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No C 221/32 Official Journal of the European Communities 28. 8. 89

Opinion on 1992 and the Community's external trade: the impact of a single Community
internal market on the Community's trade with its major trading partners

(89/C 221/07)

On 25 October 1988, the Economic and Social Committee decided, under the fourth paragraph
of article 20 of its rules of procedure, to issue an Opinion and Report on 1992 and the
Community's external trade.

The Section for External Relations, Trade and Development Policy, which was responsible
for preparing the Committee's work on the subject, adopted its Opinion and Report on
16 June 1989. The rapporteur was Mr Beltrami.

At its 268th plenary session (meeting of 12 July 1989) the Economic and Social Committee
adopted the following Opinion nem. con., with 2 abstentions.

1. General comments

1.1. Thirty years after its foundation, the Community plays a major role in international affairs, as
the figures in the appended Report show.

In terms of economic policy it has managed to pursue
an independent line with regard not only to trade but
also to monetary and financial matters.

On the trade front, the Community has achieved significant and innovative results in its relations with

countries in all five continents; this has enhanced its
negotiating position and the international standing of
its institutions.

The creation and strengthening of the European Monetary System and the broad balance achieved in visible
trade with non-EEC countries have also helped to consolidate multilateral trade and increase the prosperity
of the Community and its trading partners.

As the world's leading trading power, the Community
has given a fresh momentum to cooperation with developing countries.

1.2. This has been accomplished partly by adhering
to the principles enshrined in the Treaty of Rome, and
partly in response to guidelines which have gradually
evolved in the Community institutions.

1.3. Nevertheless, the Community's negotiating
capacity is undermined by the procedures for establishing negotiating briefs, which limit the Commission's
room for manoeuvre. The Community therefore needs
broader legal and administrative powers in this area.

This will enable it to adapt swiftly to international
developments, pursue long-term strategies and establish

the relative priority of aims for its common policy _(_ _[l]_ _)_
on economic relations with third countries ( [2] ).

The completion of the internal market and a genuine
common trade policy will require Community-level
management of all trade policy instruments and preferential arrangements (including quotas and tariffs) as
well as relinquishment of national claims to regulate
individual aspects of trade relations with third countries
independently. The Commission and the Council are
therefore urged to push ahead with the adoption of
measures to establish and strengthen the Community's
identity abroad ( [!] ).

As the world's main trading market, the Community
must adopt a liberal, open approach in order to enhance
its own, as well as worldwide, socio-economic equilibrium.

The ongoing integration of the internal Community
market must be coupled with a trade policy conducive
to the increasing liberalization of world markets. It is
inappropriate to speak of a 'Fortress Europe'. Europe
takes the lead in world trade, and will continue to do
so. The Committee unequivocally supports the view
that Europe is a 'partner' and force for progress.

Once again the Committee would stress that in all its
external relations the Community should promote not
only international economic progress but also social
progress and respect for human rights and fair labour

(') Study on the EKC's external relations—stocktaking and consistency of action (rapporteur: Mr Romoli) (CES 28 January
1982).
(') Information report on the position of the GATT negotiations
after the Montreal mid-term review (rapporteur: Mr Romoli)
(CKS 16 March 1989).

28. 8. 89 Official Journal of the European Communities No C 221/33

standards as defined by the International Labour Office
(ILO) (*). This should not be seen as political interference in the internal affairs of other countries.

2. Issues relating to the Community's international
trade

2.1. _Sectors governed by multilateral_ _relations_

2.1.1. The Committee agrees on the importance of
the General Agreement on Tariffs and Trade (GATT)
talks as regards multilateralism and non-discrimination.
It would therefore ask the Commission, as the body
negotiating on behalf of the Member States, to
respect—and insist that its trading partners do likewise—the commitments set out in the Punta del Este
Declaration ( [2] ).

2.1.2. The multinational negotiations have a major
bearing on the external impact of the single-market
programme, and their final outcome is extremely
important, as the ESC Report made clear ( [3] ).

