WORLD TRADE
ORGANIZATIONWT/TPR/M/72/Add.1
26 October 2000
(00-4455)
Trade Policy Review Body
12 and 14 July 2000
TRADE POLICY REVIEW
EUROPEAN UNION
Minutes of Meeting
Addendum
Chairperson: H.E. Dr. Iftekhar Ahmed Chowdhury (Bangladesh)
Page
ANNEX I ADVANCE WRITTEN QUESTIONS 3ANNEX II COMMENTS AND RESPONSES BY THE EUROPEAN UNION 63WT/TPR/M/72/Add.1
Page 3
ANNEX I
ADVANCE WRITTEN QUESTIONS
UNITED STATES
CHAPTER II – TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
(1) Introduction
According to paragraph 2, the "EU has enunciated a new policy of transparency and of
consultation with civil society."  Does application of this new policy vary by Directorate?  If so, are
plans underway for a Commission-wide standard?
(2) General Framework
(iii) Trade and Trade-related Policymaking
1. Paragraph 16 highlights the fact that EU/Member State competency questions can complicate
international negotiations that go beyond trade in goods.  Please provide details of EU versus national
Member State competency in the areas of services, investment, and intellectual property rights.  How
will trade competencies evolve with the EU ’s current intergovernmental conference?
2. Please provide an overview of the Common Fisheries Policy, including its objectives and
programs.  To what extent does the CFP take into  account environmental issues such as sustainable
development and conservation?  We understand the CFP is set to be reviewed in 2002.  What are
likely to be the major themes of the review and what changes to the CFP may be in the works?
(iv) Transparency and Consultation with the Public
1. Please provide further explanation on the public consultation process.  When in this process
do public consultations take place?   To what extent is the Commission obliged to either take
comments on board or to explain why it did not?  Are there uniform rules in place that apply across
the directorate generals or institutions in terms of participants, etc.?
2. In paragraph 18, the Report notes that Article 255 grants the public a right of access to
documents of Community institutions, subject to limits for the protection of public and privateinterests.  Can you please explain what is meant by "protection of public and private interests?"  How
frequently is this protection invoked?
(3) Objectives of Economic and Trade Policy
(i) Internal Market, Table II.1
Table II.1 provides a breakdown by area and Member State of non-transposed Directives,
which totals more than 12 percent of all Internal Market Directives.  Please provide a list of the
non-transposed Directives on Veterinary Checks by date for each Member State.  Why are these
Directives not implemented by the member states?  When does the EU expect that this situation will
be rectified?WT/TPR/M/72/Add.1
Page 4
(ii) Agenda 2000
The report notes EU enlargement efforts and states that prior to the negotiations themselves,
the applicant country is engaged in an exercise conducted by the Commission of "screening" on the
acquis communautaire , both the extent to which it is transposed by the applicant and its
implementation.  Please describe in greater detail the process of acquis as it relates to analysis of
applicant countries’ bilateral investment treaty obligations with non-EU countries.  How does the EU
plan to resolve any real or perceived inconsistencies?
(iii) Market Access Strategy
Please provide details of market access cases resolved and outstanding under the Trade
Barriers Regulation (TBR).  Of the total number of EU complaints brought to WTO disputesettlement, how many were the result of action under the TBR?  How do you see this evolving in the
future?
(4) External Trade Relations
(ii) Preferential Trade Agreements
1. What percentage of EU goods and services trade, on a value basis, is now conducted on a
preferential basis?   Please show the value of EU imports and exports for each preferential trading
partner.
2. According to the Report, the EU grants "the most beneficial treatment to the least
developed/ACP countries (95 percent of tariff line s duty free); followed by regional trade agreements
(80 percent of tariff lines duty free); GSP beneficiaries (54 percent) and, countries subject only to
MFN (20 percent)."  What are the percentages in terms of value of trade?
3. Please provide details of products excluded from recent EU FTAs (e.g., South Africa,
Morocco). When and how is agriculture expected to  be incorporated in the Euro-Mediterranean Free
Trade Agreements (which mandate further agricultu ral negotiations in the future) and the South
Africa FTA (lists of excluded agricultural products are to be "periodically reviewed")?
4. Please provide details of the EU-South Africa wine and spirits agreement that was reportedly
reached at technical level.  To what extent does it require South Africa to protect EU "traditional
expressions?"
5. The EU has concluded a number of agreement that have not been notified to the WTO (South
Africa, Morocco, Mexico).  Further, the services co mponent of several even long standing agreements
have not been notified.  When does the EU intend to notify these agreement?
6. What is the status of negotiations with MERCOSUR Egypt, and Chile?  How will the
resulting agreements cover substantially all services trade?  Will there be transition periods for
liberalization of services trade under the agreements, and if so, how long?   Where EU preferentialtrade agreements mandate services negotiations at a later stage, to what extent have such negotiations
taken place (e.g., Turkey)?
7. The EU-ACP Partnership Agreement (Partnership Agreement of Cotonou) provides for the
start of REPA (Regional Economic Partnership Agreement) negotiations from September 2002, with
entry into force foreseen for December 31, 2007.  Which (groups of) countries are candidates forREPA negotiations?  To what extent will REPA s be modeled on the EU’s FTA with South Africa?WT/TPR/M/72/Add.1
Page 5
8. The labor clause of the EU’s Generalized Scheme of Preferences (GSP) offers additional
tariff preferences for countries complying with ILO standards on child labor and the right to organizeand bargain collectively.  How has this operated in practice?
9. We understand that the EU is encouraging advance adoption of the "acquis communautaire"
by those countries negotiating EU membership, except in the area of tariffs.  In what areas is the EU
seeking such advance adoption, and which potential applicants are affected?
10. Is it the EC view that the "Pan-European System of Cumulation of Origin" is a single
free-trade area under Article XXIV of GATT 1994?  If yes, when will this single free-trade area be
notified?  If no, what is the legal justification for providing more favorable treatment under an FTA to
a limited number of Members that are not a party to the FTA but are participants in the
"Pan-European System of Cumulation of Origin"?  What is the legal justification for changing the
treatment –  through the removal of drawback eligibility – of goods produced by certain Members sothat the treatment is less favorable than the treatment of goods produced by other Members who
happen to be participants in the "Pan-European System of Cumulation of Origin"?
(b) Countries in Transition
1. The review notes that all Central and Eastern European countries that have concluded Europe
Agreements have subsequently requested accession to the European Union.  Please provide for each
information regarding time-lines for adopting EU regulations, transition logistics, etc.
2. Please explain why the EU feels it is necessary to require countries negotiating for accession
to implement "rapidly and in full" the Broadcast Dire ctive, in many cases years before they will attain
EU membership.
3. The EU has been negotiating "Double Zero" agreements with candidate countries.  Are these
agreements required as a first step in the accession process?  Does the EU intend to expand the list ofproducts exported without subsidies to these countries?
4. According to the Europe Agreement with Estonia, there are five products (meat of swine,
sausages, cheese and egg products, apples) for which the EU will no longer use export subsidies for
exports to Estonia.  What is the time frame for the elimination of these subsidies?  Will there be
staged decreases?  How might the list differ among the other CEECs?
CHAPTER III – TRADE POLICIES AND PRACTICES BY MEASURE
(2) Measures Directly Affecting Imports
(i) Customs Procedures
1. What is the method by which the European Communities provides for "judicial, arbitral or
administrative tribunals or procedures for the purposes, inter alia , of the prompt review and correction
of administrative action relating to customs matters " in accordance with the EC’s WTO obligations
under 3(b) of Article X of GATT 1994 (emphasis added)?  For example, please explain the judicial,arbitral, or administrative tribunal provided by the EC by which an importer can obtain a prompt
judicial or administrative review of an administrative action relating to customs matters, resulting in a
decision with EC-wide effect.  Please provide the average number of days required for completion of
such a "prompt review."WT/TPR/M/72/Add.1
Page 6
2. Please explain the judicial, arbitral, or administ rative tribunal provided by the EC by which an
importer can obtain a prompt judicial or administrative review of a tariff classification determinationpublished in the Official Journal of the European Co mmunities, with the review resulting in a decision
with EC-wide effect.
3. If the "prompt review" of such a tariff classification determination is available through EU
member State judicial procedures, please indicate whether decisions resulting from such a review
would have an EC-wide effect.  Please provide the average number of days required to completeeither such review.
4. Can importers seek "prompt review" of administrative action relating to customs matters
directly through the European Court of Justice?  If so, what is the procedure for obtaining such
review?  Must an importer first avail itself of EU member State judicial procedures before availing
itself of the European Court of Justice?  What is th e average length of time needed for an importer to
achieve a decision by the ECJ that would correct any improper administrative action?
5. Please indicate if importers seek "prompt review" by the European Court of Justice of tariff
classification determination published in the Official Journal of the European Communities?  If so,
what is the procedure for obtaining such a review?  What is the average length of time needed for the
ECJ to complete its review of such matters?
6. When will the EC, as an effort to advance trade facilitation, harmonize customs procedures
among member States of the EU?
(b) Customs Clearance Procedures
What is the timetable for ensuring that testing results are interpreted consistently and testing
errors are taken into account at all ports of entry?
(iv) Community Tariff
(a) Most-Favored-Nation (MFN) Regime
1. What percentage of covered shipments coming into the EU under the entry price regime
utilize the standard import value (SIV) for valuation/duty assessment purposes?  What is the current
detailed methodology employed for setting the SIV?  In what specific ways, if any, does this vary
from member state to member state? What procedures exist for challenging a particular SIV?  How
would an importer or exporter initiate such a process?
2. In what different manners does the EU administer quotas? Are there different administrative
procedures for quotas that are expected to be filled the moment of opening?  Please explain the low
fill rates of TRQs.
(vi) Prohibitions, Restrictions, and Licensing Requirements
(c) Common Rules on Imports
In paragraph 45, the Commission states that import licenses are only required where specific
products are subject to quantitative restrictions, safeguard measures or import surveillance, or where
products are subject to a common market organization.  However, we understand that import
"authorizations" are also required for the importation of organic produce, which relates to productlabeling, not any of the other categories mentioned above.  Please describe the process in eachWT/TPR/M/72/Add.1
Page 7
member state for granting import authorizations for organic products.  What authority in each member
state is responsible for granting the authorizations?  On what basis may import authorizations bedenied?  What is the length of time required to  obtain an import authorization?    Does the
Commission foresee implementing such requirements for other products subject to labeling
requirements?
(viii) Product Regulations and Standards
1. We are concerned that the EC’s focus on internal transparency has compromised third country
opportunities to influence the development of technical requirements as foreseen by the transparency
obligations of the TBT Agreement.  At what point in the process are proposed  "old approach"
directives notified to the WTO Secretariat for purpos es of fulfilling the transparency requirements of
the TBT Agreement? At what point in the process are proposed  "new approach" directives notified to
the WTO Secretariat for this purpose?  (This information is not specifically provided in the
Commission’s Statement on Implementation provided to the WTO Committee on Technical Barriers
to Trade – G/TBT/2/Add.12/Rev.2).
2. The Secretariat’s report indicates that a supplier’s compliance with harmonized European
regional standards (e.g., CEN, CENELEC) leads to a presumption of conformity with the "essential
requirements" established by the Commission’s new approach Directives; however, compliance with
European regional standards is voluntary since alternative technical solutions can also be shown to
meet the essential requirements .  To what extent have alternatives to European standards been
recognized as meeting the essential requirements?  We are unaware of any situation where this has
occurred.
3. In fact, it is our understanding that in these instances, compliance with the European regional
standard is, as a practical matter, driven by the need to comply with the legislated requirements and is
not voluntary, as suggested in the Secretariat’s report.  And, regional standards usually do not exist at
the time the "essential requirements" of a "new approach" Directive are agreed.  In view of this, at
what point in the process are third parties given the opportunity to comment on the relevance of a
particular regional standard in meeting the essential requirements?
4. The Secretariat’s report references agreements between the European regional standards
bodies (CEN and CENELEC) with their respective in ternational counterparts (ISO and IEC) which,
according to the Commission, have resulted in a grea ter "transposition" of international standards as
European standards.  At the same time, it is our understanding that a number of members of the ISO
have been raising concerns with the operation of the Vienna agreement and that, in many cases, the"international" standard is heavily dominated by European interests and mandates that may not be
reflective of non-European needs.  What is the Commission’s reaction to these concerns?
(a) Community Activities
In practice, regulatory decision-making in the EU appears in some instances to reflect
political interference (e.g., delays by a number of EU Member States of regulatory approval and
reimbursement for new medical devices and drug s and biotechnology product non-approvals).  What
specific measures does the EU have in place to ensure that regulatory decision-making is shielded
from political interference?
Foodstuffs
1. The Commission states that harmonization of the regulatory framework for foodstuffs has
made a significant contribution to the simplification of food law, to the benefit of exporters to the EUWT/TPR/M/72/Add.1
Page 8
market.  Please describe how this statement relates to implementation of EU regulations at the
member state level?  Do all EU member states implement EU regulations the same way?  Pleasedescribe what mechanism the Commission has in place to monitor member state implementation of
EU regulations and to encourage member states to implement these regulations in a harmonized
manner.
2. How will the EU apply its "precautionary principle" in practice, and what measures would be
implemented by applying it?  Please explain how the EU ’s "precautionary principle" differs from"general principles of risk management?"
3. Please explain the EU’s rationale for imposing regulations on wine making and how these
regulations apply to imported wines?
Labeling
1. Please explain the rationale for the EU’s regulation of traditional terms.  Many so-called
traditional terms are words used by winemakers the world over to describe the quality and nature of
their own products.  Examples of EU-claimed "traditional expressions" include such terms as
"vintage," "superior", "reserve", and "extra."  These adjectives are used in many countries to convey
general consumer information about wine;  they do not function as indicia of source or quality for anyparticular type of wine.
2. Please explain the process the Commission is currently using to develop criteria for awarding
the "daisy" eco-label.  What opportunities will be provided to non-EU companies to comment on and
provide input into the formulation of criteria now  under development, including criteria for the
products listed in footnote 107?  How many non-EU companies have applied for use of "daisy"
labels?  How many have been awarded use?
Box III.1:  Placing GMOs on the Community Market
1. Directive 49/2000 sets a 1 percent threshold for adventitious biotech content in certain food
products.  How is the EU going to ensure that sampling, testing, and enforcement is harmonized
across member states, when no sampling or testing methodologies are specified in the regulation?
2. Revisions to Directive 90/220 in COM(1998) 0 85 address monitoring requirements.  How can
a scientifically based monitoring plan measure risks that can be directly attributable to a genetically
engineered plant when such risks have not been identified?
3. There has been a de facto moratorium on new biotech approvals since June 1999.  Revisions
to Directive 90/220 are in the process of being finalized, but will not be implemented until 2002 at the
earliest.  How will the EU proceed with new biotech product approvals between now and 2002?
(b) International activities
1. Over the last several years, we have experienced problems with inconsistent application of
EU plant health requirements (e.g., barrels in Spain, pencil slats in France, and prefab houses in
Germany).  What efforts are underway to make the application of SPS measures more uniform andconsistent?
2. The WTO SPS Agreement calls for shared information.  When does the EU intend to share its
latest information on the safety of hormones in livestock production, in particular, the EMEA study?WT/TPR/M/72/Add.1
Page 9
(ix) Government procurement
1. We understand that, in the past, the EU has had difficulty in ensuring that all eligible tender
opportunities are properly notified in the Official Journal of the European Communities or other
required publications.  Please describe what the Commission and the Member states have done to
address this problem and provide an updated assessment of the degree to which this requirement is
effectively implemented throughout the EU.
2. Please describe how the EU implements the GPA requirements that technical specifications
not be applied in a manner that creates an unnecessary obstacle to international trade and that public
procurement authorities do not seek or accept advice relating to technical specifications in a manner
that may preclude effective competition.  Does the EC monitor Member States’ adherence to these
requirements, and have their been any cases in which it has taken legal or administrative actions toensure proper implementation?
(xi) Antidumping and Countervailing Measures
This past year, the EU opened a record number of 66 new antidumping and 20 new
countervailing duty cases.  How does the EU explain this surge in activity, particularly countervailingduty measures – an instrument the EU has not actively used in the past?
(3) Measures Directly Affecting Exports(i) Procedures
Please describe the process for supervising and certifying the export out of the EU those
products under veterinary and health supervision (such as dairy, egg, or meat products).  Are there
veterinarians or health authorities at ports supervising and certifying the export of these products?
Are certificates signed on the basis of paperwork, or do veterinarians visually inspect each shipment
at the port before signing certificates?  Please describe the process for products to be exported to other
EU countries as well.
(4) Measures Affecting Production and Trade(i) Legal Framework for Businesses
We understand that on June 19, 2000, EU member states agreed on the text of the 13th
revision to the Company law, which applies to takeover bids for a company.  How will this
framework legislation work?
(ii) Subsidies
(c) State Aid1. The report mentions state aid granted by member states equal to $95 billion for the period
1995-97.  Please describe how the EU includes this aid, particularly for agricultural products, in itsWTO notification on domestic support.
2. In paragraph 115, the report mentions that there is "non-notified aid" that the Commission
only learns about when it is brought to the attention of the Commission by third-party complaints or
press reports.  By what mechanism does the Commission abide by its obligation to report trade-
distorting domestic support to the WTO by ensuring that state aids are notified?  We understand thatWT/TPR/M/72/Add.1
Page 10
the Commission scrutinizes only state aid that is  considered to be distorting to intra-community
commerce.  What mechanism does the Commission have in place to ensure that all aid distorting totrade in third countries is notified to the WTO?
3. Specifically for the organic sector, what amount has each member state spent to subsidize
organic farmers and through what kinds of programs in the period from 1995-97?
4. Please specify how and what it notified as State aid for the agricultural sector on a per year
basis for the period, 1995-1997.
5. Please specify how and in which box – blue, amber, or gold – member state aid is notified.
(iv) Intellectual Property Rights Protection
(a) Overview
1. We understand that the Commission is preparing proposals on combating counterfeiting and
piracy in the internal market.  Can the Commission provide us with its view of the likely shape of
these proposals and their anticipated impact?
2. According to the Report, a consultation process was launched by the EU in 1998 on the
problem of counterfeiting and pirated products in the Single Market and counterfeits manufactured inthe EU.  The report resulting from the consultation process notes that the worst-affected areas for
piracy and counterfeiting are computer software, audiovisual and garments.  Will the consultation
process lead to an initiative to improve aspects of your enforcement regime, specifically in the area of
border controls and criminal penalties?  If so, when will these initiatives be implemented?
(b) Patents
1. According to the Report, Directive 98/40/EC has been adopted concerning the legal
protection of biotechnological inventions, with which Member states must bring their national laws
into compliance by July 2000.  Please describe in detail the type of protection afforded to
biotechnological inventions under the Directive.
2. According to the Report, the Commission intends to propose several legislative initiatives,
including a Community patent issuance system, Community design law, and a directive on thepatentability of computer progra ms.  How will the proposal for a Community Patent treat subject
matter in recently developing hi-tech areas such as biotechnology, computer software, and business
methods?
3. Article 4 of Directive 65/65/EEC lists the documents and particulars that an applicant must
submit to the competent authority in order to obtain authorization to place a medicinal product on themarket.  Among the required documents the applicant must submit are results of clinical trials and of
various pharmacological, biological and microbiological tests, as outlined in Article 4.8.  Please
describe how undisclosed test data submitted under this Article is protected as required by Article 39
of the TRIPs Agreement.
(d) Trademarks
We are aware that Regulation (EC) No. 1493/ 99 ("Council Regulation (EC) No. 1493/1999 of
17 May 1999 on the common organization of the market in wine"), in Annex VII(F)(2) explicitly calls
for the cancellation of trademarks, by 31 December, 2002, that incorporate geographical indicationsWT/TPR/M/72/Add.1
Page 11
for wine. Please explain how the requirement for cancellation of trademarks is consistent with the
EC’s obligations under the TRIPs Agreement.
(e) Geographical Indications1. How is ex officio protection provided for geographical indications?  Please provide examples
of instances where the geographical indications of non-EC nationals have been protected ex officio.
2. Please provide the contact information, mailing address, and fee information regarding
application, maintenance, and any other fees necessary for non-EC nationals to apply for and maintain
protection of geographical indications in the European Union.  If no centralized point for receipt of
requests for protection exists, please explain why.
3. Article 10 of Regulation (EEC) No. 2081/92 requires  that, in order to obtain protection in the
EC, third countries must have in place an inspection and enforcement system that mirrors that of the
EC. Please explain how the unilateral imposition of th e EC system on third countries, as a prerequisite
for obtaining geographical indication protection in the EC, is in compliance with the EC’s TRIPS
obligations.
4. Article 11 of Regulation (EEC) No. 2081/92 provides for a procedure whereby "any Member
State" may submit that a condition in a product specification has not been met, and may send a "duly
substantiated application" to the Commission, and pursuant to which, the Commission may cancel the
registration.  By contrast, if a national of a third country believes that a condition of a registration is
not being met, and seeks the cancellation of the registration, the Regulation appears to provide no
recourse. How is this consistent with the national treatment requirements of the TRIPs Agreement?
5. How is EC recognition of a foreign geographical indication achieved?  For example, does
"protection in the country of origin" require that the country of origin have in place national lawsdescribing a particular geographical region and setting for the quality standards for the goods?
6. May only a governmental organization/entity  apply for recognition of a geographical
indication in the EC?  If so, how is this compatible with the TRIPs Agreement?  How is the limitation
on who may use a geographical indication compatible with the requirements of the TRIPs
Agreement?
(g) Copyrights and Neighboring Rights
1. Can the Commission provide an update on the status of the EU Directive on Copyright and
Related Rights for the Digital Environment?
2. The European Community reports that it has proposed a Community-wide initiative to adjust
and complement the existing EU framework on c opyright and related rights for the digital
environment.  Please state the status of efforts to ratify the WIPO Treaty on Copyrights and the WIPO
Treaty on Performances and Phonograms, and the likely date of accession.WT/TPR/M/72/Add.1
Page 12
CHAPTER IV – TRADE POLICIES BY SECTOR
(2) Agriculture
(ii) Common Agricultural Policy
(a) Objectives and Mechanisms1. The most recent agricultural package targeted 2002/03 for review and possible further reform.
What additional reform does the EU envision for 2002/03?
2. How does the EU plan to implement Agenda 2000 reforms for oilseeds, while maintaining its
commitments under the Blair House Agreement?
3. With regard to the current Commission proposal for the modification of the rice regime, what
is the Commission’s intended timeframe for negotiating with the contracting parties in accordance
with Article 28 of the Uruguay Round agreement?
4. The report mentions that member state disbursal of EU CAP funds is subject to ex post
controls to ensure compliance with Community regu lations.   What penalties are in place in cases of
non-compliance? What mechanisms does the Commission have in place to investigate possible
violations within member states?  How many  investigations have been made?  How many
Commission employees are engaged in that activity?  What enforcement mechanisms does the
Commission have against individuals in member  states who have improperly used EU funds?
5. Regarding  reform of the fresh fruit and vegetable CMO in 1996, we understand that the role
of producer organizations in managing EU funds wa s greatly increased.  By what mechanism does the
EU plan to reassure WTO members that all uses of producer organization funds are indeed compatiblewith the green box?  How does the EU plan to address the reduction in transparency brought  about by
the change in the fresh fruit and vegetable CMO?
Livestock and Dairy
1. Is it envisaged the EU will make animal welfare requirements applicable to third countries.
Under what provision of the GATT would this be allowed?
2. Why is the management of the GATT import quota on pig meat, for instance, different from
the ACP or Association Agreement pig meat quota?  GATT quota import licenses are only valid until
June 30 and have to be requested again in the first 10 days of July for the following quarter, which
practically prevents trade for most of July.  This June 30 deadline does not exist in ACP andAssociation Agreement import quota management.
3. How is the decision under Agenda 2000 to increase some milk quotas without reducing price
qualify as a blue box aid, given that such action is not production limiting?
4. Is the fact that several third countries were classified as provisionally BSE-free by the
Scientific Steering Committee enough to exempt the United States from SRM removal requirements?What assurances is a third country required to give in order to be promoted to BSE-free from
provisionally BSE-free?WT/TPR/M/72/Add.1
Page 13
5. Given the equivalence provision in the SPS agreement, will the EU continue to require lists of
third country establishments for animal products from third countries with whom they have completedvet equivalency agreements?
Arable Crops
1. For coarse grains, the WTO limits with regard to 2000/01 subsidized exports will constitute a
prohibitive factor.  How is the EU going to handle the requests for an estimated 3 MMT of coarsegrain license requests over the WTO volume limit?
2. In paragraph 24, the report says "Expenditure on export subsidies was ECU 3.5 billion in
1998, down sharply - by almost 50% - since 1995. "  However, this contradicts the 4.791 billion
EURO listed in Table 2.6 "EAGGF-Guarantee 1998 -expenditure committed by type and member
state", published in Official Journal C349 of 3 December 1999 - Court of Auditors Annual reportconcerning the financial year 1998.  Can you explain this discrepancy?
Horticulture
1. In the interest of increased transparency, how will the EU begin to notify its subsidies on
fruits and vegetables by commodity instead of using a basket category?
2. Is the "operational fund-financed withdrawal  compensation" included in the EU’s price
support notification?
3. How is the aid scheme for canned fruit, tomatoes, and dried fruit consistent with WTO
restrictions on subsidizing processing?
Organics
Will the new EU logo be used on certified organic products imported from third countries?  If
not, why not?
(c) Main Instruments of Agriculture Technology
The EU, in practice, adjusts applied tariff rates frequently, approximating to some degree, the
impact of pre--Uruguay Round variable levies fo r major agricultural commodities.  What are the
"technical formulas" that are used to set minimum and maximum tariff rates on agricultural products?
How do the impacts of the tariffs set by use of thes e "technical formulas" compare to the impact of the
variable levies which were applied prior to the Uruguay Round?
(3) Developments in Selected Manufacturing Industries
(iii) Pharmaceutical
Please explain why the European Union permits Member States to delay pricing and
reimbursement decisions necessary for market access for pharmaceutical products beyond the time
limits specified in the relevant EU Directives (65/65, 93/39 and 89/105).WT/TPR/M/72/Add.1
Page 14
(4) Services
(i) Overview
1. We remain concerned that more than five years after the last enlargement, the EU has yet to
provide a consolidated EC-15 services schedule.  What is the reason for the delay, and when will it be
made available to Members?
2. The EU legal regime for services is a mix of Member State and Community laws and
regulations.  This has posed considerable difficulty for trading partners when it comes to assessing the
commercial value of commitments in the EU’s GATS schedule, where restrictive measures are
frequently inscribed for each Member individually.  This difficulty, combined with restrictive
practices at the national level, poses burdensome obstacles to service suppliers from third countrymarkets.  To what extent is the EC prepared to seek negotiating authority for the current round of
negotiations on trade in services with respect to areas of Member State or concurrent regulatory
jurisdiction?
(ii) Financial Services
(a) Overview
1. The EU recently issued a strategy paper on adopting international financial accounting
standards.  What impact will this have on the use of U.S. Generally Accepted Accounting Principles
(GAAP) by U.S. and European companies operating in Europe?
2. The EU is presently considering amendments to two directives which govern the management
and investment requirements of UCITS (Undertakings of collective investment in transferablesecurities).   Please explain how they will liberalize investment in non-EU country securities?
3. The report also makes reference to Commission efforts to improve the prudential
regulations/supervision of EU financial markets.  Please explain in greater detail the Commission’s
ideas in this area?  Do you envision an EU equivalent of the US Securities and Exchange
Commission?
 (b) Banking
Paragraph 94 of the report indicates that some member states continue to provide unfair
competitive advantage to state-run financial services entities which limit profits for commercial
banking operations.  Please update Members on how the Commission intends to address the complaintfiled by the European Banking Federation (Dec. 1999) regarding state guarantees for Germany’s
Landesbanks and whether action has been taken or considered to address competitive problems with
regard to France’s Credit Agricole.
(iii) Telecommunications
1. We note that the Secretariat’s draft does not include any references to the proposed new
regulatory framework under development. Please describe the main features under consideration with
respect to ex ante and ex post regulation at the member state level and how EU oversight will be
implemented?
2. We understand that one of the Commission’s responses to the challenge of fast-moving
technology and market developments is increased reliance on "soft law" and co-regulation.  How willWT/TPR/M/72/Add.1
Page 15
Europe ensure that this approach will not lead to fragmentation of the market, or erosion of adherence
to international commitments, as the transposition and implementation of such measures by MemberStates could well differ significantly?
3. We understand that the Commission has advanced its internal discussions with regard to the
new licensing and authorization directive.  Does this directive address the issue of a "one-stop"
European or national approach?
4. Has the EU decided that barriers to entry can be justified by the need to encourage investment
in infrastructure?  In an environment where first- mover advantage can be key, reliance on competition
policy to address this problem could result in de facto acceptance of the barriers.
5. We understand the Commission recently issued a recommendation on full unbundling of the
local loop and the proposed new directives would make this mandatory.  Please elaborate on the
rationale and proposed timing of this initiative?
6. Please describe recent developments with regard to spectrum management and coordination
across Europe?   What is the Commission doing to harmonize in this area?
(iv) Transport Services
(b) Air Transport
1. Adoption of the EU Council Regulation 925/19 99 regarding "hush-kits" has raised serious
issues of discrimination and compliance with international obligations, and as noted, the US has
initiated dispute resolution procedures in ICAO.  What steps does the Commission intend to take to
improve the transparency of the EU legislative pr ocess to avoid similar situations in the future?
2. Regarding measures to harmonize safety rules, what is the status of the "Proposal for a
Council Regulation amending Council Regulation (EEC) No 3922/91 of 16 December 1991 on theharmonization of technical requirements and administrative procedures in the field of civil aviation?"
The proposed regulation would give the Commission the power to block or modify member states'
certifications of aircraft produced in third countries "if...such approval would give an unfair advantage
to a third country, or is contrary to community policy vis-a-vis this third country."
3. Paragraph 120, including footnote 160, suggests an impulse to move beyond bilateral aviation
agreements that restrict routes, fares, market entry and capacity.  If the Commission in fact aims to
remove such restrictions, why has it sued seven individual Member States for having concluded
open-skies agreements that completely deregulate these essential aspects of air transport?
4. With reference to paragraph 122 of the report, which covers slot allocations, what is the status
of draft amendments to Council Regulation 95/93?
5. What is the status of the Commission's re opened examination of aid to Olympic Airways?
6. Regarding the discussion of alliances in paragraph 124, the list in footnote 169 of those under
review appears to be out of date.  Please provide an updated list of those under review, and the status
of each?
7. What is the status of the Commission's investigation into airport charges in all member states?WT/TPR/M/72/Add.1
Page 16
Additional Services Questions
(a) Postal / Courier
1. In the process of liberalizing postal services and shrinking postal monopolies within EU
Member States, how does the Commission intend to avoid discriminating against foreign postal and
express delivery services?
2. Please update Members on the status of the EC’s investigation of Deutsche Post for the illegal
usage of state funds and abuse of dominant market position.  When is a ruling expected in this case?
Will the timing of the ruling be affected by the planned IPO this year?
(f) Professional Services
We remain very concerned with the proliferation of restrictive nationality requirements,
quotas and other barriers in the professional services sectors, including accountancy, architecture,
engineering, medical, dental and midwifery services and legal services.  What are the prospects at the
Community level for liberalization of these sectors?
ANNEX IV.1 ELECTRONIC COMMERCE
Regulatory Framework, General
1. We are aware that there are now many other relevant e-commerce instruments in preparation
or in effect in the EU that are not mentioned in th is section, for example, the data protection directive
and negotiations with third countries, the draft copyright directive, the draft legislation on imposingVAT for digital goods coming from third countries, the draft directive on stopping child pornography
on the Internet, the draft update of the telecommunications-specific data protection directive (which
would expand coverage to all communications providers including Internet).  Please elaborate further
on these initiatives and the e-Europe Action Plan and mini "e" initiatives it has spawned (e-content,
e-learning, e-knowledge).
2. Please verify that paragraph 148 accurately represents the EU position for future GATS
negotiations?  Recent statements by Commissioner Lamy and others suggest considerable variation on
the EU position with respect to, for example, customs duties on electronic transmissions.  Is the
Commission seeking to make a distinction between the support for the de facto situation in which
customs duties are not imposed and the more formal agreement on a moratorium?
3. Is the work referred to in paragraph 151 related to the Directive on Legal Aspects of
E-commerce?
4. How is the notification process for regulation of information society services working in
practice?  Where can one find the information?  How can comments be provided?  How often have
these comments from third parties been taken into account?
5. When and how does the Commission expect the debate on the implementation or extension of
regulations on jurisdiction and applicable law for contractual and non-contractual civil and
commercial obligations to be concluded?  What is the Commission proposing with respect to
Alternative Dispute Resolution?WT/TPR/M/72/Add.1
Page 17
PERU
WT/TPR/S/72
SUMMARY OBSERVATIONS
Recent economic developments (Page vii)
One of the central objectives of the EU's macroeconomic policy is job creation.  The
European Union has made considerable progress in lowering the jobless rate.  In order to make the
economy more efficient, a Community-wide employment strategy has been in place since 1998, with
national action plans for each member State, as indicated in the Report by the Secretariat.  Could the
European Union provide further details of what this job creation strategy entails?
III. TRADE POLICIES AND PRACTICES BY MEASURE
(2) Measures directly affecting imports
(viii) Product regulations and standards (page 57, paragraph 61)
The Report by the Secretariat indicates that products placed on the Community market,
whether of Community or imported origin, must comply with the relevant health, safety and
environmental regulations.  The new approach regulations leave specific technical regulations to the
market.  In order to determine the application of these regulations, however, manufacturers must
analyse a given product.  What kinds of analyses are carried out and what documentation does a
manufacturer have to attach for the purpose of determining whether the compulsory regulationsapply?
(page 59, paragraph 66)
Under the regulatory framework for foodstuf fs, the European Union applies a number of
vertical measures, including compositional requirements.  What do these measures include, for the
following products in particular:  coffee, cocoa and fruit juices?  Has the European Union considered
revising or abolishing these measures?  The Report mentions a revision of these regulations in the
case of coffee.  What changes have been made, if any?
(page 62, paragraph 72)
Peru is one of the trading partners that commented on the maximum limits for aflatoxins
applied by the EU.  In order to take effective action on prevention and the flow of trade, has the EU
considered the possibility of instituting technical cooperation with its trading partners so as to monitoraflatoxin in the exporting country at all the stages:  production, harvesting, post-harvest, transport and
storage?
(4) Measures affecting production and trade
(iv) Intellectual property rights protection (page 84, paragraph 138)
The Report by the Secretariat indicates that the legislation on patents and the scope of
patentability provides that the human body at the various stages of its formation and development and
processes for cloning human beings and modifying their genetic identity may not be regarded asWT/TPR/M/72/Add.1
Page 18
patentable inventions.  Under what circumstances could the modification of genetic identity be
deemed to be a patentable invention?
IV. TRADE POLICIES BY SECTOR
(2) Agriculture
(ii) Common Agricultural Policy (CAP) (page 91, paragraph 9)
As shown in the Report by the Secretariat, the European Community provides considerable
support for agriculture within the framework of  the CAP, for example, programmes to curb
production, aids for the production and marketing of various products, common machinery forstabilizing imports or exports.  It is also indicated that, in addition to measures at the border, the
Community spent around €45 billion on the CAP in 1999 in the form of producer subsidies and export
subsidies.  What real benefits did agriculture derive from this Programme?
(4) Services(i) Overview (page 115, paragraph 73)
Could the EU inform us whether there are any restrictions on professional associations in the
EU concluding inter-institutional agreements with fellow professionals outside the Community for the
purpose of authorizing professional activities or  whether professionals from outside the Community
employed by European enterprises enjoy equal treatment as regards membership rights?
 (ii) Financial services (page 122, paragraph 94)
According to the Report by the Secretariat, na tional governments are still involved in the
financial services market.  Does the European Community intend to limit or abolish such involvementand promote free competition as part of the liberalization of financial services?
ANNEX IV.1 ELECTRONIC COMMERCE
(Page 142, paragraph 2)
The initiative taken by the Commission in December 1999 aims at putting Europe level with
or in front of other industrialized countries.  Peru would like to know what are the components and the
scope of Community policy on electronic commerce?
(Page 143, paragraph 5)
The Report by the Secretariat indicates that electronic transactions are being incorporated into
existing consumer protection legislation.  Does the Community have a position on consumer
protection, intellectual property relating to domain names and the security of on-line transactions?WT/TPR/M/72/Add.1
Page 19
CANADA
WT/TPR/S/72
I. ECONOMIC ENVIRONMENT
Annex I.1, para 10
The Secretariat Report states that "the postponement of the development of a competitive and
efficient pan-European banking structure remains one of the main concerns." Can the Commissionoutline its plans for the development of a pan-European banking structure?
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVE
(2) General Framework
(iii) Trade and trade-related policy-making (para 16)
The Secretariat Report refers to 'Issues of competence periodically complicating the conduct
of external economic relations for the Community and its Member States. In the WTO, competence is
shared on the GATS and TRIPS S agreements, and while there is no strictly delimited division of
competence, some issues currently fall under the national competence of Member States." Given the
GATS negotiations ongoing in Geneva, has the Council decided competence for the upcoming
services negotiations?
(3) Objectives of Economic and Trade Policy
(i) Internal Market (para 24)
In a number of instances, the EU has begun infringement procedures against Member States
for non-compliance with EU law. What means are be ing considered by the EU to enforce compliance
by Member States which may choose to use the judicial process to delay the implementation of EU
law?
(4) External Trade Relations(i) WTO
(b) WTO Dispute Settlement Proceedings (Table II.2)
Table 11.2 lists preferential trade agreements of the European Union, including participants,
date of entry into force, and GATT or WTO doc ument containing the notification. The customs union
with San Marino and the free-trade area with South Africa have no GATT/WTO document listed.Additionally, the free-trade agreement with Mexico is not listed here,. Has the Commission notified
these agreements to the WTO? If not when does it intend to do so?
(ii) Preferential trade agreements
(a) Members of the European Free Trade Association (paras 50-51)
The Report mentions that Switzerland did not ratify the European Economic Area (EEA)
agreement and instead has signed several bilate ral agreements with the Community concerningWT/TPR/M/72/Add.1
Page 20
services (land-based transport, air transport, and the free movement of people). To what extent do
these bilateral agreements differ in content from the EEA?
(b) Countries in transition (paras 53-56)
The EU is planning to expand to include Central and Eastern European countries (CEEC). It
has completed negotiations, or is in the process of negotiating with these countries to lower tariffs on
agricultural products for many tariff lines. This could result in trade diversion from the CEEC's
traditional suppliers well in advance of the formal accession date. How does the EU intend to dealwith the issue of trade diversion with respect to other third countries?
(e) Interregional agreements leading to free-trade agreements (para. 63)
The Report states that negotiations between the EU and Mexico on a free-trade agreement
have concluded and that the provisions on goods are to enter into force on July 1, 2000. Could the
Commission indicate when the provisions on services are likely to enter into force?
(iv) Partnership and cooperation agreements (para 70)
The Report states that the Community concluded Partnership and Cooperation Agreements
(PCAs) with the Russian Federation, Azerbaijan, Ka zakhstan, Kyrgyzstan, Moldova, and Ukraine. Do
these PCAs cover services?
General - Questions on Investment Policy{Note:  While the Secretariat Report has no specific section on investment policy, the following are
investment-related questions that may relate to other pails of the report.)
1. It is our understanding that EU directives in the areas of banking, insurance and investment
services include "reciprocal national treatment clauses" under which financial services firms, from
third countries may be denied the right to establish a new business if the investor's home country
denies similar access to EU services providers. Could the EU describe how these provisions are
administered? Are similar reciprocity provisions applied in other sectors?
2. Please provide an update on major privatization initiatives that have been undertaken since
the last review in 1997 and future plans for privatization over the next few years.
Country-specific Questions:
1. Austria:  Please describe any recent or anticipated improvements in the regulatory system for
the processing and approval of resident and work permits.
2. France:  Could the EU describe the "golden share" provisions which have been invoked in the
privatization of certain French firms?3. Greece:  Are tax and investment incentives in Greece taken into consideration in the
evaluation of tax and investment incentives? What regulations are in place with respect to private
investment in public utilities? Are any other restri ctions applied with respect to foreign investors in
the banking, mining, and transportation sectors?
4. Please describe any restrictions applicable to foreign participation in the privatization of
state-owned companies, including in the energy and telecommunications sectors.WT/TPR/M/72/Add.1
Page 21
III. TRADE POLICIES AND PRACTICES BY MEASURE
(2) Measures Directly Affecting Imports
(iv) Community tariff
(a) MFN regime (paras 24-29)
The EU has opened tariff quotas for imports from certain trading partners as a consequence,
inter alia, of enlargement. Although the European Commission maintains data on imports by value
and quantity on the relevant tariff lines by country of origin, the Commission does not maintainimport data by supplier country for imports unde r specific quotas. How does the Commission propose
to ensure that imports accorded to supplier countries are, in fact, supplied by the country or countries
in question and that WTO-bound quotas are fully respected?
(b) Preferential Regimes (para 27)
The EU provides Most-Favoured-Nation (MFN) treatment to only eight WTO Members.
Recognizing that regional and multilateral trade initia tives are complements, rather than alternatives,
is the EU open to the negotiation of preferential agreements with all interested parties in future? If
not, what criteria will it expect to use in selecting prospective partners?
(ix) Government procurement
(a) Community legislative framework (para 80)
What is the status of the information technology framework, which is intended to support the
delivery of a public procurement policy in Europe?
(paras 80-81)
Does the EU have a time frame for achieving the goal of addressing the whole procurement
process through the application of information technologies?
(4) Measures Affecting Production and Trade
(i) Legal framework for  businesses
(a) Company law (para 102)
The Secretariat Report notes that restrictions on investment continue to apply in various forms
of transport (including inland waterway, maritime cabotage, and air transport), and to financial
services. What are its plans for opening these sectors to foreign investment?
(ii) Subsidies
(b) Community programmes (para 111)
The level of support to the EU agriculture sector continues to be a matter of concern. How
given does the EU plan to develop the means of providing agriculture support in ways which
minimize negative consequences to farmers in third countries and which limit the buildup of stocks
surplus to market demands?WT/TPR/M/72/Add.1
Page 22
(c) State aid, Seventh Survey on State Aid (para 119)
The Secretariat Report states that the Commission published its Seventh Survey on State Aid
in 1999 and that the Eighth Survey was to have been published in April 2000. Is it possible to obtain
copies of these surveys? Are these reports available on the internet?
(iii) Competition policy
(a) Community activity (para 125)
The Report states that "the Commission has proposed that the enforcement of competition
rules be shared to a greater extent than in the past  with the competition policy authorities and national
courts of the Member States." We are of the view that this effort of decentralization in enforcement
may create inconsistencies in the interpretation and application of Community competition law and
policy. In addition, issues of confidentiality and disclosure of sensitive information may become more
complex and problematic given that enforcement will now involve numerous competition authoritiesand national courts with possibly overlapping jurisdictions operating in the context of a single market.
In this respect, what steps has the EC taken to en sure that the law will applied in a consistent and
uniform manner? What steps has it taken to ensure that confidential information is not disclosed?
 (Para 128)
We note the difference in aggregate market thresholds in the EU's policy on vertical restraints,
with 10% for vertical restraints and 30% in the new policy that was adopted on vertical restraints
(which replaces the block exemption regulations on exclusive distribution agreements, exclusive
purchasing agreements, and franchise agreements). In view of this, is fluter reform being considered
in the latter?
(b) International activity (para 131)
The EU has a wealth of experience with respect to cooperation with other competition
authorities and it has stated in the WTO Working Group on Trade and Competition Policy thatcooperation is a key element of a WTO framework agreement on competition policy. May we have
your views on what should be the core principles or substantive approaches underlying cooperation in
the WTO on competition policy matters?
(iv) Intellectual property rights protection
(a) Overview (para 133)
What is the current status of efforts to develop a uniform Community-wide system for
intellectual property rights?
IV. TRADE POLICIES BY SECTOR
(2) Agriculture
(ii) Common Agricultural Policy (para 10)
Under the Common Agricultural Policy (CAP), the EU provides direct aid (compensatory
payments) to producers, linked to factors of production, subject to reference periods and production
limiting programmes, In spite of the production limiting programmes, EU has faced potential recordWT/TPR/M/72/Add.1
Page 23
large wheat and coarse grain crops this year as well as continued high output in the beef and other
sectors. To what do you attribute this development?
(3) Developments in Selected Manufacturing Industries Automobiles (para 3 9)
This paragraph refers to motor vehicle distribution which must conform to EC legislation as a
condition of its exemption from competition law until 2002. This paragraph elaborates on the
provisions of the 1995 exemption from competition law of motor vehicle distribution and servicing
agreements (as per Commission Regulation 1475195). Please clarify if this EC Regulation on motorvehicle distribution discriminates between EU distri butors and foreign distributors operating in the
EU.
(4) Services
(i) Overview (para 77)
The Secretariat Report states that "the competence of the Community over commercial policy
covers trade in goods and cross-border supply of  services; joint competen ce between the Community
and the Member States exists in certain areas." Does this mean that competence does not cover other
modes of supply of services? What is the competency in the other modes?
(ii) Financial Services
1. We would appreciate additional information from the EC on the extent of cross border and
commercial activity of third-country financial service providers, including those without subsidiaries
in the EU.
2. We note the helpful summary of recent legislative developments, especially with respect to
Single Market undertakings. What are the EU's plan s with respect to third country providers currently
not holding single "passports" (i.e., mutual recognition of licenses)?
3. Concerning the establishment of banking entiti es by firms without the single "passport," it
appears that the rules of some EU Members (e.g., capital adequacy, licensing requirements) offer littledistinction between branches and subsidiaries., In the case of Germany, for example, what are the
advantages for a foreign service provider to establish a branch rather than a subsidiary, in terms of
regulation?
(iii) Telecommunication
(b) Regulatory framework (para 101)
(c) Implementation of the regulatory package (para 105)
1. This is with regard to the EUs efforts towa rd the development of competitive markets and
regulatory harmonization. Will these initiatives address the differing licensing conditions amongst
member states, such as the high initial cost of licensing in Germany, which may favour the incumbent
over new entrants? In addition, will these initiatives address the concerns mentioned in paragraph 105of the Secretariat report in relation to onerous licensing conditions, transparency regarding licensing
conditions and procedures, high up-front costs, and the length of time required to issue licenses in
certain cases?WT/TPR/M/72/Add.1
Page 24
2. Paragraph 105 notes the concerns relating to national regulatory authorities, Some national
regulatory authorities in the European Union appear to be vulnerable to penalty charges. How doesthis affect the role of the national regulatory authorities?
(iii) Telecommunication
(c) Implementation of the regulatory package (para 106)
Does the EU intend to promote the publication of the real cost data of incumbent
telecommunications services providers in order to clarify the levels of reasonable interconnectioncharges?
(Chart IV.8)
The chart illustrates "fixed to fixed" and "mobile to fixed" interconnection rates for Member
States. Spain is shown to have only a fixed to fixed interconnection rate. Please clarify if this means
that Spain has no "mobile to fixed" interconnection.
 (Table IV.9)
The table lists the number of operators in telecommunication services as of August 1999, In a
footnote to the Table, it is mentioned that the telecoms monopoly in Greece is to be liberalized on
December 31, 2000. Is this liberalization in Greece progressing according to schedule?
(iv) Transport services
(c) Maritime Transport, Common regulatory framework (para 129)
Regarding the application of competition law, has the regulation concerning consortia been
reviewed? If yes, what modifications have been made? Is there a special significance attached to the
modification?
Other developments (para 133)
This paragraph refers to the fine imposed on members of the Trans-Atlantic Conference
Agreement (TACA). Please provide a status report on the proceedings for the fines levied againstmembers of the TACA.
(v) Audio-visual services
1. The Secretariat Report categorizes "video games" as audiovisual services, yet these are not
explicitly categorized as such under the Central Product Classification for  it audiovisual services." Is
this how the EU defines video games? Are there EU  financial or regulatory measures which provide
support to the European video game industry?
2. In para 138, the Secretariat Report states that the Television Without Frontiers Directive was
changed in 1997 to "take account of technological and market developments, while also introducing a
clarification of the rules on jurisprudence and the protection of minors, and the new rules concerning
the broadcasting of major events and teleshopping." What wore the specifics of these amendments?
3. Para 141 states that the Commission plans to broaden the MEDIA Plus program "by opening
participation to third countries?" Will this apply only to countries with which the EU has aWT/TPR/M/72/Add.1
Page 25
audiovisual co-production treaty or are there other criteria that will be used to offer the pro~ to third
countries?
ANNEX IV.1 ELECTRONIC COMMERCE
(c) Regulatory framework (para 5)
How will the EU ensure that its own regulatory  framework is compatible with the approaches
of its trading partners? Does this regulatory framework cover areas other than financial services and
consumer protection?
(Para 9)
As noted in the Secretariat report, the EU is developing regulations that would give
consumers in the EU the right to sue foreign Internet providers of goods and services in the
consumer's local court, Is it intended that the regulations cover all foreign Internet businesses or only
those established within the EU?
ANNEX IV.2 EC FINANCIAL SERVICES SCHEDULE IN GATS (para 2)
This paragraph mentions national treatment lim itations on commercial presence of banking
institutions, specifically France requiring "sufficient presence for the management of
franc-denominated issues." The most recent supplement to the Schedule of Specific Commitments on
Financial Services (GATS/SC/31/ Suppl.4/Rev.1) stipulates" ... sufficient means and commitments in
Paris ... "Please elaborate on the meaning of "sufficient means and commitments in Paris" - what does
this condition mean and how is it determined?
SECOND SET OF QUESTIONS FROM THE GOVERNMENT OF CANADA
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) Overview (para 4) (also WT/TPR/G/72, para 22)
1. Within the EU decision structure, food safety policies are based on Commission/Parliament
codecision. As a result in some instances, the decisions appear to be based more on societalpreferences rather than safety or health reasons. How does the EU plan to reconcile the level of health
protection based on science versus societal perceptions, as stated (as in the case of GMOs)?
2. As well, the EU has adopted regulations (e.g. food labelling, 1 % GMO tolerance) without
outlining appropriate enforcement capabilities. How can such regulations be enforced?
(2) Measures Directly Affecting Imports(viii) Product Regulations and standards
(a) Community activities (also see WT/TPR/G/72, para 3)
1. The Reports state that significant progress has been achieved in the Single Market- We note,
however, that regulations for certain agricultural products may differ and be more stringent with
respect to Member States (e.g. bottled water). When does the EU plan to harmonize the variousMember State-criteria into a single EU standard?WT/TPR/M/72/Add.1
Page 26
2. As well, the EU has an organic standard, but standards used by Member States differ; in some
cases, certain regions have their own standard. What is the situation with respect to Member Statescomplying with, and implementin g the EU organic standard?
(a) Community activities (para 67)
We seek clarification on the expected relationship between the European Food Authority and
the various Member State food Safety Agencies. As we consider rapid information exchange and
notification as an essential element of a food safe ty system, how does the EU intend to ensure timely
exchange of information with its trading partners?
Subsection on labelling. from para 68
We request more information on how the EU mandatory and voluntary labelling for products
would work. We understand that the EU is in the pr ocess of reviewing the labelling options set out in
the Commission's White Paper on Food Safety. Which options are currently favoured? Will labellingmeasures relate only to the product itself or win they include non-product related process and
production methods?
(b) International activities
What are EU's plans for furnishing, in a timely fashion, the scientific evidence (referred to in
para. 76 as "risk assessment") upon which the EU bases its justification in establishing a higher levelof protection than is outlined in the Codex Alimentarius?
(ix) Government procurement (paras 80-81)
With regard to product regulations and standards, the paragraph states, "These results
demonstrate the interface between competition in public procurement and the development of
European product regulations and standards." What is the relationship/interface referred to in ,this
statement? Is the EU suggesting that more specialized standards axe appropriate or fewer?
SWITZERLAND
Protection of Intellectual property (TRIPS Agreement)
1. Article 39.3 TRIPS Agreement requires WTO Members to protect undisclosed regulatory
data for obtaining marketing approval of a new product against unfair commercial use. This means
that - for a specified period from the -marketing approval date of the original product - neitherpotential competitors nor the registration authorities may rely on the first applicant's confidential data
in support of applications for the approval of a similar product by later applicants.
2. Article 4, 8a iii of EC-Directive 65165 as amended by Directive 87121 allows member states
to choose not to offer such data protection beyond patent expiry. The TRIPS Agreement, however,
does not create a link between: regulatory. data protection and the patent situation. Please explain howthe EU -:regulation does fulfil this requirement despite the linkage of data protection to patents.
Services
1. Could you elaborate a little bit more on the actual work carried on by the Commission of the
EU to regulate "financial conglomerate" type. groups?  How do you tackle this issue?WT/TPR/M/72/Add.1
Page 27
2. Could you explain how the "general good" principle is working, as well as its concrete
efficiency?
3. Para.102 on page 124 of the Report by the Secretariat relates to the issue of the application of
VAT on telecommunications services. Similar problems will increasingly arise with the developments
of e-commerce. Could a similar solution be used to address such problems?
4. Can you give us a broad description of the services chapter that is contained in your FTA with
Mexico. Will it be notified to the Council for Trade in Services?
5. What is the foreseeable commercial impact of the decisions that will be taken by the
European Aviation Safety Agency (EASA)?
Technical -Barriers to Trade
1. In para. 25 on page 25 of the Report by the Secretariat it is stated that the Community took
initiatives during the period under review to enhance the efficiency of goods, services, and capitalmarkets. These concern i.a. removing technical obstacles to trade.
What were the concrete measures taken to remove technical obstacles to trade ln order to
enhance the efficiency of goods markets? And what is planned within the new five-year strategy for
the Internal Market?
2. Para. 27 on page 26 of the Report by the Secretariat describes the "screening" on the acquis
communautaire by the applicant country prior to the formal negotiations to join the EU. Some of the
applicant countries' have already concluded several chapters.
Are these chapters equivalent to the Europe Ag reements described ln paras. 53 ff on page 32?
The Europe Agreement also commits the. party from Central and Eastern Europe to approximate La.
technical rules and standards (=PECA). Once a PE CA is signed will the conformity assessments
undertaken in both parties be mutually accepted? When will the first PECAs be ready for signature?
What product sectors will be covered? When will these Protocols enter into force?
3. Regarding labelling, the Report by the Secretariat states in para. 68 on page 60 that the
Community may permit the import of products from third countries bearing geographical indications
and designations of origin established under the law of the third. country. by bilateral
reciprocity-based agreements. ln this context an 1994 agreement with Australia is mentioned.
What are the product areas covered by this agreement? As. a. consequence will geographical
indications covered by such an agreement also be protected in the EC? Why is such a bilateral
agreement necessary for the import of these products?
4. In para. 80 on page 57 the Commission notes that national product legislation remains "the
major obstacle to doing business within the Single  Market'. Reading this in the context of WTO
notifications of technical regulations by the EC Member States between 1995 and 1999, where certainEC Member States have notified not one single technical regulation or only a few (see table 111.6 on
page 62) one m% have the impression that there are not so many remaining national product
legislation.
What is the reason for this low WTO notification score by the EC Member States?
5. In the area of pharmaceuticals we learnt that the EC is about to negotiate an Agreement
offering Russian acceptance of Community test and procedure results, GMP and batch certificates.WT/TPR/M/72/Add.1
Page 28
Could such an Agreement already be finalised? If so, when will it enter into force?
URUGUAY
W/TPR/S/72
Paragraph 22 (Summary Observations)
Table I.1 Major features of the EU economy  by member States, 1998 (Chapter I, Economic
Environment)
Table IV.1 Basic agricultural statistics in member States, 1998 (Chapter IV, Trade Policies by Sector
(Agriculture))
1. Paragraph 22 of the Summary Observations states that "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 Comm unity expenditure.  OECD estimates indicate that
the level of support to agricultural producers in 1998-99 reached the previous historical high of1986-88 …"
2. Table I.1, Major features of the EU economy by member States, 1998, in Chapter I,
Economic Environment, indicates that the share of agriculture in the GDP (per cent) in 1997 was only
2.1%, whereas construction accounted for 5.1 %, industry 25.3 % and services 67.4%.
3. Likewise, Table IV.1, Basic agri cultural statistics in member States, 1998, in Chapter IV,
Trade Policies by Sector (Agriculture) shows that the share of the primary sector in the employed
civilian population only accounts for 4.7% of the total.
Could the European Union explain the ration ale for the vast expenditure in support of
agriculture (which takes up 45% of the EU's budget),  bearing in mind the very small percentage share
of agriculture in the GDP (2.1%) and the modest share of the primary sector in the total employed
population (4.7%), particularly in view of the important distortions this causes in global agricultural
markets and the ensuing negative effects for efficient producers, particularly in developing countries?
Paragraph 19 (Summary Observations)
Could the EU comment on paragraph 19 of the Summary Observations in the Report by the
Secretariat, which indicates that "Textiles and clothing is subject to above-average tariffs, tariffescalation and quotas ..."
Paragraphs 18 and 21 (Summary Observations) and paragraph 21 of Chapter III, Trade Policies and
Practices by Measure
1. Paragraph 18 (Summary Observations) states that "… for non-agricultural products, with an
average MFN tariff of 4.2% in 1999 …".  While paragraph 21 indicates that "The simple average
tariff on agricultural products is estimated at 17.3%, although access on high tariff items mainly takes
place through tariff quotas".  Paragraph 21 also states that "Other complexities of the border regime
for agricultural items produced in the Community include duties assessed in specific terms, on thebasis of ingredients or the season, or based on the entry price".
2. Paragraph 21 of Chapter III, Trade Policies and Practices by Measure, states that "Tariff
peaks (triple the simple average) are in evidence for meat, dairy products, and cereals, and for textilesWT/TPR/M/72/Add.1
Page 29
and clothing".  The last sentence of this paragraph states that "The range of applied tariffs, in terms of
the minimum and maximum rates, is also more important on agricultural products  (from 0 to 236.4%)than on non-agricultural products (from 0 to 26%)."
Could the European Union explain how the statements in Paragraphs 18 and 21 of the
Summary Observations and paragraph 21 of Chapter III of the Report by the Secretariat can be
reconciled with paragraphs 4 and 24 of the Report by the Government, which indicate that the EU
continues to remain an open economy fully committed to an open trading system and that the fullintegration of developing countries in the multilateral trading system and the global economy is a key
priority for the EU?
WT/TPR/G/72
Paragraph 19
1. Paragraph 19 states that "The EU has also participated in the launch of the built-in agenda
negotiations  on agriculture and services, which started smoothly in January. … The EU remains
convinced that these issues would most efficiently be concluded in the context of a comprehensiveRound.  The EU notes that in the absence of any new mandate at Seattle, those negotiations
necessarily begin on the basis of Article 20 of the Agreement on Agriculture, and Article XIX of
GATS.  In the absence of a decision at Seattle to launch a new Round as a single undertaking, there
remains no time-frame for the conclusion of these negotiations …".
In connection with paragraph 19 of the Report by the Government and in the event that there
is no new Round in the near future, it would be in teresting to know the European Union's position on
the scope of the current negotiations envisaged in the built-in agenda (agriculture and services) andwhether the EU would be ready to set a time- limit for the conclusion of these negotiations.
ARGENTINA
1. In paragraph 4 of the Report by the Governme nt (WT/TPR/G/72), the EU  states that one of
the priorities for the WTO should be the integr ation of the developing economies in the world
economy.
Does the EU not consider that more radical dismantling of the CAP and the elimination of a
tariff escalation structure, which discourages the export of processed agricultural products fromdeveloping countries, would be a good way not on ly of achieving such integration but also of
achieving a more efficient global economy with more reasonable prices that would also be to the
benefit of European consumers?
2. In paragraph 5 of the Report by the Government, the EU states that the launching of a new
Round is an important task ahead.  The EU's attemp t to include topics such as social, labour or
environmental issues, as if they were unfair trade practices, is not new.  In addition, it is trying to
exclude topics such as agriculture, which is a very sensitive issue for developing countries.
Taking this into account, together with the statement mentioned in relation to question 1,
indicate on what terms the EU believes that the R ound should be launched as the EU is promoting an
agenda for discussion that is disadvantageous to the comparative advantages of many developing
countries.
3. Please explain which of the reforms outlined in Agenda 2000 gives developing countries the
greatest export opportunities.  Also explain to what extent Agenda 2000 is able to remedy the priceWT/TPR/M/72/Add.1
Page 30
distortions already caused by the CAP, because at fi rst glance, from the point of view of developing
countries, there does not appear to be any substantial advantage.
