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TRADE POLICY REVIEWS: FIRST PRESS RELEASE, SECRETARIAT AND GOVERNMENT SUMMARIES

PRESS RELEASE
PRESS/TPRB/137
4 July 2000
European Union: July 2000

Continued European Union (EU) participation in WTO trade initiatives have resulted in a basically open market for industrial products with a simple average tariff of 4.2% in 1999, down from 4.9% in 1997, says a new WTO report on the trade policies of the EU. The WTO report says however that market access barriers for textiles and clothing are significant due to higher tariffs and quotas in place. The report states that conditions of access on agricultural products are adversely affected by the operation of the Common Agricultural Policy (CAP).

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See also:

Second press release
Chairperson’s concluding remarks


EU has open market, but still holds back on agriculture and textile products   Back to top

The new WTO report, along with a policy statement by the European Commission, will serve as the basis for the trade policy review of the EU which will take place on 12 and 14 July in the Trade Policy Review Body of the WTO.

The report notes the stronger economic performance of the European economy since 1997, with growth averaging some 2.5% a year, expected to rise above 3% in 2000 and 2001. A factor is the EU's significant progress towards completion of the Internal Market, notably by the de-regulation of the telecommunication and financial services markets, in parallel with WTO commitments, and the introduction of the euro in 1999. However, the report notes that higher growth has yet to translate into deep cuts in unemployment rates, and the EU requires further structural reforms of the labour markets to accomplish this end.

The report notes that trade trends have mirrored domestic economic developments. Imports growing faster than exports led, in 1999, to a reversal of the EU's long standing surplus on merchandise trade and a deficit of € 13.7 billion. In addition to stronger internal demand, import growth of 9% in 1999 was affected by the more than doubling of the price of oil on world markets and the sharp decline in the euro. On the export side, growth in 1999 was sustained by the strong demand of the United States, the single largest market for the EU.

The report states that the EU takes trade policy initiatives in the WTO and at the regional and bilateral levels. In the WTO, the EU plays a leading role and is a proponent of a new round of negotiations with an agenda that is broader than the one built-in to the Uruguay Round. The EU practices a policy of transparency on its own WTO documents, and engages its civil society representatives in a dialogue on WTO matters. The EU is also a leading user of the WTO dispute settlement procedures to enforce rights under the agreements, and is a respondent in a number of cases; the WTO dispute settlement procedures play a key role, notably, in managing transatlantic trade relations.

The report notes that, to the benefit of its consumers, the EU has a largely open market for industrial products, with a simple average MFN tariff of 4.2% in 1999, compared with 4.9% in 1997. Another trade liberalizing action noted by the report is the end in 1999 of the “consensus” arrangement with Japan that limited exports of cars to the EU (in place since 1991). Quotas on textile and clothing products have also been liberalized or lifted under the WTO Agreement on Textiles and Clothing. However, the report notes that the lifting of quotas on 12 of the 52 product categories restricted in 1990 represented only 5.4% of restricted imports and only benefited a handful of developing countries.

Anti-dumping measures are in place on imports of iron and steel products, electronic products and chemicals from a number of origins. The report states that a rising trend for measures in force is expected for 2000, since the number of new investigations initiated in 1999 trebled. The report notes that state aid undermines conditions of competition in parts of the manufacturing sector, since aid levels (except for Germany) have stayed the same since 1997.

In the agricultural sector, the report states that conditions of access continue to be determined by the CAP. The EU's policy to maintain high levels of self-sufficiency in primary agricultural products - including wheat, dairy products and meat — has direct spillover effects on world markets. At the border, high tariffs apply — a simple average estimated at 17.3% — although tariff quotas provide access for WTO Members at zero or reduced rates on high-tariff items, as well as for imports from preferential trade partners.

In 1999, the EU spent some €45 billion (US $50 billion) on the CAP, making agriculture — at 45% of the budget — the most visible item of its expenditure. OECD estimates indicate that the level of support to agricultural producers in 1998-99 reached the previous historical high of 1986-88. However, the nature of the support has shifted from market price support to direct payments (which are subject to production-limiting programmes), a trend which continues for cereals, dairy and meat with the CAP reform agreed in 1999.

