Opinion of the European Economic and Social Committee on the New trade agreements negotiations — The EESC position
Date: 2008-04-22
Institutions: European Economic and Social Committee
Subjects: bilateral relations, environmental impact, free-trade agreement, labour standard, market access, social impact, trade agreement (EU), trade policy

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Opinion of

the European Economic and Social Committee on the ‘New trade agreements

negotiations — The EESC position’

(2008/C 211/21)

At the plenary session held on 26 September 2007, the European Economic and Social Committee decided,
under Rule 29(2) of the Rules of Procedure, to draw up an opinion on

‘New trade agreements negotiations — The EESC position’.

The Section for External Relations, which was responsible for preparing the Committee's work on the
subject, adopted its opinion on 1 April 2008. The rapporteur was Mr Peel and the co-rapporteur was
Ms Pichenot.

At its 444th plenary session, held on 22 and 23 April 2008 (meeting of 22 April), the European Economic
and Social Committee adopted the following opinion by 101 votes to 6 with 7 abstentions.

1. Conclusions and General Recommendations

The Committee welcomes

the reaffirmation by the
1.1
Commission of
its overall commitment to multilateral trade
liberalisation. It recognises that this turn to a bilateral agenda by
the EC is predicated on the lack of progress of the multilateral
agenda.

1.2
The Committee believes that bilateral agreements must
be seen as compatible with and indeed eventually strengthening
multilateralism. Eventual gains made bilaterally can stimulate the
multilateral process. Our prosperity depends on trade, as the EC
states.

1.3
However, the Committee stresses there must be a qualita-
tive change in the approach to this new series of negotiations:
simply to try to repeat on the bilateral level the policies which
have not succeeded at the multilateral level is insufficient.

The bilateral approach may allow more respect

1.4
to
regional and national differences than is the case with multilat-
eral agreements which per force follow a broader approach.

1.5
The Committee therefore warmly welcomes the approach
from DG Trade seeking the Committee's assistance in covering
the EU's new trade agreements negotiations as foreseen in the
Commission's
‘Global Europe’ Communication of October
2006.

The Committee reaffirms its fundamental objective to
1.6
maintain and develop, as a full partner of
the European
Commission, a significant level of co-operation and responsive-
ness on behalf of European civil society in our future work with
the Commission and other major EU Institutions.

1.8
The Committee believes that in the area of monitoring it
has the potential to play an active role because of its structure.
The experience of the Committee in particular enables it to
identify effective potential partners in other countries.

1.9
The Committee, whilst noting that in this instance the
Commission is seeking comment and cooperation on the
proposed negotiations as a whole, also notes the very extensive
range of issues and concerns that these negotiations will cover,
many of which are alluded to in the body of this Opinion. The
Committee therefore strongly recommends that it should look
further and in greater depth into a number of these specific
issues in separate Opinions in the near future, for example, in
relation to Decent Work and market access.

social and environmental considerations

The Committee welcomes in particular the re-emer-
1.10
gence of
in the
Commission's brief for these negotiations, noting to this end
includes economic, social and
that Sustainable Development
environmental considerations. However,
the Committee also
notes that many primarily economic-related issues that are
raised include civil
those
affecting the free movement of people.

society considerations, not

least

1.11
In this bilateral approach the Committee considers that
a basis of fundamental, universal rights enshrined in ILO stan-
dards are essential. The Committee also believes such standards
must be used to intensify mutually acceptable and practicable
definitions of Decent Work.

2. Background — the importance of trade

Trade lies at the very heart of International Relations.
2.1
Interactions between countries take place at a number of levels,
notably through:

1.7
The Committee welcomes this opportunity to support
the Commission's aim to ensure a greater level of monitoring
and in the transparency in the negotiations and to extend and
develop its involvement with civil society in those other coun-
tries and regions of the world involved with the negotiations.

— geo-political/military interaction,

— trade and economic links,

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— ‘soft governmental’ bodies: permanent such as the WTO
(World Trade Organisation), the United Nations and its agen-
cies, including the ILO (International Labour Organisation),
the IMF and the World Bank — and ad hoc, notably on
shared environmental/Sustainable Development and Climate
Change concerns (Rio, Kyoto), — all arising from global
interests shared in common,

— sport, cultural and/or historic ties, and

— Civil Society contacts — of particular importance to this

Committee.

these,

Of
trade offers the most effective, deepest and most
enduring means of building contact between countries and
global regions, from which other contacts and ties will most
readily grow.

