and  friction  inherent  in  any  restructuring  process.  This  should  be  seen  in  a  more 
general  economic  context,  where  in  a  globalized  economy,  new  relocation  based  on 
comparative  advantage  and  free  trade  may  bring  activities  back  to  Europe  at  large  with  a 
positive fall  out on business development  and employment  in the EU.  Request for  protection 
or  government  support  should  therefore  be  evaluated  against  the  background  of  the  greater 
growth  potential  from  an outward  looking policy,  which will  progressively  ease the  need  for 
positive social measures accompanying the adjustment effort.  Therefore, market opening  offers 
considerable  benefits  to  both  business  and  citizens. 

3. 
European  firms  are exposed  to a much  greater  degree  of  competition  than  before:  they 
should have the opportunity to compete on equal terms, especially on foreign  markets, and not 
to  be  hindered  by  trade  barriers.  As  the  Commission's  White  Paper  on  Growth, 
Competitiveness  and Employment  stressed  l\  open markets worldwide  are one of the keys to 
securing faster  growth  and more rapid job creation  in Europe. If European  industry  is to reap 

1)  Chapter B.II.6. 

the  full  benefits  of  improved  competitiveness  policies  at  home  and  to take  advantage  of  the 
economies  of  scale  that  operating  in  an  increasingly  integrated  market  would  imply,  the 
European  Union  must  shape  its approach  to  international  economic  relations  with  a view  to 
improving  the  climate  in which  European  firms  operate. 

Further  trade  liberalisation  is  contributing  to  the  process  of  a  gradual  globalization  of 
4. 
markets  and  companies.  Trade  in  goods  and  services  is  increasingly  accompanied  by 
investments and networking operations between companies. Exchanges more and more include 
intra-firm  trade  in  semi-manufactures,  and  global  resourcing  aims at an  optimal  allocation  of 
research,  development  and  production  facilities.  Outward  processing  trade  using  local 
advantages for lowering production costs or the logistics of distribution systems is turning even 
medium  sized  companies  into  global  players. 

5.  Aiming  at  higher  productivity  at  lower  costs,  international  industrial  co-operation  is 
generating  inter-company  links  in  the  form  of  strategic  alliances.  Global  competitiveness 
demands the constant adaptation  of companies to the ever freer  circulation  of goods, services, 
capital  and  persons.  The  creation  of  a  favourable  environment  for  the  optimal  use  of  local 
advantages  is  a  declared  objective  of  the  Commission's  1994  Communication  on  industrial 
competitiveness. 

To achieve  competitiveness  in the global  economy,  EU  companies  need  both  to  ensure 
6. 
their presence  in third  country markets and fully  exploit the advantages of the  Single  Market. 
The  regional  integration  process  and  the  rise  of  huge  geographic  markets  like  China  require 
an  active  presence  of  companies  and  increased  co-operation  with  local  partners  in  order  to 
secure  future  market  shares.  Such  initiatives  of  the  private  sector  have  to  be  encouraged. 

The Single Market facilitates the process of economic integration and structural changes, 
7. 
aiming  at  a  level-playing  field  of  start-up  conditions  for  business.  Benefits  to  foreign 
competitors  from  the  liberalisation  of  the  internal  market  should  be  matched  by  efforts  to 
ensure EU business opportunities on third country markets. Thus the Commission's role in the 
field  of promotion  of international  trade and co-operation  needs to be reviewed  in the light of 
changing  conditions  of  markets  in  Europe  and  world-wide. 

European  firms  encounter  a multitude of obstacles abroad of  a very  different  nature  2). 
8. 
Therefore,  in  addition  to  carrying  out  adequate  policies  to  promote  the  international 
competitiveness of European  industry, the Community must strive to achieve  improved market 
access  in third  countries  in parallel  to the  continued progressive  opening  of  its own  market, 
both  by ensuring  the  full  implementation  by  its partners  of  their  Uruguay  Round  obligations 
and  through  other  market  access  actions. 

2)  For  instance,  customs duties  which  in some  instances  may  be  considerable,  and  which  in any  case  involve  significant  administrative 
costs caused by compliance with custom formalities; outright violations of negotiated agreements;  "unregulated" practices even  in areas 
where  trade  rules  have  existed  for  a  long  time  (e.g.  the use of  high  export  taxes  to get  round  the  prohibition  of  export  restrictions  in 
Article XI GATT or the use of differential  export taxation to avoid  subsidies disciplines);  "abuses" of  legitimate  practices  (e.g.  use of 
a differentiated  tariff  structure  between different  stages of  a product cycle,  not to protect the domestic market,  but to affect  the  supply 
of  inputs and  favour  domestic  processing/export  of the finished  product;  various other  forms  of obstacles  to access to  raw  materials); 
obstacles  in  the  "new"  areas  of  trade  rules  (barriers  concerning  intellectual  property  rights  obviously  affect  trade  in  goods;  barriers 
concerning  trade  in  services  have  a  relevance  of  their  own,  but  also  affect  trade  in many  products,  where  deals  include  a  very  high 
services  component:  aircraft,  shipbuilding,  etc.);  "invisible"  obstacles,  and  in  particular  insufficient  or  non-existent  enforcement  of 
national  laws  and  regulations  which,  on  the  face  of  it,  purport  to  implement  third  countries'  international  obligations,  as  well  as 
insufficient  (even  non-existent) or inadequately  enforced  domestic  rules on private anti-competitive  behaviour which  acts as barriers to 
market  access. 

9. 
In  implementing  this  strategy,  the  special  relationship  between  the  EU  and  some 
individual  third  countries  or regional  groupings  should  play  its role  to  the  full.  With  respect 
to  Central  and  Eastern  European  Countries  for  instance,  implementation  of  the  Europe 
Agreements  with  the  objective  of  facilitating  their  accession  to  the  EU  must  constitute  a 
privileged  avenue  for  achieving  improved  market  access.  Regarding  other  countries  such  as 
CIS-countries,  particular  emphasis  should  be  put  on  market  access  objectives  in  the  context 
of  the  current  negotiations  on their  accession  to the  WTO  in addition  to  the  implementation 
and expansion of their commitments under the bilateral agreements. Exchanges with emerging 
markets  in  other  regions  can  be  promoted  through  negotiations  aimed  at  further  tariff 
reductions  and  the  abolition  of  other  trade  impediments.  As  far  as  developing  countries  are 
concerned, measures which support  and encourage  their integration  into the multilateral  trade 
system  deserve  particular  attention. 

10.  This  Communication  sets  out  proposals  to  meet  these  objectives.  In  developing  the 
strategies  described  in  this paper,  the  active support  of European  business  will  be  essential. 
This  paper  is  intended  as  a  basis  for  rapid  reactions  from  European  business  and  other 
interested  parties, so that the policy  approach  set out  in it can be further  refined,  even  as it is 
being  implemented  in  the  year  ahead.  Although  substantial  market  opening  is  necessarily  a 
long  term  process,  an  improved  market  access  strategy  should  result  in  more  effective 
Community  action  and  in  concrete  benefits  for  European  industry,  including  in  particular 
SMEs. 

11.  Sections  2  and  3 outline  the  objectives  and  instruments  available  for  a  more  effective 
market  opening  strategy.  Section  4 contains  two parts.  The  first  sets  out  the  bilateral  market 
opening  agenda  and  the  second,  the  multilateral  agenda. 

