|
PRESS
RELEASE
PRESS/TPRB/10
18 July 1995 WTO
rules crucial for minimizing frictions and ensuring
outward-looking focus for further growth of the European
Union and its trading partners Back
to top
The
European Union is among the pace-setters in the
multilateral trading system, and recent accessions and
new preferential arrangements have further increased its
influence on the system. The trade policies pursued by
the EU in the past two years show increasing internal
policy integration, a rapidly expanding and increasingly
complex network of free-trade area and preferential
relations and active participation in multilateral trade
liberalization. A strong, constantly active WTO framework
is necessary to guide the Union's future trade policies
and counterbalance the discriminatory impact of expanding
preferential links.
The
first report by the WTO Secretariat on all aspects of the
EU's trade policies - including services for the first
time - covers the period since 1993. In this time, the
Single Market was accomplished, the Maastricht Treaty
entered into force and the Union was enlarged to fifteen
members. According to the report, the European Economic
Area agreement, Europe Agreements with central and
eastern European countries, a Customs Union Agreement
with Turkey in 1995 and ongoing negotiations on
Euro-Mediterranean Agreements have increased the network
of preferential links and provide fora in which trade
problems with preferential partners can be addressed
outside the multilateral system. The major revision of
the GSP scheme from January 1995 links preferences for
industrial products to the EU's assessment of the
"sensitivity" of the products concerned and the
exporting country's level of development and degree of
specialization.
The
report states that a core element of the Internal Market
process was the elimination of trade restrictions
maintained by individual member States. In substitution,
unified quotas were introduced for bananas, canned
sardines and tuna, certain steel supplies from the
republics of the Commonwealth of Independent States
(CIS), and a number of consumer products from China. New
standards legislation reflects the growing importance of
environmental objectives and constraints on production
and trade. Some progress has been made in harmonizing
export-related policies and a draft directive on common
rules for export credit insurance is in preparation.
Single
Market integration in pharmaceuticals has been delayed by
diverging standards, national price regulations and
reimbursement systems. The report states that new
disciplines on supports to the coal sector are being
phased in and that a restructuring plan for the steel
industry, approved in early 1993, was abandoned in
October 1994.
Trade
in services has expanded rapidly; however, services are
still less important in trade than in overall GDP of the
Union. Integration in services, which has generally
trailed behind that for goods, has progressively
established a common framework of requirements for
internal trade and establishment. Robust growth has
occurred in sectors subject to recent liberalisation and
deregulation initiatives. Market access may improve as a
result of the ongoing GATS negotiations on financial
services, maritime transport and basic
telecommunications. However, the report says the EC has
made no access commitments under the GATS on audiovisual
services. Although current EU rules in areas such as
banking, insurance and air transport contain reciprocity
provisions, these have not been invoked.
The
European Union's Uruguay Round commitments include
widespread tariff reductions for manufactures. However,
tariffs in some "sensitive" sectors will not
change notably, and significant escalation will remain in
textiles and clothing. The EU has begun phasing out the
quantitative restrictions under the MFA (Multi-fibre
Arrangement); products reserved for later stages tend to
be those of particular interest to producers in southern
member States and Mediterranean countries with
preferential access. Under the Europe Agreements, textile
and clothing imports from six central European countries
are to be fully liberalized by 1 January 1998.
Market
access commitments in agriculture involve the
tariffication of variable levies and other import
barriers. High tariff peaks remain on meat, dairy
products, cereals and tobacco. The report states that
tighter disciplines on export subsidies and subsidized
exports may gradually reduce the adverse effects on world
markets of EU surplus disposal. However, third country
suppliers depend on tariff quota obligations to enter EU
markets in sensitive areas such as sugar.
The
EU remains one of the most frequent users of anti-dumping
remedies in the GATT system. New anti-dumping,
countervailing and safeguard regulations incorporate the
relevant WTO provisions with some EU-specific extensions.
