APPENDIX 2
Further memorandum from the Confederation
of British Industry
UNICE COMMENTS ON THE COMMUNICATION FROM
THE EUROPEAN COMMISSION TO THE COUNCIL AND TO THE EUROPEAN PARLIAMENT
"THE EU APPROACH TO THE MILLENNIUM ROUND"[1]
I. INTRODUCTION
UNICE broadly supports the thrust of the 8 July
1999 European Commission communication on the EU Approach to the
Millennium Round. It is pleased to see that the Commission positions
are in line with most of its own positions for the Millennium
Round Agenda. Like the Commission, UNICE believes that the challenges
to the multilateral system can best be met through a new comprehensive
round of trade negotiations.
A comprehensive round will help WTO live up
to the challenges created by rapid and far-reaching economic change,
and help meet the concerns expressed by some developing countries
and part of public opinion regarding market liberalisation. UNICE
also supports a round that should aim to last no more than three
years. It shares the Commission's views on the single undertaking,
however with some flexibility. It believes that the round should
allow for early balanced agreements on a provisional basis provided
the support of a critical mass of WTO members is reached and,
at the end of the Round, all of the results are adopted in their
entirety by all WTO members.
To promote its position and improve mutual understanding
on trade and investment issues, through transparency and dialogue,
UNICE has actively participated and will continue to participate,
in the run-up to Seattle and during the round, in meetings with
civil society representatives organised notably by the Commission
and WTO. Its member federations have participated in similar meetings
at national level. Experience shows that these meetings help to
forge consensus when participation is based on co-operation and
experience-sharing while avoiding politicised rhetorical exchanges.
These meetings should in no way exclude or replace separate consultations
with business, labour unions and other components of civil society.
UNICE welcomes the Community proposals to improve
the transparency of WTO itself through early derestriction of
documents and minutes of meetings. These measures will contribute
notably to increasing public opinion awareness of WTO and hence
to building stronger and broader support for the multilateral
liberalisation process.
With this position UNICE would like to comment
briefly on the different issues detailed by the Commission in
its communication and further explain, where appropriate, its
priorities and concerns so that the objectives of forthcoming
WTO negotiations are realistic and forward-looking.
II. GENERAL
REMARKS
UNICE supports the Commission's view that trade
and investment liberalisation should be conducted in a manner
conducive to sustainable development and take account of the capacities
and constraints of developing countries. It is, however, concerned
that the Commission has failed to define "sustainability"
clearly in its overall objectives for a comprehensive round. It
is only in the context of the specific chapters relating to "Trade
and Environment" and "The New Round and Development"
that it refers respectively to economic development and the interdependence
of economic development, social development and environmental
protection and states that they are mutually reinforcing components
of sustainable development.
UNICE would like the EU to seek, in the Seattle
Ministerial Declaration, a definition of the principle of "sustainable
development" which would apply to all WTO agreements and
explicitly include economic sustainability with social and environmental
sustainability. Such a definition should also clearly state that
national treatment (NT), most favoured nation treatment (MFN)
and regulatory stability are necessary conditions for sustainable
development.
WTO's contribution to improving living and working
conditions world-wide is to make sure that trade liberalisation
and other environmental, social, development and consumer objectives
are mutually supportive and benefits of growth are evenly shared
between all WTO Members. It would, however, be wrong to believe
that the multilateral trading system is the appropriate forum
to find answers to human rights abuses, non respect of core labour
standards or environmental problems. These important issues should
be specifically addressed in the specialised international agencies.
It is a long-standing UNICE position to request
increased co-operation between WTO, IMF and the World Bank to
ensure greater coherence between their respective policies to
promote sustainable development and in particular help developing
countries to benefit fully from further trade liberalisation.
It is pleased to see that a similar proposal is among the Commission's
proposals for adoption at the Seattle ministerial conference.
III. COMPARISON
OF COMMISSION
PROPOSALS AND
SPECIFIC UNICE POSITIONS
A. UNICE PRIORITIES
1. Investment
In its communication the Commission supports
the launch of negotiations in the WTO for the establishment of
a multilateral framework of rules governing international investment,
with the objective of securing a stable and predictable climate
for investment world-wide. It emphasises the non-discrimination
principle as the linchpin of an open and efficient investment
regime and the host country's right to regulate the activity of
investors (whether foreign or domestic) on their respective territory,
for achievement of legitimate policy objectives. The Commission
also insists on access to investment opportunities based on commitments
made by each Member and transparency regarding changes in applicable
laws and regulations.