(especially social and environmental

that these must seek to promote respect for sustainable develop-
ment
standards). The
mandate should be seen against a backdrop of major global
issues: climate change, the Millennium Goals, poverty reduction,
decent work and health standards (notably food).

The Committee would recommend relaunching the
2.6
debate within civil society on the collective preferences under-
pinning the European model of the social market economy. In
the bilateral negotiations, Europe must make it clear that it
stands by its collective preferences on social matters and in the
food safety and the environment. This view is
areas of
confirmed in the Commission communication of October
2007: ‘The EU needs to ensure that third countries offer proportionate
levels of openness to EU exporters and investors and to have ground
rules which do not impinge on our capacity to protect our interests and
to safeguard our high product standards relating to health, safety, the
environment and consumer protection’.

Indeed international trade and investment are the key
2.2
drivers of European economic growth and of
the external
dimension of EU competitiveness. As the Commission ‘Global
Europe’ Communication states,
‘our prosperity depends on
the Commission has full
trade’. Of
competency in trade matters — whereas in many other areas of
international relations it can only have political aspirations. The
accountability of
the Commission here however remains an
issue of concern and will need to continue to be monitored as
these negotiations progress.

Importance too is that

The Commission has announced that it will soon be
2.7
putting new ideas on the table to address these key challenges,
based on the EU's commitment to opening up markets and
ensuring fair competition. The Committee therefore feels it a
matter of some urgency to press ahead with these bilateral
agreements in the pursuance of a threefold policy objective —
protection, fairness and reciprocity — so that a new generation
of agreements can emerge.

trade,

lower

The encouragement of

tariffs and the
2.3
removal of other trade and investment barriers, is seen by many
to be of critical importance in achieving widespread acceptance
of the more positive and beneficial aspects of globalisation. The
major emerging economic powers like China, Brazil and India
included in the Commission's new strategy — are
— all
adopting less restrictive trading practices, a key sign of how the
pace of globalisation is growing exponentially.
Increased
economic ties — through increased trade — enables cultural,
and most importantly for the EESC, contacts at civil society
level to be strengthened considerably. Many believe these ties
will also promote and encourage the acceptance and develop-
ment of best practice in environmental improvement and the
promotion of Sustainable Development as well as the develop-
ment of higher social and employment standards. This is not yet
a certain outcome — the Committee believes that it will need
careful monitoring through the direct
involvement of civil
society.

2.4
The Committee attaches key importance to the role of
civil society in the implementation and follow-up mechanisms
for those facets of the agreements that relate to sustainable
development. We recognise the advantage to be gained by coop-
eration-based dialogue in fostering an atmosphere of confidence
among the partners as this is the only way to address the sensi-
tive issues involved.

3. The Commission ‘Global Europe’ Communication — A

major change in EU Trade Policy

3.1
The approval by the Council of Ministers in April 2007
of the Commission Communication ‘Global Europe competing in
the world’ is a highly significant event globally. The EU is one of
the largest world trading partners, accounting for a 26 % share
in world trade in services and a 17,5 % share in goods (EU25
— 2005 EC figures). Whilst reaffirming the EU's commitment to
this Commission strategy promotes a new
multilateralism,
generation of bilateral and regional trade agreements as well as
targeting the elimination of non-tariff and regulatory barriers.

3.2
This new framework is clearly the result of the lack of
practical progress in the Doha Development Round. As such it
is to be welcomed as a statement of intent to pursue the liberal-
ising agenda. The Commission is correct to stress this is not in
to keeping
place of multilateralism but as a commitment
momentum going. The Committee welcomes this. The conclu-
sion of the Doha Round remains a strategic political necessity.

This Communication nevertheless represents a major
3.3
change of direction in EU trade policy, the first since 1999.
Nevertheless
the
Communication, not least for its reaffirmation of the Commis-
sion's commitment to the development of trade and the EU's
attachment to multilateralism.

the Committee has already welcomed (1)

2.5 We welcome the inclusion of the important guideline in
the negotiating mandate for the new agreements which specifies

(1) Malosse Opinion dated May 2007 (REX/228 — CESE 136/2007 fin).

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It

that

is important

3.4
the bilateral agreements do not
thwart multilateralism. They should therefore be confined to
providing support for the multilateral approach and must be
seen as compatible with, and indeed eventually strengthening
multilateralism. Indeed, the Committee considers that eventual
gains made bilaterally can stimulate the multilateral process as a
result of the more in-depth discussions and the closer alignment
of positions brought about by bilateral approaches.