The new Trade Barriers Regulation specifies internal
procedures for actions against illicit trade practices
abroad, including certain areas of services and
intellectual property; all such actions must be
authorized under international dispute settlement
provisions. According to the report, no general emergency
trade legislation is foreseen in services sectors.
The
report notes that a prominent feature of past Community
trade policies, bilateral export restraints towards the
EU markets, have disappeared in recent years. The
bilateral "consensus" for monitoring Japanese
car exports is to expire at the end of 1999 as provided
for under WTO provisions.
The
new WTO Agreements define the multilateral framework both
for the development of the EU's external policies and for
the process of further European integration and
co-operation. In this connection, the m.f.n.-based
commitments made by the EU in the Uruguay Round will
mitigate the effects on third parties of the spread of
its regional and preferential relationships. The report
concludes that a comprehensive, credible set of
multilateral rules and disciplines under the WTO, if
respected by all Members, will be crucial in minimizing
frictions and ensuring an outward-looking focus that both
the Union and its partners need to grow and prosper.
Notes
to Editors
1.
The WTO Secretariat's report, together with a report
prepared by the European Communities will be discussed by
the WTO Trade Policy Review Body (TPRB) on 24 and 25 July
1995.
2.
The WTO Trade Policy Review Body conducts a collective
evaluation of the full range of trade policies and
practices of each WTO member at regular periodic
intervals and monitors significant trends and
developments which may have an impact on the global
trading system.
3.
The two reports, together with a record of the TPRB's
discussion and of the Chairman's summing up, will be
published in due course as the complete trade policy
review of the European Union and will be available from
the WTO Secretariat, Centre William, Rappard, 154 rue de
Lausanne, 1211 Geneva 21.
4.
The reports cover developments of all aspects of the
European Union's trade policies, including domestic laws
and regulations, the institutional framework,
trade-related developments in the monetary and financial
sphere, trade practices by measure and trade policies by
sector. Attached are the summary observations from the
Secretariat and government report. Full reports will be
available for journalists from the WTO Secretariat on
request.
5.
Since December 1989, the following reports have been
completed: Argentina
(1992), Australia (1989 & 1994), Austria (1992),
Bangladesh (1992), Bolivia (1993), Brazil (1992),
Cameroon (1995), Canada (1990, 1992 & 1994), Chile
(1991), Colombia (1990), Costa Rica (1995), Côte
d'Ivoire (1995), Egypt (1992), the European Communities
(1991 & 1993), Finland (1992), Ghana (1992), Hong
Kong (1990 & 1994), Hungary (1991), Iceland (1994),
India (1993), Indonesia (1991 and 1994), Israel (1994),
Japan (1990, 1992 and 1995), Kenya (1993), Korea, Rep. of
(1992), Macau (1994), Malaysia (1993), Mexico (1993),
Morocco (1989), New Zealand (1990), Nigeria (1991),
Norway (1991), Pakistan (1995), Peru (1994), the
Philippines (1993), Poland (1993), Romania (1992),
Senegal (1994), Singapore (1992), South Africa (1993),
Sweden (1990 & 1994), Switzerland (1991), Thailand
(1991), Tunisia (1994), Turkey (1994), the United States
(1989, 1992 & 1994), Uruguay (1992) and Zimbabwe
(1994).
The
Secretariats
report: summary
Back
to top
TRADE
POLICY REVIEW BODY: EUROPEAN UNION
Report by the Secretariat Summary Observations
The
European Union is among the pace-setters in the
multilateral system owing to its economic weight and
reliance on external trade. Recent accessions and new
preferential arrangements have further increased its
influence on the system. The trade policies pursued by
the EU in the past two years illustrate three main
tendencies: internal policy integration and harmonization
across sectors and, more strongly, among member States; a
rapidly expanding and increasingly complex network of
free-trade area and preferential relations; and active
participation in multilateral trade liberalization. The
co-existence of, and interaction among, these tendencies
highlights the necessity for a strong, constantly active
WTO framework to guide future trade policies and
counterbalance the discriminatory impact of expanding
preferential links.
