Key Developments in the EU trade policy (2009-2010)

Introduction

58. The communication "Trade, Growth and World Affairs"[20], an integral part of the "Europe 2020” strategy, was adopted in November 2010. It sets the direction of the EU trade and investment policy for 2010-2015, based also on the lessons learned from "The Global Europe 2006-2010"[21]. It proposes a strategy to reduce trade barriers, to open global markets and to get a fair deal for European businesses. The overall aim is to ensure the benefits of trade reach European citizens — in the form of stronger economic growth, more jobs and increased consumer choice at lower prices.

59. The EU plans to draw on its trade policy to help exit the current crisis and to create the right environment for a strong EU economy. Specifically, the communication proposes to complete the negotiations on the Doha Development Agenda in the WTO by reaching an ambitious and comprehensive agreement before the end of 2011. Moreover, it calls for concluding the negotiations of FTAs with major trading partners such as India and Mercosur; to deepen trade relations with other strategic partners, such as the US, China, Russia and Japan, where the main focus will be on tackling non-tariff barriers to trade. To help European businesses access global markets, the Commission will present in 2011 a legislative proposal for an EU instrument to increase the leverage to secure improved symmetry in access to public procurement markets in developed and large emerging economies, building on the implementation of international commitments.

60. The European Commission on 18 November 2010 adopted a regulation[22] revising rules of origin for products imported under the generalised system of preferences (GSP), notified to the WTO on 29 March 2011. This regulation relaxes and simplifies rules and procedures for developing countries wishing to access the EU's preferential trade arrangements, while ensuring the necessary controls are in place to prevent fraud. In addition, special provisions are included for Least Developed Countries (LDCs) which would allow them to claim origin for many more goods which are processed in their territories, even if the primary materials do not originate there. The new rules of origin are applied from 1 January 2011. The proposal also puts forward a new procedure for making out proofs of origin, which places more responsibility on the operators. From 2017, the current system of certification of origin carried out by the third country authorities will be replaced by statements of origin made out directly by exporters registered via an electronic system. This will allow the authorities of the exporting country to re-focus their resources on better controls against fraud and abuse, while reducing red-tape for businesses. This future Commission proposal will be subject to ordinary legislative procedure by the Council and Parliament.

61. The EU uses transparency mechanisms in the design and implementation of trade policy which significantly contribute in identifying and addressing potential barriers to international trade and investment. These instruments include meetings between civil society and the EU officials to discuss aspects of Europe's trade policy, and public consultations with domestic and foreign stakeholders.

WTO

62. The World Trade Organisation (WTO) and the multilateral trading system are the focus for the EU trade policy, as the EU believes that a system of global rules is the best way to ensure that trade between countries remains open and that prosperity can be widely shared.

63. Despite the slow progress since the last review, completing the Doha Round remains the EU's top priority. The potential benefits are simply too important to be lost. 2011 represents the best opportunity to conclude an ambitious, balanced and comprehensive agreement to which all major players make significant contributions and from which all players, big and small, could benefit. Doha represents a potentially sizable boost to the world economy. A failure to conclude the Doha Round would on the other hand be significantly detrimental to the current global economic uncertainty and could challenge the credibility of the multilateral trading system.

64. This commitment to multilateralism was clearly demonstrated in the EU negotiation activity since the last report. The EU has remained flexible to ensure an agreement is reached and has played a constructive and proactive role in all areas of negotiation.

65. Concerning Non-Agricultural Market Access (NAMA), the EU seeks meaningful liberalisation through sectoral arrangements, which it sees as a necessary complement to the formula approach. Liberalisation in non-agricultural products is key for the development dimension of the round since the large majority of exports from developing countries are manufactured products. An ambitious outcome in NAMA is beneficial also for South-South trade, as 70% of the duties paid in this sector by developing countries (DCs) are paid to other DCs. The EU considers that WTO Members should contribute to sectoral initiatives in accordance with their capacity and share in world trade: in addition to developed countries, also the more advanced emerging economies should make a meaningful contribution, given both their increasingly important role in the world trading system and the importance of improved access to their markets for the development of South-South trade to the benefit of other developing countries. The EU recognises that developing countries should be able to benefit from appropriate flexibility in response to their particular development needs and challenges. The EU considers that the sectoral initiatives for chemicals and machinery are particularly important, and sees scope for sectoral arrangements also for gems and jewellery, forestry and possibly some other industrial sectors. Non-tariff barriers are another clear priority for the EU, and it considers the horizontal mechanism and a series of proposals for the elimination of non-tariff barriers for electric and electronic products, textiles, clothing and footwear as crucial complements to the tariff side of the negotiations.