In this connection, please indicate which measures or policies can be classified under the
so-called structural aid and the subsidies in the blue box.
4. In paragraph 25 of the Report by the Government, the EU appears to support the full
integration of developing countries in the multilateral trading system.  Not only does it state that there
will be no more quotas or tariffs for the least-developed countries, but it also indicates that it will
announce further measures for these countries.
It would be interesting to know what measures the EU is considering in this regard and
whether it has assessed their impact, the possible elimination of MFN preferences and, consequently,
the conditions for access to the Community market for other competing developing countries.
5. The objectives underlying the so-called "multifunctionality" of agriculture raise doubts in
many countries outside the EU because multifunctionality is seen as a potential opportunity to applydistortionary policies on agricultural prices.
How will the objectives announced by the EU at the 1999 Berlin Council regarding
agriculture (conservation of the rural environment, nature conservation, contributing to rural
activities, meeting the needs of consumers, protectin g the environment, safeguarding animal health)
be made compatible with the market outlined in  the MacSharry reform and eventually approved by
the aforementioned Council, using what instruments?
6. Regarding stabilization of spending in the agriculture sector - an aspect that guided the work
at the Berlin Council - explain how the decisions taken at Berlin will affect subsidies to farmers and
overall spending on agriculture and whether the measures adopted at Berlin will lead to an increase in
export subsidies for certain agricultural sectors or products.
7. What agricultural policy measures will the EU take to ensure that aid to the rural sector
reaches producers without artificially boosting the production of foodstuffs and affecting international
trade?
8. Given the importance of the agricultural sector in a number of countries that are candidates
for accession to the EU, it is likely that the budgetary criteria adopted in Berlin will have to be
re-adjusted and, as a result, the requirements of the CAP will have to be substantially increased.
What stage has internal consideration reached as regards, on the one hand, maintaining the
objectives set in Berlin in 1999 and, on the other, meeting the needs resulting from the accession
process?
9. According to a number of estimates, it will not be long before one third of arable land in the
EU  comes under the "set aside regime".  The expansion process – especially after the entry of Polandand Hungary – will imply being ready to incorporate large stretches of arable land and a substantial
number of farmers.
How will the EU deal with this area/population expansion in the CAP, using what tools?
Could this delay the reform of the CAP in sensitive sectors such as dairy products and others?WT/TPR/M/72/Add.1
Page 31
10. EU - South Africa Agreement
10.1 What is the current status of the Trade,  Development and Cooperation Agreement between
the European Community and its member States and the Republic of South Africa?
10.2 On what date will the Agreement as a whole enter into force?
10.3 What clauses are already being implemented?
10.4 It would seem that the negotiations between th e EU and South Africa have been guided by the
principal of "asymmetrical reciprocity".  What factors were taken into account when determining this
differentiated treatment, especially as regards the different pace of liberalization to be respected byeach party (12 years in the case of South Africa and ten years for the EU)?
10.5 In addition to the tariff reductions granted for agricultural products, what other measures are
included in the Agreement in terms of tariff quotas for agricultural products?  How will these quotas
be administered?
10.6 In what sectors or disciplines does the EU-South Africa Agreement provide for "WTO-Plus"
regimes (Government procurement, trade protection mechanism, intellectual property, investment,
services, etc.)?
10.7 What was the final agreement reached on geographical indications and alcoholic beverages
(port, sherry, ouzo, grappa)?
10.8 How is the question of "rules of origin" envisaged in the Agreement?  Were the criteria for
WTO negotiations followed in any way?
11. EU - Mexico Agreement
11.1 This Agreement includes an economic integration agreement for services which provides for
the liberalization of this sector within a period of ten years and covers the liberalization of the vast
majority of the corresponding subsectors.
Explain the distinctive features of this regime, whether liberalization is horizontal or vertical
and also whether a specific timetable for liberalization has already been agreed or whether there will
be subsequent sequential negotiations to be used as the basis for drawing up (negative or positive)
lists.
11.2 What undertakings were made by both contracting parties in the aforementioned Agreement
and what steps do these undertakings imply for the commitments undertaken in other trade
negotiation forums, for example, the multilateral forum (GATS)?
11.3 Has any special programme been drawn up to  reduce Mexico's trade deficit with the EU?
11.4 Has consideration been given to adopting measures to deal with the asymmetry between
Mexico and the EU other than those laid down in the Agreement itself (variations in the periods for
tariff reduction, rules of origin, etc.)?
11.5 Has progress been made in drawing up a cooperation programme with the objective of
offsetting the negative trade effects that might arise for Mexico?WT/TPR/M/72/Add.1
Page 32
12. EU Agreements with countries of the Mediterranean Basin
12.1 Can the EU clarify the meaning of "unified euro-mediteranean zone"?
12.2 What comments should be made regarding publications which state that the free exchange of
goods in the agricultural sector is politically and economically inapplicable for the EU and ruinous for
the future food needs of third countries in the Mediterranean?
13. Partnership Agreement between the EU and th e African, Caribbean and Pacific countries
(ACP)
On 23 June 2000, the new Agreement replacing the Lomé Conventions was signed.Are there any forecasts or studies on the impact this Agreement will have in third countries,
especially developing countries?
HONG-KONG, CHINA
1. Textiles and Clothing
(WT/TPR/S/72, P. ix, Para. 19; PP.53-54, Paras. 47-48)
We note that access to the EU market for textiles and clothing products is still subject to many
barriers: above-average tariffs, tariff escalations, AD actions and quotas. Textiles and clothing are
products of high export interest to many developing Members. We note that only 5.4% of restricted
categories have been integrated in the first and second stages integration under the ATC. We areinterested to know if the EU has any plans to brin g down the exceptionally high barriers of this sector,
so that the developing and least-developed Members, as well as EU consumers can benefit from a
more liberalized market.
(WT/TPR/S/72, P. 43, Para, 21; PP. 99- 100, Paras. 31-32 and Chart IV. 3)
It is mentioned that while the average MFN tariffs on manufacturing products bad declined in
recent years, the exception continued to be high  MFN tariffs on textiles and clothing. Clothing
products have average tariff rates above 12%. In particular, out of the 402 lines with tariff rates in
excess of 12%, 337 are in textiles and clothing. Textiles and clothing are also subject to tariff peaks.
We are interested to know if the EU has any plan  to bring down the tariffs on textiles and clothing
imports,
2. Tariff
(WT/TPR/S/72, P. 43, Para. 21)
One third of the dutiable lines of the Community are at "lowtariff rate (3% or less), e.g. 1.3%
for printed books, newspapers, pictures and other products; and 2.4% for rubber and articles thereof.These low rates represent nuisances to the trade. They are not meaningful or effective as a trade
policy instrument to the imposing authorities. We are interested to know if the Community has any
plan to eliminate such nuisance tariffs in line with its liberalisation efforts.WT/TPR/M/72/Add.1
Page 33
(WT/TPR/S/72, P.39, Para. 1)
While the simple average tariff for non-agricultural products is at 4.5%, tariff peaks (highest
rate being 12.4%) exist in a few sectors (e.g. textiles and clothing, electrical equipment, vehicles,
organic chemicals and alcoholic solutions). We woul d like to know if the Community has any plan to
reduce the disparity by bringing down the tariff rates of these products.
3. Preferential Regimes
(WT/TPR/S/72, P. 46, Para. 27)
The Community grants duty-free or reduced tariff treatment for imports of a number of products
under preferential agreements and arrangements, for which almost all its trading partners are eligible.
Among 137 WTO Members, exclusive MFN treatment applies to imports from only eight WTO
Members including Hong Kong, China. Under the multilateral trading system, MFN treatment should
be the rule while preferential trading arrangements should be the exception. However, the reverseseems to be case for the Community. We would like to hear the Community's views on this
development.
4. Product Regulations and Standards
(WT/TPR/S/72, P. 58, Para. 64)
We understand that the Community could, under Council Directive 92/59/EEC governing
General Product Safety Requirements, require Member States to adopt emergency measures for the
protection of public health and safety. There are cases that certain Member States have adopted
measures more stringent than those recommende d by the European Commission. This will cause
confusion to the trade and affect trading partners' market access to the Community. Would there be
any mechanism to harmonize Member States' measures in particular those which are more stringent
than the Community Directives?
[An example is the Commission's emergency ban on phthalate-containing PVC toys and childcare
articles. A number of Members States have adopted national measures more stringent than those
required by the Commission.]
5. Government Procurement (GP)
(WT/TPR/S/72, P. 64, Para. 79)
While the Single Market legislative framework in the field of GP has been in place since the
last TPR in 1997, we note that not all directives are fully transposed into national laws. While we
appreciate that improvement has been made in this area, with the share of non-transposed directives
declined from 55% in 1997 to 36% in 1998, we woul d like to know the latest situation. And we hope
that the EU could step up its efforts in this aspect so that the alignment process could be completed as
soon as possible.
(WT/TPR/S/72, P. 64, Footnote 128)
We are glad to note the launch of the Systems d'Informations sur les Marchés Publics
(SIMAP) with a view to encouraging best practice in the use of information technology in GP and
also the plan to extend SIMAP to address the whole procurement process. We would be interested to
know the timeframe for full  implementation of SIMAP.WT/TPR/M/72/Add.1
Page 34
6. Anti-dumping
(WT/TPR/S/72, P. 67, Para. 88)
It is stated that according to the lastest comparative data for 1998, the EU had the second
largest number of AD measures in force. At the end of 1999, the EU had 192 AD measures in force,
which was a 30% increase over 1995. A further rising trend for AD measures is expected due to a
three-fold increase in the number of initiations of new investigations in 1999. We would like to ask
the EU's comments on the foregoing observations. We are also interested to know the EU's outlook on
the future trend of AD actions. Does the EU. envisage the rising trend to continue for the next few
years? If so, what are the reasons for a further rising trend?
7. Intellectual Property Rights Protection
(WT/TPR/S/72, PP. 83-84, Para. 135)
The Commission has recognised that although the protection of intellectual property rights by
international conventions had led to some standardization of national legislation, it was not an
adequate basis for completing the single market. It has therefore decided to strive for harmonization
of national laws in different areas and for stronger effective protection of intellectual property
throughout the world. As the European market becomes more integrated, well-defined and EU-wide
IP protection will be one of the most important elements in facilitating trade and building upconfidence. We are therefore pleased to be updated on the harmonization approach and the many
enhancements of the EU's IP laws.
(WT/TPR/S/72, P. 84, Para. 136)
It is mentioned that the EC intended to propose a directive on the patentatibility of computer
programs to harmonize and clarify Member States' patent laws on this issue. Is there any target date of
implementing this directive, and what is the state of play at the moment?
(WT/TPR/S/72, PP. 85-86, Para. 14 1)
The EC seems to prefer the Community patent over the EPO-based system which is thought
to be too costly. However, it is noted that the Community patent would also incur significant cost in
translation. Would the EU share with us more details of the Community patent system, and how
effective it is estimated to be in encouraging more widespread use of patent in Europe, vis-à-vis  the
EPO-based system?
8. Financial
(WT/TPR/S/72, P. 117, Para 82; P. 118, Para. 85)
The principle of single passport (i.e. mutual recognition of licences among EU Member
States) has been implemented in certain sub-sectors like banking and insurance. There are also
proposals of applying the 'single passport` principle to other subsectors (e.g. European Commission(EC) also proposed the single licence arrangement for asset management companies to operate
throughout the EU). We would like to know whethe r there are plans to apply the 'single passport'
principle to services sectors other than financial services.WT/TPR/M/72/Add.1
Page 35
(WT/TPR/S/72, P. 122, Para. 94)
It is noted that National Government's involvement in financial services continues to prevail
in a number of ways (e.g. provision of financial services of general economic interest, using credit
institutions, raising public funds etc.). We are glad to note that the EC holds the view that Members
States should rely more on competitive tendering for the provision of services of general economic
interest. We wonder if the EC has any concrete pl an in mind on how to reduce state participation and
intervention with a view to minimizing market distortion.
9. Telecommunications
(WT/TPR/S/72, P. 122, Para. 99)
It is noted that EU is considering harmonization of licensing conditions and development of
'one-stop shop' procedure- Would th e EU share with us whether there is any concrete plan and, if yes,
details of implementation?
(WT/TPR/S/72, PP. 125-126, Paras. 106-107)
It is noted that national implementation of the regulatory framework for cost accounting
varied among Member States and seemed to have contributed to extensive price squeezes.
Competition in local access market is also lacking. Would EU consider introducing redress measures
or mechanism?
10. Air Transport
(WT/TPR/S/72, P. 134, Para, 125)
It is unveiled in European Commission's investigations that airport charges discriminate
against foreign carriers in some airports and th at abuse of dominant position by incumbent airport
operators occurred in a number of Member States. Would the Commission take any measures to
rectify the situation?
11. Maritime Transport
(WT/TPR/S/72, P. 136, Para- 128)
One of the principles of EUs policy in maritime transport services is to enable counteractive
measures against unfair pricing practices by third-country shipowners. We would be interested to
know if there is any incidence of application of the relevant measures.
(WT/TPR/S/72, P. 136, Para. 129)
Competition law is applied to maritime transport services with a block exemption for certain
practices of liner conferences.  We would be interested in knowing the share of maritime trade
conducted under the cover of the exemption.
12. Audio-visual
(WT/TPR/S/72, P. 140, Para. 13 8)
It is laid down in the Television without Frontiers (TWF) Directive that broadcasters should
reserve a majority proportion of their transmission time for European works. We would like to knowWT/TPR/M/72/Add.1
Page 36
the details of the requirement (i.e. definition of majority proportion and European works) and whether
exemption would be available.
CHILE
REPORT BY THE SECRETARIAT
Part II:  Trade Policy Regime:  Framework and Objectives
1. Paragraph 30 of this part states that "market opening is likely to be accompanied in the years
ahead by increasingly competitive pressures from imports on the Community market and, as in the
past, by the problems and frictions inherent in any restructuring process".
In this connection, we would like to know whethe r the EU is really ready to open its market to
imports from third countries, especially for sensitive products (fruit and vegetables).
Part II:  Trade Policy Regime:  Framework and Objectives:  External Trade Relations2. In paragraph 65, it is indicated that the EU introduced a revised GSP scheme for the period
1 July 1999 to 31 December 2001.
Could the EU indicate whether the GSP currently in effect for certain countries with which it
is carrying on trade negotiations will be maintained until the date mentioned (December 2001)?
Part III:  Trade Policies and Practices by Measure1. In the first paragraph of this part it is stated that the EU has liberalized 12 of 52 quotas.
Could the EU indicate those products to which quotas still apply and those which have been
liberalized?
Part IV:  Trade Policies by Sector:  Agriculture
1. This part does not make any reference to the Community's control mechanisms for the
application of subsidies, as is the case for the policy on setting aside surplus agricultural production.
For example, in the case of  Greek production of canned peaches, in its decision of
14 November 1995, the Court of Auditors indicated that the Commission had initiated a serious
dialogue with the Greek authorities in order to establish a system for management and effectivecontrol in the fruit and vegetables sector.
Can the EU assure us that this control has been put in place and is working properly?
2. The reforms of the Common Market Organizations of 28 October 1996 are intended to
improve observance of the Community's regulations.  For example, the administrative measuresrelating to requests for support from processors have become stricter.
How can the Commission ensure that processors  do not pay a price that is lower than the
minimum set by the Community and that the money paid through a financing organization is not used
to pay for the delivery of larger amounts of the raw material than those officially announced?WT/TPR/M/72/Add.1
Page 37
3. The implementation of the Community set aside compensation and the set aside quotas will
not have any practical effects if the Greek administ rative controls do not change, as pointed out by the
Court of Auditors in 1994.
In this connection, we should like to know whether the Community has taken any measures in
this respect.
4. Could the EU provide the following statistical information for Spain, Italy, France and
Greece, for the 1994/1995, 1995/1996, 1996/1997, 1997/1998 and 1998/1999 seasons for the
following:
(a) Production of peaches;
(b) volume set aside;
(c) consumption of fresh peaches;(d) balance of fresh peaches (imports and exports);
(e) amounts processed with aid;
(f) processing coefficient;
(g) set aside prices;
(h) compensation paid to producers.
REPORT BY THE GOVERNMENT
Part III:  The EU Trade Policy Framework
1. In paragraph 11, the EU indicates that its trad e policy should be viewed within the context of
its general approach to sustainable development.  It adds that Article 6 of the EU Treaty requires theintegration of environmental concerns into all EU policies as the best way of achieving sustainable
development, which is one of the key objectives of the EU.
In this respect, we should like the EU to explain its position on the granting of fisheries
subsidies as these lead to surplus fishing capacity and, as a result, over-exploitation of natural
fisheries resources .
Part V:  The EU and the WTO:  Preferential Trade Agreements1. Paragraph 32 mentions the Agreement recently concluded with Mexico.  Perusal of this
Agreement shows that no reductions have been granted for products such as meat, milk, yoghurt,products of the milling industry, canned fish, sugar, preserved foods and juices, and chemical
products.
Could the EU explain the reasons for this?
2. In addition, wine is not covered by the reductions, which implies that it does not enjoy lower
tariffs.
Could the EU confirm this information and expl ain the rationale for not liberalizing the wine
market?
3. Paragraph 34 mentions the Trade and Cooperation Agreement with South Africa, indicating
that two supplementary agreements are being negotiated, one on the denomination of origin for wines
and spirits.WT/TPR/M/72/Add.1
Page 38
Have the problems faced by some members of the Community in implementing this
Agreement been resolved?
4. The second agreement is on fisheries.
Could the EU describe the main features of this agreement and its scope as far as the
protection of fisheries resources is concerned?
NEW ZEALAND
1. The Secretariat report (paragraph 22 of the Summary Observations) comments on the
continued large budgetary outlays that the Common Agricultural Policy (CAP) represents, What does
the EU estimate to be the budgetary implication fo r the CAP caused by enlargement, and what policy
responses is the EU considering to deal with these (Including in sectors such as dairy)?
2. Agenda 2000 incorporated further rural development measures (green box) as well as blue
box support. Does the EU envisage further expansion of green box support measures as an alternative
to more trade distorting measures?
3. EU enlargement (of up to thirteen new members) could have profound effects on third
country trade. How does the EU intend to take these effects into account in devising the integration of
new members? In particular, how does the EU intend to alleviate trade diversion?
4. Can the EU comment on any plans to reduce or eliminate the complexities of its border
regime, in particular for agricultural products, as noted in paragraph 21 of the Secretariat's summary?
Specifically, what progress has the EU made in reducing the disparities between conditions of access
for agricultural items produced in the Community and those items not produced in the Community,
which enjoy much more favourable terms?
5. Page 10 of the Community report notes the contribution which preferential trade agreements
make in support of the multilateral trading system. What efforts does the EU intend to make to ensure
that difficult areas such as agriculture are include d in such agreements (both existing and planned) in
order to ensure that they contribute to liberalising the multilateral trading system?
6. Paragraph 67 on page 59 of the Secretariat's report refers to scientific evidence underpinning
food safety policy, with the p-precautionary principle to be used where appropriate. The EU has
stated that recourse to the precautionary principle should not be used as a trade protectionist measure,
and that safeguards against such a practice could be adopted. Can the EU advise what form such
safeguards might take?
7. New Zealand notes the development, since the interim review in 1997, of recent EU policy on
food safety including the White Paper and the proposal to establish an European Food Authority.
What sort of relationship does the EU envisage between its proposed Food Authority and the WTO or
other international standard setting bodies such as Codex Alimentarius and the OIE?
8. Despite recent reform, the EU fisheries regime continues to be characterized by price support,
subsidies and tariff barriers to protect local fishers. The wider issue of the incompatibility ofsubsidisation with sustainable development is the focus of the proposal to the Committee on Trade
and Environment supported by New Zealand and a wide range of other WTO members. How does the
EU intend to further reform the fisheries market, in order to contribute to the sustainable management
of its fisheries resources?WT/TPR/M/72/Add.1
Page 39
BRAZIL
Generalized System of Preference
1. The EU introduced a revised GSP scheme for the period 1. 999 - 200 1. The product coverage
includes processed agricultural products, fish, mining and industrial products. Least developed
countries are eligible for the most favorable trea tment. Under provisions to assist countries that
combat drug production and trafficking, treatment better than the general regime is available (Pg.36,67).
Could the EU confirm that its GSP has been applied as authorized by GATT Decision of
25 June 1971 as generalized, non-reciprocal and non-discriminatory?
2. GSP beneficiaries may apply to obtain the EU's  special incentive arrangement for countries
demonstrating adherence to certain internationally recognized core labor standards or to certain
standards set by the International Tropical Timber Organization (Pg. 36, 68).
As for the Labor and Environment Programs, what results can the EU provide concerning the
beneficiary countries with these programs? Who is in charge of the supervision of these programs?
GSP was set out in the Decision of 25 June 1971, as generalized, nonreciprocal and
non-discriminatory. How does the EC justify this reciprocity?
3. Graduation from benefits applies to country-product category combinations, plus any country
whose share of a certain product in the EU's imports exceeds 25%. As a result, implicitly the system
disadvantages larger countries and discourages countries concentrating exports to the EU in a narrow
range of products (Pg. 35, 66).
Could the EU, as a matter of transparency to affected members, present in a more detailed
form the criteria used in the graduation scheme?
Rules of Origin1. The EU applies two different sets of rules of origin: preferential and non-preferential In, view
of the objectives of preferential arrangements, the rules of origin are generally more stringent than
non-preferential ones. Another aspect is the cumulation system, which allows partners to use each
other's materials to produce an originating product- There are three types of cumulation schemes:
bilateral, diagonal and full (Pg. 42, 18).
Could the EU explain why cumulative rules of origin should not be considered as barriers to
trade to third members? Is the EU measuring the im pacts on trade diversion that these special rules of
origin are creating in third countries?
Anti-dumping
1. The number of initiations of new investigations in 1999, which rose three-fold to 66 from an
average of 22 in the last three years, is likely to lead to a rising trend of measures in force once
investigations are concluded (Pg. 67, 88).
Could the EU give an explanation whether this trend is the result of the 1998 appreciation of
the euro or the beginning of a more protective practice?
2. EU's legislation on anti-dumping includes a provision on cumulation of imports concerning
injury analysis if three conditions are present: margin of dumping for each country more than the "deWT/TPR/M/72/Add.1
Page 40
minimis"; minimis''; volume of imports from each country not negligible; cumulative assessment of
the effects of the imports appropriate in light of the conditions of competition between imports andcompetition between imports and like products (Article 3, 3.3 of the Anti-Dumping Agreement).
Could the EU explain what are the criteria applied to the analysis on cumulative assessment?
3. EU's legislation, on anti-dumping includes provision on the Community interest that shall he
based on an appreciation of all the various interests taken as a whole, including the interests of the
domestic industry and users and consumers (Article 21 of the Council Regulation 384196 onAnti-Dumping).
Could the EC explain in what form and how these interests are considered during the
investigation process?
4. EU's legislation on anti-dumping includes pr ovision on price undercutting, requiring the AD
authorities to establish whether there has been significant price .undercutting by the dumped importsof the like product of the importing member (Article 3.2 of the Anti-Dumping Agreement).
Could the EU explain what factors are taken into account when conducting a price.
undercutting assessment.
Textiles
1. The EU has a basically open market for non-agricultural products, with a simple average tariff
of 4,5%. Sensitive products such as textiles and clothing have higher tariffs and quotas. The EU's
integration into GATT 1994 has, to date, liberalized 12 of 52 quotas, affecting only a handful of
suppliers (Pg. 39, 1).
Which results can the EU offer, concerning developing countries. to confirm that the
objectives of the ATC have been achieved? Have the value and the volume of exports from
developing countries to the EC increased in the last five years?
Eco-labeling1. The Commission has proposed to revise the scheme to establish the European Eco-label
Organization to develop the ecological criteria and the assessment and compliance verification
requirements, and also promote the eco-label. The Commission also established ecological criteria to
15 product groups, including paper, footwear and textile (Pg. 61, FN 106,107).
The eco-label schemes raise concerns about their trade distortive effects. Brazilian enterprises
are worded with the transparency and implementation of these schemes, once they are not given
adequate opportunity to make their views known in th e internal procedures of the adoption of specific
criteria and by the fact that the schemes discrimi nate against non-European production methods. What
are the measures taken by the EU to ensure a fair, transparent and non-discriminatory participation of
foreign exporters in the process of elaboration, adoption and implementation of eco-labels.
Agriculture
1. Notification m According to the Secretariat Report, since the entry into force of the WTO, the
EU has completed its notification obligations (Pg.30, 44).  However, according to document
G/AGINGIS/12 on Members' Usage of Domestic Support Categories, Export Subsidies and Export
Credits, page 19, the EU has not notified its total domestic support (green box, S&D box, blue box, dominimis and current total AMS for 1997. 1998, and 1999.WT/TPR/M/72/Add.1
Page 41
Could the EU explain why these notifications are not submitted? Could the EU explain when
these subsidies will be notified?
2. Food safety - Product regulations and standards are key market access issues. The EU's new
policy of "food safety" may lead to more stringent regulation of foodstuffs in the future, with
implications for market access conditions for expor ters (Pg.39, 4).  The EU has been arguing for the
application of the "precautionary principle" to trade in agricultural goods. But the Community also
argues that the "precautionary principle" should not be used as a barrier to trade. A Community'spaper on the issue, however, suggests that, in c onducting the risk assessment of a product, a
Government should not be limited to scientific evidences and should, therefore, consider other
elements that belong to the range of consumer concerns, political concerns and evert cultural
differences.
How does the EU see the application of the PP - which is not even a principle of international
law, but an element that was taken into account in the negotiations of some Multilateral
Environmental Conventions - to trade in agriculture without breaching the SPS agreement and.
therefore, creating a barrier to trade?
3. Blue box - Article 6.5 of the Agreement on Agriculture allows for direct payments under
production-limiting programs not to be subject to the commitment to reduce domestic support.
Could the EU explain how these programs have been implemented? Can the EU give data on
the programs related to the blue-box?
4. Food security - The EU sponsors the thesis that export subsidies are an important component
of the food security programs. However, exports of similar products from developing countries have
been affected by these practices.
How could the EU justify the distortion on trade created by these programs?
5. Sugar - The main mechanisms of the CAP are the guaranteed common prices and the
Common Market Organizations. The Berlin European Council in March 1999 reached political
agreement on Agenda 2000 and the Agricultural Council in May 1999 adopted the specific
regulations setting out reform of the CAP (Pg.95, 16).
However, sugar was not included in the reform. Not only subsidies to this sector are high, but
also the enlargement of the EU to Central Europe may increase the effect of market distortion to thissector. Could the EU anticipate whether sugar will be included in a future reform?
6. Animal Welfare - Among the new concepts the EU is including in its proposal on agriculture
in the WTO is the cone-opt of animal welfare. Inspection missions from the EU in Brazil are also
including welfare requirements as market access conditions to imports by the EU.
Since the concept of animal welfare is not Weed in a multilateral framework, bow could the
EU guarantee that such concept is not being used as barriers to imports, or at least bringing princes to
the level of those applied in Europe?
SPS
1. SPS measures applied by the EU are raising serious concern from third countries exporters,
Directive 96123/CE on residues control to animal products requires that exports are conditioned onstrict plans to control residues.WT/TPR/M/72/Add.1
Page 42
Why this directive has not been notified to the WTO? How the EU can justify the increasing
requirements in this area?'
2. The EU will impose the prohibition of imports of feed products that contain risk materials of
BSE from 2001. Is the EU planning to impose this re quirement also to countries that are considered
BSE - free? If so, how does the EU justify th is requirement in terms of the SPS Agreement?
3. Sanitary certification that are already under EU legislation are being submitted to additional
requirements when exported to certain member states. In case of animal feed, imports are submitted toDecisions 941309/EC and 97/199/EC. However, Fran ce is imposing additional requirements that are
causing supplementary costs to exporters. How the EU justifies this practice? Are these additional
requirements being notified to the WTO?
INDIA
Enlargement of the European Union
1. Both the Secretariat and Government Reports point out to the ongoing efforts towards
enlargement of the European Union. These efforts could progressively add as many as 13 new
countries to the European Union and the first batch may be integrated within the next five years,
We feel that there would certainly be trade diversions as a result of the enlargement of the
European Union. We would like the EC to explain if they have done any objective assessment of the
impact of this enlargement on the third countries, especially the developing countries.  Presuming that
such an expansion would lead to economic losses to third countries, as a result of deviation from the
basic MFN principle, what measures are being contemplated by the EU to address such a situation?
Regional Trade Agreements
The European Union is an important user of this instrument which is a derogation from the
basic MFN principle. In the Government report, it has been mentioned that all the RTAs it had entered
into are WTO consistent - especially consistent with GATT Article XXIV. India's views in this regard
are different. Our view is that the RTAs should complement the multilateral trading system. But given
the plethora of RTAs involving the EU, it is reasonable to assume that trade diversion is taking place.
We would request the EU to explain how they ensure in their negotiation of RTAs with their bilateralpartners that there is no trade diversion and especially that the developing countries don't suffer.
Agriculture
1. In para 21 of its Summary Observations, the Secretariat notes that "conditions of access on
agricultural products are affected by the opera tion of the CAP (Common Agricultural Policy)". In
para.22, it also notes that 'in addition to border measures, the Community spent some Euro 45 billion(US$ 50 billion) on the CAP in 1999, making agricu lture - at 45% of the budget - the most visible
item of Community expenditure". Para 26 of the Secretariat Report (page 46 thereof) refers to the
questions raised by Members in the WTO Committee on Agriculture in relation to allocation and
administration of EU's tariff quotas on agricultural products. We would like to hear from the EU on
the stops taken by them to improve the allocation and administration system of tariff quotas.
2. What is the position of the EC with respect to the re-classification of some processed
agricultural produce for subsidization purposes? What products have been affected by this technique?
What is the impact of this mechanism on EC levels of subsidization?WT/TPR/M/72/Add.1
Page 43
3. What is, the total amount of 'unused' subsidies, if any and in what sectors? We would like to
know as to how the EC intends  to deal with this issue.
4. Would the EC kindly explain the method it adopts to calculate the AMS and also how does it
differ among different agricultural products or sectors?
5. Has there been an increase in the green box expenditures by the EC? We would request the
EC to provide us with a list and breakdown of expenditure.
6. We would like to know the position of the EC with respect to the WTO inconsistency (under
the M ruling on poultry) of the representative price system as used in different forms, in the fruits and
vegetables, rice, sugar and molasses sectors.
7. We would also like to know the position of the EC with respect to the WTO inconsistency
(under the DSB ruling on bananas) of some of its licensing systems, particularly, in rice and sugar.
Tariff Structure
We note from para 21 of the Secretariat Report (page 43) that tariff peaks and tariff escalation
are in evidence especially in certain manufactured, agricultural and textiles and clothing items. We
also note that non-ad valorem duties are in place for around 10% of the tariff lines and these mainly
concern the agricultural products. Para 23 (page 44 of the Secretariat report) notes the complex nature
of the duty regime for the agricultural products, under which band of entry prices is established foreach period of importation. We feel that such a complex system in sectors of importance to the
developing countries would put a heavy burden on them and at the same time make the system less
transparent. We would like to know from th e European Union whether any steps are being
contemplated/ have been taken to simplify the tariff structure.
Use of Trade Defence Instruments
1. We note that the EU is the most frequent user of trade defence instruments. It has been
reported that during 1999, as many as 89 new cases were initiated and a majority of them were againstthe developing countries, including India. Even according to the EU's own report for 1998, India has
become the most targeted country for its trade defe nce action. As against the EC's claims that only 0,3
per cent of global imports are subjected to anti-dumping/ anti-subsidy measures, this figure in relation
to India's exports to the EU is 2.5%. We consider the excessive use of these instruments to be very
serious given the fact that the EU has traditionally registered trade surpluses, We are thereforeconcerned at this use as these actions not only cause trade distortions but also promote protectionist
tendencies. We also note from para 87 of the Secretariat report (page 67) that the EU's legislation
implementing the WTO AntiDumping Agreement also covers two procedures "anti-absorption" and
"anticircumvention". Box III.2 on page 68 of the same report indicates that the GATT panel had
earlier held a similar EU legislation that covered 'anti circumvention" to be inconsistent with GATTprovisions.
2. We would like to know from the EU on why and under what provisions of WTO they have
included procedures concerning "antiabsorption" an d "anti-circcumvention"? The EU is aware that the
issue of anti-circumvention is already being discussed under the aegis of the Committee and
Anti-Dumping Practices and so far ne consensus has been reached on dealing with this issue.
3. We would also like to know from the EC as to how they implement Article 15 of the WTO
Agreement on Anti-Dumping Practices which calls for special and differential treatment for the
developing countries,WT/TPR/M/72/Add.1
Page 44
4. We have bilaterally expressed our concern to the EU authorities that some of the proceedings
for trade remedy action suffered from serious procedural and technical flaws in violation of therelevant norms not only of the WTO, but also of the EC itself. In fact, in a number of cases,
complaints are filed and cases are initiated without much ground. As per one report, as many as 33%
of the cases were terminated without measures. While the BC could argue this to be a proof for its
fairness in application of the system, from the exporter's point of view, it affects its future market
access prospects. In fact, we feel that a number of weak investigations are initiated only to createuncertainty in the market. We would like the EU delegation to kindly let us know of the measures that
exist in their system to minimise the incidence of frivolous complaints.
5. Another trend noticed by India is that the EC  frequently allows evidently weak and flawed
complaints to be voluntary withdrawn, rather than being formally rejected. This allows greater scope
for revival of such complaints. We would like to k now from the EC as to why complaints were being
allowed to be withdrawn, rather than being rejected.
6. While Article 27 of the WTO Agreement on Subsidies and Countervailing Measures allows
S&D treatment for the developing, countries, we regret to note that in anti-subsidy cases involving
India, the EU authorities without appreciating the situation in India approached the issue from a
purely technical and legalistic manner. Also, in one instance, an anti-subsidy investigation wasinitiated even without holding the mandatory pre-initiation consultation. In a number of other cases,
the EU declined to accept the price undertakings offered by the Indian exporters. We would like the
EU side to give us reasons for this treatment to Indian exporters.
Measures directly affecting exports
1. Para 91 of the Secretariat Report (page 69) states "that all goods leaving the customs territory
of the Community are subject to customs supervisi on and must be presented to customs, with under
the normal procedure, an export declaration, co nsisting of a single ad ministrative document (SAD),
accompanied by pertinent documents`. It also states  that the customs authority may grant permission
to simplify the completion of formalities and procedures. The EC delegation may kindly give an
indication of the circumstances in which and the categories of exporters for whom these formalities
would be simplified.
2. Para 94 of the Secretariat Report (page 70) refers to guidelines for export of dual-use goods
and technology. We would like to know the details conc erning the list of such items, the, destinations
and guidelines thereof We note that there are certain destinations such exports may take place under
simplified procedures. Could the EC explain why such a distinction is maintained.
3. Please give us a list of categories of cultural goods in which export licensing requirements are
maintained.
Product regulations and standards
1. Para 66 of the Secretariat Report (page 59) relating to the regulatory framework for foodstuff
refers to the EC Commission's proposal to replace the 15  vertical directives in the field of hygiene and
controls of foodstuffs of animal origin with one single instrument. We would like to know if the
trading partners are fully consulted in this process.  We would also like to know the present stage of
drawing up of this directive.
2. Para 67 of the same report (page 59) states that the Commission is proposing a radical new
approach for consultations among Member states of the EU with regard to greater visibility of food
safety in the policy discussions. The Secretariat Report further notes that this development will haveWT/TPR/M/72/Add.1
Page 45
implications for the imported and export food given the leading role of the EC in the world food trade.
We want to know the present stage of these consultations. We also want the EC to ensure that thiswould not lead to measures more restrictive than ne cessary and that it would be least trade distorting.
3. With reference to Para 68 (page 59-60) of the same report, we would like to know the
countries with whom bilateral reciprocity-based agreements have been reached with regard to import
of products from third countries bearing geographical indications and designations of origin
established under third country law.
4. With reference to para 72 of the Secretariat Report (page 62), we would like to know from the
EC the problems faced by its Member States in meeting notification obligations, as it has been pointed
out that there 'appears to be no fully consistent practice among the Member States regarding the
notification obligation.
GSP Scheme
The Secretariat Report (para 68 on page 36) notes that the present GSP scheme of the EU
which was revised from 1 July 1999 contains a clause which provides for special incentives to
countries demonstrating adherence to certain intern ationally recognised core' labour standards or to
certain standards set. by the International Tropical Timber Organization. We strongly resist the
linkages between trade and core labour standards. We feel that the ILO is the right forum to deal with
the issue of core labour standards and the Singapore Ministerial Conference had settled the issue. We
do not agree that the EC has a right to link the GSP benefits to core labour standards or any other
non-trade related issue. We would therefore request th e EC to reconsider their scheme in this regard.
Movement of Natural Persons
The GATS calls upon Members to progressively remove restrictions on the movement of
service providers. As Members are aware, India has achieved a high degree of competitiveness in the
IT and software sectors. However, this advantage could not be translated into positive results due toabsence of liberal regimes governing visas and work permits. Our service providers have reported
serious restrictions in this regard in the EU's Member States. While some Member States like
Germany, UK and Ireland have announced some liberalisation measures for grant of visas, we feel
that a more coordinated action is required. We would therefore request the EC to consider measures
aimed at greater coordination among Member States for easy flow of IT and software professionals
from India. In a general manner, we would like to  hear from the EC on how they are implementing
their commitments under movement of natural persons under the GATS.
AUSTRALIA
Trade Agreements
1. The EU maintains an active policy of negotiating preferential trade agreements
To what extent does the EU take account of the potential for trade diversion when making
decisions on its regional and bilateral trade negotiations?
To what extent has the EU considered reductions in its MFN tariff rate when there is a
substantial volume of trade already enoying preferential access?
2. Australia notes that the EU's recent free trade agreement with Mexico contained very limited
coverage of agriculture.WT/TPR/M/72/Add.1
Page 46
How does the EU reconcile this approach with the provisions of Article XXIV?
Is the EU intending to adopt this limited coverage of agriculture in its future free trade
agreement negotiations, for example with MERCO SUR/Chile and the countries involved in the
Euro-Med process?
Agriculture
1. Australia has noted the preliminary results of the Commission's recent Geographical BSE
Risk assessment.
Can the Commission provide assurances that it has consistently applied its assessment process
in respect of the preliminary GBR assessments accorded to Member States and Third countries?
2. Australia notes the Commission Decision of 29 June 2000 regulating the use of material
presenting risks as regard,,, transmissible s pongiform encephalopathies and amending Decision
94/474/EC (L 1158/76). With reference to Article 6 (Import into the Community) paragraph 3(b)which states that "the provisions of paragraphs 1 and 2 shall only apply to import from third
countries" ... "which have submitted a dossier but for which the outcome of a risk assessment
identifying all potential risk factors is not satisfactory".
How does this relate to a country's GBR assessment? What risk factors are to be taken into
account, in determining if an assessment is 'not satisfactory', and how does the Commission proposeto set the benchmark for a 'satisfactory' assessment? Can the Commission provide advice on whether
it will follow OIE recommended guidelines, or the nature of the test that the Commission proposes to
apply, if the Commission has decided not to follow OIE recommended practice?
3. The Commission has announced that inwards processing arrangements (IPAs) will be
streamlined to allow exporters to purchase raw ma terials for export production on the world market.
Would the Commission advise how these IPAs will operate and, in particular, how it will
ensure that third country suppliers of raw materials can assured that they are not at a competitivedisadvantage in supplying these raw materials to EU processed food manufacturers?
Enlargement
1. The EU is facing a further major round of enlargement with the prospect of up to 12 more
countries joining the EU in the coming years. The accession of these countries to the EU will
obviously have a major impact on Australia's trade and investment relations with them.
What specific action is the EU taking to encourage the applicant countries to speed up the
process of bringing their ITN tariff levels into line with the EU's? What other steps are being taken by
the EU to ensure that the interim trade arrangemen ts with the accession countries lead to their full
membership of the EU Customs Union within a reasonable length of time as provided in Article
XXIV.5(c) of the GATT? How long does the EU anticipate this process will take? it will be before thevarious accession countries have fully adopted the Common External Tariff? (In agriculture, couldn't
this mean higher tariffs? Should we remind them of the provision in Article XXIV.5 that the joining
of a customs union should not result in higher tariffs against third countries?)
2. When these countries accede to the EU third countries will have the right to enter into an
Article XXIV.6 compensation process.WT/TPR/M/72/Add.1
Page 47
Has the EU formed a view on what would be appropriate base periods to use in calculating
the impact of EU membership on third countries' trade with these countries?
Given the significant fluctuations in traditional trade with these countries since they embarked
on economic transition, compared with trade flows prior to the transition process, will the EU
undertake to enter into a timely discussion with third countries to agree an appropriate base period for
calculating compensation?
3. The EU has reached an agreement with a number of applicant countries that it will reduce its
agricultural export restitutions to zero, and the applicant countries in central/eastern Europe will
reduce their tariffs on imports of EU agricultural products to zero (a so-called "zero for zero"
settlement).
In the discussion on base periods referred to above) will the Commission undertake to take
fully into account any increase in trade between the EU and the applicant countries generated by these
arrangements?
Anti-dumping and countervailing cases
1. We note from a report in April 2000 by the London firm of Rowe and Maw, that the EU
opened 65 Dew anti-dumping cases in 1999 compared with 22 cases opened in 1998. In the case. of
countervail cases, the EU opened 18 new cases in 1999 compared with only 3 cases for the wholeperiod January 1985 to June 1997.
Could the EU explain the background to this dramatic increase in the use of these trade
measures? Against the background that new cases have a "chilling" effect on trade even before
anti-dumping or countervail tariffs are Introduced, to what extent does the EU take account of this
effect, particularly when the trade from developing countries are involved? Has the EU made any
calculation, or aware of such work elsewhere, detailing the impact of its antidumping/cvd policies on
developing countries? What were the conclusions of these studies?
Shipbuilding
1. We refer to the meeting of EU Industry Ministers on 18 May 2000 when they discussed the
world market for merchant ships and the signing of a protocol agreement with the Government of
South Korea. aimed at what the EU Ministers referred to as "unfair competition".
Would the EU provide assurances that it does not intend to revoke its decision of June 1998 to
end operating subsidies for the EU shipbuilding industry on 31 December 2000? What forms of
assistance will continue to be available to the EU shipbuilding industry after that date?
Environment
1. We refer to the draft legislation proposed by the Commission on 13 June 2000 to the Council
and the European Parliament on waste electrical and electronic equipment and restrictions on the useof certain substances in eletrical and electronic equipment which, inter alia, includes trade bans on the
use of certain substances including lead, mercury and cadmium. It has been said that this draft
legislation has been proposed without first conducting an analysis of the risks associated with the
suspect materials in electrical and electronic equipm ent, and that it is possible that the environment
will be worse off because the environmental impact of  the alternative material., has not been studied.
Would the EU provide details of the scientific studies undertaken to justify these trade bans.WT/TPR/M/72/Add.1
Page 48
Would the EU explain how this draft legislati on is consistent with the Technical Barriers to
Trade Agreement which determines that non-tariff barriers to trade may be imposed only ifgovernments can show that the restriction is "necessary" for achieving a legitimate purpose such as
environment protection and does not have a disproportionate effect on trade.
2. We refer to reports that the Commission is drafting legislation that would ban the use of
cadmium in batteries.
Would the EU provide the details of the scientific studies on which this proposal is based?We note that the International Cadmium Association has proposed an industry-funded
recycling program for cadmium batteries as an alternative to the trade ban. What considerations would
need to apply for the EU to adopt the indu stry proposal as an alternative to the ban?
3. The EU recently tabled a paper outlining ies appr oach to the "precautionary principle" in the
SPS land TBT Committees. The paper calls for the elaboration of international guidelines on theapplication of the "Precautionary principle". It also notes that the approaches outlined in the paper
have been applied by countries for many years as part of their common practice in food safety and
environmental issues, both domestically and through international law. Given the paper's claim that
precaution is already common practice under existing international and domestic law,
What does the EU propose to add to the body of international law by elaborating international
guidelines on the "precautionary principle"?
How would such guidelines relate to existing WTO obligations?
Can the EU also explain its understanding of the role of science in decision-making on
measures to protect human, animal and plant life and health in circumstances where there is not full
scientific certainty about the level of risk
What plans does the EC have for its communication? Will it be revised in light of domestic
and international feedback.
Government Procurement
1. Access to the EU government procurement ma rket is restricted through the plurilateral
Government Procurement Agreement to which Australia is not a party.
What measures doe; the EU propose to take to improve access to its government procurement
market based on the principles of non-discrimination and national treatment?
Fisheries
1. Commissioner Fischler has been quoted as sa ying "... around 60% of our fish stocks are
over-fished and 40 % are in such poor state that they are under risk of depletion".
Given the serious pressures on EU fisheries and the concerns for the socio-econornic
consequences of the envisaged change in the Commons Fisheries Policy for the fishing industry, whatchanges are envisaged to the Common Fisheries Policy and what is the likely impact on the EU's
approach to the international rules and regulations applying to trade in fisheries products?
What will be the EU approach to the regime of tariffs currently applying to the import of
fisheries products?WT/TPR/M/72/Add.1
Page 49
General
1. "Since 1993, intra-EU manufacturing trade has significantly outpaced the growth of
EU-GDP."
Can the EU provide more details and comments on the goods and industry sectors driving this
intra-EU growth and reasons why? What is the situation regarding EU's manufacturing trade with
non-EU countries ? Any similar details on trade in se rvices, both intra-EU and with the outside world?
How does the EU measure the value of inward investment flows between member countries,
as one member country's inward flow represents another's outward flow. Presumably the overall EU
figures are the netted figures?
Can the EU provide further elaboration on the role  played by the euro in creating a "liquid
integrated marker for corporate debt", and in facilitating cross-border merger and acquisition activity
among other things?
Would the EU favour a more sharply focussed approach to a new WTO Round (that is,
mainly on enhanced marker access) if this paved the way for an early launch?
Automotive
1. An Australian automotive manufacturing company has indicated that it wished to export
limited numbers of a car model to the EU. The United Kingdom has introduced a new concessionaryscheme where low-volume imports (less than 10 to 15,000 units) into the UK could be required to
undertake a less comprehensive and less expensive type-approval process.
If the UK gives approval under this restricted and less comprehensive new vehicle
homologation method, would these cars have automatic ap proval to be sold in the rest of the EU (up
to the quota limit number)?
2. Australia and the EU have entered into a MRA on conformity assessment in the automotive
sector. At present, this MRA only extends to around 70% of relevant EC regulations.
Would the EU consider extending the MRA on conformity assessment to cover all of the
automotive products covered by relevant EC regulations.
Investment
Will the EU's focus on developing its internal markets, trade and investment lead to any
restrictions (explicit or otherwise) on outward investment?
With regard to post-MAI and -Seatde, what direction does the EU propose that WTO should
take with respect to agreements on investment?
Energy
What progress is the EU making towards the removal of coal subsidies?
What is the EU's policy towards the deregulation of the electricity and gas sectors in member
countries?WT/TPR/M/72/Add.1
Page 50
THAILAND
Food Safety
Paragraph 67 and 76 (pages 59 and 61)
1. Paragraph 76 of the secretariat report, the Commission stated that a WTO member may  only
impose more trade restrictive measures if there is scientific evidence (a risk assessment) justifying
measures leading to a higher level of protection than by applying Codex standards.
2. Paragraph 67 of the secretariat report notes that a Food Action Plan proposed by the EU is to
establish food safety as the primary objective of EU food law and change the regulatory framework
accordingly, including the control of foodstuffs through the entire chain. Scientific evidence is to
underpin the food safety policy, with the precautionary principle to be used where appropriate.
Thailand would like to express its concerns regarding the use of any foodsafety measures
which: a) are not in conformity with WTO agreem ents particularly the Agreement on SPS, b) are not
supported by sufficient and justified scientific evidence, c) lack transparency in terms of
implementation, and d) result in discrimination between the EU member states and third countries.
Moreover, in order to fully realize its policy objective on food-safety standard, the EU should,
at present, provide greater flexibility towards de veloping countries, while, on the long-term basis,
providing regular technical assistance in this area so as to help developing countries with their
capacity building in meeting such standard.
Could the EU provide information on the latest status on the Food Action Plan?
Proposal on a Directive on Waste from Electrical and Electronic Equipment:
1. The EU is in the stage of pro posing 2 directives concerning g waste from electrical and
electronic equipment. namely,
(1) Proposal for a Directive on Waste Electrical and Electronic Equipment (DWEE): 
regulating disposal practices of those equipments.
(2) Proposal for a Directive on the Restriction of the use of Certain Hazardous 
Substances in Electrical and Electronic Equipment: prohibiting Use of certain 
hazardous substances.
It is understood that these proposals have yet to be officially announced or notified to the
Committee on TBT Nevertheless, Thailand wishes to caution that these regulations, once
implemented, may impose additional and unwarranted burdens upon producers and exporters from
third countries especially those small and medium-sized enterprises (SMEs) in developing countries,
which are not yet capable of dealing with the recovery, recycling and disposal practices or able to
upgrade their production methods to be in conformity with the EU's restrictions on the use of certain
hazardous substances.
Thailand would appreciate further clarification in writing by the EU regarding the latest status
of these proposed Directives, and regarding any future accompanying measures that would help
alleviate or minimize possible negative impacts upon business operators, particularly in developing
countries, should these proposals become effective.WT/TPR/M/72/Add.1
Page 51
Common Agricultural Policy (CAP)
(a) CAP's expenditure1. Paragraph 1 and 11 (pages 88 and 92): CAP cont inued to be the EU's single most important
expenditure item, accounting for 45% of the Community's budget. The CAP resulted in higher food
prices for local Consumers than on world markets. The EU's expenditure on the CAP is mainly
channeled through the European Agricultural Guarantee and Guidance Fund (EAGGF). The
Guarantee section, which accounted for some 90% of CAP expenditure, mainly finances aid toproducers (74%) and refunds on exports to third countries (12%).
Given the high level of expenditures in agriculture support, accounting for 45% of the
Community's total budget, and given the relatively small share of agriculture sector in the GDP of
around 2%, could the EU provide the rational explanation as to the disproportionate allocation of
resources that has been the chronic and underlying causes of world market distortion in agriculturalproducts at the expense of the more efficient producers, particularly those among developing
countries?
Thailand would like to seek further clarification an the EUs price guarantee practices under
CAP reform 2000 on arable crops, beef and dairy products, particularly regarding direct payments to
producers through European Agricultural Guarantee and Guidance Fund (EAGGF), includingcompensation an farmers' income forgone underproduction limiting programmes.
(b) The EU's sugar regime
Paragraph 12 and Table 1V4 pages 92 and 94: The EU's sugar regime relies on export refunds
to dispose of surplus Community sugar production on world markets, as well as protection against
imports from third countries (except for imports from ACP countries under the Sugar Protocol to the
Lomé convention). Export refunds given to sugar producers in 1998 accounted for 71.2% of EAGGF
Guarantee section expenditure.
Thailand would like to express our concerns regarding the high level of support on sugar
export which can have distortive effect on world sugar price, resulting in a depressed market price.
Such policy directly affects other sugar exporting countries especially the developing countries.
Does the EU have any concrete plan to reduce and/or phase-out, with or without a future
round of trade negotiations, its export subsidy on sugar and to make greater use of Green Boxmeasures?
(c) Production limiting Programmes
Given the withdrawal of land from production under the Production Limiting Programmes.,
does the EU implement any plans at introducing alte rnative agriculture activities, unrelated to the
forgone production, in these lands? If yes. what are, the activities or crops being promoted as thealternatives by the authorities?
(d) GMOs
What EU member states currently maintain or contemplate on introducing requirement and/or
restrictions on the importation and marketing of GMO products in their respective markets?WT/TPR/M/72/Add.1
Page 52
(e) Export subsidy rollover
The existence of export subsidy rollover coul d be indicative of the overbudgetary provisions
and could be perceived as a signal that the EU is able to cut back on the export subsidy provision.
Does the EU have any plan to do away with such practice?
JAPAN
1. Regional trade agreements
Negotiations on free trade agreements (WT/TPR/S/72, p.35, para. 64)
Reference is made in the Secretariat Report that negotiations for the conclusion of free trade
agreements between the EU and Chile, and with MERCOSUR, “are not expected to be concluded
until after the end of the next round of multilateral negotiations under the WTO”.  Please explain in
detail the reason for this statement.
The EU has recently concluded free trade agreements with Central and Eastern European
countries. Besides these countries, the EU has also concluded a free trade agreement with Mexico,
which entered into force on 1 July 2000.  Furthe rmore, the EU has concluded COTONOU Agreement,
which is a preferential arrangement of opening its market for developing countries.  We understand
that the EU now has trade relations on the MFN ba sis with only six countries, namely, Japan, the
United States, Canada, Australia, New Zealand and the Republic of Korea.  Please explain the
motives and the rationale of the EU for concluding so many regional preferential trade arrangements.
Free trade agreement between the EU and Mexico
(WT/TPR/S/72, p.35, paras. 62 and 63)
With respect to the Free Trade Agreement between the EU and Mexico, it is said that 95% of
each party’s trade volume is covered by this agreement.  Please explain the ground for this statement,
as well as calculating methodology, including whether the figure is calculated in a one-way or two-
way direction.
Japan also understands that certain exceptions on agricultural products exist with regard to the
FTA between the EU and Mexico (i.e. the trade coverage is 62%).  Please explain the ground for this
statement, as well as calculating methodology, including whether the figure is calculated in a one-way
or two-way direction.
Compatibility of regional trade agreements with the multilateral trading system
Please explain the historical, political and economical background as to why the EU is
concluding various cooperation agreements and regional integration agreements with Mediterranean,
African, and Middle-East countries, as well as Mexico.  How is the EU able to assure the
compatibility of these movements with the multilateral trading system?  It would be highlyappreciated if the EU could make a commitment that EU’s existing measures on anti-dumping,
safeguards and import quotas will not be automatically invoked on behalf of its new Member States.
After introducing the System of European Cumulation of Origin, the required local content
ratio was raised on certain products.  This measure may be considered as a measure inconsistent with
Article XXIV.5 of GATT and could have a negative effect on trade by reducing imports to the EU.
Japan would like to request the EU to put the standards back to their previous ones.WT/TPR/M/72/Add.1
Page 53
Duty-free access given to the LDCs in the preferential arrangements
(WT/TPR/S/72, p.36, para, 67)
Are all products from least developed countries eligible for duty-free access?  If not, which
products are excluded from the treatment?
Special incentive arrangement for labour standards or for ITTO standards(WT/TPR/S/72, p.36, para. 68)
Please explain in detail what exactly are the special incentive arrangements that are given to
countries that show their adherence to certain labour standards as well as those standards set by the
International Tropical Timber Organization by submitting information on their measures related to
ITTO.
Investment
We would like to know what is the definition of "EU companies"?  With regard to investment
in the territory of the EU, please explain in detail with concrete examples the difference of treatment
between the EU companies and those companies esta blished in a country which has not concluded a
Cooperation Agreement with the EU (hereinafter refe rred to as "non-EU companies”). Although it is
possible to understand, to some extent, the restriction of investment in the services sector by referringto the EC’s schedules on services, we would li ke to know which laws and regulations should be
referred to in order to identify the restrictions of investment in the manufacturing industry. Please
provide such restrictions in a most comprehensive way possible with examples. What is the difference
in restriction between the EU companies and those companies established outside the EU?With
regard to investment in the manufacturing industry, please provide sectors where investment is notopen to non-EU companies only?  Please also provide sectors where higher levels of restrictions are
imposed on non-EU companies than on EU companies?
What kinds of incentives, such as subsidies, are there in the EU that invite investment? Please
exemplify subsidy and other preferential measures that relate to investment promotion. Are thesemeasures granted equally to European companies and non-European companies?
To which Organizations should we contact to seek information on the laws and regulations of
the EU in relation to investment?  Has a united enquiry point been established in the EU? What kind
of information is being provided through electronic means? Can the non-EU companies obtain suchinformation in the same manner as the EU companies?
2. New policy concerning food safety
(WT/TPR/S/72, p. 39, para. 4)
According to the EU’s new policy on "food sa fety", more restrictive measures will be
introduced on market access in the future.  Please describe in a concrete manner what kind of
measures are being considered.WT/TPR/M/72/Add.1
Page 54
3. Tariffs reductions on industrial products
(WT/TPR/S/72, p. 43, paras. 20 and 21)
Japan appreciates that the EU has bound all tariff rates.  However, we are concerned that,
although the EU is composed of developed countries, it still maintains tariff peaks, such as 20 per cent
for trucks and 10 per cent for automobiles, televisions and other audio-visual equipment.  As a result,the average tariff rate for industrial products remains at the rather high level of 4.5% (compared with,
for instance, 1.5 % for Japan).  Japan would like to request the EU to further reduce the tariff rates of
industrial products, including the tariff peaks.
Special tariff systems under the preferential agreements(WT/TPR/S/72, p. 47, para. 29)
Under preferential agreements, there seemingly exists:
(a) seasonal import restrictions on fresh tomatoes, etc.;(b) minimum import prices on flowers; and
(c) a special tariff system on citrus fruit.
Japan would like to have more detailed information on the administration and operation of the
above-mentioned measures.
Tariffs of Members which are candidates for the future EU enlargement
If the EU enlarges itself to include a new Member State, that member's tariff rates will be
adjusted to the level of the common tariff rates applied by the EU as of the date when such
membership comes into effect.  Japan is interested, in the context of GATT Article 24:6 negotiations,
in following such cases where the EU’s common tariff rates are higher than the tariff rates applied by
the new Member State prior to enlargement.
4. Quantitative restrictions and safeguard measures
State-trading (WT/T PR/S/72, p. 55, para.53)
The Report indicates that “a special regime applies to the EU's import arrangements with
certain (state trading) countries” and that “the general principle is “liberalization of imports, namely
the absence of any quantitative restrictions””.  Please explain in a concrete manner on these import
arrangements?
Safeguard measures (WT/TPR/S/72, p.56, para.58)
The Report states that “the EU completed the elimination of all quantitative restrictions
introduced or maintained under Article XIX of GATT 1947”.  Should any quantitative restrictions stillremain in whatever form, please indicate them.WT/TPR/M/72/Add.1
Page 55
5. Standards
(WT/TPR/S/72, p. 62, para. 74)
Vienna Agreement and Dresden Agreement
Paragraph 74 states that it is quite common that international standards are quoted in
European standards. While this is true, it does not necessarily capture the whole picture.  It seems that
there are several points where both the Vienna and Dresden Agreements need improvements,
especially regarding impartiality and transparency.
In the second sentence of paragraph 74, the words "commitment", for CEN, and "obligation",
for CENELEC are used respectively. What is the difference of usage? (If the
"commitment/obligation" is referring to the effe ct of the ruling in the Vienna and Dresden
Agreements on the results of the parallel voting for the standards, we understand that the Vienna and
Dresden agreements do not necessarily require implementation of all ISO/IEC standards as
CEN/CENELEC standards.  In the case of a ne gative outcome in CEN/CENELEC voting but positive
outcome in ISO/IEC voting, CEN/CENELEC are not necessarily required to implement the ISO/IEC
standard.  Furthermore, when ISO/IEC standards are adopted as CEN/CENELEC standards,
CEN/CENELEC members are obliged to implement them as their national standards, which is a duty
prescribed in the CEN/CENELEC principles, not  a duty created by the Vienna and Dresden
Agreements.)
The second and third sentences of paragraph 74 indicate the “high level of transposition of
international standards” for CEN and CENELEC. Can the EU provide information on the actual
difference in the situation, before and after the Vienna and Dresden Agreements came into effect?
Assuming that there was a substantial increase, does the EU think that the introduction of the 2
Agreements was the major reason?  (We believe that a high level of transposition of international
standards as CEN/CENELEC standards is not the result of the CEN/CENELEC
"commitment/obligation" to adopt international sta ndards in the Vienna and Dresden Agreements, but
mainly because of the strong influence that European countries have historically enjoyed in ISO/IEC
process, such as their voting power, geographical advantage.)
As far as Japan is concerned, we understand that the main objective of the 2 Agreements,
although not stated in paragraph 74, is to introduce a system for a parallel approval of standards
having the aim to avoid the duplication of work between the ISO/IEC and the CEN/CENELEC. This,
in effect, allows the CEN/CENELEC to lead the standard-making process in ISO/IEC. Some non-
European ISO/IEC Members are concerned by the situation, especially in relation to the
CEN/CENELEC-lead standards. In concrete terms, this process: (a) lacks openness, in that draftsunder consideration in the CEN (the so-called "prE N") are not accessible to non-European ISO/IEC
Members; (b) lacks transparency, in that the number of non-European ISO members allowed to
participate in the CEN is limited to a small number; and  (c) lacks impartiality, in that non-European
Members' rights are limited prior to the stage of DIS.
