WORLD TRADE
ORGANIZATIONWT/TPR/M/102
23 September 2002
(02-5089)
Trade Policy Review Body
24 and 26 July 2002
TRADE POLICY REVIEW
THE EUROPEAN UNION
Draft Minutes of Meeting
Chairperson:  H.E. Ms. Amina Chawahir Mohamed (Kenya)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE EUROPEAN COMMISSION 4III. STATEMENT BY THE DISCUSSANT 9
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 13
V. REPLIES FROM THE REPRESENTATIVE OF THE EUROPEAN COMMISSION
AND ADDITIONAL COMMENTS 45
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 57WT/TPR/M/102
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The sixth Trade Policy Review of the Europ ean Union (EU) was held on 24 and 26 July 2002.
The Chairperson (H.E. Ms. Amina Chawahir Moha med) welcomed the delegation of the European
Commission, headed by Mr. Roderick Abbott, Deputy Director-General of the Directorate General for
Trade, and the discussant, Mr. Faizal Ismail, Head of the South African Delegation to the WTO.  As
usual, the discussant spoke in his personal capacity and, in accordance with established procedures,
had provided in advance a broad outline of the themes he intended to raise (documentWT/TPR/D/81).
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting. The Report by the European Commission was contained in document
WT/TPR/G/102 and that of the Secretariat in doc ument WT/TPR/S/102. Whereas the Report by the
Secretariat provided a comprehensive overview of the trade and trade-related policy developments inthe EU since the last Review in mid-2000, the Report from the Commission was a policy statement of
recent and future directions for trade policy.
3. Copies of advance written questions had been submitted by Canada; Guatemala; Japan;
Chinese Taipei;  Australia;  Argentina;  New Zealand;  the Republic of Korea;  Hong Kong, China;
Costa Rica;  Uruguay;  Mexico;  Norway;  Malaysia;  Brazil;  India;  Chile;  the United States; andThailand, and had been transmitted to the delegation of the European Commission.  These questions
and the replies provided by the European Commission are reproduced in document
WT/TPR/M/102/Add.1.
4. The reports by the European Commission and the Secretariat both highlighted the central role
played by the multilateral trading system in th e external trade and economic relations of the EU,
within a trade policy regime that also encompassed an extensive network of preferential trade
agreements and arrangements.  Both reports also emphasized the EU's commitment to a successfulcompletion of the Doha Development Agenda (DDA), agreed at the Ministerial Conference in
November 2001.   Progress on this agenda, together with the EU's continued emphasis on establishing
a sound basis for economic activity, through macroeconomic stability and completion of the Internal
Market, would make a significant contribution  to reviving world economic growth.WT/TPR/M/102
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE 
EUROPEAN COMMISSION
Introduction
5. The representative of the European Commission (hereafter "Commission") expressed his
thanks for the opportunity provided by the Review to  contribute to a better understanding of the EU's
trade policy and practices and their impact on the multilateral trading system.
6. With regard to the report by the Secretariat, he highlighted the observations that:  (i) the EU
had an open trade regime; (ii) it had continued to carry out important internal reforms in the last two
years, which had benefited its external trade relations;  and (iii) its commitment to the multilateral
system was unswerving, and its regional initiatives had supported, and had been in no way detrimental
to the multilateral system.  During the last two years, the EU had demonstrated a strong commitment
to trade and development, which had been key to progress in the WTO.
7. The main purpose of his opening remarks was to highlight a few key elements in the EU's
trade policy that will facilitate understanding of wh at the EU had been doing over the last two years,
and why, and that would be the frame of its future policy-making.
8. Among the major developments on the internal front was the remarkable progress in
consolidating the Internal Market, and in taking measures of economic and social renewal that wouldimprove the performance of the internal market, and therefore  the international competitiveness of
the EU. The most visible sign was the successful introduction of the euro at the start of 2002, which
had completed the process of monetary union for the twelve participating Member States. This step,
together with the many other measures of economic integration in Europe, would continue to
stimulate trade within the Union, and accelerate further liberalization and reform, thus strengtheningthe domestic base for the EU's international trade performance.
9. Many of the internal reforms within the EU institutions in the last two years had been to
prepare for and underpin the enlargement process, which had moved forward steadily. Negotiations
with the most advanced candidate countries were now in a crucially important stage, and the first
wave of accessions was anticipated for 2004, in time for the next Review of the EU.  There was no
doubt that this enlargement would be conducive to further trade liberalization, would result in a bigger
market for the trading partners of the EU, would bring enormous economic and social benefits for theacceding countries, and would strengthen Europe in a myriad of ways.
Globalization and global governance
10. The first theme to be highlighted was the continued debate over economic globalization, and
the way in which the EU should respond to it.  Fo r the EU, the debate was essentially about the extent
to which policies and politics should try to keep pace with the globalization of markets, how far the
globalization process needed to be managed or controlled, and whether the EU's efforts to harness
globalization needed to be carried out through international cooperation, as opposed to nationally or
locally.  Globalization had shown the need for str onger mechanisms for international cooperation and
governance;  trade policy, and above all the multilateral trading system was obviously a key elementin the EU coming to terms with, and making the be st of, globalization.  One of the great achievements
of the DDA was that it recognized that for globalization to be not only efficiency-boosting but also
fair, Members needed more international rules, backed up by stronger multilateral institutions.
11. In substance, Members needed multilateral rules that enabled and underpinned effective
domestic regulation, and led to more trade and investment liberalization within a system thatWT/TPR/M/102
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promoted sustainable development. On process, Members needed a system that strengthened the
interconnections between governments, markets, a nd civil society. One of the main achievements of
Doha was that it maintained the direction of the WTO towards being a forum concerned as much with
rule-making as with liberalization, and recogn ized fully the WTO’s place in the collective
international efforts to combat poverty, ensure more equitable growth, and support sustainable
development.
12. The EU's efforts at European integration and its support for the multilateral system coincided.
Establishing the Internal Market had been a laboratory for harnessing globalization through
international cooperation and the setting of common rules. Internally, the EU had underpinned a high
level of market openness with the necessary economic, social, and environmental regulation,
accompanied by some redistribution of the gains of openness.  This experience within the EU
reflected the process ahead at the global level, where a complementary relationship needed to befound between trade liberalization and market opening, on the one hand, and policy integration and
greater equality in growth, on the other.  The Commission had launched in 2001 a new set of
proposals to improve governance both within the EU and globally, as one was the mirror of the other.
In this sense, the European blend of market integration, common rules, and social safety net
mechanisms might serve as guidance for others when coping with the effects of globalization.
13. Similarly, the WTO’s system of rules, negotiated market access commitments, and
commitment to future progressive liberalization and be tter rules constituted an external framework for
agreement on, and implementation of, the right ec onomic policies comparable to the EU’s own
Internal Market programme, and its own experience in international cooperation and rule-making.
14. Globalization had forced the WTO and each of its Members to try to manage increasing
interlinkages between trade and other policy areas, like health, environment, the impact of trade on
development, consumer protection, and social development.  Members could see it in their decisionon TRIPS and health taken at Doha; in their efforts to work with other international organizations in
technical assistance and development aid; in ensuring a harmonious relationship between trade policy
and environmental policy;  and in the efforts undert aken in the ILO to address the social dimensions
of globalization.  The EU strongly supported the latter initiative because it showed that, when
necessary, the international community was able to  wrestle with complex cross-cutting policy issues
in a constructive way that respected each Member’s and each organization’s aims. That was why the
EU had continuously called for involving the WTO in increased cooperation with other parts of the
UN system, such as the ILO, to bring the organizations of international governance closer together.
15. These developments suggested that trade policy had become too important to be left to trade
negotiators alone.  A keener interest in the WTO’s functioning, its transparency and its accountabilityhad been stimulated. A broad cross-section of society had started to take a real interest in trade policy.
The EU had realized that if it wanted to continue the policies of rules-based trade liberalization, it
could only do so if it managed to take public opinion with it.  Thus, during the period under review,
the EU had sought greater involvement of its parl iaments, both at the European and national levels,
and European civil society, in trade policy and practices.
16. This had made it possible for the EU to define ambitious positions for Doha, supporting both
trade liberalization and improved trade rules, with the overall objective of sustainable development,
and to project its views relatively efficiently, in terms of continuing to push for a round through the
smoke and teargas of Seattle, and the long two years before Doha.WT/TPR/M/102
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The EU and the WTO
17. The second theme was the need for a strong and open multilateral trading system.  Because
the EU saw the WTO as a key part of the international economic architecture, it had naturally
supported its further development, through a new trade round. A strong and open multilateral trading
system was the key tool to manage the process of globalization, and was the bedrock of the EU's trade
policy. The multilateral trading system not only increased trade, but contributed to internationalstability and peace, and promoted essential democratic values, such as non-discrimination and
equality. Members had worked very hard, particularly in the run-up to Doha, to restore confidence in
the WTO, to find ways to strengthen the system, and to promote a more active participation of
Members. No one had worked harder than the EU.
18. Over the period under review, the EU's primary objective had remained the access of EU
goods and services to markets around the world to the benefit of its workers, consumers, and
businesses, tackling market access barriers at multilateral and bilateral level.  Second, the EU had
continued to play an active part in the various phases of the negotiations on agriculture and services,
including the launch of the built-in agenda negotiations and the TRIPS built-in agenda.  The EU’s
approach on agriculture took into account the need for a balance between trade and non-tradeconcerns.  More generally, the EU continued to recognize that further liberalization and expansion of
trade for agricultural products would make an important contribution to sustained and continued
economic growth in all countries. The internal agen da of the EU complemented the initiatives taken at
Doha, and the need to ensure greater coherence of policy objectives with the external dimension of
sustainable development. The Commission had just presented the Mid-Term Review  of the Common
Agricultural Policy (CAP), which would further in tegrate environmental concerns, and would help the
sector to become more market-oriented and more competitive in a socially acceptable manner.
19. Third, the EU had continued to be actively engaged in the work of the dispute settlement
body. One of the EU's priorities was to strengthen its effectiveness and credibility. The dispute
settlement activity had contributed significantly to the clarification of key provisions of relevant
Agreements in the area of trade defence. However, dispute settlement should always be a last resort.
20. Fourth, the EU had spared no effort to en sure progress in the implementation-related
discussions, especially in the run-up to Doha, including on special and differential treatment (S&D),
as correct and timely implementation was a key element of a well-functioning multilateral trading
system.
21. Fifth, the EU had pursued its long-standing effort to aid the full integration of developing and
least-developed countries into the global economy. This was clearly reflected in its autonomousdecision, in 2001, to remove all tariffs and quotas from products originating in least-developed
countries. The Everything-But-Arms (EBA) initiative  demonstrated that the EU continued to help
development through trade, and that Europe was capable of taking domestically difficult decisions for
the broader international good.  The EU's new approach to relations with its ACP partners was another
example of its desire to find new means to bring trade policy to the service of development, andsupport the integration of the developing regions into the world economy.
22. Linked to these issues, and very high on the agenda of the EU, was its support for trade
related technical assistance (TRTA) and capacity-building, both at the bilateral and the multilateral
levels.  The EC and its Member States provided the lion’s share of contributions to the WTO's DDA
Global Trust Fund.  Better global governance was relevant to development aid and the EU supportedmore coordination, cooperation, and coherence between donor institutions and partners.  At the
bilateral level, the EU had made trade-related aid a major component of its current five-year
development plan and aid programmes. Strengthening developing countries’ capacity to use trade asWT/TPR/M/102
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an engine of economic growth was one of the priorities of the EU's development policy:  too often,
offering trade opportunities alone was not sufficient without capacity-building.
The new round
23. The third theme of the EU’s trade policy concer ned its leadership role in the preparation and
launch of the new round.  After the failure of Seattle, and taking into account global developments,
the EU had successfully put a good deal of effort into the preparation and the launch of the DDAnegotiations.  The EU's role had been crucial in two areas: the development dimension of the agenda,
and the need for negotiations on rules-related issues.
24. First, a prerequisite for the successful launch  of a round in Doha had been to ensure that
interests of developing countries were reflected in the agenda. The EU had strongly supported explicit
developmental goals in all parts of the DDA, in cluding market access, special and differential
treatment, support for better internal policies, a much stronger role for developing countries in the
process of negotiations, and ways to strengthen their capacity to participate in negotiations and
implement their outcome.  The EU had actively supported the development focus of the Doha
Declaration on trade-related technical assistance and capacity-building, STD, LDCs, trade, debt and
finance, trade and transfers of technology and small economies, which had been helpful in bringingother industrialized countries around to the same view . This bridge-building role had been particularly
important on the more sensitive issues, such as TRIPS and health, and implementation of existing
WTO Agreements, issues on which the EU had worked constructively with others to find a middle
ground.
25. The second area where the EU had been instrumental was in delineating a significant rule-
making component to the new trade round.  Through the decision to negotiate WTO Agreements on
new issues, such as investment, competition, trade facilitation, and public procurement, Doha would
do much to boost the WTO’s role as a regulator of international trade, and as a mechanism of
international cooperation, rather than unilateral or bilateral policymaking.  Basic multilateral rules in
these areas would substantially increase the stability and predictability of conditions for trade and
economic activity, thus stimulating new flows of  trade and investment around the world. Negotiations
in these fields should assist countries to create transparent, non-discriminatory, predictable, and moreefficient systems for the benefit of their own operators as well as of their partners. Negotiated rules in
these areas would strengthen international governance to the benefit of industry, which demanded
clear and transparent rules from Members, and would also benefit the weaker players in the WTO,
who could base their policies on consistent and tr ansparent standards.  The EU would cooperate with
its trade partners to ensure that work in Geneva in these new fields moved forward, since this wasvital for the general success of the whole round.  This was not to belittle the role of domestic
regulation, or the importance of domestic economic reform: multilateral rules and common standards
should help to underpin economic reform for all Members, and ensure greater convergence of
domestic rules.
26. Without further development of rules and a major rebalancing of the system in favour of
developing countries, Members would not be able to tackle the challenges of globalization.
Launching a broad-based round with an agenda that included the interests of developed and
developing country Members alike, was in itself a major achievement, but producing the right
outcome would now require an enormous effort.  At this point, the DDA was only potentially a
development round:  making progress in the negotiations and successfully concluding an ambitioustrade round within the agreed three-year timeframe remained the big challenge ahead.  But it was one
that Members had to seize, since the DDA offered Members options to act globally in areas that had
never before had a place in the multilateral system.WT/TPR/M/102
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Regional trade relations
27. The fourth theme was the EU’s bilateral and regional trade relations around the world.  While
maintaining its very strong engagement in the multi lateral process to promote open and fair trade, the
EU had continued to pursue a number of regional initiatives.  Over the last two years, new trade
agreements had entered into force with Mexico and with a number of countries in South-Eastern
Europe, and in the Mediterranean. The EU had recently concluded negotiations for a FTA with Chile,
which provided a new "WTO plus" benchmark for future agreements.  A number of other negotiationswere ongoing, for example with members of Mercos ur and of the Gulf Co-operation Council, while
negotiations for economic partnership agreements (E PAs) with the ACP countries would begin later
in 2002 in the framework of the Cotonou agreement, and should enter into force in 2008.  EPAs were
WTO-compatible trading arrangements that aimed to  progressively remove barriers to trade between
the EU and the ACP countries, and to enhance cooperation in all trade-related areas.  EPAs wouldtake into account the level of development and the socio-economic impact of trade measures on ACP
countries, and their capacity to adapt to the liberalization process.  EPAs would be instruments both
for the development of ACP partners and for establishing reciprocal FTAs between these countries
and the EU.
28. The more recent agreements and negotiations went significantly beyond tariff liberalization to
include major areas of rules aimed at promoting regional integration and at establishing a stronger and
more transparent trade policy regime both within partners, and between the EU and its partners. This
reflected the EU's conviction that to be sustainable future trade policy had to encompass both
traditional trade liberalization and rules.  While  liberalization provided the stimulus to economic
growth, the rule-making component ensured stability and predictability, and that the gains of
liberalization did not remain the preserve of interest groups.
29. The EU had always believed that regional integration could be mutually supportive of the
multilateral system, as demonstrated by its own experience as a customs union and its agreements
with third countries.  The creation of additional trade and investment possibilities through regional
agreements, accompanied by more ambitious rule-mak ing or regulatory initiatives than was possible
at the multilateral level, could act as a "pathfinder" for subsequent liberalization and rule-making
within the broader membership of the multilateral system.
30. It was important to ensure that this mutually supportive relationship between regional
agreements and the multilateral system was preserved, both by updating the relevant WTO rules and
procedures, as was foreseen in the DDA, and thr ough an appropriate design  of individual regional
agreements.  However, the major current priority for the EU was a successful and timely conclusion
of the DDA negotiations. Regionalism did not offer an alternative to the strengthening of themultilateral trading system, which was why the EU's trade policy worked on these two
complementary levels.WT/TPR/M/102
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III. STATEMENT BY THE DISCUSSANT
Introduction
31. The discussant (Mr. Faizal Ismail) noted that the first challenge at the start of his career in
trade policy was to lead the negotiations with the EU on the trade and cooperation agreement (FTA),
which had entered into force on 1 January 2000.
32. He recognized the positive contribution made by the EU to trade liberalization and
development.  As noted in the Secretariat Report, the EU had played a leadership role prior to, and
during the Doha negotiations, and had contributed significantly to the successful launching of theDDA.  The EU and the European NGO community in particular had been responsible for the
significant breakthrough agreed in Doha in the form of the Declaration on TRIPS and medicines. The
EBA had no doubt led the way in addressing the market access needs of least developed countries.
The Commission was also to be applauded for the leadership role it had assumed in the Mid-Term
Review of the CAP, to initiate a serious debate among its Member States on the need for radicalreform and adjustment of its agricultural and trade policies.
The EU policy statement
33. The discussant wondered how  the EU saw the world and the challenges ahead.  According to
Mr. Defraigne, the chef de cabinet of Commissioner Lamy, the EU saw the need to balance the driveto increase the efficiency of markets with policies that promoted sustainable development.
Furthermore, while globalization had resulted in rapid flows of trade and finance, less attention had
been given in the multilateral system to norms on the environment, consumer protection, animal and
human health, and food safety. In Mr. Defraigne's view, the real challenge was to encourage and
develop effective policies in the North and in the South - to increase the capacity to adjust toglobalization so developing countries "can get a fair share of world growth and turn this into social
progress and environmental sustainability".
34. The discussant had based his intervention on an analysis from a "development" and
"southern" perspective, and would begin with a statement on the fundamental challenges confronting
developing countries.  He would then engage with the EU policy statement by first addressing the
issue of adjustment, secondly by raising questions regarding the environmental sustainability of EU
trade policies, and thirdly by examining the track record of the EU in ensuring that its social policiesand concerns were not addressed in ways that increased the levels of protection in the EU, thus further
reducing the possibility of gains for developing countries from the opportunities of globalization, and
reducing their scope for development.
The discussant's argument
35. There was no doubt that the last two decades had ushered in the rapid expansion of global
markets with ever increasing opportunities for social progress for humanity. However, whilst
globalization, and the rapid flows of trade, finan ce and information technologies had benefited some
of them, most developing countries had been largely excluded from these benefits, and had been
marginalized.  For most developing countries the single most important challenge remained that ofpoverty. The negative effects of globalization - environmental degradation, terrorism, disease and the
spread of AIDS - had alerted all to the interdependence of the world. Thus, world leaders had
recognized these challenges when they had agreed  at the Millenium Summit to improve the lives of
the poor by 2015 by implementing the Millenium Development Goals. This commitment had been re-
affirmed at the Finance for Development Summit in Monterrey, and the World Food Summit, and
would, no doubt, be reasserted at the World Summit for Sustainable Development (WSSD) inWT/TPR/M/102
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Johannesburg. The WHO Commission on macr o-economics and health had emphasized the
inextricable relationship between health and economic  development. The burden of disease, especially
the AIDS pandemic, in some low-income countries was a stark barrier to economic growth.
36. The discussant asked how trade liberalization could contribute to this fundamental challenge:
the DDA recognized a critical link between trade liberalization and the more efficient functioning of
global markets and development.  Developing countries undoubtedly needed to adjust, and establish
appropriate policies to develop their competitiveness and engage with globalization.  At the presentmeeting, however, Members needed to address the responsibilities of the EU in this area. The EU was
the largest exporter and the second largest importer in the world and therefore had a leading role in
advancing and shaping the processes of globalization, multilateral rules, and economic development.
To contribute meaningfully, the EU needed to make  major adjustments in its own internal markets
and society.
37. The first issue for discussion concerned the extent to which adjustment had been made in the
EU.
