Category Archives: External trade

The common commercial policy is a pillar for the external relations of the European Union. It is based on a set of uniform rules under the Customs Union and the Common Customs Tariff and governs the commercial relations of the Member States with Non-EU Member Countries. The purpose of the instruments of trade defence and market access is mainly to protect European businesses from obstacles to trade. The EU has evolved during the process of globalisation by aiming for the harmonious development of world trade and fostering fairness and sustainability. It actively encourages the opening of the markets and the development of trade in the multilateral framework of the World Trade Organisation (WTO). At the same time, it supports developing countries and regions through bilateral relations with a view to involving them in world trade using preferential measures.

COMMON TRADE POLICY REGIME
Exports
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Dual-use items
Export credit insurance
Export of cultural goods
Ban on trade in instruments of torture
Imports
Common rules for imports
Common rules for imports from certain Non-EU Member Countries
EU procedure for administering quantitative quotas
Trade in seal products
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Anti-dumping measures
Anti-subsidy measures
Protection against trade barriers
Protection against subsidies and unfair pricing practices which cause injury in the air transport sector

Towards an EU Aid for Trade strategy

Towards an EU Aid for Trade strategy

Outline of the Community (European Union) legislation about Towards an EU Aid for Trade strategy

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Towards an EU Aid for Trade strategy

Document or Iniciative

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions entitled “Towards an EU Aid for Trade strategy – the Commission’s contribution” [COM(2007) 163 final – Not published in the Official Journal].

Summary

Trade is an important catalyst for growth and poverty reduction in developing countries. But successful integration of developing countries into world trade requires more than better market access and strengthened international trade rules. In order to fully exploit the benefits from trade, developing countries also need to remove supply-side constraints and address structural weaknesses. This includes domestic reforms in trade-related policies, trade facilitation, enhancement of customs capacities, upgrading of infrastructure, enhancement of productive capacities and building of domestic and regional markets. Complementary efforts are required in areas such as macroeconomic stability, fiscal reforms, promotion of investment, labour policy, capital and product market regulations and institutions, and human capital development.

Aid for Trade is a very important factor in this context. It is geared to generating growth, employment and income, thereby contributing to the first and eighth Millennium Development Goals, i.e. to reduce the proportion of people living on less than a dollar a day and to establish an open trading and financial system that is rule-based and non-discriminatory.

The objectives of Aid for Trade are:

  • to enable developing countries, particularly the least?developed countries (LDCs), to use trade more effectively to promote growth, employment, development and poverty reduction and to achieve their development objectives;
  • to facilitate the access of these countries to international markets by improving their supply-side capacity and trade-related infrastructure;
  • to help these countries to implement and adjust to trade reform, including via labour market and social adjustments;
  • to assist regional integration;
  • to assist good integration into the world trading system.

An EU Aid for Trade strategy can contribute to these objectives through the following measures:

  • increasing the volumes of EU Aid for Trade, in particular by taking trade?related assistance up to EUR 2 billion a year by 2010, but also by promoting an effective response to wider Aid for Trade needs;
  • enhancing the quality of EU Aid for Trade;
  • implementing effective monitoring and reporting.

Increasing the volumes of Aid for Trade

The Commission recalls that five categories of Aid for Trade were identified by the World Trade Organisation (WTO) Task Force on Aid for Trade, i.e.:

  • trade policy and trade regulation;
  • trade development;
  • trade-related infrastructure;
  • productive capacities;
  • trade-related adjustment.

The first two categories are grouped under “trade?related assistance”. They include:

  • trade policy and trade regulation, which are aimed at ensuring effective participation of developing countries in multilateral trade negotiations and assisting these countries in the implementation of trade-related legislation;
  • development of trade and the business climate, and improvement of business support services and institutions.

In 2005 the EU undertook to increase its trade?related assistance to EUR 2 billion per year by 2010, with half coming from the Commission and the other half from the Member States. The Commission currently provides EUR 840 million per year, whereas Member States contribute only EUR 300 million.

To increase the volume of aid, the Commission recommends that:

  • the Member States reach a level of EUR 600 million per year by 2008, in order to attain the 1 billion target set for 2010;
  • a significant share of the increased aid should be allocated to the African, Caribbean and Pacific (ACP) countries in support of regional integration and Economic Partnership Agreements (EPAs). In particular, the ACP countries must be given guidance on the actual amounts involved.

In addition, in all the developing countries, it is necessary to develop effective approaches to trade needs assessments at regional level and to ensure that these needs will be taken into account in the national development strategies of the partner countries. In particular, the EU should endeavour to apply effectively the instrument of the Integrated Framework * used with the LDCs and to extend the same type of approach to non-LDCs.

The EU must also continue to implement a wider Aid for Trade agenda in order to:

  • support economic infrastructure, productive capacities and trade-related adjustment (fiscal reforms);
  • develop coherent reporting practices for all categories of Aid for Trade.

Enhancing the quality of Aid for Trade

In order to improve the quality and effectiveness of Aid for Trade, the Commission recommends that the EU strategy focuses on the following aspects:

  • lay down the means to ensure that the Aid for Trade actions produce results in this field, e.g. by identifying the areas of Aid for Trade which bring about the widest and most sustainable reduction in poverty;
  • ensure better ownership and participation by integrating trade-related issues into poverty reduction strategies, with active participation by private?sector and civil?society stakeholders;
  • promote the institutional and financial sustainability of programmes by stakeholder capacity?building and ownership in all operations. It is also necessary to guarantee social and environmental sustainability by means of sustainability impact assessment of trade policies and agreements. In the specific case of environmental sustainability, the EU must help partners develop sustainable production methods. Other important aspects are the promotion of decent work and the development of effective labour market and social adjustment mechanisms;
  • ensure joint analysis, programming and delivery between EU partners. The joint analysis of trade-related needs must be undertaken by using the Integrated Framework instrument in the LDCs and by developing similar processes in other countries. The EU could then better coordinate its response strategies in countries and regions. The opportunities for joint delivery depend in particular on progress in working through sector-wide approaches (SWAPs) in the field of Aid for Trade. In particular, the SWAPs are to permit the development of joint delivery methods, such as budget support and co-financing between EU partners;
  • aim for aid effectiveness in regional Aid for Trade, and in particular supporting regional partners’ capacity to own and lead Aid for Trade efforts, coordinating the programme in support of regional and trade integration, streamlining the methods of delivery and enhancing cooperation with non-EU donors. In particular, the EU strategy must give priority to regional interventions in the EPA context.

Implementing effective monitoring and reporting of aid

To make progress in all these areas, monitoring and reporting are essential, both at international and EU levels. In particular, global monitoring and reporting must include the quantitative dimension of Aid for Trade and the qualitative dimension (associated with the effectiveness of the aid). At EU level, the Commission recommends that progress in implementing the EU Aid for Trade strategy should be assessed yearly by the Council.

Finally, the three groups of measures mentioned above must be accompanied by building human capacity in donor organisations. On this subject, the Commission recommends taking stock of the EU’s existing capacity and expertise and of joint European initiatives to develop and share expertise.

Background

This Communication is the Commission’s contribution to further expanding EU support for Aid for Trade with a view to adoption of a joint EU strategy by the Council (see Related Acts). It belongs to a package of measures adopted by the Commission to monitor the honouring of the development policy commitments entered into by the EU (see Related Acts).

Key terms of the act
  • Integrated Framework: multi-donor programme introduced to support LDCs in increasing their participation in the global economy. Its objective is to support LDCs in mainstreaming trade into their national development plans and to assist in a coordinated delivery of trade-related assistance in response to needs identified by the LDCs.

