Memorandum by Directorate General for
Trade, European Commission
1. What are the future prospects for
multilateral trade negotiations? What effect will the rising number
of bilateral agreements have on the existence and further development
of multilateral agreements?
All WTO partners are engaged in intense discussions
to move forward the Doha Development Agenda, and the common ambition
is to conclude negotiations in the course of 2008. Discussions
have notably focused on the following areas: agricultural market
access and subsidies; non agricultural market access (tariffs
and non-tariff barriers for industrial goods); services; rules
governing anti-dumping; subsidies; geographical indications; trade
facilitation and environmental goods. Substantive issues remain
open in all these areas and technical teams are exchanging views
in order to seek common ground. Gradual progress is being made
in most areas, though very substantial work is still needed on
services, geographical indications and trade and environment in
particular. It will notably be important to secure an Agreement
which differentiates equitably between the interests and concerns
of least developed, developing and developed economies. It will
also be important to secure greater openness of South-South markets,
which offer the greatest prospects for development, economic growth
and welfare gains.
While it is difficult to assess the prospects
going forward, it is clearly the view of the European Commission
that scope for an agreement exists this year. In this regard,
it is our view that bilateral negotiations underway on behalf
of the European Union can contribute to this process. Appropriately
framed, reciprocal obligations and concessions made in bilateral
agreements prepare the ground both politically and economically
for more generalised concessions in a multilateral agreement at
the WTO and stronger multilateral rules. Any such multilateral
agreement then ensures greater distribution of benefits to least
developed partner countries, and provides business generally with
a far more transparent trading environment. It is for this reason
that the EU has argued for improved wording of the GATT rules
covering bilateral or regional trade agreements (Article XXIV
of GATT).
2. What role can European trade policy play
to stimulate growth and create jobs in Europe?
Openness to trade is essential for growth and
jobs. It boosts productivity by enabling more efficient allocation
of resources, by providing greater opportunities to exploit economies
of scale, by exposing the domestic economy to greater competitive
pressures, by rewarding innovation and providing access to new
technologies, and by increasing incentives for investment. Our
openness to others is good not only for the rest of the world,
including developing countries, but is also vital in maintaining
our leading role in the global economy.
Europe's prosperity is intrinsically linked
to that of other regions of the world, and increasingly to that
of emerging economies. This is why Europe must reject the temptations
of protectionism. Moreover, any obstacle to global supply chains
could be damaging to EU industry since raising the cost of intermediary
goods and raw materials would make it less competitive.
In order to keep the EU at the forefront of
international competitiveness, EU trade policy takes a dynamic
approach that looks at the position of EU firms in a globalising
economy. For the EU, this is not about trying to compete where
we cannot, but making sure we succeed as a provider of top quality,
often highly specialised goods and services in a knowledge based
economy.
Trade policy supports excellence and innovation
in Europe by promoting the better recognition and enforcement
of intellectual property rights (IPR) especially in major emerging
markets. Addressing barriers, and in particular non-traditional
"behind-the-border" barriers such as standards, discriminatory
taxes or licensing requirements, in third countries accounts for
the bulk of the potential to improve the competitive position
of EU industry. The EU is one of the most open markets in the
world. Our leading trading partners are less open, sometimes significantly
so. The EU stands to gain from the further opening of markets
worldwide consistent with the sustainable development of its partners.
The EU takes a robust approach to ensuring that markets are genuinely
open and that international rules are applied fairly and transparently.
This is crucial in the services sector, which is of growing importance
for the European economy but which faces higher trade barriers
than goods.
The first priority of the trade policy strategy
set out in the Commission's Global Europe communication of October
2006 remains further multilateral liberalisation and rule-making
(through a broad and balanced agreement in the WTO). Even an ambitious
multilateral outcome would solve only part of the competitiveness
equation. Beyond the multilateral dimension, EU trade policy's
contribution to growth and jobs is focussed in particular on new
market-access driven Free Trade Agreements with India, South-Korea
and ASEAN countries, a renewed Market Access Strategy to sweep
away trade barriers in third countries, and a new Partnership
and Trade Agreement with China.
3. What should be the relationship between
European trade policy and policies on development, climate change
and depletion of natural resources?