I. Adjustment of the EU agriculture and industries would increase growth, and allow
developing countries to export and develop
38. What adjustments needed to be made by the EU?
39. The high level of protection in the EU for agricultural and non-agricultural products had
undoubtedly increased the burden to EU consumers and taxpayers. In addition, the arsenal of
subsidies provided to farmers in the EU discriminate d in favour of the large and rich among them.  A
recent OECD study quoted by the British consumers association had argued that a family of four in
the UK spent about US$1,200 more on food than th ey would have without the CAP.  The consumer
lobbies in the EU would tackle this. In addition, a number of studies suggested that reducingprotection and increasing internal efficiency woul d provide significant impetus for increased growth,
both within the EU and in the global economy.
40. What was the impact of the EU's failure to adjust on the lives of the poor in developing
countries?
Agriculture
41. While two thirds of all poor people in developing countries lived and worked in the
agriculture sector, and were dependant on agriculture for their livelihoods, this was the case for less
than 5% of the population in the EU.  Yet the EU's  trade policies combined billions of dollars of
domestic support, export subsidies, and extremely high tariffs to protect their large farmers. This hadhad a devastating impact on the livelihoods of small and poor farmers in the developing world, and
had contributed to a vicious cycle;  the decimation of the productive and export competitiveness of
developing countries raised debt levels and increased poverty.  The EU claimed that the sustained
vitality of its rural communities (Government report, p. 9) was an important societal goal:  the
discussant asked whether the EU had undertaken any studies to educate its Member States on theimpact of the CAP on the livelihoods of rural communities in developing countries.
Clothing, textiles, and steel
42. European countries had historically based their industrialization on labour-intensive
production in sectors such as clothing, textiles, and steel, which now occupied relatively insignificantroles both in employment and production levels as these economies had graduated to higher value-WT/TPR/M/102
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added sectors in manufacturing and services.  The opportunity for developing countries to increase
their employment and exports in these sectors of natural comparative advantage to them had beenseverely stifled by a combination of high tariffs, tariff peaks, tariff escalation, and import quotas, in
addition to an arsenal of contingent protection measures and standards that continued to stifle the
growth and industrial development of many developing countries.
43. The Secretariat’s Report noted that, while the EU had implemented its commitment to
integrate this sector into the GATT 1994 (normalization), it had significantly back-loaded theliberalization of quantitative restrictions required  under the ATC to the end of the transition period.
44. Thus, in the sectors where developing countries could compete, the EU effective rates of
protection were extremely high. These problems were compounded by tariff peaks, triple the simple
average, and tariff escalation, raising the tariff in higher value-added or processed products of
developing countries. A recent report by the Swedish Board of Trade, issued in December 2001, hadconcluded that tariff escalation in EU agricultural and fishery imports was a serious impediment to the
export and development prospects of developing countries.  In addition, the EU remained the second
largest user of anti-dumping measures.  These measures tended to be taken in areas of comparative
advantage to developing countries, further exacerbating their ability to compete in global markets.
45. He asked whether the EU had undertaken any studies on the cumulative effect of tariff peaks,
tariff escalation, and trade remedies on imports of developing countries, with a view to encouraging
domestic industries to adjust. He asked whether  the EU had developed adjustment programmes in
these key sectors, especially textiles and clothing. He also asked whether the EU had considered
compensating developing countries for the serious impediments to growth and development that had
resulted from its trade policies in these sectors.
46. The second issue the discussant was concerned with was the EU's commitment to
environmentally sustainable policies.
II. Removing subsides in agriculture and fi shing would reduce environmental degrading and
resource depletion
47. Were the EU's trade policies environmentally sustainable? The EU initiative to conduct
Sustainability Impact Assessments of its trade policies was  interesting and innovative, although littlewas known about the methodology employed and the results of these studies. The EU's commitment
to environmental sustainability would be treated with scepticism on the world stage if it did not act in
an area in which it had both direct responsibility and competence.  He asked whether the EU's trade
policies and subsidies in agriculture had contributed to the degradation of the environment, and
whether policy measures were being taken to address this issue.  Similarly, he asked whether the EUsubsidy regime in fishing had contributed to the excess capacity of fishing fleets and unsustainable
depletion of fish resources, and whether policy measures were being taken to address this issue.
48. The third issue to be raised was the technical regulations and social policies of the EU.
III. Did the technical regulations or social policies of the EU exacerbate the regime of protection,
and were these laudable social policies being captured by protectionist lobbies in the EU, thus further
delaying the EU's objective of liberalization an d advancement of economic development in the South?
49. Technical regulations and social policies had proliferated in the EU. These regulations had
undoubtedly raised the costs of foreign or third-country producers more than for domestic firms.  The
impact of the EU's proposed directive on producer responsibility for waste would have a disastrousimpact on small producers from developing countrie s. In the context of the internal integrationWT/TPR/M/102
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process of the EU, such  regulations could be a source of trade diversion.  This explained why these
regulations and social policies had been regarded suspiciously as protectionist instruments or the "newprotection". In addition, mutual recognition agreements (MRAs) for conformity assessment
procedures had been available only to a few trading partners. While these MRAs were provided for by
the TBT Agreement, their consistency with the MFN principle - that any advantage given to one
trading partner must be given to all other WTO trading partners automatically and unconditionally -
could be questioned. The list of trading partne rs (Canada, United States, Japan, Australia, New
Zealand, Israel), who currently enjoyed these MRAs  with the EU suggested special and differential
treatment in reverse.
50. Food safety concerns had been used to enforce import bans in the EU. These decisions had
been based on the controversial use of the precautionary principle, which required action if there was
a risk. Undoubtedly, the huge popular appeal of this principle allowed for its misuse by both vestedinterests and politicians.  He asked how the EU proposed to reduce this tendency for abuse.
51. The policy of the EU on international standard  setting (Secretariat Report p. 44), although
understandable, provided room for concern. On the one hand, the EU recognized the need to
participate in these international standard setting bodies, and on the other, it asserted the right to
develop its own standards in terms of its own policy objectives, provided these were not applied in adiscriminatory and arbitrary manner.  This raised the issue of governance and participation in the
decision-making process for EU technical regulations. The Government Report had addressed this
issue (p. 14), and raised the need for transparency and participation by civil society.  He asked about
the role of foreign producers, and other parties whose interests were directly affected by the  trade
policies of the EU.  He also asked how the EU pr oposed to have a more inclusive and transparent
decision-making process.
Conclusion
52. The discussant noted that his intervention had covered the EU's concern to balance trade
liberalization with social policies:  to meet environmentally sustainable outcomes, which could only
be achieved in the context of adjustment.  He had argued that poverty and development were the most
urgent and fundamental challenges for developing countries, and that the EU needed to undertakeradical adjustment to fulfil its commitment to trad e liberalization and efficient markets. This would
have a positive impact on economic development and the reduction of poverty in the South.
Moreover, the EU commitment to environmental sustainability would be viewed sceptically if it did
not address its trade policies that contributed to environmental degradation, particularly in agriculture
and fisheries.  The EU technical regulations or social policies ran the risk of being captured by rent-seeking protectionist interests, unless there was great vigilance, transparency, and participation by all
other interest groups, both within and outside the EU.WT/TPR/M/102
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
53. Members welcomed the delegation of the EU, headed by Mr. Roderick Abbott, and thanked
him for the comprehensive introductory remarks on the trade policies and practices of the EU.  They
also thanked the discussant for his valuable and provocative contribution, and the Secretariat for
providing a comprehensive report.  A number of Members recalled the questions they had submitted
to the delegation in writing, and look ed forward to the replies by the EU.
54. The representative of Korea noted the substantial bilateral economic and trade relationship
between Korea and the EU. The EU was the largest foreign direct investor in Korea, with total
investment  at US$23 billion in 2001, amounting to 30 % of total FDI in Korea. The EU was also the
third largest trading partner of Korea, and the two-way value of trade had recently reached almost
US$40 billion.
55. The representative noted that the on-going deepening and widening of regional integration in
the EU would contribute to the growth of the gl obal economy. The single currency was expected to
further facilitate international trade transactions. Korea hoped that the enlargement of the EU would
contribute not only to promoting economic prosperity and political security for Europe, but also to
further strengthening the multilateral trading system.
56. Korea greatly appreciated the leadership role  played by the EU in strengthening the
multilateral trading system and its critical role in  launching th e DDA negoti ations, and in establishing
the roadmap towards a successful conclusion.
57. The first issue of concern to Korea was the  preliminary safeguard measure on imports of
steel taken by the EU in late March 2002.  This was a response to the United States safeguard measure
on steel, and Korea was also of the view that the  measure was in violation of the WTO rules. The
EU's concern that the European market would be flooded by steel exports diverted from the United
States market had not been vindicated.  Import restrictions imposed by a major trading partner, suchas the EU, might mislead others into taking th eir own actions, resulting in a proliferation of
protectionism across nations. Certain countries had already followed suit by taking similar measures.
The spread of such import restrictive measures would negatively affect the ongoing DDA
negotiations, and the multilateral efforts to reduce global excess production capacity of steel. Burden
sharing, not burden shifting, should be the solutio n to the global steel problem. Korea hoped that the
EU would demonstrate its firm commitment to th e global trading system by setting a good example,
and withdrawing its provisional safeguard measure on steel as soon as possible.
58. Anti-dumping was another area of concern.  A rapid increase in the number of anti-dumping
measures had  taken place  around the world. An ti-dumping measures were increasingly being
misused to protect domestic industry, instead of providing relief from unfair trade practices abroad.Korea had been the third most frequent target of the EU's anti-dumping measures in 2001. These
measures were currently imposed by the EU on 11 export items from Korea, including colour TVs,
magnetic disks, and some steel products.  Alt hough some 40% of anti-dumping investigations were
terminated without measures being taken, in many cases, the announcement of an investigation
inflicted irreparable damage to the industries concerned.  In addition, the current anti-dumping rulescontained loopholes that allowed investigating authorities to unjustifiably establish a dumping case or
arbitrarily increase dumping margins.
59. Korea regretted that the EU had just initiated a countervailing investigation against Korean
chipmakers. Considering the negative impact on trade of anti-dumping and countervailing actions,
Korea hoped that the EU would be cautious in enforcing its trade-remedy regulations.WT/TPR/M/102
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60. Shipbuilding subsidies was also of concern.  The Council of the EU had decided on 27 June
2002 to resume subsidies to the shipbuilding industry of up to 6% of contract value until March 2004,if the bilateral negotiations with Korea proved unsuccessful by the end of September 2002. This
decision could prejudice the bilateral negotiations. Such a scheme was also in contradiction with the
EU's commitment to the rule-based multilateral trading system.  The subsidy scheme would distort the
conditions for competition, as it would be provided to a specific industry and companies.
Furthermore, providing subsidies to one industry gave the wrong signal to other ailing industries,which would likewise demand relief from foreign competition.  Korea requested the EU to reconsider
its plans to resume shipbuilding subsidies.
61. As pointed out in the Secretariat Report, the EU had adopted various technical regulations for
the purposes of health, safety, and environmental preservation. Although their purpose was
understandable in principle, certain regulations were a substantial burden on international trade. Koreawas concerned that non-EU companies were given very limited opportunities to voice their opinions
during the process of setting these regulations.  Besides, a substantial portion of the EU's technical
regulations were formulated on the basis of the precautionary principle, giving rise to controversy
over their scientific justification.  Korea hoped th at the EU would ensure that such regulations did not
function as trade barriers, and that every interested entity be given an adequate opportunity, to conveytheir legitimate concerns in advance of implementation.
62. The representative of Canada recalled the extensive historical, political, cultural and
economic ties between Canada and the EU.  The EU remained Canada’s second largest bilateral trade
and investment partner with bilateral interests covering a full spectrum of areas, from natural
resources to high-technology, from cultural exchange s to financial services.  Changes to EU policies
thus impacted Canada’s interests in many ways.
63. Canada acknowledged the leadership role of the EU at Doha, and particularly of Trade
Commissioner Lamy in achieving a successful launch. Reviewing the EU’s trade policies was
particularly challenging given the complexity of its inter-institutional relationships, and the evolving
nature of its rules and decision-making processes. The expanding breadth and depth of the EU was
demonstrated by the development of a common foreign and security policy, and initiatives in justice
and home affairs.
64. EU's enlargement would be positive both for the existing Member States and the new
members, but would also have implications within the WTO, with up to 17% of Members speaking
with a single voice and applying one set of trade policies.  While most of the work being done
between the EU and the applicant countries related to  internal matters, there would be both positive
and negative implications for other WTO Members. Consequently, EU's enlargement increased theimportance of the Trade Policy Reviews, which provided the opportunity to comment on the trade and
economic regime of such a significant  participant in the multilateral trading system.
65. Canada had raised a number of concerns at th e last Review of the EU in mid-2000, and was
pleased that several had been addressed.  Certain issues were still outstanding, however, and new
issues had arisen. As a major exporter and developer of innovative agricultural products, Canada wasconcerned that its exports to the EU had declined over the last few years.  One reason was the EU's
recent trend towards regulations that were an  impediment to Canada's exports. Canada was
particularly concerned because these regulations were often introduced  under the guise of food safety
and SPS concerns, but were taken without a sound scientific basis and a due regard for international
standards. One example was the EU's management of agricultural biotechnology:  the approvalprocess had been stalled for four years, although there was no evidence to suggest that foods obtained
through biotechnology, which had been approved under an internationally recognized approach, suchWT/TPR/M/102
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as those developed by the OECD and FAO/WHO,  were any less safe than their conventional
counterparts.
66. Canada welcomed the recent proposals for reform in the Mid-Term Review  of the CAP.
These appeared to be a positive step towards reducing trade-distorting supports.  Canada was however
disappointed that the EU had not seized this opportun ity to reform other agricultural sectors, such as
the sugar regime, but had instead adopted extensions.  The simple average tariff on agricultural
products was four times higher than on non-agricultural products. Furthermore, above average tariffsapplied to products subject to the CAP, and there was also evidence of tariff escalation on processed
products. Canada called upon the EU to reduce its use of the special safeguard mechanism under the
WTO Agreement on Agriculture.
67. Although the EU market remained largely open for non-agricultural products, high tariffs
applied to various fish and seafood products, including groundfish and cooked and peeled northernshrimp.  While Canada was encouraged by progress to date in establishing an autonomous tariff-rate
quota for shrimp, this quota remained subject to restrictive end-use requirements.  Canada trusted that
the EU would ultimately reduce the tariff on cooked and peeled shrimp, thereby rendering such a
quota unnecessary.
68. Canada was pleased that a temporary derogation for its ice wine on the EU market had been
obtained since the last Review.  The EU and Canada were currently negotiating a broader wine and
spirits agreement, and Canada hoped  a mutually acceptable solution would be found.
69. As border restrictions had come down, internal regulations had increasingly become the
source of impediments to trade, and certain tr ading partners of the EU were concerned with
preserving the viability of the international standard-setting process. The Commission continued to
put in place environmental directives that did not appear to be founded on scientifically sound risk
assessments, but appeared to be more a response to consumer pressure. These directives had thepotential to significantly hamper Canadian trade.
70. Canada encouraged the EU to ensure that the multilateral processes used for consultations on
proposed regulations were effective. It had sought to better understand the Community’s regulatory
process, and was working on various initiatives to increase the dialogue to avoid or minimize the
adverse effects of regulation on trade.
71. The Commission’s White Paper on Governance recognized that the regulatory practices of the
EU were increasingly complex and opaque. Canada's comments on the White Paper, encouraging
greater transparency and consultation with civil society, including advance consultation with affected
third parties, demonstrated Canada’s interest in greater transparency, and a more systematic approach
to rules-making. Canada had also encouraged the EU to increase use of scientific and technicalexperts.
72. Canada encouraged the EU to assess thoroughly the feasibility and impacts of a proposed
privacy directive that would require providers of public telecommunications services and networks to
guarantee the security of their networks to ensure the confidentiality of communication and traffic
data.
73. Canada was pleased that Member States had pledged to reduce levels of state aid by 2003. In
particular, it was encouraged by the proposed elimination of subsidies that contributed to fishing
overcapacity, part of the EC's recent announcement regarding the reform of the Common Fisheries
Policy (CFP).  Canada was concerned, however, with continuing significant levels of support to bothWT/TPR/M/102
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the shipbuilding and coal mining industries, and encouraged Member States to reduce financial
assistance in these sectors.
74. Worlds events had raised new implications for trade, and questions concerning migration had
been very topical in Europe. The recent European Council in Seville had concluded that expanding
trade ties with source countries of illegal migration was one means of reducing underlying causes of
migration flows. Canada, as a nation with a long history of welcoming immigration, was interested in
learning more about the EU's plans on how to integrate its migration policies into its relations withthird countries, and what specific effects this  integration would have on trade policy.
75. The consequences of terrorism were affecting many aspects of daily life.  Among the issues
for Governments to deal with was the balance between security and the smooth flow of trade.  Some
initiatives, such as improving container security, should help achieve both goals. Canada understood
that the EU was considering the inclusion of anti-t errorism clauses in its cooperation or association
agreements with third countries.  Canada asked about the EU’s assessment of the impact of these
clauses on its trade relationships with third countries.
76. The representative of Switzerland noted that the EU and Switzerland had many similarities
with respect to their agriculture, industry, and service sectors.  WTO ties had therefore been
complemented and enriched by a network of preferential agreements, whose objective was to gobeyond the liberalization and cooperation that linked the Members of the WTO.  Seven bilateral
agreements extending the scope of free trade between Switzerland and the EU had entered into force
on 1 June 2002.  Issues currently under negotiation included services and processed agricultural
products.
77. Switzerland and the EU had a largely shared vision of several key elements of the DDA due
to the affinities of their economic structures, the intensity of their  integration, and the experience they
shared in developing and extending cooperation.  This was the case for agriculture, where aprogressive, realistic, and wide-ranging approach was needed.  It also applied to the importance of
integrating developing countries into the multilateral trading system and, in a longer-term perspective,
to making room for both environmental and other "Singapore" issues.  Switzerland was following
closely the development of the EU's action, which it largely supported.
78. Switzerland, like the EU, had been adversely affected by the safeguard measure taken
recently by the United States on a number of steel products.  Switzerland welcomed the excellent
cooperation between the co-complainants, in part icular with the EU, in the dispute settlement
proceeding that had been initiated.  However, the EU had subsequently taken a provisional safeguard
measure on certain steel products to prevent a divers ion of trade flows in its market.  Although this
was understandable, Switzerland was concerned by its effects and by a possible imposition ofdefinitive safeguard measures in the autumn.  On the issue of textiles and clothing products
(mentioned in the Secretariat Report), Switzerland was aware of the sensitive nature of trade flows in
these products.  Nevertheless, the EU had removed restrictions  on only 20% of the products in
question, which posed a major and relatively short-term challenge for the Commission.  The
representative was however encouraged by the importance attached in the statement of theCommission's delegation to the development dimension of its WTO activities.
79. With regard to fisheries, Switzerland had noted Commission estimates that the substantial
excess capacity of the fishing fleet was one of the causes of the resource depletion.  Given the
importance of environmental issues in the Community, a concern shared by his country, Switzerland
firmly hoped that the EU would continue its resour ce conservation efforts in a consistent and coherent
manner.WT/TPR/M/102
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80. The representative of Guatemala noted that experience had shown that opening markets to
exports was a more powerful tool for development than technical assistance and capacity-building.
The opening up of the EU's market was of utmost importance in Guatemala's economic growth
projections.  Comparison of any indicators illustrated the enormous size difference between
Guatemala and the EU:  even without indirect subsidies, the EU's agricultural subsidies in one year
were equivalent to total government expenditure in Guatemala for 20 years. However, Guatemala
believed that free trade based on comparative advantage could be beneficial to all Members, and, in amarket-oriented system, Guatemala was in a position to compete with the EU on certain products.
81. Regarding textiles and clothing, the Secretariat Report (paragraph 23) stated that the general
principle of the EU's regime for imports was libe ralization of imports, namely the absence of any
quantitative restrictions. Guatemala asked what positive action the EU was taking to make its rules of
origin and its non-tariff barriers for textiles and clothing more flexible.
82. On measures directly affecting production and trade, the Report stated that grants were the
leading form of state aid to manufacturing (61%), followed by tax exemptions (22%).  Guatemala
asked for details concerning these grants and tax exemptions. In addition, paragraph 119 of the same
section of the Report stated that trade-distorting subsidies had continued to be contentious issues in
relations between the EU and its trading partners; this seemed to be an anachronism seen against thebackground of paragraph 13 of the Doha Ministerial Declaration.
83. Sugar was of the utmost importance to Guatemala.  The EU's self-sufficiency in sugar was the
result of subsidies, domestic support, and trade barriers. In the Secretariat Report (paragraph 32) it is
noted that, "despite a situation of structural overproduction, the Commission has repeatedly limited
itself to proposing the continuation of the existing sugar regime, while maintaining the level of quotas
and prices unchanged".  Given this bleak picture, Guatemala asked whether the EU was thinking of
reforming the sugar sector in the near future.
