WTO Trade Policy Review
of the European Union

Statement by the United States
Ambassador Linnet Deily

(As delivered)
Wednesday, July 24, 2002

· Mr. Chairman, on behalf of the United States, I am pleased to present the questions which were prompted in the minds of officials back in Washington by this latest report by the Secretariat on the European Union's trade policy. As always, we appreciate the hard work of the Secretariat in compiling its report and thank the EU for its own informative statement. And we are keenly aware that the role of discussant is an extremely taxing one, and wish to thank Mr. Ismael for his contribution to this process, as well.

· I would also like to welcome Roderick Abbott and his team from Brussels. It appears there is no lack of opportunity for our officials to consult on vital issues of the day; nonetheless it is a pleasure to see you here.

· Since the last review of the EU's trade policy two years ago, and since the last review of the United States by this body last September, a great deal has happened on the global trade scene of essential interest to governments on both sides of the Atlantic. Most notable is the agreement on the Doha Development Agenda, which I believe most observers concur was facilitated by fairly extensive cooperation between the EU and the United States.

· I realize this has been said before, but I want to reiterate here that the United States and the EU share the largest and most complex two-way trade and investment relationship in the world, and that our interactions with each other on economic issues reflect both the overwhelmingly positive and occasionally difficult aspects of that relationship.

· What is undeniable, though, is that we both have a fundamental interest in the growth and continued robust health of the rules-based trading system. And, as last week's welcome progress on Doha-related matters shows, we are both prepared to work hard to advance the trade agenda.

· Such a commitment to the trading system demands, however, an equal commitment to open trade policies at home and it is in this spirit that we approach these policy reviews as serious yet constructive dialogues.

· With these basic points as context, I would like to turn to the Secretariat's report and make some overall comments. We will of course be looking forward to discussing our specific questions, and the EU's responses, during this review.

· I would like to address my first comments to the Secretariat. Although we applaud the Secretariat's thoroughness of preparation, we note two areas where we desire more nuance. I am referring to the Secretariat's characterization of two matters of current dispute between the EU and the United States, namely our steel safeguard measure and the FSC/ETI case:

- on steel, we would appreciate the Secretariat making clear, in paragraph 28 under Summary Observations and in paragraph 37 under Section III, Trade Policy Practices by Measure, that it is the EU's stated position that it decided to impose a provisional safeguard measure on 15 steel products on March 27 in response to the U.S. safeguard action. We also would appreciate clarification in those same two paragraphs that it is the EU's stated position that the "rebalancing" measures proposed by the Commission are justified because the two parties could not agree on compensation in the case of the United States' Article XIX measure.

- in a similar vein, we request the Secretariat clarify, in paragraph 29 under Summary Observations, that it is the EU's contention that annual export subsidy benefits under the U.S. FSC rules equal $4.04 billion. As the Secretariat knows, the United States has claimed before the arbitration panel that the EU should be entitled to no more than $1.1 billion annually in countermeasures in this case, and, if numbers are going to be used on the matter in the report, we would like both arguments listed.

· I would like now to proceed by touching on the highlights of the questions we have submitted to the EU in response to the Secretariat's report.

· The United States unsurprisingly takes great interest in the evolution of the EU Common Agricultural Policy (CAP) and is following closely the discussion in the Community on the Commission's recent Mid-term review of CAP reform. The questions we have submitted here will certainly not be exhaustive and we look forward to continued discussion with our EU counterparts as this process, so central to the eventual success of the Doha Agenda, progresses in the coming months.

· Given the steady decline in traditional trade measures as impediments to international commerce, certainly among developed countries, the role of regulatory issues in the shaping of economic relations between countries looms larger. Nowhere is this more true than in the case of the EU, which through its sheer size can have a profound regulatory influence on world trade.

· Our concerns with EU policies in this sphere remain from previous discussions in this body. Specifically, we echo the Secretariat's identification in its report that EU rulemaking processes are often perceived by third countries as exclusionary, allowing no meaningful opportunity for non-EU parties to influence the outcome of regulatory decisions.

· We welcome the current internal debate within the EU on governance and the need for transparency in rulemaking However, we call again on the EU to take steps to ensure that WTO members and affected exporters have a meaningful opportunity to comment on regulatory proposals and have those comments considered before a final internal EU position on technical regulations is reached.

· Concerns with EU regulatory approaches come up in several other areas; again, not really new to anyone who follows U.S.-EU relations. Unfortunately, we can cite little progress since the EU's last trade policy review in the area of agricultural biotechnology, where the EU continues to ignore its international obligations, refusing to make final decisions on approvals of agricultural biotechnology products, even where no health risks have been identified through scientific review.

- the situation is becoming even more discouraging in that the EU appears bent on instituting a mandatory labeling and traceability scheme for biotechnology products that the United States believes will be prone to fraud and basically inoperable, posing a new barrier to the development of this promising technology.

· Another worry which we address in our questions involves the EU's newly promulgated regulations related to wine labeling. Here, too, the EU appears to have finalized regulations before third countries could indicate their concerns. As we, and other members, have a number of concerns with the regulations, this state of affairs is most disturbing.

· It is a sign of hope that the expansion of the EU to include new members to the East and South appears to be gathering momentum. The United States remains steadfast in its support of a more integrated Europe and stronger ties between the EU and its neighbors.

· An enlarged Union will be a net economic gain for American companies. However, as we have said in the past, we remain watchful in seeking to ensure that the interim arrangements the EU has made with its prospective members do not on balance divert third country trade and investment.

· More broadly, we remain interested in preferential trade arrangements the EU has concluded or is seeking with other regions of the world, for example in Latin America. Here, too, we hope these arrangements will be on balance trade creating and we ask the EU to provide updated information on the scope and related timetables for implementation of its agreements.

· I am disappointed that, once again, we are compelled to note that the EU has failed to submit a consolidated services schedule for the 1995 expansion of the Union to fifteen members. What is the EU's latest estimate of when that information will be made available?

· In the area of intellectual property protection, the United States and the EU have many of the same objectives in the WTO, as well as in individual third country markets. As we did two years ago, however, we are submitting several questions on the operation of the EU's regime for regulating geographical indications. We remain concerned that, despite the EU's intense interest in this topic in the Doha discussions, foreign persons wishing to obtain protection for their GIs in the EU itself face a non-transparent process that appears to come into some conflict with the EU's TRIPs obligations.

· We have also submitted a fair number of questions in the areas of services, particularly financial services, and e-commerce, both of which areas we know the EU has been taking significant internal steps of late.

· Finally, Mr. Chairman, I would like to emphasize that we appreciate this chance for constructive dialogue with the EU and with other members of this body. To the extent we can keep each other informed of developments in our thinking on trade-related issues, we can with some patience reinforce the impetus for further liberalization of the global trading system, a goal of potentially great benefit for us all.

· We look forward to a lively discussion continuing on Friday.