2.1.3. The Commission, with the Community's
economic weight behind it, should use existing machinery (antidumping, distorsion of trade and unfair trade
policies) decisively and effectively. As the Committee
has noted before ( [4] ), the Commission must also increase
the number of administrative staff dealing with deter

(') ESC opinion on the proposal for a Council Regulation (EEC)
applying generalized tariff preferences for 1988 in respect of
certain industrial products originating in developing
countries; proposal for a Council Regulation (EEC) applying
generalized tariff preferences for 1988 to textile products
originating in developing countries; proposal for a Council
Regulation (EEC) applying generalized tariff preferences for
1988 in respect of certain agricultural products originating in
developing countries; draft Decision of the representatives of
the Governments of the Member States of the European Coal
and Steel Community, meeting with the Council applying
for 1988 the generalized tariff preferences for certain steel
products originating in developing countries (rapporteur:
Mr Cavazzuti) (OJ No C 319, 30. 11. 1987).
( [2] ) ESC opinion on the GATT/Uruguay Round negotiations: the
current situation and future prospects from the viewpoint of
relations between the European Community and the main
industrialized countries, the developing countries, and
the State-trading countries (rapporteur: Mr Romoli) (OJ
No C 318, 12. 12. 1988).
(•') Information report on the position of the GATT negotiations
after the Montreal mid-term review (rapporteur: Mr Romoli)
(CES 16 March 1989).
( [4] ) ESC Opinion on relations between the European Community
and the newly industrializing countries of South-East Asia
(rapporteur: Mr Collas) (31 March 1989) (OJ No C 139,
5.6. 1989).

rent measures and strengthen the 'new Community
commercial instrument' if it is to tackle unfair competition effectively. At all events, a firm position is needed
on the fourteen topics which are the subject of multilateral negotiations aiming, _inter alia,_ to strengthen the
(weak) machinery for settling disputes ( [2] ).

2.1.4. GATT's international status and role as an
arbitrator should be strengthened by bringing all visible
trade within its sphere of influence and negotiating the
gradual elimination of present exceptions ( [3] ) ( [5] ) ( [6] ).

2.1.5. In a highly significant judgment rescinding
two Community Regulations of December 1986 ( [7] ), the
Court of Justice has stressed the importance of conducting transactions with other regions within the framework of a common trade policy. In the light of this the
Commission is asked to negotiate the gradual opening
of the internal market in the goods in question to
countries which are prepared to open up their home
markets in return, to the extent that their level of
development and economic resources allow.

2.1.6. The Commission is asked to call at inter
national level for a more accurate definition of the
developing countries, and to rank them according to
_per capita_ income. Countries with a _per capita_ income
above that of a Member State should be asked to
observe more closely the principles underpinning
GATT. The question of ranking should therefore be
given priority in the forthcoming Uruguay Round. It
goes without saying that these countries may be
excluded from the generalised system of preferences
(GSP) so that other countries can benefit more. NonGATT members, particularly the newly industrializing

( [5] ) ESC opinion on relations between the European Community,
Japan and the USA (rapporteurs: Mr Curlis and Mr Staratzke)
(OJ No C 328, 22. 12. 1986).
( [6] ) ESC opinion on the impact of current US economic and
political developments on the Uruguay Round and international trade (rapporteur: Mr Romoli) (OJ No C 232,
31. 8. 1987).
( [7] ) Council Regulation (EEC) No 3924/86 applying generalized
tariff preferences for 1987 to certain industrial products originating in developing countries and Council Regulation
No 3925/86 applying generalized tariff preferences for 1987
to textile products originating in developing countries (OJ
No L 373, 31. 12. 1986, p. 1 and 68).

No C 221/34 Official Journal of the European Communities 28. 8. 89

nations, should be asked to make a firmer commitment
to the principles of a multilateral trading system and
to joint GATT( [1] )( [2] )( [3] )( [4] ).

2.1.7. The GSP should not apply to counterfeit products, and there should be a reappraisal of the position of
countries which, having progressed to a more advanced
stage of industrialization, introduce export quotas for
raw materials and thereby create unfair market distortions, to the benefit of their own national industries^) ( [5] ).