The report notes that trade relations with only eight WTO Members are fully inside the WTO due to the EC's numerous preferential trade agreements and arrangements. Most-favoured-nation treatment applies only to imports from: Australia; Canada; Hong Kong, China; Japan; Republic of Korea; New Zealand; Singapore and the United States. The most beneficial treatment is granted to least-developed countries and African, Caribbean and Pacific (ACP) countries with 95% of lines duty free, followed by regional trade agreements (80%) and beneficiaries of EU's Generalized System of Preferences (GSP) (54%).

The report also notes that the EU's new generation of regional trade agreements require the partner to make a greater commitment to market access for EU products than in the past. “Euro-Med” free-trade agreements are in place with Israel, Jordan, Morocco, the Palestine Liberation Organization and Tunisia. A free-trade agreement with South Africa came into force in 2000. The EU's first preferential trade agreement in the Americas was concluded in November 1999, with Mexico, and negotiations started in 2000 with Chile and MERCOSUR.

The EC also concluded the Partnership Agreement of Cotonou with the ACP countries in February 2000, to replace the expired Fourth Lomé Convention. The new agreement continues the free access to the EU market for most exports of the ACP countries, without requiring market access commitments on their part for EU products, until 2007 at the latest. Such commitments are to be negotiated by the EU with regional groupings of ACP countries during the transitional period. A waiver from the most-favoured-nation provision is currently under consideration by the membership of the WTO.

At the bilateral level, the EU aims to reduce non-tariff barriers to trade resulting from product regulations and standards, a key market access issue, both in the EU market and in its trading partners. The report notes that the EU has concluded mutual recognition agreements on the results of conformity assessment with Australia, Canada, New Zealand, Switzerland, and the United States, and it is negotiating one with Japan. The report adds that for the future, market access conditions for exporters of foodstuffs are likely to be affected by the EU's policy of greater food safety, linked to a number of “food scares” at EU level.

In the services sector, the report notes the EU's commitment to continue removing restrictions to competition and trade, although the pace of liberalization is more advanced in telecommunication and financial services than in transport or audiovisual. The opening to competition of telecommunication services and infrastructure in the EU in 1998, including to foreign operators, was largely the result of the successful conclusion of WTO negotiations. The market is valued at €183 billion, on a par with the size of the United States' market. Its openness will give a boost to the development of the new economy.

In financial services, the EU's WTO commitments came into force in March 1999, extending the “single passport” concept to foreign providers of banking and insurance services, both dynamic sectors of the EU market. The introduction of the euro in 1999 also gave a major boost to the integration of the European capital markets.

Notes to Editors

Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member countries’ trade and related policies are examined and evaluated at regular intervals. Significant developments which may have an impact on the global trading system are also monitored. For each review, two documents are prepared: a policy statement by the government of the member under review, and a detailed report written independently by the WTO Secretariat. These two documents are then discussed by the WTO’s full membership in the Trade Policy Review Body (TPRB). These documents and the proceedings of the TPRB’s meetings are published shortly afterwards. Since 1995, when the WTO came into force, services and trade-related aspects of intellectual property rights have also been covered.

For this review, the WTO’s Secretariat report, together with the policy statement prepared by the European Commission, will be discussed by the Trade Policy Review Body on 12 and 14 July 2000. The Secretariat report covers the development of all aspects of the EU's trade policies, including domestic laws and regulations, the institutional framework, trade policies by measure and by sector.

Attached to this press release is a summary of the observations in the Secretariat report and parts of the government's policy statement. The Secretariat report and the government’s policy statement are available for the press in the newsroom of the WTO internet site (www.wto.org). These two documents and the minutes of the TPRB’s discussion and the Chairman’s summing up, will be published in hardback in due course and will be available from the Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.