2.  The  Objectives  of  a Market  Access  Strategy 

12.  The  Community  has  traditionally  acted  to  eliminate  trade  barriers  abroad,  through 
bilateral  and  multilateral  negotiations,  including  resorting  to  available  international  dispute 
settlement mechanisms.  However, the very success of these efforts  at liberalisation have made 
many  of the  less obvious obstacles more  apparent  and  pernicious  than  before.  Moreover,  the 
more  new  trade  rules  are  agreed  upon,  the  greater  the  need  to  monitor  and  ensure  their 
effective  application.  Thus there  is a need  for: 

~  a more systematic,  more coherent, and more pro-active  approach to both  negotiation  and 

enforcement  of  trade  deals  and  rules  on  the  part  of  the  Community,  and 

-  greater  emphasis  on  the  objective  of  third  country  market  opening  in  the  Community's 

commercial  policy. 

13.  To  this  end,  a market  opening  strategy  should  pursue  the  following  goals: 

(a)  The  Community's  trading partners  should  effectively  adhere  to  and  comply  with  the 
numerous  and  complex  obligations  arising  out  of  the  agreements  now  covered  by  the 
WTO.  In  view  of  the  vast  expansion  of  the  subject  matter  covered  by  the  WTO  as 
compared with the GATT, this implementation and enforcement  effort  will be of a much 
greater  magnitude  and  complexity  than  what  was  necessary  under  the  GATT  regime, 
extending,  inter  alia,  into  intellectual  property  and  services.  Legislation  implementing 
WTO  obligations  should  not only be enacted, but  also effectively  enforced.  Obviously, 

for  Community  efforts  to  secure  other  countries'  respect  of  their  obligations  to  be 
effective  and credible they must be accompanied by its rigorous compliance with its own 
WTO  obligations. 

(b)  The  renewed  stress  on  market  opening  of  the  commercial  policy  also  implies  the  full 
exploitation of existing market opening instruments specifically adapted to this objective. 
Trade  policy  instruments  should  contribute  fully  to  the  longer  term  objective  of  the 
viability of the Community's economy through the achievement of proper access to third 
country  markets. 

(c)  The  Community  must  also  act against  other barriers to  economic flows,  be they trade 
or  investment,  which  do  not  fall 
into  the  traditional  concept  of  "trade  barrier": 
discriminatory national laws on investment, the non-enforcement of domestic competition 
laws,  leading  for  instance  to  untransparent  trade  practices  or  denial  of  access  to 
distribution infrastructure,  are but a small selection of the barriers which firms  frequently 
encounter.  In other  words, there are too many  areas where the rules of the game do not 
exist  or  are  insufficient,  and  the  Community  must  contribute  to,  and  indeed  actively 
promote  the  establishment  of these  rules. 

(d)  Business needs to be informed  about the possibilities offered  by existing  instruments to 
press for  the reduction  of trade barriers and to contribute to trade promotion,  as well  as 
of  trade  policy  instruments  aimed  at  protecting  the  Community  against  unfair  trading 
practices  such  as dumping  or  export  subsidies. 

3.  The  Policy  Instruments  Available 

14.  There  are  two  avenues  by  which  the  Community  can  pursue  market  opening:  the 
multilateral  and  the  bilateral.  The  choice  of  approach  will  depend  to  a  large  extent  on  the 
objective.  As  the  world's  largest  trading  partner,  the  Community  has  a  clear  interest  in 
strengthening  the multilateral  trading  system by consolidating the Uruguay  Round  results and 
applying the WTO rules. It has also an interest in further  market opening actions, thus creating 
new opportunities  for  European  business  in third  country  markets.  A bilateral  approach  may 
in certain cases achieve quicker results and, if it is used vis-à-vis a country  with a particularly 
interesting  market  for  the Community,  it may  be a starting  point  for  a genuine  liberalisation 
policy. Its market opening effect  can be multiplied  if other trading partners agree to  subscribe 
to the  same undertakings.  Many barriers cannot  be reduced  or eliminated  unless other  major 
trading  partners  accept  to  do  so  similarly  at  the  same  time,  making  the  multilateral  effort 
indispensable. The two main groups of instruments available to the Community to achieve the 
objectives  set  out  above  are  as  follows: 

(i)  The  multilateral  level 

15.  The  privileged  forum  for  a  multilateral  Community  action  will  naturally  be  the  new 
WTO,  but  other  fora  such  as the  OECD,  the  Energy  Charter  Treaty,  WIPO,  the  Council  of 
Europe,  IMO  or  ICAO  3) should  also  offer  opportunities,  in particular  in  order  to  initiate  or 
complete  work  carried  out  under  the  WTO aegis: 

3)  WIPO  (World  Intellectual  Property  Organisation),  IMO  (International  Maritime  Organisation),  ICAO  (international  Civil  Aviation 

Organisation). 

~  Enforcement  of  existing  obligations  through  multilateral  dispute  settlement  or,  as 
appropriate,  through Community action permitted  under such multilateral rules. Industry 
should  be  sensitised  to  the  possibility  for  action  under  this  heading  (e.g.  against  foreign 
subsidies, technical  barriers  to trade  or  lack  of  intellectual  property  right  protection),  and 
encouraged  to  supply  the  Commission  with  concrete  examples of  real problems.  This  can 
be done by the Commission  on its own initiative  (in consultation with the  113 Committee) 
or  at  the  request  of  a  Member  State,  Community  industry  or  enterprise  under  the  Trade 
Barriers  Regulation  (TBR). 

~  Reduction  of  barriers  to  EC  exports  or  other  economic  interests  in  the  context  of the 

negotiations concerning the accession of third countries to the WTO (currently 20 countries) 
or the OECD (e.g., China, Taiwan, Russia, Ukraine for the WTO or Korea for  the OECD). 

~  Future multilateral negotiations in the  WTO (or in certain  instances  in the  OECD).  Two 
important deadlines have already been fixed.  Firstly, the first regular ministerial  conference 
of WTO will take place  in December  1996 in Singapore. Later, the date of  1 January  2000 
will  mark  the  start  of  the  first  round  of  multilateral  trade  negotiations  on  liberalisation 
commitments  in  services.  In  the  same  year,  work  on  the  continuation  of  the  reform  of 
international  agricultural trade will begin. There are areas where new rules of the game are 
needed,  and  the  Community  must  have  a  flexible,  but  nevertheless  concrete  multilateral 
agenda. 

(ii)  The  bilateral  level 

16.  At the bilateral  level, the Community  has other  means of persuasion  and  of  negotiation 
at  its  disposal: 

~  Bilateral negotiations of a general or sector-specific character, ad hoc or in the context of 
the  conclusion  of  overall  agreements  with  the  country  in  question;  more  concretely,  this 
means that  once a problem  concerning  a third  country  has been  identified  as warranting  a 
market  opening  effort  (either  because  access to  that  country's  market  for  a  given  product 
or  sector  is  not  free,  or  because  certain  practices  in  that  country  constitute  a  more 
"horizontal"  barrier  to trade), negotiating  away  those  obstacles may  be  the  most  effective 
instrument,  especially  if  they  are  not  the  result  of  a  more  or  less  deliberate  attempt  to 
hinder  trade. 

~  Systematic,  co-ordinated  use of all  bilateral  opportunities, including  high  level  visits  to 
Brussels  or  Commissioners'  and  senior  officials'  missions  in  third  countries  and  other 
relevant  international  events. 