Recycling and recycling markings
Concerning recycling and recycling markings, Japan notes that the system of recycling and
marking differs among the European countries, which makes it unnecessarily difficult for companies
to abide by the regulations. We thus appreciate the EU's comment on this issue.WT/TPR/M/72/Add.1
Page 56
6. Government Procurement
Exclusion of certain sectors from the scope of the proposed new EC public procurement directives
(WT/TPR/S/72, p. 64, para. 79)
According to the press release, the European Commission approved last May that as utilities
in the telecommunications sector are now operating in a full competitive environment, this sector
would be excluded from the scope of the proposed new government procurement directives.  Once
these directives become effective, we understand that this will not affect other Member countries'
rights under the Agreement on Government Procurem ent (GPA), just because the EC has not included
telecommunications’ utilities in its entity lists of the GPA.
On the other hand, it is reported that the EC is envisaging, in the proposed directives, an ad
hoc mechanism enabling the exclusion of the othe r sectors gradually being liberalized from public
procurement rules, once liberalization and competition are effective in the electricity and water
sectors in particular.  We are very much interested in any future cases where this exclusion will
become a reality, since these two sectors are covere d by the EC's Annex III of the GPA.  We may thus
need to consider (as a result of the ceasing application of the new directives and, consequently, the
GPA to the sectors) some compensatory adjustme nt in relation to the rights and obligations of
Member countries.  We, therefore, would like to ask the EC for its concrete clarification as to what
criteria the EC will use when judging whether the utilities concerned are under effective competition,
and thus whether they qualify for exclusion under the coverage of the new directives.
In connection with the current government procurement directive relating to the water,
energy, transport and telecommunications sectors (93/ 38/EEC), we would like to know whether there
have been, since the inception of the current GPA in January 1996, any cases where utilities in these
sectors have been excluded from the application of the Agreement due to the fact that they were
judged as being exposed to effective competition.  If  so, we would like to ask the EC for its detailed
explanation as to what criteria were actually used when making the judgement.
The EC's discriminatory measures under th e GPA (WT/TPR/S/72, p. 65, para. 83, and p. 66,
Table III. 7)
Regarding the EC's Annex III entities of the GPA, the general notes to the Annexes stipulate
that the EC will not extend the benefits of the Agreement to the suppliers of particular Member
countries, on the basis of reciprocity, in respect of individual sectors covering water, electricity,
airports, ports and urban transport.  Consequently, all Japanese suppliers are excluded from the EC's
offers under the GPA for the electricity and urban transport sectors.  In light of the negotiating history
of the Agreement, we understand that those notes are attached to the EC's Annexes from a reciprocitypoint of view, whereby a Member not having made an offer for the corresponding sector, shall be
omitted.  For our part, we did not in fact make any offers for the domestic entities engaged in the
electricity and urban transport sectors and operating as a fully-fledged private company faced with
market competition.  The reason being that if we were to make offers under the auspices of the GPA,
we naturally thought that the Government could le gally make the offered entities comply with the
disciplines of the Agreement, which is not the case wi th private companies.  In this respect, it should
be noted that the "Teito Rapid Transit Authority" in Japan is indeed covered by Japan’s Annex III as
this Authority, in the position of a juridical person in a public law, is subject to the Transport
Ministry's supervisory control. Furthermore, public transport utilities operating in major Japanese
cities are also covered in that they are the internal  agencies of some sub-central governments listed in
Japan’s Annex II.WT/TPR/M/72/Add.1
Page 57
Under the circumstances, we would like to as k the EC for its view on removing the notes
relating to Japan’s suppliers, as we presume that opening up the electricity and urban transport sectorsto Japan would not cause any particular problem to the EC, as far as the reciprocity conditions are
met, as explained above.
7. Anti-dumping
In Japan’s view, there are cases where anti-dumping measures are abused by the EU. Under
the free-trade regime, anti-dumping is an exceptional measure, which should be used strictly in
accordance with the rules. We, therefore, appreciate the EU's comment on this issue.
In our opinion, the anti-dumping investigation on TV camera parts is an example of such
abuse.  The investigation, which is now terminated, was self-initiated by the investigating authorities,
notwithstanding the fact that there was not su fficient evidence.  We request that any future
investigations be conducted in a more transparent manner.
8. Subsidies - scheme of state aid (Shipbuilding)
Japan believes that any governmental aid, that would distort the market conditions, should be
eliminated in order to establish fair competitive conditions in the world shipbuilding market.
According to the Council Regulation (EC) No.1540/98 (establishing new rules on aid to shipbuilding),
all production aid in support of shipbuilding contracts is to be discontinued after the end of this year.
However, it was reported that some shipbuilders in EU are seeking for a continuation of the system
for production aid.  Please provide the latest information on this issue.
9. Export Credits
(WT/TPR/S/72, p.71, para. 100)
We understand that, while individual EU countries accede to the OECD's Export Credit
Arrangement, which aims at regulating public expo rt credit and tied aid credit with a view to
eliminating trade distortion resulting from credit accommodation, any export aid extended by the EU
itself through the European Investment Bank (EIB), i.e. through public export credit and tied aid
credit, is not subject to the Arrangement.  Coul d the EU confirm that our understanding is correct?
Moreover, should not the EU-affiliated aid instituti ons, including the EIB, try to ensure that their
lending practices comply with the Arrangement?
10. Agriculture
CAP reform (WT/TPR/S/72, p.95, para. 16)
Will the CAP be applied to any new acceding countries to the EU from middle eastern Europe
in the same way as it applies to the existing EU Member States?  If so, will the budget level foreseen
for the Agenda 2000 be sufficient to cover any enlarged expenditure caused by the accession?
WTO negotiations in agricult ure (WT/TPR/S/72, p. 96, para.18)
Will the reform process planned under the Agenda 2000 be continuously pursued as
scheduled, regardless of how the WTO agriculture negotiations proceed?
Export tax in the CAP reform progra mme (WT/TPR/S/72, p. 96-99, para.19-28)WT/TPR/M/72/Add.1
Page 58
New restrictions have been imposed on the use of export tax, which, up until now, was
permitted without restriction.  According to the new restriction, export tax can only be introducedwhen urgency exists due to the CAP reform.  Coul d the EU clarify the definition of the term "when
urgency exists"?
Agriculture Village Development Programme
According to what criteria does the European Commission examine rural development
programmes drafted by the Member States?  For instance, the encouragement payment for grass fields
in France does not seem to have been approved in a positive manner.  Is payment through the rural
development programme only cover to such factors as extra costs or a loss of income?  Are not such
measures sufficient in order to function as an incentive?
11. Maritime Transport
(WT/TPR/S/72, p.136, paras. 128 and 130)
Are cabotage trades open to non-EU vessels?
Please provide a copy of the document entitled, "The third Community report on the
implementation of Regulation 3577/92, adopted on 24 February 2000."
Please provide information on every "state-aid programme", state-by-state.
Can we understand that the tonnage-tax schemes, such as those implemented in some EU
countries, are included in such "state-aid programmes"?
Please explain in a concrete term about the "state-aid" which cuts labour costs.Please provide the number of ships registered under the national flag of each Member, as well
as the number of crews thereof, year-by-year after the introduction of the "second registries" or the
scheme of international shipping.
In comparison to the normal-registry ships, please provide in terms of trade the possible
effects of cost-reduction, due to such advantages as manning, granted to "second-registry" ships.It is reported that “second registries” have recently been instituted in Italy and Spain. Please explain
the reason for such a scheme. We would like to know, in particular, whether there have been any other
specific reasons than those already provided by countries having introduced the registries beforehand.
If there are any support measures by a state for “second-registry” ships, please provide the details.
12. Telecommunications (market access in telecommunications)
Japan has requested the improvement of the interconnection rules in Germany, as well as a
reduction in the licensing fees in both Germany and France. In Japan’s view, the obscure
interconnection rules and practices, as well as the high licensing fees, hamper fair competition,thereby providing an obstacle to market access by a foreign company.  Please explain the EU’s view
on this point.
Licensing fees in Germany and Fr ance (WT/TPR/S/71, p. 125, para. 105)
Concerning “the level of fees” in the last line of para. 105, Japan would like to highlight the
fact that the licensing fees in Germany and France are extremely high.  In Germany, a license of atelephony service throughout the country costs 3,000,000DM in Germany, while in France, the licenseWT/TPR/M/72/Add.1
Page 59
fee for a nationwide service is 750,000FF for it s application combined by an annual fee of
1,500,000FF for administration purposes.  This is an excessive burden for new entrants into thetelecommunications market.  In order to promote market entrance, Japan requests the German and
French Governments to take appropriate measures for reducing the excessive financial burden.
Furthermore, Japan requests the EU to take concrete measures to urge both Governments to remove
such obstacles. Japan thinks that the EU should establish a common standard in that the license fees
be calculated to cover only the administrative costs.
Interconnection Rules in Germany (WT/TPR/S/72, p. 125, para 106)
With regard to the “concerns about interconnection” in the third line, Japan wishes to refer to
the obscure interconnection rules in Germany.  New entrants in the German telecommunicationsmarket remain at an extreme disadvantage and in an unfair situation, such as through sluggish
negotiations (approx. one year) in view of obtainin g an interconnection with Deutsche Telecom (DT),
the situation of a unilateral cancellation of negotiations by DT and the imposition of a down payment
of a one year interconnection line rate.  The German Government should establish indiscriminate and
concrete rules on the interconnection conditions between DT and other telecommunication operators,and thus prevent DT from abusing its dominant status.
13. Others
EC Directive for restricting tobacco products
The EU seems to be discussing, in view of adoption, a proposal for EC directive concerning
the manufacture, presentation and sale of tobacco products.  Japan understands that, in the proposal,
there is a provision to prohibit the use of certain adjectives, such as “mild”, which already appeared
on tobacco products, as such adjectives may cause consumers to regard the tobacco products carrying
such adjectives as safer than others.  Japan is concerned that such a provision may be too trade-
restrictive for the protection of public health.  We wish to have the EU’s view on this issue.
Excessively trade-restrictive environmental rules
Japan agrees with the EU on the importance of environmental issues. However, we are
concerned about the excessively trade restrictive nature of the environmental regulations now underconsideration and we hope that the EU will come up with a well-balanced and reasonable regulation.
We would like to invite the EU's comment on this issue.
We understand that the Draft Directive on Waste Electronic and Electrical Equipment
(WEEE) as well as that on the Restriction of the Use of Certain Hazardous Substances in Electricaland Electronic have been submitted for approval by the European Parliament and the Council, and
that the Draft Directive on End of Life Vehicle (ELV) as well as that on Waste Electrical and
Electronic Equipment are being considered. We would like to reiterate our view that the contents of
these regulations must be fully consistent with the TBT Agreements, without excessive trade
restrictive effects.WT/TPR/M/72/Add.1
Page 60
REPUBLIC OF KOREA
1. Tariffs
(Secretariat’s Report, page 43, paras. 20-22)
For 1999, the average tariff rate of the Community on all imported items is estimated at 6.9%,
with 4.5% for non-agricultural products. However, certain products, including textiles and clothing,electrical home appliance and automobiles, are subject to tariff peaks and tariff escalation. Korea
wishes to know whether the EU plans to lower such higher tariffs on these items.
2. Anti-Dumping
(Secretariat’s Report, page 67, para 87)
The number of anti-dumping investigations has drastically increased to 86 cases in
1999 from 29 in 1998, including nine cases agai nst Korea. The investigations conducted
found out that most of these 86 cases were not in breach of the EU anti-dumping regulation, a
fact that illustrates that such regulation may be abused by domestic interests and used as animport barrier. For example, following the finding that a case is in conformity with the EUanti-dumping regulation, some EU companies file  again the same anti-dumping case against
the same foreign companies often in a very short period of time and sometimes in the samemonth than the finding was pronounced – what  basically amounts to “chain complaints”.
Korea urges the EU to be more vigilant in operating its anti-dumping regime, given that therepetitive and unwarranted initiations of anti-dumping investigations are burdensome notonly for exporters but also importers as they create distortions in their business operations.
Korea is also concerned about EU’s procedures of “anti-absorption” and “anti-
circumvention”. As the Secretariat writes, absorption refers to instances where there is no movementor insufficient movement in the selling prices of the dumped product on the Community market from
the imposition of a definite anti-dumping duty. Korea is concerned that connotation of “absorption”
may be too arbitrary. Also, the definition given of  circumvention in Article 13(1) of the EU anti-
dumping regulation is very broad and complicated. In Korea’s view, it could open the door to various
interpretations which can affect companies that are in fact not circumventing anti-dumping duties.
As these anti-absorption and anti-circumvention procedures are not covered by the WTO
Anti-Dumping Agreement, Korea believes that it may not be desirable to resort to these procedures as
there is a risk that they go against WTO spirit.
3. Shipbuilding
(Secretariat Report, page 112-113, paras. 66-69)
It is Korea’s understanding that the EU is increasingly streamlining state aid in the
shipbuilding sector, although there still remains measures granting aid. Korea would like to be
provided with more information on how the re maining aid is compatible with the WTO SCM
Agreement.
Also, Korea would appreciate it if the EU could elaborate on the “Euro-built” requirements
and provide details on its provisions, including its compatibility with the WTO SCM Agreement.WT/TPR/M/72/Add.1
Page 61
4. Government Procurement
(Secretariat’s Report, page 63, para. 77)
According to the Secretariat’s report on page 63, the Commission has noted that “the EU’s
efforts to promote greater competition [in the field of government procurement] are failing to meet
initial expectations”. The report also mentioned that “New policy proposals for this area are foreseen
by the Commission”.
What are those proposals? How will they promote competition in government procurement?
Can we expect these proposals to go beyond those briefly discussed in paragraphs 79 to 81?
5. Conformity Assessment
(Secretariat’s Report, page 58, para.63)
In the EU, imported products must comply with essential technical requirements and get the
CE mark to be allowed to be placed on the market. However, the procedure to get approval can be
lengthy and delay market access to new products, especially when a notified body is required to assessthe conformity of these products. From Korea’s standpoint, this problem could be partially remedied
if the EU were to expand the number of mutual recognition agreements.
Is the EU considering signing new such agreements with other countries (e.g., Korea) than the
current five countries with which it already has MRAs?
6. Competition Policy
(Secretariat’s Report, page 81, para. 128)
The Report mentions that “Under the new regime , vertical arrangements between firms whose
combined market share is less than 30% enjoy a safe haven from the application of Article 81(1),unless the arrangement contains blacklisted restrictions.”
What are these blacklisted restrictions?
BOLIVIA
1. How has the European Union put this priority into practice in the light of Article 10.2 of the
Agreement on the Application of Sanitary and Phytosanitary Measures?
2. What measures is the European Union taking to reverse the declining trend in exports of
agricultural products from developing countries to the Community market?  According to the
document by the WTO Secretariat, these exports fell from 30.5 per cent in 1990 to 28 per cent in 1998
(G/AG/NG/S/6, page 2, paragraph 3).
In the chapter on trade policies by sector of the Report by the Secretariat, it is stated that the
Common Agricultural Policy of the European Union absorbs 45 per cent of the Community's budget,
and has been the cause of domestic food prices that are higher than on world markets, as well as
having negative effects on the environmental condition of rural areas (page 88, paragraph 1).WT/TPR/M/72/Add.1
Page 62
3. How can the European Union reconcile its Common Agricultural Policy with its theory on the
benefits of a free market and openness in general if it constitutes a heavy burden for the population?
4. How can the European Union reconcile its Common Agricultural Policy with its
environmental considerations if this policy damages the environment, as indicated in the Report?
5. How can the European Union reconcile its Common Agricultural Policy with its general
approach to sustainable development if the Policy is detrimental to developing countries, exacerbating
their poverty in general and that of rural populations in particular, a situation that can be seen in the
continual growth of urban poverty belts?
6. How can the Common Agricultural Policy be justified in view of its negative impact on the
environment and in particular how does it comply w ith Article 6 of the Treaty on the European Union,
which requires the integration of environmental concerns into all EU policies (page 6, paragraph 11,
of the Report by the Government)?WT/TPR/M/72/Add.1
Page 63
ANNEX II
COMMENTS AND RESPONSES BY THE EUROPEAN UNION
(Consolidated version supplied by the European Commission on 9 October 2000)
CONTENTS
Page
I. ECONOMIC ENVIRONMENT 65
a) Recent economic performance 65
b) Employment generation strategy 66
c) Investment regulations 68
d) Competition policy 71e) WTO Dispute settlement, Trade Barriers Regulation (TRB) cases;
preferential agreements; notification of RTAs; EU-ACP PartnershipAgreement; market access for developing, particularly least-developedcountries; GSP 75
f) Enlargement of the EU; conditions for Central and Eastern European Countries 89
g) Internal Market; trade competencies between the EU and Member States;
non-transposed Directives 94
h) Transparency 95i) Miscellaneous 98
II. TRADE POLICY BY MEASURE 98
a) Customs procedures; import authorisation requirements; customs valuation 98
b) Tariffs; tariff quotas 101c) Rules of origin 104
d) Technical regulations and standards (national product legislation) 104
e) SPS measures; food safety; precautionary principle 116f) Labelling requirements 128g) Anti-dumping measures and other trade defence measures 129h) Government procurement 134i) Export procedures (for products subject to veterinary and health supervision) 140
j) State aid 141
k) Intellectual property rights (protection of undisclosed data) 142l) Miscellaneous 151
III. SECTORAL MEASURES 152
a) Agriculture (CAP, export subsidies, domestic support) 152
b) Common Fisheries Policy 167c) Manufacturing; textiles and clothing; pharmaceuticals; shipbuilding 173d) Services; access for natural persons; consolidated EC-15 Schedule,
common legal regime, financial services, telecommunications, transport,
professional services, audio-visual services 179
e) Electronic-commerce 202WT/TPR/M/72/Add.1
Page 65
TPR S ECTION I
ECONOMIC ENVIRONMENT
I-a) Recent economic performance
Question from Australia (Q.25)
"Since 1993, intra-EU manufacturing trade has si gnificantly outpaced the growth of EU GDP."
Can the EU provide more details and comments on the goods and industry sectors driving this ...
growth and reasons why?  What is the situati on regarding EU's manufacturing trade with non-EU
countries?  Any similar details on trade in services, both intra-EU and with the outside world?
Intra-EU trade is expanding as European product markets become more and more integrated.
Structural changes account for a large part of the integrative dynamism, most notably the Single
Market Programme, which has laid down the foundation for greater coherence and markettransparency. By removing barriers to trade, and by pushing market liberalisation, the Single Market
Program has been one of the main driving forces behind the rapid growth in intra-EU trade in
manufacturing. In this respect, it is worth noting that intra-EU manufacturing trade has outpaced GDP
growth since 1993 even though the manufacturing share of GDP has been declining. The
establishment of the European Monetary Union should provide additional impetus to the integration
process, stitching European product markets together even more closely.
Global forces are also having a discernible impact on trade in manufacturing, as firms increasingly are
marketing products globally, taking advantage of more liberal trade regimes worldwide. The
observation, that growth in extra-EU manufacturin g trade has surpassed growth in manufacturing
trade within the EU since 1995, serves as a good indicator of the powerful impact from globalisation.
Compared to trade in manufacturing, services still make up a smaller share of total trade, though
deregulation of previously regulated industries and the gradual removal of trade restrictions are
boosting trade volumes in services. These structural changes are occurring at the European as well as
the global level. Therefore, intra- and extra-EU trade in services are expected to expand further in the
future.
Question from Australia (Q.26)
How does the EU measure the value of inward investment flows between member countries, as one
member country's inward flow represents another' s outward flow.  Presumably the overall figures are
the netted figures?
As a matter of achieving consistency, investment flows within the Community are measured at the
level of the source country. In accordance with th e source level approach, investment inflows into one
Member State are computed from the total outflows to that country from other Member States.Subsequently, net inflows for a particular Member State may be gauged by subtracting total outflows
from total inflows, where the latter is calculated as explained above.
Question from Australia (Q.27)
Can the EU provide further elaboration on the role pl ayed by the euro in creating a "liquid integrated
market for corporate debt" and in facilitating cross-border merger and acquisition activity amongother things?WT/TPR/M/72/Add.1
Page 66
The major achievement since the introduction of the euro has been the progress in creating a euro-area
financial market. The weight of the euro area in the international economy and in trade has guaranteed
that the euro is already a leading world currency. However, issuance of euro-denominated debt since
January 1999 has exceeded all expectations. The euro has rapidly become an attractive alternative to
the dollar for issuance, with international bond i ssuance split more or less evenly between the two
currencies.
Even more notable has been the extraordinary grow th in the corporate bond sector inter-linked with
the marked increase in merger and acquisition activity seen in the euro area over the last 18 months.
Euro-denominated issuance increased more than three-fold in 1999 compared to 1998. This year
market conditions have been less than ideal, with widening credit spreads and volatile equity markets.Nevertheless, corporate issuance has remained strong - pointing to the stability of the euro bond
market as a whole. Corporate bond issuance will  undoubtedly continue to increase as corporate
restructuring in Europe proceeds, providing an alte rnative to bank-financing for the corporate sector,
thereby facilitating the process of structural change.
Oral Question from Norway
Due to our close economic ties with the EU, we hav e a strong interest in the economic developments
within the Union. One of these developments, which a ffects our trade with the EU to a great extent is
the establishment of the Economic and Monetary Union. For us it would be of interest to hear how the
Commission evaluates this process so far, and how this is expected to influence growth within the
Union.
The impact of the euro on the economic performance of the euro area has already been noticeable.
The renewed commitment to macroeconomic stability and the removal of intra-euro-area exchange
rate fluctuations helped the countries of the euro area to withstand the financial market turbulence in
1997/1998. While the euro area could not hope to escape the effects of this financial turbulencecompletely, the negative consequences for growth and employment were only limited and transitory.
The euro is removing risks and uncertainties that deter investment and it is contributing to a better
allocation of savings. More efficient, wider and deeper financial markets are benefiting industry and
consumers. They minimise the cost of capital and increase the range of available financial productsand services.
Economic fundamentals in the euro area have not been as good as now for decades. As the EU
continues to enjoy sound economic fundamentals and a favourable external environment, real GDP
growth in both the EU and the euro area should accelerate to above 3% this year and next. All in all,we expect a steady recovery with equally steady gains in employment. Unemployment in the euro
area is expected to fall to 8.5% in 2001, i.e. more than three percentage points below the 11.6% peak
attained in 1996.
I-b) European Employment Strategy
Question from Peru (Q.1)
One of the central objectives of the EU's macroeconomic policy is job creation.  The European Union
has made considerable progress in lowering the jobless rate.  In order to make the economy more
efficient, a Community-wide employment strategy has been in place since 1998, with national actionWT/TPR/M/72/Add.1
Page 67
plans for each member State, as indicated in the Report by the Secretariat.  Could the European
Union  provide further details of what this job creation strategy entails?
EU employment policy
There have been major advances in EU employment policy since 1995, notably based on Title VIII of
the 1997 Amsterdam Treaty, which is entirely devo ted to Employment.  In particular, Article 127
provides that the objective of a high level of employment shall be taken into account in the
formulation and implementation of all Community  policies. To implement this article, the
Commission has issued several Communications that – based on Article 127 – draw attention to the
scope and potential that other Community policies and initiatives have to promote employment in the
EU while being consistent with the Broad Economic Policy Guidelines and the EmploymentGuidelines.
A second factor of progress refers to the new regulation for the European Social Fund (ESF) emerging
from the Agenda 2000. The new Structural Funds regulations to cover the years 2000-2006 and, in
particular, the ESF establish a direct financial link  to the European Employment Strategy. By virtue of
the new Regulation, the ESF gears its huge potential – both in terms of financial scope and policy
focus – to support the accompanying National Action Plans. The programming of the next generation
of ESF progra mmes will be based on this integrated approach.
The European Employment Strategy is based on the conviction that concrete action is required in four
specific ways: (i) establish clear quantifiable and verifiable targets for activation and prevention; (ii)
monitor how these targets are achieved through regular country surveillance; (iii) create peer pressure
at European level, as we are facing the same challenges and the same problems; (iv) develop solutionsand models through benchmarking and exchange of best practice
, if necessary by using a combination
of European and national financial assistance. An effort is made to benchmark the policy mix, the bestcombination of actions, rather than individual programmes in the quest towards the set objectives.
Peer pressure through annual examination and comparative review is used to steer the policy courseand enhance the effectiveness of action. This peer pressure is further strengthened by the adoption of
recommendations by the Council to individual member states, to encourage progress.
The advantages of such a method have become clear since the European Council launched the so-
called Luxembourg process in November 1997. A balance has been established between the co-ordination at the EU level in defining common objectives and outcomes, and the definition of the
means and conditions under which programmes and policies are implemented which is left to
individual Member States, who are responsible for their employment policy. Finally, the European
Employment Strategy must be consistent with th e framework conditions set by the Broad Economic
Policy Guidelines, which call for budgetary consolidation and sound public finances.
The European Employment Strategy has become the ke y vehicle for a new paradigm of an integrated,
comprehensive and more coherent response, across four pillars. The first Pillar on employability aims
at increasing the access of the unemployed to the labour market, by ensuring that they have the rightskills and the incentives and by promoting labour markets open to all. The second Pillar on
entrepreneurship refers to the creation of an entrepreneurial culture in Europe by making it easier to
start-up and run a business and to employ people in it. The third Pillar on adaptability aims at making
both employed people and the organisation of work capable to face the structural change. Pillar IV
(equal opportunities), enables both men and women to participate in the world of work with equal
opportunity and equal responsibility. Assembled around these four Pillars, the European Commission
proposes every year Employment Guidelines (EGs) for action. There are 21 concrete EGs for year
2000 that Member States have to reflect in their yearly National Action Plans.WT/TPR/M/72/Add.1
Page 68
These EGs pose a number of concrete challenges and clear objectives for social policy in general and
social protection in particular. EGs 1 and 2 commit the Member States to shift from passive and
curative policies to active and preventive action to offer a new start to young and adult, long-term
unemployed job seekers before their reaching 6 and 12 month of unemployment, respectively. EG 3
establishes a benchmark for the use of training and other employability measures to benefit at least20% of the unemployed. EG 4 requires a review and refocusing of tax and benefit systems to provide
incentives for unemployed and, in particular, ageing workers to take up work to develop lifelong
learning and remain in the labour market. EGs 6, 7 and 8 commit the Member States to easing the
transition from school to work and to develop a skilled labour force capable to adapt to technologicaland economic changes by means of lifelong learning, particularly in the field of information and
communication technologies. EG 9 promotes a labour market open to all and in particular  to those
disabled and ethnic minorities and other groups and individuals in disadvantage. EGs 10 and 11
commit the Member States to reduce red tape, and other administrative burdens as well as to eliminate
obstacles in particular in tax and social security systems which may prevent people from setting up an
enterprise or become self employed. EG 12 commits the Member States to explore the possibilities
offered by job creation at local level, in the social economy. Finally, EGs 18, 19, 20 and 21 advocate a
gender mainstreaming approach in implementing the guidelines and address the flanking policies ofchild care and family friendly policies as well as eliminating obstacles for the entry into labour force
of men and women after an absence, thereby promoting equal opportunities in the labour market.
The 23-24 March Lisbon European Council marked a further breakthrough in the EU's drive to
strengthen employment, economic reform and social cohesion as part of a knowledge-based economy.
The strength of political commitment at EU level was underlined by the decision to hold a meeting of
the European Council every Spring to review progress made in these fields.
The Lisbon European Council recognised the vital importance of developing a competitive, dynamic
and knowledge-based economy in the EU, particularly  by exploiting the potential of the information
society and promoting research and innovation.  It also underlined the common challenges faced by
Member States in modernising social protection systems and promoting social inclusion.  These areareas where further co-ordinated action will be taken at EU level.
The Lisbon European Council recognised the achievements of the Luxembourg Process and set the
EU new ambitious targets in the employment field.  These included raising the employment rate from
an average of 61% today to as close as possible to 70% by 2010 and increasing the number of womenin employment from an average of 51% today to more than 60% by 2010.  The European Council
identified four key areas that should receive particular attention in this context over the coming years:
improving employability and reducing skills gaps, particularly through improved employment
services; giving higher priority to lifelong learning;  increasing employment in services; furthering
equal opportunities and making it easier to reconcile working life and family life.
I-c) Investment regulations
Question from Canada (Q.10) – General questions on Investment Policy
Please provide an update on major privatisation initiatives that have been undertaken since the last
review in 1997 and future plans for privatisation over the next few years.
The Commission's comprehensive blue-print for an integrated and competitive financial services
sector has been explained in detail in its Communication of 28.10.1998 (COM 625) "Building a
Framework for Action for Financial Services",  and of 11.5.1999 (COM 232) "Action Plan for
Financial Services". Both documents are available on the European Commission's Web-site.WT/TPR/M/72/Add.1
Page 69
Country-specific Questions:
12. France:     Could the EU describe the “golden share” provisions, which have been invoked in the
privatisation of certain French firms?
The French State holds a golden share in the capital of Aérospatiale Matra, Thomson CSF and Elf.
This golden share is coupled with rights aimed inter alia  at ensuring security of supply for the State in
respect of energy or defence.  In the case of Aérospatiale Matra, the golden share was abolished upon
the formation of EADS and replaced by contractual arrangements.  The rights attaching to the golden
share were never used.  In any event, the golden share is in conformity with WTO rules.
Question from Canada (Q.19)
Trade Policies and practices by measure, (4) Measures affecting production and Trade,
(i) Legal framework  for business, (a) Company law, para 102
The Secretariat Report notes that restrictions on investment continue to apply in various forms of
transport (including inland waterway, maritime cabotage, and air transport), and to financial
services.  What are its plans for opening these sectors to foreign investment?
The Commission is not aware of any restrictions on foreign investments in the financial services
sector.
Question from Australia (Q.31)
Will the EU’s focus on developing its internal markets, trade and investment lead to any restrictions
(explicit or otherwise) on outward investment?
No. We do not believe that our markets can be devel oped through restrictions of outward investment.
The basic principle is that movement of capital is free.  In this respect Art 56 prohibits  “all
restrictions on the movement of capital between Member States and between member States and third
countries”  (56.1) and “all restrictions on payments between Member States and between member
States and third countries ” (56.2).
Question from Australia (Q.32)
With regard to post-MAI and Seattle, what direct ion does the EU propose that the WTO should take
with respect to agreements on investment? 
At the international level, a framework of multilateral rules with the objective of securing a stable and
predictable climate for FDI world-wide can greatly enhance investors’ propensity to invest abroad.
The EU is, and always has been, in favour of a WTO role in producing substantial rules on FDI. We
view a New Round as the best opportunity to negotiate multilateral investment rules.
Such rules should be based on the principles of non-discrimination and ensure the right balance
between, on the one hand, improving transparency, predictability and protection of investment activity
and on the other hand, recognising and strengthening the ability of host countries to regulate investors
activities, in the pursuit of domestic objectives.WT/TPR/M/72/Add.1
Page 70
In general, we should be committed to efforts in terms of capacity building towards developing
countries, in parallel with the inclusion of investment rule-making in the WTO.
Question from Japan (Q.9) - Investment
We would like to know what is the definition of "EU companies"?  With regard to investment in the
territory of the EU, please explain in detail with  concrete examples the difference of treatment
between the EU companies and thos e companies established in a country which has not concluded a
Cooperation Agreement with the EU (hereinafter re ferred to as "non-EU companies”). Although it is
possible to understand, to some extent, the restriction of investment in the services sector by referring
to the EC’s schedules on services, we would like to know which laws and regulations should be
referred to in order to identify the restrictions of investment in the manufacturing industry. Please
provide such restrictions in a most comprehensive way possible with examples. What is the differencein restriction between the EU companies and t hose companies established outside the EU? With
regard to investment in the manufacturing industry, please provide sectors where investment is not
open to non-EU companies only?  Please also provide sectors where higher levels of restrictions are
imposed on non-EU companie s than on EU companies?
For the purposes of freedom of establishment (i.e. the possibility for a company to set up branches or
subsidiaries in another Member States) EU companies are defined in Article 48 of the Treaty as
"companies or firms formed in accordance with the law of a Member State and having their registered
office, central administration or principal place of business within the Community".
In practice, this means that a company set up in a Member State by Japanese shareholders (even at
100%) would still be regarded for the purposes of freedom of establishment as an "EU company".
As far as inward foreign investment is concerned, for instance the investment by a Japanese company
in a European company, this is very much a matter of national law.
'Companies or firms' means companies or firms constituted under civil or commercial law, including
co-operative societies, and other legal persons governed by public or private law, save for those which
are non-profit-making."
In principle Article 73b of the Treaty provides for equal treatment of capital movements (which
includes direct investment operations) with respect to operations carried between Member States andbetween Member States and third countries. However, Article 73c(1) grandfathers the continuation of
any Community or Member State differential regimes with respect to direct investment or
establishment which already existed on 31/12/1993 and Article 73c(2) allows the adoption of common
regimes in these areas. Any tightening of existing regimes requires unanimity among Member States.
Examples of possible existing differential Community regimes could be the application of a
reciprocity requirement in the area of financial services to a non-WTO member.
Manufacturing industry
There are very few remaining restrictions on investment in this area. Any restrictions that do exist are
pre-1994 measures with some fairly historic rationale. Thus, for instance, for Ireland, one can see
from OECD reservations that "investment by reside nts of non-EU member countries in flour milling
activities" is restricted. However more generally with respect to both internal EU operations and
operations with third countries the general exceptions of public security, public order, armaments etc.
apply (e.g. thus investment in a defence industry will undoubtedly be subject to national approval) asWT/TPR/M/72/Add.1
Page 71
well as restrictions which are considered to be in the public (non-economic) interest, as established in
the case law of the European Court of Justice.
Sectors where higher level of restrictions imposed
As with all other economies the principal area where restrictions exist are in areas, such as transport
and fishing where operations are governed at an international level by bilateral arrangements. Here,the progression from bilateral Member State to bilateral EU agreements should be borne in mind.
Thus, for instance, Community ownership and control requirements have replaced national ownership
and control requirements in the airline sector for licensing purposes. Accordingly, the implications of
such flagging requirements should be interpreted in terms of the development of the EU as an
integrated area as far as relations with third countries is concerned, in a world organisation of thesesectors organised bilaterally, rather than as a preferential regime.
Question from Japan (Q.10) - Investment
What kinds of incentives, such as subsidies, are there in the EU that invite investment? Please
exemplify subsidy and other preferential measures that relate to investment promotion. Are these
measures granted equally to European companies and non-European companies?
Member States continue to organise their own m easures to attract inward investment. It should,
however, be noted that any aid granted by a Member State or through State resources must not distort
or threaten to distort competition (see Treaty Articles 87 and following).
Question from Japan (Q.11) - Investment
To which Organizations should we contact to seek information on the laws and regulations of the EU
in relation to investment?  Has a united enquiry point been established in the EU? What kind ofinformation is being provided through electroni c means? Can the non-EU companies obtain such
information in the same m anner as the EU companies?
The EU regime as a whole is governed by specific Articles of the Treaty. These are directly applicable
by Courts in all Member States. The Commission has published an interpretative Communication in1997 on the legal regime applicable in this area. Th is gives the Commission's view of how the Treaty
provisions should be interpreted in the light of the jurisprudence of the European Court of Justice. As
far as national measures which existed on 31/12/ 1993 are concerned, individual Member States would
be the appropriate interlocutors. There is no distinction made between EU and non-EU operators.
I-d) Competition policy
Question from Canada (Q.22)
III. Trade Policies and Practices by Measure, (4) Measures affecting production and Trade,
(iii) Competition policy, (a) Community activity, para 125:
The Report states that “the Commission has proposed that the enforcement of competition rules be
shared to a greater extent than in the past with the competition policy authorities and national courtsof the Member States.”  We are of the view that this effort of decentralization in enforcement may
create inconsistencies in the interpretation and application of Community competition law and policy.
In addition, issues of confidentiality and disclosure of sensitive information may become more
complex and problematic given that enforcement wi ll now involve numerous competition authoritiesWT/TPR/M/72/Add.1
Page 72
and national courts with possibly overlapping jurisdictions operating in the context of a single
market.  In this respect, what steps has the EC ta ken to ensure that the law will applied in a consistent
and uniform manner?  What steps has it taken to  ensure that confidential information is not
disclosed?
1) What steps has the EC taken to ensure that the law will be applied in a consistent and uniform
manner?
The risk of an inconsistent application of EU co mpetition rules should not be overestimated: Articles
81(1) and 82, like a great number of other Treaty provisions, have been applied by national Courts for
decades without any particular problem.
The maintenance of a consistent application in the new system will primarily depend on the clarity ofthe rules. The Commission will continue to improv e the legislative framework by issuing guidelines
and block-exemption regulations and by adopting individual decisions.
Furthermore, specific information and consultation mechanisms will have to be set up for the purpose
of ensuring day to day consistency. In addition, the Commission will retain the power to decide thecase itself. The Commission keeps its own power of enforcement which it will use to ensure
consistent application of EU competition law.
Finally, like in other areas of Community law, the Court of Justice will ensure consistency via the
system of preliminary references foreseen by the Treaty in its Article 2 34.
2) What steps has it taken to ensure that confidential information is not disclosed?The Council regulation will be amended in order to ensure that confidential information exchanged
within the network of Competition authorities is kept secret. Officials of competition authorities of the
Member States will, like Commission officials, be bound by an obligation not to disclose confidential
information. In order to protect the rights of defence, information exchanged will only be used forimposing fines on companies (i.e. criminal sanctions on individuals will not be imposed on the basis
of information exchanged).
Question from Canada (Q.23)
III. Trade Policies and Practices by Measure, (4) Measures affecting production and trade,
(iii) Competition policy, (a) Community activity, para 128:
We note the difference in aggregate market thresholds in the EU’s policy on vertical restraints, with
10% for vertical restraints and 30% in the new policy that was adopted on vertical restraints (whichreplaces the block exemption regulations on exclusive distribution agreements, exclusive purchasing
agreements, and franchise agreements).  In view of this, is further reform being considered in the
latter?
The 10 % threshold is the de-minimis threshold for vertical restrictions except hardcore restrictions
such as Resale Price Maintenance (RPM).  In other words, below 10 % market share it is considered
that vertical agreements will normally not appreciably restrict trade between Member States and will
not appreciably restrict competition, i.e. fall outside Article 81(1).
The 30 % threshold is the threshold of the new Block Exemption Regulation 2790/1999 which applies
to vertical agreements, again except those containing hardcore restrictions.  In other words, below 30
% market share it is considered that vertical agreements which do restrict competition appreciablyWT/TPR/M/72/Add.1
Page 73
will normally have positive effects which outweigh the negative effects and can therefore be
exempted under Article 81(3).
The Commission intends to adopt a new de-minimis Notice next year, after having finalised both the
adoption of the new rules for vertical and for horizontal agreements.  This review of the de-minimis
Notice may also entail a change in the market share thresholds (currently 5 % for horizontal
agreements and 10 % for vertical agreements) contained therein.
Question from Canada (Q.24)
III. Trade Policies and Practices by Measure, (4) Measures affecting production and trade,
(iii) Competition policy, (b) International activity, para 131:
The EU has a wealth of experience with respect to cooperation with other competition authorities and
it has stated in the WTO Working Group on Trade and Competition Policy that cooperation is a key
element of a WTO framework agreement on competition policy.  May we have your views on what
should be the core principles or substantive approaches underlying cooperation in the WTO oncompetition policy matters?
We consider that it is premature to talk about common or core "substantive approaches" at this stage.
No harmonisation of substantive competition laws is envisaged.  Rather, we propose to develop a
multilateral framework agreement focusing on core principles of competition law and policy, basic
cooperation modalities and support for developing countries.  A WTO Competition Policy Committee
would be established to administer the WTO basic framework agreement.
The core principles would be solidly based on non-discrimination and transparency.  Non-
discrimination would relate to the domestic legislative framework.  Transparency would be at the
centre of the core principles to be agreed in a framework agreement.  Transparency of domestic
competition law regimes is of great importance for firms engaged in international trade as well as forconsumers.  Moreover, transparency provisions should include issues of "due process" and the
availability of effective domestic remedies.  This would be an important contribution of a multilateral
agreement to the effective enforcement of domestic competition law.
It is also suggested to give priority to developing a common principle on hard-core cartels. These
cartels are among the anti-competitive practices that are most likely to be damaging to developing
countries, e.g. through price-fixing, markets alloca tion and other practices, and focusing on this area
would allow competition authorities to aim their limited resources at those practices that have a
greater impact on the structure of competition in a given market.  Hard-core cartels constitute one of
the substantive areas where WTO Members at this point in time would agree on their harmful, anti-competitive effects.
We also favour a flexible and progressive approach to the issue of sectoral exclusions from the
application of competition law.  Some exclusions of a horizontal nature – like, for instance, those
which may apply to small and medium-sized enterprises – may be driven by legitimate developmentconsiderations and have only an insignificant impact on international trade.  At this point in time, it
would appear that a WTO multilateral framework agreement could limit itself to ensuring the
necessary level of transparency concerning exclusions from the application of domestic law.
Finally, we have been arguing in favour of agreement on modalities for international cooperation on
competition issues as a key element of a multilateral framework agreement on competition. The need
for international cooperation is based on two facts.  First of all, the globalisation of corporate practiceswhich may affect the interests of more than just one country, such as market allocation or price-fixingWT/TPR/M/72/Add.1
Page 74
of hard-core cartels or multijuridictional mergers, and, secondly, the fact that an ever-increasing
number of countries have either adopted or are currently considering the adoption of a domesticcompetition law. Significant gains could be achieved through increased international cooperation.
These gains are: addressing obstacles to market access arising from anti-competitive practices,
fostering closer cooperation among competition authorities through such means as notification,
exchange of information, limiting the scope for ju risdictional conflicts, and promoting a gradual
convergence of competition laws and policies.
Question from Korea (Q.6)
The Report mentions that “Under the new regi me, vertical arrangements between firms whose
combined market share is less than 30% enjoy a safe haven from the application of Article 81(1),unless the arrangement contains blacklisted restrictions.
What are these blacklisted restrictions?The blacklisted restrictions mean that:
− a producer may not impose on its distributors at which price to resell its products. However,
maximum and recommended prices are normally permissible;
− a producer may not restrict its distributors selling to any customer if it is an unsolicited order
(passive sales). This means that each distributo r must be free to respond to a request for the
product or service made by any customer inside  the Community. Distributors must be left free
to also use the Internet to respond to such requests;
− a producer applying a selective distribution system, for instance in the field of cosmetics, may
neither restrict active nor restrict passive selling by the authorised distributors to end-usersor other authorised distributors;
− a producer buying components for incorporation in its own products, for instance a
component for the manufacture of a household appliance, may not prevent the supplier of thecomponents from selling these as spare parts to end-users or independent repairers.
Question from the United States (Q.52)
We understand that on June 19, 2000, EU member states  agreed on the text of the 13th revision to the
Company law, which applies to takeover bids for a company.  How will this framework legislation
work?
On 19 June 2000, the Council of the EU adopted a common position on the proposed Thirteenth
Directive on take-over bids. This will be sent to the European Parliament for second reading, in theframework of the co-decision procedure. The Parliament should give its new opinion in November
2000.
This is a framework directive which sets some general principles that Member States may implement
following their own legislation and traditions. Its main objectives are:
− to guarantee a minimum legal certainty in case of cross-border takeovers, by setting some
common standards such as certain obligations for the offeror and for the board of the offeree,
the control of the offer by a supervisory authority, the definition of the applicable law and the
competent authority when two or more Member States are involved, co-operation between the
different supervisory authorities.WT/TPR/M/72/Add.1
Page 75
− to ensure an adequate level of protection for minority shareholders throughout the Union in
case of a change of company control, by setting some principles such as equivalent treatment
of all holders of securities (with voting rights), a mandatory bid when a certain percentage ofvoting rights is reached, information to all parties.
I-e) WTO Dispute settlement, Trade Barriers Regulation   (TRB) cases; preferential
agreements; notification of RTAs; EU-ACP Partnership Agreement; market access for
developing, particularly least-developed countries; GSP
Question from Argentina (Q.4)
In paragraph 25 of the Report by the Government, the EU appears to support the full integration of
developing countries in the multilateral trading system.  Not only does it state that there will be no
more quotas or tariffs for the least-developed countries, but it also indicates that it will announce
further measures for these countries.
It would be interesting to know what measures the EU is considering in this regard and whether it has
assessed their impact, the possible elimination of  MFN preferences and, consequently, the conditions
for access to the Community market for other competing developing countries.
Paragraph 24 (not 25) of the Report by the Government states that, as regards market access, the EU
is committed to grant duty-free and quota-free access to essentially all exports originating in LDCs by
2005 at the latest. The further steps that the EU intends to announce later this year, to which this same
paragraph makes reference immediately after, have to be seen in the light of the EU’s procedures for
decision. The Commission adopted its proposal on 21 October.
The EU also hopes its market opening will find an echo in the most advanced developing countries,
which would show solidarity with those fellow countries which are the poorest in the world by
adopting similar measures.
Questions from Argentina (Q.10.1, 10.2 and 10.3) – EU – South Africa
10.1. What is the current status of the Trade,  Development and Cooper ation Agreement between
the European Community and its member States and the Republic of South Africa?
10.2. On what date will the Agreement as a whole enter into force?
10.3. What clauses are already being implemented?
The Trade, Development and Co-operation Agreement (TDCA) between the EU and South Africa
was signed on 11 October 1999 in Pretoria and has entered provisionally into force on first January2000. Formal entry into force will only be achieved after the necessary internal parliamentary
procedures of ratification. This Agreement being a mixed Agreement (The EU plus its Member
States), the TDCA needs to be ratified by the 15 EU Member States Parliaments as well as by the
South African Parliament and the European Parliament. All trade and trade-related provisions are
between those which have been provisionally put into force on 1st January 2000. That means that theprocess of progressive liberalisation has started on this date.
10.4. It would seem that the negotiations between th e EU and South Africa have been guided by the
principal of "asymmetrical reciprocity".  What factors were taken into account when
determining this differentiated treatment, especially as regards the different pace ofWT/TPR/M/72/Add.1
Page 76
liberalization to be respected by each party (12 years in the case of South Africand ten years
for the EU)?
The very title of the agreement clearly states its signification. The development dimension has
presided the EU-South Africa negotiations from its  very inception in recognition of the special
circumstances of South Africa after years of sanctions and isolation and its rapid political changes
since the early 1990s. Although progress in the last years is evident, the South African economy stillcarries serious structural problems inherited from the past and can be considered by and large as a
developing economy. The principles of asymmetry and differentiation of the TDCA conform to this
reality and express the deep political and economic EU commitment of partnership and co-operation
in helping to build South Africa’s future.
10.8. How is the question of "rules of origin" envisaged in the Agreement?  Were the criteria for
WTO negotiations followed in any way?
The EU and South Africa will provide shortly full deta ils of the TDCA in their joint notification to the
Members of the WTO.
10.7. What was the final agreement reached on geographical indications and alcoholic beverages
("port", "sherry", "ouzo", "grappa")?
An agreement on Port and Sherry is included in annex X of the TDCA. The issues concerning ouzo
and grappa have been dealt with in the recently concluded Wines and Spirits agreement, which is due
to enter into force next 1st September.
Question from Argentina (Q.12) – EU Agreements with countries of the Meiterranean Basin.
12.1. Can the EU clarify the meaning of  "unified euro-mediterranean zone"?
The Barcelona Declaration, adopted by Ministers at the end of the Euro-Mediterranean Conference of
27/28 November 1995, established the objective of the progressive establishment of a Free Trade
Area.  This free trade area is to be established through the new Euro-Mediterranean Association
agreements between the European Union and the countries of the Mediterranean basin and through
free trade areas between the Mediterranean countries themselves.
Question from Argentina (Q.14) -  EU-ACP
On 23 June 2000, the new Agreement replacing the Lomé Conventions was signed.
Are there any forecasts or studies on the impact of this Agreement will have in third countries,
especially developing countries?
In the area of trade, the new ACP-EU Partnership Agreement does not include any provision which
could have new immediate effects in the competitive position of other countries, since the agreementhas simply extended for a further eight-year period the previously existing trade regime. Of course,
the EU will have to assess, in the future, the im pact of the projected regional economic partnership
agreements on third countries and, particularly, on other developing countries. The assessment of this
impact is, moreover, part of the studies mandated by the European Council of Heads of State and
Government while preparing for this kind of actions. It therefore will have to be carried out in
preparing for the future negotiations.WT/TPR/M/72/Add.1
Page 77
Question from Brazil (Q. 1. i)
The EU introduced a revised GSP scheme for the period 1999 – 2001. The product coverage includes
processed agricultural products, fish, mining and industrial products. Least developed countries are
eligible for the most favorable treatment. Under provisions to assist countries that combat drug
production and trafficking, treatment better than the general regime is available (Pg.36, 67).
Could the EU confirm that its GSP has been applied as authorized by GATT Decision of 25 June 1971
as generalized, non-reciprocal and non-discriminatory?
Yes. The EU’s GSP is generalised, non-reciprocal and non-discriminatory. This is without prejudice
of certain special features, i.e., the additional support the EU gives to certain countries in theirstruggle against the production and the traffic of drugs. In this case, the reason of the special regime is
to support the reduction of their dependence on drug production, the stabilisation of their economic
and social structures and the consolidation of the institutions guaranteeing the rule of law. Bolivia,
Colombia, Ecuador and Peru as well as the six Central American countries are the beneficiaries of this
special regime.
Question from Brazil (Q. 1. ii)
GSP beneficiaries may apply to obtain the EU’s special incentive arrangement for countries
demonstrating adherence to certain internationally recognized core labor standards or to certain
standards set by the International Tropical Timber Organization (Pg.36, 68).
As for the Labor and Environment Programs, what results can the EU provide concerning the
beneficiary countries with these programs? Who is in charge of the supervision of these programs?
GSP was set out in the Decision of 25 June1971, as generalized, non-reciprocal and non-
discriminatory. How does the EC justify this reciprocity?
These programmes do not entail any reciprocity. They are intended as incentives for good labour and
environment management by adding, not by qualifyin g, to the GSP benefits. The beneficiary countries
have to commit themselves to the good management of the system and the European Commission has
the power to control without any previous warn ing the compliance with the commitments freely
assumed by the beneficiaries. Up until now, the EU can provide no results of these special provisionssince only two countries have applied for them (Moldova and the Russian Federation) and the internal
procedures for granting the benefits have not been completed yet.
Question from Brazil (Q. 1.ii)
GSP beneficiaries may apply to obtain the EU’s special incentive arrangement for countries
demonstrating adherence to certain internationally recognized core labor standards or to certain
standards set by the International Tropical Timber Organization (Pg.36, 68).
For GSP purposes, Brazil applies the specific GSP rules of origin, which are more stringent than the
non-preferential rules of origin. The only possible relaxation from these GSP rules is the cumulation
of origin.
Only two different types of cumulation of origin exist for GSP purposes: Bilateral and Regional.
Brazil only enjoys the benefit of the bilateral cumulation (donor country content, cumulation with EU
materials).WT/TPR/M/72/Add.1
Page 78
As for the Labor and Environment Programs, what results can the EU provide concerning the
beneficiary countries with these programs? Who is in charge of the supervision of these programs?GSP was set out in the Decision of 25 June1971, as generalized, non-reciprocal and non-
discriminatory. How does the EC justify this reciprocity?
Cumulative rules of origin, and particularly bilateral cumulation, should not be considered as barriers
to trade to third countries. These provisions only aimed at enhancing the trade between Brazil and EU;
cumulation of origin is not introducing further limitation to non-Brazilian materials, it only facilitates
Brazil exportations. By doing so, EU is not creating trade diversion, it only encourages development
of the beneficiary countries.
Question from Brazil (Q. 1.iii)
Graduation from benefits applies to country-product category combinations, plus any country whose
share of a certain product in the EU’s imports exceeds 25%. As a result, implicitly the system
disadvantages larger countries and discourages countries concentrating exports to the EU in a
narrow range of products (Pg.35, 66)
Could the EU, as a matter of transparency to affect ed members, present in a more detailed form the
criteria used in the graduation scheme?
Details of the criteria being used for graduation under the EU’s GSP scheme can be obtained in Part 2,
Annex II of Council Regulation (EC) n. 2820/98 of 21 December 1998.
Question from Canada (Q.8)
The Report states that the Community concluded Partnership and Cooperation Agreements (PCAs)
with the Russian Federation, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, and Ukraine.  Do thesePCAs cover services?
The PCAs mentioned cover certain aspects of trade in services, including cross-border supply of
services, conditions affecting the establishment and operation of companies, movement of persons, as
well as a number of sector-specific provisions, e.g. relating to financial and transport services.
Question from the United States (Q.9)
What percentage of EU goods and services trade, on a value basis, is now conducted on a preferential
basis?   Please show the value of EU imports and exports for each preferential trading partner.
It is no simple matter to provide an accurate figure for the value of merchandise trade that is
conducted on a preferential basis. There are about 16 million records covering the applied tariff for all
products from all origins under all regimes and it is difficult to correlate this to the trade data.
Consequently, the WTO Secretariat's report limits itself to a breakdown of the applied tariffs byregime and HS chapters. In December 1997, the OECD Secretariat estimated that around one third of
EU trade is MFN duty-free, another third is MFN trade where duties are greater than zero, and
preferential trade accounts for the remaining third.
In response to the second part of the US question, the EU has prepared a table showing the value of
EU imports and exports for each preferential partner shown in Table II.2 on page 31 of the
Secretariat's report. This shows that EU trade with preferential trade agreement partners accounts foraround 35% of total merchandise trade. N.B. this does not take account of GSP.WT/TPR/M/72/Add.1
Page 79
Question from the United States (Q.10)
According to the Report, the EU grants “the most beneficial treatment to the least developed/ACP
countries (95 percent of tariff lines duty free); followed by regional trade agreements (80 percent of
tariff lines duty free); GSP beneficiaries (54 percent) and, countries subject only to MFN (20
percent).”  What are the percentages in terms of value of trade?
For similar reasons as set out in the answer to th e previous question, it is difficult to calculate the
imports entering the EU customs territory duty fr ee under a preferential basis (ACP, GSP, regional
trade agreements).
It is, however, possible to provide the answer in re spect of the other two categories of trade partner:
− 99% of imports from the least-developed c ountries enter the EU duty-free. Average EU
imports from the LDCs in the period 1995-1998 were 7.8 billion ECU, of which 7.7 billion
ECU was duty-free;
− 39% of imports from the 8 countries with wh ich the EU has purely MFN trade enter the EU
duty-free. Average imports from these countries were 236 billion ECU, of which 92 billion
ECU was duty-free.
See attached table:
Average EU
imports 1995-98
(MECU)Share in total
(%)Share in sub total
(%)
Total EU imports from World: 627,357 100 -
LLDC total 7,814 1 100
LLDC duty free 7,736 1 99
MFN total 236,393 38 100
MFN duty free 92,423 15 39
Question from the United States (Q.12)
Please provide details of products excluded from  recent EU FTAs (e.g., South Africa, Morocco).
When and how is agriculture expected to be incorporated in the Euro-Mediterranean Free Trade
Agreements (which mandate further agricultural nego tiations in the future) and the South Africa FTA
(lists of excluded agricultural products are to be “periodically reviewed”)?
Agriculture is not excluded from the coverage of either the Euro-Mediterranean Association
Agreements or the EU/South Africa Trade, Co-operation and Development Agreement.  All these
agreements provide for a degree of liberalisation of trade in agricultural products.  Given the sensitive
nature of trade in certain products in this sector , the agreements also foresee a gradual extension of
liberalisation and coverage through a process of further negotiations.WT/TPR/M/72/Add.1
Page 80
Question from the United States (Q. 13)
The EU has concluded a number of agreements that have not been notified to the WTO (South Africa,
Morocco, Mexico).  Further, the services component of several even long standing agreements have
not been notified.  When does the EU  intend to notify these agreement?
The EU is preparing - jointly with partner countries - notifications concerning the Free Trade Areas
with South Africa, Morocco and Mexico.  These will be submitted shortly .
Question from the United States (Q.14)
What is the status of negotiations with MERCOSUR Egypt, and Chile?  How will the resulting
agreements cover substantially all services trade?  Will there be transition periods for liberalization
of services trade under the agreements, and if so, how long?
Negotiations with Mercosur and Chile have just started. Both parties agreed that the future FTA
should be compatible with GATS Article V. The framework for trade liberalisation as well aspotential transitional period will be the result of the negotiations.
Where EU preferential trade agreements mandate se rvices negotiations at a later stage, to what
extent have such negotiations taken place (e.g., Turkey)?
In the case of Mexico, the services FTA agreement should enter into force before the end of year
2000. The agreement foresees a review mechanism and further liberalisation no later than 3 yearsafter entry into force.
Questions from the United States (Q.15)
The EU-ACP Partnership Agreement (Partnership Agreement of Cotonou) provides for the start of
REPA (Regional Economic Partnership Agreement) negotiations from September 2002, with entryinto force foreseen for December 31, 2007.  Which (groups of) countries are candidates for REPA
negotiations?  To what extent will REPAs be modeled on the EU’s FTA with South Africa?
All ACP countries are, in principle, candidates  for REPA negotiations. Article 36.1 of the ACP-EC
Partnership Agreement provides that “the Parties agree to conclude new WTO compatible tradingarrangements, removing progressively barriers to trade between them and enhancing co-operation in
all areas relevant to trade”. Furthermore, Article 37.5 of the same Agreement states that “negotiations
of the economic partnership agreements will be undertaken with ACP countries which consider
themselves in a position to do so, at the level th ey consider appropriate and in accordance with the
procedures agreed by the ACP Group, taking into account regional integration process within theACP”.
Although the Trade, Development and Co-operatio n Agreement (TDCA) between the EU and South
Africa has a clear developmental content, it does not appear to be an appropriate model for regulating
trade relations with countries whose level of development is far from comparable with South Africa’s.
However, it seems obvious that, when negotiating a regional agreement with Southern Africa,negotiators will have to take into account the provisions of the TDCA and its effects in the regional
context as well as the process of regional integration.WT/TPR/M/72/Add.1
Page 81
Question from the United States (Q.16)
The labor clause of the EU’s Generalized Scheme of Preferences (GSP) offers additional tariff
preferences for countries complying with ILO standards on child labor and the right to organize and
bargain collectively.  How has this operated in practice?  
The Commission does not yet have any experience in the application of these arrangements. Since the
publication of Council Regulation n. 2820/98, whose Title II refers to the implementation of the
special incentive arrangements, only two countries ha ve applied to benefit from the social clause: the
Republic of Moldova on 11 February 1999 and the Russian Federation on 9 June 1999. In the first
case, the decision to grant the special incentive arrangements to products from Moldova is in its final
stage of adoption (a Commission Regulation should be  adopted by the end of July 2000 and will enter
into force two months after its adoption). As far as the Russian Federation is concerned, the
examination of the application is not completed.
Question from Canada (Q.4)
II. Trade Policy Regime: Framework and Objectives, (4) External Trade Relations,
(i) WTO, (b) WTO Dispute Sett lement Proceedings, TableII.2:
Table II.2 lists preferential trade agreements of the European Union, including participants, date of
entry into force, and GATT or WTO document cont aining the notification.  The customs union with
San Marino and the free-trade area with South Africa have no GATT/WTO document listed.
Additionally, the free-trade agreement with Mexico is not listed here.  Has the Commission notifiedthese agreements to the WTO?  If not, when does it intend to do so?
The EU is preparing - jointly with partner countries  - notifications of the Free Trade Areas with South
Africa and Mexico.  These will be submitted shortly .
Question from Canada (Q.16)
III. Trade Policy and Practices by Measure, (2) Measures Directly Affecting Imports, (iv) Community
tariff, (b) Preferential Regimes, para 27:
The EU provides Most-Favoured-Nation (MFN) trea tment to only eight WTO Members. Recognizing
that regional and multilateral trade initiatives are complements, rather than alternatives, is the EU
open to the negotiation of preferential agreements with all interested parties in future?  If not, what
criteria will it expect to use in selecting prospective partners?
The economic and political advantages and disadvantages of all proposals for new agreements are
examined by the Commission and Council on a case-by-case basis against an indicative list of criteria.