3.5 We note that
the complexities here have been very
clearly set out by Professor Patrick Messerlin (2). Human
resources are so scarce in some small states and regional config-
urations that multilateral or bilateral
is a stark and critical
choice.

It is essential, therefore, that the Commission negotiates
3.6
FTAs that can be shown to provide real added value. The bilat-
eral approach may allow more respect to regional and national
differences in approach than is the case with multilateral agree-
ments which per force follow a broader approach. In this regard
we note too the clear,
renewed emphasis on the three
outstanding ‘Singapore Issues’, namely competition, investment
and public procurement, which the Commission now intends to
pursue through the proposed FTA negotiations, despite these
issues being dropped by the EU from the DDA negotiations at
Cancún.

3.7
However, the Committee stresses there must be a qualita-
tive change in the approach to this new series of negotiations:
simply to try to repeat on the bilateral level the policies which
have not succeeded at the multilateral level is insufficient.

3.8
The EU must equally appreciate that in each case the
negotiating partner will want to proceed at a pace and manner
in keeping with their own traditions. There are wide differences
in approach between Europe and Asia in many areas, which
need to be respected. Within the ASEAN members in particular
there are other wide differences, notably in levels of develop-
ment. The EU cannot extend its standards without negotiation.

4. General recommendations for future FTAs

4.1
The Commission has set out both a series of key FTA
and other trade negotiations that it wishes to promote, together
with a series of key negotiating areas, including technical and
non tariff barriers and the ‘Singapore Issues’, by means of which
it aims to develop and strengthen its ‘competitiveness agenda’
for trade policy. Negotiations should be as broad as possible but
outright contradictions and incompatible standards between
agreements must be avoided at all costs. The Committee will
look for clear guidelines to be followed in both the foreseen
FTAs and other negotiations that are likely to follow in the
following areas.

Technical barriers to trade:

4.2
now constitute a greater impediment

in many countries these
to trade creation and

(2) Jan Tumlir Policy Essay (ECIPE, 2007).

economic growth and pose more barriers to market access than
those provided by tariffs (not least as so many individual devel-
oping countries have unilaterally reduced tariffs to develop trade
and investment). In this regard, standards, particularly in the
field of human, animal and plant health are regularly a major
point of contention, especially as the EU maintains some of the
highest standards in the world — often perceived by others as
‘back-door’ protectionism. The EU must be prepared to intensify
the training and wider capacity building already available and
otherwise build on the success of its existing Trade Related
Technical Assistance (TRTA) programmes.

4.3
Tariff barriers will be a key issue in each of the three
key negotiations, with Korea, India and ASEAN. India in particu-
lar has some very high tariffs, backed by further duties, notably
the Additional Duty and the Extra Additional Duty, with an
aggregate tariff as high as 550 % for certain products. Lack of
harmonisation is a problem among ASEAN countries, where a
wide range of differing tariff levels are applied, as well as discri-
minatory excise tax systems (3).

Negotiating the removal of as many non tariff barriers
4.4
(NTBs) as possible will be high on agendas, although here the
underlying problems will be as a result of overgrown bureaucra-
cies, stifling levels of local regulation, lack of alternative employ-
ment for superfluous officials and even possibly corruption. The
WTO estimates, for example, that 93 % of imports into India
face NTBs of some kind, compared with just 22 % for Brazil (4).
NTBs are also high in ASEAN countries, but here their extent
also varies widely as well
(for example affecting 31 % of
imports into Indonesia, compared with just 2 % for Singapore).
For Korea the figure is 25 %.

4.5
Economic criteria must be paramount — current and
future markets must be a fundamental driver in determining
future FTAs.

4.6
Substantially all goods and services must be included
ai.e. at least 90 % of trade: GATT Article XXIV specifies that
‘restrictions shall be “eliminated” between members of an FTA’.
Some exceptions will need to be made, especially where subsis-
tence levels of agriculture may be involved. This restriction
cannot apply however in the area of services, where optimal
inclusion will be critical. Huge potential gains for each nego-
tiating party — possibly the most quantifiable in trade terms —
are at stake here. Free movement of capital and finance will of
course be of key importance here if all parties are to gain
maximum benefit. However major problems arise particularly
over the movement of people, notably in ‘Modes’ 3 and 4. To
resolve these successfully will be especially challenging, notably
the granting of more open access to individual Member States
for qualified professionals from each trade partner in turn. Civil
society will want to monitor developments, and implementa-
tion, in this area very closely. It is appreciated that for all sides

(3) CBI Briefing Paper, March 2007.
(4) WTO ‘Market access: Unfinished Business — Post Uruguay round

Inventory’, 2003.