2.1.8. The Commission should continue to hold

multilateral talks on subjects which fall within the 'grey
area', and help to open up national markets which are
not at present governed by the new rules on international competition.

2.1.9. Where subjects are not yet covered by multilateral talks, the Commission is asked to propose their
inclusion.

2.1.10. The completion of the internal market will
automatically require closer links between the European
Community and the Organization for Economic Cooperation and Development (OECD). We cannot continue with the present situation, in which Member
States are able to make commitments on matters which
are the responsibility of the Community. A change in
the role of the Community within the OECD will mean
that the Community institutions will have to take a
more active part in working parties.

2.1.11. The completion of the internal market should
not affect rights granted under international agreements
negotiated by the EEC either multilaterally (GATT,
OECD) or bilaterally [agreements with the European

(!) Information report on the position of the GATT negotiations
after the Montreal mid-term review (rapporteur: Mr Romoli)
(CES 16 March 1989).
( [2] ) ESC Opinion on relations between the European Community
and the newly industrializing countries of South-East Asia
(rapporteur: Mr Collas) (31 March 1989) (OJ No C 139,
5. 6. 1989).
( [3] ) Report of the section for External Relations on the renewal
of the generalized system of tariff preferences of the European
Community for the five-year period 1986 to 1990 (rapporteur:
Mr Cavazzuti — 16 September 1985).
( [4] ) ESC opinion on the proposal for a Council Regulation (EEC)
applying generalized tariff preferences for 1989 (rapporteur:
Mr Cavazzuti) (OJ No C 318, 12. 12. 1988).
( [5] ) ESC opinion on the GATT/Uruguay Round negotiations: the
current situation and future prospects from the viewpoint of
relations between the European Community and the main
industrialized countries, the developing countries, and
the State-trading countries (rapporteur: Mr Romoli) (OJ
No C 318, 12. 12. 1988).

Free Trade Association (EFT A), Mediterranean
countries, African, Caribbean and Pacific States (ACP)
or countries of the Association of South-East Asian
Nations (ASEAN)]. The Community is obliged to honour these agreements, provided of course that the benificiary countries do likewise. The same applies to standards and public supply contracts in sectors covered by
GATT codes: the benefits of the single market will
be extended without discrimination to all the trading
partners.

2.2. _Sectors governed by bilateral national_ _relations_

2.2.1. There are two areas here in which a Com
munity policy can be developed.

2.2.2. The first concerns the Community's policy on
visible trade, which contains a number of gaps owing to
differences in the Member States' import arrangements.

2.2.3. The most important of these are: the remaining quotas still imposed by individual Member States
on third countries; textile quotas fixed by some Member
States on the basis of bilateral agreements between the
Community and non-EEC countries; and quotas on
sensitive products laid down for Member States under
GSP agreements between the Community and developing countries.

2.2.4. Differing import arrangements and the attendant fragmentation of the Community market result in
serious disparities in access to the Community market;
they require controls at internal Community frontiers,
which is contrary to the objective of creating a single,
large internal market by 1992. The completion of the
internal market should above all serve to iron out any
remaining disparities resulting from national quotas on
goods imported from outside the Community. To this
end, the safeguard measures provided for in Article 115
will in principle have to be scrapped and rules on
imports from outside the Community will have be
aligned ( [4] ) ( [6] ). Once Community import policy has been

( [6] ) ESC opinion on the proposal for a Council Regulation (EEC)
applying generalized tariff preferences for 1988 in respect of
certain industrial products originating in developing
countries; proposal for a Council Regulation (EEC) applying
generalized tariff preferences for 1988 to textile products
originating in developing countries; proposal for a Council
Regulation (EEC) applying generalized tariff preferences for
1988 in respect of certain agricultural products originating in
developing countries; draft Decision of the representatives of
the Governments of the Member States of the European Coal
and Steel Community, meeting with the Council applying
for 1988 the generalized tariff preferences for certain steel
products originating in developing countries (rapporteur:
Mr Cavazzuti) (OJ No C 319, 30. 11. 1987).