In this context, a number of strategic questions have to be addressed: will the proposed agreement be
compatible with all relevant WTO rules? will the proposed agreement achieve identifiable offensive
economic interests of the EU? what would be the political and other benefits of the proposedagreement? what would be the impact of the proposed agreement on the Community’s other external
commitments? what would be the impact of the proposed agreement on the Community’s common
policies? what will be the overall economic effe ct of the proposed agreement? would the proposed
agreement be likely to support the development of the multilateral trading system?  This list of
questions, however, is not exhaustive .WT/TPR/M/72/Add.1
Page 82
Question from Chile (Q.2)
In paragraph 65, it is indicated that the EU introduced a revised GSP scheme for the period
1 July 1999 to 31 December 2001.
Could the EU indicate whether the GSP currently in effect for certain countries with which it is
carrying on trade negotiations will be maintained until the date mentioned (December  2001)?
This is a matter which is part of the trade negotiations with those countries.
Question from Chile (Q.11)
Paragraph 34 mentions the Trade and Cooperation Ag reement with South Africa indicating that two
supplementary agreements are being negotiated, on the denomination of origin for wines and spirits.
Have the problems faced by some members of the Community im implementing this Agreement been
resolved?
Yes. Wines and Spirits agreements between the EU and South Africa are to enter into force on 1st
September 2000 after the successful conclusion of the negotiations.
Question from Chile (Q.12)
The second agreement is on fisheries.
Could the EU describe the main features of this agreement and its scope as far as the protection of
fisheries resources is concerned?
Negotiations for a fisheries agreement between the EU and South Africa are still only in their first
stages. It is not possible therefore at this point in time to address the main characteristics of this
eventual agreement.
Question from Hong Kong/China (Q.5)
The Community grants duty-free or reduced tariff  treatment for imports of a number of products
under preferential agreements and arrangements, for which almost all its trading partners are
eligible.  Among 137 WTO Members, exclusive MFN treatment applies to imports from only eight
WTO Members including Hong Kong, China.  Under the multilateral trading system, MFN treatment
should be the rule while preferential trading arrangements should be the exception.  However, thereverse seems to be case for the Community.  We would like to hear the Community's views on this
development.
Preferential access to the Community market is subject to the relevant disciplines of the WTO system,
notably Article XXIV of the GATT 1994 and the Enabling Clause.  These provisions recognise thepositive contribution which regional agreements make to the overall expansion of trade and which
trade preferences make to promoting developmen t.  Non-discrimination and MFN treatment are
indeed fundamental principles of the open multilateral trading system, which the EU firmly supports.
At the same time, the rules on which this system  is based clearly allow for preferential treatment
subject to the disciplines defined notably in Article XXIV.
The actual share of preferential trade in EU imports is possibly less than the number of EU
preferential partners might suggest.  According to  a study undertaken by the OECD, roughly one-thirdWT/TPR/M/72/Add.1
Page 83
of EU imports were duty-free, where tariff preferences play no role, one-third were at MFN rates
greater than zero, and one-third were under preferences.
The average share of all partners in regional agreements with the EU (Customs Unions, Free Trade
Areas, Lomé Convention ) over the four-year period 1995-1998 was 32%.  Other partners accounted
for 68%.
Question from Japan (Q.(1) ii)
The EU has recently concluded free trade agreements with Central and Eastern European countries.
Besides these countries, the EU has also concluded a free trade agreement with Mexico, which
entered into force on 1 July 2000.  Furthermore, the EU has concluded CO TONOU Agreement, which
is a preferential arrangement of opening its market for developing countries.  We understand that the
EU now has trade relations on the MFN basis w ith only six countries, namely, Japan, the United
States, Canada, Australia, New Zealand and the Republ ic of Korea.  Please explain the motives and
the rationale of the EU for concluding so many regional preferential trade arrangements.
As well as participating actively in multilateral liberalisation under the GATT and now WTO, the EU
has concluded or is negotiating preferential trading agreements with a wide range of trading partners.
These preferential trading agreements can take the form of Free Trade Areas, Customs Unions, or
non-reciprocal trading agreements such as the Lomé conventions.  In addition, the EU grants non-
contractual unilateral trade preferences to developing countries under the GSP or other specific
regimes.
These agreements can respond to a variety of circumstances and objectives.  Regional trade
agreements provide an economic dimension to a wider relationship with immediately neighbouring
countries, in Europe, North Africa and the Middle East .  Such agreements formed part of the response
of the EU to the collapse of Communist regimes in Central and Eastern Europe around ten years ago.
These have played an important role in supporting political and economic reform in the countriesconcerned, and have taken on an increasing “pre-accession” character as many of these countries have
emerged as candidates for EU membership.   Regional agreements are also important instruments in
promoting the development of partner countries.  Separately, the EU has also encouraged regional
integration between developing countries as an aid to development.
Questions from Japan (Q.2 (i) and (ii))
Free trade agreement between the EU and Mexico (WT/TPR/S/72, p.35, paras. 62 and 63)
(i) With respect to the Free Trade Agreement betw een the EU and Mexico, it is said that 95% of
each party’s trade volume is covered by this agreement.  Please explain the ground for this
statement, as well as calculating methodology, including whether the figure is calculated in a
one-way or two-way direction.
(ii) Japan also understands that certain exceptions on agricultural products exist with regard to
the FTA between the EU and Mexico (i.e. the tr ade coverage is 62%).  Please explain the
ground for this statement, as well as calculating methodology, including whether the figure is
calculated in a one-way or two-way direction.
Full liberalisation under the agreement will cover 100% of trade in industrial products, 62% of trade
in agricultural products and 99.5% of trade in the fisheries sector. This amounts to a total trade
coverage of 95% of the volume of total bilateral trade (average of total bilateral trade volume 1996-1998), thus leading to a liberalisation of substantially all trade between the parties as foreseen inWT/TPR/M/72/Add.1
Page 84
Article XXIV:8 of the GATT 1994. As all industrial products will be liberalised, and 99.5% of trade
in fisheries sector, the products for which no liberalisation is foreseen are concentrated in theagricultural sector. Since 62% of trade in agriculture products (average of bilateral trade volume
1996-1998) will be fully liberalised, the sector is covered by the liberalisation – hence no major sector
is excluded from liberalisation under the agreement.
Question from Japan (Q.3.(i))
Please explain the historical, political and econom ical background as to why the EU is concluding
various co-operation agreements and regional integration agreements with Mediterranean, African,
and Middle-East countries, as well as Mexico.  How is the EU able to assure the compatibility of
these movements with the multilateral trading system?
see Answer to Q.1.(ii)The EU negotiates all its regional agreements to be  compatible with the relevant WTO rules, notably
GATT Article XXIV and GATS Article V.  This provides a guarantee that the agreements will besupportive of the multilateral trading system .
Questions from Japan (Q.4)
Are all products from least developed countries eligible for duty-free access?  If not, which products
are excluded from the treatment?
No. Products under Protocols in the late Lomé Conv ention (Bananas, Rum, Sugar, Beef and veal) as
well as a number of products (dairy products, cereals, rice, pig and caprine meat, poultry, some
processed agricultural products) are excluded from the free access treatment for LDCs in the present
EU’s GSP scheme.
Questions from Japan (Q.5)
Please explain in detail what exactly are the special incentive arrangements that are given to
countries that show their adherence to certain labo ur standards as well as those standards set by the
International Tropical Timber Organization by s ubmitting information on their measures related to
ITTO.
The details requested are included in Title II of the Council Regulation (EC) n. 2820/98 of 21
December 1998.
Questions from Australia (Q.1-2)
The EU maintains an active policy of negotiating preferential trade agreements
− to what extent does the EU take account of the potential for trade diversion when making
decisions on its regional and bilateral trade negotiations?
− to what extent has the EU considered reductions in its MFN tariff rate when there is a
substantial volume of trade already enjoying preferential access?
The likely economic impact and advantages/disadvantages of an agreement are among the factors to
be considered in assessing proposals for new preferential trading agreements.WT/TPR/M/72/Add.1
Page 85
The EU expects that future reductions in its MFN tariff rates will occur as the consequence of
comprehensive market access negotiations in the framework of a new WTO Round.
Questions from Australia (Q.3-4)
Australia notes that the EU’s recent free trade agreement with Mexico contained very limited
coverage of agriculture.
− how does the EU reconcile this approach with the provisions of Article XXIV?
With a full liberalisation under the EU/Mexico agreement of 95% of total bilateral trade, substantially
all trade will be liberalised. In addition, with a coverage of 100% of industrial products, and full
liberalisation of 99.5% of fisheries and 62% of agricultural bilateral trade, no major sector is excludedfrom liberalisation.  The EU considers the agreement wi th Mexico to be fully in conformity with the
provisions of Article XXIV .
Question from Uruguay (Q.4)
In connection with paragraph 19 of the Report by the Government and in the event that there is no
new Round in the near future, it would be interesting to know the European Union's position on the
scope of the current negotaitions envisaged in the built-in agenda (agriculture and services) and
whether the EU would be ready to set a time-l imit for the conclusion of these negotiations.
The EU believes that the built in agenda negotiations, like any sectoral negotiations, will almost by
definition be more difficult to conclude because there is less room for balance across the negotiations.
The extent of difficulty remains to be seen.
Question from the United States (Q.18) - Pa n-European System of cumulation of Origin
Is it the EC view that the “Pan- European System of Cumulation of Origin” is a single free-trade area
under Article XXIV of GATT 1994?  If yes, when will th is single free-trade area be notified?  If no,
what is the legal justification for providing more favorable treatment under an FTA to a limited
number of Members that are not a party to the FTA but are participants in the “Pan-European System
of Cumulation of Origin”?
All countries concerned have concluded bilateral free trade agreements with the Community and with
each and every other participating country. The rules of origin in all of these agreements are identical.
What the US is referring to as 'Pan-European System  of Cumulation of Origin', is in fact a diagonal
cumulation rule which is included in all of these agreements.
The only products benefiting from a particular FTA w ill be those that are originating in the country
that is a signatory party to the FTA in question. The preferential treatment applied is the one laid
down in that FTA.
Products originating in any other country are not eligible for preferential treatment under that FTA.
The Community does therefore not regard the 'Pan-European System of Cumulation of Origin' as a
single Free Trade Agreement that should be subject to notification under article XXIV of
GATT 1994.WT/TPR/M/72/Add.1
Page 86
The so-called system of Pan-European cumulation of origin was the subject of a communication to the
WTO, dated 1 July 1998 (WT/REG/GEN/N/1).
Each individual FTA (including the diagonal cumu lation provision) was subject of a notification to
the WTO.
What is the legal justification for changing the treatment – through the removal of drawback
eligibility – of goods produced by certain Members so that the treatment is less favorable than the
treatment of goods produced by other Members who happen to be participants in the “Pan-European
System of Cumulation of Origin”?
The objective of a 'no drawback'-clause in the bilateral free trade agreements between the Community
and the participating countries is to ensure th at the duties on non-originating materials, imported
under the Inward Processing regime, are being paid in cases where such materials are incorporated in
a product that is exported to one of the participating countries as an originating product eligible for
preferential treatment there.
However, upon exportation the manufacturer of the product has the option not to use the preferential
system under the free trade agreement, in which case drawback will be granted.
Question from the United States (Q.11)
Please provide details of products excluded from  recent EU FTAs (e.g., South Africa, Morocco).
When and how is agriculture expected to be incorporated in the Euro-Mediterranean Free TradeAgreements (which mandate further agricultural nego tiations in the future) and the South Africa FTA
(lists of excluded agricultural products are to be “periodically reviewed”)?
Mediterranean third countries will establish a free trade area through the conclusion of Euro-
Mediterranean Agreements and free-trade agreements between the partners of the European Union.The Euro-Mediterranean Agreements concluded so far indicate that the free-trade area should be
progressively implemented during a 12 years period starting from the entry into force According to
the Barcelona declaration, signed in 1995, EU  Member States and 12 of each Agreement.
As far as agriculture is concerned, the Barcelona Declaration states that trade in agriculture is to
progressively liberalised through reciprocal preferential access among the parties, taking as a starting
point traditional trade flows, as far as the various agricultural policies allow and with due respect to
the results achieved within the GATT negotiations.
Details of products excluded from the EU/South Africa FTA and the EU/Mexico FTA are set out in
the relevant agreements.
The FTA with SA is published in Official Journal L311 volume 42 of 4 December 1999.The
agriculture products excluded for the moment by the EU are listed in Annex IV List 7 therein. The
agriculture products excluded for the moment by SA are listed in Annex VI List 4 therein. Therelevant review clause is set out in Article 18.
The FTA with Mexico has been made available by the Commission on the following website:
http://europa.eu.int/comm/trade/bilateral/mexico/fta.htm
Agricultural products excluded for the moment by the EU are those of Annex 1 therein under
category 5. Agricultural products excluded for the mo ment by Mexico are those of Annex II under
category 5. The relevant review provisions are set out in Title II, Chapter I, section 3 under:WT/TPR/M/72/Add.1
Page 87
Article 8, paragraph 8
Article 9, paragraph 8
Article 10.
Question from New Zealand (Q.5)
Page 10 of the Community report notes the contribution which preferential trade agreements make in
support of the multilateral trading system.  What ef forts does the EU intend to make to ensure that
difficult areas such as agriculture are included in such agreements (both existing and planned) in
order to ensure that they contribute to liberalising the multilateral trading system?
In negotiating agreements to which it will be a party, the EU is concerned to ensure that the results
will be compatible with all relevant WTO rules.  Since these rules provide that regional trade
agreements should cover “substantially all the trade” and that no sector should be excluded, they
themselves provide a guarantee that agriculture will be included .
Agriculture is always part of the EU's free-trade agreements.
Question from Japan (Q.14)
Special tariff systems under the preferential agreements (WT/TPR/S/72, p. 47, para 29)
Under preferential agreements, there seemingly exists:
(a) seasonal import restrictions on fresh tomatoes, etc.;
(b) minimum import pr ices on flowers; and
(c) a special tariff system on citrus fruit.
Japan would like to have more detailed information on the administration and operation of the above-
mentioned measures.
(a) Preferential agreements frequently confine preferences to a limited period of the year
when Community output is not marketed or is less substantial.
(b) With regard to the minimum import price for flowers, it is true that a minimum price
system exists for flowers imported from the Mediterranean countries, in accordance
with Council Regulation 4088/87 (as last amended by Regulation 1300/97) and
Commission Regulation 700/88 (as last amended by Regulation 2062/97).
(c) Preferential agreements in respect of citrus fruit are reproduced in TARIC 2000, OJ C
115A of 24 April 2000, Volumes I and IV.
Question from Chile (Q. 9)
Report by the Government
1.1 Part V:  The EU and the WTO:  Preferential Trade Agreements
9. Paragraph 32 mentions the Agreement recently concluded with Mexico. Perusal of this
Agreement shows that no reductions have been granted for products such as meat, milk, yoghurt,
products of the milling industry, canned fish, sugar, preserved foods and juices, and chemicalproducts.WT/TPR/M/72/Add.1
Page 88
Could the EU explain the reasons for this?
Certain agriculture products have been excluded, by both the EU and Mexico, from liberalisation for
the moment. The agreement provides for future review of the situation.
10. In addition, wine is not covered by the reductions, which implies that it does not enjoy lower
tariffs.
Could the EU confirm this information and explain th e rationale for not liberalizing the wine market?
Under the agreement, the EU will in fact eliminate duties over a period of three years commencing 1
July 2000, on most wines imported from Mexico .
Question from India (Q.7) – GSP
The Secretariat Report (para 68 on page 36) notes that the present GSP scheme of the EU which was
revised from 1 July 1999 contains a clause which provides for special incentives to countries
demonstrating adherence to certain internationall y recognised core labour standards or to certain
standards set by the International Tropical Timb er Organisation. We strongly resist the linkages
between trade and core labour standards. We feel that the ILO is the right forum to deal with the
issue of core labour standards and the Singapore Ministerial Conference had settled the issue. We do
not agree that the EC has a right to link the GSP benefits to core labour standards or any other non-
trade related issue. We would therefore request the EC to reconsider scheme in this regard.
The EU in no way conditions the benefits of its GSP scheme to countries demonstrating adherence to
certain internationally recognised core labour standards or to certain standards set by the ITTO. All
developing countries are eligible to the benefits of the EU’s GSP scheme. On the other hand, the EU
remains deeply attached to these standards and wish es to provide incentives to those countries which
share its attachment to them and ask for the special incentives.
Question from the United States (Q.8)
Please provide details of market access cases resolved and outstanding under the Trade Barriers
Regulation (TBR).  Of the total number of EU complaints brought to WTO dispute settlement, howmany were the result of action under the TBR?  How do you see this evolving in the future?
Since the adoption of Regulation 3286/94 (so-called Trade Barrier Regulation), 16 cases have been
brought under the Trade Barriers Regulation: 4 against NAFTA countries (3 USA, 1 Canada),
8 against Latin American countries (5 Brazil, 2 Ar gentina, and 1 Chile), 5 against Asian countries
(1 Japan, 3 Republic of Korea, and 1 Thailand).
It is worth noting that in half of the cases a solution was found either through negotiated settlement or
following WTO consultations.
In particular, out of the 16 TBR cases lodged, 8 have led to WT O dispute settlement proceedings. In
3 of these cases the Community requested the estab lishment of a WTO panel. So far this has led to 2
successes, both were against the US ( 1916 Act  and IMRO-royalties ) although one has already been
appealed. One case is still pending before a WTO Panel ( Argentina-hides and skins ). Finally 3
investigations are still at the report level so it is too early to assess results.WT/TPR/M/72/Add.1
Page 89
The table below provides a complete list of all TBR cases. With the exception the Brazilian steel
plates case which has been terminated all other cases are still active.
It is difficult to anticipate how the number of TBR complaints will evolve. However, the TBR
Regulation will remain one of the main instruments of the Commission's Market Access strategy.
NOTICES OF INITIATION OJ REFERENCE
Thailand –  Piracy of sound recordings OJ C 189 of 20.7.91
USA – Origin Rules for Textiles OJ C 351/6 of 22.11.96
USA – Antidumping Act of 1916 OJ C 58/14 of 25.2.97
Argentina - Exports of hides and skins OJ C 59/6 of 26.2.97
Brazil - Cognac geographical indication OJ C 103/3 of 2.4.97
Japan - Tariff quota usage leather OJ C 110/2 of 9.4.97
USA - Music licensing rights OJ C 177/5 of 11.6.97
Brazil - Import licensing for steel plates OJ C 197/2 of 27.6.97
Brazil - Minimum import prices for textiles  OJ C 63/2 of 27.2.98
Korea – Importation of Cosmetic products OJ C 154/12 of 19.5.98
Chile - Prohibition of transhipment of Swordfish OJ C 215/2 of 10.7.98
Brazil – Minimum import prices for Sorbitol OJ C 361/13 of 24.11.98
Brazil – Subsidies for export of regional aircraft OJ C 108/33 of 17.4.99
Canada - Prosciutto di Parma geographical indication OJ C 176/6 of 22.6.99
Korea – Pricing of pharmaceutical products  OJ C 218/3 of 30.7.99
Argentina – Import of textile and clothing products OJ C 340/70 of 27.11.99
I-f) WTO Aspects of Enlargement
Question from Japan (Q.15)
3. (3) If the EU enlarges itself to include a new Member State, that member's tariff rates will be
adjusted to the level of the common tariff rates applied by the EU as of the date when such
membership comes into effect.  Japan is interested, in the context of GATT Article 24:6 negotiations,in following such cases where the EU’s common tariff rates are higher than the tariff rates applied by
the new Member State prior to enlargement.
When Enlargement takes place, the acceding Member States will have to apply the EU Common
External Tariff.  This may mean either that tariff rates have to be increased or that they have to bereduced to be aligned on the CET.  The EU will undertake any negotiations with affected partners as
may be called for under Article XXIV:6.
Question from Canada (Q.5)
The Report mentions that Switzerland did not ra tify the European Economic Area (EEA) agreement
and instead has signed several bilateral agreements with the Community concerning services (land-based transport, air transport, and the free movement of people). To what extent do these bilateral
agreements differ in content from the EEA?
The sectorial bilateral agreements between the EU and Switzerland are of more limited scope than the
the EEA agreements and also less "dynamic", as the obligations are fixed once and for all in theagreements, while the EEA agreements contain obligations for the EEA countries to take over future
EU acquis. The agreements with Switzerland are restricted to certain sectors only. The agreements
with Switzerland are thus traditional trade agreements and do not provide for the comprehensive
institutional set-up provided by the EEA agreements, establishing instead a number of jointWT/TPR/M/72/Add.1
Page 90
committees. The agreements with Switzerland therefore only partly reflect the EU acquis (in free
movement of persons and to some extent in air transport).
Question from Canada (Q.6)
Question from the United States (Q.21)
The EU is planning to expand to include Central and Eastern European countries (CEEC).  It has
completed negotiations, or is in the process of negotiating with these countries to lower tariffs on
agricultural products for many tariff lines.  This  could result in trade di version from the CEEC’s
traditional suppliers well in advance of the formal accession date.  How does the EU intend to deal
with the issue of trade diversion with respect to other third countries?
The EU has been negotiating “Double Zero” agreem ents with candidate countries.  Are these
agreements required as a first step in the accessi on process?  Does the EU intend to expand the list of
products exported without subsidies to these countries?
EU commercial relations with the Central and Eastern European Countries that are candidates for
accession are governed by the regional agreements (notably Association or Europe Agreements)
which it has concluded with them.  These agreements establish bilateral Free Trade Areas in the sense
of GATT Article XXIV.  The current negotiations are likely to lead to an increased liberalisation of
bilateral trade in the agricultural sector.
Questions from the United States (Q.17)
We understand that the EU is encouraging adv ance adoption of the “acquis communautaire” by
those countries negotiating EU membership, except in the area of tariffs.  In what areas is the EU
seeking such advance adoption, and which potential applicants are affected?
All new Members of the EU have to adopt the full legislative acquis on their accession to the Union.
This body of law and regulatory instruments has been built up over many years and comprises many
thousand pages of text.  It deals with many issues relevant to all aspects of the WTO (trade in goods,
trade in services and trade-related intellectual property rights).  It is not realistic to expect any new EU
member to be able to implement the acquis overnight.  At the same time, it is highly desirable that any
transitional arrangements after accession are kept to the minimum.  Accordingly, all candidatecountries need to prepare themselves to take on the rights and obligations of EU membership by
progressive alignment onto the acquis, including, as appropriate, through transposing it into national
legislation, moreover, most of the candidate countries have committed themselves to progressive
alignment on the Community acquis in the framework of the Europe Agreements.
Question from the United States (Q.20)
Please explain why the EU feels it is necessary to require countries negotiating for accession to
implement “rapidly and in full” the Broadcast Directi ve, in many cases years before they will attain
EU membership.
See answer to US Question 17.  The Broadcasting Directive is one of the many pieces of Community
legislation that are covered by the process of gradual assimilation and adoption of the acquis by the
candidate countries.WT/TPR/M/72/Add.1
Page 91
Question from New Zealand (Q.3)
EU Enlargement (of up to thirteen new members) could have profound effects on third country trade.
How does the EU intend to take these effects into account in devising the integration of new
members?  In particular, how does the EU intend to alleviate trade diversion?
and
Question from India (Q.1)
Both the Secretariat and Government Reports point out to the ongoing efforts towards enlargement of
the European Union. These efforts could progressively add as many as 13 new countries to theEuropean Union and the first batch may integrated within the next five years.
(a) We feel that there would certainly be trade diversions as a result of the enlargement of the
European Union we would like the EC to explain if they have done any objective assessment of the
impact of this enlargement on the third countries, es pecially the developing countries. Presuming that
such an expansion would lead to economic losses to thir d countries, as a result of deviation from the
basic MFN principle, what measures are being cont emplated by the EU to address such a situation?
The EU recognises the potential significance of the admission of up to thirteen new Member States.
It is confident that the net effects of Enlargement will be positive for third countries, through the
stimulus to trade and investment that expans ion of the single European market will bring.
Question from Australia (Q.8)
The EU is facing a further major round of enlargement with the prospect of up to 12 more countries
joining the EU in the coming years.  The accession of these countries to the EU will obviously have a
major impact on Australia’s trade and investment relations with them.
What specific action is the EU taking to encourage the applicant countries to speed up the process of
bringing their MFN tariff levels into line with the EU’s?  What other steps are being taken by the EU
to ensure that the interim trade arrangements with the accession countries lead to their full
membership of the EU Customs Union within a reasonable length of time as provided inArticle XXIV:5(c) of the GATT?  How long does the EU anticipate this process will take?  It will be
before the various accession countries have fully adopted the Common External Tariff?  (In
agriculture, couldn’t this mean higher tariffs?  Should we remind them of the provision in
Article XXIV:5 that the joining of a customs union should not result in higher tariffs against third
countries?)
When Enlargement takes place, the acceding Member States will have to apply the EU Common
External Tariff and other instruments of the common commercial policy.  The EU expects that the
acceding Member States will be able to apply the common commercial policy, including the CET,
from the date of their accession, without any need for any transitional periods.  In certain cases, tariffrates may have to be increased or be reduced to ensure that they are aligned on the CET.   In this
process, the EU will be mindful of the obligation under GATT Article XXIV:5(a) that the applicable
duties after enlargement should not on the whole be any higher than those applicable immediately
beforehand.  When these countries accede to the EU, third countries will have the right to enter into
an Article XXIV:6 compensation process.WT/TPR/M/72/Add.1
Page 92
Question from Australia (Q.10)
Given the significant fluctuations in traditional trade with these countries since they embarked on
economic transition, compared with trade flows prior to the transition process, will the EU undertake
to enter into a timely discussion with third countries to agree on an appropriate base period for
calculating compensation?
The EU will expect to initiate negotiations under Article XXIV:6 with interested third countries
before any increases in bound tariff rates occur.  Any such negotiations will be governed by the
relevant procedures that are set out in Article XXIV and XXVIII.
Question from Australia (Q.11)
The EU has reached an agreement with a number of applicant countries that it will reduce its
agricultural export restitutions to zero, and the applicant countries in Central/Eastern Europe will
reduce their tariffs on imports of EU agricultural products to zero (a so-called “zero for zero”
settlement).
In the discussion on base periods (referred to above) will the Commission undertake to take fully into
account any increase in trade between the EU and the applicant countries generated by these
arrangements?
As above, any negotiations under Article XXIV:6 will be governed by the relevant procedures set out
in that Article and in Article XXVIII.
Please see the replies to the question n° 11.5, 11.6 and 11.8 from Argentina
Question from the United States (Q.21)
The EU has been negotiating “Double Zero” agreem ents with candidate countries.  Are these
agreements required as a first step in the accessi on process?  Does the EU intend to expand the list of
products exported without subsidies to these countries?
The so called zero-for-zero negotiations are not required as a first step in the accession process, but
should according to the Council mandate to the Commission form a part of the accession process.
In accordance with Article 19(4)/20(4) of the respective Europe Agreements, there is always a
possibility to gra nt further concession between the EU and the respective candidate countries .
Question from the United States (Q. 22)
According to the Europe Agreement with Estonia, there are five products (meat of swine, sausages,
cheese and egg products, apples) for which the EU will no longer use export subsidies for exports to
Estonia.  What is the time frame for the elimination of these subsidies?  Will there be stageddecreases?  How might the list differ among the other CEECs?
There is no provision in the Europe Agreement which relates to products for which the EU will not
grant any subsidies for exports to Estonia. A bilateral agreement between the EU and Estonia has
however been concluded, according to which the EU abolished the subsidies on exports of pig meat,
cheese, poultry, eggs and apples as from 1 July 2000. There are no staggered decreases, as no export
refunds at all will be granted for the destination Estonia for the products in question.WT/TPR/M/72/Add.1
Page 93
The list of products for which the export refunds will be abolished differ amongst the other CEECs,
however the point of departure has been the same in each bilateral negotiation (i.e. the sectorsoriginally put on the table have been pig meat, poultry, cheese, eggs, apples and tomatoes).
Question from Switzerland (Q.8)
Para. 27 on page 26 of the Report by the Secretariat describes the "screening" on the acquis
communautaire by the applicant country prior to the formal negotiations to join the EU. Some of the
applicant countries have already concluded several chapters. Are these chapters equivalent to the
Europe Agreements described in paras. 53 ff on page 32? The Europe Agreement also commits the
party from Central and Eastern Europe to approximate i.a. technical rules and standards (=PECA).
Once a PECA is signed will the conformity assessments undertaken in both parties be mutuallyaccepted? When will the first PECAs be ready for signature? What product sectors will be covered?
When will these Protocols enter into force?
The chapters of the acquis are not equivalent to the Europe Agreements, but are the chapters of the so
called “acquis communautaire” that comprises the entire body of European Community legislation,that has accumulated, and been revised, over the last 40 years.  The “acquis”  comprises 31 chapters
covering all the Community legislation (including the Europe Agreements).
Question from the United States (Q. 7)
The report notes EU enlargement efforts and states  that prior to the negotiations themselves, the
applicant country is engaged in an exercise conducted by the Commission of “screening” on theacquis communautaire, both the extent to which it is transposed by the applicant and its
implementation.  Please describe in greater detail th e process of acquis as it relates to analysis of
applicant countries’ bilateral investment treaty oblig ations with non-EU countries.  How does the EU
plan to resolve any real or perceived inconsistencies?
The purpose of the screening exercise is to explain to candidate countries prior to the negotiations the
acquis that  they will have to implement on the date of their accession at the latest.  In this exercise the
Commission services try to establish whether candidate countries can accept the acquis and if so, what
is the date foreseen for adoption and implementation of the acquis.
It should be noted that the expression acquis communautaire refers to the corpus consisting of the
Treaties and secondary legislation (Regulations, directives, decisions, recommendations,
communications…), but also the decisions of the European Court of Justice and Court of First
Instance as well as institutional practices.
As far as treaties with third countries are concerned, applicant countries are aware that the rights and
obligations, which they will have to honour as Member States, imply the termination of all
agreements between themselves and the Communities, and of all other international agreements which
are incompatible with the obligations of membership.  This implies that treaties or any provision
thereof which the EU considers as not fully compatible with the "acquis" will be modified ordenounced in time for conformity to be achieved by the date of accession.  This principle is equally
applicable to bilateral treaties in the field of investment.  It is up to applicant countries to ensure that
they comply with this requirement.WT/TPR/M/72/Add.1
Page 94
Question from the United States (Q. 19)
The review notes that all Central and Eastern European countries that have concluded Europe
Agreements have subsequently requested accession to the European Union.  Please provide for each
information regarding time-lines for adopting EU regulations, transition logistics, etc.
The acquis should be implemented at the latest upon each country's accession.  Given that the acquis
comprises tens of thousands of pages of sometimes very detailed legislation, applicants are
encouraged to adopt and implement this legislation as soon as possible, in order to achieve full
conformity upon accession.
Applicants are also encouraged to ensure that they possess adequate administrative infrastructure to
implement the acquis.
As for transitional arrangements, these could only be envisaged in exceptional cases, when it is
demonstrated that they are indispensable.  Requests for such arrangements shall be limited in time and
scope, and accompanied by a plan with clearly defined stages for application of the “acquis”.  Theymust not involve amendments to the rules and policies of the Union, disrupt their proper functioning,
or lead to significant distortions of competition.  In this connection, account must be taken of the
interests of the Union and all applicant States
I-g) Internal market, trade competencies between the EC and Member States, non-
transposed Directives
Question from Canada (Q.2)
Trade Policy Regime: Framework and Objective, (2) General Framework, (iii) Trade and trade
related policy-making, para 16
The Secretariat Report refers to “issues of competence periodically complicating the conduct of
external economic relations for the Community and its Member States.  In the WTO, competence is
shared on the GATS and TRIPS agreements, and while there is no strictly delimited division of
competence, some issues currently fall under the national competence of Member States.”  Given theGATS negotiations ongoing in Geneva, has the Council decided competence for the upcoming
services negotiations?
The EU has negotiating authority for GATS 2000 negotiations.
Question from Canada (Q.3)
Trade Policy Regime: Framework and Objectives, (3) Objectives of Economic and Trade Policy, (i)
Internal Market, para 24
In a number of instances, the EU has begun infringement procedures against Member States for non-
compliance with EU law. What means are being considered by the EU to enforce compliance by
Member States which may choose to use the judicial  process to delay the im plementation of EU law?
The infringement procedure is governed by Article 226 of the Treaty.  It requires the Commission to
go through a pre-contentious procedure before bringing proceedings before the Court of Justice: this
involves sending a letter of formal notice to the Member State concerned, inviting them to commenton the alleged breach of Community law and then, if necessary, a reasoned opinion which again callsWT/TPR/M/72/Add.1
Page 95
for a response from the Member State. During this pre-contentious phase, informal contact often take
place with the Member State which enable the problem to be resolved (in 1997 and 1998, 37% ofInternal Market cases were settled after the letter of formal notice). In addition the Commission
publishes a twice yearly "Single Market Scoreboard" which contains comparative data on the
transposition of Internal Market directives and on overall compliance with Internal Market rules by
the Member States.  This has created a form of peer pressure which has been particularly effective in
reducing delays in transposing directives into national law.
Question from Canada (Q. 28)
The Secretariat Report states that “the competence of the Community over commercial policy
covers trade in goods and cross-border supply of services; joint competence between theCommunity and the Member States exists in certa in areas.”  Does this mean that competence
does not cover other modes of supply of services?  What is the competency in the other modes?
In principle, the Community has exclusive competence for modes of supply 1 and 2. For modes 3 and
4, the Community and Member States have joint competence, which means that any trade agreementcovering those modes of supply must be concl uded by both Community and Member States, without
prejudice to the negotiating authority of the Community. The precise division of competence between
the Community and Member States may vary between services sectors
Question from the United States (Q.91)
The EU legal regime for services is a mix of Member State and Community laws and regulations.
This has posed considerable difficult y for trading partners when it comes to assessing the
commercial value of commitments in the EU’s GATS schedule, where restrictive measures are
frequently inscribed for each Member individually.  This difficulty, combined with restrictive
practices at the national level, poses burdensome obstacles to service suppliers from third countrymarkets.  To what extent is the EC prepared to seek negotiating authority for the current round of
negotiations on trade in services with respect to areas of Member State or concurrent regulatory
jurisdiction?
The Community is a full member of the WTO and it exerts competencies both in all the fields covered
by the WTO Agreements.
The EU has exclusive competence in the field of goods under Article 113 of the Treaty. For Services
and TRIPs the European Court of Justice ruled in Opinion 1/94 that there is no “domaine réservé” for
Member States.
I-h) Transparency
Questions from the United States (Q.4 and 5)
Please provide further explanation on the public consultation process.  When in this process do public
consultations take place?   To what extent is the Commission obliged to either take comments on
board or to explain why it did not?  Are there uniform rules in place that apply across the directorate
generals or institutions in terms of participants, etc.?
In paragraph 18, the Report notes that Article 255 grants the public a right of access to documents of
Community institutions, subject to limits for the pr otection of public and private interests.  Can youWT/TPR/M/72/Add.1
Page 96
please explain what is meant by “protection of public and private interests?”  How frequently is this
protection invoked?
There are no uniform rules or procedures in place across the Commission for consultation. Currently,
such processes are implemented on a service-by-services basis and vary from Directorate-General to
Directorate-General. Different types of dialogue exist.
With regard to transparency, strong efforts have been made, for instance, to improve the accessibility
of documents and information through the Commission’s website.
The increased use of Green and White Papers allowing to seek views of various interest groups is also
part of this process.
Example of a consultation process: DG Trade dialogue with civil society:The DG Trade dialogue with civil society was started in 1998 as part of the outreach process in
preparation of the expected launch of a New Round of Trade negotiations at the Seattle MinisterialConference of 1999.
The dialogue process has been strengthened and structured in more detail in 2000, these changes
being announced at the General Meeting between DG Trade and civil society representatives chaired
by Commissioner Lamy in April of this year.
Web Site link to information on this issue:
http://europa.eu.int/comm/trade/2000_round/dialngo.htm
The dialogue structure referred to in the document is therefore specific to DG Trade. Other services in
the Commission have their own consultation and dialogue processes, which vary depending on the
type of dialogue and/or co-operation processes.
Currently, the Commission is working on a harmonised approach with regard to such dialogues and
consultation processes across the Commission, on the basis of the Commission Services’ Discussion
Paper: "The Commission and Non- Governmental Organisations: Buil ding a Stronger Partnership".
Web Site link to this document:
http://europa.eu.int/comm/secretariat_general/sgc/ong/en/communication.pdf
The White Paper on Reform of the Commission foresees the development of a set of
recommendations in this area by the end of this year (Action 4).Web Site link to this Document:
http://europa.eu.int/comm/off/white/reform/part2_en.pdf
Explanations on the public consultation process :
Again, there are no harmonised processes in place for the moment. Examples are in the attached Com
document.
Example:The Commission consultation process provides for three elements:WT/TPR/M/72/Add.1
Page 97
• General meetings to discuss overall WTO policy and the dialogue process with wide
participation, to take place every six months.
• Issue Group meetings on four specific subjects running in parallel, to meet once a
month for a minimum of two and a maximu m of six meetings (after which new
subjects can be taken up).
• A contact group of representatives of civil society constituencies, which meets on an
ad-hoc basis, as a facilitator to the process (to assist in consultation of constituencies
dissemination of information, etc.)
The aim of Commission consultation and dialogue pr ocess is to have a confident working process
between all interested stakeholders, focussing successively on issues where in a finite period of work
better mutual understanding of concerns and better contacts between all the key players can be
achieved.” There is no formal obligation for the Commission to take comments or proposals on board,
but on the other hand, the process is intended to inform all participants better about the issues and the
various positions regarding these subjects, as well as to feed the Commission’s own reflectionprocess.
Other rules apply to consultation processes applied by other services. There are no uniform rules in
place applicable across the board to Commission services or other Community institutions regarding
participation or modalities of such dialogues.
Access to documents
With regard to article 255, work currently ongoing on the preparation of a regulation for the
implementation of the relevant provisions. In the meantime, access to documents is regulated under acommon code of conduct agreed between the Commission and the Council.
Web Site link to this document:
http://europa.eu.int/comm/secretariat_general/sgc/citguide/en/citgu28.htm
Examples for reasons why access to documents can be refused are as follows. If the document:
• relates to complaints made to the Commission, or contains information whose
disclosure would harm the conduct of international relations;
• refers to the personnel records of Commission staff (relating to recruitment,
promotion or medical files)
• contains a firm's trading or manufacturing secrets;
• is an audit report on the use of EU f unds paid to companies for implementing a
project about which litigation is pending;
• has been given to the Commission on the strict proviso that it would not be passed on
to a third party;
• expresses the personal opinions of Commission officials or advice from a
Commission department
Nor can the confidentiality be breached of certain documents that are protected by EU legislation,
particularly those originating in the committees which assist the Commission in its work.
Web Site link for this topic:http://europa.eu.int/comm/secretariat_general/sgc/acc_doc/en/index.htm#4WT/TPR/M/72/Add.1
Page 98
I-i) Miscellaneous
Question from Australia (Q.28 - 4th General Question)
Would the EU favour a more sharply focussed approach to a new WTO Round (that is, mainly on
enhanced market access) if this paved the way for an early launch?
The short answer is No. Extension of WTO rules and disciplines to areas like investment and
competition, and clarification of WTO rules in areas like the environment are essential parts of our
Round agenda and we are not interested in, nor would we have a mandate for, sacrificing scope for a
quick start. The risk of early launch of a market access based Round is that these rule making issues –of importance to us and others – would not be part of a single undertaking and we may never be able
to bring them into the negotiations. We believe ma ny of our trading partners also would not accept a
« market access only » Round, which would not bring into the negotiations enough balance. The
question is probably academic since we see no prospect of consensus on a market access Round either
in the short, medium or long term.
TPR S
ECTION II
TRADE POLICY BY MEASURES
II-a) Customs procedures, import authorisation requirements
Question from Australia (Q.7)
The Commission has announced that inwards proce ssing arrangements (IPAs) will be streamlined to
allow exporters to purchase raw materials for export production on the world market.
Would the Commission advise how these IPAs will operate and, in particular, how it will ensure that
third country suppliers of raw materials can assured that they are not at a competitive disadvantage
in supplying these raw materials to EU processed food manufacturers?
At the time being the European Community is reforming its economic customs arrangements, one of
which is related to inward processing. The Commission proposal for a Council regulation
(COM(98)226 final) which should facilitate for inward processing arrangements sourcing on the
world market has advanced in the legislative process to the second reading in the EuropeanParliament.
Currently each inward processing arrangement is subject to an authorisation that requires the
examination in light of the economic conditions test. In the future the authorisation procedure will be
less burdensome and open to world market sourcing because the economic conditions test is deemedto be fulfilled for all industrialised products and for agricultural products that are not maintained in
the list of sensible products. For the listed agricultural products the a priori test will continue to apply.
However, to facilitate trade the Commission proposes to increase further the threshold of the de
minimis rule covering all listed products. For so-called « non-annex 1 products » other mechanisms
are available that should facilitate the use of agricultural products originating outside the European
Union, in particular in the context of food processing.WT/TPR/M/72/Add.1
Page 99
Question from the United States (Q.28)
When will the EC, as an effort to advance trade facilitation, harmonize customs procedures among
member States of the EU?
Customs procedures are already harmonised – th e Community Customs Code (Regulation (EEC)
No 2913/92) and its implementing provisions (Reg ulation (EEC) No 2454/93) apply throughout the
EU. The common legislation is however applied by the administrations of the 15 Member States.
The EU has numerous projects to advance trade facilitation. One major initiative is the New
Computerised Transit system which will facilitate trade, improve controls and provide greater
financial security to economic operators. Legislative amendments to the EU Customs code presentlybeing examined are designed to encourage the use of simplified and paperless customs procedures.
Various other actions to reduce bureaucracy, particularly via the use of information technology, are
underway. Under the Customs 2002 modernisation programme, many practical efforts are made to
reduce the burden on trade, as well as to increase harmonisation and ensure uniform implementation
in this area.
Question from the United States (Q.29)
What is the timetable for ensuring that testing results are interpreted consistently and testing errors
are taken into account at all ports of entry?
To speak of a timetable is not appropriate in this context as new testing methods are being developed
continuously. A longstanding and ongoi ng EU project in this area is designed specifically to deal with
this type of issue. A group consisting of laboratory specialists from Member States and the
Commission produces proposals to ensure greater standardisation of results and their interpretation.
Question from the United States (Q.30)
What percentage of covered shipments coming into the EU under the entry price regime utilize the
standard import value (SIV) for valuation/duty assessment purposes?
The Commission does not maintain a specific statistic on the use of standard import values (SIVs) for
valuation purposes. In this context it should be pointed out that the importer has the choice of using
SIV or another valuation method for the customs declaration.
What is the current detailed methodology employed for setting the SIV?
The procedure for determining the SIV is laid down in Article 4 (including references to other
Articles) of the Commissi on Regulation (EC) 3223/94.
In what specific ways, if any, does this vary from Member State to Member State?
There should be no variation in the application of the aforementioned regulation in the Member
States.
What procedures exist for challenging a particular SIV?Upon the importation of certain fruits and vegetables that are subject to the Commission regulation
(EC) 3223/94 the importer can choose for the purpose of valuation between three different methods:the application of the SIV, the unit prices calculated in accordance with Article 30 (2) (c) of CouncilWT/TPR/M/72/Add.1
Page 100
Regulation (EEC) 2913/92 and Articles 173 to 177 of Commission Regulation (EEC) 2454/93 or
finally, if known at the time of importation, the application the fob price of the products in theircountry of origin plus the costs of insurance and freight up to the borders of the Community customs
territory.
At the time of importation the importer has the choice between the three valuation methods to which
the regulation refers. If the importer disagrees with a particular SIV he can use the actual productprice or the unit prices for simplified valuation. Thus it seems unnecessary to provide a particular
procedure for challenging a SIV.
It is in the interest of the Commission that the SI Vs have been calculated correctly. For determining
the specific value for each good the Commission processes data provided by the Member States andpublishes the resulting SIVs as a Commission Regulation in the Official Journal. If these SIVs prove
to be erroneous, the Commission may correct them.
In addition, the importer has the possibility to challenge the Commission Regulation setting the SIV at
the European Court of Justice provided that all necessary criteria for this procedure are fulfilled(Article 230 of the EC Treaty).
How would an importer or exporter initiate such a process?The concerned importer could submit a request to the Commission to verify the calculation of the
SIV. With regard to court proceedings the plaintiff should address the writ to the European Court of
Justice.
Question from Japan (Q.16) - Quantitative restrictions and safeguard measures
(1) State-trading (WT/TPR/S/72, p. 55, para.53)
The Report indicates that “a special regime applies to the EU's import arrangements with certain
(state trading) countries” and that “the general pr inciple is “liberalisation of imports, namely the
absence of any quantitative restrictions””.  Please explain in a concrete manner on these import
arrangements?
This regime is referred to as “special” simply because it concerns only State-trading countries.
However, there are no “special” import arrangements, in the sense that the general principle is the
same as for the common rules on imports, i.e. the liberalisation of imports  .
Question from Japan (Q.17)
(2) Safeguard measures (WT/TPR/S/72, p.56, para.58)
The Report states that “the EU completed the elim ination of all quantitative restrictions introduced or
maintained under Article XIX of GATT 1947”.  Should any quantitative restrictions still remain inwhatever form, please indicate them.
As the report clearly mentions, the EU completed the elimination of all quantitative restrictions
introduced or maintained under Article XIX, and no new quantitative restrictions (or other type of
safeguard measures) on imports from WTO Members were introduced by the EU under Article XIX.
In short, the EU does not presently have any measures pursuant to Article XIX GATT 1994 and the
WTO Safeguards Agreement in place.WT/TPR/M/72/Add.1
Page 101
Oral question from India (Q.1)
We have a concern regarding the EC’s system of fixing standard import values for determining the
entry price of certain fruits and vegetables through it Regulation No 2322/97 of 24 November 1997
instead of determining value under the WTO Ag reement on Customs Valuation (...). Given the
importance of the Customs Valuation Agreement to the whole Membership, we would like to hear the
response of the EC to the whole issue raised by (our) delegation.
The EU determines import values in accordance wi th the WTO rules; standard import values is a
support tool for the customs services and it does not undermine the rights of traders; the EU has
submitted information to various WTO committees on these procedure regarding imports of fruits and
vegetables.
II-b) Tariffs and tariff quotas
Question from Korea (Q.1)
For 1999, the average tariff rate of the Community  on all imported items is estimated at 6.9% with
4.5% for non-agricultural products. However, ce rtain products, including textiles and clothing,
electrical home appliance and automobiles, are subject to tariff peaks and tariff escalation. Korea
wishes to know whether the EC plans to lower such higher tariffs on these items.
The EU wants the Round to include comprehensive market access negotiations for non-agricultural
products. These negotiations should address, inter alia, tariff peaks and tariff escalation. The EU will
of course look at the level of its own tariffs in those negotiations.
Question from India (Q.4)
Are any steps being contemplated/have been taken to simplify the tariff  structure?
The EU is engaged in simplifying and modernising the EU Combined Nomenclature used for external
trade through the SLIM Programme (Simpler Legislation for the Internal Market). This work takes
full account of the EU's WTO and WCO (Harmonised System) commitments.
In the context of its approach towards non-agricultural market access negotiations in the new Round,
the EU has proposed that there should be a determin ed effort to simplify the tariff structure of all
WTO Members, by reducing tariff differentiation to the 6-digit HS level.
Oral question from India (Q.2)
We note that the rice regime of the EU is under revi sion and would come into effect from 1 September
2001. It is understood that the existing system of dete rmining import duties for rice, which was earlier
linked to the intervention price, would be replaced by a fixed tariff system. We do not understand theneed and rationale for such a new system. The ne w system has serious implications for India with
regard to its basmati rice exports. By doing away with the intervention system, we feel that only the
Indian basmati rice would face an increase in customs duty while imports of similar rice from some
developed country sources would not be affected. it should be noted here that basmati rice is the
single most important agricultural commodity bein g exported from India to the EU. Hence we would
appreciate that the EU would be sensitive to the implications of possible disruption of Indian exports
of this item to the EU.WT/TPR/M/72/Add.1
Page 102
The proposed changes in the EU rice regime will take account of the interests of our main partners
and in particular India.
Question from Canada (Q.15)
III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports
(iv) Community tariff, (a) MFN regime, paras 24-29:
The EU has opened tariff quotas for imports fr om certain trading partners as a consequence,
inter alia, of enlargement. Although the European  Commission maintains data on imports by value
and quantity on the relevant tariff lines by country of origin, the Commission does not maintain
import data by supplier country for imports under specific quotas.  How does the Commission
propose to ensure that imports accorded to supplier countries are, in fact, supplied by the country or
countries in question and that WTO-bound quotas are fully respected?
It is the responsibility of the customs services of each Member State to ensure that the goods for
which tariff quota benefit is requested in fact satisfy any conditions for access to the tariff quota in
question (see, for example, Article 308a(3) of  Regulation (EEC) No 2454/93, as amended by
Regulation (EEC) No 1427/97). The work of these services is subject to regular inspection both by the
national authorities and inspectors appointed by the Commission.
Up-to-date data on the usage of tariff quotas managed on a first-come first-served basis is open to
public access on the web ( http://europa.eu.int/comm/taxation_customs/databases/quota_en.htm ) in
exactly the same terms (for example, as to origin) as the Commission's central computer system
handling the management of those quotas. Within the framework of preferential trade agreements andthe Europe Agreements in particular, the origin of each tariff quota is specifically indicated. The
indication of "GATT" or "a utonomous" in that web application effectively refers to tariff quotas (or
trigger levels) which are applicable to any and all third countries.
Question from Hong Kong/China (Q.3)
One third of the dutiable lines of the Community are at "low-tariff " rate (3% or less), e.g. 1.3% for
printed books, newspapers, pictures and other products; and 2.4% for rubber and articles thereof.
These low rates represent nuisances to the trade.  They are not meaningful or effective as a trade
policy instrument to the imposing authorities.  We are interested to know if the Community has anyplan to eliminate such nuisance tariffs in line with its liberalisation efforts.
and
Question from Hong Kong/China (Q.4)
While the simple average tariff for non-agricultural products is at 4.5%, tariff peaks  (highest rate
being 12.4%) exist in a few sectors (e.g. textiles and clothing, electrical equipment, vehicles, organic
chemicals and alcoholic solutions).  We would like to know if the Community has any plan to reduce
the disparity by bringing down the tariff rates of these products."
The Community has no plans to change MFN tariff levels unilaterally. However, in our proposals for
non-agricultural market access negotiations (doc. WT/GC/W/178) in the Round, we have proposed
that the tariff structures of all WTO Members should be harmonised through a tariff band approach.
The "high band" would address the problem of tariff peaks, while the "zero band" and "low band"
would address the problem of very low tariffs.WT/TPR/M/72/Add.1
Page 103
Oral question from Malaysia
Regarding tariffs, we note the current high level tariff levels on products of export interest to
Malaysia. Products such as processed palm oil and palm kernel oil have high tariffs of between 4-
14% , processed tropical fruits (18-21%), cocoa products (8-17%). There is tariff discrimination
between products of tropical timber and coniferous timber, the former being 10% and the latter 7%.
We ask if the EU has intentions to reduce these tariffs to improve market access in these products.
The EU is the most important world importer of most of the products mentioned in your question; in
addition, to most developing countries the EU applies preferential tariffs; in this context it is not
foreseen to reduce duties on a MFN basis.
Question from the United States (Q.31)
In what different manners does the EU administer quotas?
(a) The general regime for the administration of quantitative quotas is contained in Council
Regulation (EC) N° 520/94. Commission Regulation (EC) 738/94 (amended by its Regulation
(EC) N° 983/96) laid down general rules for the implementation of Council Regulation (EC)
N° 520/94.
The only quantitative restrictions which are currently in place under the general regime as
those introduced pursuant to Council Regulation (EC) N° 519/94 (as last amended by Council
Regulation (EC) N° 1138/98) for certain non-textile products originating in the P.R.China.
These quantitative restrictions on China are implemented by means of annual quotas (unused
quantities of quotas are redistributed the following year). The administrative method used
currently to distribute the quotas is based on traditional trade flows. The opening of the
annual quotas is announced by publication in the Official Journal of a Notice to Community
importers, inviting them to submit applications  to the competent national authorities. The
Notice also specifies the particular information that each import licence application should
contain (applicant’s particulars, quota period, description of goods etc) as well as the
conditions under which importers qualify for either the traditional or non-traditional
(newcomer) categories-groups of importers.
(b) Unilateral textiles quotas are administered by the Commission on the basis of Council
Regulation 517/74 (L 67 of 10.3.1994. The Commission adopts a Regulation on the quota to
be attributed to countries falling under this regime. These quotas are distributed on a first
come first served basis and are usually filled very quickly.
(c) The different manners of administering tariff quotas are explained briefly in footnote 26 on
page 46 of doc. WT/TPR/S/72. Further information has been notified to the WTO under the
Import Licensing Agreement (see "laws and regulations" on page 164 of the Secretariat's
report).
Are there different administrative procedures for quotas that are expected to be filled the moment of
opening?
Tariff quotas managed on a first-come first-served basis and that are expected to be filled the moment
of opening follow the same procedures as tariff quotas that are not. Tariff quotas are commonly, but
not exclusively, opened on 1 January or 1 July. Insofar as they are opened on 1 January, those tariff
quotas are covered by the rule that goods declared for release for free circulation on 1, 2 or 3 JanuaryWT/TPR/M/72/Add.1
Page 104
are regarded for the purposes of these quotas as having been declared on a single date (see Article
308a(8) of Regulation (EEC) No 2454/93, as amended by Regulation (EEC) No 1427/97). The reasonfor this rule is to ensure fair access to the tariff quotas, even in areas or Member States where it is
impossible or impractical to lodge a customs declaration on 1 or 2 January.
Please explain the low fill rates of TRQs
Any low fill of a tariff quota is not the consequence of administrative rules or their application. The
first-come first-served system of managing tariff quotas chosen by the Community is based on the
following principles (see the third recital of Regulation (EEC) No 1427/97 amending Regulation
(EEC) No 2454/93):
− that importers throughout the Community must be treated fairly and uniformly, and
− that access to the tariff quotas  must be equal and continuous.
The granting of benefit of these tariff quotas depends in particular on the importers concerned making
a request for benefit (see Article 308a(2) of Regulation (EEC) No 2454/93). The importer decides for
himself whether or not to make such a request
II-c) Rules of origin
See Section I-e on Preferential Agreements.II-d) Technical regulations and standards
Oral Question from Argentina  (Q.2) - telecommunicaciones
In paragraph 96 on telecommunications (page 122) of the Report by the Secretariat, it is stated that
"The liberalization of the telecommunications market was extended to all foreign operators, withminor limitations on market access and national treatm ent;".  Could the EU provide details of these
"minor limitations" on market access and national treatment?
As indicated in the schedule of commitments of the Community and its member States, there is no
limitation on foreign ownership of a European co mpany, except in Portugal where ownership is
limited to 25 per cent (direct or indirect) and in France, where direct ownership is limited to 20 per
cent.  Moreover, in Finland, half of the founders and board members must be resident in the European
Economic Area, and a founder that is a legal person must be resident in the European Economic Area.
Question from Australia (Q.14) –Environment
We refer to the draft legislation proposed by the Commission on 13 June 2000 to the Council and the
European Parliament on waste electrical and elec tronic equipment and restrictions on the use of
certain substances in eletrical and electronic equipment which, inter alia, includes trade bans on the
use of certain substances including lead, mercury and cadmium.  It has been said that this draft
legislation has been proposed without first conducting an analysis of the risks associated with the
suspect materials in electrical and electronic equipmen t, and that it is possible that the environment
will be worse off because the environmental impact of the alternative materials has not been studied.
Would the EU provide details of the scientific studies undertaken to justify these trade bans.WT/TPR/M/72/Add.1
Page 105
Would the EU explain how this draft legislation is consistent with the Technical Barriers to Trade
Agreement which determines that non-tariff barriers  to trade may be imposed only if governments can
show that the restriction is "necessary" for ac hieving a legitimate purpose such as environment
protection and does not have a disproportionate effect on trade.
All details on the scientific evidence justifying the adoption of the Proposal on the restriction of
certain hazardous substances in electrical and electronic equipment (COM(2000) 347) are part of the
Explanatory Memorandum (Annex IV). This document has already been made available to Australia
and other trade partners. As regards the consistency with the TBT Agreement, the EU would like to
underline that all proposed measures have been considered to be necessary to fulfil the pursuedenvironment objective. The growing amount of WEEE and of its associated hazardous content is of
concern to us and it has been considered necessary to adopt appropriate measures to tackle this
growing environmental problem. The need to mini mise any potential impact on trade has also been
duly taken into account in designing the proposed measures.
Question from Australia (Q.16)
We refer to reports that the Commission is drafting legislation that would ban the use of cadmium in
batteries.
Would the EU provide the details of the scientific studies on which this proposal is based?The following scientific studies have been reviewed in the context of the work on the revision of
Directive 91/157/EEC on batteries and accumulat ors containing certain dangerous substances:
1. Sanitary landfilling: Process, Technology a nd Environmental Impact, Christensen et al., 1989.
2. Renal effects of cadmium body burden of the general population (J.P.Buchet and others,
1990)
3. Blood cadmium in London civil servants (J.Staessen and others, 1990)
4. Effects of exposure to cadmium on calcium metabolism: a population study (J. Staessen and
others, 1991)
5. Does environmental exposure to cadmium represent a health risk? Conclusions from the
CadmiBel study (R.Lauwerys and others, 1991)
6. Blood pressure, the prevalence of cardiovascular diseases, and exposure to cadmium: a
population study (J.Staessen and others, 1991)
7. Effects of cadmium on transmembrane Na+ and K+ transport systems in human erythrocytes
(P.Lijnen and others, 1991)
8. Field evaluation of leachate characteristics, Institute of Environmental Engineering, Bari
(Italy), 1992.
9. Transfer of cadmium from a sandy acidic soil to man: a population study (J. Staessen and
others, 1992)
10. Factors influencing the cadmium body burden in a population study (F.Sartor and others,
1992)
11. Effects of cadmium exposure on the cardiovascular system and on calcium metabolism:
results of a cross-sectional population study (J. Staessen and others, 1992)
12. Determinants of serum zinc in a random population sample of four Belgian towns with
different degrees of environmental exposure to cadmium (L.Thijs and others, 1992)WT/TPR/M/72/Add.1
Page 106
13. Impact of environmental cadmium pollution on cadmium exposure and body burden (F.Sartor
and others, 1992)
14. Cadmium. Environmental Health Criteria 134. (WHO/IPCS, 1992)
15. Cadmium – environmental aspects. Environmental Health Criteria 135. (WHO/IPCS, 1992)
16. Questions on cadmium (CECAD - Group for the study of cadmium, 1992)
17. Analysis of long-term leachate characteristics, University of Wisconsin, USA, 1993
18. Forbrug af og forurening med cadmium (Ministry for Environment, Denmark, 1993)19. Health effects of environmental exposure to cadmium in a population study
(J.Staessen/R.Lauwerys, 1993)
20. Management and Composition of leachate from landfills, Water Quality Institute for the
European Commission, 1994.
21. Risk reduction monograph n°5, CADMIUM - Background and national experience with
reducing risk (OECD/GD94/97, 1994).
22. NiCad 94 – Report on Conference (Inter national Cadmium Association, 1994)
23. Cadmium in the European Community: a policy-oriented analysis (van der Voet and others,
Waste Management & Research, 1994)
24. Cadmium and its inorganic compounds (Dutch expert committee on occupational standards,
1994)
25. Heavy metals - State of the art, targets and reduction instruments (Ministry of the
Environment and Energy, Denmark, 1994)
26. Cadmium – some aspects of risk reduction (The Netherlands, Ministry of Housing, Spatial
Planning and the Environment, 1995)
27. Proceedings of the OECD Cadmium Workshop – Sweden 1995
28. Environmental impacts of cadmium (Gerrit H. Vonkeman, 1995)29. The relative human health and environmental risks of materials in battery systems (H.
Morrow, 1995)
30. Environmental cadmium pollution and public health: the Belgian experience (J.Staessen and
others, 1995)
31. Product policy and the environment: the example of batteries (Bayer and others, 1995)32. Cadmium exposure and health risks: recent findings (Elinder/Järup, 1996)
33. Sources of cadmium in the environment (OECD proceedings, 1996)
34. Public health implications of environmenta l exposure to cadmium and lead: an overview of
epidemiological studies in Belgium (J. Staessen and others for CadmiBel and PheeCad Study
Groups, 1996)
35. Market, evolution of technological progress and environmental impact of batteries and
accumulators. (ERM, 1997), European Commission DGXI.