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some sectors are more sensitive than others, but agreements
contradictory or incompatible with any of the others reached
must be avoided at all costs. Nevertheless the Committee
endorses the intention of the Commission to work from a posi-
tive list, as per the DDA negotiations, as opposed to the nega-
tive list approach adopted by the United States.

4.7
The EU should promote the international dimension of
the Internal Market, not least to encourage increased economic
integration wherever
this would be beneficial, such as in
accounting standards, not least to ensure a level playing field.

4.8
All FTAs will require both safeguard clauses and a
dispute settlement mechanism and some social agenda moni-
toring process. The Committee recommends that a mechanism
for the rapid settlement of non-tariff disputes be put in place.
This would be a bilateral mechanism designed to offer
conciliation through a flexible apparatus along the lines of
the European Union's experience with the internal ‘Solvit’
network. The EESC has already addressed the question of the
monitoring of such a social agenda in the context of bilateral
agreements and has suggested the establishing of ‘joint bilateral
observatories’ (5).

5. Recommendations for future trade agreements:

the

social and environmental aspects (6)

5.1
The Committee particularly welcomes that the Commu-
nication spells out the importance of Social Justice, stating that
‘we must also recognise the potentially disruptive impacts of
market opening for some regions and workers, particularly the
less qualified’. It emphasises too the underlying threat of climate
change and singles out energy and biodiversity in this context.

5.2
In the Uruguay Round the EU Commission supported a
social clause for world trade but such a step was abandoned not
least because of opposition from the developing world which
for disguised
saw such conditionality as having a potential
protectionism.

Concern in the EU has persisted however about ‘social
5.3
dumping’ — using artificially low wages and social on-costs to
provide ‘unfair’ competition. The EESC (7) in particular takes the
view that free zones, which exist in the countries with which
bilateral negotiations are under way, must in no case operate
outside the limits set by national legislation (on social and envir-
onmental issues). They represent real cases of social and envir-
onmental dumping. The negotiated agreements must ensure that
no business, by means of sub-contracting, can set objectives at a

lower level than national legislation or fundamental ILO conven-
tions.

5.4
All bilateral negotiations must be based on the frame-
work provided by the principal international undertakings: the
the 2005 Sustainable Development
1998 ILO declaration,
Summit, and commitments entered into under the Millennium
Development Goals concerning poverty reduction, and the
2006 ministerial declaration on decent work.

social

Despite the sensitivities and lack of progress in pursuing
5.5
the
agenda multilaterally through the WTO,
this
Committee urges the Commission to consider how it can be
pursued bilaterally. Indeed as already stated a bilateral approach
may be more fruitful in achieving the Commission's goal for it
ensures the dialogue can more fully and directly addressed with
due respect to differences in development.

5.6 More and more European citizens are asking questions
about Europe's globalised future. For its part, the Commission is
seeking to define the ‘European interest’, as illustrated by the
December 2007 summary report on the Lisbon Strategy. The
Commission emphasises the external dimension (8): it notes that
it is becoming increasingly necessary to ensure that equal condi-
tions exist at international level.

the European interest,

In order to strengthen the external dimension of the Lisbon
Strategy, combining the defence and the legitimate opening up
of
the Commission has agreed that
dialogue with third countries be stepped up and rationalised,
placing a clearer emphasis on questions of mutual interest, such
as market access, regulatory convergence, migration and climate
change. Each year,
it will adopt a single report on access,
naming those countries and sectors where major obstacles
continue to exist. The Committee wishes to see civil society in
Europe and our negotiating partners involved. This should
restore visibility and coherence to the Union's policies on trade,
external relations and development aid.

5.7
For the immediate present and with regard to the trade
negotiations under way, the Committee considers that a founda-
tion for the sustainable development chapter (social, environ-
mental, human rights and governance aspects) is provided by
the 27 conventions already listed (9) by the current GSP Plus
system. The aim is make this a common reference point. The
ratification, implementation and monitoring of these 27 inter-
national conventions should represent the minimum threshold
for discussing the sustainable development chapter in the nego-
tiations opened with the Asian countries (10).