Since December 1989, the following reports have been completed: Argentina (1992 and 1999), Australia (1989, 1994 and 1998), Austria (1992), Bangladesh (1992 and 2000), Benin (1997), Bolivia (1993 and 1999), Botswana (1998), Brazil (1992 and 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 and 1998), Chile (1991 and 1997), Colombia (1990 and 1996), Costa Rica (1995), Côte d’Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992 and 1999), El Salvador (1996), the European Communities (1991, 1993, 1995 and 1997), Fiji (1997), Finland (1992), Ghana (1992), Guinea (1999), Hong Kong (1990, 1994 and 1998), Hungary (1991 and 1998), Iceland (1994 and 2000), India (1993 and 1998), Indonesia (1991, 1994 and 1998), Israel (1994 and 1999), Jamaica (1998), Japan (1990, 1992, 1995 and 1998), Kenya (1993 and 2000), Korea, Rep. of (1992 and 1996), Lesotho (1998), Macau (1994), Malaysia (1993 and 1997), Mali (1998), Mauritius (1995), Mexico (1993 and 1997), Morocco (1989 and 1996), New Zealand (1990 and 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991, 1996 and 2000), Pakistan (1995), Papua New Guinea (1999), Paraguay (1997), Peru (1994 and 2000), the Philippines (1993), Poland (1993), Romania (1992 and 1999), Senegal (1994), Singapore (1992, 1996 and 2000), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 and 1998), Sri Lanka(1995), Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991 and 1996), Tanzania (2000), Thailand (1991, 1995 and 1999), Togo (1999), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 and 1998), the United States (1989, 1992, 1994, 1996 and 1999), Uganda (1995), Uruguay (1992 and 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).

The Secretariat’s report: summary  Back to top

TRADE POLICY REVIEW BODY: THE EUROPEAN UNION
Report by the Secretariat — Summary Observations

Recent Economic Developments

Since its last Trade Policy Review in 1997, the European Union (EU) has continued to make significant progress towards the completion of the Internal Market, including with the introduction of the euro. Since 1997, led by domestic demand, growth has risen to an average of some 2.5% a year and inflation has declined to historically low levels, of 1.2% in 1999. Unemployment, however, remains high, at 9.2%. Capitalizing on the economic potential of a quickly changing and competitive international environment is seen as requiring a correspondingly high degree of flexibility in labour, goods and services markets.

In the framework of the Growth and Stability Pact, macroeconomic policies of Member States have been supportive of the economic recovery, geared to fiscal discipline and price stability. The euro was introduced on 1 January 1999 for 11 of the 15 Member States. The European Central Bank (ECB) now conducts monetary policy for the euro area with the objective of maintaining price stability (below 2%). No active exchange rate policy is in principle pursued for the euro, which had declined by over 20% against the dollar by April 2000.

Structural policies have also been supportive of growth in the economy of the EU. The Community's initiatives to complete the Internal Market are aimed at improving the efficiency and functioning of markets for goods, services and capital. Notable efforts have been made to liberalize financial services (whose effects on capital markets were enhanced by the euro), and telecommunications, supported by the EU's WTO commitments.

Greater importance has been given to an effective competition policy due to the structure of markets in newly deregulated sectors such as telecommunications. In addition, a wave of mergers and acquisitions has taken place in sectors affected by Internal Market initiatives or the rising importance of electronic commerce. More generally, increasingly globalized markets have boosted transatlantic merger activity.

Job creation is the EU's central economic policy objective, to be realized through improved competitiveness of European enterprises, operating in a business environment enhanced by EMU and more efficient markets. Although the jobless rate has been declining steadily since 1997, and dipped into single digits in 1998 for the first time in five years, it is still above the natural rate. To achieve more efficient labour markets, a Community-wide employment strategy has been in place since 1998, with National Action Plans for each Member State.

International trade trends have largely mirrored domestic economic developments. The EU's export and import growth (in value terms) fell sharply in 1998 compared with 1997, although the slowdown was more marked on the export side. These trends continued in 1999, with export growth estimated at 3% compared with 9% growth for imports. In addition to stronger internal demand, import growth (in value terms) was affected by the more than doubling of the price of oil on world markets, and the declining euro. The EU's longstanding surplus on merchandise trade gave way to a deficit of 13.7 billion in 1999.

The composition of the EU's trade shifted sharply away from Asia in 1998, due to the crisis in emerging markets. Sustained growth in the United States — the EU's leading trade partner — has accordingly boosted the share of this market to 22% of the EU's exports in 1998. Central and Eastern Europe have also gained in importance, reaching a share of over 15% in EU exports.