~  A  special  category  of bilateral  instruments  of trade liberalisation,  and therefore  of  market 
access  for  our  firms,  is  that  of  the  effective  progressive  implementation  of  agreements 
providing for  improved  market  access  or  for^ree  trade with  individual  third  countries  or 
with regional groupings, such as the Europe Agreements with central and eastern  European 
countries,  the  Euro-Mediterranean  Agreements  as  well  as  agreements  such  as  that  with 
MERCOSUR.  In  the  first  place,  the  different  consultative  mechanisms  established  in 
existing  agreements  should  be  fully  used  to  deal  with  particular  market  access  problems 
posed.  Such  agreements  can  generate trade  liberalisation  that  subsequently  spreads to the 
multilateral  field  provided  that  the  criteria  set  out  in  the  WTO-Agreements  are  fully 
respected. 

~  The  Commission's  role  is not to press  in favour  of the commercial  interests  of  individual 
companies in winning contracts outside. However, it will not hesitate to intervene whenever 
it appears that European  companies, large or small, are denied  fair  and equal  opportunities 
to  compete  on technical  and  economic  merits  with  companies  from  third  countries. 

~  The  Trade  Barriers  Regulation  can  also  be  used  as  a  bilateral  tool  to  ensure  that  the 
obligations  assumed  by  a country  under  any  international  trade  rules, be  they  multilateral 
or bilateral, are adhered to. Recourse by European industry to the Trade Barriers Regulation 
would  allow  the  European  Community  to  tackle  individual  barriers  immediately  in  those 
cases in which companies feel  most aggrieved by them. In addition, this would  provide the 
Community  with  greater  leverage  in  the  context  of  negotiations  on  the  problems  in 
question:  in  fact,  although  this  regulation  ultimately  allows  for  the  use  of  retaliation  (in 
conformity  with  international  rules)  as  a  sanction  for  third  countries'  trade  barriers,  its 
purpose  is  to  ensure  the  removal  of  those  barriers;  thus,  the  regulation  is  geared  to  a 
negotiated  settlement  when  this  appears  capable  of  yielding  a  satisfactory  result. 

~  The  same  holds  true  with  respect  to  GSP,  since  its  benefits  could  be  withdrawn  in  full 
conformity  with  international  rules  from  individual  developing  countries  discriminating 
against  the  Community  or  failing  to  comply  with  their  Uruguay  Round  market  access 
commitments. 

(iii)  Flanking  policies 

17.  A market  access strategy,  as an integral  part  of the common  commercial  policy,  has to 
be  seen  in  the  overall  context  of  the  Community's  policies  aimed  at  improving  the  business 
environment  for  European  firms,  and  therefore  their  ability  to  generate  growth  and 
employment.  There  are  also  other  actions  which  play  a  specific  role  in  enhancing  export 
opportunities  for  our  firms  which,  in this sense, can be  seen  as flanking  policies  of  a  market 
opening  strategy: 

•  Mutual recognition has over the past year risen to the top of the international  trade agenda, 
as one of the limited  number  of  instruments  available to reduce regulatory  obstacles  faced 
by  traders,  and  one  which  by  its  reciprocal  nature  may  be  more  attractive  (and  therefore 
more  effective)  than  unilateral  pressure  to  liberalise  third  country  markets. Negotiation  of 
mutual  recognition  agreements  (MRA)  coincides  with,  and  in  turn  stimulates,  internal 
pressures  in  third  countries,  especially  the  USA  and  Japan,  towards  autonomous 
deregulation.  It is therefore  contributing  significantly  to the global aim in this area, which 
remains  the  harmonisation  of  standards  and  technical  regulations  themselves.  The 
elaboration  and application  of internationally agreed standards, whenever  feasible,  should 
be  the  preferred  venue  to  avoid  difficulties  arising  from  diverging  technical  regulations 
because  of  their  wider  impact. 

•  Wider  forms  of  business  and 

industrial  co-operation  are  also  encouraged  by  both  the 
Community  and  its  Member  states.  Among  them,  the  co-operation  aspect  of  the 
Community's extensive network of bilateral agreements with, and the provision of technical 
assistance  to, third  countries can play  an  important  role as an incentive  for  further  market 
opening by those countries. These  instruments can be used in a way that contributes to the 
long  term  development  of  local  resources  and  technologies  in third  countries  through  the 
development  of  common  economic  and  commercial  interests, thus providing  for  a  further 
increase  of  investment,  co-operation  and  business  opportunities  arising  from  the  ongoing 
globalization of the world economy. International cooperation in research and technological 

development  constitutes  an  important  stepping  stone  for  the  development  of  industrial 
cooperation  4).  The  Community  has  also  set  up  a  number  of  instruments  to  promote 
industrial  cooperation  with  third  countries,  such  as ECIP,  MED-Invest,  or  AL-Invest  5). 

•  Activities which focus on changes in policies generally applicable to all European  exporters 
could be supplemented  by specific  export promotion  initiatives. These, however, should be 
conducted  only  as a complement to Member  States' activities and  not in competition  with 
them,  and  only  when  a Community  contribution  would  constitute  clear  value  added. 

18.  These  various  instruments  could  be  employed  in a coherent,  co-ordinated  manner  with 
respect  to  individual  countries  as well  as within  particular  sectors.  In  the case  of particular 
trading  partners,  current  concerns  may  often  be  addressed  for  instance  in  the  context  of 
negotiations  on e.g.  a bilateral  agreement  between the  Community  and  a third  country.  More 
importantly,  they  can  be  addressed  more  effectively  on  a  bilateral  basis  once  such  an 
agreement  is in place. Certain commitments can also be pursued within the context of requests 
to join organisations such as WTO or the OECD. Some problems may be submitted  for  WTO 
dispute  settlement.  Others are  addressed  during  periodic  high-level  meetings  and/or  visits by 
Commissioners.  For  some  developing  countries the  Community  has not  hesitated  in the past 
to withdraw  GSP  benefits  when  its interests  were harmed  by  certain  actions  by  this  country. 
Finally,  Commission  Delegations  have  sometimes  been  instrumental,  to  the  benefit  of  EU 
exporters  as  a  whole,  in  prompting  a  greater  voluntary  coordination  of  export  promotion 
efforts  undertaken by the different  Member States. The outstanding success of various sectoral 
forums  such  as automotive  industries  forums  is just  an  example  in this  respect. 

19.  An example of a combination  of different  instruments  in a specific  sectors is the policy 
in the textiles and clothing sector. This sector has been undergoing  an important  restructuring 
over the past two decades due to the new competitive environment, both internal and external. 
The Community  is obliged, under the new WTO rules, to eliminate remaining quotas over the 
next  ten  years.  In  exchange,  the  European  industry  legitimately  expects 
that  greater 
competition  in its home market will be matched by increased market opportunities abroad  and 
by fair competition and better protection against fraud  and piracy. Taking into account that the 
pace  of  elimination  of  MFA-quotas  has  been  linked  to  the  opening-up  of  MFA-countries' 
home markets, the Commission  is working closely with the industry to spot third country trade 
barriers  which  should  be  eliminated  as  a  priority  in  countries  and  market  segments  of 
particular  export  interest.  This  will  enable  the  Commission  to  negotiate  with  third  countries 
on the pace of the elimination of quotas on the basis of the market opportunities they are ready 
to  offer  to the  Community. 