(5) See REX/182 The Social Dimension of Globalisation.
(6) Opinion on The Challenges and Opportunities for the EU in the Context of

Globalisation, rapporteur: Mr Malosse, 31 May 2007.

(7) Corporate social responsibility, Evelyne Pichenot, December 2006.

(8) Communication from the Commission of 11 December 2007, assess-

ment and summary of the Lisbon Strategy.

(9) List in appendix.
(10) Table showing the ratification of international conventions by Asian

countries.

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5.8
In the light of the varying levels of development in the
Asian countries concerned, and their institutional capacity for
effective implementation, the Committee recommends that this
condition be evaluated on a case-by-case basis, and recommends
financial support in line with the distance each country must
cover in order to catch up. At the same time, this foundation is
only a starting point, which can be fleshed out by stronger
commitments for the more developed countries, such as South
Korea.

5.9
To this end, free trade agreements must be backed up by
cooperation agreements offering substantial financial assistance
in order to catch up with international standards. This level of
financial commitment will have a strong influence on the strict-
ness of requirements, particularly in the environmental sphere.
Technical assistance will be all the more effective if it is linked
to the results flowing from the implementation of certain
conventions. By granting funding, the monitoring of commit-
ments can serve as a spur to social progress.

5.10
Technical assistance will also focus on establishing or
strengthening local or regional bodies to supervise implementa-
tion (e.g. labour inspections, agency for the use of pesticides,
etc.). The Committee places particular emphasis on the need to
place bilateral monitoring mechanisms in the hands of local or
regional bodies with the capacity to effectively monitor produ-
cers throughout the territory in question and to impose sanc-
infringement. Real access to public
tions in the event of
procurement also entails greater
territorial
involvement of
authorities in monitoring and implementation.

5.11
The Committee calls for impact assessments for each
country in the social and environmental fields to be available
from the initial stages of negotiation, to provide negotiators
with an objective overall picture of the chances of, and difficul-
ties in, establishing a realistic commitment with any given
country. It is preferable to slow down the negotiation process in
order to guarantee a sound result, taking account of the impact
assessments currently underway, which will enable civil society
to judge developments with complete transparency, and to eval-
uate the financial assistance required to attain the best social or
environmental objectives.

5.12
For many countries lowering customs tariffs means the
loss of revenue which is used to finance public services. This
complex issue deserves further investigation. Free trade agree-
ments should therefore not include any proposals or measures
which might directly or indirectly impede the operation of
public services.

6. A dynamic approach to decent work in the Union's

trade agreements

6.1
The Committee believes that decent work, as defined by
the ILO, must become a priority benchmark in trade at
European and global
level. It is a concept that is recognised
internationally by employers, states and workers. The guarantee
compliance
of

decent work — including

employment,

with workplace rights, social dialogue and social protection —
is crucial
to reducing poverty and bringing about global
progress (11).

Free

trade

agreement monitoring committees must
6.2
provide backing for existing dialogue procedures, especially
when a partnership or association agreement has set up a struc-
ture for dialogue on ‘employment and social affairs’.

The Committee considers that progress on social stan-
6.3
the sustainable development
dards should form a part of
approach set out in the mandate. It was agreed in 1996, that
the joint work of the ILO and the WTO needed to be strength-
ened.
In 2007, this resulted in a joint report on trade and
employment, and is due to continue in the form of a study on
the ‘informal’ sector. The Committee recommends that the EU
take account of ILO regional-level interventions in assessing the
impact of trade integration on decent employment and on how
policies on employment, social protection and labour standards
are framed. It wishes to alert negotiators to the importance of
defining indicators that are compatible with the decent work
agenda.

6.4
At the current stage in the negotiations, the Committee
judges it essential that the eight basic conventions be ratified (12)
and properly implemented (subject to verification by a joint
WTO/ILO working group), calls for the other four priority
conventions on health and safety and labour inspections to be
taken into account, and urges that the largest possible number
of conventions relevant to the countries concerned be ratified,
subject to the principle of differentiation.

6.5
The Committee recommends that the negotiation of new
trade agreements be accompanied by the introduction of
national decent work programmes. It urges the relevant Asian
countries to call for ILO assistance in carrying out a three-fold
diagnosis, and to facilitate the recognition of this plan by all the
international institutions. The Committee would like to see the
bilateral negotiations issue included in the follow-up communi-
cation on decent work planned for 2008.