Real GDP growth in the EU is expected to accelerate from 2.3% in 1999 to 3.4% in 2000 and 3.1% in 2001. Net job creation is expected to continue at a rate above 1% over the next two years, with employment increasing by 1.3% in 2000 and 1.2% in 2001. However, further structural reforms would need to accompany economic growth in order for the unemployment rate to be pushed below the forecasted 7.9% in 2001.

Institutional Developments

The Treaty of Amsterdam revised the founding treaties of the EU in May 1999 to bring the Community closer to its citizens. The European Parliament is engaged in co-decision with the Council for an expanded range of areas, and the scope of qualified majority voting in the Council is also wider. The EU is committed to greater openness of decision-making through transparency and consultation of civil society in all policy areas, including on trade policy matters.

Preparations for enlargement continued with all applicants from Central and Eastern Europe formally joining the process in February 2000. An Intergovernmental Conference is meeting in 2000 to address the institutional issues raised by enlargement. Other related issues are the functioning and financing of the major Community programmes on agriculture, and structural operations. A reform of the Common Agricultural Policy (CAP) was thus agreed in 1999.

External Trade Relations
Basic objectives

The basic objectives of the EU's trade policy regime have remained largely the same since the last Review. The EU continues to pursue multilateral, regional, and bilateral initiatives to liberalize trade. At the multilateral level, the EU is a proponent of a new round of negotiations, with a broader agenda than the one “built-in” to the Uruguay Round, where negotiations began in 2000. At the regional level, the EU's new generation of agreements emphasize a greater reciprocity of market-access commitments than in the past, and concern a broader range of trading partners. Development policy is accordingly focussed more narrowly on least developed countries and GSP beneficiaries.

With major trading partners, the EU is emphasizing the reduction of non-tariff barriers to trade resulting from product regulations and standards, and has concluded mutual recognition agreements on the results of conformity assessment. In addition to such initiatives, the EU and the United States have strengthened the framework for their relations, both inside and outside the WTO, to more effectively manage their trade conflicts.

WTO

The EU is a key participant in the WTO. Notifications of trade policy developments are regularly made to the WTO and are in principle also available to the public in keeping with the EU's policy of transparency. Uruguay Round commitments are being implemented on schedule, although the extent of actual trade liberalization appears to be modest. The EU is part of all WTO initiatives to liberalize trade, from information technology products and pharmaceuticals, to financial services and telecommunications.

The EU is a leading user of the dispute settlement procedures to enforce multilateral trade obligations of its trading partners, and is also frequently involved as a respondent, often on transatlantic disputes. Most complaints are settled at an early stage, but the EU has had difficulties in complying with rulings in two high-profile cases — bananas and hormone-treated beef — leading to retaliation authorized by the WTO against the EU's exports in 1999. The EU does however recognize that its efforts to ensure that WTO trading partners comply with their obligations must be accompanied by its own rigorous compliance with the agreements.

Preferential trade agreements and arrangements

Since 1995, "Euro-Mediterranean" association agreements to establish bilateral free-trade areas were concluded with Israel, Jordan, Morocco, the Palestine Liberation Organization, and Tunisia; an agreement at negotiator's level was reached with Egypt in 1999. A free-trade agreement with South Africa came into force in 2000. The EU's first preferential trade agreement in the Americas was concluded in November 1999, with Mexico, and negotiations started in 2000 with Chile and MERCOSUR.

In February 2000, the EU and the African, Caribbean and Pacific (ACP) countries agreed on a successor to the Fourth Lomé Convention. The Partnership Agreement of Suva continues the EU's non-reciprocal trade preferences until 2007 at the latest, to permit the parties to conclude new trading arrangements, with the aim of WTO-compatibility. WTO Members are considering a request for a waiver.

For most developing country trade partners, the Community's GSP scheme offers preferences on (mainly) non-agricultural products. Supplementary preferences are available to least developed countries, as well as countries combatting drug production and trafficking. A new feature is the additional preferences on offer — as a positive inducement — to countries adhering to core labour standards or to environmental standards.

Market Access for Goods

To the benefit of its consumers, the EU has a largely open market for non-agricultural products, with an average MFN tariff of 4.2% in 1999, compared with 4.9% in 1996. In addition, the EU removed six quantitative restrictions under the WTO Agreement on Safeguards, notably Germany's restriction on coal (in place since 1958), and the “consensus” with Japan on imports into the EU of motor vehicles of Japanese origin (in force from 1991 to 1999).