28. 8. 89 Official Journal of the European Communities No C 221/35

harmonized, the Community will also have to coordinate the criteria governing the 'local content' of Community products, bearing in mind its stance on the
establishment and holdings of non-EC companies in
individual Member States. It should be possible to
accomplish this without serious problems in many sectors at present protected by quotas.

2.2.5. In some sectors, however, a fully liberalized
external trade policy could have adverse social and
economic implications. In such instances, the Community should introduce adequate support measures,
such as greater use of the structural funds for industrial
redevelopment, with due respect for the principle of
cohesion.

2.2.6. However, it is always possible that national
safeguard measures for certain products will be transformed into Community ones at the end of 1992. Safeguard measures of this kind should comply with international rules which have been agreed on by the trading
partners.

2.2.7. The Committee would recommend the gradual application of protection and safeguard measures
at Community level. At first the Community should
maintain the current level of protection, but afterwards
gradually reduce it( [1] ) in tandem with the elimination
of practices of its trading partners which go against the
letter and spirit of GATT.

2.2.8. The establishment of a time limit will be a
clear and unequivocal indication of the Community's
political will and of the temporary nature of such
protectionist measures.

2.2.9. The Committee stresses the immediate need:
to strengthen the productivity and competitiveness of
sectors which will lose the protection they enjoy at
present; to build up the technological resources of Community firms with the aid of common research programmes and appropriate training of employees; to
adopt suitable instruments to protect industrial and
intellectual property and know-how in advanced sectors
(industrial standards) ( [2] ).

(*) ESC opinion on the proposal for a Council Regulation (EEC)
applying generalized tariff preferences for 1989 (rapporteur:
Mr Cavazzuti) (OJ No C 318, 12. 12. 1988).
( [2] ) ESC opinion on relations between the European Community
and the newly industrializing countries of South-East Asia
(rapporteur: Mr Collas) (31 March 1989) (OJ No C 139,
5. 6. 1989).

2.3. _Sectors not covered by international_ _agreements_

2.3.1. A second area of uncertainty concerns sectors
which are not covered by international agreements
(such as trade in services) or by the new regulations on
public supply contracts (telecommunications, water,
energy, transport). For all these sectors, the Community
is framing its own proposals in the run-up to the internal market.

2.3.2. In such cases, if there is no automatic extension, reciprocity can be negotiated multilaterally or
bilaterally with non-Community countries. The Committee has advocated an open, multilateral and nondiscriminatory approach to any such negotiations in
the spirit of GATT( [3] ), provided beneficiary countries
do likewise.

2.3.3. Given the increasing strategic importance of
financial and insurance services in the Community and
world economies, the opening up of these markets
should be negotiated so that the treatment offered by
Community countries is extended to the territory of
non-EEC countries.

2.3.4. The basic principle which should apply to all
financial services is that a Community-based financial
body should have the same access as national operators
to the financial markets of non-Community countries.

2.3.5. In sectors subject to EC harmonization, the
Commission should verify that Community companies
obtain equal treatment and access. The Committee fully
supports the principle of a balance of mutual advantage,
as proposed by the Commission.

2.3.6. The Committee feels that the best way of
demonstrating the success of the single Community
market and its stimulating effect on world economic
growth would be for the ECU to be recognized as the
European currency and as the currency for conducting
trade in goods and services. This will strengthen economic and financial cohesion in the Community and
bring an element of certainty and stability to an inter

( [3] ) ESC opinion on relations between the European Community,
Japan and the USA (rapporteurs: Mr Curlis and Mr Staratzke)
(OJ No C 328, 22. 12. 1986).

No C 221/36 Official Journal of the European Communities 28. 8. 89

national monetary system which is far too volatile and
easily influenced by fluctuations in the dollar (^ ( [2] ).

2.3.7. The Committee feels that it would be advan
tageous for non-EC countries to be able to link their
financial and commercial transactions to the European
monetary area. These transactions could be conducted
in ECU.

3. The external impact of 1992

3.1. As the accompanying Report makes clear, the
completion of the many aspects of the internal market,
by means of the related accompanying measures set out
in the White Paper, will enable Community firms to
realize their full potential. In addition to stimulating
internal trade, this will enhance their competitiveness
in markets outside the Community.