As trade is one of the most important ways in
which the EU interacts with the rest of the world, EU trade policy
has a significant contribution to make in supporting global efforts
in each of these inter-related areas. Indeed, one of the key over-arching
aims of EU trade policy is to promote sustainable development—in
all its dimensions (economic, social and environmental) not just
in Europe but worldwide.
The implications of international trade for
policy objectives in these areas, along with the potential contribution
to be made by EU trade policy, have been and remain a recurring
theme in Europe. Two important recent statements of EU policy
have been (i) the Renewed EU Sustainable Development Strategy,
adopted by the European Council in 2006,[1]
which provides an overarching strategy for all EU policies addressing
how to meet the needs of present generations without compromising
the ability of future generations to meet their needs, and (ii)
the European Consensus for Development, jointly agreed
by the Council, Commission and Parliament in 2006,[2]
which provides a common vision of the importance of addressing
the "development challenge" facing Developing Countries
and ensuring policy coherence for development among relevant EU
policies.
There are two main ways for EU trade policy
to address these issues. One is by configuration of partners:
multilateral in the WTO; bilateral in agreements
with individual countries or regions, such as in the Economic
Partnership Agreements (EPAs) being negotiated with ACP countries;
or autonomous such as in the Generalised System of Preferences
which includes duty-free, quota-free access for the Least Developed
Countries (the so-called Everything But Arms—EBA—regime)
and GSP+, the specific incentive arrangement rewarding Developing
Countries for sustainable development and good governance with
better market access conditions.
The other is by mode of action: (state to state
agreements, or in interaction with private interests, stakeholders,
representative bodies, the public in general). At all these levels,
EU trade policy promotes sustainable development in different
ways:
— the use of trade agreements to achieve
better implementation of social and environmental standards, and
to create mechanisms for wider stakeholder dialogue and involvement.
— efforts to liberalise trade in environmental
goods and services, both in the multilateral negotiations under
Doha and in our bilateral negotiations (which will help both climate
change and natural resource protection).
— trade Sustainable Impact Assessments
(SIAs), which examine potential consequences from trade agreements
and can alert negotiators to economic, social or environmental
risks to be avoided.
The EU (Commission and Member States together)
is also the most significant provider world-wide of Aid for Trade
development assistance to support Developing Countries' own efforts
to maximise the benefits they can draw from trade. The EU has
committed itself to provide €2 billion of trade-related assistance,
one of the key components of Aid for Trade, each year by 2010.
4. Have developing countries benefited from
multilateral trade agreements? What steps should European trade
policy take to help less developed countries reap the benefits
of global trade?
We consider the answer to the first question
to be essentially positive. While it is difficult to calculate
the precise contribution of the multilateral trading system founded
on the GATT/WTO, given other factors also in play, it has provided
the framework for progressive market opening and liberalisation
and underpinned the development of a predictable, rules-based
system for the conduct of international trade. The global share
of Developing Countries in world trade in goods and services has
increased along with some diversification of their exports, rising
levels of global economic welfare and a considerable expansion
in international trade flows. In 2006, Developing Countries accounted
for 36% of merchandise trade and 26% of services trade worldwide.
World trade in goods has increased 27-fold in volume terms since
1950, three times faster than world output growth.
At the same time, it is clear that Developing
Countries have not all been able to take full advantage of the
possibilities for trade to act as a driver for growth and development.
While there have been numerous success stories, notably in Asia
and Latin America, other Developing Countries, notably in Africa,
have lagged behind. In the WTO context, this reinforces the case
for bringing the current DDA negotiations to a successful, pro-development
conclusion as quickly as possible, taking into account the needs
and interests of Developing Countries and in particular the Least-Developed
and weaker and more vulnerable ones among them.
In parallel to further multilateral market opening
and rule-making, reinforced efforts are called for on Aid for
Trade to support Developing Countries in building an effective
supply-side capacity to compete on global markets. This aid can
address constraints affecting their trade potential and development
prospects and help them cope with adjusting to the global market
place. As far as the EU is concerned, the EU Aid for Trade Strategy,
agreed in October 2007, provides a strong basis for taking these
efforts forward in the development assistance activities of both
the Commission and the EU Member States.