36. Cadmium in Sweden – environmental risks (H. Parkman and others, 1997)
37. Cadmium in goods – contribution to environmental exposure (Bergbäck/Jonsson, 1997)
38. Implementation of the Mercury-containing and rechargeable battery management act.
(Environmental Protection Agency, USA, 1997)WT/TPR/M/72/Add.1
Page 107
39. Health effects of cadmium exposure – a review of the literature and a risk estimate (Lars
Järup and others - ed Scan J Work Environ Health, 1998)
40. Cadmium – The issues and answers (H. Morr ow, 1998 – International Cadmium Association)
41. Le Cadmium en “questions” – compléments actualisés (CECAD - Group for the study of
cadmium, 1998)
42. Environmental exposure to cadmium, forearm bone density, and risk of fractures: prospective
population study (J. Staessen and others  for PheeCad Study Group, 3 April 1999)
We note that the International Cadmium Association has proposed an industry-funded re-cycling
program for cadmium batteries as an alternative to the trade ban.  What considerations would need to
apply for the EU to adopt the industry proposal as an alternative to the ban?
The discussions with the International Cadmium Association on an industry-funded recycling
program are still ongoing. It is therefore premature to comment on any possible outcome at this stage.
Question from Australia (Q.32)
Would the EU consider extending the MRA on conformity assessment to cover all of the automotive
products covered by relevant EC regulations?
A light type-approval is possible for small series, up to 500 units per year and per Member State.
However, this type-approval granted by one member  state may be refused by other member states, or
may be accepted for a limited number of cars; it is up to each member state to decide whether to
accept it or not and for which quantities, still up to 500 max.
Question from Thailand (Q.2)
The EU is in the stage of proposing 2 directives concerning waste from electrical and electronic
equipment, namely,
(1) Proposal for a Directive on Waste Electrical and Electronic Equipment (DWEE) regulating
disposal practices of those equipments,
(2) Proposal for a Directive on the Restriction of the use of Certain Hazardous Substances in
Electrical and Electronic Equipment: prohib iting use of certain hazardous substances.
It is understood that these proposals have yet to be officially announced or notified to the Committee
on TBT. Nevertheless Thailand wishes to cautio n that these regulations, once implemented, may
impose additional and unwarranted burdens upon producers and exporters from third countries
especially those small and medium-sized enterprise s (SMEs) in developing countries, which are not
yet capable of dealing with the recovery, recycling and disposal practices or able to upgrade their
production methods to be in conformity with the EU’s restrictions on the use of certain hazardoussubstances.
Thailand would appreciate further clarification in writing by the EU regarding the latest status of
these proposed Directives, and regarding any future accompanying measures that would help
alleviate or minimise possible negative impacts upon business operators, particularly in developing
countries, should these proposals become effective.WT/TPR/M/72/Add.1
Page 108
The proposals for a Directive on Waste Electrical and Electronic Equipment (WEEE) and for the
restriction of the use of certain hazardous substances in electrical and electronic equipment referred toby Thailand have now been adopted by the European Commission (EC) and accordingly transmitted
to the Council of Ministers and to the European Parliament for adoption in accordance with the co-
decision procedure. It has also been duly notified under the TBT Agreement in July.
The EU wishes to underline first that the rapid growth of WEEE and of its associated hazardous
content is of concern given the environment and health implications the WEE E can cause during the
waste management phase. The objective of the proposed directive is mainly two-fold: first to protect
soil, water and air from pollution and second to avoid the generation of waste. Regarding in particular
the restriction of the use of certain substances, the EU would add that the proposed substitution of
substances scientifically recognised as being hazardous is considered to be the most effective way ofensuring an appropriate reduction of environment/health risks associated with such substances.
Relevant scientific information regarding those substances is to be found in the explanatory
memorandum attached to the proposal, which was notified under the TBT Agreement.
The proposed Directive will apply uniformly to all electrical and electronic equipment placed on the
EU market, independently from where they have been manufactured. Foreign and domestic producers
are therefore put on an equal footing.
Oral question from India
We face serious market access problems for bicycles in France keeping in view the French policy
effective from 1 October 1995 that all bicycles sold in France have to be fully assembled in France.This condition is not applicable to imports from It aly. It is pertinent to note that countries like
Germany, UK, Holland and the Scandinavian countri es do not have the 100% assembly rule. We
would strongly request the EU to take up this issue with the French authorities and get the stipulation
which is impeding the access for Indian-made cycles into France removed.
The EU is not aware of such a requirement for the sale of bicycles in France.
Question from Japan (Q.22) - Recycling and recycling marking
Concerning recycling and recycling markings, Japan notes that the system of recycling and marking
differs among the European countries, which makes it unnecessarily difficult for companies to abide
by the regulations. We thus appreciate the EU’s comment on this issue.
At Community level a marking symbol (crossed-out dustbin) was established according to Article 4 of
Directive 91/157/EEC by Directiv e 93/86/EEC for batteries containing certain levels of mercury,
cadmium and lead. This symbol shall teach consumers to keep end of life batteries separately from thenormal household waste. It is intended to require the same symbol for all batteries and appliances
containing batteries as well as for electrical and electronic equipment.
Article 8 of Directive 94/62/EC on packaging and packaging waste was intended to establish a
marking and identification system for packaging. The identification system was introduced on avoluntary basis by Commission Decision 97/129/EC. As regards the marking, the Commission
decided in 1999 on the basis of the Parliament ’s comments to drop the Proposal for a Directive on the
marking of packaging since it did not provide useful information for the consumer.
Coding standards are to be developed in the area of end of life vehicles according to the draft
Directive on end of life vehicles. The draft Directive establishes that the Commission, in developing
the common coding standards, takes into account of the work going on in international fora.WT/TPR/M/72/Add.1
Page 109
Question from Japan (Q. 46)
The EU seems to be discussing, in view of adop tion, a proposal for EC directive concerning the
manufacture, presentation and sale of tobacco products.  Japan understands that, in the proposal,
there is a provision to prohibit the use of certain adjectives, such as “mild”, which already appeared
on tobacco products, as such adjectives may cause consumers to regard the tobacco productscarrying such adjectives as safer than others.  Japan is concerned that such a provision may be too
trade-restrictive for the protection of public health.  We wish to have the EU’s view on this issue.
The question raised by the Japanese concerns the proposal for a directive on tobacco products, which
has been through a first reading in the European Parliament, and has been the subject of a CommonPosition in the Council.  It is now in second reading stage in Parliament.   A provision of this
proposal, Article 8 (Commission amende d proposal COM(2000)428), states
1. The use of the terms “low tar”, “light”, “ultra light”, “mild”or any similar terms
including indication of the yields, which have the aim or the direct or indirect effectof conveying the impression that a particular tobacco product is less harmful than
others shall be prohibited, unless such terms have been expressly authorised by the
Member States where the products in question have been marketed or manufactured.
The EP first reading and the Common Position adopted by the Council drop certain parts of the
Commission proposal (e.g. the text in italics above) , making the ban on such misleading descriptors a
complete one.  The Commission accepted the Council’s Common Position, including this change.
The proposed directive is based scientific evidence. The proposal to regulate misleading descriptors
was one made to the Commission by its High Level Cancer Experts Committee, which adopted
Recommendations on tobacco control in October, 1996. The scientific justification for this proposal is
set out in scientific publications accompanying the Recommendations. The Commission then adopted
in December 1996 a Communication on the same subject (Com 609).  The issue of misleadingdescriptors was taken up in Paragraph 15.6 of that Communication.
In view of various factors, e.g. an annual deat h toll in the EU associated with smoking of around
500,000 deaths, the provisions cannot be characterised as being "too trade restrictive for the protection
of public health.
It may also be mentioned that the World Health Organisation will open negotiations for a Framework
Convention on Tobacco Control in Geneva in October, 2000.  The draft of the negotiating text has
already been prepared by two working group meetings in October, 1999 and March 2000 and
submitted to the World Health Assembly in May, 2000.  The question of misleading descriptors is oneof the issues on the table of negotiations. The European Commission has obtained a mandate from the
Council to negotiate this convention under Article 300 of the Treaty.
Question from Japan (Q. 47) - Excessively  trade-restrictive environmental rules
Japan agrees with the EU on the importance of environmental issues. However, we are concerned
about the excessively trade restrictive nature of the environmental regulations now under
consideration and we hope that the EU will come up with a well-balanced and reasonable regulation.
We would like to invite the EU’s comment on this issue.WT/TPR/M/72/Add.1
Page 110
Question from Japan (Q. 48)
We understand that the Draft Directive on Waste Electronic and Electrical Equipment (WEEE) as
well as that on the Restriction of the Use of Certain Hazardous Substances in Electrical and
Electronic have been submitted for approval by the European Parliament and the Council, and that
the Draft Directive on End of Life Vehicle (ELV) as well as that on Waste Electrical and Electronic
Equipment are being considered. We would like to reiterate our view that the contents of these
regulations must be fully consistent with the TBT Agreements, without excessive trade restrictive
effects.
The EU fully agrees with Japan as to the need to make sure that the proposed Directives on WEEE are
consistent with TBT rules. All proposed measures have been considered to be necessary to fulfil thepursued environment/health objective. In addition, the need to minimise any potential impact on trade
has also been duly taken into account in designing the proposed measures. The measures are therefore
considered to be justified and least-trade restrictive to meet the assigned objective.
The proposal on the WEEE, illustrating the Polluter-Pays principle, makes producers responsible for
certain phases of the waste management of their products, which also creates an incentive to improve
the design of their products. Regarding the restriction of the use of certain substances, the proposed
substitution of substances scientifically recognised as being hazardous is considered to be the most
effective way of ensuring an appropriate reduction of environment/health risks associated with such
substances. In addition, the implementing modalities of such a substitution requirement have duly
taken into account the need to avoid unnecessary obstacles to trade.
To conclude, and given the environment challenge posed by the rapidly growing generation of
WEEE, the EU is strongly of the view that the proposed measures do correspond to the urgent need to
tackle the identified environmental problems without creating unnecessary obstacles to trade.
Question from Korea (Q. 5)
In the EU, imported products must comply with essential technical requirements and get the CE mark
to be allowed to be placed on the market. However, the procedure to get approval can be lengthy and
delay market access to new products, especially when a notified body is required to assess the
conformity of these products. From Korea’s standpoin t, this problem could be partially remedied if
the EU were to expand the number of mutual recognition agreements.
We still attach importance to the principle of negotiating a bilateral Mutual Recognition Agreement –
as stated in the Commission’s Communication of December 1998 on EU-Korea relations. We are
currently evaluating its potential economic significance.
We have taken a number of important preliminary steps to improve mutual knowledge and co-
operation. These include the useful seminars held some time ago on our respective standards /
certification systems and informal contacts to clarify the parameters of an eventual agreement.
We want to continue such informal discussions. We need also to be sure we can commit the necessary
resources to this. Currently they are heavily committed to implementation of existing agreements
which have proved much more difficult to put in motion than we anticipated. It is also very important
to convince our industry that this is a priority.
Finally, our recent ad referendum  agreement on cosmetics demonstrated that one can achieve progress
in the area of certification through regulatory co-operation as well as through MRAs and that it isworth pursuing efforts on deregulation or regulatory co-operation.WT/TPR/M/72/Add.1
Page 111
Question from Peru (Q.2)
2) Measures directly affecting imports
Product regulations and standards
(Página 57, Párrafo 61)
The Report by the Secretariat indicates that products placed on the Community market, whether of
Community or imported origin, must comply with  the relevant health, safety and environmental
regulations.  The new approach regulations leave specific technical regulations to the market.  In
order to determine the application of these regulati ons, however, manufacturers must analyse a given
product.  What kinds of analyses are carried out and what documentation does a manufacturer have
to attach for the purpose of determining whether the compulsory regulations apply?
The harmonisation of legislation can be pursued through various legislative measures and the term
"New Approach" (N uevo Enfoque) only indicates directives based on a number of common
principles. The "Old approach" directives also meet the objective of harmonisation. Tests, certificates,
data and documents to assess the appropriate requirements will depend on product or sector involved.
The sectors covered by New Approach can be resume d by the list of New Approach Directives (see
new version of Guide on New/Global Approach- available on
http://europa.eu.int/comm/enterprise/new approach/standardization/document/1999_1282_EN.pdf )
EC New Approach directives require that a product fulfils the essential requirements, has undergone
prescribed conformity assessment procedures and is duly marked. The conformity assessment
procedures are based on either the manufacturer itself carrying out the tasks ("self certification") or
the intervention of a third party, a so-called Notified Body. Notified bodies can only be designated by
the EU Member States unless the Community has an agreement with a third country.
The manufacturer has the obligation to analyse the hazards in order to identify those which apply to
the product. He must then design and construct the product taking account of his analysis. As a
general rule, in choosing the most appropriate solutions, the manufacturer must apply the principles
set out below in the following order:
– eliminate or reduce hazards as far as is reasonably practicable,
– apply appropriate protection measures against hazards which cannot be eliminated,
– where appropriate, inform users of residual hazards and indicate whether it is
necessary to take appropriate special measures to reduce the risks at the time ofinstallation and/or use.
All this information must be included in the technical file produced by the manufacturer.
Question from Peru (Q.3)
Under the regulatory framework for foodstuffs, th e European Union applies a number of vertical
measures, including compositional requirements.  What do these measures include, for the following
products in particular:  coffee, cocoa, and fruit juices?  Has the European Union considered revising
or abolishing these measures?  The Report mentions  a revision of these regulations in the case of
coffee.  What changes have been made, if any?WT/TPR/M/72/Add.1
Page 112
EU policy consists in setting up standards of composition for certain products in order to allow
producers for using within the Community related sales denominations. For example, a producer maysell a product named as "chocolate" only if it complies with the definition laid down in the concerned
legislation. EU vertical directives (chocolate and chocolate products, dehydrated milks, sugars, honey,
jams, jellies and marmalades and chestnut purée, fruit juices, coffee and chicory extracts) have been
engaging in a revision process for five years in a vi ew of simplification and better functioning of the
internal market. The new directive relating to coffee and chicory extracts is the only one which hasbeen published (directive 1999/4/EC of 22.22.1999)
Question from Switzerland (Q.7)
In para. 25 on page 25 of the Report by the Secretariat it is stated that the Community took initiatives
during the period under review to enhance the efficiency of goods, services, and capital markets.
These concern i.a. removing technical obstacles to trade. What were the concrete measures taken to
remove technical obstacles to trade in order to enhance the efficiency of goods markets? And what is
planned within the new five-year strategy for the Internal Market?
The report states in page 25 paragraph 25 some of the measures taken, i.e. establishing a regulatory
framework for e-commerce, adopting a Community-w ide intellectual property rights protection
regime, etc. For more information the following web-site can be checked:
http://europa.eu.int/comm/internal_market/en/update/strategy/index.htm
Question from the United States (Q.33)
We are concerned that the EC’s focus on internal transparency has compromised third countryopportunities to influence the development of technical requirements as foreseen by the transparency
obligations of the TBT Agreement.  At what po int in the process are proposed  “old approach”
directives notified to the WTO Secretariat for purposes of fulfilling the transparency requirements of
the TBT Agreement? At what point in the proce ss are proposed  “new approach” directives notified
to the WTO Secretariat for this purpose?  (This information is not specifically provided in the
Commission’s Statement on Implementation provided to the WTO Committee on Technical Barriers to
Trade – G/TBT/2/Add.12/Rev.2).
With regard to the transparency obligations of the TBT Agreement, there is no difference as far as
notification to the WTO Secretariat is concerned, between New Approach or Old Approach
Directives. The same procedure of notification is followed. As for the timing of notification, the
choice depends on the decision-making procedure used for each measure. In all cases, the EU ensures
that notifications are made at an appropriate early stage, when amendments can still be introduced and
comments taken into account.
Question from the United States (Q.34)
The Secretariat’s report indicates that a supplier’s compliance with harmonized European regional
standards (e.g., CEN, CENELEC) leads to a presumption of conformity with the “essentialrequirements” established by the Commission’s new approach Directives; however, compliance with
European regional standards is voluntary since alternative technical solutions can also be shown to
meet the essential requirements .  To what extent have alternatives to European standards been
recognized as meeting the essential requirements?  We are unaware of any situation where this has
occurred.
Under the New Approach Directives, standard isation bodies (CEN, CENELEC and ETSI) are
mandated by the European Commission to define the detailed technical solutions (harmonisedWT/TPR/M/72/Add.1
Page 113
standards), which can be applied by manufacturers on a voluntary basis. Manufacturers can choose to
apply harmonised standards or any in-house technical specification, provided that their productcomplies with the essential requirements defined in Directives. However, when applied, harmonised
standards, references of which have been published in the Official Journal of the European
Communities, give the presumption of conformity to the corresponding essential requirements. The
manufacturer who has correctly used harmonised sta ndards is no longer required to demonstrate how
the essential requirements which are covered by the applied harmonised standards have been satisfied.When the manufacturer applies a different technical solution, he must provide to the certification body
(notified body) with a complete technical file demonstrating that the applied solutions complies with
the relevant essential requirements. Manufacturer s thus have a choice as to how to comply with
essential requirements and it is completely up to them to decide on how to exercise that choice.
Question from the United States (Q.35)
In fact, it is our understanding that in these instances, compliance with the European regional
standard is, as a practical matter, driven by the need to comply with the legislated requirements and
is not voluntary, as suggested in the Secretariat’s report.  And, regional standards usually do not existat the time the “essential requirements” of a “new approach” Directive are agreed.  In view of this,
at what point in the process are third parties given the opportunity to comment on the relevance of a
particular regional standard in meeting the essential requirements?
At any rate and notwithstanding the use or European harmonised standards, it is the manufacturer’s
responsibility to comply with legal requirements a nd to attest conformance by means prescribed in the
directive, e.g. supplier’s declaration or third party certification. The advantage European harmonisedstandards offer is merely a presumption of conformity with the legal requirements which may
facilitate third party certification.
A manufacturer is obliged to comply with the legal requirements as soon as they enter into force even
when –provided he wishes to use them- the relevant harmonised standards are still underdevelopment. Such standards do not necessarily cover all legal requirements; there are also legal
requirements for which no standards exist at all. It is up to the interested parties in standardization,
mainly industry, to decide whether development of European harmonised standard is deemed
relevant.  The European standards organisations are invited through a mandate by the Commission,
but not obliged to present standards as harmonised standards.  They are free to identify existingstandards, national or international  standards for this purpose.  They may also confirm that there is no
need for a standard.  The European standards organisations exchange in a transparent way information
with their international counterparts on their work programme and submit texts of draft European
standards for comments. The application of harmonised standards is voluntary in legal and practical
terms. The choice is up to the manufacturer. It is the understanding of the Commission that the USdoes not offer such a choice in its legislation since, more often than not, voluntary standards are made
mandatory by direct reference or incorporation.
Question from the United States (Q.36)
The Secretariat’s report references agreements between the European regional standards bodies
(CEN and CENELEC) with their respective in ternational counterparts (ISO and IEC) which,
according to the Commission, have resulted in a gr eater “transposition” of international standards
as European standards.  At the same time, it is our understanding that a number of members of the
ISO have been raising concerns with the operation of the Vienna agreement and that, in many cases,
the “international” standard is heavily dominated  by European interests and mandates that may not
be reflective of non-European needs.  What is the Commission’s reaction to these concerns?WT/TPR/M/72/Add.1
Page 114
It is the Commission’s understanding that ISO members should seek amongst themselves clarification
on the functioning of agreements concluded by that organisation. It is, however, the Commission’sobservation that the European standardisation organisations have committed themselves to a
transparent mechanism for the co-ordination of their work with work carried out at the international
level. The Commission is convinced that an international standardization organisation like the ISO
which operates on the basis of national representation offers equal rights and opportunities to all its
national members.  Members may decide at which level (international or regional) work should becarried out and it is to the discretion of members to provide reasonable input during the development
of a standard.
Question from the United States (Q.37)
In practice, regulatory decision-making in the EU  appears in some instances to reflect political
interference (e.g., delays by a number of EU Member States of regulatory approval and
reimbursement for new medical devices and drugs and biotechnology product non-approvals).  What
specific measures does the EU have in place to ensure that regulatory decision-making is shielded
from political interference?
On the one hand, the regulatory decision-making process at Community level involves the European
Commission, the European Parliament and the Council (composed by EU Member States); it is a
political process. On the other hand, the enforcement of the European legislation is IN PART done by
Member States and there are different mechanisms set up by the Treaty to be used if the Commission
considers that a Member States has failed to fulfil an obligation under the Treaty (Articles 10, 226
EC).
Question from Switzerland (Q.10)
In para. 60 on page 57 the Commission notes that national product legislation remains "the major
obstacle to doing business within the Single Market".  Reading this in the context of WTOnotifications of technical regulations by the EC Member States between 1995 and 1999, where certain
EC Member States have notified not one single technical regulation or only a few (see table III.6 on
page 62) one may have the impression that there are not so many remaining national product
legislation.
What  is  the  reason  for  this  low  WTO notification score by the Member  States?
The reasons lie with the fact that proposals of Directives are notified by the European Commission to
the WTO. When Directives are adopted by the Council and the European Parliament, Member States
have the obligation to take over the Directives that have already been notified to WTO. Moreover,concerning national legislation not covered by EU legislative measures, it is up to each Member State
to ensure notification of draft legislation.
Question from Japan (Q.18)
(1) Vienna Agreement and Dresden Agreement
 (i) Paragraph 74 states that it is quite common that international standards are quoted in
European standards. While this is true, it does not necessarily capture the whole picture.  It seems
that there are several points where both the Vie nna and Dresden Agreements need improvements,
especially regarding impartiality and transparency.WT/TPR/M/72/Add.1
Page 115
It is the Commission’s understanding that international standards bodies like the ISO and IEC operate
on the basis of national representation and offer equal rights and opportunities to all their nationalmembers.  Members of such bodies should seek amongst themselves clarification on the functioning
of agreements which provide for c ooperation and coordination of work.
Question from Japan (Q.19)
(ii)  In the second sentence of paragraph 74, the words "commitment", for CEN, and
"obligation", for CENELEC are used respectively. What is the difference of usage? (If the
“commitment/obligation” is referring to the effect of the ruling in the Vienna and Dresden
Agreements on the results of the parallel voting for the standards, we understand that the Vienna and
Dresden agreements do not necessarily require implementation of all ISO/IEC standards as
CEN/CENELEC standards.  In the case of a nega tive outcome in CEN/CENELEC voting but positive
outcome in ISO/IEC voting, CEN/CENELEC are not ne cessarily required to implement the ISO/IEC
standard.  Furthermore, when ISO/IEC standa rds are adopted as CEN/CENELEC standards,
CEN/CENELEC members are obliged to implement them as  their national standards, which is a duty
prescribed in the CEN/CENELEC principles, not a duty created by the Vienna and Dresden
Agreements.)
The fact that CEN/CENELEC principles oblige their members to implement CEN/CENELEC
standards as national standards relates to the European internal market and does, in fact, enhance the
implementation ISO/IEC standards when adopted as CEN/CENELEC standards. Implementation of
all ISO/IEC standards as CEN/CENELEC standards would in many instances have no relevance for
the European market; likewise this could be said fo r many regions of the world.  The EU is not aware
of any of its trading partner having established such a practice or a mechanism for automatic
implementation of all ISO/IEC standards. If this was considered desirable by ISO/IEC members, the
EU would expect that a discussion be held within these bodies.
Question from Japan (Q.20)
(iii) The second and third sentences of paragraph 74 indicate the “high level of transposition of
international standards” for CEN and CENELEC. Can the EU provide information on the actual
difference in the situation, before and after the Vienna and Dresden Agreements came into effect?
Assuming that there was a substantial increase, does the EU think that the introduction of the 2
Agreements was the major reason?  (We believe that a high level of transposition of international
standards as CEN/CENELEC standards is  not the result of the CEN/CENELEC
“commitment/obligation” to adopt international standards in the Vienna and Dresden Agreements,
but mainly because of the strong influence that European countries have historically enjoyed in
ISO/IEC process, such as their voting power, geographical advantage.)
The EU notes that both agreements are successor agreements to the Lugano (ISO/CEN) and Lisbon
(IEC/CENELEC) agreements which is significant for the long-lasting and systematic way of
cooperation between international and European standardisation organisations.  According to recent
information from CEN and CENELEC the number of standards identical to ISO and IEC standardshas considerably grown in recent years.
CEN 1995 1997 1999
EN ISO (CEN standards identical to
ISO standards) published1121 1519 1954WT/TPR/M/72/Add.1
Page 116
CENELEC 1995 1997 1999
Total number of European Standards
available1.992 2.559 3.072
Identical to IEC 58 % 65 % 68 %
Question from Japan (Q.21)
(iv) As far as Japan is concerned, we understand that the main objective of the 2 Agreements,
although not stated in paragraph 74, is to introduce a system for a parallel approval of standardshaving the aim to avoid the duplication of work between the ISO/IEC and the CEN/CENELEC. This,
in effect, allows the CEN/CENELEC to lead the standard-making process in ISO/IEC. Some non-
European ISO/IEC Members are concerned by the situation, especially in relation to the
CEN/CENELEC-lead standards. In concrete terms, this process: (a) lacks openness, in that drafts
under consideration in the CEN (the so-called "prEN") are not accessible to non-European ISO/IECMembers; (b) lacks transparency, in that the number of non-European ISO members allowed to
participate in the CEN is limited to a small number ; and  (c) lacks impartiality, in that non-European
Members' rights are limited prior to the stage of DIS.
The EU shares Japan’s understanding of the main objective of both agreements and understands that
according to the constitution of ISO/IEC all members have equal opportunities to be active and
provide input into the international standardization process. The EU also understands that ISO/IECwork would only be carried out by CEN/CENELEC if there was not sufficient interest within
ISO/IEC. If this was the case, it seems logic that the number of non-European participants in
CEN/CENELEC work is limited, otherwise, work would be carried out at ISO/IEC level from the
outset.  As far as the arrangements of the agreements are concerned, the EU was not in a position to
negotiate or agree on them.  We are however, surprised to see that Japan has concerns on theimpartiality of the ISO/IEC in cases where members of both bodies did not show sufficient interest in
work at the international level.
II-e)  SPS measures ; food safety ; precautionary principle
Question from the United States (Q.38)
The Commission states that harmonisation of the re gulatory framework for foodstuffs has made a
significant contribution to the simplification of food law, to the benefit of exporters to the EU market.Please describe how this statement relates to implementation of EU regulations at the member state
level?  Do all EU member states implement EU regulations the same way?  Please describe what
mechanism the Commission has in place to monitor member state implementation of EU regulations
and to encourage member states to implemen t these regulations in a harmonised manner.
With the harmonisation of the regulatory framew ork for foodstuffs, the Commission adopted a global
approach so as to create a comprehensive horizontal framework covering all food from farm to table.At the same time, the detailed rules on food hygien e applicable to food of animal origin have been
simplified. The future rules are proposed as a Regulation. Regulations apply in a uniform way
throughout the Community. In order to verify whether they are effectively implemented in a uniform
way, the Food and Veterinary Office (FVO), based in Dublin, has a mandate to verify the
implementation in the Member States by making on the spot inspections and audits. After each visit, areport is made with recommendations, if appropriate.WT/TPR/M/72/Add.1
Page 117
Question from the United States (Q.38)
Implementation of EU regulations at the Member States’ level
List of non-transposed Veterinary Direct ives for each Member State on 30 June 2000
DirectivesTransposition
dateBEL DNK DEU GRC ESP FRA IRL ITA LUX NLD AUT PRT FIN SWE GBR
Veterinary
93/118 31.12.1994 X
96/22 1.7.1997 Partial
96/23 1.7.1997 Partial
96/43 1.7.1999 Partial X Partial
97/76 1.1.1999 X
97/78 1.7.1999 X X X Partial X
97/79 1.7.1999 X X X Partial X
98/45 1.7.1999 X
98/46 1.7.1999 X X Partial Partial
98/58 31.12.1999 X Partial X X X X Partial X X
98/99 1.7.1999 X X X X X Partial
Feedingstuffs
95/53 30.4.1998 X
95/69 1.4.1998 X Partial
96/24 30.6.1998 X X X
96/25 30.6.1998 X X X
96/51 1.10.1999 X X X X X
97/8 30.6.1998 X
97/72 31.3.1998 X
98/51 31.12.1998 X X X
98/54 13.2.1999 X
98/67 31.12.1998 X X X X
98/68 31.3.1999 X X X
98/87 30.6.1999 X X X X
98/88 1.9.1999 X X
99/20 30.9.1999 X X X X X
99/27 31.10.1999 X X
99/61 31.10.1999 XX
99/76 31.10.1999 XX
99/78 30.11.1999 X X X X X X Partial X
99/79 31.12.1999 X X X X X
VETERINARY DIRECTIVES
Council Directive 93/118/EEC of 22 December 1993 amending Directive 85/73/EEC on the financing
of health inspections and controls of fresh meat and poultrymeat
Council Directive 96/22/EC of 29 April 1996 concerning the prohibition on the use in stockfarming of
certain substances having a hormonal or thyrostatic action and of ß-agonists, and repealing Directives
81/602/EEC, 88/146/ EEC and 88/299/EEC.
Council Directive 96/23/EC of 29 April 1996 on measures to monitor certain substances and residues
thereof in live animals and animal products and repealing Directives 85/358/EEC and 86/469/EEC
and Decisions 89/187/EEC and 91/664/EECWT/TPR/M/72/Add.1
Page 118
Council Directive 96/43/EC of 26 June 1996 amending and consolidating Directive 85/73/EEC in
order to ensure financing of veterinary inspections and controls on live animals and certain animalproducts and amending Directiv es 90/675/EEC and 91/496/EEC
Council Directive 97/76/EC of 16 December 1997 amending Directive 77/99/EEC and Directive
72/462/EEC with regard to the rules applicable to minced meat, meat preparations and certain other
products of animal origin
Council Directive 97/78/EC of 18 December 1997 laying down the principles governing the
organisation of veterinary checks on products entering the Community from third countries
Council Directive 97/79/EC of 18 December 19 97 amending Directives 71/118/EEC, 72/462/EEC,
85/73/EEC, 91/67/EEC, 91/492/EEC, 91/493/EEC, 92/45/EEC and 92/118/EEC as regards the
organisation of veterinary checks on products entering the Community from third countries
Council Directive 98/45/EC of 24 June 1998 ame nding Directive 91/67/EEC concerning the animal
health conditions governing the placing on the market of aquaculture animals and products
Council Directive 98/46/EC of 24 June 1998 amending  Annexes A, D (Chapter I) and F to Directive
64/432/EEC on health problems affecting intra-Community trade in bovine animals and swine
Council Directive 98/58/EC of 20 July 1998 concerning the protection of animals kept for farming
purposes
Council Directive 98/99/EC of 14 December 1998 amending Directive 97/12/EC amending and
updating Directive 64/432/EEC on health problems affecting intra-Community trade in bovine
animals and swine
FEEDINGSTUFFS DIRECTIVES
Council Directive 95/53/EC of 25 October 1995 fixing the principles governing the organization of
official inspections in the field of animal nutrition
Council Directive 95/69/EC of 22 December 1995 laying down the conditions and arrangements for
approving and registering certain establishments and intermediaries operating in the animal feed
sector and amending Direc tives 70/524/EEC, 74/63/EEC,
79/373/EEC and 82/471/EEC
Council Directive 96/24/EC of 29 April 1996 amending Directive 79/373/EEC on the marketing of
compound feedingstuffs
Council Directive 96/25/EC of 29 April 1996 on the circulation of feed materials, amending
Directives 70/524/EEC, 74/63/EEC , 82/471/EEC and 93/74/EEC and repealing Directive 77/101/EEC
Council Directive 96/51/EC of 23 July 1996 amendi ng Directive 70/524/EEC concerning additives in
feedingstuffs
Commission Directive 97/8/EC of 7 February  1997 amending Council Directive 74/63/EEC on
undesirable substances and products in animal nutritionWT/TPR/M/72/Add.1
Page 119
Commission Directive 97/72/EC of 15 December 1997 amending Council Directive 70/524/EEC
concerning additives in feedingstuffs
Commission Directive 98/51/EC of 9 July 1998 la ying down certain measures for implementing
Council Directive 95/69/EC laying down the co nditions and arrangements for approving and
registering certain establishments and intermediaries operating in the animal feed sector
Commission Directive 98/54/EC of 16 July 1998 am ending Directives 71/250/EEC, 72/199/EEC,
73/46/EEC and repealing Directive 75/84/EEC
Commission Directive 98/67/EC of 7 Septem ber 1998 amending Directives 80/511/EEC,
82/475/EEC, 91/357/EEC and Council Directive 96/25/EC and repealing Directive 92/87/EEC
Commission Directive 98/68/EC of 10 September 1998 laying down the standard document referred
to in Article 9(1) of Council Directive 95/53/EC and certain rules for checks at the introduction into
the Community of feedingstuffs from third countries
Commission Directive 98/87/EC of 13 November 1998 amending Council Directive 79/373/EEC on
the marketing of compound feedingstuffs
Commission Directive 98/88/EC of 13 November 1998 establishing guidelines for the microscopic
identification and estimation of constituents of animal origin for the official control of feedingstuffs
Council Directive 1999/20/EC of 22 March 1999 amending Directives 70/524/EEC concerning
additives in feedingstuffs, 82/471/EEC concerning certain products used in animal nutrition, 95/53/EC
fixing the principles governing the organisation of official inspections in the field of animal nutrition
and 95/69/EC laying down the conditions and ar rangements for approving and registering certain
establishments and intermediaries operating in the animal feed sector
Commission Directive 1999/27/EC of 20 April 1999 es tablishing Community methods of analysis for
the determination of amprolium, diclazuril and carbadox in feedingstuffs and amending Directives
71/250/EEC, 73/46/EEC and re pealing Directive 74/203/EEC
Commission Directive 1999/61/EC of 18 June 1999 amending the Annexes to Council Directives
79/373/EEC and 96/25/
Commission Directive 1999/76/EC of 23 July 1999 es tablishing a Community method of analysis for
the determination of lasalocid sodium in feedingstuffs
Commission Directive 1999/78/EC of 27 July  1999 amending Commissi on Directive 95/10/EC
Commission Directive 1999/79/EC of 27 July  1999 amending the third Commission Directive
72/199/EEC of 27 April 1972 establishing Community methods of analysis for the official control of
feedingstuffs
Questions from the United States (Q 39) and Australia
How will the EU apply its ‘precautionary principle’ in practice, and what measures would be
implemented by applying it? Please explain how the EU’s ‘precautionary principle’ differs from
‘general principles of risk management’?WT/TPR/M/72/Add.1
Page 120
The Precautionary principle is a guiding principle of behaviour for decision-makers involved in risk
management. The basic idea of the principle is to ensure that decision-makers can act under thefollowing circumstances : 1) a situation of scientific uncertainty, for instance because of the
insufficiency of the data and/or their inconclusive or imprecise nature and 2) the identification of a
potentially adverse effect resulting from a phenomenon, product or process.
Thus, when scientists cannot clearly characterise the risks, risk managers should be able to take
precautionary measures and should not have to wait until the reality and seriousness of the identified
potential risks become fully apparent. The choice of the measure will also depend on the level of
protection which is deemed appropriate. If measures are taken on the basis of the Precautionary
Principle, the general principles of risk management (i.e proportionality, non-discrimination and
consistency) remain valid and should be applied. Also, information should continue to be gathered toincrease the scientific knowledge so that decisions can be reviewed on the basis of new scientific
information.
The two conditions mentioned above may be relevant to risk analysis procedures related to food
safety and environmental protection as well as to human, animal or plant life or health protection.
Question from the United States (Q.40)
Please explain the EU’s rationale for imposing  regulations on wine making and how these
regulations apply to imported wines?
It is perfectly normal for sovereign countries, to regulate winemaking practices. In general, the same
rules apply for EU production and third countries.
Question from the United States (Q.43)
Directive 49/2000 sets a 1 percent threshold for adv entitious biotech content in certain food products.
How is the EU going to ensure that sampling, testing, and enforcement is harmonized across member
states, when no sampling or testing methodologies are specified in the regulation?
49/2000 is not a Directive, but a Regulation. This implies that the labelling requirements of 49/2000 is
directly applicable in all Member States. However, the power of enforcement and control lies withineach Member State.
In the area of foodstuffs, it is the general policy of the Commission not to legislate on testing methods
for the enforcement of EU food law. The main reas on for this policy is to avoid hindering progress in
developing new and better detection methods a nd to avoid applying methods which are obsolete
already by the time of adoption of legislation or shortly thereafter. This is the reason why no sampling
or testing methodologies are specified in the Regulation.
In addition, it is important to note that the Join t Research Centre of the EU Commission has validated
several methods for the detection of GMO foods in recent years and is co-ordinating a recentlyestablished network of laboratories of the Member States, which will facilitate a common approach in
the EU.
Question from the United States (Q.44)
Revisions to Directive 90/220 in COM(1998) 085 address monitoring requirements.  How can a
scientifically based monitoring plan measure risks that can be directly attributable to a geneticallyengineered plant when such risks have not been identified?WT/TPR/M/72/Add.1
Page 121
The Common Position on the revision of Directive 90/220/EEC adopted by the Council on 9
December 1999 specifies requirements for a monitoring of genetically modified organisms (GMOs).
The concept of monitoring of GMOs has been integrated into the Common Position to accompany and
follow the placing on the market of GMOs. The monito ring in relation to GMOs is intended to offer
the opportunity to detect any unforeseen effects in relation to a deliberate release of GMOs. In case ofthe detection of such effects these can be evaluated and the appropriate action can be taken.
In addition such a monitoring can contribute to the collection of additional scientific data with respect
to questions related to the release of GMOs.
Question from the United States (Q.45)
There has been a de facto moratorium on new biotech approvals since June 1999.  Revisions to
Directive 90/220 are in the process of being finalized, but will not be implemented until 2002 at the
earliest.  How will the EU proceed with new biotech product approvals between now and 2002?
Revision to Directive 90/220/EC are, as rightly pointed out by the US, is in the process of being
finalised and the Commission strongly hopes that th e revised Directive will be adopted very soon.
As suggested by the Commission, one approach to proceed with the authorisation procedures and
overcome this standstill could be to anticipate certain stringent requirements of the Common Position
prior to formal adoption of the revised Directive.
Question from the United States (Q.46)
Over the last several years, we have experienced pr oblems with inconsistent application of EU plant
health requirements (e.g., barrels in Spain, pencil slats in France, and prefab houses in Germany).What efforts are underway to make the application of SPS measures more uniform and consistent?
The Commission is currently reviewing and updating the provisions laid down in Council Directive
2000/29/EC (consolidated version of 77/93/EEC) in respect of special requirements dealing with
wood which are listed in the Annexes 4 and 5 to th e said Directive.This exercise includes amongst
others the items mentioned in point 46.
Question from the United States (Q.47)
The WTO SPS Agreement calls for shared informati on.  When does the EU intend to share its latest
information on the safety of hormones in livestock production, in particular, the EMEA study?
The European Commission published on the 30 April 1999 a scientific opinion prepared by the
Scientific Committee of Veterinary measures relating to Public Health (SCVPH). This risk assessment
report  was made immediately available to the United States and the general public on the Internet(document XXiV/B3/SC4). This report is based on the latest scientific information available regarding
the safety of the six hormones administered to animals for growth promotion purposes in the US.
In May 2000, the SCVPH reconsidered its 30 April 1999 scientific opinion on these hormones in the
light of more recent scientific information made available to it, in particular the recent reports from
the UK's Veterinary Products Committee as well as  the Committee on Veterinary Medicinal Products
of the EMEA and of the 1999 JECFA re-evaluation for some of these hormones.  This secondscientific opinion of the SCVPH was published on the Internet in May 2000.WT/TPR/M/72/Add.1
Page 122
Under existing provisions of Community law, the EMEA is required to examine requests by an
interested manufacturer to establish an MRL for vete rinary medicinal products used for therapeutic or
zootechnical purposes. This is what the EMEA's scientific committee did for some of these hormones.
Although most of the scientific data submitte d to EMEA are confidential, a summary of its
recommendations, if adopted, could be made available to the public and the United States.
It should be noted in this respect that under the SPS Agreement the United States have the same
obligation to provide the scientific information requested by the European Commission on these
hormones. As the Appellate Body has held in the Hormones case (see paragraph 201 of its report), the
United States have unjustifiably refused to provide to the European Commission the requested data on
which they decided to authorise these hormones for animal growth promotion. Despite the fact thatsuch a specific request was made again to the United States in 1998-1999, until today they have failed
to respect this obligation.
Question from the United States (Q.82)
Given the equivalence provision in the SPS Agreement, will the EU continue to require lists of third
country establishments for animal products from third countries with whom they have completed vet
equivalency agreements?
Negotiations have taken place with a number of Community trading partners but only four agreements
have been concluded. No agreements are yet implemented.
Agreements may be different in scope and coverage, but are not a vehicle to derogate from the level
of protection the EU has determined as being appropriate and the provisions of the agreements must
ensure that the EU’s health standards are respected. The agreements however allow a constructive
dialogue between the parties to identify the least trade restrictive means of meeting the required health
standards, as a means of facilitating trade between the parties.
Within this framework and upon entry into force of the agreements, systems other than the listing of
establishment, that would enable the EU to maintain its appropriate level of protection, could be
considered for products for which equivalence has been established.
Question from the United States (Q.87) – Organics
Will the new EU logo be used on certified organic products imported from third countries?  If not,
why not?
The E.U. logo is a public logo that can only be applied to products which give to the consumer in the
E.U. the highest possible guarantees concern ing its organic origin. In this respect the logo implies an
engagement of the  public authorities in the E.U. to the organic origin of the product. Therequirements for using the E.U. logo on organic products imply, among other conditions, that the
product has been submitted, from the start of its production at farm level, to the E.U. inspection
system. On this system the public authorities of the E.U. Member States have permanent supervision
and permanent possibility of intervention by their public inspection services. These authorities have
no such supervision possibilities on the inspection systems applied in third countries.
Question from Brazil (Q.12)
How does the EU see the application of the Precautionary Principle - which is not even a principle of
international law, but an element that was taken into  account in the negotiations of some MultilateralWT/TPR/M/72/Add.1
Page 123
Environmental Conventions - to trade in agriculture without breaching the SPS agreement and,
therefore, creating a barrier to trade?
The EU does not believe that the application of the precautionary principle as described in the
Commission communication would be trade distortive and would be in breach of the SPS Agreement
provisions.
In fact the Precautionary Principle is well in line with the SPS agreement. It describes how to proceed
if Art 5.7 of the agreement has to be considered, which reads:  "In cases where relevant scientific
evidence is insufficient, a Member may provisionally adopt sanitary or phytosanitary measures on the
basis of available scientific information, including that from the relevant international organizations as
well as from sanitary and phytosanitary measures applied by other Members. In such circumstances,Members shall seek to obtain the additional information necessary for a more objective assessment of
risk and review the sanitary or phytosanitary measure accordingly within a reasonable period of time."
Furthermore the Appellate Body on Hormones (Paragra ph 124) recognises….” that there is no need to
assume that Article 5.7 exhausts the relevance of a Precautionary Principle”. Moreover, Membershave the “right to establish their own level of sanitary protection, which level may be higher (i.e. more
cautious) than that implied in existing internat ional standards, guidelines and recommendations”.
See also reply to US Q.39
Question from Canada (Q.1 – 2nd set)
III.  Trade Policies and Practices by Measure, (1) Overview, para 4 (also WT/TPR/G/72,
para 22):
Within the EU decision structure, food safety policies are based on Commission/Parliament co-
decision.  As a result in some instances, the decisions appear to be based more on societalpreferences rather than safety or health reasons.  How does the EU plan to reconcile the level of
health protection based on science versus societal perceptions, as stated (as in the case of GMOs)?
As well, the EU has adopted regulations (e.g. food labelling, 1% GMO tolerance) without outlining
appropriate enforcement capabilities. How can such regulations be enforced?
The objective of EU legislation relating to foodstuffs is to ensure a high level of consumer protection
and information and to ensure labelling is not misleading.
In all cases, the objective of food safety has to be satisfied. The key principle of EU legislation is that
GM food must not present a danger for human health and the environment. Giving information
through labelling provides consumers with the choice to buy the products they want. The labelling
scheme for GM food in the EU is based on scientific evidence. The Regulations adopted in the EU
received the wide support of Member States and can thus be considered as reflecting an
overwhelming demand from the public and authorities.
Since April there exists a 1% threshold for the adventitious contamination of conventional foodstuff
with GM material below which products do not have to be labelled. Verification is based on
documentary evidence and testing. DNA- and protein-based methods are capable of delivering the
necessary accuracy to enforce the Regulations. It is in the power of the enforcement bodies of
Member States to decide to what extent, and in wh at way, such testing will be used as a method of
enforcement.WT/TPR/M/72/Add.1
Page 124
Question from Canada (Q.2 – 2nd set)
III. Trade Policies and Practices by Measures, (2) Measures Directly Affecting Imports,
(viii) Products Regulations and standards, (a) Community activities (also see WT/TPR/G/72, para. 3):
The Reports state that significant progress has been achieved in the Single Market.  We note,
however, that regulations for certain agricultural products may differ and be more stringent withrespect to Member States (e.g. bottled water).  When does the EU plan to harmonize the various
Member State-criteria into a single EU standard?
As well, the EU has an organic standard, but standards used by Member States differ; in some cases,
certain regions have their own standard.  What is the situation with respect to Member Statescomplying with, and implementing the EU organic standard?
The E.U. regulation (EEC) n° 2092/91 is applicable to the entire territory of the E.U. The
requirements are therefore the same in the whole E.U. subject to the following qualifications:
- the Regulation does not exclude private standards with a private label. these standards
may be more strict than the E.U. Regulation, and in this way may be slightly different
between each other. Certain of these private standards have a long tradition and
sometimes an important commercial impact;
- with regard to livestock production requirements Member States have the right to
impose, only for the production on their own territory, more strict requirements.However, products from other Member States satisfying the E.U requirements must
be accepted. For judgement of equivalency of products from third countries, the
standard of the E.U. Regulation, and not the national more strict standard applies.
Some Member States have taken up this right and established, for certain aspects,
more strict provisions.
- for the implementation of the provisions of the Regulation, important tasks are
delegated to the Member States competent authorities. These tasks concern in
particular the setting up and supervision of the inspection system, as well as the
assessment of equivalency for those countries which are not in the EC list. This maylead to some differences in the detailed implementation of the basic rules in this
respect in the E.U. Regulation itself.
Question from Canada (Q.5 – 2nd set)
III.  Trade Policies and Practices by Measure, (2 ) Measures Directly Affecting Imports, (viii)
Product regulations and standards, (a) Community activities, para 67:
We seek clarification on the expected relationship between the European Food Authority and the
various Member State food Safety Agencies.   As we consider rapid information exchange andnotification as an essential element of a food safety  system, how does the EU intend to ensure timely
exchange of information with its trading partners?
The Commission services are in the process of drafting the proposal of the Regulation setting up the
Food Authority. Details on procedures and transmission of information will be contained therein and
are not finalised as yet.WT/TPR/M/72/Add.1
Page 125
The Authority will work in close collaboration with the national authorities or agencies on scientific
and technical issues with a view to exploit the best available data in a timely manner.
Question from Canada (Q.6 – 2nd set)
III.  Trade Policies and Practices by Measure, (2 ) Measures Directly Affecting Imports, (viii)
Product regulations and standards, (a) Community activities, subsection on labelling, frompara 68:
We request more information on how the EU manda tory and voluntary labelling for products would
work.  We understand that the EU is in the process of reviewing the labelling options set out in the
Commission’s White Paper on Food Safety.  Which options are currently favoured?  Will labellingmeasures relate only to the product itself or will they include non-product related process and
production methods?
Rep.2 The sectoral bilateral agreements between the EU and Switzerland are of more limited scope
than the EEA agreements and also less "dynamic", as the obligations are fixed once and for all in the
agreements, while the EEA agreements contain obligations for the EEA countries to take over future
EU acquis. The agreements with Switzerland are restricted to certain sectors only. The agreements
with Switzerland are thus traditional trade agreements and do not provide for the comprehensive
institutional set-up provided by the EEA agreements, establishing instead a number of joint
committees. The agreements with Switzerland therefore only partly reflect the EU acquis (in free
movement of persons and to some extent in air transport).
Question by Japan (Q.12)
According to the EU’s new policy on "food safety", more restrictive measures will be introduced on
market access in the future.  Please describe in a concrete manner what kind of measures are being
considered.
In its White Paper on Food Safety, adopted on 12 January 2000, the Commission has unfolded a
strategy to establish a high level of food safety. The main elements of this strategy are: the
establishment of a European Food Authority which must become the scientific point of reference for
the whole Union, the need to improve the coherence of the corpus of Community legislation coveringall aspects from stable to table, to re-enforce official food safety controls both at a national and
Community level, and finally to improve consumer information.  The key principle for imported
foodstuffs is that they must meet health requirements at least equivalent to those set by the
Community for its own production."
Question from Thailand (Q.6)
Could the EU provide information on the latest status on the Food Action Plan?
The Commission published in January 2000 a White Paper on Food Safety explaining the programme
of work over the next to years with a view to complement, improve or streamline the legislation on
food safety. The White Paper was therefore accompanied by an "action plan" with about 80 measures
to be adopted within 2 years. The implementation of this action plan is progressing. A number of
measures have already been adopted by the Commission (such as the amendment to the list of
ingredients the use of which is forbidden in compound feedingstuff - n° 20 in action plan) ; others are
now under discussion with the Council of Minist ers and the European Parliament (such as the
Proposal on a Regulation for Hygiene - n°8 in the Action Plan). The proposal establishing theEuropean Food Authority originally planned for September 2000 will be adopted by the Commission,WT/TPR/M/72/Add.1
Page 126
after the European Parliament has given its final opinion ; the latter is now expected for end of
October 2000.
Oral question from Bolivia
How has the European Union put this priority (the integration of developing countries in the
multilateral system) into practice in the light of  Article 10.2 of the Agreement on the Application of
Sanitary and Phytosanitary Measures?
The Community believes that the scope of the SPSA is limited, but its requirements are unequivocal.
With respect to food safety it covers measures taken to protect human life and health from risk posed
by additives, contaminants, toxins or disease-carrying or-disease causing organisms in foods,beverages and foodstuffs.
The Community believes that it meets its obligations under the WTO/SPS Agreement fully, and also
considers that ensuring a high level of consumer protection is one of its highest priorities. This is not
incompatible with the Community’s willingness to support developing countries through constant andtargeted technical assistance actions, carried out by both the Commission and the EU Member States.
However, we also consider that no compromise  can be made on the protection of consumer life and
health. It is not acceptable to allow for differing levels of protection against similar risks. Hence, in
our view it is not possible to be less rigorous in the application of an SPS health measure aimed at
achieving our chosen level of protection Indeed, quite apart from the health implications, this would
result in discrimination. However, except for emergency situations, it is the practice of theCommission to allow a reasonable time period for implementation of new Community measures.
Oral question from Mauritius
We have noted with interest the EU’s engagement in  the area of food safety, which is the object of
growing consumer concerns in my country. We w ould wish to know whether the EU is proposing to
put in place technical assistance programmes to enable countries like mine in raising standards to
address our consumer concerns. We would be particul arly interested in the provision of technical
assistance for infrastructure, logistics, investment and technology transfer to meet approved
standards.
There is no Technical Assistance programme foreseen  at present for Mauritius which addresses
questions of food safety.   Mauritius has committed virtually all its present development aid allocation
from the European Union (i.e. its allocation under the 8th European Development Fund), meaning that
no funds are at present available for such a programme.   A further allocation will be made under the9th European Development Fund, however, and – if the Government of Mauritius considers it
appropriate – there is nothing to prevent it requesting some of these funds be spent on raising food
safety standards.
Question from New Zealand (Q.6)
The EU has stated that the recourse to the precautionary principle should not be used as a trade
protectionist measure and that safeguard to such practice could be adopted. Can the EU advise what
form such safeguard may take?
The precautionary should be applied under the following conditions:WT/TPR/M/72/Add.1
Page 127
− In cases of scientific uncertainty, when scientific information is insufficient, inconclusive or
uncertain, a preliminary objective scientific evaluation has shown that there are reasonable
grounds for concern the potentially adverse effects on the environment, human, animal orplant health may be inconsistent with the chosen level of protection.
− Once the decision has been taken to act, measures should be least trade restrictive and
consistent with measures already adopted in similar circumstances. They should clearly
comply with basic trade principles such as non-discrimination, least-trade restrictiveness,
consistency and transparency.
Question from New Zealand (Q.7)
New Zealand notes the development, since the inte rim review in 1997, of recent EU policy on food
safety including the White Paper and the proposal to establish an European Food Authority.  What
sort of  relationship does the EU envisage between its proposed Food Authority and the WTO or otherinternational standard setting bodies such as Codex Alimentarius and the OIE?
The future European Food Authority will have an independent legal personality, but the establishment
of such an authority will clearly have no effect whatever on the international negotiating powers
conferred on the European Commission and the member States by the Treaty.
However, it is envisaged that the Food Authority may have powers of cooperation with international
organizations, but only in the scientific and technical field, not in the area of negotiation.  It is also
envisaged that the future authority may assist the Commission, at the latter's request, on scientific and
technical issues discussed at international level.
Question from Hong-Kong (Q.6)
We understand that the Community could, under Council Directive 92/59/EEC governing General
Product Safety Requirements, require Member States to adopt emergency measures for the protection
of public health and safety.  There are cases that certain Member States have adopted measures more
stringent than those recommended by the European Commission.  This will cause confusion to the
trade and affect trading partners' market access to the Community.  Would there be any mechanism to
harmonize Member States' measures in particu lar those which are more stringent than the
Community Directives?
Commission emergency decisions under Directive 92/59/EEC (General Product Safety) are a
mechanism to ensure that uniform temporary measures are adopted across the Community in the case
of an emergency until permanent measures are adopted. The spirit and nature of the emergency
instrument under the Directive calls for a minimum common level of measures across the Union but
obviously allows more stringent national measures. This is particularly true if emergency measures
were implemented in some Member States before the Community measures were adopted.
By contrast a more permanent measure (Directive or Regulation) requires Member States to bring
their national legislation in line with the Community legislation.   Except ions to this are derogations
for specific countries which joined the European Union at the time that Community legislation was
already in force. Alternative a Member State may implement more stringent measures by invokingconditions special for that particular Member State. In that case the Member State needs to provide to
the European Commission supporting data which ma y or may not be accepted by the Commission.  If
it is accepted the Member State is allowed to maintain the measures. If it is not accepted the
Commission initiates infringement procedures against the Member State.WT/TPR/M/72/Add.1
Page 128
In the case of the "phthalates" emergency Decisio n, 8 Member States had taken unilateral emergency
measures to restrict phthalates in toys before the Commission decision on emergency measures underDirective 92/59 was adopted. In almost all cases the measures taken were more stringent than the
measures eventually adopted in the Commission Decision. At the same time that the Commission
adopted its emergency Decision it also proposed permanent measures to restrict phthalates in the
context of Directive 76/769/EEC (the so-called limitations directive).
II-f) Labelling Requirements
Question from Brazil (Q.10)
The Commission has proposed to revise the scheme to establish the European Eco-label Organization
to develop the ecological criteria and the assessment and compliance verification requirements, and
also promote the eco-label. The Commission also  established ecological criteria to 15 product
groups, including paper, footwear and textile (Pg.61, FN 106, 107).
The eco-label schemes raise concern about their trade distortive effects. Brazilian enterprises are
worried with the transparency and implementation of these schemes, once they are not given adequate
opportunity to make their views known in the internal procedures of the adoption of specific criteria
and by the fact that the schemes discriminate aga inst non-European production methods. What are
the measures taken by the EU to ensure a fair, transparent and non-discriminatory participation of
foreign exporters in the process of elaboration, adoption and implementation of eco-labels.
The revision of the European Eco-label scheme has been adopted by the Council of Ministers. It
should be noted that the initial proposal from the Commission to establish an independent "European
Eco-label organisation" was eventually turned into the so-called European Union Eco-labelling Board
(EUEB). The EUEB will receive a mandate from th e Commission to develop and periodically review
the eco-label criteria and should, on this basis, draft the eco-label criteria. The Commission will thenbe informed on the draft criteria and decides on whether the mandate has been fulfilled. If this is the
case, it will then submit the criteria to the regulatory committee for adoption.
It should be stressed that, under the newly adopted procedure as under the current scheme, the whole
process is entirely transparent, ensuring thereby that European and non-European producers are put on
an equal footing and given equal opportunities to be informed and to participated in the process.
Information is given at all stages of the procedure (from the selection of a product group to the
decision on environmental criteria) and stakehol ders invited to submit comments. All relevant
information is now available on a special Website (http\\europa.eu.int\ecolabel).
Question from the United States (Q.41) - Labelling
Please explain the rationale for the EU’s regulati on of traditional terms.  Many so-called traditional
terms are words used by winemakers the world over to describe the quality and nature of their own
products.  Examples of EU claimed “traditional expressions” include such terms as “vintage” ,
“superior”, “reserve”, and “extra”.  These adjectives are used in many countries to convey general
consumer information about wine;  they do not function as indicia of source or quality for any
particular type of wine.
The Commission explained the rationale of its legislation concerning traditional expressions in a
lengthy intervention at the eighteenth meeting of the Committee on Technical Barriers to Trade of 1
October 1999 (G/TBT/M/17).WT/TPR/M/72/Add.1
Page 129
Question from the United States (Q.42)
Please explain the process the Commission is currently using to develop criteria for awarding the
“daisy” eco-label.  What opportunities will be provided to non-EU companies to comment on and
provide input into the formulation of criteria now under development, including criteria for the
products listed in footnote 107?  How many n on-EU companies have applied for use of “daisy”
labels?  How many have been awarded use?
Following the adoption on 26 June 2000 of Council and European Parliament Regulation on a revised
Community Eco-label award scheme (awaiting publication in the OJ, meanwhile available on
request), the Commission gives mandates to develop and review criteria to a new body called the EU
Eco-Labelling Board, made up of the eco-label Competent Bodies from each Member State and of thedifferent interest groups. The draft criteria proposed by the EUEB are then submitted to the eco-label
Regulatory Committee for approval and finally adopted and published by the Commission. The new
Regulation provides for detailed methodological requirements related to the development of criteria,
including a feasibility and market study, life cycle considerations, and an improvement analysis.
Transparency and extensive consultation of all interested parties is explicitly foreseen, including their
participation in ad hoc working groups, and a period of at least 60 days is allowed for comments on
final drafts. Comments and participation from non-EU countries are welcome. For example, at their
request representatives from the US, Canada and Brazil have previously participated constructively in
the development of criteria for product groups such as paper and textiles, and are systematically
informed of on-going developments on all product groups.
To date, two non-EU companies out of about 50 have applied for and been awarded the eco-label.
Under the new Regulation, companies from third c ountries may now apply directly. Also, reductions
in the fees for SMEs and for developing countries of at least 25% will shortly be implemented
For detailed information on the eco-label, please consult the eco-label web-site at
http://europa.eu.int/eco-label
II-g)  Anti-dumping And Trade Defence Measures
Question from Brazil (Q.6)
EU’s legislation on anti-dumping includes a provision on cumulation of imports concerning injury
analysis if three conditions are present: margin of dumping for each country more than the “de
minimis”; volume of imports from each country not negligible; cumulative assessment of the effects of
the imports appropriate in light of the conditio ns of competition between imports and competition
between imports and like products (Article 3, 3.3 of the Anti-Dumping Agreement). Could the EU
explain what are the criteria applied to the analysis on cumulative assessment?
The criterion regarding the appropriateness of a cumulative assessment in view of the conditions of
competition provided for in Article 3(4) of Council Regulation (EC) No 384/96 is analysed in thelight of whether the imports under consideration compete both with each other and with the products
of the Community industry. This encompasses an analysis of the product in question and the like
product, the similarity in the behaviour of exporters, import volumes, prices, the undercutting of the
Community industry's prices and the similarity of sales channels.WT/TPR/M/72/Add.1
Page 130
Question from Brazil (Q.7)
EU’s legislation on anti-dumping includes provision on the Community interest that shall be based on
an appreciation of all the various interests taken as a whole, including the interests of the domestic
industry and users and consumers (Article 21 of the Council Regulation 384/96 on Anti-Dumping).
