Statement by Ambassador Linnet F. Deily
U.S. Permanent Representative to the World Trade Organization

October 25, 2004

Thank you, Madame Chair. The United States warmly welcomes the representatives of the European Communities, led by Pierre Defraigne and including Ambassador Trojan, to this review. My delegation also appreciates the work of the Secretariat, as well as the comments from our discussant, Don Stephenson of Canada, which give us a good start to our work today.

The United States and the EU share a positive and thriving trade relationship, the largest two-way trade relationship in the world. The United States is the EU’s largest trading partner, and depending on the data series, the EU stands out as the first or second largest trade partner of the United States. According to recent estimates, the jobs of some 12-14 million people on both sides of the Atlantic are related to U.S.-EU trade and investment flows.

We have disputes, and we have each made use of the multilateral rules of the WTO help us work through them. But it is important to put the disputes into the right context – that of a bilateral trade and investment relationship that reaches into the hundreds of billions of dollars. Particularly in recent years, our respective leaders have worked hard to maintain constructive dialogue, even on the most contentious of our disagreements. In that regard, I would especially like to salute the commitment and vision of EU Trade Commissioner Pascal Lamy as he prepares to leave the European Commission at the end of this week, both from the perspective of our bilateral relations as well as for the leadership he has displayed in the Doha Development Agenda.

As we undertake this review of Europe’s trade policies, it is interesting to recall a statement made fifty five years ago this month by then U.S. Marshall Plan Administrator, Paul Hoffman. In 1949, speaking to the precursor to the OECD, Hoffman called for "the formation of a single large market within which quantitative restrictions on the movement of goods, monetary barriers to the flow of payments and, eventually, all tariffs would be permanently swept away."

Of course, the project of European economic integration continues today and this review comes at a critical juncture in that effort. In May of this year, Europe realized the historic achievement of enlarging to include ten new Member States, an undertaking the United States has long supported. The implications of this step for EU trade policies and the access of trading partners to the enlarged EU market are the subjects of many of our questions.

The United States remains concerned about the European Union’s response on WTO issues related to its enlargement, and in particular its need to provide for adequate compensation in the areas of tariffs and services. We are also interested in more information regarding the status of the new Member States’ enforcement of intellectual property rights, adoption of EU regulations and standards, customs administrations, and agreements with third countries.

As in past reviews, the role of non-tariff barriers and regulatory issues in EU trade policy is of great importance to the United States. As we look to the future of the enormous U.S.-EU trade relationship, we believe that our principal challenges will lie in confronting the trade implications of regulatory measures adopted by the EU institutions. While the Secretariat’s report did an excellent job of explaining the mechanics of EU trade policy formulation, we believe it did not comment extensively enough on whether non-EU parties have a meaningful opportunity to influence the outcome of regulatory decisions. We believe that the EU needs to do more to increase transparency and access to its increasingly complex regulatory and trade policy process.

Accordingly, we have posed a number of questions related to EU Technical Barriers to Trade and Sanitary and Phytosanitary measures. In particular, we have a number of questions related to the European Commission’s October 2003 proposal to implement a new regulatory regime for chemicals called REACH that the U.S. believes in its present form will be unworkable and may not even achieve the EU’s own goals. In the context of this review, we would welcome more information about the draft REACH proposal and why the EC believes it will streamline and simplify its regulatory system for chemicals.

Further, we continue to have a long list of unanswered questions regarding the EU’s rules related to wine labeling. We would appreciate a clarification, for instance, on whether US wines sold in the EC would be prohibited from using descriptive and marketing terms necessary to inform consumers about a product, a universe of terms that may include such common words as “classic” or “fine” or “superior”?

Europe and the United States share a strong interest in the services sector, in innovative technologies, and in the need to protect intellectual property rights. Several of our questions relate to these areas. For example, we continue to have significant questions about the protection of geographical indications in the EU, including with respect to non-EU nationals and agricultural products as well as with respect to wine and spirits. We note that a European Council regulation appears to require, as a condition for protecting the geographical indications of another WTO Member, that the other Member offer equivalent protection to EC products. We would be interested to learn how the EC squares that requirement with the national treatment obligation under TRIPS.

A number of our other questions relate to traceability and labeling of biotech products. We remain discouraged that the EU appears determined to implement a mandatory labeling and traceability scheme for biotechnology products that will pose a new barrier to the development of this promising technology.

Yet another concern relates to the level and nature of state aid and subsidies to European industries by EU Member States. We note that, unfortunately, the Secretariat’s report says very little about this issue that is so important.

The United States has followed great interest in the evolution of the EU Common Agricultural Policy (CAP), which is critical to the success of the Doha Agenda. Several of the questions that we have submitted are aimed at better understanding how CAP reform will be implemented and will operate at a practical level.

Europe continues to expand its large network of preferential trade arrangements with third countries. Therefore, we have posed a number of questions that pertain to arrangements the EU is negotiating with countries in Latin America and the Persian Gulf, for example. We hope that 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.

In closing, Madame Chair, the United States appreciates the opportunity to comment on the EU’s trade policy, and we look forward to further discussions on trade matters with the European Communities – in the context of this review, our bilateral relationship, and here at the WTO. Thank you.