Textiles and clothing is subject to above-average tariffs, tariff escalation, and quotas; the EU's first and second stage integration of the sector into GATT 1994 lifted quotas on 12 of the 52 product categories restricted in 1990 (5.4% of restricted imports), affecting only a handful of developing countries. Anti-dumping measures are in place on imports of iron and steel products, electronic products, and chemicals from a number of origins, and a rising trend for measures in force is expected for 2000 due to the three-fold increase in the number of initiations of new investigations in 1999. State aid undermines conditions of competition in parts of the manufacturing sector, and aid levels have remained largely unchanged since the last Review, except for Germany where aid to the new Länder declined sharply.

Conditions of access are also affected by the EU's numerous preferential trade agreements and arrangements, which make exclusively MFN treatment applicable only to imports from eight WTO Members: Australia; Canada; Hong Kong, China; Japan; Republic of Korea; New Zealand; Singapore; and the United States. The most beneficial treatment is granted to least developed countries and ACP countries (95% of lines are duty free), followed by regional trade agreements (80%), GSP beneficiaries (54%), and countries only subject to MFN (20%).

Conditions of access on agricultural products are affected by the operation of the CAP. High levels of self-sufficiency apply to primary agricultural products, such as wheat, dairy products, and meat, with spillover effects on world markets. The simple average tariff on agricultural products is estimated at 17.3%, although access on high-tariff items mainly takes place through tariff quotas. The EU's allocation and administration of tariff quotas has been highly controversial in the WTO in the case of bananas. Other complexities of the border regime for agricultural items produced in the Community include duties assessed in specific terms, on the basis of ingredients or the season, or based on the entry price. As a result, more open conditions of access generally apply to items not produced in the EU (e.g. coffee, cocoa).

In addition to border measures, the Community spent some € 45 billion (US$50 billion) on the CAP in 1999, making agriculture – at 45% of the budget – the most visible item of Community expenditure. OECD estimates indicate that the level of support to agricultural producers in 1998-99 reached the previous historical high of 1986-88, although direct payments (which are subject to production-limiting programmes) have risen in importance to account for about one-quarter of the total. A further shift to direct payments is foreseen by the reform of the CAP agreed in 1999, with cuts in market price support for cereals, dairy, and meat.

Product regulations and standards are a key market access issue, both for the Internal Market and for trading partners. The Community has concluded mutual recognition agreements on the results of conformity assessment with Australia, Canada, New Zealand, Switzerland, and the United States, and is negotiating one with Japan. For the future, market access conditions for exporters of foodstuffs are likely to be affected by the EU's policy of greater food safety, linked to a number of “food scares” at Community level.

Government procurement is also a key market access issue for the Internal Market and for trading partners. Procurement of goods and services accounted for some 14% of Community GNP, or over 1,000 billion, in 1998. Greater competition in this area has long been a central objective of the EU to ensure a better use of public monies, but results to date are disappointing.

Market Access for Services

The EU is committed to continue removing restrictions to competition and trade in the services sector. Among subsectors, however, the pace of liberalization differs significantly. Since the last Review in 1997, major legislative developments have taken place in financial services and telecommunications. The effects of these internal policy developments on conditions of competition in these sectors have been reinforced by the EU's commitments in the WTO providing national treatment to foreign service providers. In contrast, WTO commitments have not been made for transportation and audio-visual services, and EU legislation provides for various forms of European or bilateral preference.

Starting in 1998, in parallel with WTO commitments, telecommunication services and infrastructure in the EU were opened to competition, including to foreign operators. A more competitive market has rapidly developed. Legislative changes aimed at harmonizing disparate conditions and standards are to be completed by the end of 2001. A concentration of suppliers has taken place to exploit economies of scale in the provision of long-distance and mobile telephony services, subject to the Commission's active enforcement of EU competition law.

Developments relating to financial services include the implementation of the Action Plan for the sector, to harmonize regulation where necessary, as well as the structural change to capital markets resulting from the introduction of the euro in 1999. In addition, the EU's WTO commitments in the sector came into force in March 1999, extending the principle of the single passport to foreign providers in banking and insurance. Growth has been especially dynamic in banking and securities.