Could the EC explain in what form and how these interests are considered during the investigation
process?
The Community interest test is set out in Article 21 of Council Regulation (EC) No 384/96. It
involves Community-based interested partie s (Community producers, importers, users and
consumers), whose various interests are assessed on the basis of substantiated data; measures are not
imposed if there are compelling reasons showing that they would be contrary to the general
Community interest.
Question from Brazil (Q.8)
EU’s legislation on anti-dumping includes provision on price undercutting, requiring the AD
authorities to establish whether there has been significant price undercutting by the dumped imports
of the like product of the importing member (Artic le 3.2 of the Anti-Dumping  Agreement)? Could the
EU explain what factors are taken into account when conducting a price undercutting assessment?
The EU provision related to significant price undercutting is Article 3(3) of Council Regulation (EC)
No 384/96. Undercutting levels are established by comparing the prices of dumped imports with the
Community producers' prices on the Community market. The price undercutting analysis is carried
out at the level of the exporting country and the Community. Depending on the circumstances,
however, such an analysis can concern the behaviour of specific exporters and specific sales channelsor product types.
Question from Hong Kong/China (Q.9)
It is stated that according to the latest com parative data for 1998, the EU had the second largest
number of AD measures in force.  At the end of  1999, the EU had 192 AD measures in force, which
was a 30% increase over 1995.  A further rising trend for AD measures is expected due to a three-fold
increase in the number of initiations of new inves tigations in 1999.  We would like to ask the EU's
comments on the foregoing observations.  We are also interested to know the EU's outlook on the
future trend of AD actions.  Does the EU envisage the rising trend to continue for the next few years?If so, what are the reasons for a further rising trend?
and
Question from Brazil (Q.5)
The number of initiations of new investigations in 1999, which rose three-fold to 66 from an average
of 22 in the last three years, is likely to lead to a rising trend of measures in force once investigationsare concluded (Pg.67, 88). Could the EU give an explanat ion whether this trend is the result of the
1998 appreciation of the Euro or the beginning of a more protective practice?
andWT/TPR/M/72/Add.1
Page 131
Question from the United States (Q.50)
This past year, the EU opened a record number of 66 new antidumping and 20 new countervailing
duty cases.  How does the EU explain this surge in activity, particularly countervailing duty measures
– an instrument the EU has not actively used in the past?
The number of AD and CVD investigations depends on the number of complaints from EU industry,
which is something over which the EU has no control.
The number of investigations fluctuates, but it would be difficult to speculate on the reasons why
complaints are lodged at a certain time. The complex nature of economic reality and the fact that EU
legislation requires complainants to provide evidence of the existence of dumping, but not to explain
why dumping is taking place, makes it problematical to single out individual reasons for the existence
of these patterns.
However, the steep increase in cases opened against Asian countries (from 8 to 44) suggests that the
Asian financial crisis might have played a key role. This crisis, which started in April 1997 directly
affected Hong Kong, Indonesia, Japan, Malaysia, Taiwan, Thailand and South Korea, provoked a
collapse of domestic demand in South East Asia, especially in the steel sector. This led to a surge inexports sold below cost or at subsidised prices.
Moreover, the decline in domestic consumption in South East Asia affected trade with countries
traditionally exporting to this region. These countries were compelled to redirect exports into other
available markets, mainly towards the US and the EU. In this context, reference is made to the
increase in new investigations opened by the EU concerning the People’s Republic of China and
Taiwan.
The global nature of the factors underlying the increase in AD and CVD cases initiated by the EU is
confirmed by the fact that the same trend has been followed by other main users of trade defence
instruments. For instance, the US initiated more in vestigations in 1999 than in 1998, with an increase
from 46 in 1998 to 56 in 1999.
However, as regards the EU, this growth in new cases does not represent a change of trend or policy,
but is rather the result of very specific circumstances that are unlikely to be repeated. In fact, nofurther CVD investigations have so far been initiated this year.
In conclusion, the EU policy remains unchanged, and does not promote a broader use of anti-dumping
and anti-subsidy regulations. Community anti-dumping and anti-subsidy legislation contains strict
requirements concerning the presentation of complaints and initiation of proceedings, particularly as
regards evidence relating to the existence of dumpi ng (or subsidisation) and injury caused thereof.
Question from Japan (Q.7)
(1) In Japan’s view, there are cases where anti -dumping measures are abused by the EU. Under
the free-trade regime, anti-dumping is an exceptional measure, which should be used strictly in
accordance with the rules. We, therefore, appreciate the EU's comment on this issue.
The EU does not consider that its anti-dumping measures are abusive since they are in conformity
with WTO provisions, nor can they be considered as an exception to free-trade regimes. Rather on the
contrary, it estimates that the anti-dumping instrument is necessary for the well functioning of free-
trade regimes. In this respect, Article VI of the GATT 1994 is clear: "The contracting partiesrecognise that dumping, by which products of one country are introduced into the commerce ofWT/TPR/M/72/Add.1
Page 132
another country at less than the normal value of the products, is to be condemned if it causes or
threatens material injury to an established industry in the territory of a contracting party or materially
retards the establishment of a domestic industry". In the EU's opinion, the EU legislation on anti-
dumping is in line with the relevant WTO AD Agreement and it is applied according to WTO
principles and provisions.
(2) In our opinion, the anti-dumping investigation on TV camera parts is an example of such
abuse. The investigation, which is now terminated, was self-initiated by the investigating authorities,
notwithstanding the fact that there was not sufficient evidence.  We request that any future
investigations be conducted in a more transparent manner.
Refer to previous reply.
Question from Australia (Q.12)
We note from a report in April 2000 by the London firm of Rowe and Maw, that the EU opened 65
new anti-dumping cases in 1999 compared with 22 cases opened in 1998.  In the case of countervailcases, the EU opened 18 new cases in 1999 compared with only 3 cases for the whole period January
1985 to June 1997.
Could the EU explain the background to this dramatic  increase in the use of these trade measures?
Against the background that new cases have a "chill ing" effect on trade even before anti-dumping or
countervail tariffs are introduced, to what extent does the EU take account of this effect, particularly
when the trade from developing countries are invol ved?  Has the EU made any calculation, or aware
of such work elsewhere, detailing the impac t of its anti-dumping/CVD policies on developing
countries?  What were the conclusions of these studies?
It is not necessarily true that new cases have a chilling effect on trade even before
anti-dumping or countervailing duties are introduced. In fact, in the experience of the EU, the reverseis often true. In any case, it is difficult to see how such an effect would be relevant to the initiation of
a new investigation, even if it did exist. The WTO Agreement and the EU’s own anti-dumping
legislation outline strict criteria for the opening of new cases. If those criteria are met, the European
Commission is obliged to initiate a proceeding. This is a guarantee that the instrument is used fairly
and equitably.
On the other hand, the EU is sensitive to the concerns of developing countries, and fully respects its
obligations under Article 15 of the AD Agreement. For example, it tries to exclude cottage industries
from the scope of anti-dumping proceedings, it is far more lenient on the granting of extensions for
questionnaire replies, and whenever possible, it accepts undertakings as an alternative to duties.
Thus, the application of the EU AD/CVD policy assures that its impact on developing countries is
minimised both at a procedural level and as regards the imposition of measures.
As regards the "dramatic increase in the use of tr ade measures". Please refer to answer to similar
Japanese and US questions.
Oral question from Chile
The second question concerns anti-dumping measures, and unfortunately the EU continues to be one
of the main users of such measures.  We should like to know how the growing use of this type of
measure affects the EC's intention to move towards greater liberalization of trade and restrict oreliminate the use of such measures?  We should also like to know whether there has been anWT/TPR/M/72/Add.1
Page 133
evaluation of their impact on the Community?  Lastly, we should like to know the justification for the
provisions on absorption and anti-circumvention in the Community's regulations, which are notenvisaged in the WTO.
Refer to previous similar questions from US, Japan and others. In particular, it should be pointed out
that:
• The term absorption means that the exporter has paid for the duty himself rather than
it being paid by the importer a fact which international rules recognises lowers the
export price. A new dumping margin and a new duty can be calculated on that basis.
As to circumvention , which means that exporters are wrongly evading anti-dumping
duties we can only say that any such evasion must be actionable. Of course, any such
investigation has to carried out in a reasonable manner and the Community has shownthat it only acts after a detailed investigation and when such evasion has been proved
beyond doubt. So far, there had been no cases against Korea. Moreover, most WTO-
Members have similar provisions.
• The Commission did not make any specific study on the general impact of anti-
dumping measures on the EU economy.
Question from Korea (Q.2)
The number of anti-dumping investigations has drastically increased to 86 cases in 1999 from 29 in
1998, including nine cases against Korea. The investigations conducted found out that most of these
86 cases were not in breach of the EU anti-dum ping regulation, a fact that illustrates that such
regulation may be abused by domestic interests and used as an import barrier. For example,following the finding that a case is in confor mity with the EU anti-dumping regulation, some EU
companies file again the same anti-dumping case a gainst the same foreign companies often in a very
short period of time and sometimes in the same month than the finding was pronounced - what
basically amounts to "chain complaints". Korea ur ges the EU to be more vigilant in operating its
anti-dumping investigations are burdensome not only for exporters but also importers as they create
distortions in their business operations.
Refer to the replies already given to US, Japan, Brazil and Australia. In particular by reminding that
Community anti-dumping and anti-subsidy legislation contains strict requirements concerning the
presentation of complaints and initiation of proceedings, particularly as regards evidence relating to
the existence of dumping (or subsidisation) and injury caused thereof.
Korea is also concerned about EU'S procedures of  "anti-absorption" and "anti-circumvention". As
the Secretariat writes, absorption refers to instances where there is no movement or insufficient
movement in the selling prices of the dumped pro duct on the Community market from the imposition
of a definite anti-dumping duty. Korea is concerned that connotation of "absorption" may be too
arbitrary. Also, the definition given of circum vention in Article 13(1) of the EU anti-dumping
regulation is very broad and complicated. In Korea's view, it could open the door to various
interpretations which can affect companies that are in fact not circumventing anti-dumping duties.
As these anti-absorption and anti-circumvention procedures are not covered by the WTO Anti-
Dumping Agreement, Korea believes that it may not be desirable to resort to these procedures asthere is a risk that they go against WTO spirit.
The term absorption means that the exporter has paid  for the duty himself rather than it being paid by
the importer a fact which international rules reco gnises lowers the export price. A new dumping
margin and a new duty can be calculated on that basis.WT/TPR/M/72/Add.1
Page 134
As to circumvention, which means that exporters are wrongly evading anti-dumping duties we can
only say that any such evasion must be actionable. Of course, any such investigation has to carried out
in a reasonable manner and the Community has shown that it only acts after a detailed investigation
and when such evasion has been proved beyond doubt. So far, there had been no cases against Korea.
Moreover, most WTO-Members have similar provisions.
Oral question from Argentina (Q.1)
In paragraph 54 (page 55) of the Report by the Secretariat there is a reference to the protection
measure imposed by the EU for 2000, at the request of  Spain, on the import of garlic from China.  We
should like to know what this protective measure on im ports of garlic from China entails;  what is the
justification for this measure and what is Spain's complaint?
Imports of garlic from China are limited to 12,000 tonnes per year or 1,000 tonnes per month.
Imports within these limits are subject to a system of certificates.  The measure was published in
OJ L125, page 21, of 26 May 2000.  It is justified by the increase in imports from China and their lowprice, which were disrupting the Community market for this product.
The EC has in force a safeguard clause on imports of garlic from China, which limits the quantities
that can be imported from that country.
II-h)  Government Procurement
Question from Korea (Q.4)
According to the Secretariat’s report on page 63, the Commission has noted that “the EU’s efforts to
promote the greater competition [in the field of gover nment procurement] are failing to meet initial
expectations”. The report also mentioned that “New policy proposals for this area are foreseen by the
Commission”.
What are those proposals? How will they promote competition in government procurement? Can we
expect these proposals to go beyond those briefly discussed in paragraph 79 to 81.
The European Commission has proposed, in May 2000, to the Council and the European Parliament
some amendments to the Directives with the aim of improving the functioning of EU's public
procurement system. These proposals may be consulted at the SIMAP webpage  (http://simap.eu.int/)
under the title "public procurement news". These amendments concern the scope of the Directive, theintroduction of greater flexibility as regards dialogue between purchasers and suppliers and the use of
framework contracts. In addition, the Commission also proposes a simplification and clarification of
some of the existing rules and the merger of Directives on works, supplies and services procurement
into a single consolidated Directive. Access to procurement opportunities will also be made easier. To
tackle the low rate of response to procurement opportunities, particularly from small and medium-sized enterprises, the Commission intends to encourage the introduction of electronic procurement
(with the aim of 25% of procurement transactions done electronically by the year 2003).
Question from the United States (Q.48)
We understand that, in the past, the EU has had difficulty in ensuring that all eligible tender
opportunities are properly notified in the Official Journal of the European Communities or otherrequired publications.  Please describe what th e Commission and the Member states have done toWT/TPR/M/72/Add.1
Page 135
address this problem and provide an updated assessment of the degree to which this requirement is
effectively implemen ted throughout the EU.
Due to the institutional structure of the EC, our publ ic procurement system is a de-centralised system
based on objectively defined obligations that apply to thousands of entities in all our Member States.
In order to reinforce market integration and competition across the frontiers procurement undertaken
above certain thresholds is subject to the EU Directives. The remaining procurement is subject to
National rules and to the general rules of the EC Treaty.
While total public procurement has declined slightly between 1993 and 1998 as a proportion of Gross
Domestic Product, for the EU as a whole, the number and value of tenders advertised according to the
rules appears to have doubled over the same period. The number of public administrations and public
utilities advertising their tenders in the Official Journal had grown five fold over the same period.
Overall, it does not seem that the level of implementation of public procurement rules in the EuropeanUnion is substantially different from the level of implementation in other countries. Moreover, if one
takes into account the above-mentioned factors, the level of actual application of procurement rules in
the EU compares favourably with the situation in procurement systems with similar degree of
complexity. For instance, the number of complaints against procurement decisions is very low both in
absolute and relative terms. For the whole EU market the European Commission receives yearly about250 complaints for violation of the procurement Directives, of which about 100 actually lead to the
opening of detailed enquiries. The European Co mmission (and also National Courts and National
Authorities) is actively pursuing these cases and will pursue similar cases in the future in order to
guarantee the respect of EU Public Procurement rules.
Question from the United States (Q.49)
Please describe how the EU implements the GPA requirements that technical specifications not be
applied in a manner that creates an unnecessary obstacle to international trade and that public
procurement authorities do not seek or accept advice relating to technical specifications in a manner
that may preclude effective competition.  Does the EC monitor Member States’ adherence to these
requirements, and have their been any cases in which it has taken legal or administrative actions to
ensure proper implementation?
The current provisions on technical specifications are designed to require public purchasers to define
technical specifications by reference to an exhaustively listed set of instruments so as to avoid
conferring any advantage on a given economic operator or preferring national production. These
instruments are not only well known, transparent a nd publicly available but also favour, as far as
possible, harmonisation of specifications at international level. Moreover, those provisions imply anobligation to accept solutions that are ‘equivalent’ and to make this clear in the tender documentation.
Some entities may have interpreted these provisions as limiting the buyer's choice to only those
products which comply with the standard but such an  interpretation is not correct: the standard is only
a ‘reference’ and other solutions can be compared to the solution provided by the standard.
The Commission monitors that this provision is correctly interpreted and applied by member States.The Commission has also recently made proposals to fully clarify in the Directives the extent of the
"reference" obligation. These changes will also encourage effective competition through the
participation of the greatest possible number of bidders and in particular innovative businesses. These
amendments will clarify that public purchasers are enabled to specify their requirements also in terms
of performance levels, while at the same time safeguarding what has been achieved in terms ofstandardisation, as reference to the standards will still be an optionWT/TPR/M/72/Add.1
Page 136
Question from Canada (Q.17)
III. Trade Policies and Practices by Measures, (2) Measures Affecting Imports, (ix) Government
Procurement, (a) Community legislative framework , para 80:
What is the status of the information technology framework, which is intended to support the delivery
of a public procurement policy in Europe?
The EU policy within the SIMAP project has been to  develop a framework in order to encourage the
use ICTs in the public procurement area. As a part of this framework, open architecture tools have
been developed and are in use by contracting entities and their suppliers. As such the SIMAP web site
(http://simap.eu.int) is the European public procurement portal.
More particularly:
• Notification: an Internet based application has been developed and is operational
since 1.1.1999. It is available to all potential contracting entities, free of charge, in
order to draft, validate and transmit notices electronically for publication in the
Official Journal.
• Dissemination :
- procurement opportunities are available free of charge in the internet- procurement data are easily searchable via the search and retrieval 
mechanism (SRM)
- links with the whole tender documents exist either via the "purchasers 
profile" or directly via  the contact notices published in the OJ
- information on procurement data (policy documents, directives, guidelines, 
best practices...) is available in the SIMAP web site and links are provided 
with national and /or  international procurement sources.
• Common tools:
- The CPV (Common procurement Vocabulary), has been developed and is 
used for the identification of the object of the contract in the notices and the 
automatic translation in the eleven official EU languages. It is intended to be 
the only vocabulary used in the public procurement legal framework. From 
the suppliers side CPV has facilitated the search of the procurement 
opportunities.
- "Standard forms" have been developed and used for the drafting of the 
contract notices
Question from Canada (Q.18)
III. Trade Policies and Practices by Measures, (2) Measures Affecting Imports, (ix) Government
Procurement, para 80-81:
Does the EU have a time frame for achieving the goal of addressing the whole procurement process
through the application of information technologies?WT/TPR/M/72/Add.1
Page 137
The Commission has proposed on May 2000 a modification of the current legal framework in public
procurement in order to permit and encourage the use of electronic means in the whole procurementprocess. It is hoped that the adoption of this proposal by the Council and European Parliament will be
end of 2001. It is also foreseen that government procurement on line should be effective before the
end of 2003.
Question from Canada (Q.8 – 2nd set)
III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports, (ix)
Government procurement, paras 80-81:
With regard to product regulations and standards, the paragraph states, “These results demonstrate
the interface between competition in public pr ocurement and the development of European product
regulations and standards.”  What is the relationship/interface referred to in this statement?  Is theEU suggesting that more specialized standards are appropriate or fewer?
The reference to standards should of course remain possible. However, the key point is that standards
should not be considered as absolute obligations but simply as a common yardsticks against which the
solutions proposed by suppliers can be measured. Contracting authorities should examine whether or
not the products or services offered are genuinely equivalent to products or services manufactured inaccordance with the standards.  Please see answer to question 1.2 for more details.
Question from Hong Kong/China (Q.7)
While the Single Market legislative framework in the field of GP has been in place since the last TPR
in 1997, we note that not all directives are fully transposed into national laws. While we appreciate
that improvement has been made in this area, with  the share of non-transposed directives declined
from 55% in 1997 to 36% in 1998, we would like to k now the latest situation.  And we hope that the
EU could step up its efforts in this aspect so that the alignment process could be completed as soon aspossible. (WT/TPR/S/72, P. 64, Para. 79)
Please notice that the Single Market legislative framework in the field of public procurement has
evolved since the last TPR in 1997 with the adopti on of Directives 97/52 and Directives 98/4 that
introduced modifications in the nine pre-existing Directives.
Implementation of the original nine Directives by the fifteen Member States is now almost complete.
The remaining eleven cases of non-transposition refer all to the two more recent Directives.
Question from Hong Kong/China (Q.8)
We are glad to note the launch of the Systems d'In formations sur les Marches Publics (SIMAP) with a
view to encouraging best practice in the use of  information technology in GP and also the plan to
extend SIMAP to address the whole procurement pro cess.  We would be interested to know the
timeframe for full im plementation of SIMAP. (WT/ TPR/S/72, P. 64, Footnote 128)
The notification and dissemination projects are already operational since the 1.1.1999 (see answer to
question 2.1 above.)
As far as the timeframe for full implementation of e-procurement it is linked to the adoption and
transposition of the modified legal framework.(see answer to question 2.2 above).WT/TPR/M/72/Add.1
Page 138
Question from Japan (Q.23)
Exclusion of certain sectors from the scope of the proposed new EC public procurement
directives (WT/TPR/S/72, p. 64, para. 79)
(i) According to the press release, the European Commission approved last May that as utilities
in the telecommunications sector are now operating in a full competitive environment, this
sector would be excluded from the scope of the proposed new government procurement
directives.  Once these directives become effective, we understand that this will not affectother Member countries' rights under the Agreement on Government Procurement (GPA),
just because the EC has not included telecommunications’ utilities in its entity lists of the
GPA
On the other hand, it is reported that the EC is envisaging, in the proposed directives, an  ad hoc
mechanism enabling the exclusion of the other sectors gradually being liberalized from publicprocurement rules, once liberalization and competition are effective in the electricity and water
sectors in particular.  We are very much interested in any future cases where this exclusion will
become a reality, since these two sectors are covered by the EC's Annex III of the GPA.  We may thus
need to consider (as a result of the ceasing application of the new directives and, consequently, the
GPA to the sectors) some compensatory adjustment in relation to the rights and obligations ofMember countries. We, therefore, would like to ask the EC for its concrete clarification as to what
criteria the EC will use when judging whether the utilities concerned are under effective competition,
and thus whether they qualify for exclusion under the coverage of the new directives.
As Japan rightly points out, the EU Telecommunication sector has not been covered under the EC's
GPA entities list. Japan refers, in addition, probably to a recent proposal by the European Commission
to the Council of Ministers and the European Parliament for amendment of the EU Procurement
Directives. This proposal aims at creating a new mechanism that would allow utilities that becomesubject to effective competition to be exempted from EU public procurement rules. This mechanism
would only be available to public ‘enterprises’, but not to other kind on entities that are subject to the
public procurement rules. The EU Decision-making procedure is not concluded yet. Thus, at the
moment, the exemption of certain entities from public procurement rules is only a future possibility
that would depend on a number of internal and extern al factors. It would, therefore, be premature to
enter now into the questions raised by Japan. In this  respect the EU also refers Japan to Article XXIV
par. 6(b) of the GPA and the experience members of the GPA may have had in the application of that
provision.
Question from Japan (Q.24)
(ii) In connection with the current government proc urement directive relating to the water, energy,
transport and telecommunications sectors (93/38/ EEC), we would like to know whether there
have been, since the inception of the current GPA in January 1996, any cases where utilities in
these sectors have been excluded from the applic ation of the Agreement due to the fact that
they were judged as being exposed to effective competition.  If so, we would like to ask the EC
for its detailed explanation as to what criteria  were actually used when making the judgement.
Up to now Directive 93/38/EEC does not contain a general mechanism allowing for the entities of the
water, energy and transport sectors to be excluded on the basis that they become exposed to
competition. There are therefore no cases to report concerning these sectors.
The only existing provision in this respect refers to  entities in the telecommunication sector, which, as
Japan points out, is not covered under the EC’s GPA offer. This provision is Article 8(1) of DirectiveWT/TPR/M/72/Add.1
Page 139
93/38/EEC which excludes from the scope of the directive certain contracts awarded by entities
providing telecommunication services subject to the c ondition that "other entities are free to offer the
same services in the same geographical area and under substantially the same conditions". According
with the Court of Justice of the European Communities,  this condition is to be verified as a matter of
law and of fact (Judgement of 26 March 1996, Case C-392/93, The Queen v H. M. Treasury, ex parte
British Telecommunications plc. ECR 1996 page I-1631).
Even if Article 8(1) of Directive 93/38/EEC ma y be applied directly, Article 8(2) allows the
Commission to publish for information the list of services which it considers to be covered by this
exclusion. This was done by the Commission in its Communication published on 3 June 1999
(1999/C 156/03). As explained in this text, the Commission previously carried out an assessment of
the competitive situation in the telecommunications sector within the Community, both as a matter of
law and of fact. The assessment was based on notifications of the operators and all the data availableto the Commission. The results were cross-checked  with the findings based on the implementation
report of the telecommunications regulatory package. The assessment concluded that, at that moment,
telecommunications services were offered under conditions of effective competition in most
geographical markets within the EU.
The Commission has recently proposed, in order to increase legal certainty, to modify Directive
93/38/EEC so as to make the removal of the telecommunication sector unconditional and, therefore,
not longer subject to Article 8.
Question from Japan (Q.25)
The EC's discriminatory measures under the GPA (WT/TPR/S/72, p. 65, para. 83, and p. 66,
Table III. 7).
Regarding the EC's Annex III entities of the GPA, th e general notes to the Annexes stipulate that the
EC will not extend the benefits of the Agreement to the suppliers of particular Member countries, onthe basis of reciprocity, in respect of individual sectors covering water, electricity, airports, ports and
urban transport.  Consequently, all Japanese suppliers are excluded from the EC's offers under the
GPA for the electricity and urban transport sectors.  In light of the negotiating history of the
Agreement, we understand that those notes are attach ed to the EC's Annexes from a reciprocity point
of view, whereby a Member not having made an offe r for the corresponding sector, shall be omitted.
For our part, we did not in fact make any offers for the domestic entities engaged in the electricity
and urban transport sectors and operating as a fully-fledged private company faced with market
competition.  The reason being that if we were to make offers under the auspices of the GPA, we
naturally thought that the Government could legally make the offered entities comply with the
disciplines of the Agreement, which is not the case with private companies.  In this respect, it shouldbe noted that the "Teito Rapid Transit Authority" in Japan is indeed covered by Japan’s Annex III as
this Authority, in the position of a juridical person in a public law, is subject to the Transport
Ministry's supervisory control. Furthermore, public transport utilities operating in major Japanese
cities are also covered in that they are the internal agencies of some sub-central governments listed in
Japan’s Annex II.
Under the circumstances, we would like to ask th e EC for its view on removing the notes relating to
Japan’s suppliers, as we presume that opening up the electricity and urban transport sectors to Japan
would not cause any particular problem to the EC, as far as the reciprocity conditions are met, as
explained above.
The EU shares Japan’s interest in an improvement of the coverage of the GPA. The EU considers that
the current review of the Agreement provides the appropriate framework that would allow bothWT/TPR/M/72/Add.1
Page 140
parties to work together in that direction. In this  context, the EU would be ready to carefully consider
any new development on the Japanese side and to examine its possible impact on our notes.
Question from Australia (Q.22)
Access to the EU government procurement market is restricted through the plurilateral Government
Procurement Agreement to which Australia is not a party.
What measures does the EU propose to take to im prove access to its government procurement market
based on the principles of non-discrimination and national treatment?
The EU is in favour of achieving the opening-up of government procurement markets at the
international level. However, the GATT and GATS Agreements currently exclude Government
Procurement from its main provisions, in particular non-discrimination and national treatment.
In order to make concrete progress the EU joined the WTO plurilateral Government Procurement
Agreement that guarantees non-discrimination and national treatment at least among the parties. TheEU is not restricting access to its public procurement markets but it would welcome if other WTO
Members, like Australia, would become parties to  the GPA. The EU and the other GPA parties are
currently reviewing the Agreement in order, among other objectives, to make it more attractive for
other countries to join.
In addition to that, the EU fully supports the current work (in the Working Groups on Transparency
and GATS Rules) to reach at least a minimum set of rules on Government procurement applying to all
WTO parties.
II-i) Export procedures
Question from Japan (Q.29) on Export Credits (WT/TPR/S/72,p71,para100)
We understand that, while individual EU countries accede to the OECD's Export Credit Arrangement,
which aims at regulating public export credit and tied aid credit with a view to eliminating trade
distortion resulting from credit accommodation, any export aid extended by the EU itself through the
European Investment Bank (EIB), i.e. through public export credit and tied aid credit, is not subject tothe Arrangement.  Could the EU confirm that our understanding is correct?  Moreover, should not the
EU-affiliated aid institutions, including the EIB, try to ensure that their lending practices comply with
the Arrangement?
For defining the situation of EIB credits the following distinction should be made:
1. The EIB acting on behalf of and mandated by the EU taking care of the administrative aspects
of EU programmes;
2. The EIB executing financial activities based on its own resources and for its own account.
The first category of activities are not falling under the Arrangement disciplines and  notification
requirements as they have been specifically excluded in paragraph 30 b) which stipulates an exception
for the aid programmes of multilateral or regional institutions.
For the second category of activities trade distortions are avoided by way of their untied character:
procurement for this category of activities is by way of open international tendering. Information isWT/TPR/M/72/Add.1
Page 141
contained in the EIB “Guide to tendering for contracts”: open international character of the tendering
and transparency by way of publication in the “Official Journal” of the EU.
II-j)  State aid
Question from the United States (Q.53)
The report mentions state aid granted by member states equal to $95 billion for the period 1995-97.
Please describe how the EU includes this aid, particularly for agricultural products, in its WTO
notification on domestic support.
Firstly it should be noted that the $95 billion figure is a yearly average for the reporting period 1995-
1997. Secondly this overall figure includes state aid that is granted to firms in the manufacturing, non-
manufacturing and service industries.
The WTO notifications pursuant to the Agreement on Subsidies and Countervailing Measures and the
notifications on domestic support under the Agricultural Agreement are made on an annual basis and
do not include the service sector. For example state aid to rail transport that relates to public service
obligations and that represents over 35% of the $95 billion is not included in data forwarded to the
WTO.
Question from the United States (Q.54)
In paragraph 115, the report mentions that there is “non-notified aid” that the Commission only
learns about when it is brought to the attention of the Commission by third-party complaints or press
reports.  By what mechanism does the Commission ab ide by its obligation to report trade-distorting
domestic support to the WTO by ensuring that state aids are notified?  We understand that the
Commission scrutinizes only state aid that is considered to be distorting to intra-communitycommerce.  What mechanism does the Commission have in place to ensure that all aid distorting to
trade in third countries is notified to the WTO?
In the event that alleged non-notified aid is established by the Commission as in fact being state aid
that is compatible with the Common market, then this aid is subject to EU and WTOreporting/notification obligations as appropriate. Secondly a comparison is made between
Commission approvals of aid with notifications that are forwarded to the WTO to ensure
completeness.
The premise upon which the second part of the question is based is not correct. The EU Treaty
requires Member States to notify all plans to grant aid at a draft stage.  The Commission scrutinises all
such notifications as well as complaints from 3rd parties about alleged non-notified aid and press
reports that give rise to the belief that non-notified aid might be granted.
The distortion of intra-community commerce is one of the criteria taken into consideration by the EU
in assess ing the compatibility of aid with Community law.
The Community notifies all subsidies to the WTO.  In accordance with Article 25.7 of the SCM
Agreement, such notifications do not prejudge the legal status of the measure and do not imply that
the subsidy has any effect on trade.WT/TPR/M/72/Add.1
Page 142
Question from the United States (Q.95)
Paragraph 94 of the report indicates that some member states continue to provide unfair competitive
advantage to state-run financial services entities which limit profits for commercial banking
operations. Please update Members on how the Commission intends to address the complaint filed by
the European Banking Federation (Dec. 1999) regarding state guarantees for Germany's
Landesbanks and whether action has been taken or considered to address competitive problems withregard to France’s Crédit Agricole.
The European Banking Federation filed in December 1999 a short complaint regarding the state
guarantees for three public banks in Germany while announcing a more detailed description of the
issue to follow. This additional information has not yet been provided.
Independent of the complaint and as follow-up of the presentation of the Commission's report on
Services of general economic interest in the banking sector to the Council of Ministers, the
Commission started talks with the German Government on the subject of the public law form credit
institutions, their status and their role.
As regards Crédit Agricole, the French government, following the Commission decision taken in
1999, agreed to abolish the scheme in question.
Question from Canada (Q.5)
III. Trade Policies and Practices by Measure, (4 ) Measures affecting production and trade, (ii)
Subsidies, (c) State aid, Seventh Survey on State Aid, para 119:
The Secretariat Report states that the Commission published its Seventh Survey on State Aid in 1999
and that the Eighth Survey was to have been published in April 2000.  Is it possible to obtain copies ofthese surveys?  Are these reports available on the Internet?
The Eighth Survey on State aid in the EU was published on the 11th April 2000. Copies are available
and may be obtained on the Commission’s EUROPA Internet site ate the following address:
http://europa.eu.int/comm/competition/state_aid/others/
II-k)  Intellectual Property Rights
Question from Peru (Q.5)
The Report by the Secretariat indicates that the legislation on patents and the scope of patentability
provides that the human body at the various stages  of its formation and development and processes
for cloning human beings and modifying their genetic identity may not be regarded as patentable
inventions.  Under what circumstances could the modification of genetic identity be deemed to be apatentable invention?
Article 6(1) of directive 98/44 on the legal protection of biotechnological inventions provides that
patents shall not be provided for inventions where their commercial exploitation would be contrary to
ordre public or morality, however exploitation shall not be deemed to be so contrary merely because it
is prohibited by law or regulation. Article 6(2) of the directive further provides that on the basis of
Article 6(1) the following in particular shall be considered unpatentable:WT/TPR/M/72/Add.1
Page 143
(a) processes for cloning human beings
(b) processes for modifying the germ line genetic identity of human beings;
Patent law in Europe also provides that methods for treatment of the human body by surgery or
therapy and diagnostic methods practised on the human body shall not be regarded as inventions
which are susceptible of industrial application.
To the extent that an invention relating to genetic modification does not conflict with Article 6(1) and
Article 6(2) then it is patentable provided of course it meets the normal requirements of novelty,
inventiveness and industrially applicable.”
Question from the United States (Q.58)
We understand that the Commission is preparing proposals on combating counterfeiting and piracy in
the internal market.  Can the Commission provide us with its view of the likely shape of these
proposals and their anticipated impact?
Following the consultation exercise initiated with its 1998 Green Paper on Combating Counterfeiting
and Piracy in the Single Market, the Commission is preparing a follow-up communication taking
stock of the consultation process and announcing an action plan to strengthen and improve the fight
against counterfeiting and piracy in the Single Market. At this stage, it is much too early to give
precise information on the content of this action plan, since consultations are on-going within the
Commission.
However, the actions to be envisaged in this action pl an will not necessarily be confined to initiatives
of legislative nature, but could also include other forms of action, such as measures aiming to improve
collaboration between private sector and public authorities, support for information and awareness
campaigns as to the dangers and disadvantages of counterfeiting, and training for officials involved in
the fight against counterfeiting and piracy.
Question from the United States (Q.59)
According to the Report, a consultation process was launched by the EU in 1998 on the problem of
counterfeiting and pirated products in the Single Market and counterfeits manufactured in the EU.The report resulting from the consultation process notes that the worst-affected areas for piracy and
counterfeiting are computer software, audio-visual and garments.  Will the consultation process lead
to an initiative to improve aspects of your enfor cement regime, specifically in the area of border
controls and criminal penalties?  If so, when will these initiatives be implemented?
The consultation process has revealed that the extent of counterfeiting and of piracy in the EU, while
being not so worrying as in other regions in the world, is important and, overall, on the increase. This
is a major problem for all industrial and economic sectors in that it discourages investment and
innovation, costs jobs and puts the health of consumers at risk. The harmful effects on society as a
whole and on consumers were stressed widely by the interested parties. Clearly, there is a need foraction to reinforce the fight against counterfeiting and piracy in the Single Market.
As regards border controls, since the Community legislation on the matter was reinforced in 1999, it
is not envisaged at this stage to present further im provements but to ensure the effective enforcement
of existing legislation.WT/TPR/M/72/Add.1
Page 144
Question from Argentina (raised in oral statement)
As regards intellectual property, what measures does the EU envisage putting into effect in order to
lower the currently high levels of piracy of trad emarks, copyright and computer software, audiovisual
material and clothing?
Further to the consultation exercise initiated with its 1998 Green Paper on Combating Counterfeiting
and Piracy in the Single Market, the Commission is preparing a follow-up communication which
takes account of the consultation process. The Community will propose an action plan to strengthen
and improve the fight against counterfeiting and piracy in the Single Market. This action plan will
cover counterfeiting and piracy in relation to all intellectual property rights including trademarks and
copyright.
Question from the United States (Q.60)
According to the Report, Directive 98/40/EC has been adopted concerning the legal protection of
biotechnological inventions, with which Member states must bring their national laws intocompliance by July 2000.  Please describe in detail the type of protection afforded to biotechnological
inventions under the Directive.
The European Parliament and the Council adopted directive 98/44 on 6 July 1998. The Member States
have until 30 July 2000 to convert the Directive into domestic law by appropriate legal and
administrative regulations.
Biotechnological inventions can be protected by m eans of national and European patents in Europe.
European patents are granted under the European Patent Convention, which has already been
modified to take account of the directive. For plant varieties special protection comes into
consideration in accordance with the laws protecting plant varieties applying in the various Member
States as well as by regulation 2100.94 (EC) providing Community protection for of new plantvarieties ("Community plant variety right").
The directive provides that inventions which are new, which involve an inventive step and which are
susceptible to industrial application shall be patentable even if they concern a product consisting of or
containing biological material or a process by means of which biological material is produced,
processed or used.
However the directive provides that patents shall not be ' granted in respect of: b) Plant or animal
varieties, or essentially biological processes for the production of plants or animals ; this provision
does not apply to microbiological processes and to the products thereof.'
Plant varieties
The Act of the Union for the Protection of New Varieties of Plants ( UPOV ), which was revised in
1991, provides a definition of Plant Variety in Article 1 (vi), which in the nearly unanimous opinion
of the UPOV  States participating in the preliminary work should also be relevant to Patent Law. This
procedure specifies as a plant variety:
a plant grouping within a single botanical tax on of the lowest known rank, which grouping,
irrespective of whether the conditions for the grant of a plant variety right are fully met, can
be:
• defined by the expression of the characteristics that results from a given genotype or
combination of genotypes,WT/TPR/M/72/Add.1
Page 145
• distinguished from any other plant grouping by the expression of at least one of the
said characteristics, and
• considered as a unit with regard to its suitability for being propagated unchanged.
An identical provision is found in Article 5(2) of Council Regulation (EC) No 2100/94 of 27 July
1994 on Community plant variety rights.
Whether the plant variety resulted from conventional breeding processes or from a genetic process is
irrelevant. A genetic modification of the genome of a plant can thus result in a new plant variety. Itwas however not totally clear, how genetic inventi ons, which are not specifically directed toward the
entire genome of the plant, but concern only a certain DNA sequence of the genome, are to be treated.
Such an invention could also cover new plant varieties, because due to fundamental biomolecular
technologies such inventions regularly go far beyond the narrow taxonomical limit of an individual
plant variety, and can be applicable to whole plant categories, if not to an indefinite multiplicity ofplant varieties. Plant cells are however not covered by the patenting exclusion.
The directive which takes the term ‘plant variety’ from the concept of protection of new plant
varieties, appears to resolve this ambiguity. It states that: ' Whereas a plant grouping which is
characterised by a particular gene (and not its whole genome) is not covered by the protection of newvarieties ...'. The directive also allows a farmer to produce seed or other plant propagation material for
a specific plant variety which is protected by patent for his own enterprise, provided that he acquired
the original material from the patentee and/or with his agreement.
Animal varieties
Just like plant varieties animal varieties (in the sense of "breeds of animal") are also covered by the
patenting exclusion. It must be noted however that no other commercial protected right systems are
available for animals, unlike plants where the system of protection of new plant varieties is applicable.
Animal breeding today involves the genetic manipulation of animals to an increasing extent. The
directive expressly forbids the patenting of animal varieties. Higher taxonomic units, like Orders,
Families, or Genera, do not fall into the category "animal varieties" and are therefore not covered bythe exclusion.
Therefore the directive specifies that an invention whose object is an animal can be the subject of a
patent, if the technical feasibility of the invention is not confined to a particular animal variety
(Article 4(2) of the directive). Furthermore animal cells as such, which thanks to modern technology
can be cultivated more or less like bacteria and yeasts, are not covered by the patenting exclusion.
Like plant cells they are rather considered to be "microbiological products" in a broader sense.
Essentially biological processes
Finally essentially biological processes fall under the patenting exclusion found in the directive. The
term "biological process" is to be understood as limited strictly speaking to technical procedures, in
which the course of events is influenced by means other than those which occur in nature, for example
chemical or physical means. The patenting exclusion specifically does not apply to microbiological
processes and the products made by such means. This refers to procedures for extracting,
transforming, and using micro-organisms, but also the fields of cell and molecular biology, which in
accordance with the practice are assigned to the category of microbiological processes. Furthermore
patent protection is available for inventions, which relate to genes or proteins.WT/TPR/M/72/Add.1
Page 146
Whether a procedure is " essentially biological ", depends above all on, to what extent the procedure
is technically influenced by human action. If this intervention plays a significant role, it is not possibleto see it as a substantially biological process. On the other hand conventional breeding procedures,
which are wholly within the natural limits of crossing and selection, should be treated as substantially
biological processes. Thus for example a procedure for cross-breeding or a selective breeding
procedure, in which only the animals which show certain features were selected for breeding or
crossing, would therefore be seen as "essentially  biological " and would thus be covered by the
patenting exclusion. On the other hand procedures for the treatment of plants or animals for the
improvement of their characteristics, or their profitability, or for the promotion of their growth,
irrespective of whether a mechanical, physical, or chemical procedure is involved, such as for instance
a procedure for pruning plants, would not be substantially biological. The patenting exclusion does
not apply even though the invention includes biological processes, if it is essentially of a technicalnature.
Thus a patent can be granted for a process for breeding plants which is not essentially biological.
Similarly biological processes, which are not directed  to the cultivation of plants, are patentable, that
is to say procedures for the manufacture of products utilising higher plants, but not the plantsthemselves.
Discoveries
Only an invention can be the subject of a patent. Discoveries, which do not extend human ability, but
only human knowledge, are not patentable. It is often held that all biological inventions, which deal
with human, vegetable, or animal genes, involve materials which already occur in nature and can
therefore under no circumstances be invented, but only discovered. Thus the mere sequencing of a
genome belongs to the area of discovery and for that reason alone cannot take advantage of patent
protection. It is different if a DNA sequence is rel eased from its natural surroundings by means of a
technical procedure and is made available for the fi rst time to a commercial application. Here there is
a step taken from knowing to being able. Such a gene is new in the patent sense, if it was notpreviously accessible to the public as such, and thus technically was not available. The same applies
to micro-organisms and natural materials, which are extracted from their complex natural
surroundings by technical procedures. It is however essential, when patenting the material which has
been isolated, that its special function or useful characteristics can be defined.
The directive also takes this line. Among other things it says: '... the granting of a patent for
inventions which concern such sequences or partial sequences should be subject to the same criteria
of patentability as in all other areas of technology: novelty, inventive step, and industrial application;
whereas the industrial application of a sequence or partial sequence must be disclosed in the patent
application. Whereas a mere DNA sequence without the indication of a function does not contain any
technical information and  is therefore not a patentable invention'.
Offences against "ordre public" or the rules of propriety
Patents are not granted for inventions which violate "ordre public" or the rules of propriety. In
particular the directive provides that patents shall not be granted for inventions the publication or
exploitation of which would be contrary to ``ordre public'' or morality, provided that the exploitation
shall not be deemed to be so contrary merely because it is prohibited by law or regulation.
The directive also specifies a number of cases, in which it is to be assumed that such a breach is
present and for that reason alone the invention cannot be patented. The following cases are
mentioned:
• processes for cloning human beings;WT/TPR/M/72/Add.1
Page 147
• processes for modifying the germ line genetic identity of human beings;
• uses of human embryos for industrial or commercial purposes;
• processes for modifying the genetic identity of animals which are likely to cause them
suffering without any substantial medical benefit to man or animal, and also animals
resulting from such processes.
Question from the United States (Q.62), and
Question from Switzerland (Q.1)
United States:
Article 4 of Directive 65/65/EEC lists the documents  and particulars that an applicant must submit to
the competent authority in order to obtain authorization to place a medicinal product on the market.
Among the required documents the applicant must subm it are results of clinical trials and of various
pharmacological, biological and microbiological tests, as outlined in Article 4.8.  Please describe
how undisclosed test data submitted under this Article is protected as required by Article 39 of theTRIPs Agreement.
Switzerland:
Article 39.3 TRIPS Agreement requires WTO Members to protect undisclosed regulatory data for
obtaining marketing approval of a new product against unfair commercial use. This means that - for a
specified period from the marketing approval date of the original product - neither potential
competitors nor the registration authorities may rely on the first applicant's confidential data in
support of applications for the approval of a similar product by later applicants. Article 4, 8a iii of
EC-Directive 65/65 as amended by Directive 87/21 a llows member states to choose not to offer such
data protection beyond patent expiry. The TRIPS Agreement, however, does not create a link betweenregulatory data protection and the patent situation. Please explain how the EU regulation does fulfil
this requirement despite the linkage of data protection to patents
The existing term of the Community acquis in this area, which permits the linking of data protection
to the patent period, is TRIPs compliant. Under the term of the community acquis, Member  States
may decide whether to limit data protection to the patent period or whether to treat the two separately.
Questions from the United States (Q.63 (Tra demarks) to 69 (geographical Indications)
(d) Trademarks
We are aware that Regulation (EC) No. 1493/99  (“Council Regulation (EC) No. 1493/1999 of 17
May  1999 on the common organization of the market in wine”), in Annex VII(F)(2) explicitly calls
for the cancellation of trademarks, by 31 December, 2002, that incorporate geographical indications
for wine. Please explain how the requirement for c ancellation of trademarks is consistent with the
EC’s obligations unde r the TRIPs Agreement.
(e) Geographical Indications
How is ex officio protection provided for geographical indications?  Please provide examples of
instances where the geographical indications of non-EC nationals have been protected ex officio.
Please provide the contact information, mailing address, and fee information regarding application,
maintenance, and any other fees necessary for non-EC nationals to apply for and maintain protectionWT/TPR/M/72/Add.1
Page 148
of geographical indications in the European Union.  If  no centralized point for receipt of requests for
protection exists, please explain why.
Article 10 of Regulation (EEC) No. 2081/92 requires th at, in order to obtain protection in the EC,
third countries must have in place an inspection and en forcement system that mi rrors that of the EC.
Please explain how the unilateral imposition of the EC  system on third countries, as a prerequisite for
obtaining geographical indication protection in the EC, is in compliance with the EC’s TRIPS
obligations.
Article 11 of Regulation (EEC) No. 2081/92 provides for a procedure whereby “any Member State”
may submit that a condition in a product spec ification has not been met, and may send a “duly
substantiated application” to the Commission, and pursuant to which, the Commission may cancel the
registration.  By contrast, if a national of a third country believes that a condition of a registration is
not being met, and seeks the cancellation of the registration, the Regulation appears to provide no
recourse. How is this consistent with the national treatment requirements of the TRIPs Agreement?
How is EC recognition of a foreign geographical indication achieved?  For example, does
“protection in the country of origin” require that the country of origin have in place national laws
describing a particular geographical region and setting for the quality standards for the goods?
May only a governmental organization/entity apply for recognition of a geographical indication in the
EC?  If so, how is this compatible with the TRIP s Agreement?  How is the limitation on who may use
a geographical indication compatible with the requirements of the TRIPs Agreement?
The questions under (c) and (d) are addressed in the context of the review under Article 24.2 of the
application of the section of the TRIPS Agreement on geographical indications. The EU has provided
extensive information on these issues, including notably in document WTO IP/C/W/117/Add.10, of
26 March 1999 and IP/Q2/EEC/1.
Question from the United States (Q.70)
Can the Commission provide an update on the status  of the EU Directive on Copyright and Related
Rights for the Digital Environment?
Political agreement was reached on the Draft Directive on Copyright and Related Rights in the
Information Society on 9 June 2000. It is expected that the Common Position will be formally adopted
by the Council later this year probably in September. Thereafter, the Draft Directive will receive its
Second Reading in the European Parliament. It is hoped that it will progress without amendment to
final adoption.
Question from the United States (Q.71)
The European Community reports that it has proposed a Community-wide initiative to adjust and
complement the existing EU framework on copyright and related rights for the digital environment.
Please state the status of efforts to ratify th e WIPO Treaty on Copyrights and the WIPO Treaty on
Performances and Phonograms, and the likely date of accession.
The Draft Directive on Copyright and Related Rights provides the means by which the Community
will adjust and complement the existing framework on copyright and related rights for the digital
environment. The adoption and implementation of the Draft Directive is a pre-condition for the
Community and its Member States to ratify the WIPO Treaty on Copyright and the WIPO Treaty onPerformances and Phonograms. On 16 March, by way of a decision, the Council approved the 2WT/TPR/M/72/Add.1
Page 149
WIPO Treaties which the Community and its Member States have already signed. The likely date of
ratification will depend on the timing of the adoption of the Draft Directive and thereafter the expiryof the period in which  Member States are required to implement the Draft Directive(once adopted)
into their national laws. In theory, the earliest date  that ratification can take place by the Community
is immediately after the expiry of the period in which Member States will be required to transpose the
Draft Directive. The Draft Directive stipulates that Member States will have 2 years following
adoption and publication in which to do so. However, there is a political commitment on the part ofthe Community to deposit the instrument of ratification at the same time as the Member States.
Question from Canada (Q.25)
III.  Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade,
(iv) Intellectual property rights protection, (a) Overview, para 133:
What is the current status of efforts to develop a uniform Community-wide system for intellectual
property rights?
In addition to the Community measures already in place, the following Community wide initiatives in
the area of industrial property rights are intended to further strengthen and harmonise intellectual
property protection in the European Community
− Proposed Regulation on the Community Patent – the proposal has been approved by the
Commission and will now be considered by the Council and Parliament.
− Proposed directive on the patentability of software related inventions – Commission currently
considering what form this proposal should take.
− Proposed Regulation on the Community Design – Discussions within the Council still
ongoing.
As far as copyright and related rights is concerned, the Draft Directive on Copyright and Related
rights provides the means by which the Community will adjust and complement the existing
framework on copyright and related rights for the digital environment. The adoption and
implementation of the Draft Directive is a pre-condition for the Community and its Member States toratify the WIPO Treaty on Copyright and th e WIPO Treaty on Performances and Phonograms.
Political agreement was reached on the Draft Directive on Copyright and Related Rights in the
Information Society on 9 June 2000.  It is expected that the Common Position will be formally
adopted by the Council later this year probably in September. Thereafter, the Draft Directive will
receive its Second Reading in the European Parliament. It is hoped that it will progress withoutamendment to final adoption.
In addition, there is also the Draft Directive on Droit de Suite on which there is now a common
position and which will introduce a right for artists to receive a share in the proceeds of resale of their
original works of art.
Other measures have already been adopted in the field of copyright and related rights including
Directive 96/9 on the legal protection of databases; Directive 91/250 on the legal protection of
computer programs; Directive 92/100 on rental right and lending right and certain rights related to
copyright in the field of intellectual property; Directive 93/83 on the co-ordination of certain rulesconcerning copyright and rights related to copyright applicable to satellite broadcasting and cable
retransmission; Directive 93/98 harmonising the term of protection of copyright and related rights;
and finally Directive 87/54 on the legal protection of topographies of semiconductor products.WT/TPR/M/72/Add.1
Page 150
Question from Hong Kong, China (Q.10)
The Commission has recognised that although the protection of intellectual property rights by
international conventions had led to some standardization of national legislation, it was not an
adequate basis for completing the single market.  It has therefore decided to strive for harmonization
of national laws in different areas and for stronger effective protection of intellectual propertythroughout the world.  As the European market beco mes more integrated, well-defined and EU-wide
IP protection will be one of the most important  elements in facilitating trade and building up
confidence.  We are therefore pleased to be updated on the harmonization approach and the many
enhancements of the EU's IP laws.
Please see reply to Canada, Q.III.4.iv.a
Question from Hong Kong, China (Q.11)
It is mentioned that the EC intended to propose a directive on the patentatibility of computer
programs to harmonize and clarify Member States' pate nt laws on this issue.  Is there any target date
of implementing this directive, and what  is the state of play at the moment?
The internal discussions between the Commission services have not yet been concluded. The draft
proposal for a Directive will be presented once the best approach towards all the aspects of the issue
has been identified.
Question from Hong Kong, China (Q.12)
The EC seems to prefer the Community patent over the EPO-based system which is thought to be too
costly.  However, it is noted that the Community patent would also incur significant cost in
translation.  Would the EU share with us more  details of the Community patent system, and how
effective it is estimated to be in encouraging more widespread use of patent in Europe, vis-a-vis the
EPO-based system?
and
Question from the United States (Q.61)
According to the Report, the Commission intends to propose several legislative initiatives, including a
Community patent issuance system, Community design  law, and a directive on the patentability of
computer programs.  How will the proposal for a Community Patent treat subject matter in recentlydeveloping hi-tech areas such as biotechnology, computer software, and business methods?
The European Commission agreed on 5 July 2000 on a proposal for a regulation establishing  a
Community Patent to give inventors the option of obtaining a single patent legally valid throughout
the European Union. A principal aim of the proposal is to reduce the cost of obtaining and enforcingpatents in Europe.
At present, a typical European Patent (to apply in eight Member States) costs approximately 49,900
Euro, of which 12,600 (some 25 per cent) is accounted for by translation costs. In the case of a
European Patent to apply in all 15 Member States and requiring translation into all eleven EU official
languages, the translation costs go up to some 17,000 Euro.WT/TPR/M/72/Add.1
Page 151
The proposal to create a Community Patent would reduce translation costs to some 2,200 Euros by not
requiring any translation beyond that already fore seen in the Munich Convention for the granting of
the patent - this implies that the patent would be granted and published in one of the working
languages of the EPO - English, French or German - and the claims into the other two.
Currently, national courts rule in cases of disputes relating to European Patents since they are treated
as national patents. Where a patent holder wishes to bring an action for infringement of his EuropeanPatent, it may be necessary to bring actions in a number of Member States. Similarly where someone
wants to challenge the validity of a European Patent he may need to bring actions in all the Member
States where that European Patent is valid. This requirement to bring actions in more than one
jurisdiction within the Community means that liti gation involving European Patents is expensive.
There is also the possibility of different interpretations in the Member States of how patent lawapplies in a particular case.
In its proposal, the Commission provides that all disputes relating to the infringement and/or the
validity of Community Patents are dealt with by a single new centralised Community tribunal within
the framework of the European Court of Justice.
The proposal that has been agreed by the Commission should therefore lead to significant cost savings
for the applicant for and holder of a Community pa tent. The proposal will now be considered by the
Council and European Parliament. Only when it ha s been agreed by the Council will the regulation
enter into force. Therefore it will be some time be fore the effectiveness of the Community patent can
be determined.
Question from India (raised in oral statement)
We notice that recently, the Munich Office of the EU Patent Office has revoked a patent on
insecticidal properties of neem as a fungicide. We would want to know fr om the EU their plans on
ensuring that such patents are not granted in the future. We would also lik e to know from the EU
whether it would instruct its Patent Offices to insist on the patent applicants for disclosing the source
of origin of biological material and associated  traditional knowledge in their application so that
adequate information is available to them to  understand the patent application better and also
address the issues relating to benefit sharing.
The European Patent Office (EPO) is not an institution of the European Community (EC). Rather, its
actions are governed by the European Patent Conv ention (EPC). This Convention is an international
agreement to which 19 countries including all EU Member States are a party. Therefore, the
Community is not in a position to give any instru ctions to the EPO. Nevertheless, the Community is
closely following the EPO’s activities including those in the field referred to in the question.
II-l) Miscellaneous
Oral question from India
We want to seek clarification on certain measures concerning income tax systems in the Member
States of the EU, which we feel constitute export subsidies or subsidies contingent on the use of
domestic goods both of which are not consistent with the WTO Agreement on Subsidies and
Countervailing Measures. These measures include: (a ) France: Income tax law provides for the start
up costs of overseas business conditional upon the inclusion of French products through a tax
deductible reserve account. Also, allowance of 10% of the receivables accounts to be held in a
separate account for medium and long term credit risks related to export sales (b) Greece: Income taxlaw allows domestic exporters to claim special tax exemptions depending on the percentage of theirWT/TPR/M/72/Add.1
Page 152
revenues coming from exports (c) Ireland Income tax law includes a « Special Trading House »
system under which special tax rates are levied for revenues from export sales of Irish products (d)Belgium: Income tax law allows for certain tax exemptions for recruiting personnel with export-
related functions (e) Netherlands : Income tax law allows for establishment of special export reserves
for small and medium sized business.
None of the measures in question involve subsidies contingent upon export performance. In addition,
several of the measures have been phased out.
TPR Section III
S
ECTORAL MEASURES
III-a) Agriculture (CAP, export subsidies, domestic support)
Oral question from Bolivia (Q.2)
What measures is the European Union taking to reverse the declining trend in exports of agricultural
products from developing countries to the Community market?  According to the document by the
WTO Secretariat, these exports fell from 30 .5% in 1990 to 28% in 1998 (G/AG/NG/S/6, page 2,
paragraph 3).
The EC continues to be the biggest importer of agricultural products produced in the developing
countries;  it recently approved an initiative to extend preferences to the least-developed countries;  it
has also recently signed a new agreement with more than 70 ACP countries, which renews theextensive access to the Community market granted to those countries.
Oral question from Bolivia (Q.3)
How can the European Union reconcile its Common Agricultural Policy with its theory on the
benefits of a free market and openness in general if it constitutes a heavy burden for the population?
The CAP is a support policy for farmers, decided by the highest political authorities in the
Community countries, which transcends the purely theoretical rationale of free market benefits.
Oral question from Bolivia (Q.4)
How can the European Union reconcile its Common Agricultural Policy with its environmental
considerations if this policy damages the environment, as indicated in the Report?
The report is inconsistent on the subject of the CAP's effects on the environment;  in any event and
since the 1992 reform, environmental issues have been given increasingly specific and more extensiveconsideration in the CAP.
Oral question from Bolivia (Q.5)
How can the European Union reconcile its Common Agricultural Policy with its general approach to
sustainable development if the Policy is detrimental of developing countries, exacerbating their
poverty in general and that of rural populations in particular, a sitatuion that can be seen in thecontinual growth of urban poverty belts?WT/TPR/M/72/Add.1
Page 153
The CAP has not prevented the EU from being the main importer of agricultural products from the
developing countries;  we do not consider that the CAP exacerbates the situation in developing
countries.  The most recent statistics show that it is other countries (some developed and some
developing) which have been increasing their share of agricultural exports.
Oral question from Bolivia (Q.6)
How can the Common Agricultural Policy be just ified in view of its negative impact on the
environment and in particular how does it comply with Article 6 of the Treaty on the European Union,
which requires the integration of environmental concerns into all EU policies (page 6, paragraph 11,
of the Report by the Government)?
See the reply to question 3.
Questions from the United States (Q.55 &56)
Please specify how and what it notified as State aid for the agricultural sector on a per year basis for
the period, 1995-1997.
Please specify how and in which box – blue, amber, or gold – member state aid is notified.
In principal, Member States are not allowed to grant any additional national support to agricultural
products covered by the Common Agricultural Policy. In some exceptional cases, Member States
have the permission to grant national aid. This ai d is explicitly notified in the EU Domestic Support
notification as amber box measure. However, the situation is different as regards the global overall
support to the agricultural sector by means of financial assistance to research, pest and disease control,producer and resource retirement and other green box  measures. The financing could be 100% by the
Member State, 100% by the EU or in between, depending on the measure involved.
Question from the United States (Q.72)
The most recent agricultural package targeted 2002 /03 for review and possible further reform. What
additional reform does the EU envision for 2002/03?
In the Berlin agreement of March 1999, the European Council invited the Commission to submit a
report in 2002 to the Council on the developm ent of agricultural expenditure accompanied, if
necessary by appropriate proposals and requested the Council to take the necessary decisions in linewith the objectives of the reform.
Question from the United States (Q.73)
How does the EU plan to implement Agenda 2000 reforms for oilseeds, while maintaining its
commitments under the Blair House Agreement?
The current system of differentiated hectare payments for oilseeds and cereals will disappear in two
years. From the  marketing year 2002/03 onwards the hectare payments for cereals, oilseeds and set-
aside land will be the same. The aid per hectare for these crops will be based on the average cerealsyield of the region concerned multiplied by 63ÿ.  Therefore crop specific oilseeds payments will be
eliminated.WT/TPR/M/72/Add.1
Page 154
Question from the United States (Q.74)
With regard to the current Commission proposal for the modification of the rice regime, what is the
Commission’s intended timeframe for negotiating with the contracting parties in accordance with
Article 28 of the Uruguay Round agreement?
The EU will soon consult with the third parties intere sted in the matter, in full respect with its WTO
obligations.
Question from the United States (Q.75)
The report mentions that member state disbursal of EU CAP funds is subject to ex post controls to
ensure compliance with Community regulations.   What penalties are in place in cases of non-
compliance? What mechanisms does the Commission have in place to investigate possible violations
within member states?  How many investigations have been made?  How many Commission
employees are engaged in that activity?  What  enforcement mechanisms does the Commission have
against individuals in member states who have improperly used EU funds?