The
Economic Environment
In
1994, the economy of the European Union grew by over 2.5
per cent. While most member States were recovering from
the 1993 recession, Denmark, the Netherlands, Ireland and
the United Kingdom showed sustained growth. The recovery
has not yet led to a significant fall in recorded
unemployment, which stood at an average level of some 11
per cent in 1994, with wide differences among member
States.
Underlying
the growth were increasing exports and investment,
stimulated by buoyant world markets, lower interest
rates, and greater profitability and business confidence.
Aided by wage moderation, strong productivity growth and
depreciation of some member States' currencies, the value
of merchandise exports in January-August 1994 grew by 12
per cent over the same period of 1993. Preliminary data
point to an improving merchandise trade balance after a
small deficit in the first eight months of 1994.
Trade
in services has expanded rapidly, benefiting from a
general pattern of sectoral change, deregulation,
internal market integration and technical progress. The
EU's services balance has been in surplus for many years,
reflecting a strong competitive position in major
sectors. Despite robust growth, services currently
represent about one quarter of the Union's total trade,
contrasting with a share of close to two thirds in its
GDP.
Transition
to Economic and Monetary Union remains a policy priority.
In this context, price inflation has declined in most
member States and, although still fragile, budgetary
positions have improved after a marked deterioration in
1993. These factors, combined, until recently, with
relative tranquillity in foreign exchange markets, have
contributed to lower, converging interest rates.
Developments
in the Institutional Framework
The
entry into force of the Treaty on European Union - the
Maastricht Treaty - on 1 November 1993 added a new
dimension to existing Community policies. Key objectives
of the Treaty are the phasing-in of economic and monetary
union, the establishment of a common foreign and security
policy, the development of common citizenship, and close
co-operation on justice and home affairs. The rôle of
the European Parliament in the Union's decision-making
process was enhanced. The European Monetary Institute
started work in 1994, preparing the ground for the
European System of Central Banks and, in time, a European
Central Bank. The Maastricht Treaty did not affect the
substance of traditional Community policies in areas such
as agriculture, transport, commerce and competition.
The
accession of Austria, Finland and Sweden on 1 January
1995 added some 7 per cent to the Union's GDP and 6 per
cent to its population. It resulted in no significant
institutional changes, although Parliament, Council,
Commission and Court of Justice were enlarged and certain
decision-making procedures, including those for qualified
majority voting in the Council, modified. While several
countries have lodged applications for EU membership, no
further enlargement negotiations are envisaged before the
1996 Intergovernmental Conference provided for in the
Maastricht Treaty.
Asked
to clarify the allocation of competence within the Union
to conclude the Uruguay Round agreements, the European
Court of Justice confirmed in November 1994 the
Community's exclusive competence with respect to
multilateral agreements relating to goods. However,
competence to conclude agreements related to certain
types of services and intellectual property was shared
between the Community and the member States.
Consequently, the WTO Agreements were signed by the
Council, Commission and the member States and ratified by
the Council, with the European Parliament's approval, as
well as by national parliaments.
Trade
Policy Features and Trends
The
general achievement of the Single Market, from 1 January
1993, consolidated an important stage of integration,
substituting common for national policies in many areas.
The coincidence of internal reform with external
negotiations enhanced the Community's participation in
the Uruguay Round. New negotiating interests in modern
sectors were coupled with a growing realization that
structural changes in traditional industries were
inevitable. Harmonization has continued in sectors such
as coal, pharmaceuticals, financial services,
telecommunications and aviation as well as in
export-related policy areas; and new standardization
initiatives have been launched with a strong
environmental background. Negotiations are underway in
the WTO to achieve international acceptance of changes in
the common import régime resulting from the accession of
the new member States.