20.  Another  example  concerns  measures  to  promote  further  liberalisation  of  information 
technology related  products and  services, where greater  market  access can be better  achieved 
by  a combination  - which  might  take  the  form  of  an  information  technology  agreement  - of 
international  liberalization  of  telecommunication  services  in  the  WTO,  the  achievement  of 
mutual  recognition  of technical  standards  for  equipment  or interconnection,  the  liberalisation 
of  public  procurement  of  telecommunication  equipment,  and  vigilant  action  to  protect 
intellectual  property  rights. Other measures which could be examined  in response  to  industry 
interests  include  the  acceleration  of  tariff  reduction  or  greater  clarity  in  the  customs 
classification  of  information  technology  related  products.  Although  such  negotiations  can  be 

4)  See  Commission  Communication  on the perspectives  of  international  R&D cooperation  (C0M(95)489  final). 
5)  ECIP  (European  Community  Investment  Partners),  and  instruments  to  promote  investments  in  Mediterranean  and  Latin  American 

countries. 

8 

initiated  in  a  bilateral  basis with  individual  countries,  a  greater  impact  could  be  achieved  if 
they  could  be  inscribed  in a multilateral  context. 

4. 

Steps  to  Establish  A  Concrete  Market  Access  Strategy 

21.  On  the  basis  of  the  objectives  outlined  above  and  of  the  policy  instruments  described, 
a  market  access  strategy  should  consist  of  two  parts.  First  a bilateral  element  which  would 
seek  to  do the  following: 

(a) 

identify  obstacles to  market  access  and  choose priorities  for  action 

(b) 

(c) 

identify  the  most  appropriate  opportunities  for  the  elimination  of  trade  barriers,  e.g.: 
enforcement  of  existing  international  obligations;  negotiation  of  new  or  clearer 
international  rules;  bilateral  (formal  or  informal)  negotiations 

improve  coherence  between  the  multilateral  and  the  bilateral  approaches  used  in 
individual  markets  and  their  coordination  with  other  actions  such  as  promotion  of 
industrial  cooperation  and  technical  assistance. 

(d) 

improve  coordination  of  market  opening  activities  undertaken  by  the  Commission, 
Member  States,  Industry  and  Commission  delegations 

22.  Second,  at the  multilateral  level,  the  strategy  would: 

(a) 

(b) 

(c) 

consolidate the Uruguay Round acquis and make sure that all the signatories of the Final 
Act  scrupulously  implement  all  of  their  undertakings 

identify  ways of pushing  market  opening  still  further  and  exposing  new  areas to  multi-
or  plurilateral  disciplines 

respond to the new challenges and new obstacles raised by the globalization  of the world 
economy. 

23.  Any  proposed  strategy  does  not  imply  a  fundamental  change  in  existing  Community 
policies and objectives, but a more systematic and co-ordinated use of existing Community and 
Member  States  resources  to  attain  these  objectives,  with  the  active  support  of  European 
industry. This is an area where the negotiation and use of trade instruments by the Community 
as  a  whole  can  certainly  yield  better  results  than  fragmented  and/or  uncoordinated  action. 
Within  the  Commission  there  will  be  a  need  to  ensure  greater  coherence  of  the  activities  of 
the various services involved.  In institutional  terms, the initiative does not imply a transfer of 
responsibility from the Member States to the Community nor vice-versa: experience has shown 
that,  in  most  cases  it  is  possible,  through  a  pragmatic  approach,  to  reach  agreement  with 
Member  States  about  the  common  defence  of  their  interests. 

(i).  The  Bilateral  Agenda 

(a)  The identification  of trade barriers 

24. 
In  order  to  help  identify  the  barriers  which  hamper  European  firms  abroad,  the 
Commission, as requested by the Council, has decided to progressively set up a comprehensive 
data base covering obstacles to market  access in the Community  with the active  participation 
of  Member  States  and  industry.  An  initial  data  base  should  be  established  for  the  sectors  in 
question  by pooling  all  information  available within the  Commission  services.  The results  of 
this  exercise  would  then be transmitted  to Member  States and  industry  which,  from  then  on, 
would  be  closely  associated  with  all  further  stages of the work.  Much  information  is  already 
available,  some  in  Member  State  capitals  but  possibly  even  more  in  the  economic  and 
commercial  sections  of  Member  State  diplomatic  missions.  Member  State  and  Commission 
missions  in  third  countries  should  be  called  upon  to  pool  their  resources  to  amend  and 
complete  the  information  contained  in the draft  data base prepared  in  Brussels.  In  the  future 
they  should  make the  necessary  arrangements  for  the  ongoing  updating  of  this  information. 

25.  Early results are needed on market access. The Commission  is taking  the lead  in using 
the  information  already  collected  in some  sectors (textiles,  clothing,  automobiles,  chemicals) 
to launch an effective  market opening  initiative in parallel with the building-up  of the  overall 
data  base  to  show  how  it  would  work  in  practice.  It  will  be  essential  that  the  database  is 
comprehensive (i.e. covering  all  sectors and  all kinds of trade barriers  for  which  industry  has 
an  interest),  clear  in  describing  the  market  access  situation  and  barriers  encountered,  simple 
and  user friendly,  and  always  kept up to date. The contents  of the  data base  should  be  made 
available  on-line  to  all  interested  parties  in  Europe,  with  the  exception  of  certain  categories 
of  classified  information,  in  particular  the  Commission's  analysis  of  the  legal  and  political 
means  of  addressing  the problems  in  question  and  the  sources  of  the  information. 

26. 
In determining  negotiating  objectives  with third  countries, and  without prejudice  to the 
need  for  prospective  and longer  term overall analysis of trade policy  objectives, the  approach 
followed  will basically  be demand driven, and  guided  by the priorities  set out  in  cooperation 
with  the  industry  all  over  the  European  Union.  Particular  market  opening  efforts  will  be 
devoted  to  those  markets  where  there  are  specific  or  important  export  interests  and 
opportunities, as well as to fast  growing  economies and to high valued  added  and  technology 
intensive  sectors, where the current  world  division  of labour  is pushing  European  industry  to 
specialise  in. 

(b)  How  to  eliminate  these  barriers and promote  market access 

27.  Depending  on  the  nature  of  the  obstacles  and  problems,  the  best  way  to  tackle  them 
effectively  has to  be  determined.  This  crucial  phase  implies,  in  particular: 

-  establishing priorities  amongst  these  problems,  on  the  basis  of  their  relative  importance, 

the  likelihood  of  their  elimination  and  the  resulting  economic  benefits 

-  comparing  such  priorities  with  the available  means  and  instruments of  action 
-  choosing  the approach  to  be taken  and  of  instruments  and  opportunities  to  be  used 
-  setting  a timetable  for  its execution  (where  appropriate  against  the background  of  already 

scheduled  bi-  and  multilateral  events). 

10 

28.  The determination of priorities  could be greatly facilitated  by the elaboration and regular 
updating  of market  access reports outlining  the main barriers encountered  on the  markets  of 
identified  priority countries, which will in addition provide a global overview of where market 
access  problems  lie  and  what  the  nature  of  these  problems  is.  Furthermore,  the  present 
practice  by  the  Commission  to  issue  every  year  a  report  on  US  barriers  to  trade  could  be 
enlarged  to  the  EU's  main  trading  partners.  These  reports  will  be  made  available  both  to 
industry  and  to  Member  States  in  order  to  allow  them  to  comment  on  priorities.  The 
Commission  will, in  close  consultation  with  Member  States,  determine  the  most  appropriate 
course of action to solve the market access problem identified,  either through bilateral  contacts 
or  diplomatic  demarches,  or  in the  context  of  multilateral  discussions. 