Rules concerning control of FEOGA expenditure s are laid down in Council and Commission
Regulations, in Commission decisions and clearance of accounts guidelines.
The management of the FEOGA expenditure is shared between the Commission and the Member
States. The Member States are in charge of day-to-day administration and control. They devote very
large resources to this.
The rules laid down in the above-mentioned legal instruments are very detailed: they concern, for
example, the establishment of an integrated administration and control system, the quality of the
control systems, the number of on-the-spot checks , the systems for cross-checkings, the role of the
certifying bodies (which are certifying the accounts) and internal audit bodies, sanctions, etc.
Clearance of accounts is concerned with ensuring that money has been spent in accordance
Community rules. The Commission performs system audits in the Member States. The auditors of the
commission visit Member States regularly to check the systems in place, both through national rules,
instruments and guidelines and through on-the-spot checks. Major international audit firms are alsoused to perform audits.
If the Commission finds weaknesses in the control system in a Member State, the Member State is
informed and requested to improve the system. When the weaknesses are serious, the Commission
refuses financing for the Member States (so-called financial corrections).The rules are applied by the Commission in a very strict manner. Currently, more than 600 million
Euro are recovered on average every year from Member States.
Furthermore, Member States’ sanctions systems as laid down in Community rules impose penalties on
individual beneficiaries of around 300 million Euro per year on average. All in all, some 1000 millionEuro is recovered every year, which gives an indication of the strictness of the system.
When there is reason to believe that the irregularities arise from fraud or other illegal activities, the
European Anti-Fraud Office (OLAF) is alerted and makes inquiries that which can ultimately lead to
prosecution against the fraudulent party. Tasks and operation of OLAF are described in Decision
1999/352/EC, ECSC of 28 April 1999. The Office reports annually on its operational activities .WT/TPR/M/72/Add.1
Page 155
Question from the United States (Q.76)
Regarding reform of the fresh fruit and vegetable CMO in 1996, we understand that the role of
producer organizations in managing EU funds was greatly increased.  By what mechanism does the
EU plan to reassure WTO members that all us es of producer organization funds are indeed
compatible with the green box?  How does the EU plan to address the reduction in transparency
brought about by the change in the fresh fruit and vegetable CMO?
Producer organisations are the basic elements of the common market organisation. Regrouping supply
through these organisations strengthens the positi on of growers on the market EU funding of producer
organisations through operational funds is used to  improve production planning and quality, increase
marketing efficiency and promote the use of environmentally-sound techniques.  Council Regulation2200/96 and Commission regulation 411/97 provide a detailed description of targets and tools.
Producer organisations are not allowed to give direct aid to producers or processors, with the
exception of compensation payments for withdrawal (see US question 84).
Question from the United States (Q.77)
Is it envisaged the EU will make animal welfare requirements applicable to third countries.  Under
what provision of the GATT would this be allowed?
In the last meeting of the Committee on agriculture meeting in special session, the EU submitted a
paper ( G/AG/NG/W/19) which presents the EU vi ews on animal welfare. This paper should be
further discussed at the September session of the Committee on agriculture meeting in special session .
Question from the United States (Q.78)
Why is the management of the GATT import quota on pig meat, for instance, different from the ACP
or Association Agreement pig meat quota?  GATT quota import licenses are only valid until June 30and have to be requested again in the first 10 days of July for the following quarter, which practically
prevents trade for most of July.  This June 30 deadline does not exist in ACP and Association
Agreement import quota management.
The management of GATT import quota on pigmeat conforms with the current GATT agreement in
all aspects and it is true that the validity of licences extends only until the end of each GATT year.
However, this does not usually create any problems for trade, as operators can take this into account
when applying licences in the last quarter. In the case of imports of chilled meat difficulties may arise,
as storage time cannot be very long.
The management of import quotas under the Association agreements is based on bilateral agreements
with the aim to facilitate the future integration of these markets into the Community market. It is
therefore quite natural that the rules may differ from management of GATT quotas.
Question from the United States (Q.79)
How is the decision under Agenda 2000 to increase some milk quotas without reducing price qualify
as a blue box aid, given that such action is not production limiting?
The reform as decided under the Agenda 2000 includes the introduction of direct aid for dairy in
2005/06.  The price reduction in 3 steps from 2005/06 onwards will be partly compensated by direct
aid. The aid will be based on the individual quota rights in 1999/00 and is therefore compatible withthe criteria of Article 6 § 5 of the Agreement on Agriculture (blue box).WT/TPR/M/72/Add.1
Page 156
Question from the United States (Q.82) – Arable crops
For coarse grains, the WTO limits with regard to 2000/01 subsidized exports will constitute a
prohibitive factor.  How is the EU going to handle the requests for an estimated 3 MMT of coarse
grain license requests over the WTO volume limit?
The EU will comply with its WTO commitments in 2000/2001 like in previous years.
Question from the United States (Q.83)
In paragraph 24, the report says “Expenditure on export subsidies was ECU 3.5 billion in 1998,
down sharply - by almost 50% - since 1995 . . . ” However, this contradicts the 4.791 billion EURO
listed in Table 2.6 “EAGGF-Guarantee 1998 -expenditure committed by type and member state,”
published in Official Journal C349 of 3 December 1999 - Court of Auditors Annual report concerning
the financial year 1998.  Can you explain this discrepancy?
The two sets of figures are not comparable since the first one covers expenditure for direct export
subsidies subject to reduction commitments while the second one covers all expenditures for direct
export subsidies, including sugar originating in AC P countries and India, for which the EU has not
undertaken any reduction commitments.
Question from the United St ates (Q.84) - Horticulture
In the interest of increased transparency, how will the EU begin to notify its subsidies on fruits and
vegetables by commodity instead of using a basket category?
In the notification on Domestic Support marketin g year 1997/98 (G/AG/N/ EEC/26) the EU provides
per product information on the support to bananas, apples, pears, apricots, cherries, peaches,nectarines, table grapes, plums, lemons, clementines, mandarins, satsumas, oranges, cucumbers,
courgettes, artichokes, tomatoes, cauliflowers, aubergines. The EU is of the opinion our notification is
sufficient transparent.
Question from the United St ates (Q.85) - Horticulture
Is the “operational fund-financed withdrawal comp ensation” included in the EU’ s price support
notification?
Yes, see page 8 of the notification on Domes tic Support marketing year 1997/98 (G/AG/N/EEC/26).
It should be noted that the amount concerned only covers the expenditures on cauliflower and
aubergines. Compensation paid for the withdrawal of other products for instance lemons, apples,
peaches, pears, nectarines are not included to avoid double counting: the support to these products is
already covered in Supporting Table Ds 8 (page 13,14).
Question from the United St ates (Q.86) - Horticulture
How is the aid scheme for canned fruit, tomatoes, and dried fruit consistent with WTO restrictions on
subsidizing processing?
The EU does not subsidise processors but producers through the aid scheme for canned fruit.WT/TPR/M/72/Add.1
Page 157
Question from the United States (Q.88) – Main instruments of Agriculture Technology
The EU, in practice, adjusts applied tariff rates fr equently, approximating to some degree, the impact
of pre-Uruguay Round variable levies for major agricultural commodities.  What are the “technical
formulas” that are used to set minimum and maximu m tariff rates on agricultural products?  How do
the impacts of the tariffs set by use of these “technical formulas” compare to the impact of the
variable levies which were applied prior to the Uruguay Round?
The EUdoes not apply any variable levy, as a result of the UR Agreements.
Question from New Zealand (Q.1)
The Secretariat report (paragraph 22 of the Summary Observations) comments on the continued large
budgetary outlays that the Common Agricultural Policy (CAP) represents.  What does the EU
estimate to be the budgetary implication for th e CAP caused by enlargement, and what policy
responses is the EU considering to deal with these (including in sectors such as dairy)?
This is an issue for the EU and the candidate countries, which is under scrutiny. There is no definitive
policy responses at this stage.
Question from New Zealand (Q.2)
Agenda 2000 incorporated further rural development measures (green box) as well as blue box
support.  Does the EU envisage further expansion of green box support measures as an alternative tomore trade distorting measures?
The EU is currently implementing the Agenda 2000 reform which was adopted in March 1999. The
details of the domestic support measures of Agenda 2000 were notified to the Committee on
Agriculture on 17 September 1999 (document G/AG/N/EEC/17).
Question from New Zealand (Q.4)
Can the EU comment on any plans to reduce or eliminate the complexities of its border regime, in
particular for agricultural products, as noted in paragraph 21 of the Secretariat’s summary?Specifically, what progress has the EU made in redu cing the disparities between conditions of access
for agricultural items produced in the Community and those items not produced in the Community,
which enjoy much more favourable terms?
EU is the world's largest importer of agricultural products. Market access is also an issue for the WTO
negotiations on agriculture.
Question from Peru (Q.6)
As shown in the Report by the Secretariat, the European Community provides considerable support
for agriculture within the framework of the CAP, for example, programmes to curb production, aids
for the production and marketing of various products, common machinery forstabilizing imports or
exports.  It is also indicated that, in addition to measures at the border, the Community spent around
€ 45 billion on the CAP in 1999 in the form of producer subsidies and export subsidies.  What real
benefits did agriculture derive from this Programme?
The Common Agricultural Policy has, since it was first set up, demonstrated a capacity to adapt and
change in the face of new challenges. In its early  years, the main focus was to reach the goal ofWT/TPR/M/72/Add.1
Page 158
increasing agricultural productivity, set out in article 39 of the Treaty, as quickly as possible. This
approach soon enough brought results. Indeed, the successes were such that it was not long before theCAP was called upon to manage production surpluses in certain sectors. The first response that was
taken was to clamp down on supply by means of quantitative restrictions. More recently, the CAP has
embarked on a new approach which is based on two elements: lowering institutional prices for key
products and offsetting the impact of these cuts on producer incomes by means of direct payments.
This approach was the basis of the 1992 reform, which has been broadly successful both in terms ofmarket balances and in terms of stabilising farm incomes.
In march 1999, the European Council adopted the Agenda 2000 reform, which continues and deepens
the reform started in 1992. The reformed CAP represents a step towards supporting the broader rural
economy rather than agricultural  production, and ensures that farmers are rewarded not only for what
they produce but also for their general contribution to society.
The new reform will help develop a genuinely multi-functional, sustainable and competitive
agriculture, which will also help to secure the fu ture of the more fragile rural regions. It recognises
that agriculture has a key role to play in preserving the countryside and natural spaces. It also seeks torespond to consumer concerns on food safety, quality and animal welfare issues. Finally, the reform
of the CAP aims to ensure that the rural environmen t is protected and improved for future generations.
Question from Argentina (Q.1)
1. In paragraph 4 of the Report by the Governme nt (WT/TPR/G/72), the EU  states that one of
the priorities for the WTO should be the integration of developing economies in the world economy.
Does the EU not consider that more radical dism antling of the CAP and the elimination of a tariff
escalation structure, which discourages the export of processed agricultural products from
developing countries, would be a good way not only of achieving such integration but also of
achieving a more efficient global economy with more  reasonable prices that would also be to the
benefit of European consumers?
The EU is already by far the largest importer of agricultural products from developing countries,
through inter alia its extended system of trade preferences.
Question from Argentina (Q.3)
Please explain which of  the reforms outlined in Agenda 2000 gives developing countries the greatest
export opportunities.  Also explain to what extent Agenda 2000 is able to remedy the price distortions
already caused by the CAP, because at first glance,  from the point of view of developing countries,
there does not appear to be any substantial advantage.
In this connection, please indicate which measures or policies can be classified under the so-called
structural aid and the subsidies in the blue box.
With Agenda 2000, the EU continues to move away from price support. Therefore the impact of the
reviewed PAC on world markets and world prices should be improved, for the benefits of all
developing countries, if these benefits are not captured by a small number of large exporters.
With regard to the classification of measure, please refer to the EUnotification G/AG/N/EEC/17 of
17 September 1999.WT/TPR/M/72/Add.1
Page 159
Question from Argentina (Q.6)
The objectives underlying the so-called "multifuncitonality" of agriculture raise doubts in many
countries outside the EU because multifunctionality is seen as a potential opportunity to apply
distortionary policies on agricultural prices.
How will the objectives announced by the EU at the 1999 Berlin Council regarding agriculture
(conservation of the rural environment, nature conservation, contributing to rural activities, meeting
the needs of consumers, protecting the environment,  safeguarding animal health) be made compatible
with the market outlined in the MacSharry refo rm and eventually approved by the aforementioned
Council, using what instruments?
Current EU policies aiming at enhancing the multifunctional role of agriculture include a whole series
of measures. They range from general services such as research projects, education and training,
extension services and communication, facilitation of private initiatives and public infrastructure, to
support measures specifically targeted at the environmental and rural functions of agriculture and
which are payments made to producers, fall mainly under agri-environmental, structural and ruraldevelopment programme, and application of regulatory standards.
Under Agenda 2000 reforms the so-called second pillar of the CAP comprising the environmental and
rural functions has been reinforced, implying a further shift away from generic market support (the
first pillar) to targeted agri-environmental and rural development measures.
The clear distinction between the targets of differ ent measures, together with the specification of
detailed implementation rules, will allow these policies to meet their specific goals without causing
production and trade distortion.
Question from Argentina (Q.7)
Regarding stabilization of spending in the agriculture sector – an aspect that guided the work at the
Berlin Council – explain how the decisions taken at Berlin will affect subsidies to farmers and overall
spending on agriculture and whether the measures adopted at Berlin will lead to an increase in
export subsidies for certain agricultural sectors or products.
The stabilisation of agricultural budget in the reform  of the CAP is granted by the fact that direct
payment compensating price cut are a fixed amount calculated ex-ante using a given yield and a given
base area.  The stabilisation of export subsidies is granted by the commitments agreed upon in the
Uruguay Round.
Note that the EU in the five years of implementation period never used the total amount of export
subsidies allowed under the UR agreement .
Question from Argentina (Q.8)
What agricultural policy measures will the EU take to ensure that aid to the rural sector reaches
producers without artificially boosting the production of foodstuffs and affecting international trade?
The Rural Development policy as decided in Berlin is clearly addressed to improve a balanced
development of rural areas, to preserve the environm ent, and to have an important role in the cohesion
of the EU territorial, economic and social policy.WT/TPR/M/72/Add.1
Page 160
All rural developments measures are co-financed by the EU Commission and Member States. Rural
development initiatives are presented to the EU Commission for approval in the framework ofregional Rural plans, and the Commission carefully  checks that they comply with the current
regulation and with the objectives of rural policy.
Question from Argentina (Q.10)
According to a number of estimates, it will not be long before one third of arable land in the EU
comes under the "set aside regime".  The expansion process – especially after the entry of Poland and
Hungary – will imply being ready to incorporate large stretches of arable land and a substantial
number of farmers.
How will the EU deal with this area/population expansion in the CAP, using what tools?  Could this
delay the reform of the CAP in sensitive sectors such as dairy products and others?
Recent projections by the European Commission a nd the OECD would not support the view that a
significant ly higher level of set-aside would be required in the arable sector in EU-15 in the comingyears. The accession of the current candidate countries would increase the overall arable area by
roughly 40%. However, the magnitude of exportable surpluses is expected to be relatively small in
comparison to EU-15.
Agenda 2000 provided a framework for the further development of the CAP. The is part of an
ongoing process of reform. It is therefore possible that further steps are taken in this direction
independently of enlargement.
As regards the need to restructure the agricultural labour force in the candidate countries, it is
important to emphasise the role that rural development programmes will play over the coming years.
Question from Argentina (Q.13.2)
What comments should be made regarding publications which state that the free exchange of goods in
the agricultural sector is politically and economically inapplicable for the EU and ruinous for the
future food needs of third countries in the Mediterranean?
The Commission is not aware of the publications mentioned in the question.
Question from Canada (Q. 20 – 1st set)
III.  Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade,
(ii) Subsidies, (b) Community programmes, para 111 :
The level of support given to the EU agriculture sector continues to be a matter of concern.  How
does the EU plan to develop the means of providing agriculture support in ways which minimize
negative consequences to farmers in third countries and which limit the build-up of stocks surplus tomarket demands?
In March 1999, the Heads of States and Governments adopted the Agenda 2000 reform (the "Berlin
Agreement). In that reform, we have continued the move away from a high prices policy towards
lower prices complemented by direct aids not linke d to current output. And we have also provided a
wide range of instruments to address more directly many of the concerns which fall under the concept
of multifunctionality by means of green box measures, which have no or at most minimal effects ontrade and production.WT/TPR/M/72/Add.1
Page 161
Contrary to other WTO members, since the first re form of the CAP in 1992, the EU has been engaged
in a reform process of progressive reduction in support and protection, thus constantly minimising
would-be the negative effects on world markets.
Question from Canada (Q.26)
IV.  Trade Policies by Sector, (2) Agriculture, (ii) Common Agricultural Policy, para 10:
Under the Common Agricultural Policy (CAP), the EU provides direct aid (compensatory payments)
to producers, link ed to factors of production, subject to reference periods and production limiting
programmes.  In spite of the production limiting programmes, EU has faced potential record large
wheat and coarse grain crops this year as well as continued high output in the beef and other sectors.
To what do you attribute this development?
On cereals, compensatory payments to farmers ar e linked to the decrease of the EU intervention
prices and therefore, decrease of direct support to production. These payments are granted to a limitedarea called the ‘base area’. The set aside programme is a condition for these payments. The set-aside
rate has not changed for the past two years: 10% of the Base area. The recent changes in cereals
production are therefore not linked to this program, but more likely, to climatic conditions.
In the case of beef, the increase in direct aid decided within agenda 2000 are only a partial
compensation of the income loss caused by the price reduction which was also decided (60 to 70 %).
Furthermore, the payments are limited to quotas or national ceilings calculated on a historical basis.So no increase in production should follow the agenda 2000 decisions.
Question from Argentina (Q.9)
Given the importance of the agricultural sector in  a number of countries that are candidates for
accession to the EU, it is likely that the budgetary criteria adopted in Berlin will have to be re-
adjusted and, as a result, the requirements of the CAP will have to be substantially increased.
What stage has internal consideration reached as regards, on the one hand, maintaining the
objectives set in Berlin in 1999 and, on the other, meeting the needs resulting from the accessionprocess?
Please see the responses to the Japanese questions n° 31 and 32, below.
Question from Japan (Q.31)
(1) CAP reform (WT/TPR/S/72, p.95, para. 16)
Will the CAP be applied to any new acceding countries to the EU from Middle Eastern Europe in the
same way as it applies to the existing EU Member States?  If so, will the budget level foreseen for theAgenda 2000 be sufficient to cover any enlarged expenditure caused by the accession?
In March 2000 in Berlin, the Heads of States and Governments of the EU said that the European
Council considered that the policy reform set out  in the Berlin agreement, and the financial
framework to fund them over the medium-term, would ensure that the Union was in a position to face
the challenges of the forthcoming period and to make a success of its future enlargement.WT/TPR/M/72/Add.1
Page 162
Question from Japan (Q.31.1)
(2) WTO negotiations in agricult ure (WT/TPR/S/72, p. 96, para.18)
Will the reform process planned under the Agenda 2000 be continuously pursued as scheduled,
regardless of how the WTO agriculture negotiations proceed?
The Agenda 2000 reform will be implemented as decided in Berlin by the EU Heads of States and
Governments in March 1999.
Question from Japan (Q.31.3)
(3) Export tax in the CAP reform program me (WT/TPR/S/72, p. 96-99, para.19-28)
New restrictions have been imposed on the use of export tax, which, up until now, was permitted
without restriction.  According to the new restriction, export tax can only be introduced when urgency
exists due to the CAP reform.  Coul d the EU clarify the definition of the term "when urgency exists"?
According to article 16 of Council Regulation (EC) No 1766/92, the European Commission can adopt
particular measures to stabilise the EU market only if world prices reach a level that put at risk the
supply of the EU markets. In addition, such situation of world prices should be considered as
persistent or even becoming worse.
Question from Japan (Q.31.4)
(4) Agriculture Village Development Programme
According to what criteria does the European  Commission examine rural development programmes
drafted by the Member States?  For instance, the encouragement payment for grass fields in Francedoes not seem to have been approved in a positive manner.  Is payment through the rural development
programme only cover to such factors as extra costs or a loss of income?  Are not such measures
sufficient in order to function as an incentive?
Through the Rural Development Regulation the Community cofinances 9 broad categories of
measures in Member States' Rural Development Plans, ranging from investment aids for agricultural
holdings to agri-environmental measures, support for farming in Less Favoured Areas and
development of rural areas (including village renewal). Under the agri-environmental measures
farmers can receive payments for commitments going beyond good farming practice to cover the
(additional) costs incurred and income foregone including a limited incentive element. The plans have
to be approved by the Commission and strictly meet  all the requirements laid down in the Community
legislation.
Question from Uruguay (Q.1)
Secretariat Report (WT/TPR/S/72)
Could the European Union explain the rationale for the vast expenditure in support of agriculture
(which takes up 45% of the EU's budget), bearing in mind the very small percentage share of
agriculture in the GDP (2.1%) and the modest shar e of the primary sector in the total employed
population (4.7%), particularly in view of the important distortions this causes in global agricultural
markets and the ensuing negative effects for efficient producers, particularly in developing countries?WT/TPR/M/72/Add.1
Page 163
and
Question from Thailand (Q.3.1) – CAP’s expenditure
Given the high level of expenditures in agriculture support, accounting for 45% of the Community ’s
total budget, and given the relatively small share of agriculture sector in the GDP of around 2%,
could the EU provide the rational explanation as to the disproportionate allocation of resources thathas been the chronic and underlying causes of world market distortion in agricultural products at the
expense of the more efficient producers, particularly those among developing countries?
First of all, it is important to draw attention to an error of interpretation that occurs over and over
again:  agriculture accounts for 45 per cent of the Community's budget, not 45 per cent of the EU'stotal public expenditure.  The Community budget itself accounts for less than 1.27 per cent of the
European Union's GNP.
Secondly, although the average rate of employment in the primary sector in Europe is low overall, in
some countries it is much higher.  The agricultural sector continues to be a key provider ofemployment in the economy of some rural areas.  Moreover, account should be taken not only of
employment in the agricultural sector but of the number of jobs created by agribusiness, which is
considerable, especially in some EU countries.
Question from Chile
We would like to know whether the EU is really ready to open its market to imports from third
countries, especially for sensitive products (fruit and vegetables).
This is an issue for both the WTO negotiations on agriculture and the new round. However, it is worth
noting that the EU is already by far the largest importer of agricultural products from developing
countries,including fruits and vegetables.
Question from Chile (Q.4)
Section IVTrade Policies by Sector: Agriculture
This part does not make any reference to the Community's control mechanisms for the application of
subsidies, as is the case for the policy on setting aside surplus agricultural production.  For example,
in the case of Greek production of canned peaches, in its decision of 14 November 1995, the Court of
Auditors indicated that the Commission had initiated a serious dialogue with the Greek authorities in
order to establish a system for management and effective control in the fruit and vegetables sector.
Can the EU assure us that this control has been put in place and is working properly?The mechanisms for checking withdrawals were revi ewed thoroughly after the 1996 reform.  They are
set out in Chapter III of Regulation (EC) No. 659 /97, O.J. L 100, page 22.  Compliance with these
provisions is monitored in the context of the clearance of accounts.
The common market organization reforms of 28 Oct ober 1996 were aimed at improving enforcement
of the Community's regulations.  For example, administrative controls in respect of applications for
assistance from processors have been tightened.WT/TPR/M/72/Add.1
Page 164
Question from Chile (Q.5)
How can the Commission ensure that processors do not pay a price that is lower than the minimum
set by the Community and that the money paid through a financing organization is not used to pay for
the delivery of larger amounts of the raw material than those officially announced?
The minimum price must compulsorily be paid by bank or postal transfer.  The application for
assistance must be accompanied by copies of the transfer documents bearing a reference to the
processing contract concerned.  These elements are monitored by member States.
Question from Chile (Q.7)
Could the EU provide the following statistical information for Spain, Italy, France and Greece, for
the 1994/1995, 1995/1996, 1996/1997, 1997/1998 and 1998/1999 seasons for the following:
a) production of peaches;
b) volume set aside;c) consumption of fresh peaches;
d) balance of fresh peaches (imports and exports);
e) amounts processed with aid;
f) processing coefficient;
g)  set aside prices;
h) compensation paid to producers.
There are no statistical records containing a breakdown of these diverse data by member State and by
marketing year.
Question from Brazil (Q.6.1)
According to document G/AG/NG/S/12 on Members’  Usage of Domestic Support Categories, Export
Subsidies and Export Credits, page 19, the EU has not notified its total domestic support (green box,
S&D box, blue box, de minimis and current total AMS for 1997, 1998, and 1999.
Could the EU explain why these notifications are not submitted? Could the EU explain when these
subsidies will be notified?
The notification on Domestic Support for the marketing year 1997/98 was submitted to the WTO in
May this year (G/AG/N/EEC/26). The notifica tion for the marketing year 1998/99 is under
preparation.
Question from Brazil (Q.6.3)
Blue box – Article 6.5 of the Agreement on Agriculture allows for direct payments under production-
limiting programs not to be subject to the commi tment to reduce domestic support. Could the EU
explain how these programs have been implemented?  Can the EU give data on the programs related
to the blue-box?
The new arable crop farm policy of 1992 is based on the following principles:
− farmers can apply for a hectare aid for cereals, oil seeds, protein crops, non textile linseed
and set-asideWT/TPR/M/72/Add.1
Page 165
− the aid is regionalized and fixed per hectare (based on the average yield in the past);
− the hectare aids are limited to a fixed area at a regional or national level, the so-called base
area (based on the number of hectares cultivated in the past);
− in the case of the large producers, there is an obligation to set aside land on the holding (in
relation to the request for compensatory aid), the farmer will be granted a special
compensation for the set-aside land.
The sum of the base areas for the EU-15 amounts 53.6 Mio hectare. A base area is the surface for
which farmers can apply for a hectare aid for cereals, oilseeds, protein crops, non textile linseed or
set-aside. There is no subdivision into different crops, except for maize for which Member States mayreserve part of a base area only for that crop by defining a specific base area for maize. The sum of
those specific base areas amount to 3.1 Mio hectare. In the case of the crop specific payment granted
to oilseeds, a supplementary discipline applies, as provided in Schedule CXL.
The 1992 reform for beef consist of the reduction of market support compensated by an increase in
the headage premiums. The main existing premiums for beef producers, the suckler cow premium and
the special premium for male animals, were increas ed in three steps to compensate for the reduction
of the intervention price. For supply control and environmental reasons the premiums were tied to
historical references and subject to a maximum stocking density. The ceilings in 1995/96 were for
suckler cows 11,5 mln heads and for the special premium 11,2 mln heads.
Question from Thailand (Q.3.1)
Thailand would like to seek further clarification on the EU’s price guarantee practices under CAP
reform 2000 on arable crops, beef and dairy products, particularly regarding direct payments toproducers through European Agricultural Guarantee and Guidance Fund (EAGGF), including
compensation on farmers’ income forgone under production limiting programmes.
Please see replies to question 6.3 from Brazil, to question 3 from Argentina and to question III (4)ii(b)
from Canada
Question from Brazil (Q.6.4)
Food security – The EU sponsors the thesis that export subsidies are an important component of the
food security programs. However, exports of similar products from developing countries have been
affected by these practices.  How could the EU justify the distortion on trade created by these
programs?
The EU considers that export subsidies are not more trade distorting than other measures affecting
export competition, in particular subsidized export credits, the operation of single-desk exporters,
abuse of food aid transactions or the loan-deficiency payments. As a matter of fact, and as shown in
papers produced by the WTO Secretariat, the EU share in world trade for most of the products forwhich the EU can grant export subsidies has decreased since the entry into force of the Marrakech
agreement. This has mainly benefited the main agricultural exporters, few of which are developing
countries.
Question from Brazil (Q.6.5)
Sugar – The main mechanisms of the CAP are the guaranteed common prices and the Common
Market Organizations. The Berlin European Council in March 1999 reached political agreement onWT/TPR/M/72/Add.1
Page 166
Agenda 2000 and the Agricultural Council in May 1999 adopted the specific regulations setting out
reform of the CAP (Pg.95, 16). However, sugar was not included in the reform. Not only subsidies to
this sector are high, but also the enlargement of the EU to Central Europe may increase the effect of
market distortion to this sector. Could the EU ant icipate whether sugar will be included in a future
reform?
The EU is actively considering the issue.
Question from Thailand (Q.3.2)
Does the EU have any concrete plan to reduce and/or phase-out, with or without a future round of
trade negotiations, its export subsidy on sugar and to make greater use of Green Box measures?
Please see reply to question 6.5 from Brazil. Future commitments will be discussed in the negotiations
on agriculture.
Questions from India (Q. 3.a)
Para 26 of the Secretariat Report (page 46 thereof) refers to the questions raised by Members in the
WTO Committee on Agriculture in relation to alloca tion and administration of EU's tariff quotas on
agricultural products. We would like to hear from th e EU on the steps taken by  them to improve the
allocation and administration system of tariff quotas.
See reply to question 1 from Uruguay (p.129).The rules on administration of tariff quotas must be addressed in the negotiations on agriculture.
Question from India (Q.3.b)
What is the position of the EC with respect to the re-classification of some processed agricultural
produce for subsidization purposes? What products have been affected by this technique? What is the
impact of this mechanism on EC levels of subsidization?
Question from India (Q.3.c)
What is, the total amount of ‘unused’ subsidies, if  any and in what sectors? We would like to know as
to how the EC intends to deal with this issue.
Notifications  G/AG/N/EEC /12, 16 and 26 concern domestic support in the marketing years 95/96,
96/97 and 97/98. Current AMS has been always well under the EU commitments. (for example in
1997/98 current AMS was 50,194 Mio EURO, compared with a commitment level of 74,067 Mio
EURO. ). There are no plans on this issue.
Question from India (Q.3.d)
Would the EC kindly explain the method it adopts to calculate the AMS and also how does it differ
among different agricultural products or sectors?
All the requested information is available in the notifications referred to in answer to question (c).WT/TPR/M/72/Add.1
Page 167
Question from India (Q.3.e)
Has there been an increase in the green box expenditures by the EC? We would request the EC to
provide us with a list and breakdown of expenditure.
Green box expenditure increased in 96/97 and decreased in 97/98. The notifications related in answer
to question (c) contain all the details on our green box expenditure in 95/96, 96/97 and 97/98.
Question from India (Q.f and g)
We would like to know the position of the EC with  respect to the WTO inconsistency (under the DSB
ruling on poultry) of the representative price system  as used in different forms, in the fruits and
vegetables, rice, sugar and molasses sectors.
We would also like to know the position of the EC  with respect to the WTO inconsistency (under the
DSB ruling on bananas) of some of its licensing system, particularly, in rice and sugar.
Our import regimes are in conformity with WTO provisions. On fruit and vegetables, representative
prices do not apply.
Question from Thailand (Q.3.3)
Given the withdrawal of land from production un der the Production Limiting Programmes, does the
EU implement any plans at introducing alternative agriculture activities, unrelated to the forgone
production, in these lands?  If yes, what are the activities or crops being promoted as the alternatives
by the authorities?
Non food and non-feed crops can be cultivated in withdrawn land, subject to certain conditions.  Reg
2461/1999 sets the modalities for the use of set aside land.
Question from Thailand (Q.3.5)
The existence of export subsidy rollover could be indicative of the over-budgetary provisions and
could be perceived as a signal that the EU is able to cut back on the export subsidy provision.  Doesthe EU have any plan to do away with such practice?
The EU has not used all their budgetary commitm ents on export subsidies. The EU has always
respected the commitments of their UR schedule and also the rules of the Agreement on Agriculture
and will continue to do so.
III- b) Common Fisheries Policy
Question from United States
Overview
The Common Fisheries Policy (CFP) is the European Union's instrument for the management of
fisheries and aquaculture. It was created to manage a common resource and to meet the obligation set
in the original Community Treaties. Because fish  are a natural and mobile resource, they are
considered as common property. In addition, the Treaties which created the Community stated thatWT/TPR/M/72/Add.1
Page 168
there should be a common policy in this area, that is, common rules adopted at Community level and
implemented in all Member States.
The first common measures
The first common measures in the fishing sector date from 1970. They set rules for access to fishing
grounds, markets and structures. It was agreed that , in principle, Community fishermen should have
equal access to Member States' waters. However, in order to ensure that smaller vessels could
continue to fish close to their homeports, a coastal band has been reserved for local fishermen who
have traditionally fished these areas. Measures were also adopted for a common market in fisheries
products. A structural policy was set up to coordinate the modernisation of fishing vessels and on-
shore installations.
All these measures became more significant when, in 1976, Member States followed the international
movement and agreed to extend their rights to marine resources from 12 to 200 miles from their
coasts. Member States also decided that the Community was best placed to manage fisheries in the
waters under their jurisdiction and to defend their interests in international negotiations. After years ofdifficult negotiations, the CFP was born in 1983.
The 1983 common fisheries policy
The CFP has to take into account the biological, economic and social dimension of fishing. It can be
divided in to four main areas dealing with conservation of fish stocks, structures (such as vessels, port
facilities and fish processing plants), the common organisation of the market and an external fisheriespolicy which includes fishing agreements with non-Community members and negotiations in
international organisations.
Structures
The EU's structural policy helps the fishing sector adapt to today's needs. Funding is available for
projects in all branches of fishing and aquaculture and for market and development research. Funding
is available for modernisation of the fishing fleets as well as for getting rid of excess fishing capacity.
For each Member State, fleet restructuring is planned within multi-annual guidance programmes
setting out objectives and the means to achieve them.
The common organisation of the market
This policy was part of the first set of common measures. The objective was to create a common
market inside the Community and to match production to demand for the benefit of both producersand consumers. These original objectives have been complemented by the creation of the Community
single market and the gradual opening up of world trade.
The European Council of Ministers for fisheries adopted in December 1999 a new basic Regulation
on the Common Organisation of the Markets (CMO) in fishery and aquaculture products. This newCMO will be effective as from January 2001. The pur pose of the new Regulation is to achieve a better
match between supply and demand, strengthen the co mpetitiveness of the processing industry and
improve information to consumers about the fish products available on the market.
Relations with third countries
At the bilateral and multilateral levels, fisheries agreements became necessary when distant-fishing
vessels from the Community lost access to thei r traditional grounds following the extension ofWT/TPR/M/72/Add.1
Page 169
fisheries zones. Fishing rights for such vessels have been negotiated with many non-Community
countries in return for various forms of compensation whose nature depends on the interests of thethird country concerned. The Community is also involved in negotiations with international
organisations and regional fisheries organisations to ensure rational fishing.
Enforcement
The authorities in the Member States have to ensure that CFP rules are respected. There is also a
Community Inspectorate. Their role is to ensure that all national enforcement authorities apply the
same standards of quality and fairness in their enforcement.
References :
http://europa.eu.int/comm/dg14/cfp1_en.htm
http://europa.eu.int/pol/fish/index_en.htm
http://europa.eu.int/comm/dg14/pcp/index_en.htm
See also document  "Report from the Commission to the Council and the European Parliament on
the application of the Community System for Fisheries and Aquaculture in 1996-1998" Brussels,
24.1.2000, COM(2000) 15 final. (To be found at http://europa.eu.int/comm/dg14/docrap_en.htm )
THE CFP A ND ENVIRONMENTAL ISSUES (SUSTAINABLE DEVELOPMENT AND CONSERVATION )
Fisheries activities are closely connected with marine ecosystems: over-intense or badly adapted
fisheries can damage these ecosystems and seri ously affect biological balances. Furthermore,
deterioration of marine ecosystems through human activities other than fisheries can harm
conservation of the resources exploited. The requirements to integrate environmental concerns and tomanage the exploitation of marine living resources in a sustainable manner are already included in the
Common Fisheries Policy objectives.
Indeed, the legislative framework of the CFP explicitly includes the concept of sustainable
development. Article 2 of the basic regulatory instrument for the CFP, Council Regulation 3760/92,states that "the general objectives of the common fisheries policy shall be to protect and conserve
available and accessible living marine aquatic resources, and to provide for rational and responsible
exploitation on a sustainable basis, in appropriate economic and social conditions for the sector,
taking account of its implications for the marine eco-system, and in particular taking account of the
needs of both producers and consumers"
Fish resources are limited and artificial enhancement cannot substitute for the natural production. The
main objective is therefore to ensure that the resources are able to replenish themselves over a long
period while offering stable economic and social conditions for those who work in the fisheries sector.
The CFP provides management tools that are used to achieve sustainable development and
conservation, in particular by:
1. Establishing zones in which fishing is prohibited or restricted;
2. Limiting exploitation rates and setting quantitative limits on catches;
3. Limiting time spent at sea;
4. Fixing the number of vessels authorized to fish;5. Laying down technical measures regarding fishing gear and its use;
6. Setting minimum size or weight of individual fish caught;WT/TPR/M/72/Add.1
Page 170
7. Granting structural aids to support reduction in the fleet or to promote selective
fishing;
8. A Community-level system for monitoring , inspection and enforcement of fisheries
regulations.
References:
Document: Communication from the Commission to the Council and the European Parliament
"Fisheries management and nature conservation in the marine environment" Brussels,
14.07.1999, COM(1999) 363 final. (To be found at:
http://europa.eu.int/comm/dg14/doccom_en.htm )
The 2002 CFP review
The Commission took the initiative to launch in March 1998 a consultation process on the future of
the CFP. A questionnaire was addressed to representative organisations and associations with aninterest in fisheries, such as professional fishermen’s organisations, the processing and marketing
sectors, trade unions, environmental NGOs, consumer associations and research institutes. The
consultation process continued through mid 1999 with a series of regional meetings in the Member
States.
By the beginning of 2001 the Commission will have pr esented a report on the situation of fisheries in
the Union and this will be accompanied by a Green Paper in which it will set out the options for our
future fisheries policy and the possible amendments to Community law. The debate on the CFP after
2002 creates the opportunity to start addressing the future challenges that the CFP will face in the
coming years and the strategic priorities that will have to be pursued or reinforced.
It is the Commission's view that among these priorities are the following:1. Conservation of resources: reliable planning tools for fishermen and the processing sector,
effective fisheries management, solutions to complex problems such as discards, definition of"good practice" for sustainable fisheries, just as in agriculture.
2. The CFP’s economic and social dimension: solutions for the long-term and structural social
problems of the sector, diversification, i.e. offering a broader range of job opportunities
within and outside the fisheries sector.
3. External fisheries relations: strengthen the position of the Community with regard to
international partners, both third countries and regional fishery organisations, develop new
forms of partnership to permit further fisheries agreements, .be a trustworthy international
partner willing to guarantee sustainable exploitation and to contribute to the economic
development of third countries.
4. The Mediterranean: obtain a clear picture of the actual state of stocks and act accordingly,
draw up realistic technical rules that can be implemented and monitored.
5. "Good Governance" in fisheries policy: involve everybody concerned in management
decisions.WT/TPR/M/72/Add.1
Page 171
References
Document: report from the Commission on the regi onal meetings arranged by the Commission in
1998-1999 on the Common Fisheries Policy after 2002. Brussels, 24.01.2000, COM(2000) 14final (To be found at: http://europa.eu.int/comm/dg14/docrap_en.htm )
See also document mentioned under paragraph 1.
Question from Chile  (Q.11)
Paragraph 34 mentions the Trade and Cooperation Ag reement with South Africa, indicating that two
supplementary agreements are being negotiated, one on the denomination of origin for wines and
spirits.
Could the EU describe the main features of this agreement and its scope as far as the protection of
fisheries resources is concerned?
At present there is no fisheries agreement between the EU and South Africa.
Indeed, the trade agreement between South Africa and the EU stipulates that a separate agreement on
fisheries must be concluded before the end of the year 2000.
Question from New Zealand (Q.8)
Despite recent reform, the EU fisheries regime continues to be characterised by price support,
subsidies and tariff barriers to protect local fishers.  The wider issue of the incompatibility ofsubsidisation with sustainable development is the focus of the proposal to the Committee on Trade
and Environment supported by New Zealand and a wide  range of other WTO members.  How does the
EU intend to further reform the fisheries market in order to contribute to the sustainable management
of its fisheries resources ?
The European Council of Ministers for fisheries adopted in December 1999 a new basic Regulation
on the Common Organisation of the Markets (CMO) in fishery and aquaculture products. This new
CMO will be effective as from January 2001. The pur pose of the new Regulation is to achieve a better
match between supply and demand, strengthen the co mpetitiveness of the processing industry and
improve information to consumers about the fish products available on the market.
Indeed, through the latest reform of the EU Common Organisation of Markets (COM) for fishery and
aquaculture products, unlimited amounts of some fishery products may be imported at a reduced duty
rate or at no duty rate at all, for an indefinite period of time.
As an example, from 2001 unlimited amounts of some white fish species, such as cod, Alaska Pollack
or hoki (Macruronus Novaezealndiae), this latter being of special interest for New Zealand, and cold
water shrimps ( Pandalus Borealis ) can be imported at reduced or zero duty rate.
For other species (herring, tuna-loins, salted cod, cooked and peeled cold water shrimps) multi-annual
autonomous quotas at reduced (or zero) rates have been agreed
The issue of import duties, linked to issues such  as the improvement of competitiveness of the EU
processing industry or a better match between supply and consumer's demand, will be covered by the
Commission's discussion document on the future of the Common Fisheries Policy.
It should be noted that EU price support to fishermen is very limited and is only designed to avoid
occasional market failure. The amount spent on price support amounted to only 0.5 % of the value ofthe landings of the species covered.WT/TPR/M/72/Add.1
Page 172
References :
Commission's web page on  "Reform of the Comm on Organisation of the Markets in fishery and
aquaculture products" at http://europa.eu.int/comm/dg14/info/info76_en.htm .
Questions  from Australia (Q.23)
Given the serious pressures on EU fisheries and th e concerns for the socio-economic consequences of
the envisaged change in the Common Fisheries Policy for the fishing industry, what changes areenvisaged to the Common Fisheries Policy and what is the likely impact on the EU's approach to the
international rules and regulations applying to trade in fisheries products?
What will be the EU approach to the regime of tariffs currently applying to the import of fisheries
products?
On the first part of the question
The EU is presently in the process of examining th e current situation with a view to a wide-ranging
reform of the CFP to be effective from 2002. The Commission  will publicise its ideas beginning of
2001 with a view to initiate a political debate on the future of the CFP.
On the second part of the question
The EU has recently demonstrated its capacity to improve market access for fishery products
originating from third countries.
Indeed, through the latest reform of the EU Common Organisation of Markets (COM) for fishery and
aquaculture products, unlimited amounts of some fishery products may be imported at a reduced duty
rate or at no duty rate at all, for an indefinite period of time. As an example, from 2001 unlimited
amounts of some white fish species and cold water shrimps can be imported at the reduced rates, for
an indefinite period of time.
For other species (herring, tuna-loins, salted cod, cooked and peeled cold water shrimps) multi-annual
autonomous quotas at reduced (or zero) rates have been agreed by the European Council of Ministers.
References:
Commission's web page on  "Reform of the Comm on Organisation of the Markets in fishery and
aquaculture products" at http://europa.eu.int/comm/dg14/info/info76_en.htm .
Oral Question from Iceland
In the Secretariat’s report, on page 75-76, there is some mentioning of EU objectives regarding
fisheries subsidies for the years 2000-2006. Iceland would be interested to learn what these
objectives, if implemented, really mean. Is the EU  planning to reduce fisheries subsidies granted to
some Member States over the next few years and, if so, what implications will such programme haveon the capacity and the size of the fleets within the Community? Iceland would be grateful if the EU
could elaborate further on this issue .
Please find here enclosed the Web Page of the website on EUROPA with the information needed.
The address is http://europa.eu.int/comm/dg14/info/ifop4_en.htm.WT/TPR/M/72/Add.1
Page 173
III- c)  Manufacturing, textiles and clothing, pharmaceuticals, shipbuilding,
Textiles
Question from Hong Kong, China (Q.1)
We note that access to the EU market  for textiles and clothing products is still subject to many
barriers: above-average tariffs, tariff escalations, AD actions and quotas. Textiles and clothing are
products of high export interest to many developing Members.  We note that only 5.4% of restricted
categories have been integrated in the first and second stages integration under the ATC.  We are
interested to know if the EU has any plans to  bring down the exceptionally high barriers of this
sector, so that the developing and least-developed Members, as well as EU consumers can benefitfrom a more liberalized market.
and
Question from Uruguay (Q.2)
Could the EU comment on paragraph 19 of the Summary Observations in the Report by the
Secretariat, which indicates that "Textiles and clothing is subject to above-average tariffs, tariff
escalation and quotas …"
The EU, in line with its obligations under the ATC, will integrate at least 18% of the volume of its
1990 imports and this will include products under quota.
As far as tariffs are concerned, the EU's rates should not be regarded as "exceptionally high". Average
applied tariffs are presently the following:
− 0.7 % for raw materials,
− 5.3 % for yarns and fibres,
− 6.3 % for fabrics and
− 11.9 % for clothing (a total average of 9 %).
These compare quite favourably with the average applied rates of some other Members: between 20
% and 25 % by Members such as Argentina, Brazil or Thailand; 38 % for India and 39 % for
Pakistan. The averages are even higher when we l ook only at clothing, where average tariffs are rarely
lower than 20 % and reaching 40 % for Thailand and India and 45 % in Pakistan. Average bound
tariffs for the sector bound in WTO are considerably higher: while the end-rates bound by the EU for2005 average 7,9 %, in other countries these range between 25 % and 30 % in Chile, the Philippines
and Thailand, over 35 % in Colombia or Indonesia, and for countries such as India and Pakistan tariffs
have been bound at levels either exceeding 35 % or not bound at all for a number of products.
According to the EC's schedule its bound rates wi ll require further reduction until 2004 down to
following maximum levels: 0% for raw materials, 4 % for yarns and fibres and 8% and for fabrics.
For clothing the maximum rates will be 12%, but at present EU rates are already in many cases below
these rates.
As far as the  least developed countries  are concerned, it should be recalled that the EU has no quotas
on their textiles and clothing exports.  In addition, these countries usually benefit from zero dutiesWT/TPR/M/72/Add.1
Page 174
arising either from preferences under the Generalise d System of Preferences (GSP) or under the Lomé
Convention.  This includes large garment suppliers such as Bangladesh.
Question from Brazil (Q.9)
Which results can the EU offer, concerning developing countries, to confirm that the objectives of the
ATC have been achieved? Have the value and the volume of exports from developing countries to theEC increased in the last five years?
When looking at the effect on developing countries  of the EU's policy in this area, the following
should be taken into account:
The EU has no quotas  on textiles and clothing imports from the least developed countries .  In
addition, these countries usually benefit from zero duties  arising either from preferences under the
Generalised System of Preferences ( GSP ) or under the Lomé Convention.  This includes large
garment suppliers such as Bangladesh.
In 1999 roughly 44 % of the EC's imports in textiles  and clothing products were duty free. For 46% of
the imports a GSP  reduction of 15 %  of the MFN tariff rate was applied.
Quotas are subject to annual in creases. According to Articles 2.13 and 2.14 of the ATC the annual
quota growth rates are increased by a certain percentage in each stage (stage 1: 16%, stage 2: 25%,
stage 3: 27%): " growth on growth ".  These enhanced growth provisions  of the Agreement have
lead to a significant growth of quotas. Between 1995, the first year of the ATC and 2002, the first yearof stage 3, quotas will have generally have grown between 60 and 90 %, while in certain cases
growth rates of up to 160 %  will have been implemented
Small suppliers  of textiles and clothing - Sri Lanka and Peru - benefit from higher growth rates, since
EU applies Article 2.18  of the ATC (advancing growth rates increases required by ATC by on stage
for small suppliers) generously. The EU has not  only advanced the growth rates for these two
countries by one stage; it also took into account the growth rate for stage 1 and thus cumulated rates
for stages 1 to 3.
Question from Chile (Q.3)
In the first paragraph of this part it is stated that the EU has liberalized 12 of 52 quotas.
Could the EU indicate those products to which quotas still apply and those which have been
liberalized?WT/TPR/M/72/Add.1
Page 175
The following quotas have so far been removed:
Category Description
46 Sheep's or lamb's wool
61 Narrow woven fabrics
72 Swimwear
74 Women's or girls' suits77 Ski suits
67 Clothing accessories
70 Panty-hose and tights of synthetic fibres
86 Corsets
91 Tents100 Textile fabrics, impregnated
111 Camping goods
19 Handkerchiefs
The following categories are still under quota:
I.           Yarns And Fibres (Fils, Fibres: "F")
Category Description
1 Cotton yarn
22 Yarn, synthetic fibre
23 Yarn, artificial fibre115 Yarn, flax or ramie
II.         Tissus, fabrics ("T")
Category Description
2 Cotton fabrics
3 Fabrics synth. Fibres
9 Toilet/kitchen linen; terry
32 Pile/chenille fabrics [+137]33 Fabric, synth.fil. Yarn (<3m)
35 Fabrics, synthetic fibres
36 Fabrics, cont. artific.fibres
37 Fabrics, artific.staple fibres
50 Wool fabrics, sheep/lamb117 Fabrics, flax or ramie
III.        Made-Ups ("M")
Category Description
20 Bed linen [prod: +118]
39 Tab/toil/kitch linen, not terry
59 Carpets other than 58
90 Twine, cordage - synth. fib.
97 Nets
continuedWT/TPR/M/72/Add.1
Page 176
Category Description
109 Tarpaulins, sails,etc
118 Tab/toil/kitch. linen: flax/ram
142 Carpets, of sisal
151A Floor coverings, coconut
163 Gauze and articles of gauze
IV. CLOTHING (habillement "H")
Category Description
4 T-Shirts, shirts
5 Pullovers
6 Woven breeches/trousers
7 Women's blousers
8 Men's shirts (not knitted)12 Tights, stockings, etc
13 Underpants, etc – knitted
14 Men's coats
15 Women's coats
16 Men's suits
17 Men's jackets
18 Underpants, etc; not knitted
21 Parkas, anoraks
24 Pyjamas
26 Dresses
27 Skirts
28 Trousers, knitted29 Women's suits
31 Brassières
68 Babies' garments
73 Track-suits
78 Other garments, not knitted83 Other coats, incl. Ski suits
10 Gloves
161 Other garments, not knitted
Shipbuilding
Question from Australia (Q.13)
We refer to the meeting of EU Industry Ministers on 18 May 2000 when they discussed the world
market for merchant ships and the signing of a protocol agreement with the Government of South
Korea aimed at what the EU Ministers referred to as "unfair competition".
Would the EU provide assurances that it does not intend to revoke its decision of June 1998 to end
operating subsidies for the EU shipbuilding industry on 31 December 2000?  What forms of
assistance will continue to be available to the EU shipbuilding industry after that date?WT/TPR/M/72/Add.1
Page 177
The EU has not changed its position. The 9% contract-related aid will end on 31 December 2000 and
the Commission has not introduced any proposal for that purpose. The aid regimes permitted underCouncil Regulation EC No. 1540/98 are closure ai d, restructuring aid and innovation aid. Other
permitted support is in the areas of regional development, R&D and environmental protection. All of
these will continue to exist after 31/12/00.
Question from Japan (Q.29)
According to the Council Regulation (EC) No.1540/98 (establishing new rules on aid to shipbuilding),
all production aid in support of shipbuilding contracts is to be discontinued after the end of this year.
However, it was reported that some shipbuilders in EU are seeking for a continuation of the system
for production aid.  Please provide the latest information on this issue.
In accordance with Article 3.1 of Council Regulation 1540/98, contract-related operating aid would be
abolished on 31 December 2000. This provision could only be amended by a new Council decision
based on a Commission proposal to that effect.
There have been calls for aid to be extended in view of alleged unfair competition practices by Korea.
For the moment the EU does not consider that change s to the current aid policy would be appropriate.
Questions from Korea (Q.3)
It is Korea’s understanding that the EU is increasingly streamlining state aid in the shipbuilding
sector, although there still remains measures granting aid. Korea would like to be provided with moreinformation on how the remaining aid is compatible with the WTO SCM Agreement.
Also Korea would appreciate it if the EU could elaborate on the “Euro-built” requirements and
provide details on its provisions, including its compatibility with the WTO SCM Agreement.
The shipbuilding sector is a very specific one as ships (sea-going vessels) are usually not directly
imported into the territory of the purchaser. In th e absence of specific international disciplines (on
subsidies and dumping) governing the shipbuilding sector, the EU has established an internal State aid
regime designed to protect its industry against unfair trading practices from other competitors in the
form of various measures of support and to cope with price undercutting from foreign producers. Themain form of support under the EU aid regime has been contract-related operating aid. Since the mid
’80s the level of this aid has progressively decreased to the current level of 9%. This subsidy is due to
be abolished at the end of year 2000, according Council Regulation 1540/98 on shipbuilding. Since
this aid is not contingent upon export performance, it falls within the category of domestic subsidies
which are not prohibited by the ASCM. In addition, the decreasing market share of the EU, comparedto other shipbuilding countries, demonstrates that this aid does not cause injury to the EU’s main
competitors. It would have been phased out earlier if the OECD Agreement on shipbuilding, which
aimed at establishing normal competitive conditions, had entered into force in 1996.
Automotive sector
Question from Canada (Q.27)
This paragraph refers to motor vehicle distribution which must conform to EC legislation as a
condition of it s exemption from competition law until 2002. This paragraph elaborates on the
provisions of the 1995 exemption from competition law of motor vehicle distribution and servicing
agreements (as per Commission Regulation 1475/95) . Please clarify if Commission RegulationWT/TPR/M/72/Add.1
Page 178
1475/95 on motor vehicle distribution discriminates between EU distributors and foreign distributors
operating in the EU.
Commission regulation 1475/95 applies equally to bo th EU and non-EU distributors; both enjoy the
same privileges and obligations.
Questions from Australia (Q.30)
Would the EU consider extending the current MRA on conformity assessment to cover all the
automotive products covered by the relevant EC regulations?
The current MRA only extends to around 70% of relevant EU regulations?1) Regarding question on automatic approvalHomologations in the EU have to comply with the requirements of DIRECTIVE 92/53/EEC on EU
Whole Vehicle Type Approval which is mandatory in its application for new type of vehicles of theinternational category M1 (passenger cars with up to 9 seats) as from 1 January 1996. The approval
authority of each member state must also send a copy of the vehicle type approval certificate to the
approval authorities of the other member states. This procedure is used both for component type-
approvals and vehicle type approvals. Registration, permit to sale or entry into service under the
article 7 of 92/53/EEC is allowed in each Member state only if they are accompanied by a valid
certificate of conformity provided by the manufacturer that the vehicle conforms to the relevant type
approval.  A simplified scheme for M1 is possibl e under single type approval but this is to a
maximum of just 500 cars. Otherwise individual cars , those not marketed normally in the EU, can be
approved according to Single Vehicle Approval and once registered can be sold throughout the EU
but they must be registered first and individually. There might be a few tens of cars of a type
registered this way.
2) Regarding MRA.
AUSTRALIA is from April of this year a contracting party to UN-ECE as are all member states
except Ireland. Discussion with Australian will take place in Brussels in November. This seems to be
the appropriate forum to discuss this issue. There is not major objections to extend MRA to further
regulations where possible and were reciprocity can be found. The main goal would be for Australia
to accept to as many UN-ECE regulations as possible in the shortest possible time.
EU Imports in Australia are subject to the AUSTRALIAN DESIGN RULES under the Motor Vehicle
Standard Act 1989 and our last information are that they were only in 60% equivalent to ECEregulations. EU manufacturers have perceived this as a barrier to export new models into Australia
due to the costs to meet Australian design rules. We know that a new ROAD VEHICLE
CERTIFICATION SCHEME was approved in February by the Federal Office of Road Safety
following negotiations with the Australian Chamber of Automotive Producers. However this does not
seem to have significantly change the technical obstacles to trade created by the 1989 Act. Theseissues are relevant to the possibilities of agreeing a mutual recognition agreement with Australia.
Question from the United States (Q.89) - Pharmaceuticals
Please explain why the European Union permits Member States to delay pricing and reimbursement
decisions necessary for market access for pharmaceutical products beyond the time limits specified in
the relevant EU Directives (65/65, 93/39 and 89/105)WT/TPR/M/72/Add.1
Page 179
The time periods for products coming on the market varies. However, as long as a company has
received - within the applicable time-periods - an indication from the Member State that the price-reimbursement rate that the company is bidding for is unacceptable to the health system concerned,
the time limits of the directives are met.  It is not a matter for the EU to judge whether a Member State
is unreasonable in refusing to pay the price a certain company wants or whether a company could be
said to be unreasonable by refusing to charge a price that the Member State in question finds
acceptable -even if an impasse can continue to exist for a considerable time.
III- d) Services: Access for natural persons, consolidated EU- 15 Schedule, common legal
regime, financial services, telecommunications, transport, professional services, audio-
visual services
Services -General
Question from Switzerland (Q.3)
Could you explain how the “general good” principle is working, as well as its concrete efficiency?
The general good is a Community law principle which has been established by the Court case law. It
was developed first in the context of the free movement of goods and was subsequently applied to the
freedom to provide services and the right of establishment.
The general good is an exception to the fundamental principles of the Treaty with regard to free
movement of services and establishment. It allows a host Member State to require the compliance of
its own national provisions by provider of services or branches established in its territory by financial
undertakings of another Member State. Although this compliance creates obstacles to carry on
business on free provision of services or right of establishment, it is lawful under Community law
when the national measure in question is justified on “general good grounds”. As a restriction tofundamental freedoms of the Treaty, the Court of justice has laid down strict conditions to this
principle to be applied. According to the case law, for a national measure be justified by the “general
good ”, it must meet, at the same time, the following requirements:
– it must come within a field which has not been harmonised at EU level,
– it must pursue an objective of “general good” (e.g., protection of workers and social
protection, prevention of fraud, cohesion of national tax regimes, cultural policy, etc.),
– it must be non-discriminatory,
– it must be objectively necessary,
– it must be proportionate to the objective pursued,– it must not duplicate home country rules.
As an exception to the fundamental rights of the Tr eaty, the general good must also be object of a
strict interpretation.
The application of the general good is based in a legal interpretation. The Commission as guardian of
the Treaties carries out this analysis to verify whether a national measure complies with EU law.
However, the Commission cannot impose its position on Member States or declare void and null
national provisions deemed to be illegal. In the Treaty system, it is up to the Court of Justice to decide
on the interpretation and the application of the law. The Court of Justice is not bounded by the
Commission’s interpretation, and it may upheld or deviate from it in its ruling. “WT/TPR/M/72/Add.1
Page 180
Question from the United States (Q.89) - Pharmaceuticals
Please explain why the European Union permits Member States to delay pricing and reimbursement
decisions necessary for market access for pharmaceutical products beyond the time limits specified in
the relevant EU Directives (65/65, 93/39 and 89/105)
The time periods for products coming on the market varies. However, as long as a company has
received - within the applicable time-periods - an indication from the Member State that the price-
reimbursement rate that the company is bidding for is unacceptable to the health system concerned,
the time limits of the directives are met.  It is not a matter for the EU to judge whether a Member State
is unreasonable in refusing to pay the price a certain company wants or whether a company could be
said to be unreasonable by refusing to charge a price that the Member State in question findsacceptable -even if an impasse can continue to exist for a considerable time.
Question from Peru (Q.7) – Services – Overview
Could the EU inform us whether there are any re strictions on professional associations in the EU
concluding inter-institutional agreements with fellow professionals outside the Community for thepurpose of authorizing professional activities or whether professionals from outside the Community
employed by European enterprises enjoy equal treatment as regards membership rights?
1) One has to distinguish between professional  organisations and competent authorities to
licence/authorise the exercise of a regulated profession, which are in most Member States Ministries
or Government agencies.
2) Community law does not prevent, in general, recognition of 3rd country qualifications, even
if held by 3rd country (non- EU or EEA) nationa ls. The Commission considers however that for 6
health professions (doctors, nurses, dentists, midwives, vets and pharmacists) recognition can only be
granted to diplomas which meet the minimum requirements concerning the content and the length of
the education and training leading to those diplomas.
3) Professional organisations can enter into agr eements with counterparts from outside the EU
but that will only bind them and not the competent authorities.
4) If a 3rd country professional is duly licensed/au thorised to practice in an EU State he/she has
the right to register in a professional organisation (or the duty to if such registration is compulsory) on
the same terms as local professionals.