3.2. They will need the support of an active Community external policy designed to ensure that third
countries understand and value Europe's increasing
attractiveness as a trading partner and as a market. The
Commission should also contribute in every negotiating
body to (a) the removal of obstacles barring the access
of Community firms to outside markets, and (b) the
completion of trade and cooperation agreements to
create lasting economic ties and strengthen the Community's leading role in international economic
relations.

_3.3._ Exporters to the Community will benefit from
a single market of 320 million consumers, with uniform
standards and procedures, where goods can move freely. The completion of the internal market and the
attendant liberalization will undoubtedly have the
additional advantage of attracting outside investment,
thereby creating new jobs.

3.4. A differentiated approach to the main economic
areas is needed, according to their individual characteristics. These include developing countries, state-trading

(') ESC opinion on the GATT/Uruguay Round negotiations: the
current situation and future prospects from the viewpoint of
relations between the European Community and the main
industrialized countries, the developing countries, and
the State-trading countries (rapporteur: Mr Romoli) (OJ
No C 318, 12. 12. 1988).
( [2] ) ESC opinion on the impact of current US economic and
political developments on the Uruguay Round and international trade (rapporteur: Mr Romoli) (OJ No C 2.32,
31. 8. 1987).

countries (Comecon), countries with which the Community has free trade arrangements (e.g. EFTA) and
other special areas, such as the Mediterranean and the
Gulf. The Committee feels that in future relations will

have to be conducted within a multilateral framework.

The Committee attaches particular importance to the
following points:

3.4.1. It fully supports the Commission's policy
towards the EFTA countries, ensuring that they actively
participate in opening up a large free trade area with
the Community, again in accordance with multilateral
rules. For the reasons outlined in the appended Report,
the EFTA nations—which together already form the
Community's main trading partner—are likely to be
the main beneficiaries of the Community's internal
market.

3.4.2. It is in favour of constructive action in respect
of Mediterranean, Gulf, ASEAN and Latin American
countries. Consolidation of trade links with these

countries and support for their economic development
should be based on broader economic, technological,
financial, agricultural and industrial cooperation. Closer economic integration among groups of countries
should be encouraged. Relations with the Mediterranean countries deserve particular attention, reaffirming a
continued commitment to the goals which have underpinned Community policy. The cooperation agreements
mentioned above should be extended to encourage
Community firms to take part in more joint projects
with local partners and to pool resources in a joint
drive for growth. The Commission is also asked to
review its policy on cooperation with Pacific countries,
_inter alia_ in the light of the economic momentum that
has gathered strength in individual countries over the
past decade ( [3] ).

3.4.3. Trade relations with Comecon countries can
be developed on the basis of the joint Declaration
recognizing the EEC as a legal, institutional and economic entity. However, in the light of the special political
and economic situation in the Comecon area, it will
only be possible to achieve significant results in the
medium term by gradually phasing out most of the
remaining quotas and, above all, by promoting broader

(') ESC opinion on relations between the European Community
and the newly industrializing countries of South-East Asia
(rapporteur: Mr Collas) (31 March 1989) (OJ No C 139,
5. 6. 1989).

28. 8. 89 Official Journal of the European Communities No C 221/37

economic, financial and industrial cooperation in
accordance with market laws ( [1] ). The Committee nevertheless believes that trade relations between the Community and the European members of Comecon should
be improved and extended, particularly at this time of
change in the countries concerned and developments in
international economic relations, primarily by offering
these countries real help in getting to grips with the
problems confronting them ( [2] ).

3.4.4. ACP countries need assurances of continuing
cooperation in all forms—financial, commercial, technical and institutional—and a continuing policy of noninterference and non-discrimination on the part of the
Community. Community measures are however needed
to enhance the role of local economic and social interest
groups, open up opportunities for private investment
and encourage smaller firms, cooperatives and nongovernmental organizations to play a more active
part( [3] ).