UNICE welcomes the Commission proposals which
are centred around the principles of non-discrimination and national
treatment. It would like also to add the principle of transparency
which should bind all WTO Members. UNICE supports the right of
all WTO Members to regulate economic activity on their territory,
however it insists that this right should be based explicitly
on the principles of NT, MFN and transparency and that a clause
be developed stipulating that no lowering of standards should
be applied by governments to attract FDI. In addition the concept
of sustainable development should be clearly defined in the investment
agreement and specifically include economic sustainability together
with social and environmental development.
While UNICE attaches great importance to transparency,
it also looks for an agreement which would provide a basis for
removal, or at least reduction, of inhibitions to investment flows.
UNICE shares the bottom-up approach proposed by the Commission
for market access as a realistic way of handling the pre-investment
phase (the right of establishment) for non-TRIMS issues, but this
approach should not be used to define the extent of post-investment
protection, which should be unequivocally non-discriminatory and
transparent.
The Commission proposes that a multilateral
agreement on investment should focus on FDI and exclude short-term
capital movements. UNICE fully agrees that, in some respects,
short-term capital movements require a differentiated treatment
from FDI, however it suggests that the possibility of covering
them should be examined and business should be closely consulted
on this matter. In the areas of repatriation of funds and protection
against direct and indirect expropriation no distinction should
be made between the different forms of investment.
Regarding dispute settlement arrangements, clarification
is needed especially regarding "investor-to-state" disputes.
The right for companies to lodge complaints against treatment
at variance with published policies of the host state concerned
should be recognised and not be subject to derogations for developing
countries.
2. Services
The Commission aims at comprehensive negotiations
with a view to obtaining more and better commitments from all
WTO members on market access, most favoured nation and national
treatment.
UNICE shares the Commission objectives on services.
It strongly supports liberalisation of services markets throughout
the world going beyond standstill commitments in order progressively
to remove barriers to trade and investment. UNICE also underlines
the need for regulatory authorities to commit to pro-competitive
principles.
Negotiations of rules and disciplines regarding
government procurement of services, subsidies and emergency safeguard
measures should be part of the new round. UNICE's preferred method
of scheduling would be a requirement that countries state all
the restrictions in force affecting market access and national
treatment, sector by sector.
3. Trade Facilitation
In this field UNICE has put forward a number
of specific proposals in order to simplify, harmonise and automate
procedures. It has notably called for co-operation between operators
and customs which should evolve towards true partnership, delegation
of controls through "One-Stop Clearance", processing
of administrative formalities in the field of transport, technical
controls and means of payments.
The Commission communication is broadly in line
with UNICE's proposals. It advocates a set of WTO commitments
to simplify and harmonise trade procedures. It suggests in particular
provisions to facilitate convergence of official controls and
simplified procedures to reduce red tape and documentation.
UNICE welcomes Commission proposal to involve
the private sector in co-ordinated, long-term capacity-building.
While UNICE recognises the specific difficulties
some developing countries might have with rapid introduction of
specific commitments in the area of trade facilitation, it is
concerned by the general Commission proposal that "countries
should where necessary be given not only support but also time
to introduce commitments". Such a provision should be more
narrowly defined in order to prevent abusive postponement of trade
and customs regulatory changes. It should be clearly underlined
that trade facilitation is an issue in which all gain.
4. Market Access
On this issue UNICE, in its 9 June position,
concentrates more on the objectives to be achieved than on the
specific method to achieve them. European business looks for improved
market access commitments covering simultaneous reduction of non-tariff
barriers and tariffs. It calls in particular for: full and effective
implementation of UR agreements, a comprehensive approach covering
all sectors, a 15% tariff peak maximum and the dismantling of
all tariffs for industrial imports from least developed countries,
defined as such by the UN, by all developed WTO members and significant
contributions from the most advanced (emerging) developing countries.
These two categories of countries should be clearly defined. It
strongly opposes the automatic elimination of tariffs below certain
limits. It also suggests immediate binding of all applied tariffs
by all WTO members. Sectoral initiatives should be possible provided
they are balanced, involve a critical mass of WTO Members and
they become part of the single undertaking at the end of the round.