Type
and incidence of trade policy instruments
The
European Union's Uruguay Round commitments include
widespread tariff reductions for manufactures, bringing
the average rate down by 38 per cent to 3.7 per cent in
2000 and eliminating tariffs on products such as
pharmaceuticals, most steel items, paper, furniture, some
toys, soaps and detergents. However, tariffs in some
"sensitive" sectors, including clothing and
passenger cars, will not change notably, and significant
escalation will remain in textiles and clothing.
Market
access commitments under the WTO Agreement on Agriculture
involve the conversion of variable levies and other
import barriers into tariff equivalents, and the
reduction of all tariffs by 36 per cent on average by 1
July 2001. For virtually all tariffied items, the EU has
introduced specific duties, whose levels reflect the
differences between external and internal prices in the
base period of 1986-88 and, thus, the restrictiveness of
the previous régime. Although ad valorem equivalents are
not available in all cases, estimates indicate peaks on
meat, dairy products, cereals and tobacco.
Under
the Agreement on Textiles and Clothing, the EU has begun
phasing out the quantitative restrictions under its
twenty bilateral MFA Agreements. While all such
restrictions must be eliminated by 1 January 2005,
participants have scope to determine the product mix in
each stage of integration.
The
products reserved for later stages tend to be of
particular interest to producers in southern member
States, especially Portugal, and Mediterranean countries
with preferential access. Under the Europe Agreements,
textile and clothing imports from six central European
countries are to be fully liberalized by 1 January 1998.
A
core element of the Internal Market process was the
elimination of trade restrictions maintained by
individual member States. In substitution, unified quotas
were introduced for bananas, canned sardines and tuna,
certain steel supplies from the republics of the
Commonwealth of Independent States (CIS), and a number of
consumer products from China. Certain textile items from
the CIS republics are subject either to bilateral quotas
or double checking surveillance, while supplies from
other non-WTO members, including Chinese Taipei, are
governed by autonomous restrictions.
Reciprocity
provisions in a directive harmonizing procurement
conditions in the "excluded sectors" of water,
energy, transport and telecommunications generated
frictions with the United States, which in 1993 imposed
sanctions in its own Federal procurement on EU suppliers
in a number of sectors. In April 1994, the parties
reached an agreement extending national treatment in
specified areas (excluding telecommunications) on the
basis of sectoral reciprocity. The agreement, ratified in
late-May, is intended to be incorporated, to a large
extent, into the WTO Agreement on Government Procurement.
New
standards legislation reflects the growing importance of
environmental objectives and constraints on production
and trade. Core elements of a 1994 directive on packaging
and packaging waste, covering production, content, re-use
and recycling of packaging, will be implemented through
new technical regulations. Criteria have been established
for the award of "eco-labels" under a voluntary
scheme which covers five consumer products to date.
Some
progress has been made in recent years in harmonizing
export-related policies. From 1 July 1995, exports of
dual-use (military and civilian) goods are covered by a
comprehensive régime of standards and controls, based on
provisions of the Maastricht and EC Treaties. A draft
directive on common rules for export credit insurance is
in preparation.
Prior
to the Internal Market programme, integration in services
had generally trailed behind developments in the area of
goods. However, it may have benefited from experience
gained in dismantling barriers to trade in goods through
common regulation and mutual recognition. Legislation in
core services areas has progressively established a
common framework of minimum requirements for internal
trade and establishment; in some cases, member States
have led the process of liberalization, while in others
Commission initiatives have set the pace. The
possibilities for external suppliers to benefit from
internal liberalization vary among sectors, and market
access may improve as a result of the ongoing GATS
negotiations on financial services, maritime transport
and basic telecommunications.
Current
EU rules in areas such as banking, insurance and air
transport contain reciprocity provisions which can be
used in the absence of bilateral access commitments or
multilateral obligations, although they have not been
invoked. Subject to specific horizontal and
sector-specific limitations, the Community has offered
under the GATS to bind national treatment for
establishment and conditions of operation for all
financial services. In air and maritime transport,
benefits such as cabotage rights are reserved for
companies wholly or majority owned by member States or
their nationals. At this stage, internal liberalization
of air transport co-exists with a segmented external
régime based on member States' bilateral aviation
agreements with third parties; the Commission is
attempting to introduce a unified framework.