EU trade policy is multi-dimensional (multilateral,
regional/bilateral and autonomous) and at each of these levels
includes elements intended to respond to the particular needs
of Developing Countries and to support their further development
and beneficial integration into the global trading system. Moreover,
trade policy is not static: although the basic orientations and
instruments of EU trade policy are well established, individual
instruments and measures will continue to evolve, as will the
EU's relations with Developing Countries, whether in a multilateral
or bilateral/regional context. In all these areas, the objective
of using trade policy to support sustainable development worldwide
will remain one of the guiding principles.
As regards the poorest countries in the world
(the countries ofAfrica, the Caribbean and the Pacific—ACP)
the Commission is negotiating Economic Partnership Agreements
(EPAs) to replace the Cotonou Agreements with the ACP countries.
These negotiations are a means of fostering the gradual integration
of the ACP countries into the global economy. EPA negotiations
are supported through trade-related assistance providing support
for the negotiation process, ACP supply and trade capacity. The
EPAs provide the best access to the EU market of any trade regime
(no EU duties or quotas for any products). They will encourage
processed exports with simpler and improved "rules of origin"
and help attract much-needed investment. They will help the ACP
countries engage in the global economy on their own terms and
will include measures to build the ACP countries' capacity to
trade.
The EU believes that regional integration offers
the best potential to boost local trade and create larger markets
to attract trade and investment and, as a matter of fact, regional
integration is at the heart of the ACP's own development strategies.
Therefore, the EPAs are centred around regional integration (ie
the final objective is to have region-to-region agreements between
the EU and groupings of ACP countries. End 2007, a full EPA was
initialled with the Caribbean region (its ratification process
is now under way), while interim agreements, covering trade in
goods, were initialled with a number sub-Saharan African countries
or groupings of countries and Pacific countries. The Commission
will use 2008 to transform these interim EPAs into full trade
and development agreements.
5. Is there still need for Trade Defence Instruments,
and if so how can these be designed to ensure that their effects
are targeted and proportionate?
In the absence of international competition
rules the need for trade defence instruments will remain. This
has been confirmed by the outcome of the wide-ranging public consultation
that the European Commission conducted in early 2007 in the context
of the ongoing review of the functioning of our trade defence
instruments. Although there were significant differences amongst
stakeholders about the nature of the rules that should be applied
they all agreed that they saw no alternative to the application
of these instruments to counter anti-competitive practices in
international trade.
The current European system is considered by
most commentators to be effective and measured by international
standards. However the public consultation did highlight some
areas where improvement could be considered both to make the system
more effective and sufficiently flexible to make them more responsive
to the changing global trading environment.
There is no consensus at present among EU Member
States as to how to improve the system in order to address these
concerns. The Commission will continue to consult and draw on
the experience of cases before it so that proposals can be brought
forward in due course.
6. What is the best approach for ensuring
that Intellectual Property Rights are protected? Do these rights
hinder developments goals—and, if so, how can an appropriate
balance be struck?
Intellectual property rights are instrumental
in promoting creativity and innovation as well as the dissemination
and application of their results, and in encouraging fair trade
Proper protection for innovation and creativity are conditions
for sustainable and significant economic development. There are
basically two approaches to ensure that intellectual property
rights are protected in third countries. the first is through
co-operation and dialogue. The second is through firmer means,
for example through the dispute settlement mechanism of the WTO.
The European Commission has so far favoured the first approach
with a number of its trade partners such as for example China,
Russia and Ukraine, but it does not exclude the use of other tools
in case co-operation and dialogue do not bear fruit.
Intellectual property rights are and should
be supportive of development. They are effective tools for economic,
social and cultural development. Developing countries are often
more exposed than developed countries to counterfeiting of medicines
and piracy of cultural goods. Intellectual property rights must
also take into account specific needs of developing countries,
such as for example the protection of public health and nutrition,
the reduction of poverty, the protection of traditional knowledge
as well as the fair and equitable sharing of benefits arising
from access to their genetic resources. The European Commission
attaches great importance to the development dimension of intellectual
property rights.