UNICE shares the Commission's objective aiming
at harmonising the tariff structures of all Members across all
non-agricultural products, without exceptions. It welcomes the
recognition that credible market access negotiations must be accompanied
by a comprehensive non-tariff initiative. The two negotiations
should be linked together in practice.
The Commission communication differs, however,
with UNICE's views notably on the following: it gives no maximum
figures for tariff peaks (UNICE proposes 15%); the tariff band
approach implies the automatic elimination of tariffs below a
certain level (UNICE opposes the automaticity of the process);
Commission proposals on binding are less ambitious than UNICE
would like (UNICE proposes binding of all applied rates).
The proposed reduction of tariff differentiation
to the six-digit HS level does not take sufficient account of
the specific sensitivity of individual items. A number of sector
associations have reserved their positions on this approach and
UNICE wishes to await further consultation before taking a final
position.
5. Government Procurement
Even if the Commission communication underlines
that work already carried out notably on transparency in procurement,
review of GPA and GATS work on services procurement, should be
brought to a successful conclusion within the WTO framework, the
text makes no reference to scope and coverage and remains rather
vague, without concrete proposals. It nevertheless presses for
a high degree of transparency coupled with a phased programme
of gradual market opening.
UNICE strongly supports liberalisation and increased
transparency of government procurement markets for goods and services.
It would also like, as a long-term objective, to see a truly multilateral
set of rules based on national treatment and reciprocity of access.
Specifically, UNICE calls for a widening of
GPA in terms of countries and sectors covered and improvements
on coverage of the sub-federal level. It also calls for definition
of a workable set of transparency principles as bidding procedures,
evaluation criteria, dispute settlement mechanism, etc. UNICE
agrees with the Commission that an agreement on transparency should
be combined with an agreement to pursue negotiations progressively
to liberalise the government procurement markets.
6. Trade and Environment
Above-mentioned UNICE's comments on sustainable
development are also valid for trade and environment. UNICE shares
the Commission's approach and priorities for action particularly
regarding MEAs, non-product related PPM and environmental labelling,
and stronger co-operation with other relevant international bodies.
In addition UNICE would like WTO members to reaffirm their support
for the present definition of like products.
Regarding the work of CTE, it should deal only
with horizontal issues such as the relationship between trade
measures contained in MEAs and WTO. All the other subjects should
be dealt with by the indidual negotiating groups which will be
set up in the context of the new round.
On the Precautionary Principle, UNICE supports
correct application of this principle within the context of sustainable
development. The principle cannot and should not be misconstrued
to be an absolute standard, overriding all others. UNICE opposes
any interpretation of the Precautionary Principle that does not
rely on a risk-based, science-justified approach. Such an approach
is embodied in the WTO Sanitary and Phyto-Sanitary Agreement.
UNICE urges Ministers to reaffirm WTO's commitment to sound science
criteria. One way to avoid divergent interpretation of the precautionary
approach lies in improved exchange of scientific information and
in better government-to-government consultations in the early
stages of legislation.
7. Electronic Commerce
UNICE urges governments to enhance constraint-free
electronic commerce transactions. It agrees with the Commission
that decisions on electronic commerce have to be taken on the
basis of the balanced results of the work programme adopted at
the 1998 Geneva WTO ministerial meeting.
No negotiating group on electronic commerce
should be set up in WTO. WTO is not the right platform for drafting
rules on domestic regulation. However, WTO could also give useful
guidance on how electronic commerce should be supported within
individual economies.
B. OTHER ISSUES
1. Intellectual Property
UNICE believes that the right strategy that
will allow the building-up of strong and harmonised intellectual
property protection is to concentrate for the time being on injecting
life into the provisions of the agreement at worldwide level by
proper implementation, enforcement and assistance to those countries
which need it.
Discussions in the field of intellectual property
should therefore be limited to ensuring effective and timely implementation
of the TRIPs agreement and pursuing the work programme embodied
in the built-in agenda. Once the agreement has been consolidated
and more widely implemented, further negotiations could then be
considered.
In this context, UNICE welcomes the Commission's
statement, in line with its own position, that any initiative
for future negotiations should not lead to a lowering of standards
or affect ongoing work in the TRIPs Council under the so-called
built-in agenda". It is also UNICE's position that the present
achievements and the current transition periods must not be re-opened
in new negotiations.