84. Guatemala, like other members of the Cairns group, considered that GSP preferences were
temporary, revocable, erodable instruments, whose impact was much weaker than a thorough reform
of agricultural trade.  Guatemala invited its tradin g partners to address, in the TRIPS Council, issues
relating to intellectual property, stressed that labelling regulations were outside the scope of the
agricultural negotiations, and urged the EU not to use unilateral criteria relating to the environment,food safety, and other non-trade concerns as restrictions to trade.
85. In 2001, Guatemala had been shocked to discover that the EU was preparing to reduce its
levels of tolerance of ocratoxin A, which developed in coffee beans.  Contacts with highly reliable
European scientific sources had revealed a greate r concentration of ocratoxin A in European wines
than in Guatemalan coffee.  And yet, invoking the precautionary principle, the EU had placedGuatemala's coffee exports at risk, and a potential threat remained to this day. Guatemala's trade
depended on a few products destined for a handful of markets, and its vulnerability was therefore
greater when the precautionary principle was used against its exports. On a positive note, Guatemala
had high expectations of mutual benefit from trade in services, in a context of progressive
liberalization, and recognition of its own independent efforts at liberalization.
86. The representative of Japan noted that the EU had been pursuing integration through
deepening and enlargement, and viewed with interest  the role that a further integrated EU might play
in the world, especially in international trade. Japan expected that the EU would create, based on
multilateralism, an open, non-exclusive, and transparent economic space.  Furthermore, Japan
expected that the rights and benefits currently enjoyed by companies and other economic entities ofthird countries, including Japan, in EU Member States and in the candidate countries in central andWT/TPR/M/102
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eastern Europe, would not be hampered in the process of enlargement. Such rights should be properly
protected or even promoted.
87. Japan welcomed the successful introduction of the euro as it would provide better business
opportunities not only for the countries that had adopted the euro, but also for third countries,
including Japan.  Japan hoped that the EU would continue to work at the harmonization of taxation,
and a more flexible labour market, so that the euro area would become more attractive.
88. Japan appreciated the on-going structural reforms under the Lisbon strategy. The EU's goals
were in line with those pursued by the international community, and cooperation, bilaterally and
multilaterally, could contribute to achieving common goals.  The EU's structural reforms should
promote the smooth inflow of capital and persons from countries outside the EU, and contribute to the
expansion of international trade. A more open and transparent business environment for non-EU
companies interested in the EU market w ould be beneficial to the EU as well.
89. Japan was ready to reinforce the regulatory reform dialogue with the EU.  In this dialogue,
Japan had raised a number of requests regarding the EU's various regulatory schemes, including in
environment and labour.  Japan believed that its concerns were shared by other non-EU countries.
Japan hoped that the EU, and its Member States, would intensify the dialogue with non-EU
governments, and foreign companies with business in Europe.
90. With regard to the DDA, Japan shared the EU's view that it was balanced, and met the
different interests of Members. Japan also agreed with the EU that a strong political will and
satisfactory progress made before the Fifth Ministerial Conference would make it  possible to
complete the negotiations in time.
91. Japan valued the EU's commitment on development aspects in the DDA, especially to the
steady implementation of measures in trade-related technical assistance and capacity-building. As the
EU and its Member States had pledged more than 60% of the total amount for the global trust fund,Japan expected the EU to remain active in the coor dinated efforts to finalize the technical cooperation
programme for 2003.
92. Concerning the "Singapore Issues", while enhancing technical assistance and capacity-
building, Members should spare no efforts for launching negotiations on new issues at the Fifth
Ministerial Conference. Japan hoped that the EU would continue to take a leading role in this area.
93. For a successful conclusion of the negotiations, Japan considered it essential for Members,
including the EU, to observe the WTO rules such as those on anti-dumping and safeguards.  Japan
was concerned that, in some cases, anti-dumping measures had been taken arbitrarily by the EU.
Japan and the EU, along with other WTO Members, had worked closely to deal with the United States
safeguard measure on steel.  However, Japan was also concerned with the provisional safeguardmeasure imposed by the EU, and the possible spread of  such safeguard measures for trade diversion
reasons. Japan reiterated its request to the EU not to take definitive safeguard measures on certain
steel products currently under investigation.
94. Japan appreciated the EU's efforts, through th e Mid-Term Review of the CAP, to secure a
more market-oriented and efficient agriculture, and  also to strengthen its multifunctionality in areassuch as environment and rural development.  Japa n asked the EU for clarification concerning the
prospects for the reform plan under discussion. Japan hoped that in the ongoing agriculture
negotiations the EU would contribute to the creation of new trade rules that reflected non-trade
concerns of Members and thus allow a smooth process of agricultural reform.WT/TPR/M/102
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95. Reiterating its commitment to the multilateral trading system, Japan noted its interest in
seeking further economic and trade liberalization with the EU in areas beyond the WTO framework.The two parties were making efforts to implemen t the Action Plan for EU-Japan cooperation, agreed
upon in December 2001;  there were already some concrete results. Japan hoped to continue its
constructive cooperation with the EU for promoting further economic and trade liberalization.
96. The representative of Chinese Taipei praised the remarkable achievements of the EU in the
enlargement process and in the introduction of the euro.  The inception of the common market almost
coincided with that of the GATT, but the performance of the EU in economic intergration had been
much more striking.    The enlargement process had not only brought greater international
competitiveness among its Member States, but had also set an example for  the WTO, demonstrating
that closer economic integration would benefit all Members.
97. With regard to the euro, Chinese Taipei was of the view that the integration of European
currencies would be a major historical landmark, and would not only provide a major boost to
competition and price transparency among the EU Member States, but would also gradually become a
more important vehicle for financing, investing, pricing, and trading in the world.
98. His delegation appreciated the commitment of the EU to a successful conclusion of an
ambitious negotiating round within a three-year ti meframe, and acknowledged the EU's leading role
in the WTO.
99. Chinese Taipei was concerned that the EU's new chemical policy, known as REACH, which
stood for the registration, evaluation, and authorization of chemicals, appeared to be a costly,
burdensome, and complex regulatory system that could prove unworkable in practice. The new policy
could also represent an obstacle to trade in chemicals, possibly distorting global markets for thousands
of products. Chinese Taipei fully supported the EU's objective of protecting human health and the
environment. However, before implementation, any policy that might affect global trade should beaddressed and fully discussed in an appropriate international forum, such as the WTO.
100. A second issue of concern was the EU directive, adopted in February 2002, which had
suspended for safety reasons the introduction and import into the EU market of jelly confectionery
containing the food additive E 425 konjac.  This additive had been marketed for human consumption
in Asia for decades, and was scientifically proven to be a healthy food product.  His delegation askedabout the reasons for considering konjac a life-threatening food product.
101. Chinese Taipei was disappointed that the "bilater al and regional trade relations" section of the
EU's statement did not include a reference to Chinese Taipei, which ranked as the EU's eleventh
largest bilateral trade partner in 2000.  His delegation hoped a space could be found for Chinese
Taipei at  the next Trade Policy Review of the EU, thus  reflecting the full picture, and sharpening the
focus for bilateral economic cooperation between the EU and Chinese Taipei.
102. The representative of Australia recalled his country's comprehensive and dynamic trade and
investment relationship with the EU. The EU was Aust ralia's largest trading partner, when viewed as a
single entity, and his country thus had an important stake in the EU's economic well-being and trade
policy practices, which could also have a very direct and substantial impact on Australian interests.
103. Australia welcomed the EU's progress on its ambitious programme of structural reform and
economic integration,  symbolized by the successful introduction of the euro in 2002, and encouraged
it to continue along this path. Like in Australia, sustainable development remained a key plank of the
trade and economic policies of the EU.WT/TPR/M/102
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104. The EU's strong economic credentials and the liberalizing intent of many of its economic and
trade policies had been a feature of its participatio n in the international trading system for the last 50
years.  However, like other Members, the EU now had to deal with an increasingly complicated web
of issues.  This had placed new burdens and strains on all Members in communicating effectively with
constituent groups, and elicited the interest of a vast array of interests from a range of
non-government backgrounds.  Many of the new issues were outside the traditional parameters of the
GATT and the WTO, such as environment, public health, safety issues, and animal rights.
105. Members had responded differently to questions of whether work on these issues should be
related to the work of the WTO. Australia was concerned that attempts to progress these issues in the
new negotiations, other than in the terms set out clearly in the Doha mandate, would detract from the
ability to deliver outcomes in a focused manner on the key objective of improved economic and living
standards for all Members. Australia remained convinced that the main development dividend to beextracted from the WTO negotiations would result from improved and expanded market access.
106. The day before the Review had been the annive rsary of the conception of the EU in the form
of the European Coal and Steel Community (ECSC), which had formally entered into force on 23 July
1952, and had expired on 23 July 2002.  An editorial in the Wall Street Journal had eulogized the
expiry of the 1952 Treaty of Paris, and stated that  even though the world had largely passed the ECSC
by, the issues that prompted its creation remained.  It commented on the current tensions in world
steel trade, and commended the EU's decision to st ep back from the brink of retaliatory sanctions
against the United States. It observed that the decision showed a willingness to consider the
long-term, rather than just the short-term in trade matters, and lamented the EU's caution extending
the principles on agriculture that the EU benefited from internally to those outside its borders. The
editorial said that, unfortunately, the CAP had no expiration date but hoped it would not be in place
for too long.  Australia however acknowledged the encouraging suggestions advanced in recent weeksby the Commission to reform certain aspects of the CAP.
107. Many countries, including Australia, had hoped that the Uruguay Round might have signalled
a turning point in the agricultural trade supp ort policies in force for the past 40-50 years.
Unfortunately, when Members eliminated  the variable levy, placed a ceiling on export restitutions,
and made a tentative start on reducing domestic support levels, the distortions that had characterizedinternational agricultural trade had not disappeared. One statistic epitomized this situation: since the
end of the Uruguay Round, the annual level of EU imports of food from all sources had actually
fallen. While it might have been assumed that market access commitments, the substantial growth in
the economies of the EU,  the more recent market opening measures, and the relative difference in
world commodity prices and EU support prices woul d lead to a substantial overall increase in imports
of food into the EU over the last decade, this had not occurred.
108. The widespread use by the EU of specific, as opposed to ad valorem , tariffs had led to rising
rather than falling effective protection levels for many products of particular interest to developing
countries.  Some preliminary calculations showed th at it would take a 30% reduction in these rates to
simply return to the pre-Uruguay Round  levels of protection. The large majority of participants in theDoha negotiations would be looking to this round to achieve the long expected substantial reform of
agricultural trade.  A large majority of participants in the Doha negotiations would be looking to this
round to achieve substantial reform of agricultural trade. While it was too early to predict what might
come out of the negotiations, it was clear that th ere would be no outcome to the Doha Round unless
Members eliminated export subsidies, substantially increased market access, and reduced domesticsupport levels.
109. There were reasons to hope that the EU had begun by moving, albeit very tentatively, in the
right direction.  The recent Mid-Term Review  proposals however only dealt with one of the threeWT/TPR/M/102
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pillars currently being negotiated in the WTO. The EU had regrettably failed, so far, to indicate what
it might do on export subsidies, or its position on market access.  Moreover, under the recentproposals, overall domestic support to farmers would be reduced only marginally from prevailing
levels.
110. Of equal concern were indications that what the EU might give on one hand would be taken
away with the other.  There were suggestions that any market access improvements would be
conditional on the EU's right to impose mandatory consumer and eco-labelling requirements based onproduction and process methods. It was one thing to impose labelling regulations based on science-
based risk assessment about food safety. It was quite another to insist on mandatory labelling
requirements based on non-scientific preferences about how a product had been made, how much the
worker had been paid, how the animal had been raised, and whether the supplying country had met
international standards of human rights.  The EU was also advancing the notion that market accesswould be based on intellectual property rights, whic h they would unilaterally determine as owned by
EC producers.
111. These issues raised important questions of principles about trade policy.  Australia wondered
whether it was fair and reasonable, for example, for one country, or group of countries, to impose its
philosophical preferences on animal welfare through trade restrictions authorized under the WTO.Would it be fair and reasonable for one country to impose restrictions on another, under the guise of
animal welfare, that would otherwise have a commercial advantage.  Australia asked where the limits
lay with this sort of approach.
112. Australia recognized the EU's real and legitimate public policy concerns on food safety and
environmental issues but would be seriously concerned if the EU's regulatory responses to such
problems introduced new complexities or trade restrictions into the WTO. While Australia placed the
highest priority on food safety and environmental protection, it remained convinced that relateddecisions had to remain firmly based on science and be least trade restrictive. Anything less would
undermine existing WTO rules, which had amply proved their effectiveness.
113. Australia was concerned with a growing tre nd in the EU to impose its own rules and
regulations on other Members, often in ways that raised real questions of WTO consistency. It viewed
European intentions cautiously in areas such as geographical indications, especially when Memberswere forced to contend at short notice with overly burdensome technical standards, such as wine
regulations recently notified by the EU. Australia had serious concerns about the systemic WTO
implications of the adoption of regulations seeking to protect domestic producers from competition
through labelling requirements and unilateral declarations about intellectual property.
114. While Australia welcomed the ongoing agricultural policy reform in the EU, the 1992 and
Agenda 2000 reforms were only incremental steps towards a genuinely competitive, market-driven,
agriculture sector capable of withstanding the pressures of EU enlargement and further liberalization,
through the Doha Round negotiations. Australia hoped that the Commission's recent proposals for the
Mid-Term Review of the CAP represented an acceleration of the process of market-oriented reform.
That would be the most effective response to the EU's domestic social, environmental, and consumerconcerns, and should provide the basis for the EU to address its trading partners' longstanding
concerns in agriculture. There were many potential stumbling blocks, and Australia was interested to
watch the debate unfold, given its central importance to the work in Geneva.
115. The EU had further extended its network of preferential and regional trade arrangements since
its last Review. Given the volume of trade covered by its current and prospective arrangements,Australia was concerned about the potential for trade diversion and trade distortion, which could
damage third countries and undermine the WTO system.  Australia was pleased that the EU hadWT/TPR/M/102
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decided to support the idea of tightening WTO disciplines on RTAs, including the need for FTAs to
genuinely cover substantially all trade.
116. Notwithstanding the differences that had been identified, Australia and the EU had a mutual
interest in a strong, effective multilateral trading system, and in many areas of common approach
across the negotiating agenda including services, industrial products, the effectiveness of the dispute
settlement system, and the underlying importance of development issues to the Doha process. Their
mutual interests in an effective WTO could best be advanced by the conclusion of the newnegotiations within the timeframes and mandate agreed by Ministers at Doha. Australia looked
forward to cooperating, and working closely with the EU, while addressing differences in a
constructive and pragmatic manner.
117. The representative of New Zealand noted the EU's constructive role in the WTO. As
highlighted in the Secretariat Report, the EU had been at the forefront of building a coalition in favour
of the launch of the DDA , and an active participant in the regular work of the WTO. New Zealand,
like the EU, recognized the central importance of development issues  in the Doha Round, and
congratulated the EU for its efforts to address de veloping countries' concerns within existing WTO
rules. The EU had made valuable contributions, including through the provision of technical
assistance, its EBA initiative, and on the issue of access to medicines. He encouraged the EU tocontinue these efforts, and help developing countries to integrate into the multilateral trading system.
The EU's efforts were a positive reminder of the recurring message from developing countries that the
key to unlocking the development potential of trade was to improve market access, particularly for
agricultural products, textiles, and clothing.
118. New Zealand welcomed the ongoing programme of reform under the Lisbon Strategy for
economic and social renewal and the comparatively open nature of the EU market for non-agricultural
products.  New Zeland also welcomed the EU's progress since its last Review in liberalizing some ofits services sectors, and its continuing efforts to do so, including its Financial Services Action Plan.
119. New Zealand was disappointed by the continuing high level of subsidies and protection in the
EU's agriculture  sector. The Secretariat Report had noted the stark disparity between the simple
average tariff on non-agricultural products (4.1%), and on agricultural products (16.1%).
Trade-distorting support to farmers in the EU remained unacceptably high: among the highest in theworld, even when the size of the population was taken into account. The EU's reliance on export
subsidies to gain some relief from domestic surplu ses had also contributed to the weakening of world
agricultural markets.
120. New Zeland welcomed the EU's recognition of the need for further liberalization in
agriculture for sustained economic growth. The di rection of CAP reform since 1992 showed that
Europe was moving towards a system in which domestic policy goals could be met without
undermining international trade.  New Zealand was encouraged by the emphasis in the recent Mid-
Term Review proposals on decoupling support from production, towards less trade-distorting
interventions.  New Zealand was keen to see further reform in key areas, such as the dairy sector
where the Secretariat had noted that EU interventions continued to significantly disrupt unsubsidizedtrade.  It was equally important to focus on reform of market access and export subsidies, as
improvements in these areas would benefit Members, especially developing countries.  He
encouraged the EU to use the Mid-Term Review  and enlargement as vehicles for addressing these
issues.
121. New Zealand welcomed the EU's constructive role in the WTO agriculture negotiations.  New
Zealand could not however support the description in the Commission report of the intentions of the
Doha Declaration with respect to aiming at a balance between trade and non-trade concerns, whichWT/TPR/M/102
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reflected important societal goals.  The Doha mandate talked only of taking non-trade concerns into
account in the negotiations as provided for in the WTO Agreement on Agriculture.  New Zealand wasnot suggesting that the societal goals of the EU were not valid, but the agriculture negotiations could
only address relevant non-trade concerns.  It was not legitimate to address "technical" or "quality"
issues such as standards, labelling, or intellec tual property, which were not covered in the WTO
Agreement on Agriculture, had no WTO Ministerial mandate for discussion, or might be subject to
discussion elsewhere in the WTO.
122. New Zealand also welcomed the Commission's efforts to reform the CFP. The Secretariat
noted that the EU had accepted that excess capacity was one of the causes of fisheries resource
depletion.  He encouraged Member States to take account of the environmental impact of this policy
in taking decisions on the future of the CFP, and en couraged the EU to consider joining the initiative
on fish subsidies of New Zealand and the Friends of Fish in the Negotiating Group on Rules, as adirect contribution to sustainable development.
123. The Secretariat Report commented on the potential confusion between food safety  and
consumer information issues. He noted that the EU had proposed product tracing (traceability)
requirements for many foods, feedstuffs, and food-producing animals.  New Zealand welcomed the
EU's focus on underpinning food safety policy with scientific evidence, and encouraged it to ensure
that measures to ensure full product tracing would only be used where their necessity to achieve the
EU's appropriate level of protection had been scientifically demonstrated, and would be no more trade
restrictive than necessary.
124. His country shared many of the EU's objectives on intellectual property rights protection,
particularly in relation to finding an effective resolution to the outstanding TRIPS/public health issues
by the end of 2002. New Zealand did not however  support the EU’s ambitions in the area of
geographical indications.  His country's current experience with extended protection for geographicalindications of wines and spirits had not delivered claimed benefits. The policy approach that the EU
seemed to be promoting in this area could lead to  significant regulatory barriers.
125. A practical example of these concerns was the  Commission’s new wine labelling regulation
(753/2002), which indicated disquieting directions in the EU's policies with  respect to its TRIPS and
TBT obligations.  New Zealand expected the EU's policies on protection of intellectual property andits labelling requirements to be consistent with its WTO obligations, but this was not evidently the
case of the new wine labelling regulation.  It  seemed to conflict with the TBT Agreement's emphasis
on ensuring that technical regulations and standards met legitimate objectives, and did not create
unnecessary obstacles to international trade.  He urged a reconsideration of the regulation, taking into
account the views raised by New Zealand and other Members in the recent TBT Committee session,which would be detailed in written submissions before 9 August 2002.
126. New Zealand was pleased to note that the EU had recognized, on a bilateral basis, the
equivalence of measures in a number of other sectors of interest, including in the bilateral Mutual
Recognition and Veterinary Agreements, and with respect to New Zealand's official organic assurance
programme.
127. He welcomed the EU's continued support for the multilateral trading system, and encouraged
it to maintain its active role in the DDA.
128. The representative of the United States noted the developments in global trade of essential
interest to governments on both sides of the Atlantic  since the last Review of the EU in mid 2000 and
since the last Review  of the United States in September 2001.  Most notable was the agreement onWT/TPR/M/102
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the DDA, which had been facilitated by fairly extensive cooperation between the EU and the United
States.
129. The United States and the EU shared the largest and most complex two-way trade and
investment relationship in the world, and their interactions on economic issues reflected both the
overwhelmingly positive, and occasionally difficult, aspects of their relationship. Both undeniably
shared a fundamental interest in the growth and continued robust health of the rules-based trading
system.  As the previous week’s welcome prog ress on Doha-related matters had shown, both were
prepared to work hard to advance the trade agenda. Such a commitment to the trading system
demanded, however, an equal commitment to open trade policies at home, and it was in this spirit that
the United States approached trade policy reviews:  as serious, yet, constructive dialogues.