66. The EU pursues gradual liberalization of global trade in services, which represents a very important contribution to economic performance, long term investment and development. At the multilateral negotiations, the EU seeks the consolidation of existing liberalisation as well as new market access for services providers. The EU's approach is respectful of national public policy priorities such as public services or cultural diversity and takes into account developing and least developed members' priorities. Services liberalization is essential to ensure an overall balance with the two other core market access pillars (Agriculture and NAMA). Since the last EU TPR, the EU has been heavily involved in the negotiations and has continued to push for meaningful progress in this key economic sector.

67. The EU has played a leading role in the agricultural negotiations throughout the Doha Round with the firm belief that further liberalization of trade in agricultural products is an important contribution to sustainable growth of the global economy. Conditional on meaningful offers by our negotiating partners and a balanced outcome in all areas of the negotiations, and hence of a successful conclusion of the round, the EU has in particular shown its willingness to make substantial cuts in its agricultural tariffs based on a tiered formula which will cut highest tariffs the most, to significantly reduce trade distorting subsidies, and to eliminate export refunds, on the condition of a successful completion of the Doha Round, containing inter alia the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect. Furthermore, the EU seeks to promote the protection of geographical indications through the establishment of a meaningful multilateral register and the extension of additional protection of geographical indications for wines and spirits to geographical indications for all products.

68. The EU has also participated actively in negotiations on Trade Facilitation and would hope to find an agreeable solution that provides enhanced technical assistance and capacity-building in this area and has been active in suggesting solutions acceptable to developing countries on the rules governing the aid. The EU will be working to clarify and improve GATT Articles V, VIII and X with a view to facilitating trade and removing obstacles to the movement of goods across borders, as well as unnecessary and cumbersome formalities while promoting cooperation across agencies for that purpose. This streamlining may offer some of the biggest gains from the Doha Round, as it can dramatically reduce the cost of trading across borders.

69. The EU's approach to the DDA has been to complement further market opening with stronger rules and disciplines. The EU has been an active participant in the Negotiating Group on Rules. The EU favours amendments of the Anti-Dumping Agreement so as to clarify existing rules and prevent protectionist abuse. Equally, the EU seeks to strengthen current rules of the Agreement on Subsidies and Countervailing Duties and disciplines on fisheries subsidies. Furthermore, the EU has continued to support the further clarification of existing rules on regional trade agreements.

70. The EU maintains its strong commitment to environmental protection and the fight against climate change in its trade policy, including through its work in the Committee on Trade and Environment and its Special Session; the EU promotes the liberalisation of trade in environmental goods and services and seeks a clarification of the relationship between the WTO and Multilateral Environmental Agreements (MEAs).

71. The EU, together with Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru, Venezuela initialled the "Geneva Agreement on Trade in Bananas" (GATB) on 15 December 2009and in parallel, a separate EU-US agreement on bananas was initialled by the parties on the same day. This closed one of the most protracted disputes in the multilateral trading system. According to GATB, the EU will gradually reduce its banana tariff from 176? per tonne to 114? per tonne by 2017 (or by 2019 at the latest should the conclusion of the Doha Development Round be postponed). The GATB includes a "settlement clause" for the definitive settlement of all pending disputes. The EU-US agreement reflects the GATB: the EU-US dispute on bananas will be considered as settled upon settlement of the disputes brought by the Latin-American banana exporters. GATB was signed on 31 May 2010, the tariff cuts being provisionally applied as of 8 June 2010(and retroactively as of 15 December 2009, the date of initialling). The EU internal procedure for the ratification of the agreements has been completed and it has been notified to the WTO on 8 March 2011. The GATB will enter into force once all parties to the agreement notify the WTO on the completion of their internal procedures while the US agreement will follow suit and will enter into force upon entry into force of GATB.

72. On 18 November 2010, the EU has lodged a waiver request in the WTO to be allowed to grant exceptional autonomous preferences to imports of a limited number of Pakistani products as part of the EU response to the devastating floods that hit Pakistan in August 2010.

73. In a rapidly changing environment that poses ever new challenges, the importance of full compliance and effective implementation of all WTO rules and agreements, including the plurilateral accords, cannot be overemphasized. In parallel with its committed participation in the DDA negotiations, the EU has paid full attention and has been engaging actively in all other negotiating and non-negotiating work within the various WTO bodies and committees.

74. In particular, the EU has been very actively engaging in the TPRB tasks of monitoring protectionism. The EU has been the most transparent and cooperative Member by timely reporting comprehensive information on its trade practices and measures to the WTO Secretariat. Consequently, the WTO TPRB monitoring reports contain substantial information on wide-ranging EU practices, illustrating the high level of transparency exerted by the EU. In this context, the EU has strongly advocated greater transparency, and encouraged other WTO Members to follow the EU example and champion in transparency.

75. The EU will continue to give priority to further accessions, notably of LDCs, and will aim to improve and clarify the unique dispute settlement system of the WTO.