Temporary
measures
The
EU's system of "commercial defence" was
reorganized in December 1994. New regulations for
anti-dumping, countervailing and safeguard measures
incorporate the relevant WTO provisions, with some
additions or modifications. While safeguard actions
remain subject to member States' qualified majority
approval in the Council, the threshold for definitive
anti-dumping and countervailing duties was reduced to a
simple majority vote, easing access to these instruments.
The new Trade Barriers Regulation (TBR), which replaces
the 1984 New Commercial Policy Instrument (NCPI),
specifies internal procedures for actions against
objectionable or illicit trade practices abroad,
including certain areas of services and intellectual
property. The actions must be authorized under
international dispute settlement provisions. Only a few
investigations had been carried out under the NCPI since
its inception in 1984; two cases remain active, now under
the TBR.
The
European Union remains one of the most frequent users of
anti-dumping remedies in the GATT system, maintaining 156
measures at the end of 1994. This contrasts with two
countervailing actions and three safeguard measures under
Article XIX, including restrictions by Germany on coal
imports since 1958. Under WTO provisions, the safeguard
actions are to be terminated by 1 January 1999. Pursuant
to an agreement on competitive conditions in the
shipbuilding industry, concluded in the OECD framework,
the EU is to introduce a specific trade remedy mechanism
for ship transactions with effect from 1 January 1996.
The
WTO Agreement on Safeguards prohibits "grey area
measures" and requires all existing measures to be
abolished by 1 January 1999. The one exception for the EU
will be the bilateral "consensus" for
monitoring Japanese car exports, which is due to expire
at the end of 1999. Available evidence suggests that most
other bilateral export restraints by Japan and other
Asian suppliers have already disappeared.
No
general emergency trade legislation exists, or is
foreseen, in services sectors. Community procedures, used
once to date, may be invoked in the event of "unfair
pricing practices" in international cargo liner
shipping.
Sectoral
policy developments
The
1992 reform package represented the single most important
change to the Common Agricultural Policy since its
inception. Internal producer prices have since been
reduced significantly in some sectors, while farmers'
incomes have been maintained through direct payments.
Because of the 1992 CAP reform, the Community does not at
present envisage major new adjustments as a consequence
of the WTO Agreement on Agriculture.
The
EU remains a major supplier in world markets for
temperate-zone farm products such as meat, dairy products
and cereals. In these areas, tighter disciplines on
export subsidies and subsidized export volumes under the
WTO Agreement may gradually narrow the extent of surplus
disposal and the adverse effects on world markets.
However, given the generally high level of continued
import protection, third country suppliers are likely to
depend on tariff quota obligations to enter EU markets in
sensitive areas. A recent revision of the EU sugar
régime maintains the existing multi-layered system of
internal delivery quotas behind high trade barriers;
tariff quota obligations will benefit only traditional
preferential suppliers, predominantly ACP countries.
The
Community's agri-monetary system was reformed under
Internal Market requirements from 1993. The system, used
for many years to support producer incomes in
"hard-currency" member States, was stripped of
its protective elements and reduced to mainly technical
functions. However, the new rules are currently being
tested in a turbulent monetary environment.
In
most manufacturing areas, the Single Market programme was
completed on schedule by 1 January 1993. However,
integration in pharmaceuticals has been delayed by
diverging standards, national price regulations and
reimbursement systems. The introduction of common
approval procedures from 1995 onwards may overcome
standards-related problems. In the coal sector, different
policy approaches remain among the main producing member
States, Germany (which contributes some 40 per cent of EU
output, but accounts for close to 90 per cent of
subsidies granted), the United Kingdom and Spain. New
Community rules introduced in January 1994, scheduled to
apply until the expiry of the ECSC Treaty in 2002,
provide for increased transparency and stricter
disciplines on national support.