Notwithstanding the importance of these developments, an increasing exposure of the services sector to competitive forces inside and outside the EU has revealed certain structural rigidities whose correction could enhance the economic performance of the sector.

Protection of Intellectual Property Rights

Community initiatives to complete the Internal Market have to some extent harmonized regimes of the Member States, supplemented by instruments creating unitary Community rights on trade marks and plant varieties. Since the last Review in 1997, new harmonization initiatives apply to the legal protection of biotechnological inventions and to the protection of designs, and an initiative is planned for the patentability of computer programs. Initiatives are also planned to establish new unitary rights through a “Community design” and a “Community patent”. A 1999 study highlights infringements of trade marks and copyright, with worst affected areas being computer software, audio-visual and clothing.

Government report Back to top

TRADE POLICY REVIEW BODY: THE EUROPEAN UNION
Report by the European Commission - Part VI

Future policy directions — a new trade round

During the period under review the EU has been at the forefront of efforts to launch a new comprehensive round of trade negotiations in the WTO in 2000. It considers that a comprehensive trade round, conducted as a single undertaking and offering a balance of benefits to all WTO members will make an important contribution to global economic growth and sustainable development as well as strengthening further the rules-based trading system.

The EU’s position on a comprehensive round

The Commission's substantive proposals for a Round were set out in the 1999 Communication from the Commission to the Council and to the European Parliament concerning the EU Approach to the WTO Millennium Round. This Communication set out a possible EU agenda for the Round, covering among other things further liberalization or rule-making in the fields of agriculture and services, non-agricultural tariffs, investment, competition, trade facilitation, trade and environment, TRIPS and public procurement. It stressed that results in all areas should support and contribute to sustainable development, and proposed a detailed agenda to ensure that the needs and interests of developing countries would be concretely reflected in the negotiations. The Communication noted how it had been sought to involve, and reflect the views of, the European Parliament and representatives of civil society in developing its approach to the new round, and noted the strength of European business support for a Round. It also noted the need to develop a better understanding of how to progress in relation to social and labour issues.

A separate economic appraisal of the Round prepared by the Commission concluded that further multilateral liberalization on the lines of the EU’s agenda could result in global annual welfare gains of US$400 billion, of which about US$90 billion would accrue to the EU but over half the gains would accrue outside the main industrialized countries i.e. in the developing world. Independent studies commissioned by other WTO members show closely comparable results.

In its conclusions of 26 October 1999, the EU Council unanimously supported the proposal to launch a comprehensive Round. The Council recognized that a new trade round could constitute an important means to improve the European economy, to foster global economic growth and development, and ensure the successful management of globalization. The Council also stressed that a comprehensive Round offers the best way to take account of the trade interests of the WTO membership as a whole. These Conclusions constituted the basis for the EU’s position at the Seattle Ministerial Conference and remain the EU’s position.

Seattle and after

Like other WTO Members, the EU was profoundly disappointed by the failure of the Seattle conference to launch a new round. It believes that there are lessons that all Members can draw from this.

One of these lessons to be drawn from Seattle is that in future the WTO needs to work in a more inclusive and transparent way vis-à-vis all Members, and improve communication with the outside world. Work also needs to be organized more efficiently. There may be scope for short-term improvements in working methods, particularly in preparing for and managing ministerial conferences, where greater transparency, efficiency, and means to ensure fuller participation by developing countries seem warranted. In the longer term, we may need to examine options for broader improvements to the system, in particular to ensure the greatest possible transparency towards, and dialogue with, the wider public. However, we should not let “institutional reform” detract from the goal of launching a Round. Nor should the WTO system be made the scapegoat for failure to bridge gaps on the substance of negotiations.

The second — and key — conclusion that no delegation can fail to draw from Seattle is on the substance of the discussions. Despite continued differences on several points of the negotiating agenda, can one conclude that those differences could not have been bridged given better preparation in Geneva? Is it not possible that with more time in Seattle and appropriate flexibility all round, negotiations could have been launched? And does this not mean therefore that it should be possible to bridge those differences in the future?

The continued case for a new round

Against this background, the EU continues to support the launch of a comprehensive Round, along the lines supported by a large group of countries before and at Seattle: a Round in the sense of an inclusive approach in which all WTO Members can find their interests addressed.