Developing countries without sufficient technological
capacity are often not able to benefit fully from intellectual
property rights and need to assimilate technology from developed
countries and to build their own sound and viable technological
base. At the same time, no technology transfer can take place
without companies feeling secure about the level of protection
of their intellectual property. In this respect, intellectual
property rights contribute to the promotion oftechnology transfer
and need to be complemented by accompanying measures such as for
example transitional arrangements for their implementation, technical
co-operation and assistance in the definition of appropriate strategies.
The European Commission is supportive of such measures.
7. Services represent 77% of European GDP
and employment. What are the best mechanisms to remove barriers
to trade in services? Is the GATS still fit for purpose?
There are various trade policy instruments at
our disposal to remove barriers to trade in services. In the context
of its renewed Market Access Strategy, the European Commission
is proposing a closer and more systematic partnership with Member
States and business in Brussels as well as in third countries
to make the best possible use of the available tools.
Bilaterally, the instruments at our disposal
include Free Trade Agreements that are currently under negotiation
with a number of countries or regions. Regulatory dialogues and
co-operation among regulators in a number of sectors with some
trading partners also help address some regulatory barriers. In
addition, services trade irritants are regularly raised through
consultations mechanisms with our trading partners as well as
diplomatic contacts.
At the multilateral level, the General Agreement
on Trade in Services (GATS) is the first multilateral trade agreement
to cover trade in services and one of the major achievements of
the Uruguay Round. The GATS negotiation process differs from that
of the other market access areas (agriculture, market access for
non-agricultural products): instead of numerical targets and formulas
to cut customs tariffs, it involves a requests/offers system and
significant flexibility for Members to decide what commitments
they take in their schedules. Arguably the GATS has so far proven
more successful in providing legal certainty and preventing new
barriers from being erected (the WTO dispute settlement mechanism
acts as a deterrent), than in removing actual barriers to trade
and offering new liberalisation. Discussions in the context of
the GATS DDA negotiations have however helped reformers in certain
Members to undertake liberalisation in certain sectors, although
this may yet not be reflected in service liberalisation offers
made by Members. It is also worth noting that services commitments
taken in WTO accessions have generally led to the removal of a
numbers of barriers to trade in services. In addition to the tools
available in the context of bilateral trade relations, the EU
will continue to work towards ambitious multilateral results on
services.
8. Is there still a role for the WTO in the
21st Century?
Today's world is more than ever facing global
issues which need to be addressed by global responses. In this
respect, the WTO is leading the way as the most advanced global
institution, notably because of its effective enforcement mechanism
and broad constituency. Since the creation of the WTO following
the Uruguay Round of Negotiations, the benefits of this institution
have been very clearly demonstrated. Stronger dispute settlement
disciplines have contributed to building a more transparent trading
environment, and ensured compliance with WTO obligations. The
multilateral trading system has provided small, often least developed
countries with a strong platform to voice their concerns and ambitions—and
indeed, the WTO remains an institution where decision making is
consensus based, providing all countries with an equal voice.
The benefits accruing in terms of global economic growth and poverty
eradication have been very significant, and no doubt explain the
continued strong interest in non Member countries in joining the
WTO.
Looking ahead, there are nevertheless challenges
to be faced if the WTO is to retain its pertinence and secure
public support into the 21st Century. For instance, the EU will
continue to argue in the DDA about the importance of building
links with other multilateral organisations, including in terms
of interpreting WTO provisions in connection with other multilateral
agreements, notably in the environmental field. Likewise, as membership
continues to expand, consensus-based decision-making needs also
to deliver effective action. In this regard, an enhanced role
of the WTO Secretariat could be studied. In addition, plurilateral
agreements which will be negotiated by all the membership in the
legal framework of the WTO but, at least initially, only binding
on a critical mass of members could be further explored.
The WTO is a relatively young organization,
but it has already delivered very significant benefits. The EU
will continue to support it strongly, in order to further develop
its capacity to provide trading openness, security, transparency
and equity into the 21st century.
27 February 2008
1 (http://register.consilium.europa.eu/pdf/en/06/st10/st10917.en06.pdf). Back
2
(http://ec.europa.eu/development/icenter/repository/european_consensus_2005_en.pdf). Back
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