130. Two areas of the Secretariat Report needed more nuance. On steel, the United States would
appreciate the Secretariat making clear in the relevant sections of the Report that it was the EU’sstated position that it had decided to impose a provisional safeguard measure on 15 steel products on
27 March 2002 in response to the U.S. safeguard action, and that it was also the EU’s stated position
that the "rebalancing" measures proposed by the Commission were justified because the two parties
could not agree on compensation in the case of the United States’ Article XIX measure.  In a similar
vein, the United States requested the Secretariat to clarify that it was the EU’s contention that annualexport subsidy benefits under the U.S. FSC rules equaled US$4.04 billion. The United States had
claimed before the arbitration panel that the EU should be entitled to no more than US$1.1 billion
annually in countermeasures in this case.
131. The United States took a great interest in the evolution of the CAP, and was closely following
the discussion in the Community on the Commission’s recent Mid-Term Review. The advance
questions the United States had submitted were not exhaustive, and it looked forward to continued
discussion as this process, so central to the eventual success of the Doha Agenda, progressed in thecoming months.
132. Given the steady decline in traditional trade measures as impediments to international
commerce, certainly among developed countries, th e role of regulatory issues in the shaping of
economic relations between countries loomed larger.  This was particularly the case of the EU, which
through its sheer size could have a profound regulatory influence on world trade. U.S. concerns withthe EU's policies in this sphere, which had been expressed in previous discussions in the TPRB,
remained.  Specifically, she echoed the Secretariat’s identification in its report that EU rule-making
processes were often perceived by third countries as exclusionary, allowing no meaningful
opportunity for non-EU parties to influence the outcome of its regulatory decisions.
133. The United States welcomed the current internal debate within the EU on governance, and the
need for transparency in rule-making.  However, she called again on the EU to ensure that Members
and affected exporters had a meaningful opportunity to comment on regulatory proposals, and that
those comments were considered before a final internal position on technical regulations was reached.
134. Concerns with EU regulatory approaches had come up in several other areas.  Unfortunately,
there had been little progress since the EU’s last Trade Policy Review on  agricultural biotechnology,where the EU continued to ignore its international obligations, refusing to make final decisions on
approvals of agricultural biotechnology products, even where no health risks had been identified
through scientific review. The situation was becoming even more discouraging as the EU appeared
bent on instituting a mandatory labeling and traceability scheme for biotechnology products that the
United States believed would be prone to fraud and basically inoperable, posing a new barrier to thedevelopment of this promising technology.WT/TPR/M/102
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135. Another worry involved the EU’s newly promul gated regulations on wine labelling.  Again,
the EU appeared to have finalized regulations before third countries could indicate their concerns.  Asthe United States and other Members had a number of concerns with these regulations, this was most
disturbing.
136. It was a sign of hope that the expansion of the EU to include new Members to the East and
South appeared to be gathering momentum.  The United States remained steadfast in its support of a
more integrated Europe and stronger ties between  the EU and its neighbors.  An enlarged Union
would be a net economic gain for American companies. However, the United States remained
watchful to ensure that the EU's interim arrangements with its prospective members did not, on
balance, divert third-country trade and investment.
137. The United States remained interested in the preferential trade arrangements the EU had
concluded or was seeking to conclude, with other regions of the world, for example in Latin America.
The United States hoped these arrangements would be on balance trade creating, and asked the EU to
provide updated information on the scope and related timetables for implementation of its agreements.
138. The United States was disappointed that, once again, her country was compelled to note the
EU's failure to submit a consolidated services schedule for the 1995 expansion of the Union.  She
asked  for the Commission’s latest estimate of when that information would be made available.
139. In the area of intellectual property protection, the United States and the EU had many of the
same objectives in the WTO as well as in individual third-country markets.  However, the
United States was again submitting several questions on the operation of the regime for regulating
geographical indications on the EU market. It was concerned that foreign persons wishing to obtain
protection for their geographical indications faced a non-transparent process that appeared to conflict
with the EU's TRIPS obligations.
140. The United States appreciated this chance for constructive dialogue with the EU, and with
other Members of the TPRB.  To the extent Members could keep each other informed of
developments in their thinking on trade-related issues, they could with some patience reinforce the
impetus for further liberalization of the global trading system, a goal of potentially great benefit for
all.
141. The representative of Norway recalled his country's close political and economic ties with the
rest of Europe. Although not a member of the EU, No rway was part of the internal market through the
European Economic Area (EEA), which included th e development of common legislation in a number
of fields. The Commission’s policy statement had rightfully referred to the comprehensive
harmonization of legislation and market conditions brought about by the EEA under "developments in
the internal market".
142. The EU was Norway’s most important tradin g partner; over three quarters of Norway's
exports went to the EU, and over two thirds of its imports were from the EU. Norway, therefore, had a
strong interest in the Union's economic developm ents; maintaining a positiv e environment for growth
was important.  Norway had followed the development of the euro with great interest, and was
pleased to see that the common currency seemed to  be stabilizing at a predicted level, after some
initial turbulence.
143. The reports submitted for the meeting indicated that, while the EU had actively pursued its
internal economic integration, there had been few changes in its trade policy since the last Review.
The enlargement of the EU to include a substantial number of new members would undoubtedly
create new challenges.  Norway trusted that the DDA would provide a useful incentive to make theWT/TPR/M/102
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needed changes to  trade policy necessitated by new members in the EU.  In this regard, Norway
praised the leadership role of the EU in the launch of the DDA.
144. Norway noted from the Commission’s policy statement that multilateral rules were high on
the EU's list of priorities and considerable effort was also going into the negotiation of bilateral
agreements. Norway also actively pursued a policy of negotiating bilateral agreements, and saw such
agreements as a tool for promoting further liberal ization.  However, Norway's firm opinion was that
there should be no doubt about the primacy of the multilateral trading system and its objective of tradeliberalization on a MFN basis. The Secretariat Report noted that only nine Members had solely MFN
treatment applied to their exports to the EU, while all others enjoyed preferential treatment in one
form or another. Norway asked the EU for it s view on how to secure a mutually supportive
relationship between the growing number of RTAs and the multilateral trading system.
145. Norway had fully integrated textiles into th e GATT in 2000, well ahead of the final deadline,
and its experience with a planned and structured integration had been good. Norway encouraged a
gradual liberalization of the textiles market to give national and foreign producers incentives to adapt
to a future where quota protection no longer existed. In accordance with the Agreement, the EU had
integrated 18.08% of 1990 imports during the period under review, but the liberalization of 80% of
restricted imports remained ahead for the final two-year period.  This was an important issue fordeveloping countries and therefore for the progress in other areas of the ongoing negotiations.
146. The representative noted with concern that the EU was still the second largest user of anti-
dumping measures, behind  the United States. The fact that a majority of panel cases addressed anti-
dumping measures, in one way or another, indicated that the rules in this area were unclear.  The
findings of panels in many cases indicated that such  measures were designed to restrict trade and not
to stop dumping. Norway hoped to see a reduction in the number of anti-dumping actions taken by the
EU in the future, and to see active and constructive participation by the EU in the negotiations on anti-dumping rules.
147. Norway had followed with great interest the Commission’s  Mid-Term Review  proposal for
changing the CAP. Like the EU, Norway endorsed the right of  every Member to pursue non-trade
objectives, including food security, food safety, and environmental protection.  WTO rules should
allow for measures and instruments to be used by Members to maintain a certain degree ofagricultural production, including in countries with unfavorable climatic conditions.  The negotiations
on services were proceeding well and had moved to the request stage; Norway generally shared the
goals of the EU in this area.
148. The Secretariat Report (paragraphs 38 to 57) addressed certain aspects of the CFP that were
of interest to Norway.  As was the case within the EU, Norway was deeply concerned about present
levels of exploitation of important fish stocks in the north east Atlantic, and in particular the
detrimental effects of fleet over-capacity on sustainable harvesting of fish stocks. The Commission’s
Green Paper on the future of the CFP had pointed to, inter alia , inadequate management measures as
well as substantial over-capacity as major obstacles to sustainable fisheries.  Norway noted that the
Commission had proposed radical cuts in present fleet subsidies.
149. Norway agreed with the EC that a key priority continued to be the full integration of
developing countries and in particular the least developed countries in the multilateral trading system
and the global economy.  The EBA initiative provided important incentives for facilitating and
increasing exports from the poorest countries. However, as pointed out by the Commission in its
policy statement  (page 10), many LDCs had diffic ulties in using their trade opportunities. Norway
had implemented duty- and quota-free market access for all products from LDCs as of 1 July 2002.WT/TPR/M/102
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Norway was interested to hear the views of the Commission on  how to develop instruments of trade-
related technical assistance to increase trade based on the EBA initiative.
150. The representative of Uruguay highlighted the EU's key role in the adoption of the DDA in
November 2001. The success of the new round of negotiations and its conclusion by 1 January 2005
hinged to a great extent on the attitude and political vision of the EU, and on its adherence to the
principles of equity, non-discrimination, and special and differential treatment for developing
countries, which should prevail in the multilateral trading system.
151. The EU had maintained the momentum of its internal economic integration agenda since its
last Review by advancing towards the completion of its Internal Market through product and capital
market reform, by taking the final step towards a single currency in the euro area, and largely
maintaining control of public finances despite sl ower economic growth.  The EU had also concluded
new trade agreements, including seven bilateral agreements with Switzerland, a free-trade agreementwith Mexico, and an agreement with Chile, and developed existing agreements with the ten candidate
countries for accession in Central and Eastern Europe.  Negotiations with MERCOSUR were
ongoing.
152. Uruguay shared common or similar positions with the EU on certain issues in the WTO and
on the international economic agenda, and would continue to strive with the EU to achieve commonobjectives and strengthen the multilateral trading system. Conversely, on other issues of critical
importance to Uruguay, such as agriculture, there were major differences of approach and position,
although Uruguay still hoped for a convergence of views in the course of the negotiations.  Serious
difficulties of market access persisted in relation to commodities such as rice and, above all, a wide
range of processed products.  The EU maintained huge subsidies and direct income support, estimated
at US$106 billion in 2001, which distorted production and international trade to the detriment of
efficient agricultural producing countries. The most  recent OECD report stated that for each US$100
of income received by a producer, US$35 corresponded to support granted by the EU. Export
subsidies, estimated by the Commission at US$2.5 billion, had continued to depress international
prices, and had pushed Uruguay out of traditional markets. Implementation of technical regulations
and administrative and customs procedures had been stepped up, creating yet further impediments to
market access in the EU.
153. Uruguay considered the mandate on agriculture agreed upon at Doha to be ambitious and
tailored to the serious shortcomings and limitations of present-day world agricultural trade. Uruguay
hoped that the objectives reflected in the Doha mandate would be achieved, thereby considerably
reducing the unfair discrimination suffered by the sector since the inception of the GATT. The
liberalization and reform of the agricultural sector was an essential and irreversible fact. Uruguaytrusted that the EU, which was playing a key role in this process, would be up to the challenge.
154. Trade between the EU and Uruguay had been affected by a number of factors in recent years,
including the disparity in the value-added component exported by the two parties, and more vigorous
growth on the part of European exports to Uruguay. The EU represented a very substantial share of
Uruguay’s foreign trade, at around 20%, and the EU  had traditionally been its second trading partner,
after MERCOSUR.  On the other hand, the share of  Uruguay in total EU imports was between 0.08%
and 0.06%.  Since 1993, the EU had reversed the trend of the previous 15 years and generated a
constant surplus in its trade with Uruguay.  In spite of specific explanatory factors related to the
foreign trade of Uruguay, a similar surplus could be observed in the EU's trade with all Latin
American countries.
155. The representative of Brazil stated that the EU  was Brazil’s biggest trading partner:  25% of
Brazil's exports went to the EU, and around 26% of its imports came from the EU, with bilateral tradeWT/TPR/M/102
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at around US$30 billion. The EU was also one of th e two most important foreign direct investors in
Brazil.  MERCOSUR and the Commission were currentl y holding meetings at Ministerial level in Rio
to continue the negotiations towards closer ties between the two groups; Brazil was encouraged by the
Commission's statement to the effect that the EU was prepared to complete this process during the
Doha negotiations.
156. Brazil recognized the EU's crucial role in the multilateral trading system, and had no doubt of
its commitment to strengthening the system. Brazil acknowledged  the steps the EU had begun to taketo address the difficult issue of agriculture; this needed to be tackled for the present round to be
successful. In this regard, Brazil welcomed the Commission's proposals in the context of the
Mid-Term Review of the CAP, to give new impetu s to the process of reform. Although Brazil was
still examining the proposals, a preliminary analysis i ndicated that they might be regarded as a step in
the right direction, as stated at the TNC.
157. Agriculture was of leading concern to Brazilian foreign trade.  According to some estimates,
the reform of the CAP could mean a greater transfer of resources to rural development.  Another
possibility was the establishment of new standards for  European agricultural producers with respect
to  traceability, labelling, and environmental and animal welfare.  Brazil sought assurances from the
EU that those standards would  not lead to new trade restrictions and other protectionist measures.Brazil was also interested in clarifying the agricultural dimension of  enlargement, and the steps
envisaged by the EU to integrate  new members in the CAP. Brazil was also concerned with the EU's
sugar regime, under  which the EU granted what could be considered as prohibited subsidies on the
export of about 1.6 million tonnes of white sugar.
158. The representative of Argentina acknowledged the key role of the EU in the multilateral
trading system, and in particular the major contribution made by the EU to the launch of the DDA.  A
successful outcome should help developing and least developed countries  achieve their developmentobjectives.
159. With respect to the Mid-Term Review  of the CAP, which was supposed to establish the basis
for reform after 2006, the Commission proposal was a half-hearted attempt to reform a policy that was
a heavy burden on  taxpayers and consumers, and am ong the most trade-distorting  practices of the
multilateral trading system. The Commission proposal was also inadequate when viewed in the lightof the commitments made by the EU at the Fourth Ministerial Conference in Doha, and within the
framework of the MERCOSUR-EU negotiations.  The  Commission’s proposal was aimed only at
redirecting expenditure, and not at eliminating export subsidies or substantially reducing domestic
support.
160. The Commission's proposal reduced CAP di sbursements by only 0.4%.  It basically
constituted a colour change for domestic support boxes, with some programmes going from amber to
green. If approved by the Member States, these changes should in theory result in fewer distortions to
trade and production, but there were serious doubts as to whether decoupled payments -  not linked to
agricultural production units - were really disa ssociated from production and income, given their
impact on farmers' incomes. Such measures would not lead to improved market access for agriculturalproducts on the European market.  From all perspectives, the proposal  therefore appeared modest in
reducing levels of support.
161. Although only 4% of the European population actually worked in agriculture, subsidies for
farmers constituted the largest individual item in the Community budget.  The US$40 billion
earmarked for the CAP each year represented almost half of total EU expenditure.  Including indirectsubsidies and tax exemptions, a  recent OECD study had estimated that farmers had received around
US$104  billion in aid in 2001, amounting to 35% of their income.  This protectionist scheme, inWT/TPR/M/102
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addition to its well-known distortionary effects on international trade, had raised  food prices in the
EU  by 15 to 20%. Argentina called upon  the EU to  eliminate all forms of subsidies, and to extend
the application of Article 87 of the EC Treaty to multilateral trade; this provision established that any
aid granted by a Member State that distorted or threatened to distort competition was, insofar as it
affected trade between Member States, incompatible with the common market.
162. Argentina was also concerned by the proposed EU regulation on labelling and traceability of
food and feed products produced from gene tically modified organisms (GMOs), whose
implementation would have adverse  implications for exporters of products that contained or were
produced from GMOs.  Argentina had submitted its comments on this regulatory proposal to the SPS
Committee and the TBT Committee.
163. Another concern was the investigation initiate d by the EU on 28 March 2002 with a view to
adopting safeguard measures on the import of some steel products.  A provisional measure had beenadopted on 15 categories of products, three of which were  exports from Argentina, namely non-alloy
hot-rolled coils, cold-rolled sheets, and tin mill products.  This measure had led  to restrictions on
exports totalling US$83 million.
164. Argentina was also concerned by the EU measure whereby wine subject to an oenological
practice not authorized under EU legislation might be imported from some countries into the EU but
not from others; Argentina, for example had seen its access to the European market obstructed.  This
practice was undoubtedly inconsistent with the MFN principle.
165. Developing countries, such as Argentina, could only use legitimate tools of competition
(quality and price) to sell their products.  Major global exporters should also be restricted to these
tools in all areas of production.  Under present circumstances, certain Members were able to hinder
the access of exports of developing countries either by subsidizing the prices or the payment terms of
their own exports, or by creating artificial barriers to products that were a key tool for thedevelopment of countries like Argentina, as in the case of agricultural products.
166. The representative of China noted that the EU was China's third largest trading partner.  The
EU-China economic and trade relationship had undergone a process of development and enhancement
in recent years, and  the momentum was very positive. China praised the sustained development and
economic prosperity achieved by the EU, and its valuable contribution to the promotion of themultilateral trading system.  However, certain elements of  the EU's trade policy were causing great
concern.  China believed that some of the trade restrictive measures taken by the EU to protect
domestic industries were inconsistent with WTO rules.
167. The first issue of concern was the implementation of the SPS Agreement. Pursuant to Articles
5.1 and 5.6, SPS measures had to be based upon a risk assessment, and not be more trade-restrictivethan required to achieve their appropriate level of SPS protection.  Measures taken by any Member
had to be based on WTO rules and scientific evidence, but certain EU measures had runcounter to this
principle. The import ban on all products of animal origin from China was a recent example. The
excessively stringent standard on food safety for the purpose of protecting consumer health had in
reality been a trade barrier.
168. The second issue of concern was the implementation of the TBT Agreement. Article 2.8 set
out clearly the basic principles in the application of TBT measures. But the Safety Requirements and
Test Methods for lighters adopted by the EU in April 2002 had ignored these principles. China
believed that there was no scientific basis to link the safety standard of a lighter to its price.WT/TPR/M/102
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169. Thirdly, China considered that the EU's enla rgement should facilitate further development of
economic and trade relations between the EU and its tr ading partners, rather than constitute a further
expansion of trade protectionism.  China hoped that the EU could take effective policy measures to
prevent any adverse effects on its trading partners.
170. The fourth issue was the remaining quota restrictions on Chinese footwear, ceramics, and
some agricultural products.  China was also extr emely concerned by the  implementation of the ATC
liberalization process by the EU.  Although seven and a half years had passed, 222 out of 303 quota
restrictions maintained by the EU in this sector were still in place. While the EU maintained
substantial quota restrictions against certain Members, it had removed its quota restrictions against
certain non-WTO Members.  This was inconsistent with Article 1.6 of the ATC, and violated the
fundamental principle of non-discrimination of the WTO embodied in Article I of the GATT.  China,
like other Members, hoped that the EU would adopt effective measures to keep its trade policyconsistent with the WTO rules, thus helping to create an open, fair, and just environment for trade.
171. The representative of Chile noted that the magnitude of the EU's contribution to world output
and trade made it a key member of the multilateral tr ading system.  The EU had shown evidence of its
commitment to the system by taking a leading role in the launch of the DDA, which was marked by
its emphasis on development.
172. The importance of the EU however went beyond statistics.  The EU was a leading example
for countries committed to integration initiatives, by virtue of its monetary union, the Internal Market
programme, and its prospective enlargement. More fundamentally, the EU had been based on the
principles of peace, security, and democracy since its inception, which had ensured its unity and had
given the EU its international influence.
173. Chile shared these principles, which explained why the recent conclusion of the political and
economic association agreement had been such a milest one in its relations with the EU.  As its title
revealed, this agreement went beyond trade matters, and included political and cooperation elements
that reflected a new generation of agreements, and a new vision of how Chile and the EU should
progress towards the future.  At the same time, it contributed to the strengthening of links between
Latin America and Europe.
174. The EU was Chile's most important trading partner, a leading market for its exports, a
significant source of foreign investment, and the lead ing source of aid. Chile had sought to  conclude
an agreement that was fully consistent with its WTO commitments, and that would cover the
traditional trade-related issues as well as some of the newer issues, such as financial services.  The
agreement involved the progressive and reciprocal liberalization of market access for goods, services,
and government procurement.  It was designed to enhance investor confidence by extending theirbusiness options and introducing a new, rapid and direct dispute settlement mechanism.  The
agreement met Chile’s expectations of substantial bilateral liberalization thereby also strengthened
Chile's multilateral position.  Chile hoped for rapid parliamentary approval to ensure entry into force
of the trade provisions at the beginning of 2003.