29.  Regarding  trade promotion  activities,  the market  access line  in the  Community  budget 
(B7-852)  will bring together  existing activities and concentrate on the most promising  actions 
where  there  is the  highest  clear  value  added  of  a  Community  action.  Its  objectives  will  be: 

- 
- 

- 
- 

to  assist  European  companies  in the  identification  of  market  opportunities 
to  raise  the  profile  of  European  industry  through  supporting  industry  participation  in 
sectoral  trade  fairs  and  business  fora jointly  with  local  industry  in third  country  markets 
to  promote  the  image  of  European  products  and  services  in key  niche  markets,  and 
to  support  bilateral  and  multilateral  market  opening  actions. 

(c)  Finding greater  coherence  between the different  actions 

30. 
In  terms  of  coherence  of  the  Community's  action  vis-à-vis  third  countries  taken 
individually  or  in  the  context  of  regional  groupings,  the  Community  has  established  a  vast 
network  of  bilateral  relations.  Market  opening  initiatives  are  already  an  important  objective 
in our relations with some key trading partners, but there  is no systematic  policy  covering  all 
important  present  or  emerging  economies.  There  is  considerable  scope  for  exploiting  an 
untapped  potential  for  market  access  initiatives.  Internally,  this  will  require,  inter  alia,  an 
improved synergy between the Commission services responsible for trade policy, for the sectors 
instance,  services  with 
concerned,  and  those  with  geographical  responsibilities.  For 
geographical responsibilities should be aware of market access problems identified  so that any 
appropriate  bilateral  opportunities  are exploited,  and adequate  feedback  should  exist  between 
them  and  services  responsible  for  trade  policy. 

31.  Coordination should also be stepped up within the Council and with Member States. This 
can  be achieved  through  improved  coordination  between  the different  formations  of  working 
groups  and  committees  in the  Council  responsible  for  trade policy  and  for  external  relations. 
Most  important, however  is that the Community should be ready to bring to bear all relevant 
aspects of  its relations  with the country concerned to promote  industrial  cooperation  and  the 
reduction  or  removal  of  residual  import  barriers  in the  Community  itself. 

(d)  Improving  co-ordination  between different  actors 

32.  This  process  implies  not  only  a  high  degree  of  transparency  between  all  the  actors 
involved (different  Commission services, Member States' administrations, industry associations 
and  individual  firms),  but  also  a  positive  effort  on  the  part  of  each  of  them  to  ensure  the 
involvement  and  participation  of  the others. 

11 

33.  Better  coordination  with the Member States  will require: 

-  Continuous and fast  exchange of information on market access problems in third countries. 
In  addition  to  its  periodic  market  access  reports,  the  Commission  will  regularly  keep 
informed  the  Council  (mainly  through  the  113 Committee)  of  any  action  it  undertakes  to 
deal  with  specific  problems  brought  to  its  attention.  The  Commission  counts  on  the 
transmission  of  information  from  Member  States to  better  determine  priorities  for  action. 

-  More  intense  coordination  of  Member  State  and  Community  action  in  devising  and 
programming  action  with  third  countries  to  achieve  market  access  negotiating  objectives. 
Experience  shows  that,  even  punctual,  specific  Member  States'  interests  can  be  defended 
more  effectively  by  a  coherent  Community  action.  The  economic  benefits  of  improved 
market  access justify  the  necessary  cooperation  efforts  to  ensure  that  the  Community  can 
speak  with  a single  voice  in  international  trade  negotiations. 

34.  The  following  steps could  be taken  to promote  a closer  involvement  of  industry: 

-  Industry  (including  both  individual  firms  as  well  as  industry  associations)  is  invited  to 
provide  the Commission with adequate information  on problems it may want to solve; this 
information  will  remain  confidential  and  will  be  aimed  exclusively  for  practical  use  -  to 
eliminate  barriers. 

-  A continuous and two-way feedback  on action undertaken  and of results achieved,  in order 

to  ensure  that  information  flows  are  continuous. 

-  On  an  ad-hoc  basis,  increased participation  of  business  leaders  in  trips  by  Commission 
Members  to  third  countries,  with  a  double  objective:  on  the  one  hand,  to  promote 
cooperation  and  links  with  business  of  third  countries;  on  the  other  hand,  to  assist  the 
Commission  in  assessing  market  access priorities. 

35.  To this effect,  the  Commission  has decided  to designate well  publicised  contact  points 
for  business,  individually  or through their  associations, to  refer  to  it market  access  problems 
in third  countries. Input from  the Group of Euro Info  Centres specialised  in external  relations 
will  be of particular  relevance.  These  EICs work  in close co-operation  with  European  firms 
active  in  third  country  markets  and  are  thus  fully  aware  of  existing  barriers  to  entry. 
Moreover,  they  would  serve  as useful  distribution  points  for  providing  European  companies 
with  information  on  EU  activities  in  this  field.  Industry  will  be  widely  informed  of  the 
instruments available to improve third country market access. In Member States, the  Euro-Info 
centres will provide industry and especially SMEs about the possibilities of Community  action 
and  regarding  whom  they  should  address.  Industry  can  also  relay  to the  Commission  (either 
to the Representation  in the Member  State concerned,  to the external  Delegations, or  directly 
to  the  Commission  headquarters  in  Brussels)  any  information  relating  to  market  access 
problems. Particular  care will be taken to ensure that  SMEs can benefit  directly  from  market 
opening  action. 

36.  The Commission Delegations abroad will also intensify  their role in assisting EU firms 
in solving  market  access problems. Delegations'  trade counsellors are to be closely  involved 
in  dealing  with  trade  questions  and  in  advising  the  Commission  on  barriers  and  course  of 
action.  They  will  also  be  responsible  for  liaising  with  Member  States'  trade  counsellors, 
commercial  offices  and  European  business  representative  associations  in  order  to  assess  the 
market access situation and to coordinate  diplomatic action more effectively.  They could also 

12 

be  instrumental  in  exploiting  the  possibilities  of  concerted  action  on  trade promotion  of 
European  goods  and  services,  investment  and  design,  through  targeted  initiatives  adapted  to 
the  peculiarities  of  the  local  markets  in the respect  of  existing  competence. 

(ii).  The  Multilateral  Agenda 

37.  The  Community  has  maintained  a  constant  policy  of  supporting  and  enhancing  the 
process  of  multilateral  negotiations  and  disciplines.  Effective  multilateral  disciplines  are  the 
best  guarantee  that  our  exporters  and  investors  are  safeguarded  against  illegal  protectionist 
measures.  And  the  successive  rounds  of negotiations  have  led  during  the existence  of  GATT 
to an unprecedented  reduction in tariff  and non tariff  barriers over the last fifty years. The end 
of the  Uruguay  Round  and  the  creation  of the  WTO marked  a decisive  stage  in this process. 
The Community  now needs to build on the consolidation and effective  implementation  of the 
new rules. But as the economy  evolves quickly and international trade focuses  more and more 
on  areas  which  are  only  partially  dealt  with  by  existing  disciplines,  the  multilateral  system 
needs to keep pace with these developments if it is to continue providing  better market  access 
for  our  business  abroad. 