2. Dispute Settlement
Although the Commission communication provides
a number of improvements to DSU before Seattle, the text does
not go into detail and it is not a separate item in the EU communication.
UNICE supports clarification and improvement
of some of the provisions of DSU which have led to trade disputes,
and looks for greater transparency in the panel process and greater
access to non-confidential information and reports.
3. Agriculture
On this issue the Commission's view is that
negotiations should be pursued on continuation of the reform process
in agriculture. In approaching the negotiations, the EU will have
in mind the need to maintain a number of existing provisions in
the Agreement (maintenance of the blue box, renewal of the peace
clause and the special safeguard clause), the need for improvements,
particularly regarding access to third country markets and the
need to ensure the compatibility of certain rural and environmental
policies, through a recognition of the "multifunctional"
role of agriculture.
UNICE supports the gradual opening up of agriculture
to market forces. However, the changes must proceed step by step
with time to enable the agricultural sector and the industries
close to it to embrace the necessary structural adjustments.
Considering the sensitivity of the agricultural
negotiations and the fact that progress on other issues of the
negotiations, essential for business and further market liberation,
runs the risk of being linked to progress in agricultural negotiations,
UNICE calls on the EU to implement the first step of the CAP reform
in the agreed timeframe. This would allow the EU to adopt a constructive
approach while avoiding being forced into a defensive position
in the negotiations. Besides, the EU should request that the measures
of other trade partners which are trade-distortive should also
be abolished at the same time. From this point of view the EU
also has to adopt an offensive position regarding agricultural
subsidy practices of third countries.
4. Trade and Competition
The Commission supports negotiations within
WTO, as part of a new comprehensive round, on a binding framework
of multilateral rules on competition which would include core
principles and common rules relating to the adoption of a competition
law, common approaches on anticompetitive practices with significant
impact on international trade and investment, provisions on international
co-operation, and dispute settlement arrangements.
UNICE does not support the Commission position
in favour of a binding multilateral agreement on specific competition
rules, but it would welcome a WTO agreement on objectives for
competition rules directed to what is necessary to prevent foreclosure
of markets. UNICE believes that competition rules and their enforcement
should be based on core principles of efficiency, transparency
and non-discrimination. Multilaterally agreed objectives for competition
rules should not frustrate the effective working of the market
mechanism or slow down commerce. Such a framework should reduce
administrative burdens, enhance legal certainty on a global scale
and solve competing claims for jurisdiction, issues concerning
claims of extraterritoriality and multiple parallel proceedings.
UNICE welcomes Commission's statement, in line
with its position, that, regarding dispute settlement, "In
any event, there should be no review of individual decisions".
UNICE regrets that the Commission's proposals
do not specifically refer to the need to ensure adequate protection
of confidential business information and to the necessary consent
of the parties concerned before any exchange of such information
between competition authorities.
5. Labour Standards
The Commission rightly points out that the worst
abuses of core labour standards most often take place in sectors
of the economy not exposed to international trade. Thus the Commission
recognises that these abuses are not caused by trade liberalisation.
It also rightly recognises that there is no
consensus to establish a WTO working group on trade and labour
standards. UNICE welcomes the realistic and pragmatic approach
taken by the Commission. Like the Commission, UNICE firmly believes
that ILO is the best-placed organisation to assume the lead in
world-wide improvement of labour standards.
The Commission rightly acknowledges substantial
progress achieved by the ILO in this area. UNICE therefore reiterates
its support to the approach decided at the 1996 WTO Ministerial
Conference in Singapore.
UNICE also wants to underline the importance
of pursuing co-operation between the ILO and WTO Secretariats,
the practicalities of which will need to be clearly defined among
all the interested parties. The shared objective of this co-operation
should be to promote further trade liberalisation as an important
prerequisite for improvement of living and working conditions,
and to help member countries to take full advantage of the benefits
of trade liberalisation.
IV ISSUES
NOT COVERED
BY SPECIFIC
UNICE POSITIONS
1. The New Round and Development
UNICE shares the Commission's views that the
specific needs and problems of developing countries should be
fully taken into account. While it supports special and differentiated
treatment to facilitate their integration in the world economy
so that they benefit fully from liberalisation, a distinction
should however be clearly made between developing countries and
the least developed countries, as defined in the UN, which require
special attention. Derogations to the WTO rules should be limited
in time in order to maintain sufficient incentives to make the
changes necessary to adapt their economies to the new challenges
of economic interdependence.