175. Chile welcomed the proposals from the Commissi on to reform the CAP and also the CFP; the
agriculture and fisheries sectors were of substantial interest to Chile.  His delegation was interested in
additional details on the content of these proposals, their coverage, and the internal approval
procedures.  Although the proposals were a step in th e right direction, they did not appear sufficiently
bold to eliminate existing distortions.  Another concern was the potential for labelling regulations to
restrict access for Chile's products to the Community market.WT/TPR/M/102
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176. According to the Secretariat Report, the EU currently had 175 anti-dumping actions in place.
Although the EU had stated that 40% of initiations did not lead to the adoption of definitive anti-dumping measures, the figures were nevertheless worrying.  The mere initiation of an investigation
had well-known negative effects in terms of high legal costs, the damage done to a country's image,
and the loss of market share.  The Commission had recently initiated an investigation against the
Chilean salmon industry at the request of producers from Scotland and Ireland. Chile viewed the
initiation with great concern, as it was aimed at restricting access to the EU market of a key productfor its economy.  Chile was the world's second largest producer, and the sector generated employment
for many Chileans and contributed heavily to the development of remote and relatively less developed
regions of the country. Chile's exporters wished to sell at the highest prices possible, but were being
accused of doing exact to the opposite, which made no sense.  This showed once again that every time
a country, especially a developing country, became competitive in a particular sector, it was rewardedby accusations, investigations, and anti-dumping duties.  This was detrimental to the opening up of
trade, and to any effort in favour of development.
177. Despite its stated concerns, Chile acknowledged the leadership role of the EU and its
commitment to the multilateral trading system.  The Commission had provided a clear indication of
the road it intended to follow. The leadership of the EU was vital to the ongoing process of
negotiations, to the resolution of various implementation issues, and to progress in fostering
development.
178. The representative of Hong Kong, China noted that the EU was the third largest trading
partner, third largest supplier, and third largest market for Hong Kong, China, with two-way trade
valued at € 52 billion.  Hong Kong, China was the 15th largest trading partner of the EU.
179. Hong Kong, China applauded the introduction of the euro, and noted its impact on reducing
transaction costs for third countries.  His delegation also welcomed initiatives to reduce thecomplexity of the regulatory environment, whic h would also benefit the business community.  On
enlargement, his delegation urged the EU to ensure that no unjustified barriers to trade for third
countries were created, in particular by the automatic extension of import restraints to new Members,
notably anti-dumping and quantitative restrictions.
180. Hong Kong, China appreciated the contributions made by the EU to the multilateral trading
system and to the DDA; its active participation a nd strong leadership in the Doha work programme
was crucial in sustaining the momentum in the run-up to Cancun, and the timely conclusion of the
negotiations by 1 January 2005.  Hong Kong, China also appreciated the continuing contributions of
the EU and its Member States to technical assistance and capacity-building, although this was no
substitute for improved market access for developing countries.  In this respect, the EU’s adoption ofthe EBA initiative was welcome, and Hong Kong, Ch ina looked forward to the EU's leadership in
expanding this constructive initiative, with a view to improving market access for all developing
countries.  In this regard, his delegation encouraged the EU to reduce its high tariffs for textile and
clothing products, and to address tariff escalati on for food and beverage products in the new round of
negotiations.   On trade and environment, Hong Kong, China appreciated the need to address the
concerns of domestic constituencies and the civil society.  However, Members had  divergent views
on this issue and his delegation intended to work with the EU towards an outcome that could meet the
comfort levels of all Members.
181. Hong Kong, China commended the EU for its libe ral tariff regime.  All lines were bound and
applied tariffs were closely aligned to the bound rates.  The simple average applied tariff on allproducts had declined in 2002, but despite the simple average tariff of 4.1% on non-agricultural
products, EU tariffs on imports of textile and clothing products remained relatively high: tariffs forWT/TPR/M/102
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the more common textiles and clothing products like shirts, trousers, and T-shirts were all at 11.9%.
Tariff reductions in this area should be a priority for  the market access negotiations.
182. His delegation had also noted that the EU had eliminated textiles and clothing quota
restrictions on non-members, while keeping them fo r Members.  According to the Secretariat, imports
by the EU of textiles and clothing products from restrained suppliers had dropped from 45.6% in 1994
to some 43% in 2000 (document G/C/W/373).  Maintaining quota restrictions on a small group of
suppliers, while giving free access to the majority had placed the former in a disadvantageousposition.  It also raised the question of equity, as restricted suppliers did not even have a majority
share of imports.  He echoed the comments made by the ambassadors of Norway and China, on  this
subject.
183. Hong Kong, China was pleased to note the ad option by the EU of a legal framework to
implement the rulings of the Dispute Settlement Body relating to anti-dumping measures.Unfortunately, this new framework did not provide for reimbursement of anti-dumping duties paid in
excess, which was unfair to the exporters concerned.  His delegation invited the EU to re-consider its
position on the issue.
184. In 2001, the EU had been the second largest user of anti-dumping  measures.  The
Commission had noted that 40% of anti-dumping investigations were terminated without anymeasures being imposed.  Since the trade-stifling ef fect of initiating an investigation was immediate
his delegation urged the EU to follow closely the evidence requirements before such initiations took
place.
185. The representative of Hungary praised the EU's strong commitment to multilateralism and
noted its vital role in the healthy operation and de velopment of the multilateral trading system. This
had been evident during the preparatory process for Doha, and at the Ministerial Conference, where
the EU had been in the forefront of building support for a new round of multilateral trade negotiationswith a broad, balanced and ambitious agenda, encompassing trade liberalization and rule-making, and
with the development dimension right at its centre.  This role was also evident from the content and
number of negotiating proposals submitted by the EU since the beginning of 2002. The constructive
and flexible position that had been displayed by the EU would be as instrumental in the timely
conclusion of the negotiations, as it had been in their successful launch.
186. The EU combined multilateral, regional, and bilateral approaches to trade and economic
relations. It maintained an extensive system of regional trade agreements, with Hungary being a party
to one of them. As a result of this agreement, bilateral trade had increased very rapidly; the EU was by
far Hungary's largest trading partner, and Hungar y was among the ten largest partners of the EU.
Hungary shared the EU's view th at multilateralism and regionalism should not be seen as two
mutually exclusive solutions to the challenges of globalization, but as  complementary, and allowing
the gains from trade to be maximized. Hungary's e xperience supported this view: trade liberalization
on a multilateral basis had been stimulated by the reduction or removal of trade obstacles under its
regional arrangements. The trade data also proved in practice that properly designed RTAs could have
a positive, trade-creating effect from a global aspect. The continuously developing preferentialagreements between the EU and Hungary, which respected the multilateral rules, had paved the way
for a smooth process of enlargement.
187. With regard to the EU's provisional safeguard action on a wide range of steel products, his
delegation considered that Members had the right to choose to exclude or include imports originating
in a free-trade partner from such measures. Imports from a free-trade partner could be excludedprovided they had not been considered in the determination of serious injury or, if they had, that itWT/TPR/M/102
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was clearly established that imports from other trade partners alone satisfied the conditions for the
application of a safeguard measure.
188. Hungary commended the EU's long-standing polic ies in assisting the development process of
developing and the least developed countries, and appreciated in particular the almost full opening of
its markets to products from LDCs. Hungary had been  providing free market access to such products
for a long time.
189. The Secretariat Report had not been able to reflect the Commission’s recent proposals to
reform the CAP under the Mid-Term Review.  These proposals showed the EU's resolve to face the
new challenges of the ongoing WTO agricultural negotiations, and to contribute in a meaningful way
to their successful completion.  Hungary shared the EU position on a balanced and realistic treatment
of all measures, including all forms of export support, regulations on market access and domestic
support, as well as strengthened protection for geographical indications. Such a balanced approachwould permit an enlarged EU to continue the CA P reform, in line with reinforced multilateral
disciplines. As a Member and as a candidate fo r the upcoming enlargement of the EU, Hungary
intended to contribute actively to such an outcome.
190. The representative of Costa Rica noted the importance of the EU in international trade and the
multilateral trading system, and its leadership role in the launch of the Doha Work Programme.  Costa
Rica had been able to work with the EU in several fields, sharing positions on matters of particular
interest, such as investment, competition, and trad e facilitation. Costa Rica trusted that the EU would
continue to show such leadership, and thereby enable Members to attain higher levels of trade
liberalization in the present negotiations.
191. The EU was Costa Rica's second largest market for exports, behind the United States; it
accounted for 16.5% of all Costa Rica's goods exports in 2001, amounting to US$832 million, down
from US$1.2 billion in 2000. Costa Rica, like other countries, was a beneficiary of a EU preferentialaccess scheme.  Costa Rica imported EU goods to the value of US$668 million in 2001, up from
US$658 million in 2000.  The value of trade with the EU was thus very significant for Costa Rica,
which hoped to increase two-way trade significantly and boost its share of the European market.
192. Costa Rica had submitted questions to the Commission on the "Customs 2002" programme, in
particular the trade facilitation measures taken under this initiative.  Clarification had also beenrequested with respect to traceability requirements, and the scope of the precautionary principle in
relation to European regulations, as well as on government procurement, competition policy, and the
protection of intellectual property rights.  Additional queries were reflected in the substance of his
intervention.
193. The first question concerned whether the EU had recently calculated ad valorem  equivalents
(AVEs ) for the non- ad valorem  rates applied on 946 lines (44.8% of agricultural product lines), and if
so, what methodology was used for this calculation.  The Secretariat Report had noted a decline in the
simple average tariff on agricultural products from 17.3% in 1999 to 16.1% in 2002: his delegation
was interested in knowing what had been the change since 1995.  The second query concerned the
mechanism used by the Commission to calculate the subsidies paid to exporters; and how the subsidycould be prevented from depressing international prices and, in turn, creating the need for a larger
subsidy.
194. With respect to the CAP, the EU was currently discussing changes to be implemented as of
2006, after completion of the DDA.  Costa Rica asked how the EU intended to introduce the new
commitments resulting from the DDA into its domestic legislation and how commitments under theDoha Ministerial Declaration on this issue were  being taken into consideration.WT/TPR/M/102
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195. Costa Rica had noted the sustained increase in domestic support for farmers in the EU
through payments under environmental programmes, pursuant to paragraph 12 of Annex 2 to theWTO Agreement on Agriculture (green box).  According to EU notifications, such support amounted
to €5,458.7 million in 1999, up from €2,783.3 million in 1995; this was a 96% increase in a short
period of time.  Costa Rica asked the reason for this increase,  the growth rate for other environmental
programmes unrelated to agriculture during the same period, and the share of agriculture in payments
under environmental programmes in 1995 and 2000.  Costa Rica also sought a detailed description ofthe programmes notified.
196. The representative of Malaysia noted that the EU was the world's largest exporter and the
second largest importer in 2001, and was also the biggest source of FDI.  Economic developments in
the EU thus had  a substantial impact on other trading partners.  Of particular concern was the decline
in the EU's growth to 1.7% in 2001 from a high of  3.3%, although much of the lower growth was due
to external factors such as an increase in oil prices, and a drop in stock market values, particularly of
technology stocks.  A stricter monetary policy to ensure price stability might also have had an impact
on  reducing growth.   Malaysia hoped that the EU would continue to maintain sustainable levels of
growth, and asked whether forecasts were availabl e on the impact on the EU economy of recent stock
market declines and the strengthening of the euro.
197. The simple average applied tariff  had remained more or less the same since the EU's last
Review, with a slight decline to 6.4%.  Non-ta riff barriers had increased, however, and could in
certain cases constitute significant barriers to trad e.  The potential for more stringent requirements in
the areas of food and waste management was of concern.  While Malaysia recognized that the
objectives of these measures might be valid, his delegation hoped they would not lead to greater
difficulties for developing countries in accessing the EU market, nor bring into question the EU's
commitment to an open and liberal multilateral trading system.
198. Malaysia was particularly concerned with the proposed EC directive on waste electrical and
electronic equipment, which shifted the responsibility of waste management from the government to
private companies.  Establishing waste management plants entailed resources and expertise and would
be prohibitive for small and medium-scale producers from developing countries, who did not have the
economies of scale nor the benefit of a large distribution network in Europe to oversee wastecollection.  Those companies would have to contribute to the costs of setting up the plants, through
their local importers. This directive could be damaging to the competitiveness of smaller companies
from developing countries.
199. A disturbing trend had also been set by a recent regulation in one EU Member State
pertaining to voluntary labelling for socially responsible production, which could discriminate againsttrade from developing countries.  At a time of confidence-building and the need to adhere to the Doha
mandate, such regulations did not imbue developing countries with confidence that the trading system
could ensure open markets, or that measures would be implemented in a manner that was not more
trade restrictive than necessary.
200. The EU was Malaysia's third largest trading partner, with trade of over US$10 billion in 2001.
Malaysia regarded the EU as a very important trad ing and investment partner, and looked forward to
closer trade relations.
201. The representative of Mexico noted that the links between his country and the EU were varied
and strong. The EU played a key role among Mexico's trading partners; it was the second leading
market for exports, the second largest supplier, and the third largest foreign direct investor in Mexico.The free-trade agreement, which had entered into force in 2000, had given fresh impetus to their
already dynamic relationship.WT/TPR/M/102
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202. The EU had a central role in world trade and in the WTO.  This Review thus gave Members
the opportunity to identify possible delays and problems, the solution of which would guarantee theunfettered flow of trade.  In this spirit, Mexico had submitted a number of questions to the
Commission and looked forward to receiving replies.
203. Mexico reiterated the importance it attached to the multilateral trading system as a guarantee
for predictable and open market access for all countries, and in particular developing countries. Trade
Policy Reviews were a key element of this system.
204. The representative of India acknowledged the EU's constructive and important role in moving
forward the Doha work programme. The EU's econom ic health as well as its policies exercised
considerable influence on global trade and investment by virtue of status as one of the world’s major
trading powers.  The EU was recovering from the slowdown experienced from 2001, and India was
encouraged by the EU's relentless and successful pursuit of its capital market reform programme.
205. Relations between India and the EU were based on strong fundamentals. A significant
increase in activity at various levels had taken place in recent years, including two summit meetings,
with a third scheduled for October 2002. The first summit had established a roadmap for future
potential economic and commercial relations and the Indo-EU joint Commission was providing an
effective machinery for strengthening bilateral and economic relations.  Recent developmentsincluded a Round Table composed of eminent persons,  a joint civil society network, as well as a
programme of engagement by industry and business from the EU and India in selected sectors. Both
sides realized the enormous scope for deepening and widening their commercial and economic
relationship.
206. India was encouraged by the Commission’s statement in its report that the EU attached the
greatest importance to the correct and timely implementation of the WTO Agreements, and that it
would continue to participate actively in the disc ussions related to implementation, including special
and differential (S&D) treatment. India hoped to see the EU take a leading role in the negotiations on
the resolution of implementation-related concerns, including effective operationalization of S&D
clauses.
207. The EU was one of the leading user of trade remedies against its trading partners.  The EU
authorities had often initiated both anti-dumping and anti-subsidy investigations for the same productagainst a targeted country. Even the rumour of initiation of such an investigation had an effect on
trade, by affecting the behaviour of prospective importers in the investigating country, who tended to
switch towards other exporters.  For  a developing country like India, a heavy drain on resources was
involved in defending exporters targeted by an anti-dumping or countervailing investigation.
208. India's exports to the EU had also been severely affected by the use of very stringent and
often unjustified sanitary and technical standards. This was compounded when individual EU Member
States' national norms were different from the common EU norms. The problem of widely differing
standards was particularly acute with regard to seafood consignments,  where the EU's standards were
not harmonized for the testing, inspection and analysis of microbiological and chemical
contamination, including residues. There was a pres sing need for harmonization of norms within the
EU Member States.
209. Article IV of the GATS called upon Members to facilitate the increasing participation of
developing country Members in trade in services through, inter alia , liberalization of market access in
sectors and modes of supply of export interest to them. While India enjoyed an advantage in having a
pool of highly competitive and skilled manpower resources in sectors like software, accountancy,health, and services, this comparative advantage had been blunted by  highly tedious and cumbersomeWT/TPR/M/102
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procedures for getting visas and work permits in the EU.  Indian software companies were
experiencing significant delays in getting business visas or short-term work permits which, in turn,caused immense difficulty in meeting contractual obligations.  Economic needs tests were major
restrictions in the EU's health services sector. Certain requirements, like making social security
contributions, even for short-term contracts, and wage parity, further compounded the problems and
virtually  blocked  access of Indian service professionals into the EU.
210. Textiles constitute one of India's major export items. India was concerned that to date the EU
had lifted restrictions on only 20% of products restricted in 1990, leaving the elimination of the
remaining 80% of restricted imports “back-loaded” for the final stage at the end of 2004, an approach
that went against the spirit of the ATC.
211. The Secretariat Report noted that funding for the CAP continued to represent the single
largest expenditure in the EU budget, with 44% of the total budget of €93 billion. In the light of theDoha Declaration, which envisaged reductions of, wi th a view to phasing out, all trade distorting
agricultural subsidies, India looked with great interest at the ongoing debate on changes in the CAP,
and welcomed the statement of the Commission delegation that the direction of agricultural reform
was clear.
212. India was also concerned by the EU's use of preferential tariff schemes. It was important that
such schemes, while benefiting target countries in a generalized, non-reciprocal and non-
discriminatory fashion, did not adversely affect other developing countries through trade diversion.
India also had reservations regarding the use of preferential tariff arrangements to achieve non-trade
objectives.
213. The representative of Colombia noted that the EU was Colombia's third most important
trading partner, and its second most important source of foreign investment.  For this reason, and also
in consideration of the central role of the EU in the WTO, Colombia was grateful for the effortsexerted by the EU in various fora on behalf of developing countries, and for its ability to understand,
and recognize their specific problems. Preferential access schemes were of fundamental importance,
but Colombia hoped they would eventually be repla ced by a more definitive framework of real and
permanent market access to the European market to  enable developing countries to establish long-
term projects.
214. Colombia understood the complexity of the EU's agenda in the WTO; it had to address
numerous, and sometimes conflicting, interests.  All Members had made considerable efforts to
identify elements that could help in addressing the legitimate interests of all countries.
215. Among Colombia's concerns was the high number of anti-dumping investigations initiated by
the EU.  Although such initiations did not invariably result in the adoption of measures, they wereunquestionably detrimental for exporters.  Another concern was policies in the agriculture sector.
Although the reform of the CAP was heading in the right direction, as a developing country,
Colombia believed that only a far-reaching reform , which eliminated all distortions, could have the
necessary impact on the European and international markets so as to enable developing countries to
develop their export potential.  The problems surrounding the sugar and milk regimes noted in theSecretariat Report reflected the enormous distortions caused by the Community's agricultural policy.
216. Colombia was also concerned by the labelling regulations of the EU and their use for
protectionist purposes, as well as the complexity of requirements in this area.
217. The representative of Mauritius stated that, as an ACP country, Mauritius had benefited from
the provisions of the past Lomé Conventions, considered to be the most complete instrument ofWT/TPR/M/102
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North-South cooperation ever signed, based on the pr inciple of equal partnership.  Although the first
Lomé Convention was agreed in 1975, the economic links between Europe and Mauritius dated backto the Commonwealth sugar agreement, which lasted from 1953 to 1974, until the United Kingdom
joined the EEC. Its original signatories, on the exporters’ side, were Australia, South Africa, the
British West India and Guyana, Mauritius and Fiji.  This agreement became the charter for economic
and social development of the sugar producing colonies; it had enabled Mauritus to face its future
with optimism, expand production capacity, and improve its cultural practices.
218. Mauritius noted the continued advancement of the EU towards completion of a fully
integrated Internal Market and the intensification of the enlargement process, which  provided both
opportunities and challenges for Mauritius as the EU was its main trading partner. While prospects of
an enlarged market existed, the spectre of the erosion of preferences was also on the horizon.
Integration would have both trade creation and trade diversion effects, which were bound to have aprofound impact on trade of Mauritius, and adjustment was warranted.
219. The EU's progress towards realizing the goal of the Single Market was impressive,
progressing from the common market to an economic union with visible symbols such as the
Schengen visa and the euro zone. Mauritius invited the Commission to provide more information on
the initiative of the European knowledge zone.  His Government had noted that the Commission’spolicy statement did not give an indication of the evolution of trade flows with ACP countries;
information would be welcome on this, as we ll as on FDI flows from the EU to Africa.
220. The representative of Thailand, speaking also on behalf of Indonesia and the Philippines,
commended the EU for its strong leadership in rebuilding confidence and cooperation in the WTO,
leading to the launch of  the DDA, and to  improve public understanding of the multilateral trading
system.  The three countries encouraged the EU to continue its efforts in favour of technical assistance
and capacity building, which were essential as Members pursued the Doha negotiating mandate.