38.  The  first  means to  strengthen  the  multilateral  trade  system  will  consist  in  ensuring  the 
accession  to  the  WTO  of  major  trading  partners  which  are  still  not  members  as  well  as  in 
encouraging less developed countries to integrate further.  The Union can also work with other 
WTO  countries,  and  in  particular  those  with  which  it  has  bilateral  agreements,  in  order  to 
obtain  their  support  for  its WTO objectives.  Moreover,  multilateral  action  should  put  special 
emphasis on consolidating the Uruguay  Round acquis, on further  market opening actions, and 
on expanding the liberalisation disciplines to new areas such as investment while also tackling 
multilaterally  certain  problems  posed  to  international  trade. 

(a)  Implementing  and  consolidating  the  Uruguay  Round  acquis 

39.  Given  the  breadth  of  coverage  of  the  Uruguay  Round,  its  implementation  will  extend, 
for  some  areas,  until  2005. This  process  will  need  to  be  the  subject  of  close  surveillance  to 
ensure the consolidation  of the existing acquis. Some examples will illustrate what  is at stake. 

*  Subfederal public  entities 

One of the Community's main objectives in the Uruguay Round was to push for  WTO rules 
to  cover  subfederal  public  authorities.  Although  significant  progress  was  made  in  all  the 
relevant  working  parties,  some  of  the  Community's  key  trading  partners  have  not  yet 
adopted  the  necessary  measures.  The  situation  as  regards  government  procurement, 
standards,  services  and  trade-related  investment  measures  (TRIMs)  now  gives  cause  for 
concern. 

Regional  integration 
In  view  of  the  increasing  moves  towards  regional  integration  in  America  and  Asia  the 
Community  has  every  interest  in  strict  application  of  the  rules  ensuring  that  greater 
geographical  intensity of trade relations is compatible with the principles of multilateralism 
(i.e.  with  our  own  right  of  access  to  the  markets  of  other  regional  groupings).  The 
Community  must  therefore  play  an  active  role  in the  WTO's  work  in this  area. 

TRIPs 
Developing  countries have until  2005 to  implement  the commitments  taken  at  Marrakesh. 

13 

It may be possible to secure faster  implementation.  Turkey has shown itself ready to move 
much  faster,  in  the  context  of  Customs  Union.  The  Commission  is  giving  technical 
assistance  to  others  (including  China). 

*  Agriculture 

The  Community  is  a major  exporter  of  agricultural  products.  Along  with  other  Members 
of  the  WTO,  it  has  undertaken  to  gradually  liberalize  trade  in  agricultural  products. 
Therefore,  the  Community  takes  a  keen  interest  in  ensuring  that  WTO  members  respect 
their commitments in this field, and in particular those regarding the reduction of subsidized 
exports  and  market  access,  as  it  intends  to  comply  with  its  own  commitments.  The 
implementation  and management  of tariff  quotas and the special  safeguard  mechanism  are 
areas  that  need  to  be monitored  with  particular  attention. 

(b)  Further  market  opening  actions 

40. There are some areas in which the Uruguay Round made some, albeit insufficient  progress; 
in these  areas  further  market  opening  should  be  sought: 

*  Financial  services 

An  18-month interim agreement, entering into force  on  1 July  1996, which was adopted by 
the members  of the  WTO  on 28 July  last year  forms  a package  of  initial  commitments  to 
liberalize financial  services. The agreement was sponsored by the Community and has been 
rightly  welcomed  for  its  contribution  to  the  multilateral  system.  However,  it  is  up  to  the 
Community  to  improve  the  package  of  current  commitments  on  the  basis  of  the  most 
favoured-nation  clause, if possible even before  the interim agreement  expires in  December 
1997. 

*  Basic  telecommunications 

The  basic  telecommunications  negotiations  are  of  crucial  importance  to  the  Community 
because they will provide an opportunity  to exploit the Community's internal  liberalization 
process which will be completed  by  1 January  1998. The Community  expects a substantial 
level of commitment  from  its major  partners under the most-favoured-nation  clause  before 
negotiations  are  concluded  on  30 April  this  year. 

*  Maritime  transport 

Negotiations in this area, which are one of the issues outstanding from  the Uruguay  Round, 
were  started  in Geneva  in  May  1994. The Community  is making  every  effort  to  persuade 
the  major  maritime  powers  to  make  significant  commitments  on  access  to  international 
cargoes,  auxiliary  services  and  port  and  port  service  access. 

*  GATS rules and  disciplines 

There are deadlines for  developing a safeguard  clause (1998) and public procurement  rules 
(1997) for  services.  There is a need for  subsidy rules (no deadline) and for additional  rules 
to prevent  internal rules on professional  qualifications  from  becoming barriers to trade  (eg 
in  the  field  of  accountancy  or  other  professional  services).  Furthermore,  regarding  the 
protection  of  privacy  and personal  data, the Community  wishes to  improve  on the  current 
situation  under  Article XIV  of  GATS with a view to achieving  free  movement  of  data on 
the  basis of  equivalent  levels of privacy  protection. 

*  Rules  of  origin 

Work  on harmonizing  the rules of  origin  in the  WTO Agreement  has already  begun,  with 

14 

completion  planned  by  1998. 
In  parallel  with  these  multilateral  negotiations  the 
Commission  is  taking  steps  at  internal  level  to  simplify  drastically  the  vast  range  of 
preferential  rules of origin which, at the moment,  vary  from  one agreement  to another.  Its 
aim  is  to  have  a  single  body  of  rules  for  all  preferential  origins,  be  they  European  or 
Mediterranean.  It  would  therefore  seem  a  good  moment  to  examine  Community  interest 
in  multilateral  simplification  in this  field. 

*  Customs  duties 

The  Uruguay  Round  produced  an  average  tariff  reduction  of  over  33%,  exceeding  the 
record  set  by  the  previous  GATT  round.  However,  the  reductions  agreed  by  the 
Community's  partners for  a series of priority  products such as textiles and clothing,  glass, 
ceramics,  leather  and  footwear  are  very  much  smaller  than  those  called  for  by  European 
industry.  Any  new  tariff  exercise  could  therefore  be  made  to  work  in  the  Community's 
favour,  if  conducted  firmly  on  the  basis  of  a  thorough  sector-by-sector  analysis  of  its 
interests. 

*  Government  procurement 

The  new  agreement  is  largely  inspired  by  the  Community  rules  on  public  purchasing.  It 
will therefore  open up to our exporters new markets in the territories of the Union's  largest 
partners, particularly in services and construction.  Some signatories have also extended the 
list of entities covered by the agreement to include sub-federal  public authorities and public 
undertakings  with  exclusive  or  special  privileges. 

Although  progress  has  clearly  been  made,  multilateral  liberalization  of  government 
procurement  has  been  achieved  solely  between  the  small  number  of  signatories  to  the 
plurilateral  agreement,  and they have  included  provisions  exempting  certain  bodies  unless 
reciprocity  is  guaranteed. 

Apart  from  the  plurilateral  agreement,  negotiations  have  begun  recently  on  opening  up 
government  procurement  of  services  in  accordance  with  the  provisions  of  Article  XIII  of 
GATS.  The negotiations are between the GATS partners and the aim is to reach agreement 
on a set of rules that will govern the multilateral  liberalization  of government  procurement 
of  services.  The start  of these negotiations  will  provide  an ideal opportunity  for  returning 
to the task  of  multilaterizing  the  agreement  on  government  procurement  of  goods as well. 