Preferential Trade Agreements
Question from the United States (Q.14)
What is the status of negotiations with MERCOSUR Egypt, and Chile?  How will the resulting
agreements cover substantially all services trade?  Will there be transition periods for liberalization
of services trade under the agreements, and if so, how long?   Where EU preferential tradeagreements mandate services negotiations at a later stage, to what extent have such negotiations
taken place (e.g., Turkey)?
Negotiations with MERCOSUR, Chile and Turkey have started only recently. In all cases, it is agreed
that the planned agreements should be compatible with GATS Article V. The framework for trade
liberalisation and potential transitional periods will depend on the results of the negotiations. In the
case of Mexico, the GATS Article V Free Trade Agreement has been signed and ratification is inWT/TPR/M/72/Add.1
Page 181
progress. It should enter into force before the end of 2000. The agreement foresees a review
mechanism and further liberalisation no later than th ree years after entry into force. Regarding Egypt,
negotiations on an Association Agreement are expected to be formally concluded soon.
In respect of the Europe-Agreements with the countries of Central and Eastern Europe, the
Association Councils established under the agreements have continued their work to broaden the
coverage of the respective agreements during the transitional periods foreseen for this purpose. This ispart of a continuing process of liberalisation, which will contribute in due course to the accession of
these countries to the EU.
Services
Question from the United States (Q.91)
We remain concerned that more than five years after the last enlargement, the EU has yet to provide a
consolidated EC-15 services schedule.  What is the reason for the delay, and when will it be made
available to Members?
On 31 January 1997, the EU and their Member States submitted through the CTS information
consisting of a consolidated schedule of specific commitments, incorporating the schedules of specific
commitments of Austria, Finland and Sweden, and a consolidated list of MFN exemptions,
incorporating the lists of MFN exemptions of those countries (see WTO Document Job 510). These
two documents were submitted as proposals which would not replace the respective schedules and
lists until after the completion of the examination process.
The relevant examination process in the CRTA was very useful although not entirely conclusive on
certain aspects. The EU remains committed to finalising the examination process in a satisfactory way
and to the objective of establishing a consolidated EC-15 schedule of specific commitments and a
consolidated EC-15 list of MFN exemptions as soon as an appropriate solution to the outstandingissues is found.
Professional Services
Question from the United States (Q. 112)
We remain very concerned with the proliferation of restrictive nationality requirements, quotas and
other barriers in the professional services sectors,  including accountancy, architecture, engineering,
medical, dental and midwifery services and legal services.  What are the prospects at the Community
level for liberalization of these sectors?
The EU and their Member States have undertaken considerable liberalisation commitments in the
professional services sectors. They are not aware of any developments in the sense indicated in the
question. Prospects for further liberalisation are a matter for GATS 2000 negotiations.
Air transport
Question from United States (Q.103)
Adoption of the EU Council Regulation 925/1999 regarding "hush-kits" has raised serious issues of
discrimination and compliance with international obligations, and as noted, the US has initiated
dispute resolution procedures in ICAO.  What st eps does the Commission intend to take to improve
the transparency of the EU legislative process to avoid similar situations in the future?WT/TPR/M/72/Add.1
Page 182
See replies in relation to general questions on transparency (I-h).
Question from United States (Q.104)
Regarding measures to harmonize safety rules, what is the status of the "Proposal for a Council
Regulation amending Council Regulation (EEC ) No 3922/91 of 16 December 1991 on the
harmonization of technical requirements and administr ative procedures in the field of civil aviation?"
The proposed regulation would give the Commission the power to block or modify member states'
certifications of aircraft produced in third countries "if.such approval would give an unfair advantage
to a third country, or is contrary to community policy vis-a-vis this  third country."
One of the key effects of the proposal is, in fact , to simplify and speed-up certification procedures for
aircraft produced in countries outside the Comm unity by permitting EU Member States to issue
certificates on the basis of existing tests carried by other countries. This is potentially of major benefit
to foreign manufacturers and is an option that is not currently available to European manufacturers
seeking certificates in the United States. The problems raised by the United States relate to details ofdrafting. They have already been discussed bilaterally and assurances given that they can be addressed
in the course of the legislative process.
Question from United States (Q.105)
Paragraph 120, including footnote 160, suggests an impulse to move beyond bilateral aviation
agreements that restrict routes, fares, market entry and capacity.  If the Commission in fact aims toremove such restrictions, why has it sued seven individual Member States for having concluded open-
skies agreements that completely deregulate these essential aspects of air transport?
As regards the notion of "Open Skies", contrary to what is stated in the question, “Open Skies”
agreements do not all “completely deregulate” the mentioned essential aspects of air transport. While“Open Skies” abandon the classic bilateral formula of strict reciprocity, crucial elements such as
ownership and control, cabotage, leasing and regulatory harmonisation are not covered. For this
reason, the EU, with the support of its air carriers, is developing the concept of a “Transatlantic
Common Aviation Area” that would open the market more fairly and more comprehensively.
As regards the cases before the European Court of Justice to which this question refers concern the
distribution of competence between the European Communities and their Member States under the
Treaty Establishing the European Community. In addition, according to the Annex on Air Transport
Services, traffic rights, however granted, are not covered by GATS. For these reasons, we do not
believe that this question is proper in the context of the Trade Review Mechanism of the WTO,because it does not relate to rights and obligations or trade policies of the EU that come under the
Agreement Establishing the World Trade Organisation.
The EU does not share the assessment according to which the adoption of Council Regulation
925/1999 is open to criticism regarding discrimination or compliance with international obligations.
Firstly, the provisions target determined categories of aircraft as such, irrespective of the flag of the
aircraft. Hence, discrimination complaints are simply without any foundation.
Secondly, the Regulation does certainly not breach any international obligation of the EU. In this
respect, it is worthwhile to note that the United States has not filed any WTO complaint since the
problem arose more than one year ago. Furthermore, we are confident that the US challenge under theauspices of the Chicago Convention will not succeed.WT/TPR/M/72/Add.1
Page 183
Therefore, the EU cannot see any problem due to an alleged lack of transparency of the EU legislative
process. In the case at stake, the Regulation has been adopted under the co-decision procedure. The
debates of the European Parliament are fully open to the public. Moreover, the issue was the subject
of preparatory work by the European Civil Aviation Conference (ECAC) before becoming an EU
matter and, indeed was discussed at the major triennial ECAC meeting in 1997 at which the United
States was represented. Hence, complaints about la ck of transparency are simply without foundation.
Some changes to the EU’s legislative process ar e being examined within the Intergovernmental
Conference. The proposal on the agenda is to widen the list of issues on which legislative action
requires the co-decision of the European Parliament. A process of mandatory hearings however, on
the model of the American legislative process, is not under consideration.
Question from United States (Q.106)
With reference to paragraph 122 of the report, which covers slot allocations, what is the status of
draft amendments to Council Regulation 95/93?
The revision of the Regulation is part of the Commission work programme for 2000. To that end, a
proposal should be adopted by the Commission be fore the summer break. The objective of the
proposal is to ensure both stability of services and genuine and fair competition between new entrants
and incumbent carriers.
Question from United States (Q.107)
What is the status of the Commission's reope ned examination of aid to Olympic Airways?
The re-examination of the restructuring aid granted to Olympic Airways by the Greek State in 1994
was closed in 1998.  At present, the Commission monitors the situation of the airline in terms ofimplementation of the restructuring plan and compliance with the conditions attached to its decisions
adopted in 1994 and in 1998 authorising the aid in question.
Question from United States (Q.108)
Regarding the discussion of alliances in paragraph 124, the list in footnote 169 of those under review
appears to be out of date.  Please provid e an updated list of those under review, and the status of
each?
The intercontinental alliances under review are:LH/UA/SAS: Oral hear ing was held on 12/1998, Commission undertook further investigation to
assess the arguments raised at the hearing and is currently formulating its revised position.
KLM/NW: The Commission is awaiting the reply to our final questionnaire to KLM, then intends to
handle the case in consistency with LH/UA/SAS.
AF/Delta: It has recently been reinforced into a transatlantic alliance. The Commission expects
notification of this and the broader "Skyteam" partnership which also includes Korean and Mexican
partner.
Swissair/Sabena/American Airlines: This is a rece ntly formed alliance which has received immunity
from DoT. The Commission has no case on this alliance yet.WT/TPR/M/72/Add.1
Page 184
Finally: the recently announced KLM/BA and United/USAir mergers raise transatlantic issues due to
their overlaps with existing transatlantic alliances (KLM/NW and LH/UA/SAS respectively). These
overlaps will be looked at in the context of merger control procedures.
Question from United States (Q.109)
What is the status of the Commission's investigation into airport charges in all member states?
A proposal for a Directive has been launched and is pending in the Council and European Parliament.
It is based on the three principles of non-discrimination, transparency and a certain relatedness
between the costs of the facilities and services supplied and the level of the charges.
Question from Switzerland (Q.6)
What is the foreseeable commercial impact of the decisions that will be taken by the European
Aviation Safety Agency.
A future EASA could be empowered  with the task of granting type certificates under a Community
system of rules in the field of aviation safety. By establishing common rules and centralising the
certification procedure, EASA could ease the admi nistrative and financial burden of the European
industry. Hence, applicants for certification of aeronautical products would have only one set of
procedures to follow to get an approval, which then would be valid throughout the whole Community
without restrictions or additional requirements.
Question from Hong Kong (Q.17)
It is unveiled in European Commission's investigations that airport charges discriminate against
foreign carriers in some airports and that abuse of dominant position by incumbent airport operators
occurred in a number of Member States. Would th e Commission take any measures to rectify the
situation?
The Commission has been examining landing fees at all European airports since 28 June 1995 when it
ruled that the system of discounts operated at the main Brussels airport infringed EU law.
Subsequently most Member States has changed thei r system of landing fees. The EU is now in the
final stage of ensuring that landing fees throughout the European Economic Area are non-
discriminatory.
Question from Canada (Q.19)
III.  Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade,
(i) Legal framework for businesses, (a) Company law, para 102:
The Secretariat Report notes that restrictions on investment continue to apply in various forms of
transport (including inland waterway, maritime cabotage and air transport) and to financial services.
What are its plans for opening these sectors to foreign investment?
In relation to maritime cabotage: Council Regulation 3577/92 applies the principle of the freedom to
provide services to the maritime cabotage sector. There are no current plans to modify the eligibility
criteria for beneficiaries under the terms of the Regulation.WT/TPR/M/72/Add.1
Page 185
In relation to air transport: The Community’s limitations on the control and ownership of air carriers
are comparatively liberal. In practice, a Community air carrier may be owned by non-Communityinvestors up to a level of 49%, which compares favourably with a number of its major partners. Given
that the current system of bilateral agreements in international air transport restricts traffic rights on
the basis of nationality, further review of the Community’s ownership rules will only be considered in
the context of greater liberalisation of air transp ort between the Community and its trading partners.
(Unlike Canada’s schedule) there are no FDI restrictions contained in the Schedule of the EU and
their MS, and Members are free to establish themselves in the Community in a wide variety of forms.
Oral question from Argentina (air transport)
In paragraph 123 on air transport (page 133), the Secretariat states that "According to the
Commission, European companies suffer from relati ve financial fragility compared with their main
competitors;  in recent years the Commission has operated a 'one-time-last-time' approach to State
aid, which has paved the way for the restructuring and privatization of many of the State flag-carrier
airlines.  The conditions attached to aid have been strictly monitored and enforced and theCommission does not intend to permit further aid for restructuring purposes.  it is estimated that from
1990 through 1996, flag carriers received support worth o ver US$9 billion."  It would be interesting
to know what the principle of the "one-time-last -time" approach involves and what are the conditions
for granting such aid.
A word is missing in the penultimate sentence of paragraph 123 as quoted above. The text reads
“….and the Commission does NOT intend to permit further aid for restructuring purposes.”
In a liberalized environment the Commission may authorize State aid in connection with arestructuring programme only in exceptional cases and subject to a number of conditions, so as to
limit as far as possible any anti-competitive effects. Most importantly, aid must be part of a
comprehensive restructuring programme aimed at restoring the airline’s viability within a reasonableperiod. The Commission approves the restructuring programme and verifies its implementation.
The “one-time last-time” principle means that restructuring aid should only be needed once.  One of
the conditions attached to the Commission’s approval  of restructuring aid is that no further aid must
be envisaged or likely during the duration of the programme or in the future.
Oral question from Norway
We note that the European Common Aviation Area is mentioned in the Secretariat’s report on
page 130. An agreement with 10 Central and Eastern European countries based on market access, theright of establishment, non-discr iminatory treatment and common envi ronmental and security rules is
in the pipeline. Information about the new agreement would be of interest to several of us here today.
The European Common Aviation Area is a multilateral agreement that will create a single market for
air transport services comprising at least twenty-e ight countries. Such a single market already exists
within the EU and includes Norway and Iceland by virtue of the European Economic Area. The plan
is to extend this market to cover Cyprus and the ten countries of Central Europe which have applied
for accession to the EU. The ECAA will address not only market access issues, but all aspects of the
operation of air transport services and will include common standards on issues such as ownership
and control, safety, security, consumer protection and the environment. Negotiations are now well
advanced and it is hoped that the Agreement will enter into force in the second half of 2001.WT/TPR/M/72/Add.1
Page 186
Maritime transportservices
Question from Canada (Q.37)
IV. Trade Policies by Sector, (4) Services, (iv) Transport services, (c) Maritime Transport,
Common regulatory framework, para 129:
Regarding the application of competition law, has the regulation concerning consortia been
reviewed?  If yes, what modifications have been made?  Is there a special significance attached to the
modification?
Commission Regulation (EC) No 823/2000 of 19 April 2000 renewed the block exemption for liner
shipping consort ia for a further five year period (OJ L 100, 20.4.2000, p. 24.; press release IP/00/404
of 25 April 2000).
Articles 6 and 7 of the new Regulation lay down a condition relating to the market shares held by a
consortium. There is a system of three different levels of market share. Any consortium with marketshares on all markets below 30% (if within a conference) or 35% (if operating outside a conference) is
automatically exempt if it fulfils the other conditions of the Regulation. If a consortium has a market
share above 30/35% on any market but below 50% on all markets, the consortium will benefit from
the block exemption if it is notified to the Commission and the Commission does not oppose
exemption within six months. A consortium with a market share above 50% on any market may be
notified to benefit, if appropriate, from an individual exemption.
The most important change that Regulation 823/2000 made to the block exemption as compared to
Regulation 870/95 is to refer to market share threshol ds in the place of trade share thresholds (ie, the
share of trade held by the consortium between the pa irs of ports that it actually serves) referred to in
Regulation 870/95. Market share is the usual indication of market power used in competition
legislation. The trade share criterion was adopted in the previous Regulation because shippingcompanies had considered that market shares would be difficult to calculate; experience had however
shown that shipping companies were able to provide market shares.
Question from Canada (Q.38)
IV. Trade Policies by Sector, (4) Services, (i v) Transport services, (c) Maritime Transport,
Other developments, para133:
This paragraph refers to the fine imposed on members of the Trans-Atlantic Conference Agreement
(TACA).  Please provide a status report on the proceedings for the fines levied against members of theTACA.
All the TACA parties appealed against the Commission's Decision of September 1998. In such
circumstances, the Commission does not seek to en force payment of the fines. The Commission does,
however, require that companies provide a bank guarantee to ensure the protection of the EU'sfinancial interest. Two former members of the TACA brought actions before the EU Courts seeking
suspension of the obligation to provide a bank guarantee. The action brought by DSR-Senator (now
Senator) was dismissed by the President of the Court of First Instance; on appeal that dismissal was
upheld by the President of the Court of Justice. The action brought by Cho Yang was dismissed by the
President of the Court of First Instance.WT/TPR/M/72/Add.1
Page 187
Question from Hong Kong (Q.17)
It is unveiled in European Commission's investigations that airport charges discriminate against
foreign carriers in some airports and that abuse of dominant position by incumbent airport operators
occurred in a number of Member States. Would th e Commission take any measures to rectify the
situation?
The Commission has been examining landing fees at all European airports since 28 June 1995 when it
ruled that the system of discounts operated at the main Brussels airport infringed EU law.
Subsequently most Member States has changed thei r system of landing fees. The EU is now in the
final stage of ensuring that landing fees throughout the European Economic Area are non-
discriminatory.
Question from Hong Kong (Q.18)
One of the principles of EU's policy in maritime transport services is to enable counteractive
measures against unfair pricing practices by third-country shipowners.  We would be interested to
know if there is any incidence of application of the relevant measures."
Council Regulation (EEC) No 4057/86 of 22 December 1986 concerns unfair pricing practices in
maritime transport. Measures taken pursuant to this Regulation have only been taken on one occasion.
Hong Kong/China is invited to refer to Council re gulation 15/89, where a redressive duty was applied
on containerised cargo transported in liner service between the Community and Australia by Hyundai
Merchant Marine Company Ltd of Seoul, Republic of Korea.
Question from Hong Kong (Q.19)
Competition law is applied to maritime transport services with a block exemption for certain
practices of liner conferences.  We would be interested in knowing the share of maritime trade
conducted under the cover of the exemption.
The European Commission has no data on the proportion of EU maritime trade carried within
conferences.
Question from Japan (Q.35)
Are cabotage trades open to non-EU vessels?
Council Regulation 3577/92 applies the freedom to provide services to maritime transport within
Member States (maritime cabotage). Article 1 of that Regulation reads that the freedom to provide
maritime transport services within a Member State (maritime cabotage) shall apply to Communityshipowners who have their ships registered in, and flying the flag of a Member State, provided that
these ships comply with all conditions for carrying out cabotage in that Member State.
Please provide a copy of the document entitled, "The third Community re port on the implementation
of Regulation 3577/92, adopted on 24 February 2000."
This document is available in the CELEX database on the Commission's web site EUROPA
(ref: http://europa.eu.int) . The CELEX number for this document is 52000DC0099.
Please provide information on every 'State-aid programme', State-by-State."WT/TPR/M/72/Add.1
Page 188
It is not clear from the question what information is requested. However, see the "Community
guidelines on State aid to maritime transport" (ref: Official Journal of the European Communities, C205, of 5 July 1997). These guidelines set out the types of aid to the maritime transport sector that
may be granted by the EU Member States. Further, aid schemes considered under the guidelines are to
be entered into the following database:
The above database contains information on a number of State aid schemes in the maritime sector.
Please explain in a concrete term about the "State-aid" which cuts labour costs."See section 3.2 "Labour-related costs" of the guidelines.
Can we understand that the tonnage-tax schemes, such  as those implemented in some EU countries,
are included in such "State-aid programmes"?
See para 130 of the Trade Policy Review Report by the WTO Secretariat, and also to the related
footnotes. Reference in para 130 to the re-examina tion by the Commission of State-aid programmes is
understood to relate to the Community guid elines on State aid to maritime transport.
Please provide the number of ships registered under the national flag of each Member, as well as the
number of crews thereof, year-by-year after the introduction of the "second registries" or the scheme
of international shipping.
There is currently no EU wide statistics for this.In comparison to the normal-registry ships, please provide in terms of trade the possible effects of
cost-reduction, due to such advantages as manning, granted to "second-registry" ships."
The EU guidelines on State aid to maritime transpor t of 1997 addressed the observed decrease in the
competitiveness of EU flags. The guidelines no ted at 1.2 that in response to the decrease in
competitiveness EU Member States took measures "…. such as relaxing conditions applicable to
national first registers, developing second or international registers or using State aid measures or a
combination of these…"
The guidelines provide, at 2.2, that aid may be granted only in respect of vessels entered in Member
States' registers. The guidelines go on to note that the general objectives are to safeguard EU
employment; preserve maritime know-how in the EU; and improve safety.
It is reported that “second registries” have recently been instituted in Italy and Spain. Please explain
the reason for such a scheme. We would like to know, in particular, whether there have been any
other specific reasons than those already provided by countries having introduced the registries
beforehand."
There is no requirement for the Member States to submit this information to the Commission.
If there are any support measures by a State for "second registry" ships, please provide the details.
Please see the annex to the guidelines for the definition of Member States' registers. The provisions of
the guidelines apply to Member States' registers.WT/TPR/M/72/Add.1
Page 189
Audio-visual matters
Questions from Hong-Kong, China (Q.20)
It is laid down in the Television without Frontiers (TWF) Directive that broadcasters should reserve a
majority proportion of their transmission time for European works and that it would like to know the
details of the requirement (i.e. definition of majority proportion and European works) and whetherexemption would be available.
The requirements on the majority proportion are laid down in Articles 4 and 6 of the Directive
89/552/EEC as amended by Directive 97/36/EC.
Article 6 of the Directive stipulates:
1. Within the meaning of this chapter,  'European works' means the following:
a) works originating from Member States;
b) works originating from European third States party to the European Convention on
Transfrontier Television of the Council of Europe and fulfilling the conditions of
paragraph 2;
c) works originating from other European third countries and fulfilling the conditions of
paragraph 3.
Application of the provisions of (b) and (c) shall be conditional on works originating from Member
States not being the subject of discriminatory measures in the third countries concerned.
2. The works referred to in paragraph 1 (a) a nd (b) are works mainly made with authors and
workers residing in one or more States referred to in paragraph 1 (a) and (b) provided that they
comply with one of the following three conditions:
a) they are made by one or more producers established in one or more of those States; or
b) production of the works is supervised and actually controlled by one or more
producers established in one or more of those States; or
c) the contribution of co-producers of those States to the total co-produc tion costs is
preponderant and the co-production is not controlled by one or more producersestablished outside those States.
3. The works referred to in paragraph 1(c) are works made exclusively or in co-production with
producers established in one or more Member States by producers established in one or more
European third countries with which the Community has concluded agreements relating to the audio-visual sector, if those works are mainly made with authors and workers residing in one or more
European States.
4. Works that are not European works within the meaning of paragraph 1 but that are produced
within the framework of bilateral co-production trea ties concluded between Member States and third
countries shall be deemed to be European works provided that the Community co-producers supply a
majority share of the total cost of the production and that the production is not controlled by one or
more producers established outside the territory of the Member States.
5. Works which are not European works within the meaning of paragraphs 1 and 4, but made
mainly with authors and workers residing in one or more Member States, shall be considered to beWT/TPR/M/72/Add.1
Page 190
European works to an extent corresponding to the proportion of the contribution of Community co-
producers to the total production costs."
As far as the question on exemption is concerned, two provisions of the Directive are relevant :Article 2.6. of the Directive stipulates that « this Directive shall not apply to broadcasts intended
exclusively for reception in third countries, and which are not received directly or indirectly by thepublic in one or more Member States
Recital N°29 of the Directive stipulates that « channels broadcasting entirely in a language other than
those of the Member States should not be covered by the provisions of article 4 and 5 », and that
« where such a language or languages represent a substantial part but not all of the channel’stransmission time, the provisions of articles 4 and 5 should not apply to that part of the transmission
time ».
Question from Canada (Q.39)
IV. Trade Policies by Sector (4) Services, (v) Audio-visual services:
The Secretariat Report categorises "video games" as audiovisual services, yet these are not explicitly
categorised as such under the Central Product Classification for "audiovisual services".  Is this how
the EU defines video games?  Are there EU financia l or regulatory measures which provide support
to the European video game industry?
The EU is of the view that the decision to classify a service as audiovisual is intimately linked to
assessing whether there is transmission of audiovisual content to the general public.  This also applies
for video games.
There are no specific EU programmes to support the European video game industry.
Question from Canada (Q.40)
In para 138, the Secretariat Report states that the Television Without Frontiers Directive was
changed in 1997 to "take account of technological and market developments, while also introducing aclarification of the rules on jurisprudence and the protection of minors, and the new rules concerning
the broadcasting of major events and teleshopping."  What were the specifics of these amendments?
Please see the "Television without Frontiers" di rective (89/552/EEC), adopted on 3 October 1989 by
the Council as amended on 30 June 1997 by the European Parliament and the Council Directive97/36/CE.
Question from Canada (Q.41) – audio-visual services
Para 141 states that the Commission plans to broaden the MEDIA Plus program “by opening
participation to third countries?”  Will this apply only to countries with which the EU has an
audiovisual co-production treaty or are there other cr iteria that will be used to offer the program to
third countries?
The MEDIA PLUS Program has not been adopted yet. It is currently under legislative process. The
following i therefore based on the European Commission proposal, of 14 December 1999
(COM(1999) 658 final).WT/TPR/M/72/Add.1
Page 191
As for all Community programmes, a distinction has to be made between participation to the
programme and co-operation within the framework of the programme. Article 10 of the MEDIAPLUS proposal lays down the orientation proposed by the Commission in this respect.
"ARTICLE 101. The Programme shall be open to the participation of the associated countries of Eastern and
Central Europe in accordance with the conditions la id down in the association agreements or their
additional protocols relating to participation in Community programmes concluded or to be concluded
with those countries.
2. This Programme shall be open to the participation of Cyprus, Malta, Turkey and those EFTA
countries which are parties to the EEA Agreement on the basis of supplementary appropriations, in
accordance with the procedures to be agreed with those countries.
3. This Programme shall be open to the particip ation of the countries which are parties to the
Council of Europe Convention on Transfrontier Tele vision other than those referred to in paragraphs
1 and 2, on the basis of supplementary appropriations, in accordance with conditions to be established
in the agreements between the interested parties.
4. The opening-up of the programme to the European third countries referred to in paragraphs 1,
2 and 3 may be subject to a prior examination as to the compatibility of their national legislation with
the Community acquis, including the second subparag raph of Article 6(1) of Directive 89/552/EEC.
5. The Programme shall also be open to cooperation with other third countries on the basis of
supplementary appropriations and the specific arrangements to be established in agreements between
the interested parties. The European third countries referred to in paragraph 3 which do not wish to
benefit from full participation in the Programme may be eligible for cooperation with the Programme
under the conditions set out in this paragraph."
Company law
Question from Canada (Q.19)
III.  Trade Policies and Practices by Measure, (4) Measures Affecting Production and Trade,
(i) Legal framework for businesses, (a) Company law, para 102:
The Secretariat Report notes that restrictions on investment continue to apply in various forms of
transport (including inland waterway, maritime cabotage and air transport) and to financial services.What are its plans for opening these sectors to foreign investment?
In relation to maritime cabotage: Council Regulation 3577/92 applies the principle of the freedom to
provide services to the maritime cabotage sector. There are no current plans to modify the eligibility
criteria for beneficiaries under the terms of the Regulation.
In relation to air transport: The Community’s limitations on the control and ownership of air carriers
are comparatively liberal. In practice, a Community air carrier may be owned by non-Community
investors up to a level of 49%, which compares favourably with a number of its major partners. Given
that the current system of bilateral agreements in international air transport restricts traffic rights on
the basis of nationality, further review of the Community’s ownership rules will only be considered in
the context of greater liberalisation of air transp ort between the Community and its trading partners.WT/TPR/M/72/Add.1
Page 192
(Unlike Canada’s schedule) there are no FDI restrictions contained in the Schedule of the EU and
their MS, and Members are free to establish themselves in the Community in a wide variety of forms.
Telecommunications
Question from the United States (Q.97)
We note that the [WTO] Secretariat’s draft does not include any references to the proposed new
regulatory framework under development. Please desc ribe the main features under consideration with
respect to ex ante and ex post regulation at the member state level and how EU oversight will be
implemented?
The new regulatory framework is designed to facilitate the transition from monopoly to fully
competitive market.  There will continue to be both ex-ante and ex-post regulation, but much of the
ex-ante regulation will be relaxed as competition becomes effective.  EU oversight will continue as
before, supervising correct implementation of the legislation in Member States.
Future directives are the following :
Five EP and Council Directives
- Framework Directive
- Universal service Directive
- Licensing Directive
- Access and Interconnection Directive- Data protection Directive
These directives were adopted by the Commission on 12 July 2000. Following approval by the
European Parliament and the Council, they are expected to enter into force in 2002.
One Commission Directive (Art. 86) ;
This directive will enter into force along with the five directives above.
Question from the United States (Q.98)
We understand that one of the Commission’s responses to the challenge of fast-moving technology
and market developments is increased reliance on “soft law” and co-regulation.  How will Europe
ensure that this approach will not lead to fragmentation of the market, or erosion of adherence to
international commitments, as the transposition and implementation of such measures by Member
States could well differ significantly?
Non-binding measures and industry-agreed codes of practice will exist alongside ‘hard’ law, and are
likely to be used in new, volatile markets where a hard law approach may not be appropriate.  There
will be stronger co-ordination between National regulatory authorities to ensure consistency in the
EU.  International commitments will not be affected.
Question from the United States (Q.99)
We understand that the Commission has advanced its internal discussions with regard to the new
licensing and authorization directive.  Does this directive address the issue of a “one-stop” European
or national approach?WT/TPR/M/72/Add.1
Page 193
Authorisation of networks and services will remain a national responsibility, but the proposed new
system will greatly simplify and accelerate the procedure.
Question from the United States (Q.100)
Has the EU decided that barriers to entry can be justified by the need to encourage investment in
infrastructure?  In an environment where first-mover advantage can be key, reliance on competitionpolicy to address this problem could result in de facto acceptance of the barriers.
The EU seeks to have strong competition in services and strong competition in infrastructure.  It seeks
to minimise barriers to entry. Ex-ante regulation will continue to be used to address bottleneck
situations and first-mover advantages.
Question from the United States (Q.101)
We understand the Commission recently issued a recommendation on full unbundling of the local
loop and the proposed new directives would make this mandatory.  Please elaborate on the rationaleand proposed timing of this initiative?
The Commission is considering proposing legislation to the EP and the Council that could result in
local loop unbundling being made mandatory on a harmonised basis by the end of 2000/early 2001.
Question from the United States (Q.102)
Please describe recent developments with regard to spectrum management and co-ordination across
Europe?   What is the Commission doing to harmonize in this area?
The Commission is expected to adopt a Spectr um Decision soon. Meanwhile, the Communication of
1999 November is still valid.
Question from Japan (Q.36)
Japan has requested the improvement of the intercon nection rules in Germany, as well as a reduction
in the licensing fees in both Germany and France. In Japan’s view, the obscure interconnection rules
and practices, as well as the high licensing fees, hamper fair competition, thereby providing an
obstacle to market access by a foreign company.  Please explain the EU’s view on this point.
The EU approach to interconnection requires i.a., major suppliers to provide interconnection under
non-discriminatory terms, conditions and rates, in a timely fashion.  The rates must be cost-oriented
and transparent.
Licensing fees must respond to the administrative costs incurred in providing and managing a license.
They must also reflect the need to ensure the optimal use of scarce resources, and be non-discriminatory, transparent, objectively justified and proportionate in relation to their intended
purpose, taking into account the need to foster the development of innovative services and
competition.
Question from Japan (Q.37)
Japan thinks that the EU should establish a common st andard in that the license fees be calculated to
cover only the administrative costs.WT/TPR/M/72/Add.1
Page 194
The changes to the Licensing Directive to be proposed by the Commission in July will address this
issue.
Question from Canada (Q.32)
IV. Trade Policies by Sector, (4) Services, (iii) Telecommunication, (b) Regulatory framework,
para 101 and (c) Implementation of the regulatory package, para 105:
This is with regard to the EU’s efforts toward the development of competitive markets and regulatory
harmonization.  Will these initiatives address the differing licensing conditions amongst member
states, such as the high initial cost of licensing in Germany, which may favour the incumbent overnew entrants?  In addition, will these initiatives address the concerns mentioned in paragraph 105 of
the Secretariat report in relation to onerous licensing conditions, transparency regarding licensing
conditions and procedures, high up-front costs, and the length of time required to issue licenses in
certain cases?
Licensing fees must respond to the administrative costs incurred in providing and managing a license.
They must also reflect the need to ensure the optimal use of scarce resources, and be non-
discriminatory, transparent, objectively justified and proportionate in relation to their intended
purpose, taking into account the need to foster the development of innovative services and
competition.
The changes to the Licensing Directive to be proposed by the Commission in July will address the
concerns mentioned in the above paragraph.
Question from Canada (Q.33)
Paragraph 105 notes the concerns relating to national regulatory authorities.  Some national
regulatory authorities in the European Union appear to be vulnerable to penalty charges.  How doesthis affect the role of the national regulatory authorities?
The EU is not aware that NRAs are affected by such charges.
Question from Canada (Q.34)
IV. Trade Policies by Sector, (4) Services, (iii) Telecommunication, (c) Implementation of the
regulatory package, para 106:
Does the EU intend to promote the publication of the real cost data of incumbent telecommunications
services providers in order to clarify the levels of reasonable interconnection charges?
This issue has not so far been decided upon within the EU.
Question from Canada (Q.35)
IV. Trade Policies by Sector, (4) Services, (iii) Telecoms, Chart IV.8:
The chart illustrates “fixed to fixed” and “mobile to fixed” interconnection rates for Member States.
Spain is shown to have only a fixed interconnection rate. Please clarify if this means that Spain has no
“mobile to fixed” interconnection.WT/TPR/M/72/Add.1
Page 195
No, Spain also has mobile to fixed interconnectio n.  Corresponding rates may be shown in later
reports.
Question from Canada (Q.36)
IV. Trade Policies by Sector, (4) Services,(iii) Telecoms, Table IV.9:
The table lists the number of operators in telecomm unication services as of August 1999. In a footnote
to the Table, it is mentioned that the telecoms monopoly in Greece is to be liberaliszed on December
31, 2000. Is the liberalization in Greece progressing according to schedule?
Greece is liberalising according to schedule .
Question from Hong- Kong, China (Q.15)
It is noted that EU is considering harmonization of licensing conditions and development of 'one-stop
shop' procedure. Would the EU share with us whether there is any concrete plan and, if yes, details ofimplementation?
Authorisation of networks and services will remain a national responsibility, but the proposed new
system will greatly simplify and accelerate the procedure.
Question from Hong- Kong, China (Q.16)
It is noted that national implementation of th e regulatory framework for cost accounting varied
among Member States and seemed to have contributed to extensive price squeezes. Competition in
local access market is also lacking. Would EU consider introducing redress measures or mechanism?
The EU takes note of the question. It is presently considering how best to address the question of price
squeezes in the context of its programme of liberalisation of the telecommunications sector.
Financial services
Question from Hong Kong, China (Q.13)
The principle of single passport (i.e. mutual recognition of licences among EU Member States) has
been implemented in cer tain sub-sectors like banking and insurance. There are also proposals of
applying the 'single passport' principle to other sub-sectors (e.g. European Commission (EC) also
proposed the single licence arrangement for asse t management companies to  operate throughout the
EU).  We would like to know whether there are plans to apply the 'single passport' principle to
services sectors other than financial services.
The "Single Passport" Principle as it is applied in financial services sectors does not apply in other
services sectors, and there are no plans at present to apply it in other sectors.
Question from Hong Kong, China (Q.14)
It is noted that National Government's involvement in financial services continues to prevail in a
number of ways (e.g. provision of financial services of general economic interest, using credit
institutions, raising public funds etc.).  We are glad to note that the EC holds the view that Members
States should rely more on competitive tendering for the provision of services of general economicWT/TPR/M/72/Add.1
Page 196
interest.  We wonder if the EC has any concrete pl an in mind on how to reduce state participation and
intervention with a view to minimizing market distortion.
In relation to the question of national governments involvement in financial services it is important to
note that the EU treaty is neutral with respect to ownership.
In relation to the issue of general economic interest in banking, following a request of the European
Council, the Commission adopted in 1998 a Report to the Council of Ministers which found that a
number of Member States considered that certain credit institutions fulfil specific tasks that constitute,
in their views, services of general economic interest, e.g. the promotion of small and medium sized
enterprises, the granting or guaranteeing of export  credits, social housing loans, municipal financing,
financing of infrastructure projects and regional development. The Report concludes that thecompatibility of each of these systems and tasks with Article 86 (2) of the Treaty has to be examined
on a case to case basis.
As for State intervention in bank rescuing, the Commission has taken several decisions in the last five
years (see for instance, Crédit Lyonnais, Banco di Napoli, Banco di Sicilia, Crédit Foncier de France,Société Marsellaise de Crédit, ...)   and state aid approval has been conditioned to restructuring and
large sales of assets.
The Commission continues to follow these matters of importance to competition and the internal
market.
Question from Peru (Q.7) – Services - Overview
Could the EU inform us whether there are any re strictions on professional associations in the EU
concluding inter-institutional agreements with fellow professionals outside the Community for the
purpose of authorizing profesisonal activities or whether professionals from outside the Community
employed by European enterprises enjoy equal treatment as regards membership rights?
1) One has to distinguish between professional  organisations and competent authorities to
licence/authorise the exercise of a regulated profession, which are in most Member States Ministries
or Government agencies.
2) Community law does not prevent, in general, recognition of 3rd country qualifications, even
if held by 3rd country (non- EU or EEA) nationa ls. The Commission considers however that for 6
health professions (doctors, nurses, dentists, midwives, vets and pharmacists) recognition can only be
granted to diplomas which meet the minimum requirements concerning the content and the length of
the education and training leading to those diplomas.
3) Professional organisations can enter into agreements with counterparts from outside the EU
but that will only bind them and not the competent authorities.
4) If a 3rd country professional is duly licensed/au thorised to practice in an EU State he/she has
the right to register in a professional organisation (or the duty to if such registration is compulsory) on
the same terms as local professionals.
Question from Peru (Q.8) – Financial services
According to the Report by the Secretariat, national governments are still involved in the financial
services market.  Does the European Community intend to limit or abolish such involvement andpromote free competition as part o the liberalization of financial services?WT/TPR/M/72/Add.1
Page 197
From the standpoint of competition law, banks (including all credit institutions) and insurance
companies are regarded as undertakings and conseq uently made subject to the ordinary competition
rules contained in Articles 81-86 of the EC Treaty.  The regulations on economic concentration are
applied to the financial sector in the same way as to other sectors of the economy.
Regarding the banking community, since the 1980s the Commission has firmly opposed the idea that
banks, on the basis of Article 86(2) of the EC Treaty are undertakings entrusted with the operation of
services of general economic interest, excluded from the competition rules contained in Articles 81-
86.  The Commission considered that the rules of competition apply to all financial institutions.  This
attitude of the Commission with regard to inter-bank arrangements has been bolstered by judicial
doctrine, particularly following  the important "Eurocheque" decision in 1984.
As far as insurance companies are concerned, in case 45/85, VDS v. Commission ("German Fire
Insurance"), the Court of Justice clearly confirmed that competition rules are also applicable to
insurance companies.  Based on a certain amount of experience acquired through notifications, the
Commission in 1992 published a regulation of exemption by categories, applicable to the insurancesector, which expires in 2003 and which exempt s only cooperation agreements which produce
benefits for consumers and which are strictly necessary to ensure such benefits.
Question from the United States (Q.93)
The EU is presently considering amendments to  two directives which govern the management and
investment requirements of UCITS (Undertakings of collective investment in transferable securities).Please explain how they will liberalize investment in non-EU country securities?
The Commission’s proposals only apply to EU companie s listed on an EU regulated market (in the
meaning of Article 1.13 of Council Directive 93/22). Therefore, the Commission’s proposals, if
adopted, would not create any new obligation on US companies operating in Europe.
Member States can continue to permit the use of US GAAP by EU companies during all or part of the
transition period through the date on which the application of IAS will become obligatory for listed
EU companies, i.e. at the latest from 2005 onwards.
Thereafter, if any listed EU company decides to prepare consolidated financial statements in
accordance with US GAAP, this would be additional to the preparation of consolidated financial
statements in accordance with IAS.
Requirement of UCITS
In regard to investments of harmonised funds (UCITS) in common securities, such as equity and
bonds, traded at exchanges or regulated markets in non Member States, the EU market is already fully
liberalised (see Article 19 (1) c of Directive 85/611 /EEC), i.e. European UCITS can invest in these
third country securities under the same conditions as in EU securities. This also applies to theinvestment rules – e.g. on non-listed securities or major holdings - laid down in Article 25 (1) and (2)
which apply to EU and non Member States instruments on the same basis and have not been amended
in regard to WTO issues.
However, under the amended proposal to amend the UCITS directive COM(2000)329 of
30 May 2000, there would be (if adopted) substantial benefits in regard to investments in other
financial instruments than securities which would also  apply to the relevant instruments originating in
third countries. This means, European harmonised funds could invest in:WT/TPR/M/72/Add.1
Page 198
- money market instruments,
- deposits with credit institutions,
- standardised exchange traded financial derivatives as well as these OTC derivatives, 
and
- up to 30 % in units of non-harmonised open-ended securities funds (present limit is 
5%),
issued or situated in non Member States under the same rules as for these European instruments, given
that certain requirements are met which shall safeguard the quality of the instrument/issuer and thus
ensure investor protection.
EU efforts to improve the supervision of Europe’s financial markets 
The importance  of work on this area has, if anything, grown since the adoption of the Action Plan.
The rapid pace of change on financial markets makes it imperative that the EU has the right structures
to respond to change.
The EU is considering the possible options.  In partic ular, they will be looking at the way in which the
legislative cycle can be speeded up for primary legislation through informal co-operation at an early
stage; and at the need for a mechanism to lay down more precise technical rules, based on that
legislation.  This mechanism will need to be able to reach timely, proportionate, enforceable and
effective decisions.
The issue of state-run financial services entities
According to Articles 92 and 93 of the Treaty, Member States must inform the Commission about
government subsidies and support given to companies within their territories. If the Commission finds
that the governmental subsidies or support is not in conformity with the common market the
Commission will ask the Member States to withdr aw the subsidies or the support. The Commission’s
decision aims at ensuring that the subsid ies or the support do no distort competition.
Question from Switzerland (Q.2)
Could you elaborate a little bit more on the actual work carried on by the Commission of the EU to
regulate “financial conglomerate” type groups? How do you tackle this issue?
In relation to financial conglomerates, technical work is under way. A draft Directive for
implementation of the Joint Forum principles will be proposed in the beginning of next year.
Questions from Canada (Q.9)
II. Trade Policy Regime: Framework and Objectives, (4) External Trade Relations,
(iv) Partnership and cooperation agreements, para 70:
General questions on investment policy:
It is our understanding that EU directives in th e areas of banking, insurance and investment services
include “reciprocal national treatment clauses” under which financial services firms from third
countries may be denied the right to establish a new business if the investor’s home country denies
similar access to EU services providers.  Could the EU describe how these provisions are
administered?   Are similar reciprocity provisions applied in other sectors?WT/TPR/M/72/Add.1
Page 199
The EU directives in the area of banking, insurance and investment services mentioned by the
Government of Canada refer to “comparable effective market access” and not to reciprocity. Theauthority vested in the directives to limit or suspend new authorisations from a country not granting
national treatment or effective market access, or the possibility to open negotiations with a third
country, has never been used. The fact that the EU did not enter any MFN exemption in its schedule
for financial services is a clear indication that the EU will not make use of the possibilities offered by
Question from Canada (Q.29)
IV. Trade Policies by Sector (4) Services, (ii) Financial services
We would appreciate additional information from  the EC on the extent of cross border and
commercial activity of third-country financial service providers, including those without subsidiaries
in the EU.
The European Commission has not gathered any info rmation on the cross border activity of third
country financial service providers.
Question from Canada (Q.30)
We note the helpful summary of recent legislative developments, especially with respect to Single
Market undertakings.  What are the EU’s plans with respect to third country providers currently not
holding single “passports” (i.e., mutual recognition of licenses)?
The possible mutual recognition of licenses is a question contingent upon multilateral negotiations.
Question from Canada (Q.31)
Concerning the establishment of banking entities by  firms without the single “passport”, it appears
that the rules of some EU Members (e.g., capital adequacy, licensing requirements) offer little
distinction between branches and subsidiaries.  In the case of Germany, for example, what are the
advantages for a foreign service provider to establish a branch rather than a subsidiary, in terms of
regulation?
If a third country financial institution establishes a subsidiary in the Community, that subsidiary will
be deemed to be an EU institution and will benefit from the single passport system. The establishment
of a branch is not subject to, for instance, national corporate law, reporting requirements, taxation and
other specific corporate regulations
Question from Canada (Q.44)
Annex IV.2: EC Financial Services Schedule in GATS, para 2:
This paragraph mentions national treatment limitations on commercial presence of banking
institutions, specifically France requiring "sufficient presence for the management of
franc-denominated issues."  The most recent supplement to the Schedule of Specific Commitments on
Financial Services (GATS/SC/31/Suppl.4/Rev.1) sti pulates " ... sufficient means and commitments in
Paris ... " Please elaborate on the meaning of "sufficient means and commitments in Paris" – what
does this condition mean and how is it determined?
Dans le secteur des services bancaires, la France a émis une réserve concernant le traitement national.
Cette réserve dispose que seules les filiales françaises de banques non françaises agréées peuvent,WT/TPR/M/72/Add.1
Page 200
hormis les établissements de crédit français eux-mêmes, intervenir comme chefs de file pour
l’émission de titres en monnaie nationale, à condition de justifier d’un volume suffisant de ressourceset d’engagements à Paris. En revanche, aucune limitation ne s’applique aux banques étrangères qui
agissent en tant que co-chefs de file.
Cette clause est de nature prudentielle. En exigeant que l’intermédiaire qui place ces titres soit
enregistré et agréé par les autorités françaises, elle vise en effet à mieux assurer la protection desinvestisseurs susceptibles d’acheter de tels titres.
Question from Canada (Q.39)
IV. Trade Policies by Sector (4) Services, (v) Audio-visual services:
The Secretariat Report categorises "video games" as audiovisual services, yet these are not explicitly
categorised as such under the Central Product Classification for "audiovisual services".  Is this how
the EU defines video games?  Are there EU financia l or regulatory measures which provide support
to the European video game industry?
The EU is of the view that the decision to classify a service as audiovisual is intimately linked to
assessing whether there is transmission of audiovisual content to the general public.  This also applies
for video games.
There are no specific EU programmes to support the European video game industry.
Question from Canada (Q.40)
In para 138, the Secretariat Report states that the Television Without Frontiers Directive was
changed in 1997 to "take account of technological and market developments, while also introducing a
clarification of the rules on jurisprudence and the protection of minors, and the new rules concerningthe broadcasting of major events and teleshopping."  What were the specifics of these amendments?
Please see the "Television without Frontiers" di rective (89/552/EEC), adopted on 3 October 1989 by
the Council as amended on 30 June 1997 by the European Parliament and the Council Directive
97/36/CE.
Question from Canada (Q.41) – audio-visual services
Para 141 states that the Commission plans to broaden the MEDIA Plus program “by opening
participation to third countries?” Will this apply only to countries with which the EU has anaudiovisual co-production treaty or are there other cr iteria that will be used to offer the program to
thir d countries?
The MEDIA PLUS Program has not been adopted yet. It is currently under legislative process. The
following i therefore based on the European Commission proposal, of 14 December 1999(COM(1999) 658 final).
As for all Community programmes, a distinction has to be made between participation to the
programme and co-operation within the framework of the programme. Article 10 of the MEDIA
PLUS proposal lays down the orientation pr oposed by the Commission in this respect.WT/TPR/M/72/Add.1
Page 201
"ARTICLE 10
1. The Programme shall be open to the participation of the associated countries of Eastern and
Central Europe in accordance with the conditions la id down in the association agreements or their
additional protocols relating to participation in Community programmes concluded or to be concluded
with those countries.
2. This Programme shall be open to the participation of Cyprus, Malta, Turkey and those EFTA
countries which are parties to the EEA Agreement on the basis of supplementary appropriations, in
accordance with the procedures to be agreed with those countries.
3. This Programme shall be open to the particip ation of the countries which are parties to the
Council of Europe Convention on Transfrontier Television other than those referred to in paragraphs
1 and 2, on the basis of supplementary appropriations, in accordance with conditions to be established
in the agreements between the interested parties.
4. The opening-up of the programme to the European third countries referred to in paragraphs 1,
2 and 3 may be subject to a prior examination as to the compatibility of their national legislation with
the Community acquis, including the second subparag raph of Article 6(1) of Directive 89/552/EEC.
5. The Programme shall also be open to cooperation with other third countries on the basis of
supplementary appropriations and the specific arrangements to be established in agreements between
the interested parties. The European third countries referred to in paragraph 3 which do not wish to
benefit from full participation in the Programme may be eligible for cooperation with the Programmeunder the conditions set out in this paragraph."
Oral question from Argentina (air transport)
In paragraph 123 on air transport (page 133), the Secretariat states that "According to the
Commission, European companies suffer from relati ve financial fragility compared with their main
competitors;  in recent years the Commission has opera ted a "one-time-last-time" approach to State
aid, which has paved the way for the restructuring and privatization of many of the State flag-carrier
airlines.  The conditions attached to aid have been strictly monitored and enforced and the
Commission odes not intend to permit further aid for restructuring purposes.  It is estimated that from1990 through 1996, flag carriers received support worth o ver US$9 billion."  It would be interesting
to know what the principle of the "one-time-last-time" approach involves and what are the conditions
for granting such aid.
A word is missing in the penultimate sentence of paragraph 123 as quoted above. The text reads
“….and the Commission does NOT intend to permit further aid for restructuring purposes.”
In a liberalized environment the Commission may authorize State aid in connection with a
restructuring programme only in exceptional cases and subject to a number of conditions, so as to
limit as far as possible any anti-competitive effects. Most importantly, aid must be part of acomprehensive restructuring programme aimed at restoring the airline’s viability within a reasonable
period. The Commission approves the restructuring programme and verifies its implementation.
The “one-time last-time” principle means that restructuring aid should only be needed once.  One of
the conditions attached to the Commission ’s approval of restructuring aid is that no further aid must
be envisaged or likely during the duration of the programme or in the future.WT/TPR/M/72/Add.1
Page 202
Oral question from Norway
We note that the European Common Aviation Area is mentioned in the Secretariat’s report on
page 130. An agreement with 10 Central and Eastern European countries based on market access, the
right of establishment, non-discr iminatory treatment and common envi ronmental and security rules is
in the pipeline. Information about the new agreement would be of interest to several of us here today.
The European Common Aviation Area is a multilateral agreement that will create a single market for
air transport services comprising at least twenty-e ight countries. Such a single market already exists
within the EU and includes Norway and Iceland by virtue of the European Economic Area. The plan
is to extend this market to cover Cyprus and the ten countries of Central Europe which have applied
for accession to the EU. The ECAA will address not only market access issues, but all aspects of theoperation of air transport services and will include common standards on issues such as ownership
and control, safety, security, consumer protection and the environment. Negotiations are now well
advanced and it is hoped that the Agreement will enter into force in the second half of 2001.
Question from Australia (Q.32)
Would the EU consider extending the MRA on conformity assessment to cover all of the automotive
products covered by relevant EC regulations?
A light type-approval is possible for small series, up to 500 units per year and per Member State.
However, this type-approval granted by one member  state may be refused by other member states, or
may be accepted for a limited number of cars; it is up to each member state to decide whether toaccept it or not and for which quantities, still up to 500 max.
III-e) E-commerce
Question from United States (Q.113)
We are aware that there are now many other relevant e-commerce instruments in preparation or in
effect in the EU that are not mentioned in this section, for example, the data protection directive and
negotiations with third countries, the draft copyright directive, the draft legislation on imposing VATfor digital goods coming from third countries, the draft directive on stopping child pornography on
the Internet, the draft update of the telecommunications-specific data protection directive (which
would expand coverage to all communications providers including Internet).  Please elaborate further
on these initiatives and the e-Europe Action Plan and mini “e” initiatives it has spawned (e-content,
e-learning, e-knowledge).
The Council of Ministers reached a political agreement on a „Directive on Copyright and related
rights“ in the information society which was confirmed on 8 June. The Directive will adjust and
complement the existing EU framework on copyright and related rights to respond to the new
challenges of technology and the information society. The proposed Directive will stimulate creativityand innovation by ensuring that music, films, videos and all materials protected by copyright are
adequately protected throughout the Internal Market. The Commission has paid particular attention to
safeguarding a fair balance between all the rights and interests involved including rightholders,
network operators, consumers, consumer electronic industries and the educational community. The
Directive will make cross-border trade in copyright-protected goods and services easier, with
particular emphasis on “new” Information Society products and services (both on-line and on off line
via CDs for example). Network operators will have  the benefit of an obligatory exception for
technical copies on the net. Procedurally the proposed Directive will now be the subject of a formalWT/TPR/M/72/Add.1
Page 203
Common Position, due to be adopted by the Council without discussion, and then go to the European
Parliament for a second reading under the co-decision procedure.
Directive 46/95 on the protection of personal data establishes rules designed to ensure that data is only
transferred to third countries when its continued protection is guaranteed or when certain specific
exemptions apply.  Without such rules, the high standards of data protection established by the
Directive would quickly be undermined, given the ease with which data can be moved around oninternational networks.  The Directive provides for the blocking of specific transfers where necessary,
but this is a solution of last resort and there are several other ways of ensuring that data continues to
be adequately protected while not causing disruption to international data flows and the commercial
transactions with which they are associated.
So far the Commission's approach to third countries has been to examine the existing provisions in
third countries with a view to determining whether or not it is possible to recognise them as providing
for adequate protection as provided for Article 25.6 of the data protection directive. In assessing the
adequacy of protection in third countries, the Commission is concerned with the content and
effectiveness of the measures in place. In particular, protection will be considered adequate if themeasures cover the principles enumerated above, are effectively enforced and offer a means for the
individual to exercise his rights and gain redress if necessary.
The procedure for an adequacy finding by the Commission (three procedures are currently underway -
for Switzerland, Hungary and the US) involves the opinion of the national data protection
commissioners as well as  an opinion of the member States meeting in the Article 31 Management
Committee on the proposed measures. Finally the EP has a period of 30 days to exercise its right ofscrutiny and to check whether or not the Commission implements the measure within the remit given
to it by Council.
Question from United States (Q.114)
Please verify that paragraph 148 accurately represents the EU position for future GATS
negotiations?  Recent statements by Commissioner Lamy and others suggest considerable variation
on the EU position with respect to, for example, cust oms duties on electronic transmissions.  Is the
Commission seeking to make a distinction between the support for the de facto situation in which
customs duties are not imposed and the mo re formal agreement on a moratorium?
The Work Programme on electronic commerce, which hopefully will be restarted following the
General council meeting next Monday, includes an examination of the so-called moratorium on
customs duties on electronic transmissions. According to the 1998 Declaration the practice of not
imposing customs duties would continue during the Work Programme. However, there are differing
views among Members on the status of that declaration in the wake of the Third Ministerial, In the
submission made in 1999 by EU to the General Council, the EU indicated that it was seeking
agreement of partners on a variety of principles covering e-commerce. This list included, inter alia,
the principle of a permanent agreement by all Members not to apply customs duties to electronic
transmissions
Question from United States (Q.115)
Is the work referred to in paragraph 151 related to the Directive on Legal Aspects of E-commerce?
Yes. The directive of the European Parliament and of the Council on certain legal aspects of
Information Society services, in particular electronic commerce, in the internal market („Directive onelectronic commerce“) has been adopted by the Council on 28 February 2000 (OJ C 128/32 ofWT/TPR/M/72/Add.1
Page 204
8.5.2000) and by the European Parliament on 04 May 2000. Member Sates are obliged to transpose
the Directive into national law not later than eighteen months after the date of entry into force (the day
of its publication in the Official Journal of the European Communities, expected soon).
Question from United States (Q.116)
How is the notification process for regulation of information society services working in practice?
Where can one find the information?  How can comments be provided?  How often have these
comments from third parties been taken into account?
See answers to questions in Section 1 on “Transparency”.
Question from United States (Q.117)
When and how does the Commission expect the debate on the implementation or extension of
regulations on jurisdiction and applicable law for contractual and non-contractual civil and
commercial obligations to be concluded?  What is the Commission proposing with respect toAlternative Dispute Resolution?
Jurisdiction (extension and reformatti ng of the 1968 Brussels Convention) - The European
Parliament is expected to adopt its opinion on the proposed Council Regulation on jurisdiction at the
end of September 2000. Following this opinion th e Commission may adopt an amended proposal. The
Council may then adopt the Regulation at the end of 2000.
Applicable law to contractual obligations (extension of the 1980 Rome Convention) - The
Commission may adopt of Green Paper in spri ng 2001 and may propose a Regulation 2nd Semester
2001
Applicable law to non-contractual obligations - The Commission may adopt a Green Paper on the
subject in September 2000.
Alternative Dispute Resolution - The European Parliament is currently considering an amendment
to the proposed Regulation on jurisdiction, to include ADR in the provisions concerning conflicts
arising from consumer contracts concluded at distance. The Commission has been in parallel
encouraging ADR (see Commission Recommendation of 1998 on out-of-court bodies responsible for
the settlement of consumer disputes, creation of a European Extra-Judicial Network for resolving
consumer disputes, etc.)
Question from Canada (Q.42)
Annex IV.1 Electronic Commerce, c) Regulatory framework, para 9
How will the EU ensure that its own regulatory framework is compatible with the approaches of its
trading partners?  Does this regulatory framework cover areas other than financial services andconsumer protection?
The EU is discussing with its trading partners on a ll issues relevant to trade either in multilateral fora
or in bilateral frameworks. It intends to pursue such discussions in the future either to achieve a
common basis for regulatory frameworks in those multilateral fora or to achieve mutual recognition
agreements where appropriate.WT/TPR/M/72/Add.1
Page 205
Question from Canada (Q.43)
Annex IV.1 Electronic Commerce, (c) Regulatory framework, para 9
As noted in the Secretariat report, the EU is deve loping regulations that would give consumers in the
EU the right to sue foreign Internet providers of goods and services in the consumer’s local court.  Is
it intended that the regulations cover all foreign In ternet businesses or only those established within
the EU?
In principle, the rule mentioned would apply only to Internet providers established with the EU.
Article 4 of the proposed Council Regulation provides that where the defendant  is domiciled in a non-
member country, the jurisdiction of the courts of each Member State shall, subject to certainexceptions, be determined not by the EU Regulation, but by the law of that Member State.
However, there is nothing to prevent the Member States adopting similar provisions in their national
law.
It shall also be noted that a non-EU business with a branch or agency in a Member State is deemed to
be domiciled in that State in respect of consumer disputes arising out of the operation of the branch or
agency.
This rule which gives the consumers in the EU the ri ght to sue foreign Internet providers of goods and
services in the consumer’s local court, applies to consumer on-line and off-line contracts, and has
been existing since the adoption of the Brussels Convention in 1968.
Question from Canada (Q.44)
Annex IV.2: EC Financial Services Schedule in GATS, para 2:
This paragraph mentions national treatment limitations on commercial presence of banking
institutions, specifically France requiring "sufficient presence for the management of
franc-denominated issues."  The most recent supplement to the Schedule of Specific Commitments on
Financial Services (GATS/SC/31/Suppl.4/Rev.1) sti pulates " ... sufficient means and commitments in
Paris ... " Please elaborate on the meaning of "sufficient means and commitments in Paris" – whatdoes this condition mean and how is it determined?
In the banking services sector, France has expressed a reservation with regard to national treatment.
The reservation provides that only French subsidiaries of approved non-French banks, apart from the
French credit institutions themselves, are entitled to act as managing underwriters for the issue ofsecurities in national currency, provided that they show proof of sufficient means and commitments in
Paris.  On the other hand, no limitation applies to foreign banks acting as co-managers.
This clause is of a prudential nature.  By requiring the intermediary which places such securities to be
registered and approved by the French authorities, it is aimed at ensuring improved protection for theinvestors who might buy such securities.
Question from Peru (Q.9)
The initiative taken by the Commission in December 1999 aims at putting Europe level with or in
front of other industrialized countries.  Peru wo uld like to know that are the components and the
scope of Community policy on electronic commerce?WT/TPR/M/72/Add.1
Page 206
The e-Europe initiative includes in its follow-up action plan reference to the new package of
telecommunications directives adopted by the Council and Parliament on 12 July.  Theimplementation of these directives will facilitate access to and use of the Internet for electronic
commerce within the European Union.
Question from Peru (Q.10)
The Report by the Secretariat indicates that electronic transactions are being incorporated into
existing consumer protection legislation.  Does the Community have a position on consumer
protection, intellectual property relating to domain names and the security of on-line transactions?
Consumer protection rules apply irrespective of the medium used to conclude the contract, unless the
protection/directive in question specifically excludes a certain medium or is specifically targetted on a
certain way of contracting (e.g. the doorstep selling Directive). It is therefore not a question of
including electronic transactions in the consumer protection framework. The application of the
existing framework to information society services can of course create problems and these problems
are being studied. Where necessary, the EU will consider to make proposals to ensure the effectiveapplication of the rules on e-commerce. In addition, certain aspects of e-commerce may be new or
pose specific threats that may warrant new action (i.e. loopholes in the framework). The existence of
such loopholes is studied and will be addressed if necessary .
__________