221. Thailand, the Philippines and Indonesia welcomed the EU's assistance to developing countries
through, inter alia ,  increased market access opportunities, and notably the EBA initiative for least
developed countries.  There was continuing concern, however, about the trend towards discriminatory
types of arrangements that could irreversibly dilute the letter and spirit of the Enabling Clause.  As
noted during the last Review of the EU in mi d-2000, concerns remained over the EU's special
incentive arrangements for countries demonstrating adherence to certain internationally recognized
core labour standards, or for certain standards set by the International Tropical Timber Organization.
Such conditionalities, as well as other features of GSP, such as preference modulation and methodical
graduation, as well as certain arrangements such as the partnership agreement with the ACP, might
need to be revisited by the EU, as they detracted from what was intended in the Enabling Clause.  Itwas also important to remember that the EU had obtained a waiver for the ACP-EC Partnership
Agreement in Doha because it promised to constructively engage in negotiations on a certain product
of importance  to particular ASEAN countries; the waiver was not unconditional.
222. Indonesia, the Philippines and Thailand had noted the EU's high level of activity in
developing product regulations and standards, and its influence on international standard setting, andhoped that the EU would proceed in a responsible and pragmatic manner.  They had stated their
concerns over new directives issued by the EC in the guise of safety and technical standards, which
imposed onerous compliance conditions on exporting partners. One such proposal was on waste
electronic and electrical equipment (WEEE), which introduced the concept of producer responsibility
for the treatment, recovery, and disposal of produc ts. This would impose burdensome obligations and
costs on developing countries, particularly on thei r small and medium-scale industries, and  the EU
was urged to review directives that were hindering trade.WT/TPR/M/102
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223. The new framework for food law was also a matter of concern, insofar as decisions in respect
of safety issues continued to lie mainly within the political purview of the Commission, and not withthe European Food Safety Agency (EFSA), whose task was limited to scientific advice on food.  Both
these issues were symptoms of the deep impact of EU product policies on trade of other countries.
224. The EU's high propensity to initiate anti-dumping investigations, and to take definitive
measures was a matter of concern.  Although fewe r measures were taken in 2001 than in preceding
years, the number of measures in force, remained undisputably high at 175. Even if some 40% of anti-dumping investigations were terminated without measures being taken, trade was disrupted in most if
not all cases by the chilling effect of investigations. The growing tendency to combine anti-dumping
and countervailing measures on the same product, for example, on pipe-fittings from Thailand, was
also viewed with concern.
225. The representative of the Czech Republic joined  other speakers in praising the EU for the
leadership it had displayed to restore confidence in the WTO. This leadership and the commitment of
the EU to the multilateral process were of vital importance as Members were taking tremendous
strides to change the nature of the WTO, and give a sense of new direction to the multilateral trading
system.
226. The EU had always been in the forefront of efforts to launch a new round of trade
negotiations.  In pursuing this objective, the EU had been promoting its own interests, but had also
listened to the arguments of other participants and had gone the extra mile to find an approach that
was acceptable to all.  In this regard, it had played a key role in situating the interests and concerns of
developing and least developed countries at the heart of the new WTO programme.
227. The EU had contributed a great deal towards turning the DDA into a series of practical steps,
and putting the appropriate negotiating structure in place.  The EU had tabled ideas and proposals to
allow discussions to move from procedures into s ubstance. It was now important for the EU to work
closely with other major trading partners to create a healthy external environment in which the
negotiations could proceed, as trade tensions among major players would make the negotiations
harder.  The EU had also been at the forefront of efforts to make the WTO more responsive to
concerns of the general public, and was striving for a better balance between the pursuit of trade
liberalization and sustainable development to ensure a more coherent approach to policy making.
228. The EU's significant role in the world economy and its impact on the functioning of the
multilateral trading system made it important that it continue to implement policies towards increased
economic efficiency and international competitiveness. The Czech Republic was confident that the
reforms of the CAP, as recently proposed by the Commission, went in this direction, while fully
respecting the specific features of the agriculture sector. Far-reaching and complex policy changeswould have to be made, and not just because of enlargement.  The Czech Republic encouraged the
EU, and its Member States, to continue on this path.
229. The EU was by far the most important trading partner of the Czech Republic, accounting for
more than two thirds of its trade turnover. The Czech Republic was a candidate for accession and the
negotiations had entered into the final and very intensive stage. The aim was to complete the processby the end of 2002 so that Czech citizens could take part in the elections to the European Parliament
in 2004. The Czech Republic was of the firm belief that enlargement and the harmonization of
regulations and standards with the acquis communautaire  also provided a unique window of
opportunity for third countries , who would benefit in particular by the application of a single set of
trade and agriculture rules, a single tariff, and single set of administrative procedures. There was nodoubt that the enlargement process would proceed in full compliance with the WTO rules and
disciplines.WT/TPR/M/102
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230. The representative of Singapore joined previous speakers in praising the EU for the leadership
it had displayed in the WTO, in particular in the run-up to the successful launch of the DDA in
November 2001.  Singapore looked forward to the co ntinued leadership of the EU in the WTO, to
move the process forward towards the Fifth Ministerial Meeting in Cancun in 2003, and more
generally to achieve a timely and successful conclusion of the DDA negotiations by 1 January 2005,
as stipulated by Ministers.  Singapore was pleased to note that the EU had participated actively in the
various negotiating groups, and tabled many concrete and comprehensive proposals to help stimulatediscussions and move the process along. The EU had also been proactive in reaching out to explain
the Commission’s  proposals to other Members.
231. Singapore also joined previous speakers in encouraging the EU to continue with its efforts to
provide technical assistance and promote capacity- building. These were essential elements in the
present negotiations, and the EU's continued efforts would provide developing countries with thenecessary tools and resources to participate meaningfully in the DDA negotiations.  The EU was also
to be commended for its initiatives on LDCs, in part icular the adoption of the EBA initiative, and its
contribution towards the Integrated Framework Trust Fund. The EBA initiative had acted as an
impetus for other developed countries to adopt similar initiatives.
232. Singapore shared the concerns of ASEAN members over certain of the new directives on
product regulation and standards. The proposed directive on waste electronic and electrical equipment
(WEEE) was of particular concern.  Singapore ur ged the Commission to review such directives,
which were burdensome on developing countries and could unduly hinder trade.
233. The representative of Lithuania joined other delegations in praising the EU for the vital role it
had assumed in the world economy and in the multilateral trading system, and notably in the launch of
the DDA. Lithuania also congratulated the EU for maintaining the momentum of its internal economic
agenda, continuing to advance towards completion of its Internal Market by pursuing product andcapital market reform, and undertaking the final steps towards the single currency in the euro zone.
234. The EU was Lithuania's main trading partner, accounting for 47.9% of its exports and 48.4 %
of its imports in 2001, with bilateral trade valued at US$5.2 billion. Trade relations between the
parties were based on the Association Agreement, concluded in 1995, which, inter alia , had
established a free-trade area between the parties.  This agreement had been very important forLithuania, as it had permitted the diversification of its foreign trade, as well as raising the contribution
of trade to economic growth, as half of Lithuania's GDP was created by exports. This agreement was
an example of the tremendous impact that regional trade agreements could have on countries'
economic growth.
235. The signature of the Treaty of Nice, containing the target date of 2004 for enlargement, was
among the main events since the last Review of the EU in mid-2000.  Lithuania was a candidate
country and was actively engaged in accession negotiations; it expected these to conclude by the end
of 2002 in order to be able to accede to the EU in 2004. Lithuania was convinced that enlargement
would bring benefits not only for acceding countries and the EU, as stated by several delegations, but
to all countries.
236. Lithuania shared the view that the EU's trade policy was largely open, in particular, for
non-agricultural products. Several countries had remarked that improvements could be made with
respect to trade remedies, and Lithuania had also faced some problems in that respect. But the issue
was  relatively minor when compared with  the benefits of trading with the EU.
237. Several countries had remarked upon the CAP; Commission was fully committed to
continuing the reform, as demonstrated by its proposals for the Mid-Term Review. Lithuania endorsedWT/TPR/M/102
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most of the EU's positions in the current multilateral negotiations, which should benefit all nations,
and anticipated that the TPRB would recognize the EU's commitment to an open, rules-basedmultilateral trade system, as well as its role in the WTO.
238. The representative of the Slovak Republic noted the EU’s important role in the international
trading environment. The EU was the second largest importer and world's leading exporter, and it had
consistently acted as a great supporter and advocate of the rules-based multilateral trading system in
the framework of the WTO. The EU had worked with other Members to rebuild confidence andcooperation within the WTO, to improve public understanding through greater transparency and
interaction with parliamentarians and civil society representatives. The EU's role in the ongoing
process of multilateral trade negotiations under DDA had been crucial. The Slovak Republic looked
forward to continuing its fruitful cooperation with the EU.
239. The strategic goal of the EU was to become the most competitive and dynamic knowledge-
based economy in the world by 2010; to this end it had been improving its macroeconomic parameters
as well as structural and institutional reforms.  Since the last Review of the EU in mid-2000, the euro
had been introduced and further efforts had been made to complete the Internal Market.  The Slovak
Republic remained convinced that these changes would benefit not only the Member States, but also
third countries and the multilateral trading system.  They were also of crucial importance to foster theconditions for sustainable development and set the foundations for economic growth, as well as to
prepare the institutions of the EU for enlargement.
240. The Slovak Republic attached great importance to the EU enlargement; EU accession was one
of its top priorities.  Since the last Review of the EU in mid-2000, the Slovak Republic had made
great efforts in implementing the Europe Agreement, and substantial progress had been made in the
accession negotiations, which were in their final stage. The Slovak Republic was committed to
working hard to conclude them by the end of 2002, in order to participate in the elections to theEuropean Parliament in 2004 as a Member State.
241. The Europe Agreement and the process of harmonization with the acquis communautaire  had
contributed significantly to accelerating economic reforms and the process of adaptation, and had
further enhanced bilateral trade relationships.  Th e EU was the largest and the most important trading
partner of the Slovak Republic. It took 60% of Slovak exports in 2001, and the EU accounted for
49.8% of the Slovak Republic's total imports. The goods exchanged consisted principally of
machinery and transport equipment, manufactured goods, manufactured articles, chemicals, and iron
and steel products.  The Europe Agreement provided the framework for bilateral relations and any
issues were raised in that context; thus no questions had been submitted by his delegation.
242. The representative of Jamaica noted that the reports by the Commission and the Secretariat
both acknowledged the economic significance of the EU in the world economy. The EU was the
world's leading exporter of goods,  and the second largest importer. The importance of the EU was
equally evident in the area of services trade, a sector that accounted for 72% of GDP. This
prominence in the global economy had been underpinned by further consolidation of the internal
market through, inter alia,  the introduction of the euro in January 2002.
243. The political and economic strength of the EU was greatly in evidence in the shaping of the
multilateral trading system.  The Secretariat Report had highlighted the leadership role of the EU in
the WTO, and the Commission’s policy statement had noted the importance of the EU in building
support for the launch of the DDA in November 2001.  The Doha work programme was extremely
broad-based and comprehensive, covering a number of issues and themes that, taken together, wouldchallenge the capacity/ability of small capacity-constrained Members, such as Jamaica, to participate
effectively in the WTO work programme. A critical element of the work programme was theWT/TPR/M/102
Page 41
commitment to provide enhanced technical assistance to developing and least-developed countries to
facilitate their effective participation, as well as to better realize the opportunities presented by a moreopen multilateral trading system. In this regard, his delegation had noted that the Commission and the
Member States had contributed more than 60% of the total pledges for the DDA Global Trust Fund
for the financing of technical assistance activities in 2002.
244. The Doha work programme represented a delicate balance between the interests of developed
and developing countries and it was therefore critical to maintain the manifest interests of all countriesin the outcome.  In its policy statement the EU pledged to seek to preserve, and take into
consideration, the interests and concerns of developing countries in the DDA; Jamaica both urged and
was confident that this commitment would be maintain ed, as it would be vital for the success of all
aspects of the work programme. The Commission statement had made evident that the interests of the
EU and the developing and least developed countries were intertwined through various tradeinitiatives and arrangements.  Being one of the world's largest trading economies, the EU was an
important trading partner for many countries, including Jamaica.
245. For Jamaica and other ACP countries, regional trade arrangements such as the Lomé
Conventions and the current Cotonou Agreement, had been important in their capacity-building
efforts, bolstering economic growth, and facilitating  fuller integration into the multilateral trading
system. In June 2002, the ACP had adopted the draft guidelines for the negotiations on Economic
Partnership Agreements (EPAs), which are to govern trade relations between the EU and ACP
countries as of 1  January 2008.  It was hoped that, in formulating the rules and principles of these
new trading arrangements, which would have to be WTO compatible, there would be built-in
flexibility to allow ACP countries to pursue their respective development objectives.
246. At the national level, Jamaica had benefited significantly from EU development assistance,
especially in the areas of poverty alleviation and infrastructure development.  Jamaica also enjoyedwarm bilateral relations with the Member States, and anticipated that these relations would deepen
significantly over the coming years as the multilateral and regional trade and development agendas
evolved.
247. The representative of Turkey recalled that the EU was his country's major trading partner; the
value of bilateral trade was some US$34 billion in 2001, which represented 47% of Turkey’s global
trade.  Turkey and the EU had established a customs union, and Turkey had accordingly adopted the
trade policy regime of the EU.
248. Turkey recognized the vital role played by th e EU in the WTO, and that its support for the
rules-based multilateral trading system was crucia l.  The rules and regulations governing the EU's
international trade were transparent and its trade practices were predictable.  Turkey considered,however, that certain adjustments could be made to several of these trade practices.
249. The first issue was the imposition of a provisional safeguard measure on EU imports of
certain steel products, as of 28 March 2002, following the imposition by the United States of a
safeguard measure on these products.  Turkey was of the view that measures that were not consistent
with the relevant WTO provisions created uncertainty about the multilateral trade rules.  As themeasure was still under consideration in the Committee on Safeguards, Turkey hoped that these
measures would be taken in compliance with the WTO rules and provisions.
250. A second issue of concern, which could also be solved bilaterally under the customs union,
was the placing of maritime transport containers in specified customs areas to undergo additional
inspections in certain harbours, like Rotterdam, which created unnecessary delays on delivery.WT/TPR/M/102
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251. The representative of Poland recognized the vital role of the EU in the WTO system, its
significant support for the rules-based multilateral trading system, and its important role in the
preparation and launch of the DDA.  This active role of the EU in the WTO system, in the
circumstances of a new round of trade negotiations, provided evidence of the deep engagement of the
regional system in the development of  trade liberalization.  Poland was an ally of the EU in its efforts
to strengthen the multilateral trading system.  Poland believed that the experience of the EU
confirmed that regional economic integration could be fully compatible with overall tradeliberalization.
252. Poland was at the final stage of its adjustment to the acquis communautaire , a process that
should also be viewed as the route to Poland’s trade and economic liberalization. Poland was the EU's
fourth largest export market in 2001, after the United States, Switzerland, and Japan. In turn, Poland
was the seventh supplier of EU imports.  The EU had become Poland's most important trade partner inthe last decade, accounting for approximately 65% of its foreign trade. The trade deficit had decreased
since 1999, due to the substantial growth in Pola nd’s exports to the EU, and a constant level of
imports.
253. The EU Member States were a major source of FDI, which had accelerated structural change
and the modernization of Poland’s economy, and its rate of growth, including the volume and thedynamism of exports. FDI in Poland amounted to US$56.8 billion; 68% originated in the EU. These
aspects demonstrated the exceptional character of Poland's relations with the EU as an economic
partner. However, other countries would also benefit from its future participation in the  Single
Market.
254. Since Poland’s last Trade Policy Review had taken place in 2000, its next review was
scheduled for 2007.  However, Poland would be privileged to undergo this exercise much sooner, as a
member of the EU, in 2004.
255. The representative of Kenya noted that, according to the Secretariat Report, although the EU
had experienced a contraction in economic growth in  the last quarter of 2001, the current forecasts
were of a recovery developing in the course of 2002 and taking hold in 2003. A sustained recovery of
the EU's economic growth would definitely have a positive impact on other economies, and on the
world economy as a whole.
256. Kenya commended the EU for implementing a number of initiatives aimed at providing
market access opportunities for export products from developing and least developed countries. It was
important for the EU to take additional steps to enhance trade preferences as applied tariffs were
reduced.  Although Kenya was a beneficiary of EU trade preferences for developing countries, the full
impact of these schemes had been undermined by its supply side constraints, but also by certain EUpolicies, such as restrictive product standards and domestic support, particularly in agriculture. Kenya
encouraged the EU to continue with its technical assistance and capacity-building programmes to
address some of these constraints. In addition, the EU should strive, in the context of the current
negotiations, to create a competitive market-oriented agricultural trading system by substantially
reducing trade-distorting domestic-support measures in this sector.
257. Kenya praised the EU's important role in building support for the launch of the DDA in
November 2001. The continued commitment of the EU to the WTO, and to the multilateral trading
system, would be critical to the success of the DDA.
258. The representative of Morocco noted that his country and the EU had developed deep and
varied relations over the past 40 years.  The EU was Morocco's leading customer and investor, and
partner in financial cooperation.  The dynamic and evolving nature of the legal framework governingWT/TPR/M/102
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relations between Morocco and the EU had enabled th eir relations to develop, and grow stronger. This
momentum had been maintained following the conclusion of a new Association Agreement in 1996,which entered into force on 1 March 2000.
259. The Euro-Med Association Agreement is based on  four main elements: the establishment of
a political dialogue; the progressive creation of a free-trade area; the intensification of financial and
technical economic cooperation;  and the development of genuine cooperation in the social and
cultural areas.  At the  institutional level, the Association Council and Committee have beenestablished.  The agreement has undergone a first and fruitful review in the Committee on Regional
Trade Agreements.
260. The EU played a leading role at the Ministerial Conference in Doha, thanks in part to its firm
commitment to a development round in which technical assistance and capacity-building would be of
central importance to help developing and least developed countries to fully and definitively integratein the multilateral trading system.  Morocco hoped that the EU would maintain and even strengthen
that focus, and noted that the EU Member States had made generous contributions to the Global Trust
Fund at the last Pledging Conference on 11 March 2 002.  These steps clearly showed their interest in
building up the capacity of developing and least developed countries in the WTO.
261. In the next programme of technical assistance, Morocco considered it necessary to improve
the quality of technical assistance by introducing innovative activities. An example was the first trade
policy course, conducted in Casablanca, generously financed by the EU.
262. Morocco remained convinced of the commitment of the EU to further liberalization of its
market; the EBA initiative in favour of the LDCs fitted that objective.  Moreover, the active
involvement of the EU in the "Sin gapore Issues", in particular investment and competition, indicated
that substantial technical assistance would be provided to developing countries to enable them to
decide on these matters. The EU would have a leadin g role to play in the preparation of the Fifth
Ministerial Conference at Cancun, which should give concrete form to the legitimate aspirations of
the developing and least developed countries, as set out in the Doha Ministerial Declaration.
263. The representative of Bulgaria noted that her country was among the 136 that enjoyed
preferential access to the EU market. The Association Agreement signed in 1993 provided the basis
for current trade and economic relations between Bulgaria and the EU; Bulgaria had applied for EUmembership in 1995, to fulfil its primary foreign po licy goal. Following an invitation at the Helsinki
meeting of the European Council in December 1999, Bulgaria had begun accession negotiations with
the EU; the target date for concluding these negoti ations was the end of 2003.  Currently, the EU was
Bulgaria's major trading partner and largest investor. The share of the EU in Bulgaria’s total trade
turnover had grown steadily, from 39.3% in 1995 to 54.8% in 2001.
264. Many previous speakers had acknowledged the vital role of the EU in the multilateral trading
system and its leadership in the run-up to Doha, or had highlighted recent internal market
developments or efforts to assist and better integrate developing countries into the global economy.
At the same time, the EU's position as the world's leading exporter of goods and the second largest
importer naturally attracted interest and concerns relating to its current policies and practices.  As aresult, Members had raised a large number of questions, and had made comments or
recommendations for appropriate adjustment.
265. Bulagria did not intend to do so, but instead wi shed to commend the EU for its strong and
longstanding commitment to the multilateral trading system. The EU had spared no effort to restore
confidence and build consensus in favour of a comprehensive trade round that would offer benefits toall Members. Bulagaria acknowledged the role of Commissioner Lamy and of his team in theWT/TPR/M/102
Page 44
successful launch of the new round and for their wo rk to ensure the conclusion of the ambitious
negotiations, within the three-year timeframe. A key EU priority continued to be the full integration ofdeveloping countries and, in particular, the leas t developed among them, in the multilateral trading
system and the global economy, so as to help them benefit from the opportunities for growth and
development. Trade-related technical assistance and capacity building were important components of
the EU trade and development strategy. The EU was one of the main proponents of the
development-centered round of negotiations launched in Doha.  The EU had taken the EBA initiative
on an autonomous basis and the Commission and the Member States had made very substantial
contributions to the DDA Global Trust Fund. Bulgaria also appreciated the EU's role in strengthening
the political stabilization and economic development in its region, in particular the autonomous trade
measures in favour of the countries of the Western Balkans and the Stabilization and Association
agreements concluded with Macedonia and Croatia.
