Source: EURLEX
Language: en
Format: md

**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.

4. Further trade liberalisation is contributing to the process of a gradual globalization of
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.

6. To achieve competitiveness in the global economy, EU companies need both to ensure
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.

7. The Single Market facilitates the process of economic integration and structural changes,
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.

8. European firms encounter a _multitude of obstacles abroad_ of a very different nature [ 2)] .
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) 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

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

(b) identify ways of pushing market opening still further and exposing new areas to multior plurilateral disciplines

(c) 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
concerned, and those with geographical responsibilities. For instance, services with
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 mostfavoured-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 nondiscrimination. 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 repeatedly [9)] that the level of social development depends mainly
on economic development and, whilst it is certainly legitimate to discuss social matters in

7) Idem, p. 19.
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.

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###### **ISSN 0254-1475**

## **COM(96) 53 final**

# **DOCUMENTS**

##### **EN 02 11** **Catalogue number : CB-CO-96-067-EN-C** **ISBN 92-78-00555-X**

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