Traditional
manufacturing industries - textiles and clothing, motor
vehicles, shipbuilding, steel and other base metals -
remain particularly vulnerable to external competition
and changes in demand patterns. To prevent the extension
of uncoordinated national support from exacerbating
economic distortions and threatening the Single Market,
common guidelines clarify or tighten the general rules
for State aid in these industries. The market share of
domestically produced automobiles has recently increased,
aided in part by the appreciation of the yen.
A
restructuring plan for the steel industry, approved in
early 1993, was based not only on State aid for
conversion and closures but additional border measures,
mainly affecting central and eastern European supplier.
The plan was abandoned, however, in October 1994 due to
insufficient industry proposals for capacity reductions.
Adjustments
in traditional manufacturing industries have been
accompanied by robust growth in many services sectors,
including finance, insurance, communications and
transport, in which internal liberalisation and
deregulation have occurred. With internal barriers coming
down, individual service operators have become more
vulnerable to policy distortions created elsewhere in the
Union. Not surprisingly, recent national aid packages for
airlines and banks have proved controversial. Given the
risks for the integration process, efforts are underway
to intensify Community monitoring, increase transparency
and reduce member States' discretion to support national
champions.
Significant
headway has been made in liberalizing telecommunications
equipment and services markets. All value-added services,
data services and terminal equipment categories,
throughout the EU are now open to external competition
while some member States have gone further. Uncertainties
remain, however, due to national carriers' scope for
internal cross subsidization, their possible abuse of
market power, and the lack of stringent accounting
requirements at EU level. With liberalization approaching
the most sensitive stages - opening public voice
transmission and the basic network - new regulations are
in preparation.
Contrasting
with its generally active rôle in other services areas,
the EC has made no access commitments under the GATS on
audiovisual services. It has scheduled
"cultural" exceptions from m.f.n. treatment to
cover preferential arrangements for European works,
including European-content requirements under the
"Television without Frontiers" Directive. The
requirements are not currently binding on member States.
Trade
Policies and Foreign Trading Partners
The
continuing process of integration among member States,
the European Union's complex system of free-trade and
preferential relations and its rôle in concluding the
Uruguay Round have all had a significant impact on the
multilateral system. A gradual shift in internal policies
from developing new legislation towards enforcing
existing law may have contributed to maintaining the
"acquis communautaire" through the recession
and thus facilitating recent accessions.
The
European Economic Area agreement, building on previous
free-trade agreements, enables participants (Norway,
Iceland and Liechtenstein), to share fully in the common
framework for trade in goods and services. Countries in
central Europe are approaching closer integration through
staged reciprocal liberalization under Europe Agreements.
A new impetus has been directed to Mediterranean policy
with the conclusion of a Customs Union Agreement with
Turkey in 1995 and ongoing negotiations on
Euro-Mediterranean Agreements with several other
countries. All such agreements, however, provide fora in
which trade problems with preferential partners can be
addressed outside the multilateral system.
The
major revision of the GSP scheme from January 1995 links
preferences for industrial products to the EU's
assessment of the "sensitivity" of the products
concerned and the exporting country's level of
development and degree of specialization. While intended
to promote wider use by beneficiaries and improve
transparency and stability of access, the new system
appears more obviously tilted against large and dynamic
suppliers.
The
new WTO Agreements define the multilateral framework both
for the development of the EU's external policies and for
the process of further European integration and
co-operation. In this connection, the m.f.n.-based
commitments made by the EU in the Uruguay Round will
mitigate the effects on third parties of the spread of
its regional and preferential relationships. A
comprehensive, credible set of multilateral rules and
disciplines under the WTO, if respected by all Members,
will be crucial in minimizing frictions and ensuring an
outward-looking focus that both the Union and its
partners need to grow and prosper.
