European Union -Developments in EU Trade Policy

CHAPTER 8: Summary of Conclusions

The need for trade

166.  We have not heard anything in this inquiry to change the conclusion of our 2004 inquiry on trade policy: we recommend that the Government continues to pursue further trade liberalisation through the EU as an important policy objective. This should be fully consistent with the EU's development objectives, including the reduction of poverty in developing countries. The continued removal of trade barriers will lead to greater economic growth and jobs around the world. This growth is shared between developed and developing countries alike. A global recession will be made worse if there is a retreat into protectionism (para 17).

167.  The impact of commodity price volatility during 2008 on EU trade policy was limited to protectionist rhetoric rather than actions. We hope that EU Member States do not use the current economic environment as an excuse to delay or even roll back reforms of the Common Agricultural Policy.[39] We ask the Government to work with EU partners to ensure that trade liberalisation contributes to improving food security in developing countries (para 21).

The Doha Round

168.  We are disappointed that the Doha Round is yet to reach a successful conclusion and are concerned that a global recession will increase pressure for protectionist measures. We therefore welcome the decision of the leaders of the G20 countries to use their November summit as a springboard towards further Ministerial meetings on the Doha Round. We commend the UK Government, Lord Mandelson (in his former role as Commissioner for Trade) and the Commission for their work to date. We welcome Commissioner Ashton's announced commitment to work to revitalise the multilateral talks at the start of her tenure as Commissioner for Trade (para 54).

169.  We call on the Government and the Commission to make every effort to ensure that the positive rhetoric arising from the G20 summit is translated into action and a successful conclusion to the Round. The Government should also work with the incoming administration in the United States to emphasise the importance of trade liberalisation (para 55).

170.  We are concerned about the pace of services negotiations, especially as this is the area in which the UK has the most to gain from the Doha Round. Services negotiations require more attention because of the range of issues involved. We would encourage the business community to be more vigorous in advocating the completion of the Round (para 56).

171.  The Singapore issues should be revisited outside of the Doha Round (para 57).

172.  A Round in which WTO members bound tariffs at existing applied tariff rates would not be a failure: we do not take the current, historically low, levels of tariffs for granted. The embedding of current low levels of protection at a time when the global economy is facing a turbulent period featuring volatile raw material prices and a likely economic contraction would be a very real gain (para 58).

173.  We would prefer to see continued reform of the Common Agricultural Policy for its own sake, although further reductions in agricultural support would also allow the EU to offer still larger cuts in agricultural tariffs. Although it was at the periphery of the area of dispute in this summer's talks, the EU retains a central position in international trade negotiations and will need to maintain and strengthen its role as a promoter of liberalisation (para 59).

Trade disputes

174.  We are disappointed that the Commission has not made progress on reforms to the anti-dumping rules and ask the Government to work with other Member States to prioritise this work (para 66).

175.  Because its rulings have largely been accepted, the WTO Dispute Settlement Mechanism has generally been a success, although smaller participants have faced delays and third parties may be prejudiced by the outcome of cases between larger parties. We do recognise the need for support for Least Developed Countries and non-combatants to participate; more should be done to promote transparency. We look forward to the Government's proposals for these changes (para 75).

Trade and development

176.  Support for trade capacity building in Least Developed Countries and other developing nations is required in order to allow these countries to benefit from liberalisation. While we congratulate the Government for their leadership role to date, we are concerned that Aid for Trade has been in many cases no more than a rebranding of existing or pre-planned development aid. Funds should be directed towards tangible infrastructure improvements and support and advice for potential exporters and associated domestic supply chains (para 85).

177.  Aid for Trade must not be allowed to become a bargaining chip in multilateral trade talks: developed countries should recognise the benefits of capacity building in Least Developed Countries regardless of whether multilateral talks are continuing (para 86).

178.  The Commission's initial handling of the EPA negotiations was far from perfect, but improvements have been made. In particular we welcome the extension of the offer of duty-free, quota-free access to negotiating partners to remove the pressure of time on the talks. The desire to encourage ACP countries to work together in regional blocs is commendable and we hope it will lead to lower tariffs within the blocs (para 102).