The  ministerial  conference  in  Singapore  may  provide  an opportunity  for  progress  towards 
the goal of making all government procurement subject to the disciplines of the government 
procurement  agreement.  In the meantime we must make strenuous efforts  to encourage  as 
many  WTO  members  as possible  to  subscribe  to  the current  agreement. 

*  Intellectual  property 

The Uruguay  Round  negotiations on TRIPs have  helped  European products  of high  added 
value  to  gain  risk-free  access  to  the  markets  of  the  developing  countries  and,  more 
crucially,  to  those  of the  newly  industrialized  economies. 

But  further  work  should  be  launched  in  WTO,  for  example  to  bring  WTO  copyright  rule 
into  line  with  the  needs  of  the  global  information  society,  or  to  accelerate  international 
negotiations,  currently  stalled,  on  patent  law  harmonisation.  The  strengthening  of  the 
protection  of  geographical  indications  will  also  deserve  attention.  In  this  context  the 
Commission's  adoption  of  the  Green  Paper  on  copyright  and  related  information  society 
rights  represents  a  major  contribution  to  current  thinking  on  the  subject.  The  matter  is 

15 

already  being  discussed  in WIPO. 

(c)  The  new  areas  of  liberalisation 

41.  Following the Ministerial Conference  in Marrakesh the GATT Secretariat drew up a long 
list of  topics  for  WTO members'  attention  on the  basis of  ministerial  proposals.  Multilateral 
negotiations or study programmes might be launched on some of these topics at the  Singapore 
conference.  The  Community  should  prepare  its  ground  well,  particularly  in  the  following 
areas: 

*  Trade and investment 

For many years the Community has headed the list of foreign  investors and, for this reason, 
is extremely  interested  in  global  investment  liberalization  and  protection. 

Negotiations on a multilateral  agreement  on investment have just begun within the OECD. 
These  are of crucial  interest to the Community  as they will  define  concepts and  strategies. 
However, as the Council has already acknowledged, participation in the OECD negotiations, 
which  will  mainly  involve  the  industrialized  countries,  will  not  in  itself  achieve  the  goal 
of  liberalization  of  investment  conditions  worldwide  and  in  May  of  last  year  the  OECD 
Ministerial  Council  therefore  called  for  a  twin-track  approach  (i.e. within  the  OECD  and 
the  WTO). 

Since  it  is the  main  interested  party,  the  Community  should  already  be  acting  within  the 
WTO  to  push  the  principles  of  effective  market  access,  national  treatment  and  non 
discrimination.  In  addition,  existing  restrictions  should  be  fully  transparent.  Finally,  the 
multilateral  agreement  on  investment  should  be  incorporated  in  the  WTO  family  and 
become  subject  to  its dispute  settlement  machinery. 

Every effort  must be made to ensure negotiations on investment within the WTO can begin 
in  December  of  this  year.  An  informal  working  party  might  be  set  up  to  prepare  specific 
decisions  for  adoption  in  Singapore. 

*  Trade and  competition 

A  number  of  countries,  in  particular  developing  countries,  do  not  guarantee  freedom  of 
competition  in their laws. Even where they exist, national  laws on competition  in the main 
parties  to  world  trade  vary  considerably  as  regards  their  content.  Finally,  anti-trust 
authorities have very divergent approaches to the severity with which they apply their laws. 

In  trade  terms  these  divergences  are  reflected  in  appreciably  different  levels  of  effective 
market access.  The report by the Group of Experts on competition  policy  in the new trade 
order  notes  that  "the  anti-competitive  practices  tolerated  by  one  competition  authority 
sometimes  result  in access to the market  concerned  being  closed".6  Firms  operating  in or 
from  markets  where  anti-trust  legislation  is  not  very  strictly  applied  enjoy  an  unjustified 
commercial  advantage  over  companies  which  are  subject  to  stringent  competition  rules. 

If,  as the Group of Experts'  report states, "it is difficult  to imagine the emergence of a level 
playing  field  if  this  were  to  be  founded  only  on  a  group  of  inevitably  heterogeneous 

6)  Competition policy in the new trade order: Strengthening international cooperation and rules at international level, European Commission, 

Brussels,  1995,  p. 8. 

16 

bilateral agreements",7 the Community's interests will be best served by establishing a body 
of  binding  basic  standards  accompanied  by  an  effective  dispute  settlement  mechanism. 

Although  this  is  a  long-term  objective,  there  is  nothing  stopping  us  already  trying  to 
persuade  WTO  members  which  have  competition  laws  to  undertake  to  apply  them 
rigorously. 

We can make progress in this area and reach agreement  on a broader  agenda  at  Singapore 
if  a  consensus  can  be  worked  out  between  the  industrialized  countries  and  the  more 
advanced  or  otherwise  significant  developing  countries  beforehand. 

*  Trade and  environment 

The Marrakesh Conference  set up a committee to study this issue. Its task is to find options 
which will reconcile  environmental protection objectives with the demands of  international 
trade  in  goods  and  services. 

In  particular  it  was  asked  to  look  into  the  relationship  between  the  rules  governing 
international  trade  and trade measures  introduced  under  environment  conventions, as well 
as the effects  on trade of certain environment policy measures such as eco-taxes, eco-labels 
and  regulations  on  packaging  and  recycling.  The  relationship  between  the  provisions  of 
environment  conventions  and  WTO  rules  is  particularly  important  since  some  of  the 
agreements,  such as the Montreal  Protocol, the Basel  Convention  and  CITES restrict  trade 
in particular  products  in order to protect  the  environment  and  also  allow these  restrictions 
to  be  applied  to  countries  that  are  not  parties  to  the  agreements. 

The  WTO  Committee  on  Trade  and  Environment  has been  asked  to  produce  a report  for 
the  WTO's  first  ministerial  conference.  From  the  Community's  viewpoint  such  a  report 
should  be  fairly  substantial  and  contain  specific  recommendations  to  be  adopted  in 
Singapore.  It  should  in  particular  recommend  the  interpretation  or  revision  of  relevant 
GATT  and,  if  necessary,  GATS  rules  and  set  out  political  options  to  take  account  of 
environmental  concerns  but  without  promoting  green  protectionism. 

*  Trade and social  conditions 

Certain  basic  social  laws  banning  forced  labour  and  child  labour  or  guaranteeing  the 
freedoms  of  association  and of collective  bargaining  are universally  recognized  within  the 
ILO  8). It is only natural that such basic social aspects be considered  in evaluating  relations 
with  non-Community  countries  or  defining  policies  with  a  strong  social  component. 

As  far  as  trade  is  concerned,  the  idea  of  positively  encouraging  respect  for  basic  social 
rights  has  already  found  some  acceptance  in  the  generalized  preferences  schemes  (GSP), 
including those adopted by the Council in December  1994, of some industrialized countries. 

The Commission has said repeatedly9) that the level of social development depends mainly 
on economic  development  and, whilst  it is certainly  legitimate  to discuss  social matters  in 

Idem,  p.  19. 