6.6
The Committee calls on the EU and the Member States
to provide financial support and donations at the subsequent
monitoring stage of the agreements, to help implement national
decent work plans. In its annual country reports, the EU should
pay special attention to the exercise of trade union rights and to
the recommendations of the ILO's labour standards committee.

(11) Opinion on The social dimension of globalisation, rapporteurs: Mr Etty

and Ms Hornung-Draus.

(12) Table on the progress of ratifications in Asia in appendix.

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6.7
Regarding the monitoring mechanism, the Committee
considers that a contribution to the impact analyses should be
sought from regional- and local-level social partners. It recom-
mends that sector-based structures be introduced in order to
carefully analyse the specific difficulties encountered by each
sector.

7. Intellectual Property Rights (IPR) — and enforcement

7.1
The Committee welcomes the emphasis in the Commu-
nication on strengthening IPR provisions in the ways that are
outlined, including in particular offering support to SMEs and
others trading with the emerging economies. Developing the
EU's strategy for protecting intellectual property rights and
strengthening enforcement activity is essential
if the EU is to
meet its aim to reduce IPR violations and the production and
export of fake goods. Enforcement is key here. The TRIPs agree-
ment must be fully implemented by FTA partners,
thus a
primary objective for the EU in concluding these FTAs should
be to obtain solid commitments for concrete enforcement of
existing IPR legislation together with sufficient control and
measurement of results achieved, rather than aim for entirely
new agreements. Europe's Research and Development capacity
and capabilities, so rightly emphasised in the Lisbon Strategy,
will be a significant factor in maintaining EU competitiveness in
a world where strong economic challenge will increasingly come
from outside Europe.

7.2
In combating counterfeiting, the Committee urges the
negotiators — especially with India — to discuss measures to
protect consumers from the risks associated with counterfeiting.
Follow-up to the agreement should include a joint EU-India
committee on counterfeiting (as is the case with China) (13).

Given that India is involved in the Heiligendamm process
7.3
(launched in June 2007) between the G8 and the five emerging
countries to create a structured dialogue on promoting innova-
tion and protecting intellectual property rights, for civil society,
it would be helpful for the bilateral negotiations to take account
of the monitoring of this process.

9. Government procurement markets,

investment and

competition rules abroad

Despite our concerns with regard to the DDA and the
9.1
timeliness of reintroducing the ‘Singapore Issues’, the Committee
welcomes the Commission's detailed proposals with respect to
opening up public (increasingly described as government)
procurement markets abroad, investment and competition and
state aid rules, given the restrictive practices found in these areas
with many of the EU's leading trade partners. As already stated,
FTAs to be worthwhile must be seen to add value.

9.2
The Committee notes the existence of the WTO working
party in government procurement which allows like-minded
countries to make consensual progress on public procurement
under the auspices of the WTO, thus opening the possibility of
building momentum without pressurising countries
to go
beyond what they feel they can deliver or cope with. This could
be a model for proceeding in the bilateral field.

Government procurement, as is stated,

9.3
is an area ‘of
significant untapped potential for EU exporters’. It is especially
important
for EU exporters in many sectors in emerging
markets. Given the example set by the EU's existing FTA with
Chile, we look therefore to the standards agreed in the Govern-
ment Procurement Agreement (GPA) of 1994 as the minimum
that should be sought, with the EU offering technical assistance
and other ‘capacity building’
to other parties if required to
enable them to comply with that Agreement. We note that the
US is looking to achieve this goal in their negotiations and we
welcome the assurances given by the Commission that this is
the EU's goal as well. We are under no allusions that this will be
easy to achieve, not least with India where competence lies at
State, not Federal, level.

8. Rules of Origin

8.1
Cumulation of origin between EU's FTA partners should
be allowed, and rules of origin should be harmonised to facili-
tate trade with our FTA partners. Lack of cumulation, and differ-
ences in rules of origin for multilateral trade (‘non-preferential
rules’) and for free trade areas (‘preferential rules’), make it diffi-
cult for economic operators to take full advantage of the lower
tariffs of FTAs. Many European importers today pay the full
non-preferential duty rather than the lower FTA duty to avoid
potential penalties for accepting certificates of origin of uncer-
tain accuracy. In such cases FTAs fail to fulfil their purpose to
expand trade.