179.  Where the regional approach is clearly not working we recommend that the Commission scales back its hopes for integration and instead works with individual countries: this could take place within a common framework which would enable any future regional integration. The Commission should also do more to explain its reasons for this regional approach to its critics (para 103).

180.  We recommend that the Government monitor the remaining negotiations closely and provide the House with regular Written Statements on the progress towards agreement of the remaining EPAs, and in particular the steps they are taking to ensure that signatories are satisfied with their content (para 104).

181.  While the detail remains to be finalised, we support in principle moves towards a more flexible Rules of Origin regime for LDCs (para 108).

182.  We are satisfied that the Commission continues to work towards the EU's Treaty-based objective to support sustainable development of developing countries. We are also reassured that DG Trade and DG Development work together to consider the development implication of trade and liberalisation decisions. However, the Commission could do more to promote its development work (para 116).

Unilateral, bilateral & regional liberalisation

183.  The Government should work with developing countries to promote policies in the WTO which allow credit to be given for unilateral liberalisation in multilateral negotiations and thus encourage countries to bind their unilateral actions (para 119).

184.  We recognise that bilateral agreements are now a fixture of the trade negotiation landscape, and they can contribute to economic growth and liberalisation, both by making progress beyond the WTO remit and acting as the foundations for future multilateral deals. Some witnesses took the view that their proliferation has not been conducive to a multilateral settlement. To minimise the risk we recommend that the Government and the Commission should work with the WTO to enhance the Organisation's role in the monitoring of bilateral negotiations, and allow it to encourage good practice and the inclusion of provisions in bilateral agreements which help to minimise damage to non-signatories (para 140).

185.  The Commission's work on bilateral agreements has not undermined its commitment to multilateral trade agreements. We were particularly reassured that the previous Commissioner opposed agreements with developed nations which would freeze out poorer countries and hope that the new Commissioner will maintain this stance. We recommend that the Government and the Commission look at ways to help developing countries deal with the complexities of negotiating bilateral agreements, and welcome the Government's commitment of funds for this purpose. Aid for Trade facility is a suitable source of funds for such help and the Sussex Framework one possible instrument (para 141).

The role of the WTO

186.  We endorse the Minister's praise for Mr Lamy, and welcome the Government's support for his decision to seek a second term as Director-General of the WTO (para 146).

187.  Although the focus of WTO members' attention should be on completing the Round, it is not too soon to examine the future of the WTO. While the existing Round should be completed under the current rules, discussions about the Organisation's future should not wait until the end of the Round (para 161).

188.  The consensual approach to agreement should remain a fundamental tenet of the WTO. It is no longer appropriate however that the Organisation should move at the speed of the slowest or most cautious. We therefore support an extension of the plurilateral approach to negotiations. If groups of WTO members wish to negotiate agreements on particular subjects, within the consensual approach and on terms which they then make open to all WTO members, they should be allowed to do so (para 162).

189.  The WTO should also undertake work to promote unilateral liberalisation and encourage members to set applied tariffs at rates below their bound levels. We also support calls for the WTO to strengthen its research and monitoring work with a view to encouraging more liberalisation among members (para 163).

190.  WTO members should not underestimate the value of the functions performed by the Organisation outside of the multilateral trade negotiations. We look forward to the Government's work on the role and structure of the WTO and invite them to detail their emerging conclusions in the response to this report (para 164).

191.  We welcome the support given to the principle of free trade by the November G20 summit and believe that it bodes well for the future of the WTO. We share Mr Lamy's confidence that the WTO will be supported by its members, but we are concerned that actions members may take, such as the conclusion of unambitious bilateral agreements or increased protectionism, could undermine the Organisation. The WTO is of crucial importance to the wellbeing of the global economy, with a vital role to play in the current financial turmoil, and it must not be allowed to decline. The rule-making function and above all the dispute settlement system must be kept in good health even if traditional multilateral liberalisation is making slow progress (para 165).

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39   We have recently discussed the Common Agricultural Policy: European Union Committee, 7th Report (2007-08): The Future of the Common Agricultural Policy (HL 54). Back