266. One of the challenges for the EU was to carry out  internal reforms within its institutions and
pursue broader reforms to prepare for enlargement. The enlargement process had moved steadily
forward and had entered a crucial stage.  Since its last Review in mid 2000, a number of key
developments had taken place within the EU, notably the successful introduction of the euro.
Important steps had also been taken towards further liberalization, and economic and structural reformto enhance the competitiveness of the European economy. The recent proposal for reform of the CAP
was expected to contribute to that end.  These policy developments were to be seen against the
background of the recent economic slowdown, and Bulg aria welcomed prospects for recovery in the
course of 2002.
267. The representative of Nigeria noted that the EU continued to be Nigeria’s major trading
partner, a relationship based on history as a former  British colony, and as a member of the ACP/Lomé
Convention and now the ACP/EU Partnership Agreem ent. Along with other ACP Members, Nigeria
benefited from the preferential market access provisions of the Convention. The EU remained
Nigeria's key market. He recognized the EU's leadin g role in the WTO and in the multilateral trading
system, and commended the EU for its positive contribution to trade liberalization and development,
including its contribution to the declaration on TRIPS, its market access initiative for the LDCs, and
its new approach to relations with the ACP countries.  The EU support for and contribution to theGlobal Trust Fund, and other technical assistance measures, were also of note.
268. Nigeria was counting on the EU to maintain a broad support for the reduction of subsidies in
agriculture.  Similarly, the EU should address the issue of tariff peaks and tariff escalation as well as
other non-tariff measures that were obstacles to trade and prevented developing and least developed
countries from gaining access for their products on the EU market. Nigeria urged the EU to takecognisance, in its trade relations, of Africa’s level of development, as the continent had the largest
number of LDCs and low-income countries.
269. Nigeria recognized efforts under way to improve the EU's trade policies, and in particular the
CAP. Nigeria urged the EU to remain committed to the integration of developing countries, and in
particular of the LDCs and low-income countries of Africa, and to reflect this commitment in the newACP-EU Partnership Agreement, w ith a view to boosting trade flows from these countries to the EU.
Nigeria looked forward to the EU's leadership in supporting technical assistance programmes and
capacity-building measures for these countries.WT/TPR/M/102
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V. REPLIES FROM THE REPRESENTATIVE OF THE EUROPEAN COMMISSION  
AND ADDITIONAL COMMENTS
270. The Chairperson invited the representative of the European Commission to focus his
responses on three main themes: (i) economic environment; (ii) trade policies and measures; and
(iii) sectoral policies and measures.
271. The representative of the European Commission noted that his delegation had received
around 650 questions, and that most of the replies were contained in the document tabled by the
Commission, but that more were forthcoming, especially with regard to those that had been submitted
at a late stage in the process of preparing the meeting.
272. He observed that the discussant had focussed his introductory remarks on the impact of
globalization on developing countries, and the need for adjustments of EU policies in various areas if
objectives such as poverty reduction, avoiding the degradation of the environment, opportunities forbetter economic growth and for improved govern ance and social development (including health),
were to be achieved. The Commission shared entirely the views of the discussant on the  significance
of the UN Millennium Development Goals, and considered them to be of the highest importance for
sustainable development. The question was how the WTO, or trade liberalization, could contribute to
the achievement of those goals, and what role the EU could play, as a leading trading group, in thatprocess.  One possibility was that the Commission might bring forward a proposal that the WTO
should take a formal decision to adopt/approve the UN goals, and should craft suitable language as to
how the goals of the DDA and other actions could contribute. The Commission agreed that the WTO
should not stand aside.
273. The discussant had referred to the need for adjustment in EU policies, and had asked wether
the EU was doing enough to adjust in agriculture and in other areas where developing countries could
increase their exports, or whether it could do more. He and several other participants had referred tohigh tariff rates, peaks, tariff escalation, and quotas on steel and on textiles and clothing.  In fact,
steel (chapters 72 and 73) had been  a zero-for-zero sector in the Uruguay Round, and the applied
tariffs of the EU were generally at zero, occasionally at 2.7%, or even 3.7% in one case. These were
not tariff "peaks". Steel was in any event a capital-intensive sector where the natural comparative
advantage of developing countries was not evident.
274. On textiles and clothing,  the EU had harmonized its rates at 8% for fabrics and at 12% for
garments in the Uruguay Round, in the vain hope th at other leading players would do the same; the
current  average rate for the sector as a whole was 7.9%.  Among leading importers of textiles, only
Japan had tariffs at a similar level; much higher tariffs were in place in the United States, Canada and
Australia.   Although it was true that the tariffs applied by the EU in the sector were well above theEU's average for non-agricultural products – 7.9% compared with 4.1% –  it did not mean that tariff
levels were above the average for WTO Members, or that there were peaks. Furthermore, the EU was
committed to  eliminating quotas on textile and clothing products under the ATC.
275. Thus, in these two areas, the EU already had very low levels of protection, and adjustment
was not an issue.  With regard to the EU's "standards" on textiles and clothing the representativewondered whether this was, in fact, a reference to rules of origin problems that had been incorrectly
described.
276. The Commission was aware that there was work to be done, and adjustment was needed in
the agriculture and fisheries sectors.  The extra costs of the system for consumers and taxpayers were,
however, an internal issue, as was the concentration of support payments on only a few farmers, as inthe U.S. system.  One of the Commission’s proposals in the Mid-Term Review  was for a CAP withWT/TPR/M/102
Page 46
payments to individual farmers, but  this was no t a popular suggestion.  Members should be aware
that, in addition to WTO commitments, the EU had two powerful domestic reasons to pursue reform:
a budget envelope, which established expenditure constraints, and the prospect of enlargement, which
would not permit support policies to continue.
277. The representative considered it too simple to argue that the two thirds of poor people around
the world who lived and worked in the agriculture sector were suffering from the EU policies. The
vast majority were engaged in subsistence agriculture, and in supplying the needs of the village, or thenearest town; few were engaged in international trade. It was true that exports from the EU, which
received export restitution payments, could distort domestic markets in poor countries, and might
have an impact even on those outside internationa l trade, but this was a priority for the ongoing
negotiations.
278. On the issue of technical regulations and social policies, the discussant appeared to be arguing
that the EU was over-regulating, and in so doing had raised costs for third-country producers more
than for its own firms, or that regulations could cau se trade diversion or might be discriminatory.  The
example given was the proposed directive on waste electronic and electrical equipement (WEEE),
which represented a major policy shift towards the polluter-pays principle.  Although costs would rise
for all companies, the Commission did not believe there would be greater effects on third-countryproducers. If they were not associated with EU fi rms or importers, who could be made to share the
burden, there would undoubtedly be specialized fi rms who would perform the service of waste
management for a fee.
279. The Commission also did not agree with the disc ussant's argument that the mutual recognition
agreements, which were available only to a few trading partners, might be contrary to the MFN
principle. These arrangements were typical of WTO-plus treatment, where two parties agreed to
accept obligations towards each other that were not part of the basic WTO framework. The TBTAgreement provided for conformity assessment by the importing country only, and, while the
possibility of recognizing assessment by others was envisaged in its Article 6, it was not an
unconditional right of other Members  to have their assessments accepted.  This was clear from the
use of the terms “provided it is satisfied”, and the reference to consultations to arrive at a mutually
satisfactory understanding.  The EU was ready to address this issue in the new round of negotiations.
280. The Commission also disagreed with the argument, with respect to food safety, that the
precautionary principle had been abused for protectionist purposes. What was being protected was the
health of consumers and of the public.  Article 2 of the SPS Agreement allowed some flexibility for
governments to fix their own standards provided the criteria set out therein were met ("measures only
to the extent necessary" and "non-discrimination").  Members had to base their measures oninternational standards, but Article 3.3 specifically provided that they might opt for higher standards
of protection provided they were scientifically justified.  Given the very high level of consumer
concerns in the EU following the BSE outbreak, a nd more recently foot-and-mouth disease in several
Member States, the EU was politically obliged for the moment to set high standards, but they should
also be scientifically justified.
281. The representative presented his delegation's responses to points raised by Members under the
three clusters suggested by the Chairperson.
(i) Economic environment
282. The Commission was pleased that several delegations had recognized the positive effects
expected from the impending enlargement of the Co mmunity.  In response to the delegations who had
raised concerns on the impact of enlargement on the WTO, although this issue did not fall within theWT/TPR/M/102
Page 47
scope of the current Review, he stated that, as in the past, there would be a net benefit to third
countries from EU enlargement, w ith the general incidence of changes being on the whole positive.
Enlargement would stimulate trade, increase the size of the European economy, stimulate investment,
and result in the freer flow of goods and services from third countries around a larger economy. The
EU would respect all its WTO obligations related to enlargement. It was inevitable that enlargement
would increase the proportion of internal trade relativ e to the external trade of the EU, since the size
of the internal market would increase, but the overall pie would also increase.
New round
283. Many delegations had expressed their appreciation of the role played by the EU in the launch
of a new round at Doha. This had been a difficult endeavour over the last two years, but ultimately
very successful.  The EU intented to continue to exercise that leadership, being committedmultilateralists, and believed in the merits of inte rnational cooperation, international rule-making, and
international governance.  A major part of that commitment was to the development and the
sustainability goals of the Doha Declaration, as stressed by the discussant. Rule-making was therefore
a major component of the negotiations because it secured and rendered irreversible market access
benefits while helping Members to manage globalization.
Regional trade relations
284. He was grateful to many delegations for the broadly positive assessment of the free-trade
agreements recently concluded by the EU, and for the views on the future arrangements to be
concluded under the ACP-EU Partnership Agreement. The latter was of great importance in helping to
stimulate regional markets and to promote South-South trade in the ACP regions. With respect to the
questions from certain delegations on the nature of the EU benchmark for covering substantially alltrade in its FTAs, and whether it included agricultural products, the EU had abided by an internal
standard of covering at least 90% of all trade, including agriculture, in the recent Euro-Med
agreements and the agreement with Chile. The Doha negotiations on RTAs could benefit from the
wider adoption of such benchmarks.  They could also benefit from the recognition of the economic
benefits of agreements that, like the newer generations of EU agreements, went beyond tariffliberalization to cover cooperation and integration on regulatory issues. There was a  need for new
style RTAs in the globalized economy.
285. With respect to the compatibility of RTAs wi th the WTO, RTAs provided a basis for much
more far-reaching trade liberalization, regulatory init iatives and elimination of non-tariff barriers than
had yet been possible in the WTO. However, to the extent that the EU's rule-making and liberalizationagenda in the WTO was embraced, the pressure for FTAs in the future might well be reduced. In any
case, independent figures and estimates suggested that at present over 40% of EU imports were duty
free and 70% of imports entered the EU market on an MFN basis.
(ii) Trade policies and measures
Trade defence instruments
286. The EU understood the concern of some of its partners on the use of anti-dumping measures,
but noted that its procedures for such measures were more rigorous than those of most other
Members.  Furthermore, while the EU had reduced  its use of anti-dumping measures, their use by
other Members was increasing. The EU shared the interest of many Members to see continuedpressure on, and reform of, trade defence instrument s.  The EU had therefore been open to and even
supportive of the DDA negotiations to tighten the use of anti-dumping, and to introduce, on a
multilateral basis, several disciplines already applied by the EU.WT/TPR/M/102
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287. As one of the world's biggest markets, the EU was more exposed to unfair trade practices than
other, smaller markets, which explained the num ber of anti-dumping actions taken.  However, in
terms of the total value and proportion of affected imports, the EU was a very moderate user, far more
so than certain of the Members who had raised concerns in this area.
288. As regards steel, the reason for the recent safeguard action was known: the EU had been the
main victim of a protectionist U.S. measure and had therefore been forced to react. However, the EU
action, unlike that of the United States, provided generous tariff quotas, roughly equivalent to importsin 2001, beyond which  additional duties would have to be paid.  Since the measures had been
introduced, not one tonne of steel had been subject to higher tariffs on entry into the EU.  These
measures were subject to review to see what wa s required beyond September 2002, as diversion from
the U.S. market had been less important than anticipated. As the  discussant had noted, the sector
needed structural adjustment and not unilateral import restrictions. The EU encouraged the UnitedStates to engage in adjustment with the same seriousness as the EU.
Regulatory issues
289. A number of delegations, including Switzerland, Canada, and the United States had suggested
that concerns over the regulatory processes of the EU could be allayed by greater third-countryparticipation in these processes.  There was a trend to increase the scope for third countries'
participation as a principle of better governance. For example, the European Food Safety Agency
(EFSA) provided for third-country participation in its scientific work.
290. The White Paper on Governance had been open to third-country consultation. The
Commission would decide by the end of 2002 on how to bring third countries more into the process of
making regulations, taking into account comments received from its partners. The EU had instituted
open access  to virtually all its documents, as shown in its written replies to the United States and to
others.  The Sustainability Impact Assessments  of the DDA and of negotiations on FTAs were also
open to comments and participation by third countries and by civil society, and could be accessed on
the web-site of the Commission.  In the context of the proposals made on trade facilitation for the
DDA, the Commission had proposed changes to Article X of the GATT, to improve transparency and
consultation on regulations, and the Commission invited other delegations to join in improving theWTO rules in this area.  Work was also under way on a proposal to improve access to information on
EU rules and requirements, in particular for developing country exporters, and give early warning of
any concerns over proposed standards or regulations affecting their exports.
Specific regulatory measures and policies
291. China had raised concerns about the implementation of food safety controls in Europe that
had impeded its exports. Although the EU regretted having to apply any measures that disturbed trade
relations, the measures in question were necessary.  If China felt that the EU was in breach of its
WTO obligations, it was free to use the dispute settlement mechanism.  In response to a large number
of questions regarding the introduction of new food safety rules in the EU, the Commission noted thatthe draft regulation 178/2002 covering new food safety laws in the EU, including the creation of the
EFSA, had been notified to the WTO in February 2001, an extended deadline for comments had been
provided until 26 May 2001, but no comments had been received from third countries.
292. A number of concerns were expressed about the European approach to risk assessment and
precaution, for example as regards genetically modi fied organisms (GMOs).  The EU's approach to
precaution involved comprehensive pre-market scientific risk assessment, which was taken into
account when the Council took decisions. The same applied to hormones, where the Commision was
carrying out further scientific assessments in line with the findings of the dispute settlement panel,WT/TPR/M/102
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and had invited submissions from any source, including industry.  In trying to take the correct
approach to precaution, the EU was in the vanguard of those Members who were having to find theappropriate balance between trade and the protection of health and safety, often without clear
international consensus on where the balance should be struck.  Many of the issues confronting the
European regulator at present would sooner or later confront regulators of other Members.
293. The representative also recalled that the Commission had offered, before Doha to further
codify the WTO approach to precaution set out in the SPS Agreement, as clarified by the AppellateBody.  As the world's largest agricultural exporter, the EU was perhaps more concerned than anybody
else that the application of precaution not be abused or turned into a protectionist weapon that could
reduce EU access to third-country markets. The EU needed as much predictability for its traders as
possible. Its offer, however, had not been taken up. The EU was also devoting considerable resources
to technical assistance to developing countries  to help them understand and comply with EU
regulatory requirements.  The Commission agreed with Hong Kong, China that trade-related technical
assistance (TRTA) was no substitute for market access, but such access could only be really effective
if there was the capacity to comply with the regu lations of the export market, and TRTA played a
major role to this end.
294. The proposed directive on waste electronic and electrical equipment had also been mentioned
by many delegations, with concerns about its impact on industry profits.  In some cases it was by
definition not possible to impose higher environmental regulations without having a negative impact
on producers' bottom line.  All one could do was to ensure that the measure was transparent, non-
discriminatory, and proportionate, which the Commi ssion had done; no Member had challenged either
the legitimacy of this regulation or its aims.
Intellectual property protection
295. Some questions had been received on the protection of geographical indications (GIs) to
which detailed answers had been provided in writing.  Since the protection of GI's was recognized in
the TRIPS Agreement as legitimate, it was not a disguised trade barrier.  With respect to the newly
introduced wine labelling regulation, Members had raised concerns over the manner in which it had
been notified to the TBT Committee. The Commissi on had rectified the problem and the regulation
was open to comments from trading partners until 9 August 2002.  The EU recognized its obligation
under the TBT Agreement to take into account Members' comments.
(iii) Sectoral policies
Agriculture
296. Many of the questions on agriculture were outside the scope of the Review as the details of
the Mid-Term Review of the CAP were still under ex amination in the Council.  The general direction
was clearly towards less trade distortive means of support, budgetary reform to prepare, inter alia , for
enlargement, and a more sustainable form of agriculture in Europe in which support was progressively
decoupled from production.  In the WTO, the EU was committed to negotiating reductions across thethree pillars of market access, export subsidies, and domestic support. What was at stake was the
pace, and the gradient, and not the principle of reform itself.
297. The EU was very grateful to Uruguay for it s recognition that the EU had stuck to its
agriculture commitments, and to New Zealand for its encouraging statement about the trend of
European agriculture policy, and moderately grateful to Australia for its more critical observations.Australia's statistics, which showed that food imports  into the EU had actually decreased since the end
of the Uruguay Round, were incorrect.  The EU's imports of products under Chapters 1 to 24 had inWT/TPR/M/102
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fact increased from €46 billion to €59 billion between 1995 and 2001; those from Australia had
increased from €1.2 billion to €2.1 billion, which was almost double. There might however be adifferent perspective when using US$ denominated values. The EU remained the world's biggest
agricultural importer, importing more than the United States, Canada, Japan, Australia, and New
Zealand together.
Fisheries
298. Both the discussant and some delegations had raised questions on the current direction of the
fisheries policy.  Like the Mid-Term Review  of the CAP, the CFP was being reviewed and proposals
from the Commission would be discussed in the Fi sheries Council in October 2002. No decisions had
yet been taken, although they would have to be by  the end of 2002 for the changes to be introduced in
2003.  It was not possible to give answers to questions that were still under discussion, however,Members were aware of the content of the Commission's proposals, which sought to reconcile the
need to conserve fish stocks at sustainable levels, while ensuring the managed rationalization of the
fishing industry.  As the discussant had pointed out , the EU was seeking to manage a difficult process
of structural adjustment, to manage the tensions between economic and industrial policies, consumer
interests, and the preservation of the global co mmons, in a manner that had public support. Although
this was not easy, it was made easier through consultation and transparent, heavily-discussed, and
democratic decision-making.
Textiles and clothing
299. Certain delegations had noted their concern regarding the backloading of textiles and clothing
liberalization; these had been heard regularly in the Textiles Monitoring Body.  Several Members
claimed that the EU had not observed the spirit of the ATC; the Commission disagreed. The spirit ofthe ATC did not exist other than through its legally binding commitments, which the EU  had
implemented to the letter. The EU would remove all remaining restrictions on schedule as foreseen in
the ATC. For Members who wanted accelerated access to the EU market, the EU was also open to
negotiating bilateral agreements of the kind recently negotiated with Sri Lanka and with other
countries.
300. The discussant had raised more fundamental questions about EU trade policy in the textiles
and clothing sector, where developing countries enjoyed a comparative advantage, and where, in his
view, liberalization by the EU could contribute to development and poverty reduction, and where
structural adjustment was therefore necessary. The representative had no fundamental difficulty with
these observations.  As was the case of the steel sector, the EU textiles and clothing industry hadalready adjusted considerably in the last 20 years in terms of the number of employees, and had
upgraded to the higher value products where it remained very competitive. The EU recognized fully
the claims of developing countries for a bigger share of the textiles and clothing markets; this sector
received preferences and had been included in the EBA.  Improved market access remained a key area
for the tariff negotiations under the DDA, it should be part of the liberalization process, and wascertainly a sector through which the developmental credentials of the negotiations would be judged.
301. The discussant thanked the Commission for its approach to questions and points raised by
delegations. With respect to the EU's broad ap proach to globalization,  the EU had proposed to
increase the efficiency of its domestic market through adjustments to be partially balanced with social
policies and regulations as the process of globalization removed and eroded away tariff and non tariffbarriers. At the global level, the EU argued that governments should accelerate the process of
globalization, an inexorable force propelled by tr ade, finance, and information technology, and that
they should conterbalance this process with rules and regulations in the WTO.  In Doha, the EU'sWT/TPR/M/102
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position was that rules should be extended to competition, investment, government procurement, trade
facilitation, and environment.  There was a strong tension between these two approaches.