(13) See also Opinion by Mr Cappellini INT/390: The different policy
measures, other than suitable financing, that would help SMEs to grow
and develop.

investment

9.4
Equally, improving investment conditions in third coun-
tries will be important in ensuring growth both in the EU and
in the ‘receiving countries’. Many, if not most, of the EU's key
trading partners maintain a high degree of protection from
through discriminatory regimes,
foreign direct
authorisation rules that
involve major administrative and/or
bureaucratic costs, whilst in addition there are too many sectors
that are entirely, or partially,
inaccessible to European invest-
ment, especially in the service sector (banking, finance, insur-
ance, legal, telecoms, retail distribution as well as in transport).
The key in the negotiations will lie with the removal of unneces-
sary restrictions, and to ensure that the negotiations and the
process then in place are fully transparent and that the resulting
authorisation procedure within the FTA partner should be fair,
quick and efficient. We note that the US FTA model used in
their negotiations involves a comprehensive approach, including
investor protection.

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9.5 We welcome the EU's desire to include some provisions
on competition in FTA negotiations. Many of the problems
regarding investments and trade facilitation stem from the lack
of adequate competition regimes in those countries, which
impede and distort global trade and investment flows are often
impeded by market distortions caused by the absence (or by a
serious
in competition. These all
remain fundamental
issues of global governance. Both the
existing agreements with South Africa and Chile provide for
co-operation between the Commission and the local Competi-
tion authority. The Commission should aim to include such
provisions in the FTAs, although that will be hard to achieve
(with the possible exception of S Korea).

implementation)

lack of

9.6
The Commission's renewed emphasis on market access
to
strategy is also welcome, along with the commitment
concentrate resources in key countries and to set clear priorities
with regard to the removal of non-tariff and other trade barriers
in priority countries.

9.7
The Committee notes that the review of the EU's trade
defence instruments is currently under active review. The
trade defence instruments should
Committee considers that
continue to play a protective role, including within the bilateral
agreements
safeguard
measures).

(anti-dumping,

anti-subsidy

and

10. Trade facilitation

The fourth ‘Singapore issue’ is still an integral part of
10.1
the Doha agenda, and is mentioned in the Communication. The
WTO draft text on Trade Facilitation is understood to be close
to agreement. This should go a long way to establishing core
standards for the border/customs management of trade world-
wide, and reduce the risk of unpredictable government interven-
tion. Such an Agreement should include accelerated and simpli-
fied procedures for release/customs clearance of goods, proce-
dures for legal recourse and appeal, publication of trade regula-
tions, minimisation of fees and charges, and above all the estab-
lishment of a ‘single window’ — an exponentially increased use
of
IT for customs procedures. That alone should cut out a
considerable amount of duplication, cost and time, especially
where
require
virtually identical information. This will be of particular impor-
tance in the negotiations with India. According to the World
Bank (14), it takes an average of ten days to export goods from
India (7 from Brazil) and an average of 41 days to import goods
into India (against 24 for Brazil). We note too the wide variation
between ASEAN members, especially between Singapore and
Thailand. We urge the Commission to make every effort to
secure such an agreement, even if the wider DDA negotiations
become totally deadlocked. This should in turn lead to higher
standards in simpler, more efficient and less costly border and
customs procedures.

departments

government

different

several

(14) World Bank, ‘Doing Business 2007’; September 2006.

10.2
A key benefit of such an Agreement would be felt by
landlocked countries, where transparent, IT based procedures
would help eliminate loss and delay whilst goods were crossing
a third country on the way to or from a port.

10.3
Small businesses are the most exposed to customs
trading costs and often do not have necessary critical mass (in
terms of economies of
sales, distribution
scales,
networks, transport facilities, etc.) to deal with high customs
costs arising from administrative delays, corruption and other
factors, with the result that potential markets are lost. EU SMEs
would particularly benefit from agreement on Trade Facilitation.
SMEs in the short run could gain more from an ambitious trade
facilitation agreement than from tariff reductions.

size of

10.4
Irrespective of progress made in the DDA negotiations,
the Committee looks to as strong an emphasis in the actual FTA
negotiations on Trade Facilitation as on the other
three
Singapore Issues.

10.5
The Committee notes the success of the Commission's
Trade Related Technical Assistance (TRTA) programmes, which
have made a real contribution to developing countries' ability to
both deal with the demands of WTO membership and to
increase their ability to meet the exacting requirements both as
exporters of goods and services to the EU and as recipients of
EU investments. Such programmes can engage the technical
expertise of other
international bodies under UN auspices
(e.g. UNIDO, WIPO and ITC) which can further enhance the
EU's profile and engender cooperation between international
institutions. This will become particularly significant if the least
developed members of ASEAN are to become more involved, as
well as being relevant to progress in Latin America.