Government
report
Back
to top
TRADE
POLICY REVIEW BODY: EUROPEAN UNION
Report by the Government
This
is the third Trade Policy Review report presented by the
EEC Commission on behalf of the European Community, and
for the first time, it includes Services and TRIPS, parts
of the Uruguay Round Agreements which are of shared
competence between the Community and its Member States.
In the two years elapsed since the second report (April
1993), chronological developments in the field of the
European Community's external relations and trade have
been numerous, and for some of them historical:
Firstly,
the beginning of 1993 saw the end of the transition
period towards a full Single Market, and a new era with
total free movement of goods, services, capital and
people and better access to public contracts started on 1
January. The consolidation of the Single Market has since
been essential for economic recovery in Europe, and
remained central to the Community's efforts to maintain
industrial competitiveness, creating jobs and to
stimulate economic growth;
Secondly,
the entry into force of the Treaty of the European Union
(the "Maastricht Treaty") on 1 November 1993
marked the beginning of a new stage where the Union is
carrying further its development with fundamental new
commitments in the field of economic and monetary
integration (which will have major trade implications in
the longer term), an economic foreign and security
policy, and close cooperation on justice and home
affairs. Building on the EC's existing legal and
institutional framework, however, the Maastricht treaty
did not alter the substance of the Treaty of Rome in
areas such as agriculture, transport, commercial and
competition policy;
Thirdly,
the Agreement on the European Economic Area (EEA) between
the EC and five EFTA Countries (Austria, Finland,
Ireland, Norway and Sweden) came into force on 1 January
1994;
Throughout
the period, the European Union continued its efforts with
countries of Central and Eastern Europe to progressively
pave the way for a new European Architecture, by pressing
ahead with a network of Europe agreements representing a
degree of economic and political integration which goes
well beyond the notion of free trade agreement:
Association
Agreements were initially signed in 1991 with Poland,
Hungary and Czechoslovakia with the aim of establishing
progressively full freedom of movement of goods,
services, and capital
in
due course. Similar agreements were later concluded in
1993 with Bulgaria, Romania, as well as the necessary
amendments as regards the new Czech and Slovak republics.
Pending ratification by the involved Parliaments, Interim
Agreements applied (with respective dates of entry into
force varying between 1992 and 1993) which contained the
trade and trade-related aspects of these Europe
Agreements. Finally, the Europe Agreement of Hungary and
Poland entered into force on 1 February 1994, and those
for Bulgaria, the Czech Republic, Romania and Slovakia on
1 February 1995;
At
its Essen Council in December 1994, the European Council
decided to boost the process of preparing the six
associated countries for EU membership, and a
"pre-accession" strategy is now in place for
bringing them gradually into the EU internal market and
establishing structured political relations.
On
the Baltic side, Free Trade Agreements were signed in
July 1994 with Estonia, Latvia and Lithuania, which have
been recently renegotiated into full-ledged Europe
Agreements; these three Baltic countries will therefore
be included in the pre-accession strategy mentioned
above.
As
of 1 January 1995, the implementation in Community
legislation of the results of the Uruguay Round has been
the most across-the-board source of change for the
Community at the level of individual trade policy
measures;
The
Community's implementation of the Uruguay Round results
coincided with policy adjustments to accommodate the
accession of three new Member States, Austria, Finland
and Sweden on 1 January 1995. Representing a new step in
the history of European integration, the EU enlargement
is a process which will bring an overall net reduction in
the tariff protection of the acceding Members. Article
XXIV negotiations are underway and certain exporting
countries have put forward claims in cases where the
enlargement results in an increase in duty perception;
Finally,
in parallel to its new steps towards eventual integration
of the six associated Central and European countries, the
European Union has also developed a new generation of
Partnership and Cooperation Agreement (PCA) with the
Independent States of the former Soviet Union, and on the
Southern Front it is developing a Euro Mediterranean
Partnership.
These
developments, as well as the economic and trade context
in which they have taken place, are examined in the first
part of the report, section I. While 1993 started for the
Community under the cloud of a severe economic recession,
signs of economic recovery, bolstered by substantial
growth in exports and investment, and an upturn in
private consumption, have been, as of 1994, greater than
expected.