302. Members needed to see whether the EU's trade policy was fully consistent with this general
thrust. There were great opportunities to enhance the environmental sustainability of activity in the
agriculture and fisheries sectors.  There was also a need for vigilance and caution so that social
policies were not captured by protectionist lobbies.
303. Although the EU had not sufficiently addressed the development dimension of its policies, the
discussant noted the significant role played by the EU in a number of areas of concern for developing
countries and development.  In particular, he thanked the EU for posing the laudable challenge of
adopting the UN Millennium Development Goals in the WTO, and encouraged Members to move in
that direction.
304. He had not argued that EU average tariffs were high, however, he maintained his position
that, of the 10,000 or so lines of the EU tariff, there were around 1,000 tariff lines in labour-intensive
sectors such as clothing, textiles, and processed food that had a greater impact on developing
countries, and where there were high tariffs, tariffs peaks, escalation, and quotas, together with the
largest percentage of anti-dumping and other trade remedies actions.  Such protection had had an
extremely negative impact on many developing countries.
305. On steel, it was true that capital-poor developing countries might find it difficult to compete.
But a country like South Africa could be extremely competitive outside the high end of the market
because of its low energy costs, and other developing countries also shared that potential.
306. He agreed with the Commission that the consumer and taxpayer costs of protection in
agriculture and fisheries, and the disproportionate share of large farmers in total agricultural support
were issues of internal competence.  However, given the size of the EU economy, such policies
impacted directly on the economic potential of other countries and on the global commons, and, thus,were of global concern.  Although it was true that three quarters or more of farmers in developing
countries were engaged in production for the domestic sector, their export potential could develop if
market access opportunities were to be made available.
307. He agreed with the Commission that  social policies and domestic regulations were generally
useful in counterbalancing negative effects of globalization. The polluter-pays principle was alsouseful;  it would be argued at the forthcoming World Summit for Sustainable Development in
Johannesburg that those who polluted had to pay, and those who polluted the most in the world were
well known.  The difficulty in the EU was that this principle was applied in a manner that gave
advantage to domestic producers, who could adjust more quickly than third-country producers. The
issue was how to apply this principle in a non-discriminatory manner.
308. The discussant considered that, against the background of the EU's WTO commitments,
debate among Members on the occasion of this Re view of the EU might usefully focus on how to
ensure that adjustment, promotion of environment su stainability, and social policies did not result in
increased protection.
309. The representative of Argentina observed that, in the Commission’s proposals for the
Mid-Term Review of the CAP, no reference was made to the means or measures proposed to
implement the commitments assumed by the EU at the Ministerial Conference at Doha. On meat, for
example, the proposals stated that the conditions under which export subsidies for live animals could
be granted would be reinforced, which implied a continuation of export subsidies.  This was
inconsistent with the commitments assumed at Doha.WT/TPR/M/102
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310. Argentina also observed that certain sectors had been excluded from the proposed reform of
the CAP, and hoped that the Member States woul d improve the Commission's proposal to put it in
conformity with its Doha commitments.  The representative also stressed that non-trade concerns had
been clearly defined both in the Doha Declarati on, and in the Agreement on Agriculture, which stated
in its Article 20(c) that consideration should be given only to non-trade concerns that were consistent
with the objectives of the agricultural reform process.  Thus, not all non-trade concerns could be taken
into account. Argentina therefore urged the EU to ensure that its non-trade concerns were as leasttrade restrictive as possible.
311. Argentina welcomed the Commission's comment that the SPS Agreement was not part of the
ongoing negotiations, and hoped this point would also be noted in the negotiations on agriculture.
Although it was true that the SPS Agreement permitted standards of a higher level than international
ones to be applied,  its Article 3.3. stipulated that they had to be based on a scientific risk assesment.
312. Argentina considered there was a severe contradiction in the environmental policy of the EU,
as the notification made to the Committee on Agriculture suggested that the EU applied the polluter-
gets-paid principle rather than the polluter-pays principle. The  support provided to farmers under the
amber and blue boxes amounted to €77 billion, while support under the green box was €5 billion,
which was not even 10% of production-distorting s upport.  Argentina believed that the environmental
objectives of the EU would be better served through the elimination of its export subsidies, which
encouraged a greater use of pesticides, fertilizers, and energy consumption.  This was a contradiction
that remained to be solved.
313. With respect to the rural development of developi ng countries, Argentina noted that this could
be financed through exports or investment, but that the EU's agricultural support policies distorted
investment flows to these countries.  It was to be hoped that the CAP would receive less attention at
the next Review of the EU in 2004.
314. The representative of Australia observed that replies to some questions submitted by his
delegation remained outstanding, and he looked forw ard to receiving them in due course. On the trend
in the value of EU food imports, he acknowledged  that there was a question as to how to make
comparative analyses of this nature based on statistics.  However, it appeared perfectly reasonable to
use statistics based on the world's largest currency, the US$, to analyse developments since the end ofthe Uruguay Round, especially as the euro had not existed at the time.  The general point remained the
same:  Members had hoped that substantially increased market access would result from the Uruguay
Round, and were still waiting to see that improvement.
315. Australia also noted that the Commission had not specifically answered the question of
whether its measure on GMO traceability was based on a science-based risk assessment, as requiredby the SPS Agreement, and if so, to provide a copy of that risk assessment.
316. Australia had noted that the EU had been seek ing, through a number of MEAs, to water down
the concept of precaution, clearly ennunciated in the SPS Agreement.  Precaution was a principle
already incorporated in the SPS Agreement. Members would be better off with that Agreement, rather
than trying to water down the provisions on precaution, and have non-scientific risk assessment.
317. He looked forward to replies to questions submitted by his country and by Brazil on the EU's
sugar regime, on wine regulations, and on their WTO consistency. Without wishing to anticipate the
results of the ongoing discussions on the CFP, Austra lia registered a note of disappointment that the
EU had not as yet submitted proposals in the rule s group on how to improve the environment, and in
particular the sustainability of fishing stocks around the world, by eliminating fishery subsidies.WT/TPR/M/102
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318. The representative of Kenya agreed with the discussant's observation that, EU domestic
policies were of global concern.  Local farmers in developing countries like Kenya had been
adversely affected by cheap and competitive food products exported by the EU, thus frustrating their
poverty alleviation efforts.  Kenya called upon the EU to address its export subsidy policies. EU
policy on food aid had also adversely affected poverty reduction strategies. Kenya invited the EU to
give  serious consideration to the option of sourcing food aid in recipient countries, where food was
cheaper, so as to promote the poor majority engaged in subsistence agriculture.
319. The representative of Brazil recalled that his delegation had submitted questions to which the
EU had not replied, namely on sugar, and on services, in particular on the review of the "television
without frontiers" directive, and market access barriers inscribed in the EU Schedule under the form
of economic needs tests in a number of sectors.  Brazil looked forward to receiving those answers.
320. The representative of New Zealand observed that the EU tended to use a "WTO plus"
approach in developing many regulatory measures, like in the area of TRIPS. This approach was
legitimate, but not if it led to a breach of other WTO provisisons.  She invited the Commission to take
this comment into account when responding to her country's questions on wine labelling regulations.
321. The representative of Canada noted that the high attendance of the meeting, and the number
of questions submitted, demonstrated the interest of Members in the EU's trade policy, and its
importance in international trade.  The prospect of enlargement, in spite of the net benefit mentioned
by the EU, had had, and would continue to have, effects on imports from third countries. Canada
urged the EU to consider its negative impact on th ird countries.  The EU was also encouraged to be
more transparent when developing regulations, and transparency would also be welcome with regard
to the implementation of directives by Member States when transposed into national law.
322. The representative of the United States supported the comments of the representative of the
Commission on the burdensome nature of the proce ss of review, especially for those on the two-year
cycle.
323. In developing its policies and positions on the link between trade and social policies, the EU
had to ensure not only transparency, and participa tion by third parties, but also implementation within
the EU so as to avoid discrimination of third parties at the border. As had also been mentioned by
Canada, variations in the implementation of directives by Member States was a matter of concern.
324. The United States also shared the concerns of other delegations on the evolution of the EU's
regulatory process. While there had been improvements in transparency, third parties were still left
out of the process until a decision had been taken. The recent wine labelling regulations were
particularly disturbing. The EU was trying to expand its role in intellectual property rights related to
wine, by creating new concepts, including on bottle shapes and different kinds of traditionalexpressions.  Unilateral imposition of these concepts was a matter of concern. The United States
wished to be consulted at an ealier stage of the EU decision-making process in this area.  She also
shared other delegation's concerns on the EU's handling of the debate on GMOs and risk assessment,
and noted the importance of risk management.
325. The United States welcomed the Commission’s initiative on governance to increase
third-party participation, and would pursue the i ssue with the EU as it moved in that direction.
Discussions had been held with acceeding countries and the EU on how to mitigate some of the
effects of the transitional process of enlargement on U.S. exporters and investors.  While supporting
the enlargement of the EU, the United States believed that it should not lead to different levels of
market access to EU Member States for third countries. The United States appreciated the ongoingdialogue with the Commission on the matter, but would remain vigilant as the process was finalized.WT/TPR/M/102
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326. The representative of Malaysia did not agree with the Commission's statement that the
proposed directive on waste electronic and electrical equipment would not lead to higher costs for
third-countries.  Multiple waste disposal systems would be set up by individual companies and by
specialized companies; having separate facilities would increase unit costs for waste disposal for
smaller companies compared with a system with centralized facilities.  Smaller companies that had to
use specialized waste disposal companies would not enjoy economies of scale, and, thus, would
certainly have to pay, as would companies from third countries.
327. The representative of Korea reiterated the concern that the subsidies provided by the EU to
the shipbuilding industry would give a wrong sign al to other ailing industries, which could demand
relief from foreign competition.  Korea considered that the EU shipbuilding industry was losing
market share due to a lack of competitiveness and not because of subsidies provided by other
countries. Korea hoped that the two countries w ould reach a mutually satisfactory solution on the
matter in coming months.
328. The provisional safeguard action on steel taken by the EU was contributing to the distortion
of international steel trade and encouraging others to take similar measures, thus contributing to the
worsening of the climate for the DDA negotiations.  Korea was encouraged by the Commission's
statement that the action was under review, and his delegation hoped that the EU would play itsleadership role by discontinuing its measures on steel.  Technical regulations for human and animal
health, safety, and environment were a substantial burden on international trade. Korea emphasized
that all interested entities should be given the opport unity to convey their view s prior to the entry into
force of such regulations.
329. The representative of Hungary confirmed the Commission's position that enlargement of the
EU would result in a positive net benefit for thir d countries.  Preliminary studies had shown that
Hungary's accession to the EU would result in lower tariff rates for a number of products, withincreases only on a few tariff lines. Technical regulations had to be drafted carefully to avoid even
unintended negative effects. Referring to the U.S. written question, he stated that the rules of origin in
Hungary’s Protocol on European Conformity Assessm ent would be modified to take account of the
concerns expressed. Hungary was interested in th e up-coming review of the EU measures on steel,
and was in contact with the Commission on this issue.  In the framework of the ongoing negotiationson agriculture, Hungary endorsed the view of the  Commission that all forms of support to exports
should be considered, including export credits and state trading, and that the negotiations also should
consider the issue of food aid, as noted by Kenya.
330. The representative of Japan noted that his delegation was not fully satisfied with the replies
from the Commission on such issues as anti-dumping. With regard to the EU's provisonal safeguard
measures on steel, Japan shared the concern of Korea on the spread of protectionism at a sensitive
time for the DDA negotiations. Japan agreed with the Commission that structural adjustment in the
steel sector was necessary.  Japan shared the concerns expressed by other speakers with regard to the
lack of transparency in the Commission's decision-making process for technical regulations.  It also
shared the United States concern with respect to the effect on third countries of enlargement, despitethe statement of the Commission that there would be a net benefit. Japan hoped that interests of third-
party companies, where invoked, would be duly taken into account.
331. The representative of the Commission pledged to provide replies at a later stage to Brazil's
questions on services.  Replies on sugar had not been provided because this issue was to be discussed
in the next phase of the Mid-Term Review of  the CAP, and proposals would be made by the
Commission in 2003.  The EBA initiative, however,  demonstrated the willingness of the EU to
change some aspects of its policy.WT/TPR/M/102
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332. With respect to the wine labelling regulation from the Commission, this had been adopted but
would not come into force before the start of 2003. The Commission accepted that notification to theWTO should have taken place and this had now been rectified;  the Commission was providing an
extended period for Members to provide their comments.  The Commission’s ability to take
comments into account would, however, depend on whether it would be challenged on fundamental
principles of intellectual property rights protection or  whether it would just be asked to think of other
aspects of that regulation.
333. As Member States were continuing their discussions on the reform of the CFP, the
Commission was not in a position to make proposals on fishery subsidies in the WTO.  The
Commission noted that it had proposed to Member States the elimination of subsidies for new vessels
or for increasing efficiency of existing vessels, which both added to the problem of over capacity.  To
cut the EU fishing effort by 30% to 60% dependin g on the species, 8,600 boats needed to be scrapped,
which was 8.5% of the total fishing fleet and 18.5% of the total tonnage.
334. On the issue of the net benefit to third countries from enlargement of the EU, the
representative referred to Article XXIV and to the statements of Japan and Canada; the EU would be
ready to take into account individual cases, on condition that Members took into account instances
where they had benefited from tariff reductions by the EU.
335. On the issue of consultation of third countries in the rule-making process, in response to the
point raised by the United States,  he noted that improvements were under consideration by the
Commission.  In response to Australia's comment on statistics on EU food imports since the end of
the Uruguay Round, the representative stated that this was a complex issue on which the two countries
could agree to disagree, but that Australia should not assume that there had not been a genuine
improvement of market access in the EU.
336. Referring to the question raised by Canada, the representative observed that traceability and
labelling were not one and the same matter.  Labelling was generally not linked to food safety, but
was related to the need to provide consumers with information, while traceability was linked to food
safety.   The Commission understood the need for consideration of the full implications of the
proposed measures on GMOs, but noted that the European Parliament wished to restrict the presence
of GMOs in the food chain even further.  There was clearly a link between approval of the traceabilityand labelling regulations and political support for restarting the approval of new GMOs.
337. Referring to the points raised on the use of the precautionary principle, the representative
recalled that the Commision’s proposal before Doha to negotiate on the SPS Agreement to further
codify some of its elements, and notably the principle of precaution, had been rejected as an ultra
protectionist move. He wondered whether Members would now wish to re-consider their positions.
338. In response to Argentina, the representative noted that the TPRB was neither the Committee
on Agriculture, nor the agriculture negotiating group, and that it was therefore not appropriate to enter
into too much detail on agricultural issues.  The Commission was commited to working towards the
elimination of export subsidies.  However, there were still at least two years of negotiations plus four
or five years for implementation.  It was not in the language of Article 20 of the Agreement onAgriculture that non-trade concerns could only be taken into account if they were compatible with the
reform process.    These questions belonged in the negotiating group.
339. The representative of Australia noted that the Commission had not responded to the question
on whether the EU had conducted a science-based risk assessment with regard to the proposed
measures on GMOs.  Although Australia understood th e politics of the issue in the EU, the EU also
had WTO obligations to observe: the SPS Agreement stipulated that a science-based risk assessmentWT/TPR/M/102
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had to be carried out.  Although Members might regret their refusal at Doha to take up the
Commission's proposal to negotiate on TBT, SPS, and safeguards, these were issues for the future.Australia hoped the EU would not try to bring its proposals in through the back door, namely in the
negotiations on agriculture. Australia also recalled that non-trade issues were provided for in the DDA
mandate on agriculture.
340. The representative of the European Commission pledged to respond to outstanding questions
in writing in due course.WT/TPR/M/102
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON
341. The Chairperson observed that the sixth Review of the European Union had been the occasion
for a very open and fruitful dialogue between the EU and its trading partners.  Members were  very
conscious of the importance of the EU to their domestic economies, as a market for their exports, as a
source of imports and as a provider of foreign direct investment.  There were consequently many
interventions and hundreds of questions were asked.  In this regard, Deputy Director-General Abbott
and his team were to be commended for the willingness to engage in the true spirit of the reviewprocess and for the heroic efforts they had made to provide in such short order the written answers to
most of the questions posed.
342. Members acknowledged the leadership role of the EU in the WTO, notably in securing
agreement on the DDA, thus demonstrating the support of the EU for an open, rules-based multilateral
trading system.  The continued commitment of the EU was  critical to the success of the DDA.Members also welcomed the EU's strong commitment to enhancing the participation of developing
countries in the WTO, given concrete form in th e "Everything-but-Arms" initiative for LDCs, the
preferences offered to ACP countries, and donations for trade-related technical assistance.
343. The EU was praised for its efforts to improve the growth profile of the European economy.
Members noted the benefits to their traders of the adoption of the euro.  The EU was complimented onthe progress made to complete the Internal Mark et, notably with respect to financial and telecom
services, and encouraged to further open postal services and energy markets to competition.
344. Concerns were raised by many Members on th e impact on their exports to the EU of new
product and product-related regulations for health, consumer protection, safety or environmental
purposes.  Members emphasized their strong attachment to the basic principles underlying the WTO
Agreements, in particular that SPS measures should be based on science, and that unnecessary
obstacles to trade should not be created.  In this regard, the EU's use of the precautionary principlewas queried, as was the wider scope of labelling requirements for meat and biotech products.  Many
developing countries feared a disproportionate impact on their own small and medium-sized
producers of producer responsibility for management of waste.   More generally, given the substantial
impact of many Community acts on the interests of third countries, Members emphasized the
importance they attach to transparency and participation in consultations on proposed regulations.Mr. Abbott indicated that the problem was well recognized by the Commission and that serious
consideration was being given to improving the situation.
345. The EU's extensive network of preferential trade agreements and arrangements was also
discussed.  The Commission emphasized the complementary nature of multilateral and bilateral
liberalization, noting the "WTO plus" nature of recent agreements, and the strengthening of rules onRTAs under the DDA.   A related issue was the potential for trade diversion from the enlargement of
the EU and the adoption of Community policies by candidates.
346. The Common Agricultural Policy (CAP), and prospects for its reform under the DDA,
received a great deal of attention.  Many Members underlined the adverse impact of the CAP on their
exports of agricultural products.  It was also argued that the CAP had hampered the development ofthe agriculture sector in developing countries, which could otherwise be an important source for
economic growth and poverty reduction.  Members welcomed the thrust of the Commission's recently
announced Mid-Term Review of the CAP, although it was considered that far-reaching reforms would
better meet their concerns, notably in the sugar and dairy sectors, and fulfil the ambitions of the DDA.
347. The continued protection of the EU's textiles and clothing sector was another issue that
received considerable attention from Members, who noted the EU had back-loaded the liberalizationWT/TPR/M/102
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of 80% of quotas to the end of the integration process.  Members were also concerned about the
impact on their steel exports to the EU of the sa feguard action on steel and urged the EU not to take
definitive action.  Concern was also expressed on the use of anti-dumping by the EU and the rising
use of countervail.
348. With respect to services, the EU was queried on the barriers to entry of natural persons, as
well as on the preferential terms granted under bilateral agreements.  The EU was encouraged to
ensure that financial service providers from third countries would also benefit fully from the moreopen conditions of competition on the EU market resulting from the Financial Services Action Plan.
349. With respect to intellectual property protection, a number of Members queried the
Commission on the protection of geographical indicatio ns in the EU, in particular those from third
countries.  Questions were asked on the implications of the new directive on copyright and
neighbouring rights, and the proposals on a Community Patent, computer-implemented inventions,and possible new legislation on enforcement of intellectual property rights.
350. Members also sought further clarification on a number of specific areas, including:
• the reform of the fisheries regime to meet sustainable development objectives;
• the methods used to conduct Sustainability Impact Assessments (SIAs);
• special incentives for adoption of environmental or social standards by third
countries;
• reduction of tariff peaks and tariff escalation;
• subsidies to aircraft manufacture and to shipbuilding, and the elimination of harmful
tax competition;
• the new legislative framework for government procurement and the operation of the
Government Procurement Agreement in the EU;
• the draft block exemption for motor vehicle distribution and servicing agreements;
and
• VAT treatment of transactions effected by e-commerce.
351. In conclusion, the Chairperson considered that there had been a very effective dialogue
between the Commission and the EU's trading partners  on their concerns regarding the course of its
trade and trade-related policy-making.  There was no doubt that the EU was entering an historicallysignificant phase of its development, with improved governance and reshaped institutions on its
current agenda, and enlargement just ahead.  The situation of the European economy, although
improved, remained challenging.  And, while the EU 's attempts to achieve a better balance between
economic efficiency and environmental and social considerations were laudable, the Review meeting
had underlined the extent to which interdependence through trade led countries outside the EU to have
vital interests in the outcome.
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