7) 
8)  These  rights and principles, together with  the principle of non-discrimination  in employment,  are considered  to be the five  basic  social 
rights  in ILO,  and  have  been  reflected  in seven  ILO conventions  (Nos  5 and  138 on  minimum  age, Nos  29 and  105 on  forced  labour, 
No 87 on  freedom  of association, No 98 on collective bargaining, and No  111 on non-discrimination). The  issues addressed  here do not 
cover the  broader  questions of the respect of  fundamental  human  rights  and  of cases of serious  violations  of these  rights,  whose  place 
in  EU  external  relations  was  examined  in  its communication  C0M(95)216  final  of 23  May  1995. 

9)  See  White  Paper  on  Growth,  Competitiveness,  Employment,  Chapter  6.5(0-

17 

the  multilateral  context,  there  is absolutely  no  question  of  depriving  developing  countries 
of their  comparative  advantage  in  labour  costs. 

On  the  other  hand,  some  practices,  such  as  preventing  freedom  of  association  and  using 
forced  labour,  cannot be justified  in terms of the level of economic development.  In those 
international  forums  where  the  subject  is  currently  under  discussion  this  view  is  now 
gaining  ground.  Therefore,  there  should  be  an  increasingly  wide  understanding  that 
requiring  the  respect  of  such  rights  is no  longer  seen  as a protectionist  gambit. 

The  Community  should  therefore  take  a  very  progressive  stance  here  and  discuss  these 
matters with all the countries concerned, in a multilateral forum.  The Singapore ministerial 
conference  scheduled  for  December  1996 could  take the  lead  in the discussion  and  set up 
a WTO working party to look into the question of the links between international trade and 
working  conditions.  Work  currently  being  done  at the  OECD  and  ILO  should  mean  that 
the approach to the discussions is more objective and that points are more carefully  argued. 

*  Trade - finance  - currency linkage 

The  Declaration  on  coherence  in the  Final  Act  of  the  Uruguay  Round  calls  on  the  WTO 
"to  pursue  and  develop  cooperation  with  the  international  organizations  responsible  for 
monetary  and  financial  matters"  to  ensure  that  the  IMF,  World  Bank  and  WTO  "follow 
consistent  and  mutually  supportive  policies". 

The WTO has not so far  given much prominence to this aspect. It would  be logical  for  the 
Community  which  initiated  the  discussions  on  coherence  within  GATT  to  reactivate  the 
debate  to  provide  a basis for  practical  discussions  in  Singapore.  Options to help  promote 
greater  monetary  stability  might, within  the limits of the terms of reference,  be  identified. 

42.  The  first  Ministerial  meeting  of  the  WTO  provides  a timely  opportunity  to  give  fresh 
momentum  to the  work  programme.  Europe  must  work hard  in the months  ahead  to  ensure 
that  the  Singapore  Ministerial  is  in  a  position  to  take  concrete  decisions  on  the  new  WTO 
activities needed to develop new rules and new perspectives or market  opening.  But  in order 
to set a realistic set of objectives  for WTO, the preparations for Singapore must focus not only 
on the decisions to be made next December, but also on the needs of the WTO and the world 
trading  system  into  the  early  years  of  the  next  century. 

43.  Alongside  the  negotiating  issues  already  on the  agenda, the  debate  must  give  adequate 
coverage to  broader  issues, notably the need to  integrate more  fully  the  developing  countries 
into  the  trading  system.  Beyond  the  identification  of  further  measures  which  support  and 
encourage  developing  countries  to  integrate  in  the  multilateral  system,  this  requires  fresh 
thinking  not  only  about  the  agenda  and  working  methods  of  the  WTO,  but  also  about  the 
handicaps  -  such  as  excessive  debt  -  that  prevent  developing  countries  from  taking  full 
advantage  of  the  benefits  of  the  Uruguay  Round. 

44.  These  then  are,  in  the  opinion  of  the  Commission,  the  main  issues  at  stake  in  the 
multilateral  arena for  the years ahead.  How they are tackled will  determine the credibility  of 
the  WTO  as a force  for  openness  in  the  world  economy.  The  WTO  institutions  are  now  in 
place, and negotiations on issues outstanding from  the Uruguay Round are already under way. 
But  the  WTO  has  still  to  prove  itself  capable  of  becoming  the  main  forum  for  debate  and 
decision-making  on these  new  challenges. 

18 

5. Conclusions  : Next Steps 

45.  Greater  access to markets worldwide  should be one of the prime objectives  shaping  the 
deployment  of  Community  resources  in the months  and  years ahead.  To  achieve  significant 
increases  in  market  access  is  necessarily  a  long-term  process.  Both  in  tackling  pressing 
problems under  existing rules and in developing  new rules to remove other obstacles to trade 
and  investment,  the  Community  will  be  successful  if  it produces  a  clear  analysis  of  its  own 
priorities  and  works  closely  with  its  trading  partners,  developed  and  developing  alike.  We 
should  concentrate  on  action  which  responds  to  the  demands  and  priorities  of  industry  and 
which  results  in tangible  and  direct  benefits  for  our  exporters  and  investors.  In doing  so, the 
Community  should  be  guided  by  the  following  principles: 

-  The EU has set the pace for  economic integration  within the internal  market and has  given 
a  lead  in  the  multilateral  extension  of  economic  integration,  particularly  through  the 
Uruguay Round. The EU must maintain this open policy  stance and ensure that its partners 
respond  in turn  by opening  their markets. 

-  We  will fully  respect  our  obligations,  including  the  new  commitments  of  the  Uruguay 
Round. We will devote considerable attention to ensuring that our partners implement  their 
obligations as quickly  as possible. Where developing  countries need technical assistance to 
achieve  this,  we  will  try  to  give  it. 

-  The  Commission  will  work  with  Member  States  and,  more particularly,  with  European 
enterprises, in order to identify  more clearly the main obstacles we face  to our exports and 
investments  in  third  countries.  We  will  establish  priority  objectives  and  bring  all  the 
external  economic  policy  instruments  to  bear  in  a  more  coordinated  way  to  create  new 
market  opportunities  for  exporters  and  investors  worldwide.  Where  obstacles  can  be 
removed  by  appeal  to  existing  international  rules,  this  will  be  done.  Where  bilateral  or 
plurilateral  negotiations  are  needed,  they  will  be  pursued. 

-  The  EU  must give  the  WTO its full  support  as the  motor  of the  open  trading  system.  We 
must  contribute  fully  to  its  efficient  functioning  as an  institution.  Now  and  in  the  run-up 
to  the  Singapore  Ministerial  meeting  of  December  1996, we must  work  with  our  partners 
to  strengthen  the  multilateral  process  and  give  it  fresh  momentum. 

-  In shaping the negotiating  agenda of the WTO, we will give priority  to those issues which 
will create new opportunities for  European business on third country markets. With the help 
of  industry,  we  will  work  to  secure  agreement  to  such  priorities  no  later  than  the  WTO 
Ministerial.  But  if we are to achieve  such ambitious  objectives,  we must plan  now  for  the 
WTO  Work  Programme  up  to  the  year  2000  and  beyond. 

46.  This  Communication  is  a  first  analysis  of  the  Community's  priorities  in  immediate 
market-opening,  in current  negotiations and  in the debate on the future  WTO  programme.  It 
will  be further  refined  and developed  in the light of reactions, from  Member  States, from  the 
European Parliament, from  business, consumer and other organisations, and from  our partners 
in third  countries. 

19 

ISSN 0254-1475 

COM(96) 53  final 

DOCUMENTS 

EN 

02  11 

Catalogue number  : CB-CO-96-067-EN-C 

ISBN 92-78-00555-X 

Office for Official Publications of the European Communities 

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