The fundamental reasons in favour of a broad agenda remain valid. First, as regards further trade liberalization, both developed and developing countries seek improved market access for their products and services, in order to increase economic growth. It was clear at Seattle that only a comprehensive approach to market access, covering all sectors, can enable all Members to exploit their comparative advantage and thus increase their trade.

Secondly, the WTO also still needs to update its rules to respond to the effects of globalization, so that our traders and investors can enjoy a predictable, transparent and non-discriminatory framework in which to make their economic decisions and to compete. Basic rules on investment and competition are necessarily part of such an agenda and will go some way towards providing this environment. There continues to be solid support from a large number of Members for the inclusion of these issues in a negotiation. It is capital to launch negotiations on two subjects of such systemic importance and of benefit to companies and consumers around the world. It is equally important to begin negotiations either on trade facilitation or on improvements to rules in areas like trade defence or technical barriers to trade, all of which would contribute to more predictable market access conditions and to the freer flow of goods. Also, WTO rules on government procurement are in serious need of updating.

Third, Seattle also highlighted acutely the need to better integrate developing countries into the trading system through better market access, improved special and differential treatment, better co-ordinated capacity building, and a more active role within the WTO mechanisms. The EU remains willing to address comprehensively the priority issues for developing countries in a Round. Indeed, it is only in the framework of a comprehensive approach that the developing countries’ trade agenda — including more sensitive issues — can be fully addressed.

And finally the WTO must still answer questions of concern to governments and the wider public. The potential interlinkages of the trading system with the environment, sustainable development, social issues and consumer health and safety, need to be addressed in a way that safeguards both the trading system and these concerns. The EU initiative in relation to a Sustainable Impact Assessment of a new Round is an integral part of this approach. While the EU position on some of these issues would benefit from being clarified, the EU's fundamental objectives remain valid. The EU stands ready to consider the options available to achieve these objectives in order to ensure that any further clarification of the rules resolves the very complex equation of meeting legitimate societal and ethical objectives while bringing greater legal security to all Members, preserving the fundamental principles of the WTO, and preventing unjustified discrimination or disguised restrictions on trade.

In addition the EU will continue its efforts to develop a meaningful dialogue involving the ILO and the WTO on questions relating to trade, labour and social development.

The EU will continue to promote transparency in trade policy. Internally, it has launched a campaign of awareness, information and exchange of views with all actors of the civil society. This will be a permanent feature of the EU internal trade policy making. In Geneva, the EU has argued in favour of the greatest possible transparency of the WTO vis-à-vis the outside world.

Conclusion — Preparing for the launch of a new round

The Council, meeting in Seattle on 3 December, confirmed that the elements of the EU’s comprehensive approach, as set out in those conclusions, should continue to be pursued. The EU is therefore continuing actively to make the case for a comprehensive new round and is working with all its trading partners to maintain and broaden support for a round, which it wishes to see launched this year. It is more than ever necessary to adapt the multilateral trading system to the economic realities of today and to harness the powers of globalization for the benefit of all countries. WTO-members have put their priorities clearly on the table at various occasions. The launch of a comprehensive round, which takes everybody's concerns into account, but without unduly prejudging the outcome, is achievable if the necessary political capital is invested in an inclusive and transparent process.

An intensive process of consultation, review, and where necessary, adjustment constitutes the best way to restore momentum, to find convergence and to bridge outstanding differences.

In the shorter term, the EU has been among those WTO members calling for the adoption of confidence building measures, and was gratified that elements of this could be adopted in the WTO in May. The EU’s contribution includes the pledge of duty and quota free treatment for essentially all products from least developed countries, and proposals to support implementation of the Uruguay Round agreements, capacity building and transparency.

In sum, the proposed approach reflects the EU will to continue to assume its responsibilities within the WTO and to maintain the momentum for further liberalization and rule making. The EU will work to ensure that the future negotiations are put on the most solid basis possible, that flexibility is brought into the debate, that the problems identified by developing countries are being properly addressed, and that the functioning of the WTO is being improved. On this basis the EU is confident that a comprehensive trade round can be launched this year and that it can be successfully concluded in the near future.