Related Acts

of 15 September 2008 “social provisions in free trade agreements”.
By introducing provisions on labour and sustainable development in its free trade agreements, the European Union (EU) contributes to the economic, political and social stability of its partner countries. This Report enumerates the different models and practices on the subject.

Since 1996 the World Trade Organization (WTO) has committed to respecting the fundamental principles of labour legislation. On the basis of these principles, the International Labour Organization (ILO) adopted an agenda for the promotion of decent work in 2000. This agenda was taken on by the UN and the EU. They committed to including it in their international trade agreements. The agenda is also an essential reference for companies drawing up social responsibility charters and codes.

Some international treaties concluded at the bilateral or regional levels include provisions on labour legislation. In particular, agreements concluded by Canada, the United States, Mercosur and the European Union. The main provisions relate to fundamental standards of labour legislation (freedom of association, collective bargaining, the abolition of child labour, the elimination of all forms of forced labour and discrimination in the workplace). The social provisions in the agreements could extend to other areas, in particular working conditions, minimum wage, working hours, health and safety in the workplace and sustainable development. Clauses related to labour are provided for in the agreements linked to the Generalised System of Preferences, as well as to the possibility for positive or negative sanctions. After their reciprocal opening up of trade, the EU and its partners should deepen their relationships by developing minimum standards and by adopting provisions in other areas, such as fair trade, the negative effects on employment and defending universal values.

The inclusion of such provisions aims at reducing the negative effects of trade liberalisation. However, the Report emphasises that objections to the principles of labour legislation would put the brakes on social development and economic growth.

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 4 April 2007 – From Monterrey to the European Consensus on Development: honouring our commitments [COM(2007) 158 final – Not published in the Official Journal].
This political Communication introduces the two Specific Communications “Keeping Europe’s promises on Financing for Development” and “Towards an EU Aid for Trade strategy – the Commission’s contribution”.

Annual Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 4 April 2007 – Keeping Europe’s promises on Financing for Development [COM(2007) 164 final – Not published in the Official Journal].

International investments: towards a comprehensive European policy

International investments: towards a comprehensive European policy

Outline of the Community (European Union) legislation about International investments: towards a comprehensive European policy

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

International investments: towards a comprehensive European policy

Document or Iniciative

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Towards a comprehensive European international investment policy [COM(2010) 343 final – Not published in the Official Journal].

Summary

The Commission presents a strategy to prepare a new European policy for international investment.

Since the adoption of the Lisbon Treaty, the European Union (EU) has exclusive competence to introduce the progressive liberalisation of Foreign Direct Investment (FDI) transactions *. A new European policy should thus enable the treatment of foreign investors in the EU to be improved, and access for European investors to third-country markets to be facilitated.

The foundations of a common policy

European investors in third countries should be able to benefit from a favourable and stable environment, particularly in countries where the legal, political or economic conditions are insufficient to guarantee the certainty of investments. Thus, at the present time, EU countries conclude Bilateral Investment Treaties (BITs) with third countries, in order to obtain guarantees on the treatment of their investors. However, this situation creates unequal conditions of competition between European investors.

In the future, the EU should obtain guarantees through trade negotiations. Its trade partners should commit to protecting and facilitating the flow of all forms of European investment. The EU may also conclude stand-alone investment agreements with certain countries (in particular with China or Russia), in order to increase the degree of cooperation in one specific trade sector or for all types of investments.

Foreign investors in the EU should in turn benefit from a level playing field and uniform and optimum conditions.

Finally, a common policy should enable investors’ needs to be better addressed at every stage (planning, admission to a country, etc.). EU countries should also be able to adopt measures to promote investment, at national, regional and local levels, in particular through tax incentives or technical assistance.

A common negotiation agenda

Each trade partnership is unique, according to existing relations between partner States. Nevertheless, the Commission identifies a number of principles which should frame its future negotiations as regards international investments. These are:

  • selection criteria for partner countries, which take into account the guarantees offered to European investors (fair and predictable treatment, political and institutional stability, economic potential, etc) and the degree of trade cooperation;
  • the treatment of investment-related fields, in order to cover all transactions concerning the acquisition or establishment of enterprises (costs of fund transfers, payments, intellectual property rights, etc);
  • investment protection standards, specifically concerning the fair treatment of investors, legal certainty, the principle of proportionality of public action and also expropriation rights and the freedom to transfer funds;
  • the implementation of commitments concerning FDI, for example to guarantee transparency or the proper regulation of litigation;
  • States’ international responsibility, in particular concerning the payment of financial compensation.

These principles are to be formalised by a Commission Recommendation.

Key terms
  • Foreign Direct Investment: any foreign investment which serves to establish lasting and direct links with an undertaking whose capital is employed to carry out an economic activity. Such investments may enable shareholders to participate in the management or control of a company.

Related Acts

Proposal for a Regulation of the European Parliament and of the Council establishing transitional arrangements for bilateral investment agreements between Member States and third countries [COM(2010) 344 final – Not published in the Official Journal].
The Commission proposes a transitional framework for implementing international investment agreements. This framework should allow existing agreements to be maintained and conditions to be laid down for future agreements.
Codecision procedure: (COD/2010/197)

This summary is for information only. It is not designed to interpret or replace the reference document, which remains the only binding legal text.

Anti-dumping measures

Anti-dumping measures

Outline of the Community (European Union) legislation about Anti-dumping measures

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Anti-dumping measures

Document or Iniciative

Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community.

Summary

Dumping must be distinguished from simple practices of low-price sales resulting from lower costs or greater productivity. The key criterion in this respect is not, in fact, the relationship between the price of the exported product and that on the market of the country of import, but the relationship between the price of the exported product and its normal value. A product is therefore considered to be dumped if its export price to the European Union (EU) is less than the comparable price for a like product established in the ordinary course of trade within the exporting country.

The normal value to be taken into account to determine if there is dumping is usually based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country.

However, where the exporter in the exporting country does not produce or does not sell a like product, the normal value may be established on the basis of prices of other sellers or producers. In addition, when there are no or insufficient sales of the like product in the ordinary course of trade (for example, sales by a company with a monopoly) or where because of the particular market situation such sales do not permit a proper comparison, the normal value may be calculated on the basis of the cost of production in the country of origin.

In the case of imports from non-market economy countries, the normal value is determined on the basis of the price or constructed value in a market economy third country, or the price from this country to other countries, or where those are not possible, on any other reasonable basis.

The second basis of comparison, the relationship with the normal value in the country of origin which determines the dumping margin, is the export price. This is the price actually paid or payable for the product when sold for export to the EU.

In cases where there is no export price or where the price is set under an association or a compensatory arrangement between the exporter and the importer or a third party, any reference to the export price becomes impossible. It may therefore be constructed on the basis of the price at which the imported products are first resold to an independent buyer, or, if the products are not resold to an independent buyer, or are not resold in the condition in which they were imported, on any reasonable basis. In these cases, adjustments are made to take account of all costs incurred between importation and resale as well as for profits accruing.

Dumping margin

The dumping margin is the amount by which the normal value exceeds the export price. The comparison is made between sales at the same commercial stage and on dates which are as close to each other as possible. The necessary adjustments are made to take account of differences in sales conditions, taxation and other differences which affect price comparability.

Injury

The application of any anti-dumping duty presupposes the presence of a second key element: significant material injury to an EU industry, be it injury caused to an industry established in the EU, the threat of injury or substantial retardation of the establishment of such an industry.