3.4.5. It is imperative that cooperation programmes
with ACP and Latin American countries include appropriate solutions to the serious problem of indebtedness.
As well as helping to stabilize exchange rate parities, a
coordinated approach by the EEC and the other major
economic partners, in conjunction with the World Bank
and the International Monetary Fund, will encourage
policies aimed at developing ACP/Latin American
countries and promoting their exports ( [n] ). This will
help to reverse the trend towards recession, which
otherwise risks jeopardizing their political stability and
their legitimate aspirations to development. The Committee urges the Council to present effective proposals
and to strengthen its financial cooperation instruments
in order to support economic adjustment in ACP and
Latin American countries.

3.4.6. The Committee would point out that the benefits of the internal market could be undermined if the
United States were to react negatively, as this could
lead to a freeze in EC-US relations.

(') ESC opinion on the GATT/Uruguay Round negotiations: the
current situation and future prospects from the viewpoint of
relations between the European Community and the main
industrialized countries, the developing countries, and
the State-trading countries (rapporteur: Mr Romoli) (OJ
No C 318, 12. 12. 1988).
( [2] ) ESC opinion on relations between the European Community
and European state-trading countries (rapporteur: Mr Briganti) (28 April 1988) (OJ No C 175, 4. 7. 1988, p. 39).
(•') ESC opinion on the IVth EC/ACP Convention (rapporteur:
Mr Delhomenie) (3 June 1988) (OJ No C 208, 8. 8. 1988).

The difficulties encountered by the United States in
resolving domestic problems caused by high public
spending and trade deficits, with a consequent decline
in the competitiveness of its manufacturing and agricultural sector, have prompted it to introduce measures
which in practice create unnecessary distortions in the
growth of international trade (1988 Trade Act, fluctuations in the dollar, etc.).

The Community and the United States must settle their
outstanding problems, particularly those of agriculture,
in the course of the Uruguay Round if the future of the
multilateral trade system is to be assured.

The Committee endorses the firm line recently taken
by the Commission in defending the Community's legitimate interests and would urge it to continue in this
vein, though it should also continue its dialogue with
the US in order to clear the air and resolve the present
dispute, so that the two partners can cooperate closely
in the spirit of multilateralism enshrined in GATT.
The Commission should continue to play a part in
strengthening the GATT machinery so that it can
acquire greater international credibility.

3.4.7. The Community's objective in its relations
with Japan should be a more balanced pattern of trade.
This could be achieved if the Japanese market was
decisively opened, allowing greater penetration by
Community firms. This would help reduce current trade
conflicts which could result in protectionist measures (^ ( [4] ) ( [5] ).

3.4.8. The Committee believes that more balanced
international economic growth will result from the vast
potential of the internal market and fair cooperation
between the EEC, the US and Japan, and from a settlement on the problem of the external debt of developing
countries (newly industrialized countries could also
contribute to a solution here) ( [5] ).

( [4] ) ESC opinion on relations between the European Community,
Japan and the USA (rapporteurs: Mr Curlis and Mr Staratzke)
(OJ No C 328, 22. 12. 1986).
( [5] ) ESC opinion on the impact of current US economic and
political developments on the Uruguay Round and international trade (rapporteur: Mr Romoli) (OJ No C 232,
31. 8. 1987).

No C 221/38 Official Journal of the European Communities 28. 8. 89

4. Conclusion

4.1. In the Committee's view, the overriding objective of the internal market is for all the Community's
citizens to benefit from the economic advantages of the
new boosts to trade, including trade with non-EEC
countries.

4.2. The Committee would urge the Commission to
bear this objective in mind during its negotiations with

Done at Brussels, 12 July 1989.

non-EC countries, and to take all necessary measures
to stave off any adverse social or employment effects.

4.3. The Committee fully supports moves to complete the internal market, but stresses that the market
should be open to other economic blocs, not closed. It
therefore urges the Council and the Member States to
act coherently, as the single market is the stepping stone
for accomplishing the Community's ultimate objective:
European economic and monetary union.

_The_ _Chairman_

_of the Economic and Social_ _Committee_

Alberto MASPRONE