As stated in the above-mentioned "market
access" chapter, UNICE supports the dismantling of all tariffs
for industrial imports from least developed countries by all developed
WTO members and significant contributions from the most advanced
developing countries. It hopes that such a decision, will be taken
at the Seattle Ministerial Conference. UNICE also urges that such
proposals be accompanied by the strengthening of administrative
co-operation and promotion of trade facilitation. European companies
are prepared to work to that end with their partners.
UNICE supports proposals to strengthen capacity
building and assistance programmes in developing countries, however
progress cannot be achieved without appropriate regulatory reforms
in the countries concerned.
2. Technical Barriers to Trade
In this field, the Commission communication
underlines that the new round provides an ideal opportunity to
strengthen existing provisions, clarifies a number of issues and
expand the scope of certain provisions in the TBT Agreement. It
should notably promote regulatory co-operation and include more
explicit guidance on good regulatory practice. It is important
to clarify the essential criteria that characterise standards
as international, and incentives to take up international standards
should be reinforced. Finally further international harmonisation
of conformity assessment procedures should be addressed.
UNICE strongly supports the Commission approach
to strengthening, clarifying and expanding the scope of the TBT
Agreement. Moreover, it would like the WTO to play a more important
role in dismantling barriers and promoting harmonisation in the
regulatory, standards and conformity assessment areas. Improving
the implementation and operation of both the Agreement and Standards
Code is in this case imperative.
Other important steps for industry, mentioned
in the communication, would be regulating only essential requirements,
leaving technical details to international standards, and promoting
self-certification. UNICE is planning to produce a detailed position
paper in this area to be issued in the first half of October 1999.
3. Trade defence instruments
UNICE's shares the Commission's view that the
anti-dumping agreement is the result of a very extensive negotiation
and constitutes a carefully negotiated balance of often conflicting
interests. Therefore, it does not support the reopening of the
discussion on the basic notions and provisions of the agreement
in the new round. However, UNICE would welcome initiatives to
enhance transparency in the interpretation and implementation
of anti-dumping procedures by WTO. Members the objectives being
to avoid discriminatory treatment and procedural harassment for
the companies involved.
Regarding subsidies, UNICE supports the extension
of Articles 6.1 (subsidies which give rise to a presumption of
serious prejudice), 8 and 9 (authorised subsidies) of the Agreement
on Subsidies and Countervailing Measures without changes for a
further period. If negotiations are to take place which could
affect the rights and obligations of WTO Members under the Subsidies
Agreement, these negotiations should form part of the new round
of trade negotiations and should not be conducted separately from
them. UNICE would also like to have clarification of the proposals,
referred to in the Commission communication, to make the Subsidies
agreement better support the development objectives of developing
countries. While UNICE can accept the case for special and differential
treatment for developing countries in appropriate circumstances,
this should not mean that all subsidies granted by developing
countries should be automatically green-lighted, in particular
export and other subsidies which would lead to distortion of world
competition in certain sectors (for example those creating production
over-capacity).
UNICE does not support the reopening of the
Safeguard agreement. It shares the Commission's view that the
Community interest is to ensure that the use of safeguard measures
is kept within narrow, clearly defined and, above all, practical
limits.
V. CONCLUSIONS
UNICE believes that the WTO Seattle Ministerial
Conference is a unique opportunity not to be missed for further
liberalisation of world markets. It looks to the conference to
agree to launch a new comprehensive round of multilateral trade
negotiations to stimulate trade, investment and growth, in the
framework of multilaterally agreed rules.
UNICE will continue its action in the coming
months to support such an outcome. As final "users"
of the WTO multilateral system, it looks forward to continuing
the dialogue with all the EU institutions on WTO matters. It pursues
similar objectives in the various business dialogues it is involved
in such as TABD, MEBF, etc. A UNICE delegation will also be present
in Seattle during the ministerial conference.
The full set of UNICE positions for the Millennium
round (September compendium) is available on request from the
UNICE Secretariat (rex@unice.be). UNICE may review or add to its
priorities as governments' positions develop and discussions progress
in the run-up to Seattle.
October 1999
1 These comments complement UNICE compendium "UNICE
and the WTO Millennium Round" published in September 1999. Back
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