The determination of injury must be based on positive evidence and involve an objective examination of the following elements:

  • the volume of the dumped imports, particularly where there has been a significant increase, either in absolute terms or relative to production or consumption in the EU;
  • the price of dumped imports, in particular to determine whether there has been significant price undercutting as compared with the price of a like product of the EU industry, or whether the effect has been to depress prices or prevent price increases;
  • the consequent impact on the EU industry concerned, particularly in relation to production and utilisation of capacity, stocks, sales, market share, price changes, profits, return on investments, cash flow and employment.

Moreover, the effect of the dumping must be assessed in relation to the production of the like product by the EU industry, taking into account the narrowest production sector.

The term “EU industry” covers EU producers as a whole or those of them whose collective output constitutes a major proportion of the total EU production. However, when producers are themselves importers of a dumped product, “EU industry” may be interpreted as referring to the other producers in this sector.

Initiation of proceedings

Proceedings are initiated upon a written complaint by any natural or legal person, or any association not having legal personality, acting on behalf of an EU industry. Where, in the absence of any complaint, an EU country is in possession of sufficient evidence of dumping and of resultant injury to the EU industry, it shall immediately communicate such evidence to the Commission.

The complaint must include evidence of dumping, injury and a causal link between these two elements. It shall contain such information on the following:

  • the identity of the complainant and a description of the volume and value of the EU production concerned;
  • a complete description of the allegedly dumped product, the country of origin, the identity of each known producer/exporter and importer;
  • information on prices at which the product in question is sold when destined for consumption in the domestic markets of the country of origin or export, export price of the product;
  • information on changes in the volume of imports of the product concerned and effect of those imports on prices of the like product in the EU.

The complaint is considered to have been made by or on behalf of the EU industry if it is supported by those EU producers whose collective output constitutes more than 50 % of the total EU production.

The complaint is examined by an advisory committee, which consists of representatives of each EU country, with a representative of the Commission as chairman. If this consultation reveals that the complaint does not contain sufficient evidence to justify initiating a proceeding, the complaint is rejected and the complainant duly informed.

Where, after consultation within the committee, it is apparent that there is sufficient evidence to justify initiating a proceeding, the Commission must do so within 45 days of the lodging of the complaint. The Commission publishes in the Official Journal of the European Union a notice of initiation of the investigation, indicating the product and countries concerned, giving a summary of the information received and stating the period within which interested parties may make themselves known and present their views.

The complaint may be withdrawn prior to initiation of the investigation.

Investigations

The investigation carried out by the Commission, in cooperation with the EU countries, covers both dumping and injury simultaneously. An investigation period is selected which normally constitutes a period of not less than six months immediately prior to the initiation of the proceeding. The Commission sends questionnaires to the parties involved, who are given at least 30 days to reply.

The Commission may request EU countries to supply information, carry out checks and inspections, particularly amongst importers, traders and EU producers, as well as carry out investigations in third countries (provided that the firms concerned give their consent and that the government of the country in question raises no objection). Officials from the Commission may be authorised to assist the officials of EU countries in carrying out their duties. More commonly, the Commission may carry out visits to examine the records of the parties concerned; it may also carry out investigations in third countries involved.

The Commission may meet with interested parties who request such a meeting. It may also organise meetings between these parties so that opposing views may be presented. The interested parties may examine all information provided to the Commission, with the exception of confidential documents.

An investigation is concluded with termination of the proceeding or with the adoption of a definitive measure. It should normally be concluded within 15 months of the initiation of the proceeding.

Termination of the proceeding without measures

The final outcome of the proceeding may be negative. Where, after consultation, protective measures are considered unnecessary and there is no objection raised within the advisory committee, the proceeding is terminated. If there are any objections, the Commission shall immediately submit to the Council a report on the results of the consultation, together with a proposal that the proceeding be terminated. The proceeding shall be deemed terminated if, within one month, the Council has not decided otherwise.

A proceeding is terminated where the dumping and injury are considered to be negligible. A proceeding may also be terminated without the imposition of provisional or definitive duties when commitments are undertaken and are considered acceptable by the Commission. These commitments may take the form of a price review or a freeze on exports such as is required to eliminate the injurious effects of the dumping.

Imposition of provisional anti-dumping duties

Provisional duties may be imposed if a provisional affirmative determination has been made of dumping and injury, and if the EU interest calls for immediate intervention to prevent such injury. The amount of the duty must not exceed the margin of dumping, and it should be less than the margin if such lesser duty would be sufficient to remove the injury to the EU industry.

The duties must be imposed no more than nine months after the initiation of the proceeding. These duties are imposed by the Commission, after consultation with the committee or, in cases of extreme urgency, after informing the EU countries. The Commission informs the Council and the EU countries of these provisional measures. The Council may, however, decide to take a different course of action.

Imposition of definitive anti-dumping duties

Where the facts as finally established show that there is dumping and injury caused thereby, and the EU interest calls for intervention, a definitive anti-dumping duty is imposed by the Council. As with the provisional measures, the definitive duty may not exceed the dumping margin and should be less than the margin if it would be adequate to remove the injury.

The duty must be imposed on a non-discriminatory basis on imports of a product found to be dumped and causing injury. The regulation imposing the duty specifies the amount of duty applied to each supplier or, if that is impracticable, to the supplying country concerned.

Provisional and definitive duties may not be applied retroactively. However, a definitive duty may be levied on products which were entered for consumption not more than 90 days prior to the date of application of the provisional measures.

EU interest

Anti-dumping measures may not be applied if it is concluded that their imposition is not in the EU interest. To this end, all the various interests are taken into account as a whole, including the interests of the EU industry and of the users and consumers. All the parties concerned are given the opportunity to make their views known.

Duration and Review

An anti-dumping measure only remains in force as long as is necessary to counteract the dumping which is causing injury. The duties expire five years after their date of imposition or five years after the conclusion of the most recent review of the measures concerned. This review is carried out on the initiative of the Commission or at the request of the EU producers. The duties shall remain in force during the period of the review.

Refund of duties

Duties collected may be refunded where the importer can show that the dumping margin has been eliminated or reduced to a level below the anti-dumping duty. The importer must request a refund within six months of the date on which the amount of the definitive duties to be levied was duly determined or within six months of the date on which a decision was made definitively to collect the provisional duties. The application must be submitted via the EU country in which the product was released for free circulation. The EU country shall forward the application to the Commission, which comes to a decision after consultation of the Committee.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 1225/2009

11.1.2010

OJ L 343, 22.12.2009

Anti-subsidy measures

Anti-subsidy measures

Outline of the Community (European Union) legislation about Anti-subsidy measures

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Anti-subsidy measures

Document or Iniciative

Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against subsidised imports from countries not members of the European Community.

Summary

This regulation provides for the imposition of countervailing duties for the purpose of offsetting any subsidy granted, directly or indirectly, for the manufacture, production, export or transport of any product originating in a non-European Union (EU) country whose release for free circulation in the EU causes injury.

This regulation works alongside Regulation (EC) No 1225/2009 (‘the Anti-Dumping Agreement’). The provisions for the determination of injury, the definition of EU industry, the initiation of the proceeding, the investigation, the provisional and definitive measures and the termination of the proceeding are therefore identical in both regulations.

Definition of a subsidy

A subsidy is deemed to exist, firstly, if there is a financial contribution by a government or if there is any form of income or price support within the meaning of Article XVI of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and, secondly, if a benefit is thereby conferred.

Countervailable subsidies

Subsidies are subject to countervailing measures only if they are specific to an enterprise or industry or to a group of enterprises or industries. They are specific in cases where the granting authority explicitly limits access to a subsidy to certain enterprises.

Calculation of the amount of countervailable subsidies

This amount is calculated in terms of the benefit conferred on the recipient during the investigation period. This regulation sets the following rules for calculating the benefit to the recipient:

  • government provision of equity capital is considered to confer a benefit if the investment can be regarded as inconsistent with the usual investment practice in the country of origin or export;
  • a loan by a government is considered to confer a benefit if there is a difference between the amount that the firm receiving the loan pays on the government loan and the amount that the firm would pay for a comparable commercial loan;
  • a loan guaranteed by a government is considered to confer a benefit if there is a difference between the amount that the firm receiving the guarantee pays on the loan guaranteed by the government and the amount that the firm would pay for a comparable commercial loan without the government guarantee;
  • the provision of goods by a government is considered to confer a benefit if the provision is made for less than adequate remuneration in relation to prevailing market conditions or the purchase is made for more than adequate remuneration in relation to these conditions.

The amount of the subsidy is determined per unit of the subsidised product exported to the EU. Some elements may be deducted from the subsidy, such as any fees or costs incurred in order to qualify for the subsidy or export taxes intended to offset the subsidy. Where a subsidy is not granted by reference to the quantities, the amount of the subsidy is determined by spreading the value of the total subsidy over the level of production, sales or exports of the product during the investigation period.

Determination of injury

The determination of injury must be based on positive evidence and involve an objective examination of the following elements:

  • the volume of the subsidised imports;
  • the effect of the subsidised imports on prices of like products on the EU market;
  • the consequent impact of those imports on the EU industry concerned.

Initiation of proceedings

Proceedings are initiated upon a written complaint by any natural or legal person, or any association not having legal personality, acting on behalf of an EU industry. Where, in the absence of any complaint, an EU country is in possession of sufficient evidence of subsidisation and of resultant injury to the EU industry, it shall immediately communicate such evidence to the Commission. The complaint must include evidence of the existence of countervailable subsidies (including, if possible, of their amount), injury and a causal link between these two elements.

The complaint is considered to have been made by or on behalf of the EU industry if it is supported by those EU producers whose collective output constitutes more than 50 % of the total EU production of the like product produced by that portion of the EU industry expressing either support for or opposition to the complaint. However no investigation is initiated where the portion of EU industry supporting the complaint account for less that 25 % of total production.

Provisional measures

Provisional duties may be imposed if:

  • proceedings have been initiated and interested parties have had adequate opportunity to submit information and make comments;
  • a provisional affirmative determination has been made that the imported product benefits from countervailable subsidies, resulting in injury to the EU industry;
  • it is in the EU interest to intervene to prevent such injury.

Imposition of definitive anti-dumping duties

Where the facts show the existence of countervailable subsidies and resultant injury, and the EU interest calls for intervention, a definitive countervailing duty is imposed by the Council. The amount of the countervailing duty must not exceed the amount of the countervailable subsidies established and it should be less if it would be adequate to remove the injury to the EU industry.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 597/2009

7.8.2009

OJ L 188 of 18.7.2009

Protection against trade barriers

Protection against trade barriers

Outline of the Community (European Union) legislation about Protection against trade barriers

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Protection against trade barriers

Document or Iniciative

Council Regulation (EC) No 3286/94 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community’s rights under international trade rules, in particular those established under the auspices of the World Trade Organisation [See amending acts].

Summary

This regulation replaces the 1984 regulation on illicit practices. It covers trade barriers that may impede European Union (EU) exports to third country markets.

The scope of the trade barriers regulation is broader than that relating to illicit practices. The regulation applies not only to goods but also to certain services, particularly cross-border services.

Definitions

The term “obstacle to trade” (i.e. trade barrier) refers to any trade practice adopted by a third country but prohibited by international trade rules which give a party affected by the practice a right to seek elimination of the effect of the practice in question. These international trade rules are essentially those of the WTO and those set out in bilateral agreements with third countries to which the EU is a party.

The regulation defines “injury” as any material injury which an obstacle to trade threatens to cause to an EU industry on the market of the EU.

“Adverse trade effects” are those which an obstacle to trade threatens to cause to EU enterprises on the market of any third country, and which have a material impact on the economy of the EU or of a region of the EU, or on a sector of economic activity therein.

The term “EU industry” means all EU producers or providers of products or services which are the subject of an obstacle to trade or all those producers or providers whose combined output constitutes a major proportion of total EU production of the products or services in question.

The term “EU enterprise” means a company formed in accordance with the law of an EU country and having its registered office, central administration or principal place of business within the EU, directly concerned by the production of goods or the provision of services which are the subject of the obstacle to trade.

Right of referral

Complaints under this regulation may be lodged in three ways:

  • on behalf of an EU industry that has suffered material injury as a result of trade barriers that have an effect on the market of the EU;
  • on behalf of one or more EU enterprises that have suffered adverse trade effects as a result of trade barriers that have an effect on the market of a third country;
  • by an EU country denouncing an obstacle to trade.

The complaint must contain sufficient evidence of the existence of the trade barriersand of the injury or adverse trade effects resulting therefrom. In examining injury or adverse trade effects, the Commission will take account of certain factors such as the volume of EU imports or exports concerned, the prices of the EU industry’s competitors, the rate of increase of exports to the market where the competition with EU products is taking place, the export capacity in the country of origin or export, and so on.

Examination procedures

Complaints must be submitted to the Commission in writing. The Commission will decide on the admissibility of a complaint within 45 days. This period may be suspended at the request of the complainant in order to allow the provision of complementary information.

The regulation has provided for a consultation procedure by establishing an advisory committee composed of representatives of each EU country and chaired by a representative of the Commission. This committee is used as the forum for providing the EU countries with information and is where they can express their opinions either in writing or by requesting an oral consultation.

If a complaint is deemed admissible, an examination is initiated and announced through publication of an announcement in the Official Journal of the European Communities. This announcement will indicate the product or service and countries concerned. The Commission will then gather all the relevant information from the parties involved.

When it is found as a result of the examination procedure that the interests of the EU do not require any action to be taken, the procedure will be terminated. When, after an examination procedure, the third country or countries concerned take measures to eliminate the adverse trade effects or injury referred to by the complainant, the procedure may be suspended. It may also be suspended in order to try to find an amicable solution that may result in the conclusion of an agreement between the third country or countries concerned and the EU.

Adoption of commercial policy measures

Where it is found, as a result of the examination procedure, that action is necessary in the interests of the EU in order to ensure the exercise of the EU’s rights, the appropriate measures will be determined on the basis of the regulation. These measures may include:

  • suspension or withdrawal of any concession resulting from commercial policy negotiations;
  • the raising of existing customs duties or the introduction of any other charge on imports;
  • the introduction of quantitative restrictions or any other measures modifying import or export conditions or otherwise affecting trade with the third country concerned.

Where the EU’s international obligations require it to follow prior international consultation or dispute settlement procedures, these measures may only be implemented at the end of these procedures and in accordance with their conclusions.

The Council must rule on the Commission proposal within 30 days of receiving the proposal.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 3286/94

1.1.1995

OJ L 349 of 31.12.1994

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 356/95

24.2.1995

OJ L 41 of 23.2.1995

Regulation (EC) No 125/2008

5.3.2008

OJ L 40 of 14.2.2008

Successive amendments and corrections to Regulation (EC) No 3286/94 have been incorporated into the basic text. This consolidated version is for reference only.

Related Acts

Communication from the Commission – Global Europe – Europe’s trade defence instruments in a changing global economy – A Green Paper for public consultation [COM(2006) 763 final].
This Green Paper forms part of the process launched in October 2006 to reflect upon and give a fresh impetus to competitiveness in the EU as part of the global economy. In this context, the Commission has launched a procedure to reflect on how trade defence instruments (anti-dumping, anti-subsidy and safeguard measures) can continue to be used to best effect in the EU interest. The latter are in fact based on World Trade Organisation (WTO) rules and help protect the EU from unfair trade as well as manage the consequences of globalisation. Another factor is that the context in which trade defence instruments are adopted has changed.

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – Global Europe – Competing in the world – A contribution to the EU’s Growth and Jobs Strategy [COM(2006) 567 final – Not published in the Official Journal].

Protection against subsidies and unfair pricing practices which cause injury in the air transport sector

Protection against subsidies and unfair pricing practices which cause injury in the air transport sector

Outline of the Community (European Union) legislation about Protection against subsidies and unfair pricing practices which cause injury in the air transport sector

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Protection against subsidies and unfair pricing practices which cause injury in the air transport sector

Document or Iniciative

Regulation (EC) No 868/2004 of the European Parliament and of the Council of 21 April 2004 concerning protection against subsidisation and unfair pricing practices causing injury to Community air carriers in the supply of air services from countries not members of the European Community [See amending act(s)].

Summary

This regulation was approved following the air transport crisis at the end of 2001 that led some governments outside the European Union (EU) to subsidise their national airlines, while the EU industry is subject to strict rules on government aid.

The regulation allows redressive measures to be imposed when non-EU air carriers are subsidised directly or indirectly or when they carry out unfair pricing practices on one or more routes to or from the EU, thereby causing injury to the EU industry. These measures preferably take the form of duties and are imposed by regulation and enforced by the EU countries themselves.

According to the regulation, a subsidy exists when a government, regional body or other public organisation makes a financial contribution that confers a benefit. It may take the form of:

  • grants, loans or equity infusion, potential direct transfer of funds or the assumption of liabilities;
  • revenue that is otherwise due but which is foregone or not collected;
  • the supply of goods or services other than general infrastructure, or their purchase by a public body;
  • payments by a public body to a funding mechanism or the entrusting to a private body of one of the functions described above.

To be subject to redressive measures, the subsidies must be limited to an industry or group of enterprises or industries within the jurisdiction of the granting authority.

An unfair pricing practice exists where non-EU air carriers benefit from a non-commercial advantage and charge fares that are sufficiently low to cause injury to competing EU air carriers. The regulation lays down elements to take into account when fares are compared.

Before proceedings are initiated, it must be shown, by the existing facts that injury is being caused. The determination of injury must be based on positive evidence and involves an examination of the level of fares charged, their effect on EU fares and the impact of the air services concerned on the EU industry.

An investigation is initiated when a written complaint is lodged by the EU industry or on the Commission’s own initiative. Where sufficient evidence exists, the proceeding is initiated within 45 days of the lodging of the complaint, but this period may be extended by up to 30 days if there is a bilateral agreement. Notice of the initiation of the procedure must be published in the Official Journal and include the details specified in the regulation. The Commission must notify interested parties. The Commission has 45 days within which to inform the complainant if insufficient evidence is presented.

This investigation should be concluded within nine months of proceedings being initiated. An extension may be allowed if a satisfactory resolution of the complaint appears imminent or if additional time is needed in order to achieve a resolution that is in the EU interest. Interested parties may be granted a hearing. However, if they refuse access to or fail to provide necessary information within the appropriate time limits, the final findings may be made on the basis of facts available.

Four possible scenarios may be the result of an investigation:

  • provisional measures: these may be imposed for a maximum period of six months if it is determined that injury is being caused and that the EU interest calls for intervention to prevent further such injury;
  • termination of the proceedings without measures being imposed: this happens when the complaint is withdrawn or a satisfactory remedy is obtained;
  • definitive measures: these are imposed when it is established that unfair pricing practices or subsidies which cause injury exist. The level of measures imposed must not exceed the level of the subsidies or the difference between the fares charged by the two air carriers concerned (EU and non-EU);
  • undertakings: an investigation may be terminated without measures being imposed if the public authorities or non-EU air carrier concerned undertake to eliminate the subsidies and revise its prices in order to prevent further injury. In the event of an undertaking being breached, a definitive measure will be imposed.

If the circumstances warrant, the Commission may review the imposition of the measures in their initial form with a view to repealing, modifying or maintaining them.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 868/2004

20.5.2004

OJ L 162 of 30.4.2004

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 596/2009

7.8.2009

OJ L 188 of 18.7.2009

Successive amendments and corrections to Regulation (EC) No 868/2004 have been incorporated into the basic text. This consolidated version is for reference only.

Adoption of the WTO agreements

Adoption of the WTO agreements

Outline of the Community (European Union) legislation about Adoption of the WTO agreements

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Adoption of the WTO agreements

Document or Iniciative

Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, with regard to matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) [Official Journal L 336 of 23.12.1994].

Summary

Final Act embodying the results of the Uruguay Round multilateral trade negotiations

Through this Decision, the Council adopts, on behalf of the European Community and with regard to matters within its competence, the results of the Uruguay Round negotiations embodied in the Marrakesh Final Act signed on 15 April 1994 in Morocco by the representatives of the European Community and the Member States.

The Marrakesh Final Act includes a list of multilateral and plurilateral agreements and ministerial decisions and declarations that clarify provisions of certain agreements. The multilateral trade agreements are the agreements in question and the associated legal instruments are an integral part of the WTO agreements and binding on all WTO members. As far as the plurilateral agreements are concerned, although they form part of the WTO agreements, they do not create obligations or rights for WTO members that have not accepted them (e.g. the Agreement on Government Procurement).

The agreement establishing the World Trade Organisation incorporates several annexes containing the WTO agreements. Annex 1A encompasses the multilateral agreements on trade in goods. These are:

  • the General Agreement on Tariffs and Trade 1994 (GATT 1994) (which included the GATT 1947);
  • the Agreement on Agriculture;
  • the Agreement on the Application of Sanitary and Phytosanitary Measures;
  • the Agreement on Textiles and Clothing;
  • the Agreement on Technical Barriers to Trade;
  • the Agreement on Trade-Related Investment Measures;
  • the Agreement on Anti-Dumping Measures;
  • the Agreement on Customs Valuation;
  • the Agreement on Preshipment Inspection;
  • the Agreement on Rules of Origin;
  • the Agreement on Import Licensing Procedures;
  • the Agreement on Subsidies and Countervailing Measures;
  • the Agreement on Safeguards.

Annex 1B of the WTO Agreement contains the General Agreement on Trade in Services (GATS) and Annex 1C consists of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), including trade in counterfeit goods.

Annex 2 incorporates the Understanding on Rules and Procedures Governing the Settlement of Disputes. Annex 3 relates to the mechanism for reviewing the trade policies of WTO members.

Finally, Annex 4 deals with the plurilateral trade agreements. These are:

  • the Agreement on Trade in Civil Aircraft;
  • the Agreement on Government Procurement;
  • the International Dairy Agreement;
  • the International Bovine Meat Agreement.

The last two agreements were repealed at the end of 1997.

Agreement establishing the World Trade Organisation (WTO)

This agreement provided a common institutional framework for the conduct of international trade relations within the context of the rules resulting from the agreements and legal instruments mentioned above.

Contrary to its predecessor (the GATT), the WTO is a permanent organisation which benefits from a legal personality and its attributes. All members of the GATT by rights became original members of the WTO on 1 January 1995. Since that date, applicants wishing to join have had to follow the accession procedure set out in the Agreement establishing the WTO.

The WTO members have set themselves the following objectives:

  • raising standards of living;
  • ensuring full employment and a growing volume of real income and effective demand;
  • expanding the production of and trade in goods and services;
  • sustainable development and protection of the environment;
  • taking account of the needs of developing countries.

The function of the WTO is to:

  • facilitate the implementation, administration and operation of the various trade agreements;
  • provide a forum for multilateral trade negotiations;
  • resolve trade disputes, through the Dispute Settlement Body (DSB);
  • review the national trade policies of its members;
  • cooperate with other international organisations in order to ensure greater coherence in global economic policy-making.

From a structural point of view, the WTO has a Ministerial Conference, its highest body, composed of representatives of all the member countries, which meets at least once every two years. In the interval between these meetings, the General Council, made up of representatives of all the members, carries out the functions of the WTO and supervises the operation of the agreements and ministerial decisions. The General Council also meets to discharge the responsibilities of the Dispute Settlement Body and the Trade Policy Review Body provided for in the Trade Policy Review Mechanism (TPRM).

The General Council has under its guidance three subsidiary bodies, the Council for Trade in Goods, the Council for Trade in Services and the Council for Trade-Related Aspects of Intellectual Property Rights. Committees that are dependent on the General Council but not on these three councils are also established, such as the committees on ‘trade and development’, ‘trade and the environment’ and ‘regional agreements’. Finally, two committees are responsible for administrating the two plurilateral agreements on trade in civil aircraft and government procurement.

The General Council appoints a Director-General, who is responsible for heading the Secretariat of the WTO.

In principle, the WTO takes its decisions by consensus. When a decision cannot be arrived at by consensus, decisions are taken by a majority of votes, each WTO member having one vote. The European Community, which is a full member of the WTO, has a number of votes equal to the number of its Member States, which are members of the WTO. The agreement stipulates that the number of votes of the EC and its Member States shall in no case exceed the number of the Member States of the EC.

Each member of the WTO may submit to the Ministerial Conference proposals to amend provisions of the WTO’s various multilateral trade agreements.

Understanding on Rules and Procedures Governing the Settlement of Disputes

The WTO’s dispute settlement system is an important element of the multilateral trading order. It is based on Articles XXII and XXIII of the GATT 1994 and on the rules and procedures subsequently drawn up and set out in the Understanding on Rules and Procedures Governing the Settlement of Disputes incorporated in the Agreement establishing the WTO.

The dispute settlement system covers all of the multilateral trade agreements. In fact, it applies to trade in goods, trade in services and intellectual property issues covered by the TRIPS Agreement. It also applies to disputes under the plurilateral Agreement on Government Procurement. Some of these agreements contain provisions concerning dispute settlement that only apply to disputes under the agreement in question and that may supplement or modify the rules of the Understanding.

The dispute settlement system is administered by a Dispute Settlement Body (DSB) set up by the Understanding. All WTO members may attend the DSB’s meetings. However, where the DSB is administering provisions relating to the settlement of disputes concerning a plurilateral trade agreement, only the members that are parties to the agreement will be able to participate in decisions or actions taken by the DSB with respect to disputes under that agreement.

The dispute settlement process is launched when one member submits to another a request for consultations on a specific issue. These consultations must begin within 30 days of the request. If the consultations fail to settle a dispute, a member may call on the DSB to set up a panel, usually consisting of three independent experts, in order to deal with the issue. In addition, the parties may voluntarily agree to make use of other dispute settlement methods, including good offices, conciliation and mediation.

After listening to the parties, the panel submits a report to the DSB. The panel must complete its work within six months or, in cases of urgency, within three months. The report is considered for adoption by the DSB 20 days after it has been circulated to members. Within 60 days of the date of circulation it is adopted, unless the DSB decides by consensus not to adopt the report (opposite or negative consensus), or if one of the parties notifies its decision to appeal.

Indeed, the WTO’s dispute settlement procedure enables all parties to a panel case to appeal. The appeal is, however, limited to issues of law covered in the panel report and legal interpretations developed by the panel. The appeal is examined by a standing Appellate Body composed of seven members appointed by the DSB for a four-year term. Three of the members serve on any one case. The Appellate Body’s report must be accepted unconditionally by the parties to the dispute and adopted by the DSB unless there is a negative consensus, in other words, a decision by consensus not to adopt the report.

The DSB keeps under surveillance the implementation of adopted recommendations or decisions, and all pending matters remain on the agenda of its meetings until they are resolved. Deadlines are also set for the implementation of recommendations set out in panel reports. When a party is unable to implement these recommendations within a reasonable period of time, it must enter into negotiations with the complaining party with a view to developing mutually acceptable compensation. If these negotiations are unsuccessful, the DSB may authorise the complaining party to suspend the application to the member concerned of concessions or obligations. Compensation and the suspension of concessions are, however, only temporary measures that may be applied until the DSB’s recommendations are implemented by the member concerned.

In all cases, WTO members agree that they will not determination themselves that there has been a violation of the obligations laid down within the framework of the WTO, nor suspend concessions. They must apply the rules and procedures for the settlement of disputes set out in the Understanding.

Furthermore, the Understanding on Rules and Procedures Governing the Settlement of Disputes recognises the special situation of the WTO’s developing country members and least developed country members. Developing countries may opt for an accelerated procedure, request extended deadlines or request additional legal aid. WTO members are encouraged to give particular consideration to the situation of developing country members.

Trade Policy Review Mechanism (TPRM)

The Trade Policy Review Mechanism (TPRM) was set up as a temporary measure under the GATT in 1989 following the mid-term review of the Uruguay Round. This mechanism is now an integral part of the WTO system and encompasses all the fields covered by the WTO agreements (goods, services and intellectual property questions).

The TPRM aims, in particular, to achieve greater transparency in, and understanding of, the trade policies and practices of WTO members, to encourage members to adhere to the rules in force in the multilateral trading system and, thus, to promote the smooth functioning of the system.

Within the framework of the TPRM, all WTO members are subject to review. This review is held every two years for the four members with the greatest share of world trade (currently the European Community, the United States, Japan and Canada), every four years for the next 16 members and every six years for the other members. A longer period may be set for least developed countries. In practice, a certain degree of flexibility has been introduced to the rate of reviews (up to a six-month interval). In 1996, it was agreed that every other review of each of the first four trading powers would be an interim review.

The review is carried out by the Trade Policy Review Body (TPRB) on the basis of a general policy declaration submitted by the member concerned and a report drawn up by the WTO Secretariat. In drawing up its report, the Secretariat seeks the support of the member concerned but retains full responsibility for the facts presented and views expressed. The Secretariat’s report and the member’s declaration are published following the review meeting, together with the minutes of the meeting and the text of the final comments made by the Chairman of the TPRB at the end of the meeting.

Further information can be found on the website of DG External Trade and the WTO.

References

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Decision 94/800/EC 22.12.1994 OJ L 336 of 23.12.1994

Related Acts

Communication from the Commission to the Council and to the European Parliament of 26 November 2003 – Reviving the DDA Negotiations – the EU Perspective [COM(2003) 734 final – Not published in the Official Journal].

Aspects relating to trade in services

Aspects relating to trade in services

Outline of the Community (European Union) legislation about Aspects relating to trade in services

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Aspects relating to trade in services

Document or Iniciative

Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994).

Summary

The General Agreement on Trade in Services (GATS) is the first set of rules and disciplines agreed at multilateral level to govern international trade in services. It consists of three elements: a general framework containing fundamental requirements for all World Trade Organisation (WTO) members, national schedules of specific commitments concerning market access and, finally, annexes laying down special conditions to be applied to different sectors.

General framework

The agreement is distinguished by its universal scope. It applies to all services in all sectors with the exception of services provided by the public authorities. It also applies to all measures applicable to services taken at all levels of government (central, regional, local, etc.). The agreement defines four methods of supplying a service:

  • supplying a service from the territory of one member into the territory of any other member (e.g. international telephone calls);
  • supplying a service in the territory of one member to a consumer of any other member (e.g. tourism);
  • supplying a service through commercial presence of a member in the territory of any other member (e.g. banking services);
  • supplying a service through presence of natural persons of a member in the territory of any other member (e.g. construction projects, fashion models, consultants).

The agreement is based on the principle of most-favoured-nation treatment (MFN), according to which each member must accord unconditionally services and service suppliers of any other member treatment no less favourable than that it accords to services and service suppliers of any other country. However, certain exceptions are envisaged in the context of specific service activities within the framework of a list of exemptions from the MFN requirement. In fact, each government has included in its schedule the services for which it guarantees access to its market by setting out the limits it wishes to maintain for such access.

Moreover, members entering into an agreement involving economic integration are authorised to liberalise trade in services between the parties without having to extend the agreement to the other GATS members provided that it has substantial sectoral coverage and provides for the absence or elimination of practically all discrimination.

In order to ensure maximum transparency, the agreement requires governments to publish all relevant laws and regulations. These measures must be administered in a reasonable, objective and impartial manner.

The bilateral agreements concluded between governments on the recognition of qualifications must be open to other members who wish to negotiate their accession to these agreements. In addition, each member must ensure that monopolies and exclusive service suppliers do not abuse their position. Similarly, members must enter into consultations on business practices that may restrain competition with a view to eliminating them.

International transfers and payments for current transactions relating to specific commitments entered into under the GATS, must not be restricted except in cases of balance-of-payments difficulties and under certain circumstances.

Specific commitments

The provisions on market access and national treatment are not general requirements but specific commitments included in schedules annexed to the GATS and they form an integral part of the agreement. These schedules identify the services and service activities for which market access is guaranteed and set out the conditions governing this access. Once consolidated, these commitments can only be modified or withdrawn following negotiation of compensation with the country concerned.

Thus, each member must accord treatment to services and service suppliers of any other member, no less favourable than that provided for under the terms specified in its schedule.

The agreement is also based on the principle of national treatment. In fact, in the sectors inscribed in each member’s schedule, and subject to any conditions set out therein, each government must accord to services and service suppliers of any other member, treatment no less favourable than that it accords to its own services and service suppliers.

Progressive liberalisation

The GATS provides for negotiations, beginning within five years, to achieve a higher level of liberalisation of trade in services. This liberalisation will be aimed at enhancing the commitments in the schedules and reducing the adverse effect of the measures taken by the governments.

Sectoral questions

A number of annexes relating to different service sectors form part of the GATS. These annexes were designed to take account of certain specific characteristics of the sectors in question.

The annex on movement of natural persons authorises governments to negotiate specific commitments applying to the temporary stay of persons in their territory for the purpose of supplying services. The agreement does not apply to permanent employment nor to measures regarding citizenship or residence.

The annex on air transport services excludes from the scope of the GATS traffic rights and services related to these rights (mainly bilateral agreements on air services that grant landing rights). The GATS does apply, however, to aircraft repair and maintenance services, the selling and marketing of air transport services and computer reservation system services.

The annex on financial services (particularly banking services and insurance services) recognises a government’s right to take measures to protect investors, depositors and insurance policy holders. The agreement excludes from its scope services supplied by central banks.

Finally, the annex on telecommunications stipulates that governments must accord any service supplier of any other member access to public telecommunications networks on reasonable and non-discriminatory terms and conditions.

Institutional provisions

These provisions relate, in particular, to consultations and dispute settlement and to the establishment of a Council for Trade in Services. The responsibilities of this Council are defined in a ministerial decision.

Continuation of negotiations

At the end of the Uruguay Round, the governments agreed to continue negotiations in four areas: basic telecommunications, maritime transport, movement of natural persons and financial services. Other negotiations are due to be held on subsidies, government procurement and safeguard measures.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Decision 94/800/EC

22.12.1994

OJ L 336 of 23.12.1994

Related Acts

Council Decision 97/838/EC of 28 November 1997 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the results of the WTO negotiations on basic telecommunications services [Official Journal L 347 of 18.12.1997].

In accordance with the commitments entered into under the GATS, a Protocol on basic telecommunications services was signed in Geneva on 15 April 1997. This agreement liberalises trade in traditional telephone and electronic data transfer services, telex services and fax services, and lays down a number of rules for telecommunication enterprises that invest outside the territory in which they are established.

Council Decision 99/61/EC of 14 December 1998 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the results of the World Trade Organisation negotiations on financial services [Official Journal L 20 of 27.1.1999].

At the end of the negotiations following the Uruguay Round on financial services aimed at including these services in the GATS on a permanent basis and in accordance with the principle of most-favoured nation (MFN), a Fifth Protocol on financial services was annexed to the GATS. It provides for the replacement of the financial services sections in the schedules of specific commitments and lists of MFN exemptions of the members concerned with the new negotiated lists, included in the annex to the protocol.

Scheme of generalised tariff preferences from 2002 to 2005

Scheme of generalised tariff preferences from 2002 to 2005

Outline of the Community (European Union) legislation about Scheme of generalised tariff preferences from 2002 to 2005

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Scheme of generalised tariff preferences from 2002 to 2005

The European Union is putting in place the scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2005. The system simplifies and harmonises the procedures of the various existing arrangements in order to improve the access of developing countries to the Community market while ensuring the promotion of fundamental social standards and environmental standards.

Document or Iniciative

Council Regulation (EC) No 2501/2001 applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004 [Official Journal L 346 of 31.12.2001] [See amending acts]

Summary

This Regulation extends the Community’s scheme of generalised preferences for developing countries to 31 December 2005.

It provides for:

  • general arrangements;
  • special incentive arrangements for the protection of labour rights;
  • special incentive arrangements for the protection of the environment;
  • special arrangements for least-developed countries;
  • special arrangements to combat drug production and trafficking.

General arrangements

According to the Regulation, products considered to be non-sensitive products, imported into the Community from beneficiary developing countries, are exempt from customs duties. Goods from the textile and clothing sector only receive a 20% reduction in Common Customs Tariff (CCT) duties. Products classified as sensitive benefit from a CCT duty reduction of 3.5 percentage points.

These tariff preferences apply to imports of products from beneficiary developing countries. Regional cumulation of origin is envisaged in order to encourage regional groupings. The beneficiary countries of the generalised system of preferences (GSP) are listed in Annex I to the Regulation.

The Regulation stipulates that countries no longer requiring preferential treatment will be removed from the list of countries benefiting from the GSP. This concerns the countries that, during three consecutive years, have been classified by the World Bank as high-income countries and have achieved a specific level of industrial development calculated according to a formula set out in the Regulation (development index). If, during an equivalent period, these criteria have not been met by the excluded country, it will again be included in the list of countries benefiting from the GSP.

By virtue of the principle of graduation, the tariff preferences set out in the Regulation are removed in respect of beneficiary countries and products belonging to a given sector if, during three consecutive years, the country concerned meets either of the following criteria:

  • its development index reaches a specific level set out in the Regulation and Community imports from that country of all products of the sector concerned exceed 25% of Community imports of the same products from all beneficiary countries;
  • its development index reaches a specific level set out in the Regulation, the specialisation index of the sector concerned is higher than the threshold corresponding to that country’s development index, and Community imports from that country of all products of the sector concerned exceed 2% of Community imports of the same products from all beneficiary countries.

The tariff preferences are re-established if, during three consecutive years, the sector has not met either of the criteria.

Special incentive arrangements

The GSP enables beneficiary countries to be covered by incentive arrangements allowing them to benefit from an additional reduction in customs duties of 5 percentage points for exports to the Community. Thus, the total reduction comes to 8.5 percentage points.

The special incentive arrangements for the protection of labour rights may be granted to countries whose national legislation incorporates the rules adopted in the conventions of the International Labour Organisation (ILO):

  • n° 29 and n° 105 on the abolition of forced labour;
  • n° 87 and n° 98 on the freedom of association and the right to collective bargaining;
  • n° 100 and n° 111 on non-discrimination in respect of employment and occupation;
  • and n° 138 and n° 182 on the abolition of child labour.

These arrangements may also be granted to countries whose legislation has incorporated the essential elements of these rules, and which have clearly begun a clear and definite process of applying them. In such cases, the arrangements may be granted for a limited period of time. The country must demonstrate that it has made progress in applying the rules for renewal of the arrangements.

The special incentive arrangements for the protection of the environment benefit imports of products of the tropical forest originating in a country which effectively applies national legislation incorporating the substance of internationally acknowledged standards and guidelines concerning sustainable management of tropical forests (mainly those of the International Tropical Timber Organisation).

Countries wishing to benefit from these arrangements must submit their requests to the Commission, which examines them and verifies that they are effectively applying the social and environmental standards required before taking its decision.

Special arrangements for least developed countries

This Regulation incorporates the ‘Everything But Arms’ initiative adopted by Regulation (EC) No 416/2001 of 28 February 2001. In fact, the Community extends duty-free access without any quantitative restrictions to products originating in the least developed countries, with the exception of arms and ammunition. However, free access arrangements will be gradually introduced for bananas from 2002 and for rice and sugar between 2006 and 2009. In the meantime, a global tariff quota at zero duty is opened for these products (Regulation (EC) No 1381/2002 of 29 July 2002 and Regulation (EC) No 1401/2002 of 31 July 2002).

Special arrangements to combat drug production and trafficking

Specific arrangements entailing the complete suspension of CCT duties applicable to industrial and agricultural products are established for Andean Pact countries, Central America and Pakistan. These arrangements aim to promote political, economic and social stability in these countries threatened by drug production and trafficking.

The Commission is responsible for monitoring and evaluating the effects of these arrangements on the beneficiary countries and assessing their social development and their environmental policy.

Temporary withdrawal

Tariff preferences may be temporarily withdrawn in respect of all or certain products originating in a beneficiary country under certain circumstances:

  • practice of any form of slavery or forced labour;
  • serious and systematic violation of fundamental social rights and principles of labour law (freedom of association, collective bargaining, child labour, etc.);
  • export of goods made by prison labour;
  • shortcomings in customs controls on export or transit of drugs;
  • fraud, irregularities or systematic failure to comply with the rules of origin;
  • unfair trading practices;
  • infringement of the objectives of international conventions concerning the conservation and management of fishery resources.

The Regulation sets out the general substance of the administrative cooperation required on the part of beneficiary countries, particularly with regard to monitoring the origin of goods. It lays down the procedure governing the investigation carried out by the Commission before deciding whether or not to withdraw preferences temporarily together with the arrangements for the participation of the country concerned in this investigation.

Safeguard provisions

The Regulation also includes a safeguard clause enabling the Commission to suspend tariff preferences and reintroduce CCT duties where a product originating in a beneficiary country is imported on terms which cause, or threaten to cause, serious difficulties to a Community producer of like or directly competing products. Following an investigation, the Commission takes its decision within 30 days of consulting the Generalised Preferences Committee. Where immediate action is required, the Commission may take any preventive measure which is necessary.

Act Date
of entry into force
Deadline for implementation in the Member States
Regulation (EC) No 2501/2001 01.01.2002
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 2211/2003 22.12.2003 OJ L 322 of 19.12.2003

Fair trade

Fair trade

Outline of the Community (European Union) legislation about Fair trade

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

External trade

Fair trade

This Communication aims to launch the process for the development of the Community’s position on fair trade.

Document or Iniciative

Communication from the Commission to the Council of 29 November 1999 on ‘fair trade’ [COM(1999) 619 final – Not published in the Official Journal].

Summary

Background

The promotion of fair trade comes under the framework of the Community’s broader objectives in relation to development cooperation, in other words the fight against poverty, economic and social development and, in particular, the gradual integration of developing countries into the world economy.

Trade has a fundamental role to play in the creation of wealth and thus development. This communication is a first stage in the development of the Community’s position on this matter.

Definition of fair trade

The concept of fair trade applies in general to trade operations which strengthen the economic position of small-scale producers and landowners in order to ensure that they are not marginalised in the world economy. It mainly relates to developing countries and, under the present communication, covers two main aspects:

  • ensuring that producers, including employees, receive a share of the total profit commensurate with their input;
  • improving social conditions, particularly those of employees in the absence of developed structures for social services and worker representation (trade union representation for instance), etc.;

This concept has long-term development in mind. Participation in initiatives on fair trade is voluntary for both sellers and consumers.

It is important to note that the concept of ‘fair trade’ is not the same as that of ‘ethical trade’. ‘Ethical trade’ usually relates to the operating methods of companies present in the country (codes of conduct, for example).

Fair trade in practice

Fair trade goods are always made available to consumers through private initiatives. The practical implementation of fair trade has changed considerably over the years.

The traditional fair trade movement

The concept was originally developed by non-governmental organisations (NGOs). The philosophy is based upon precise principles and was originally applied by alternative trading organisations often started by churches, charities, etc. The organisations are involved in every stage (sourcing, production, etc.) and the profits are often devoted to development causes. The products are not always labelled.

Labelling initiatives

Since the end of the 1980s, normal commercial companies (supermarkets, etc.) have been more likely to be involved in fair trade initiatives and the products are marketed according to the usual rules.

In this regard, systems for labelling products were introduced in order to ensure their authenticity. There are several fair trade labels (‘Fairtrade Mark’, etc.) and each has a certification agency which verifies all the stages in the production process to ensure that the product respects fair trade principles. The certification bodies also set the criteria that must be respected in order for a product to carry a fair trade label. These criteria are harmonised at international level. All the labels are members of the FLO (Fair Trade Labelling Organisations International) which is responsible for coordination at EU and international level.

Producers and importers who have been assessed as complying with the fair trade criteria are included in international fair trade registers. Fair trade labelling schemes are financed by licence fees paid by importers and traders. These fees are related to turnover and volume of sales.

European Union and fair trade

Fair trade accounts for a relatively substantial proportion of consumption in Europe. In 1997, the turnover in the EU of fair trade products was estimated to be in the region of EUR 200 to 250 million. Overall, 11% of the EU population buy fair trade products and surveys show that there is high demand for such products.

The EU has already implemented initiatives concerning fair trade, including European Parliament resolutions and financing of NGOs, labelling bodies and projects in developing countries. With regard to legislation, the Union implements these principles through various instruments, particularly measures concerning the EU’s generalised system of preferences. Some of these regulations on fair trade benefit fair trade goods by facilitating their access to the Community market.

International community

The international community has recognised the important role played by fair trade in the development of poorer countries. The World Trade Organisation (WTO) has concluded that initiatives in this field do not represent an obstacle to the liberalisation of markets since they do not impose import restrictions or other forms of protectionism. They are thus in line with the general principles of the world economy.

Issues

The Commission identifies certain problems that should be addressed in order to ensure the continued success of fair trade initiatives. This involves ensuring greater consistency between the policies of the actors at various levels and establishing a legal definition of the concept as well as the criteria involved. Efforts should also be made to improve the substantiation, verification and control of fair trade products so as to allow consumers to make properly informed choices. In addition, consumers must be better informed about fair trade and dialogue should be continued with the movement, through the creation of a formal platform for example.