Trade
data relevant to the period demonstrate that the EC has
remained one of the most open of all major economies: on
the basis of the percentage of GDP contributed by trade
in goods and services, the EC (with a fairly consistent
22 to 25% of its GDP derived from such trade through the
last 15 years) is more open than the USA (whose figure
rose to just above 20% in 1980, and is still at 21-22% a
decade later) or, above all, Japan (whose figure has
sharply declined since the early eighties to a low of
16%). (See graph 1 in annex.)
The
growing merchandise trade deficit experienced by the EC
since 1987 levelled out in 1991. Since then the
Community's trade balance has improved considerably, to
the extent of being in balance (or even slightly
positive) in 1994 (see graph 4). The geographic breakdown
of bilateral trade balances, however, has remained
approximately the same as two years ago.
Among
the top ten exporters to the EC market, there are those
that have benefited from regional economic integration
(five individual EFTA countries), but also major trade
partners such as the USA, Japan, and China. A precisely
similar pattern exists as regards the major EC export
markets. (See graphs 6 and 7.)
Section
II of the report presents a detailed picture of the
evolution of the Community's trade policy as regards
trade in goods:
Firstly,
the main consequences of the Uruguay Round for the Common
Commercial policy, both on the tariff front ( where
increased market access will result from an average
reduction of around 37%, with a final average rate for
industrial products at a mere 3.6% and the bulk of duty
rates between 3 and 10%), and regarding revised rules in
the use of trade defence instruments (especially
anti-dumping, countervailing, and safeguards), where a
direct transposition has been carried out given the
coincidence of the Community's previous practice with the
rules of the New Codes.
Then,
the elements of the Single market programme that have the
greatest impact on trade: the unilateral removal of most
national residual restrictions (including a large number
of restrictions vis a vis China) linked with the
introduction of a new common import regime; the
coordination of procedures for the award of public works
contracts and the extension of the benefits of EC public
procurement legislation to suppliers of countries
signatories of the GATT Government Procurement Agreement;
finally, the recent steps taken in the field of
harmonisation of standards, the Community's "Global
approach" to testing and certification, and its
willingness to negotiate Mutual Recognition Agreements
with third-countries.
Section
II presents also a picture of the trade developments in
important Community sectors. Agriculture (with decisions
on reform of the CAP, and the phasing-in of U.R.
disciplines), Textiles and Clothing (with its orderly
expansion of trade enabling continued structural
adjustment), Motor Vehicles, Iron and Steel (with efforts
towards restructuring) are covered in details.
This
review confirms that doing business in the Community
market has become easier and more global. With the
disappearance of physical internal borders, Mutual
Recognition mechanisms, and greater harmonisation,
merchandise do indeed circulate freely. With the
implementation of the Uruguay Round in the above sectors,
the Community has demonstrated that a global multilateral
agreement yields global benefits for all traders, be them
from the EC or from third countries.
Sections
III and IV deal with "new areas" such as
services and trade-related aspects of intellectual
property rights (TRIPS). Trade in services, like the
trade in goods, has been substantially facilitated by the
completion of the Internal market, be it on a
cross-border basis or through commercial presence, thanks
to single licensing, the principle of home-country
authority, and that of mutual recognition/harmonisation
of supervisory rules. Here again, the Community pursues a
liberal policy in its relation to third countries'
services companies: the simple fact that a foreign
service supplier, once established under the laws of one
of the EC Member States, then receives the same treatment
as domestic EC service supplier, offers an EC-wide
trading opportunity. This section also reviews the
modifications of relevant Community legislation pursuant
to the WTO Agreement.
Finally,
section V highlights the views of the Community in two
areas where, inter alia, it is believed, progress is
needed in the newly established World Trade Organisation:
Trade and Environment (where work is already underway),
and Trade & Investment. Back
to top
|
|