EUROPEAN UNION'S GEO-POLITICAL RESPONSES!

4:12 PM Jul 25, 1995

EUROPEAN UNION'S GEO-POLITICAL RESPONSES!
Geneva 25 July (Chakravarthi Raghavan) -- The European Union's responses to the comments of delegations as well as to a number of detailed questions were described Tuesday as "candid", and with a "political" message and the EU itself characterizing its trade liberalization and web of agreements as a "geopolitical" exercise, according to the chairman of the WTO's Trade Policy Review Body (TPRB). Briefing the media after the meeting which ended with his own summing up, Amb. Nestor Osorio Londono of Colombia quoted the EU's top official, Roderick Abbot, as responding to questions about the web of preferential and cooperation trade agreements and the discretionary powers for providing preferences, as acknowledging the discretionary and arbitrary contents, but justifying it in terms of a tool to help development of developing countries.

The EU gave a "strong political message", Osorio Londono said. He also quoted the EU as talking about the "political relationships" in trade liberalization and in terms of the relationships between big partners that have to be taken into account.

But the TPRB Chairman was unable to explain what all this meant for an institution which often talks of trade liberalization and generally advocates a policy of economic liberalism or laissez faire economics which necessarily implies politics being out of economics.

He told the media that one had to read between the lines - something which the media could not, since they had only the written reports of the EU and of the secretariat, and the chair's concluding remarks.

Asked whether the descriptive, rather than prescriptive, nature of the secretariat report would be the pattern for future WTO reports for the TPRM, Osorio Londono said that this was one of the subjects that would need reflection and he would conduct some consultations with the WTO members in terms of the future.

While characterizing the remarks of delegations as "balanced" -- between 'critical' and 'complimentary' -- Osorio Londono said the members made no secret of their complaints over the EU trade policy, and were "frank and candid" about the EU's intensive use of anti-dumping and safeguards measures, their disappointment with the textiles and clothing integration programme, their concerns over the EU agricultural policy, subsidies.

"But the EU was equally frank, and the reply had a political content," he said.

But the media were no wiser whether the "political realities" and "geopolitical" contexts would apply only to the major partners or one that could be invoked by others too in terms of the liberalization demands.

The chairman's summing up referred to the concerns expressed by members over the EU's interpretation of (its obligations) GATT Art. XXIV:6 and GATS Art V:2 -- which require negotiations with other trading partners over formation of customs and free trade areas or accessions to existing ones.

In the discussions, many members had complained of the EU's tardiness, in the context of recent enlargement of the EU (with accession of Austria, Finland and Sweden) in entering into and completing the renegotiations required in such cases, with several participants stressing that in future enlargements such negotiations should be undertaken in advance of such enlargement.

In the case of the three, most WTO members were notified of the impending accession and the EU willing to enter into consultations with countries affected, but with very little time to do so, and the accessions became effective, with negative effects on some. Only the US was provided with an interim solution.

Abbot, according to the Chairman's summary, was reported as arguing that as in previous enlargements, the EU had followed relevant GATT procedures, that the WTO understanding only required that the procedures of Art. XXVIII (for renegotiation of concessions) "must be 'commenced' before the tariff concessions were modified" (and thus presumably did not require their completion).

On the complaint over the automatic extension to the new markets of the three new EU members of existing EU anti-dumping measures, the EU answered that the "proper functioning of (its) common commercial policy required the application of existing measures, such as antidumping actions, to the enlarged territory of the Union and, in his view, this was consistent with the Anti-Dumping Code".

In the discussions, several members questioned and sought information on the EU Commission's ability to prevent individual member States from pursuing potentially restrictive standardization and labelling initiatives.

The Chairman's summary did not indicate whether the EU responded to this and if so what the response was.

But on the wider question of the EU's web of agreements and effects on outsiders, the summary said that the "associated countries" highlighted the beneficial effects of the preferential trade arrangements, while others questioned how far the increasing network of preferential arrangements was compatible with the multilateral system -- with several participants requesting the EU to ensure that any further development should take into account the interests and rights of all WTO members.

The EU responded by calling its Single Market process as "open regionalism" and viewed the regional integration as moving "beyond free trade, encompassing economic cooperation, financial assistance, approximation of legislation, competition policy and policy dialogue."

"This," the EU said, "might require a new look at certain aspects of Art XXIV of the GATT, which should reflect political realities and not be a straitjacket. Intra-regional trade in the EU had remained stable for some time and fears of trading partners being 'left out' were thus unjustified. Agreements included 'sensitive' areas such as agriculture, where further liberalization was envisaged, and textiles, where timetables were fixed for full liberalization".

But participants in the discussions, according to the chair's summary, "reiterated that the provisions of Art XXIV, while not a straitjacket, "contained clear multilateral disciplines within which all free-trade areas must be viewed; these procedures were for the benefit of all. In particular, preferential agreements must be comprehensive and consistent, with reduction of trade barriers to the rest of the world."

On the complaints over the new GSP, the EU said the new scheme would respond more efficiently to economic changes in developing countries and assist the less developed among. The special incentive regime, linking trade to environmental protection and social conditions would not apply till 1998 and concessions could be withdrawn only by the Council of Ministers, after an examination procedure. The decision-making process over product sensitivity and graduation would not be altered before 1998.

On the EU's tariff cuts and escalation problems, the EU said its tariff cuts were substantial, the rates for motor vehicles and made-up textiles and clothing items were relatively low compared to others and were also bound. "But the EU has no defined plans for further tariff negotiations at this stage". The EU also seemed to rule out any accelerated liberalization of the textiles and clothing integration process, viewing any such move as disruptive for importers and exporters.