11. The role of civil society

11.1
The Committee welcomes the Commission's aim to
ensure a greater level of monitoring and transparency in the
negotiations and to extend and develop its collaboration with
civil society in those other countries and regions involved with
the negotiations. In the monitoring field, the Committee can
play an active role because of
Its experience
enables it to identify effective potential partners in third coun-
tries. In turn their involvement will help strengthen the role of
these partners at home.

its structure.

11.2
For the EPA negotiations the Committee is mandated
under the Cotonou Agreement to organise consultations and
meetings with ACP economic and social
interest groups,
widened in 2003 to include the monitoring of the negotiations
at the request of the then Trade Commissioner (Mr Lamy). With
the active participation of EC negotiators this has resulted in
the ACP-EU Follow-up Committee,
twice yearly meetings of
regional seminars once or twice a year and general conferences
in Brussels, with delegates from all of the ACP countries. As a
the Caribbean
result of consultations,

the EPA agreed for

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includes both, a social and environmental chapter and the crea-
tion of a civil society Consultative Committee responsible for
monitoring the implementation of the EPA and review all its
economic, social and environmental aspects.

representatives in connection with the ongoing Sustainability
Impact Assessment process and by providing direct electronic
access to all
its civil society contacts in the countries and
regions concerned.

11.3 With regard to the proposed association agreements
with the Central American and Andean regions, regular dialogue
has been established since 1999 with representatives of orga-
nised Civil Society from Latin America and the Caribbean, the
fifth meeting of which is due to be held in April 2008. This was
set up to ensure a civil society contribution was given to the
biennial EU — Latin America Summits. The Committee also has
extensive contacts with the Mercosur Economic and Social
Consultative Forum, the Andean Labour Advisory Council, the
Andean Business Advisory Council and the civil society Consul-
tative Committee of the Central American Integration System.

11.4
The Committee also participates in the EU — India and
the EU — China Round Tables, in both of which it forms the
EU delegation. The former was set up in 2001, the latter in
June 2007. Both meet regularly, and the work of both has
already been acknowledged by the annual
summits. The
Committee in addition has contacts at civil society level with
the national ESCs from both S. Korea and Thailand through the
‘International Association of Economic & Social Councils and
Similar Institutions’ (IAESCSI).

11.5
The Committee expects to provide cooperation in orga-
nising regular civil society consultation meetings at regional
level on trade negotiations by using its extensive regional
contacts and its cumulated experience in monitoring the EPAs
negotiations. It proposes it should organise workshops or other
interest
regular meetings for consulting economic and social
groups, in the countries and regions concerned, by means of
existing Round Tables where appropriate. Negotiators from the
EU (and their counterparts) would be invited to inform on the
state of negotiations and get feedback from European and third
the
countries
Committee could also complement the activities of the EC by
facilitating the participation of European and third countries

representatives.

In addition,

society

civil

Brussels, 22 April 2008.

11.6
The Committee's should paid attention to the bodies
and procedures used to monitor sensitive sustainable develop-
ment issues. It feels that the regular bilateral dialogue should
the various
draw on the recommendations arising out of
mechanisms in place under the 27 international conventions
cited in 5.7 above, not least by taking on board the observations
of civil society or by assessing the findings of the non-financial
ratings conducted on a country-specific basis by the World
Bank or the ratings agencies. Civil society must also conduct a
preliminary assessment of the different follow-up mechanisms
concerned.

For Korea,

the Committee recommends that use be
11.7
made of the regular OECD reports, particularly in relation to
the moratorium signed with the social partners up to 2010.

11.8
Defined as an expression of sustainable development at
company level, corporate social responsibility (CSR) can, on a
voluntary basis, help to implement the social and environmental
commitments contained in the new trade agreements. This
approach would be based in particular on the fifty or so interna-
tional framework agreements that have already been negotiated
by major companies, often of European origin. They represent a
contribution to decent work, by providing an example of
sustained social dialogue in subsidiaries in the partner countries,
and constitute an advantage in attracting local skilled labour.
Furthermore, when large multinationals or their subsidiaries in a
particular sector take on CSR commitments, this acts as a spur
for the entire value chain (suppliers and sub-contractors), espe-
cially in major
such as China. The
Committee recommends that the question of social and environ-
mental labelling should be placed on the agenda of trade agree-
ment monitoring committees,
in order to provide consumers
with high-quality information and to meet traceability needs.

emerging countries

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS