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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 goods

Aspects relating to trade in goods

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

Topics

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

Food safety > International dimension and enlargement

Aspects relating to trade in goods

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) [Official Journal L 336 of 23.12.1994].

Summary

MARKET ACCESS

General Agreement on Tariffs and Trade (GATT 1994)

This is the basic text containing the general rules governing trade in goods, the specific rules being laid down in the sectoral agreements established in the Final Act. GATT 1994 encompassed GATT 1947 and all of the legal instruments adopted before the Agreement establishing the World Trade Organisation (WTO).

The General Agreement lays down a number of fundamental principles based on GATT 1947, in particular:

  • The general principle of most favoured nation treatment: according to this principle, each WTO member accords to products of any other member treatment no less favourable than that it accords to like products of any other country (concept of non-discrimination).
  • The principle of national treatment with regard to taxation and internal regulations: according to this principle, each WTO member accords products of another member regulatory and fiscal treatment no less favourable than that accorded to products of national origin.

The Agreement also provides for the reduction and binding of customs duties, the elimination of quantitative restrictions on imports and exports and the notification requirement for State trading enterprises. The Agreement covers anti-dumping duties and regulates subsidies and safeguard measures. The provisions concerning consultations and dispute settlement are dealt with in the WTO rules on dispute settlement.

In addition, it sets out a number of criteria concerning free trade areas and customs unions as well as requirements for the members of these areas and unions. Provisions added in 1965 lay down special rules and privileges for developing countries.

Marrakesh Protocol

The Marrakesh Protocol annexed to GATT 1994 is the legal instrument that incorporates into GATT 1994 the schedules of concessions and commitments for goods negotiated during the Uruguay Round, and establishes their authenticity and the arrangements for their implementation. Each WTO member draws up a schedule of goods concessions. This schedule forms an integral part of GATT 1994. Each schedule lists all of the concessions offered by the member concerned during the Uruguay Round or previous negotiations. In accordance with Article II of GATT 1994, each member must accord to the commerce of the other members treatment no less favourable than that provided for in the appropriate part of the corresponding schedule.

Industrial products

As far as industrial products were concerned, the aim of the Uruguay Round was to reduce tariff barriers by at least one third in five years and to increase the number of bound customs duties (where governments agree not to raise the level of duty). Thus, the tariff reductions agreed upon by each member are being implemented in five equal rate reductions, as of 1 January 1995, except as may be otherwise specified in the schedules of concessions.

As a result of these commitments, customs duties levied by developed countries on industrial products imported from all regions of the world have fallen by 40 % on average, from 6.3 % to 3.8 %.

As regards the European Community, almost 40 % of its industrial products will be free of duty. In fact, the customs duties levied by the EC on industrial products are amongst the lowest in the world and most of them will have disappeared by 2004, in line with the commitments made by the Community during the Uruguay Round.

Agricultural products

In accordance with the Agreement on Agriculture, access to agricultural markets is now covered by a regime based solely on customs duties. Non-tariff border measures are replaced by customs duties ensuring equivalent protection. The new customs duties resulting from the ‘tariff fixing’ process, together with the other duties levied on agricultural products, should be reduced by an average of 36 % in six years for developed countries and 24 % in ten years for developing countries. The least advanced countries are not obliged to reduce their duties.

WTO members are also required to reduce spending on export subsidies and the quantities of exports that are subsidised with regard to specific products. For products not subject to commitments regarding a reduction in export subsidies, the Agreement on Agriculture stipulates that no such subsidy may be used in the future. Developed countries are obliged to reduce the level of direct export subsidies by 36 % in relation to the 1986-1990 base period levels over an implementing period of six years and to decrease the quantity of exports subsidised by 21 % over the same period. Developing countries must ensure reductions equivalent to two thirds of the reductions carried out by developed countries, over a period of ten years (no reductions for the least advanced countries).

As regards domestic support measures for farmers (price support), these are regulated through a reduction in the total aggregate measurement of support (total AMS). Developed countries are committed to reducing their total AMS by 20 % over six years (1986-1988 being the base period used to calculate the reductions). Developing countries must reduce their total AMS by 13 % over ten years. These commitments do not apply to measures with a zero or minimal impact on trade (so-called ‘green category’ measures, such as agricultural research or training provided within the framework of public programmes).

This set of measures is designed to be a continuous process with the long-term aim of securing gradual substantial reductions in support and protection in the field of agriculture.

Textiles and clothing

The 1973 Multifibre Arrangement (MFA), which covers natural and synthetic fibres and related products, had left trade in textile products outside the common GATT system. In fact, this agreement had set up a derogatory system by legalising bilateral voluntary restraint agreements between states, in other words quantitative restrictions, prohibited by the GATT.

The Uruguay Round negotiations aimed to ensure the smooth integration of the textiles and clothing sector into GATT 1994. Thus, the Agreement on Textiles and Clothing (ATC) provides for the gradual dismantling of the Multifibre Arrangement by 1 January 2005. This involves the gradual elimination of quantitative restrictions, especially the bilateral quotas negotiated under the MFA. Integration means that once the product is integrated, trade in that product is governed by the general rules of GATT 1994. The integration programme has four stages and all products must be integrated no later than 1 January 2005. The Agreement also stipulates that all restrictions on imports of textiles and clothing not covered by the MFA must be notified and brought into line with the GATT within one year of the entry into force of the ATC or gradually eliminated over a period not exceeding the duration of the agreement (by 2005).

Safeguard measures may be applied for countries whose local industries will have difficulties adjusting. These measures may last no longer than three years and will be strictly monitored by the Textiles Monitoring Body.

RULES CONCERNING NON-TARIFF MEASURES

Technical barriers to trade

The Agreement on Technical Barriers to Trade (TBT) aims to ensure that technical regulations and standards and conformity assessment procedures do not create unnecessary obstacles to international trade. The Agreement recognises the right of countries to adopt such measures in order to fulfil a legitimate objective, for example the protection of human health or safety or the protection of the environment. Technical regulations and standards must not discriminate between national products and like products that are imported. Indeed, the Agreement encourages the use of international standards and the harmonisation and mutual recognition of technical regulations, standards and conformity assessment procedures.

The Agreement contains a Code of Good Practice for the Preparation, Adoption and Application of Standards by central government bodies together with provisions concerning the preparation and application of technical regulations for local government bodies and non-governmental organisations. The Agreement stipulates that procedures for assessing conformity of products with national standards must not discriminate against imported products. The Agreement also provides for the establishment of national enquiry points to facilitate access to information on the technical regulations, standards and conformity assessment procedures in each member country.

Sanitary and phytosanitary measures

The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) relates to all SPS measures which may, directly or indirectly, affect international trade. SPS measures are defined as measures applied to protect human and animal life or to protect plant life from risks associated with additives, contaminants, toxins or diseases present in foodstuffs, or to protect a country in the event of the entry, establishment or spread of pests.

The Agreement affords members the right to take SPS measures based on scientific principles, but they must ensure that those measures do not discriminate against other countries. Moreover, the SPS measures must not be used for protectionist purposes. Members are encouraged to base their measures on international standards, guidelines or recommendations wherever possible. The application of standards may be contested and a dispute settlement procedure is established.

CUSTOMS AND TRADE ADMINISTRATION

Customs valuation

Where customs duties are levied on an ad valorem basis, it is important to establish a clear procedure to determine the customs value of the goods imported. Indeed, when carried out according to unfair rules, the customs valuation may have the effect of a non-tariff protective measure and be more restrictive than the customs duty itself.

The Agreement on customs valuation recognises that this value should, in principle, be based on the transaction value, in other words the real price of the goods. In very specific cases where the transaction value cannot be used as a basis for determining the customs value, the Agreement provides for five other methods of customs valuation, which must be applied in a particular hierarchical order.

Preshipment inspection

In order to prevent fraud and compensate for the shortcomings of their administrative structures, a number of developing countries have recourse to the services of private companies for the verification of the quality, quantity, price and/or customs classification of imported goods before they are exported from supplying countries. The Agreement on Preshipment Inspection sets out the requirements for user countries, mainly as regards non-discrimination, transparency, the protection of confidential business information and price verification.

Rules of origin

As necessary criteria for determining the country of origin of a product, rules of origin must not create unnecessary obstacles to international trade. The Agreement on Rules of Origin establishes disciplines for the application of these rules. It covers the rules used in non-preferential commercial policy instruments. The main objective of this Agreement is to harmonise non-preferential rules of origin so as to ensure that the same criteria are applied by all WTO members, irrespective of the purpose of their application.

Pending this harmonisation and during a transition period, WTO members must ensure that the conditions for determining origin are clearly defined and that the rules of origin do not create restrictive, distorting or disruptive effects on international trade. The rules should not pose unduly strict requirements or require the fulfilment of a certain condition not related to manufacturing or processing as a prerequisite for the determination of the country of origin.

After the transition period, and within three years, members must establish harmonised rules of origin. These rules must be applied equally and they must be objective, understandable and predictable. This harmonisation work is carried out within the WTO’s Committee on Rules of Origin and a Technical Committee established under the auspices of the World Customs Organisation.

Annex 2 to the Agreement contains a Common Declaration with regard to Preferential Rules of Origin.

Import licensing procedures

Import licences may be defined as administrative procedures requiring the submission of an application or other documentation to the relevant administrative body as a prior condition for importation into the customs territory of an importing country. The main objectives of the Agreement on Import Licensing Procedures are to simplify these procedures and to ensure that they are transparent and predictable so that they can be applied and administered fairly and equitably.

TRADE PROTECTION MEASURES

Anti-dumping measures

Article VI of GATT 1994 authorises members to apply anti-dumping measures. However, these measures may only be applied if three conditions are fulfilled:

  • the product is sold at an export price that is lower than its standard value, in other words at a price lower than the comparable price of the like product when destined for the exporting country;
  • the dumped imports cause or threaten to cause significant injury to the domestic industry of the importing country;
  • the existence of a causal relationship between the dumped imports and the significant injury to the domestic industry is clearly established.

The Agreement on the implementation of anti-dumping measures is based on the agreement negotiated during the Tokyo Round but it introduces more specific, clearer rules with regard to the method for determining dumping and the procedures to be followed when carrying out investigations. The Agreement provides greater transparency by stipulating that anti-dumping decisions must be notified immediately to the Committee on Anti-dumping Practices, established by the Agreement. It also provides for a dispute settlement procedure.

Subsidies and countervailing measures

The new Agreement on Subsidies and Countervailing Measures, contrary to that adopted at the Tokyo Round, defines the term ‘subsidy’ and stipulates that only those specific subsidies are subject to its provisions. It lays down the criteria for determining whether a subsidy is specific to an enterprise or industry or group of enterprises or industries. The Agreement divides the subsidies into the following three categories: prohibited, actionable and non-actionable. The Agreement provides for different remedies for each category of subsidies.

The Agreement also contains provisions concerning the use of countervailing measures, i.e. duties imposed by an importing country to compensate for the effect of a subsidy. These rules are similar to those that apply in the case of anti-dumping.

Safeguards

The Agreement on Safeguards lays down the rules for application of the safeguard measures provided for in Article XIX of GATT 1994. This article enables WTO members to apply safeguard measures on a non-discriminatory basis to limit imports where certain conditions are met in order to protect a domestic industry from serious injury or a threat of serious injury caused by an increase in imports.

The Agreement prohibits so-called ‘grey zone’ measures such as voluntary export restraint or other market sharing arrangements. The Agreement also provides for an extinction clause for all existing safeguard measures. In addition, it provides details on the procedures and rules to be followed when applying safeguard measures.

OTHER TRADE-RELATED RULES

Trade-related investment measures (TRIMs)

The Agreement on Trade-Related Investment Measures (TRIMs) recognises that certain investment measures may have a restrictive or distorting effect on trade. WTO members agree not to apply TRIMs that are inconsistent with the principle of national treatment established by the GATT or with the elimination of quantitative restrictions. The annex to the Agreement contains an illustrative list of TRIMs that are inconsistent with these provisions (requirement to purchase a specified quantity of products of national origin, etc.).

All TRIMs must be notified and eliminated within two years for developed countries, five years for developing countries and seven years for the least advanced countries. A Committee on Trade-Related Investment Measures is responsible for monitoring these commitments.

The members also decided to determine at a later date whether the Agreement should be complemented with provisions on investment policy and competition policy.

Balance-of-payments provisions

GATT 1994 authorises WTO members to impose restrictions on trade for balance-of-payments purposes. The Understanding on the Balance-of-Payments Provisions clarifies the GATT 1994 provisions and strengthens the procedures for consultations and notification of restrictive measures. It confirms the commitment made by the members at the Tokyo Round to give preference to price-based measures, such as import surcharges and import deposits, rather than quantitative restrictions applied for balance-of-payments purposes.

State trading enterprises

Article XVII of GATT 1994 governs the activities of State trading enterprises (government and non-government) with a view to ensuring that states do not use their enterprises as a mechanism to bypass the basic requirements they must fulfil under the GATT. The Understanding on the Interpretation of Article XVII contains a precise definition of State trading enterprises and aims to increase supervision of their activities through enhanced notification and review procedures.

Government procurement

The Agreement on Government Procurement is one of the four plurilateral agreements included in Annex 4 to the Marrakesh Agreement (in December 1997, two of these, dealing with bovine meat and dairy products, were terminated; the other agreement relates to trade in civil aircraft). These agreements only apply to the WTO members that have expressly accepted them. The European Community is one of the twenty or so WTO members that have signed and adopted these agreements.

The Agreement on Government Procurement, replacing the previous agreement from the Tokyo Round, aims to liberalise government procurement as far as possible at international level within a framework guaranteeing transparency and non-discrimination in relation to foreign products and suppliers. It covers procurement involving non-central administrations (states in a federal grouping, provinces, cantons, major towns) and relates to goods, works and services. The legal framework established by this Agreement reflects to a large extent the Community rules on government procurement.

The Agreement governs government procurement where the value exceeds a specific amount: SDR 130 000 (Special Drawing Rights, an IMF accounting unit) for the acquisition of goods and services by central government bodies, SDR 200 000 for sub-central governments, SDR 400 000 for public utility companies and SDR 5 000 000 for construction contracts.

The Agreement covers five sectors of activity: ports, airports, water, electricity and urban transport. It is based on the principle of reciprocity: countries must only open government contracts in the sectors indicated to signatories to the Agreement involved in the same sector.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Decision 94/800/EC 1.1.1995 OJ L 336 of 23.12.1994

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.

Aspects of intellectual property rights

Aspects of intellectual property rights

Outline of the Community (European Union) legislation about Aspects of intellectual property rights

Topics

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

Internal market > Businesses in the internal market > Intellectual property

Aspects of intellectual property rights

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).

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Summary

The basic principles are those of national treatment and most-favoured-nation treatment. Thus, members of the World Trade Organisation (WTO) must accord the nationals of other members treatment no less favourable than that they accord to their own nationals. Moreover, any advantage granted by a member to nationals of another member must be accorded immediately and unconditionally to the nationals of all other members even if this treatment is more favourable than that accorded to its own nationals.

Standards concerning the availability, scope and use of intellectual property rights

The agreement aims to ensure that adequate rules on the protection of intellectual property are applied in all member countries, on the basis of the basic obligations laid down by the WIPO (World Intellectual Property Organisation) in the various conventions on intellectual property rights (the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works, the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, and the Washington Treaty in Respect of Integrated Circuits). Numerous new rules or stricter rules are introduced in fields not covered by the existing conventions or where the existing conventions are inadequate.

With regard to copyright, the members of the WTO must comply with the basic provisions of the Berne Convention for the Protection of Literary and Artistic Works. Computer programs will from now on be protected as literary works. As regards rental rights, authors of computer programmes and producers of sound recordings may authorise or prohibit the commercial rental of their works to the public. A similar exclusive right applies to cinematographic works.

With regard to trademarks, the agreement specifies the types of signs that may benefit from protection as trademarks as well as the minimum rights conferred on their owner. It also lays down the requirements relating to the use of trademarks, the duration of protection, licensing and the assignment of trademarks.

As far as geographical indications are concerned, members of the WTO must provide the means to prevent the use of any indications which mislead the public as to the origin of a product and any use which would constitute an act of unfair competition. The agreement also made provision for additional protection for geographical indications for wines and spirits, even where there is no risk of consumers being misled.

Industrial designs are protected under the agreement for 10 years. Their owners have the right to prevent third parties from making, selling or importing articles embodying a design which is a copy of the protected design.

With regard to patents, members of the WTO have the general obligation to comply with the basic provisions of the 1967 Paris Convention. In addition, the TRIPS Agreement stipulates that it must be possible for all inventions to be protected by a patent for 20 years. Certain inventions may be excluded from patentability if their exploitation is prohibited for reasons of public order or morality. Other authorised exclusions relate to diagnostic, therapeutic and surgical methods for the treatment of humans or animals, as well as plants and animals (other than micro-organisms) and essentially biological processes for the production of plants or animals (other than non-biological and microbiological processes). However, members must provide for the protection of plant varieties either by patents or by a sui generis system.

As regards layout-designs of integrated circuits, WTO members must provide for their protection in accordance with the provisions of the Washington Treaty on Intellectual Property in Respect of Integrated Circuits. The TRIPS Agreement also sets out a number of other provisions, relating in particular to the term of protection.

According to the agreement, trade secrets and technical knowledge that have commercial value must be protected against breaches of confidence and any act contrary to honest commercial practices. Furthermore, anti-competitive practices in contractual licences may be subject to measures on the part of members to prevent and/or control such practices.

Enforcement of intellectual property rights

The laws of the member countries of the WTO must include procedures to ensure that intellectual property rights are respected both by foreign right holders and by their own nationals. These procedures must permit effective action against any act of infringement of these rights. They must be fair and equitable, they must not be unnecessarily complicated or costly, and they must not entail unreasonable time limits. Final administrative decisions may be reviewed by a judicial authority.

The agreement provides details concerning evidence, injunctions, damages, provisional measures and other remedies.

Transition period

With regard to the application of the agreement, developed countries have a period of one year to bring their legislation and practices into line with the agreement. This period is extended to 5 years for developing countries and countries in the process of transformation from a centrally-planned economy to a market economy, and to 11 years for the least-developed countries.

Institutional framework

The agreement created a Council for Trade-Related Aspects of Intellectual Property Rights. It is responsible for monitoring the operation of the agreement, ensuring that members comply with their obligations and affording opportunities for consultations between members.

The settlement of disputes over intellectual property is governed by the dispute settlement procedures adopted following the Uruguay Round negotiations.

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

The International Coffee Agreement 2007

The International Coffee Agreement 2007

Outline of the Community (European Union) legislation about The International Coffee Agreement 2007

Topics

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

Development > Sectoral development policies

The International Coffee Agreement 2007

Acts

Council Decision 2008/579/EC of 16 June 2008 on the signing and conclusion on behalf of the European Community of the International Coffee Agreement 2007 [Official Journal L 186 of 15.7.2008].

International Coffee Agreement 2007 (pdf ).

Summary

The European Community is a member of the International Coffee Organization (ICO) as an international institution along with 31 importing countries and 45 exporting countries. Signed by the 77 members of the ICO, the International Coffee Agreement 2007 aims to enhance and promote the sustainable development of the worldwide coffee sector through the following measures:

  • promoting international cooperation on coffee matters;
  • providing a forum for consultation among governments and with the private sector;
  • encouraging signatories to develop a sustainable coffee sector in economic, social and environmental terms;
  • seeking a balance between supply and demand and fair pricing for both consumers and producers;
  • facilitating the expansion and transparency of international coffee trade and promoting the elimination of trade barriers;
  • collecting, disseminating and publishing economic, technical and scientific information, statistics and studies on coffee-related issues;
  • promoting the development of consumption and markets for all types of coffee, including in coffee-producing countries;
  • developing and seeking finance for projects that benefit the world coffee economy;
  • promoting coffee quality with a view to enhancing customer satisfaction and benefits to producers;
  • supporting the development of food safety procedures in the sector;
  • supporting the development of strategies to enhance the capacity of small-scale farmers to benefit from coffee production, which can contribute to poverty alleviation;
  • facilitating the availability of information on financial tools and services that can assist producers.

In this context, the agreement stipulates that Members must try to limit tariff-related and regulatory barriers to coffee consumption such as preferential tariffs, quotas, government monopolies and subsidies. They must also give due consideration to the sustainable management of coffee resources, in accordance with the principles and objectives on sustainable development contained in Agenda 21, and the improvement of the standard of living and working conditions of populations engaged in the coffee sector.

The agreement also requires that each exporting Member implement the system of Certificates of Origin established by the ICC to facilitate the collection of statistics on the international coffee trade, and furnish to the ICC any information it judges necessary relating to production, imports, exports, consumption and prices.

Matters governed by the agreement fall within the exclusive competence of the European Community under the common commercial policy.

Context

The International Coffee Agreement 2007 is the seventh agreement of its kind to be signed since 1962 by members of the International Coffee Organization. A previous agreement was signed in 2001. The agreement remains in force for a period of 10 years unless it is extended or terminated before it expires.

References

Act

Entry into force

Deadline for transposition in the Member States

Official Journal

EC Decision 2008/579

16.6.2008

OJ L 186 of 15.7.2008

Trade policy serving the Europe 2020 strategy

Trade policy serving the Europe 2020 strategy

Outline of the Community (European Union) legislation about Trade policy serving the Europe 2020 strategy

Topics

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

External trade

Trade policy serving the Europe 2020 strategy

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 – Trade, Growth and World Affairs – Trade Policy as a core component of the EU’s 2020 strategy [COM(2010) 612 final – Not published in the Official Journal].

Summary

The Commission presents new guidelines for European trade policy. The policy must contribute to the objectives of the Europe 2020 strategy, in view of the impact of international trade on the sustainable growth of the European Union (EU).

The development of an open trade policy and international investment flows should thus:

  • contribute to the intelligent growth of the EU and the spread of innovation by removing barriers to international trade in goods and services and to investment. Stronger trade relations should, in particular, give European enterprises access to government procurement and research programmes in third countries;
  • be accompanied by social policies in the EU and worldwide. Open markets can lead to job losses in under-performing sectors. The Member States and the EU must therefore take the appropriate support measures, namely by extending the European Globalisation Adjustment Fund (EGF). In addition, the EU is to pursue its cooperation with developing countries as regards combating poverty, defending human rights, compliance with international labour standards and good governance;
  • contribute to green growth in the EU and worldwide. Trade agreements should provide for the efficient use of natural resources and the protection of the environment.

These objectives can be met by strengthening trade relations between the EU and its strategic partners.

In this context, it is particularly important to:

  • complete the Doha Round of negotiations launched by the World Trade Organization (WTO). It is essential to improve access by developing countries to international trade, particularly in the areas of services and agriculture, but also to improve WTO surveillance capacity and strengthen its dispute settlement system;
  • conclude the negotiation of free trade agreements between the EU and its trade partners, and strengthen relations with its strategic partners, particularly taking into account intellectual property rights and the protection of innovation, public procurement, competition rules and consumer protection;
  • develop a new European investment policy, create a favourable climate for enterprise, facilitate business access to foreign markets, including public procurement, and defend the EU’s rights to fair and secure trade.

Finally, trade policy must take into account the objectives of the EU’s external action. This concerns, in particular, the aims of European development policy through the implementation of specific trade instruments, and the requirements of the European Security Policy, namely regarding trade controls for dual-use items.

Reducing greenhouse gases by 2020

Reducing greenhouse gases by 2020

Outline of the Community (European Union) legislation about Reducing greenhouse gases by 2020

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Environment > Tackling climate change

Reducing greenhouse gases by 2020

Document or Iniciative

Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020.

Summary

This Decision sets out minimum contributions for Member States in terms of greenhouse gas emissions *, following commitments made by the Community for the period from 2013 to 2020.

Emission levels for the period from 2013 to 2020 and flexibility

Each Member State has annual emissions quotas forming a linear trajectory from 2013 to 2020. Each year between 2013 and 2020, Member States’ emissions must be lower than the corresponding annual emissions quota. The annual emissions quota for 2020 corresponds to the percentage fixed in Annex II to the Decision for each Member State.

During the period from 2013 to 2019, a Member State may carry forward from the following year a quantity of up to 5 % of its annual emission allocation *. The unused part of the quota may be carried over to subsequent years. It is also possible, under certain conditions, to transfer a part of this allocation to other Member States.

Energy efficiency

In 2012, the European Commission will assess the progress achieved by the Community and Member States with regard to the implementation of the Action Plan for Energy Efficiency. Following this assessment, the Commission shall propose strengthened or new measures, if necessary.

Use of credits from project activities

In order to fulfil their obligations, Member States may use the following greenhouse gas emission reduction credits:

  • Directive 2003/87/EC during the period 2008-2012 and corresponding to projects registered before 31 December 2012;
  • CERs issued for emission reductions from projects implemented in LDCs;

Each year, Member States may transfer up to 3 % of their unused annual allocation to another Member State. They may also carry over the unused part to subsequent years.

Reporting, evaluation of progress, amendments and review

Pursuant to Decision 280/2004/EC, Member States must declare the following in their reports:

  • their annual greenhouse gas emissions;
  • use, geographical distribution and types of credit used;
  • forecasted progress and national projections;
  • information on policies and national measures.

Every two years, the Community will evaluate progress achieved and compliance with commitments.

Corrective action

If the emission allocations which have been set are exceeded, the Member State concerned must take the following steps:

  • a deduction from the Member State’s emission allocation of the following year;
  • the development of a corrective action plan;
  • the temporary suspension of the eligibility to transfer to another Member State part of their emission allocation and rights to use credits from project activities.

Adjustments applicable upon the approval by the Community of an international agreement on climate change

Following the signing of an international agreement on climate change by the Community providing for a reduction of 20 % in greenhouse gas emissions compared with 1990, the Commission has to present, in the three next months, a report on the following points:

  • the nature of measures decided at international level;
  • options required at Community level in order to move to the 30 % reduction target endorsed by the European Council of March 2007;
  • the impact on the competitiveness of industry and agriculture, including carbon leakage risks;
  • the impact of the international agreement on other economic sectors;
  • accounting methods for emissions to land use and forestry;
  • modalities relating to afforestation, reforestation, deforestation and forest degradation in third countries;
  • the need for additional policies and measures.

In the event that no international agreement is approved by 31 December 2010, the Commission will have to prepare a proposal for including land use, land use change and forestry in the Community’s reduction commitment.

Context

The objective of the United Nations Framework Convention on Climate Change (UNFCCC), approved by Decision 94/69/EC, is to stabilise greenhouse gas concentrations. It is essential that the global annual temperature does not exceed 2° C above pre-industrial levels. In this regard, emissions of these gases should be reduced by 50 % by 2050.

Key terms of the Act
  • Greenhouse gas emissions: emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).
  • Annual emission allocation: the annual maximum allowed greenhouse gas emissions in the years 2013 to 2020.

References

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

Decision 406/2009/EC

25.6.2009

OJ L140 of 5.6.2009

Related Act

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Analysis of options to move beyond 20 % greenhouse gas emission reductions and assessing the risk of carbon leakage [COM(2010) 265 final – Not published in the Official Journal].

This Communication analyses the effects of a policy which could reduce greenhouse gas emissions by 30 %.
The 2008 economic crisis caused a sharp decrease in CO2 emissions. In fact, greenhouse gas emissions recorded in the European Union (EU) in 2009 fell by 14 % in relation to 1990 levels, even though the decrease recorded in 2008 was only 11.6 %.
As a result the possibility of moving beyond the 2020 objective seems realistic if the following options are implemented:

  • adapt the emissions trading system by “setting aside” a share of the allowances planned for auction;
  • reward fast movers that invest in top performing technology in terms of reducing emissions by allocating them extra free allowances;
  • establish carbon taxes;
  • use EU policies to encourage emission reductions;
  • use the instruments of international credits to encourage the adoption of top performing technologies in emissions reduction.

However, the Communication highlights that the total cost of reducing emissions by 30 %, taking into account the costs associated with achieving the objective of 20 % reduction, could be EUR 81 billion. This amount considerably exceeds the initial cost of the “climate-energy” package, estimated at EUR 70 billion.
It is also important that the objective of reducing CO2 emissions by 30 % is also implemented by third countries so as to avoid the risk of “carbon leakage”. International coordination at this level is, therefore, vital.

International agreements

International agreements

Outline of the Community (European Union) legislation about International agreements

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Institutional affairs > The decision-making process and the work of the institutions

International agreements

INTRODUCTION

With the entry into force of the Treaty of Lisbon, the European Union (EU) acquired legal personality. It is therefore a subject of international law which is capable of negotiating and concluding international agreements on its own behalf.

These international agreements have legal effects in the internal law of the EU and the Member States. Moreover, the founding Treaties of the EU lay down the procedures by which the EU can conclude international agreements.

Definition

International agreements are the result of a consensus between the EU on the one hand and a third country or third-party organisation on the other hand. These agreements create rights and obligations for the European institutions and Member States. They become part of the European legal order on the date of their entry into force or on the date that they specify.

Legally, international agreements are secondary conventions and agreements and must therefore comply with the founding Treaties of the EU. However, they have greater value than “unilateral” secondary acts, i.e. acts adopted unilaterally by the European institutions (regulations, directives, decisions, etc.).

External competences of the EU

The external competences of the EU are defined in Article 216 of the Treaty on the Functioning of the EU. The EU may conclude international agreements:

  • in the cases provided for by the founding Treaties;
  • where provided for in a legally binding act;
  • where the conclusion of an agreement is necessary in order to achieve one of the objectives of the EU, even in the absence of internal European legislation;
  • where the conclusion of the agreement is likely to affect common rules adopted by the EU in internal law. Thus, where the EU has adopted common rules for the implementation of a policy, Member States are no longer entitled to enter into obligations with third countries affecting those rules.

Exclusive competence and shared competence

The division of competences between the EU and Member States is also expressed at international level. Where the EU negotiates and concludes an international agreement, it has either exclusive competence or competence which is shared with Member States.

Where it has exclusive competence, the EU alone has the power to negotiate and conclude the agreement. Moreover, Article 3 of the Treaty on the Functioning of the EU specifies the areas in which the EU has exclusive competence to conclude international agreements.

Where its competence is shared with Member States, the agreement is concluded both by the EU and by the Member States. It is therefore a mixed agreement to which Member States must give their consent. The areas in which competences are shared are defined in Article 4 of the Treaty on the Functioning of the EU.

Conventions and agreements

Conventions and agreements

Outline of the Community (European Union) legislation about Conventions and agreements

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Institutional affairs > The decision-making process and the work of the institutions

Conventions and agreements

Conventions and agreements, together with unilateral acts, constitute the secondary legislation of the European Union (EU). They generate rights and obligations. They are the product of a consensus between the European institutions or between the latter and a third party. Unlike unilateral acts, therefore, conventions and agreements are not the result of a legislative procedure or the sole will of an institution.

Moreover, the founding Treaties of the EU provide for two main types of convention and agreement:

  • international agreements;
  • interinstitutional agreements.

International agreements

International agreements are agreements concluded between the EU on the one hand and a third country or third-party organisation on the other. Article 216 of the Treaty on the Functioning of the EU lists the cases in which the EU is authorised to conclude such agreements.

Moreover, international agreements have mandatory application throughout the EU. They have a value greater than unilateral secondary acts, which must therefore comply with them.

Interinstitutional agreements

Interinstitutional agreements are concluded between the European institutions. Their aim is to organise and facilitate cooperation between the institutions, specifically the Commission, the Parliament and the Council.

This type of agreement is the result of institutional practice but has been enshrined in the founding Treaties of the EU with the entry into force of the Treaty of Lisbon. Article 295 of the Treaty on the Functioning of the EU recognises the existence of interinstitutional agreements and specifies that they may also be binding. In this case the binding nature of the agreement depends on the wishes of the authors of the act.

Moreover, interinstitutional agreements may for example take the form of codes of conduct, guidelines or declarations.