Download The EU`s position on tariff and non-tariff measures

The EU's position on tariff and non-tariff
measures
Introduction
Despite the collapse of talks at Seattle the EU, led by its executive arm, the European
Commission, still favours a comprehensive new round of trade negotiations. Trade
commissioner Lamy has been holding a series of informal talks with the US Secretary of
State for trade Mrs Bashefsky. Mr Lamy is also lobbying developing countries to ensure their
support for such a trade round. He has recently been to India, and will soon travel to Brazil
(this week), to Cairo for the EU-Africa summit, and will attend the EU-Mercusor negotiations
in April. A new trade round as envisaged by the EU includes issues like investment,
government procurement, competition, market access, environment and labour standards.
Tariffs
The European Union has a common tariff level for all forest products. On most forest
products the tariff level is zero, with the exception of some manufactured goods, such as
builders joinery and carpentry wood (2.1%), boards (4.9 %) and plywood (7.0%), and also
live trees (8.4%).
The EU has always opposed the APEC-proposed acceleration of tariff liberalisation, the ATL
proposal. Most of the European based timber industries, notably the Finnish, are not in
favour of the ATL proposal. Labour and related costs in Europe are considerably higher than
in the US or Canada. As the ATL proposal would have quite likely benefited 'low cost'
countries more than 'high cost' countries, this might be one of the reasons for the lack of
industry's enthusiasm for the ATL proposal. Nevertheless the EU is and has always been in
favour of further tariff liberalisation in general and a strong proponent of market access as
part of a new trade round. According to the bilateral trade agreements that the EU has
recently negotiated with South Africa and Mexico[1], the EU will eliminate all remaining tariffs
by 2003 and its partners will remove all their tariffs in 4 stages by 2007.
The European Commission has created a market access and trade barriers database that
includes impact analyses, by country, of tariff and tariff escalation on EU export industries[2].
No analysis is carried out on the socially and environmentally protective impacts these tariff
levels may have for the importing countries. European industries are encouraged to send
relevant information on the trade barriers that they encounter exporting to third countries.
Non-tariff measures (NTMs)
The European Commission has made clear that it wishes to include non-tariff measures in
trade negotiations; at the same time, however, it risks running into trouble regarding WTO
compatibility over its own eco-label scheme.
According to the database created by the Commission on trade-distorting measures, nontariff barriers to trade in forest products include: import prohibitions/quotas, export
restrictions such as log export bans, state trading enterprises, standards and other technical
requirements, local content schemes and subsidies.
The EU wants to include non-tariff measures in market access negotiations at the WTO. This
position was reiterated in the EU submission on trade at the Intergovernmental Forum on
Forests in New York (31 January - 9 February), in which it stated its support for:
" continued efforts by countries and the WTO to liberalise trade and to
improve market access, including for sustainably managed forest products
and services, with special attention to substantially reducing tariffs as well as
non-tariff measures that restrict or distort trade while allowing for the optimal
use of the world's resources in accordance with the objectives of sustainable
management."
It further urges:
"countries, international organisations [, including WTO] and other interested
parties to undertake as appropriate, further co-operative work on voluntary
certification and/or labelling schemes, in line with the recommendations of IPF
while seeking their international compatibility and considering their
equivalence…"
Under the section on non-tariff barriers in the EU Mexico agreement[3], the EU also supports
efforts to harmonise labelling schemes.
"working towards the approximation and
requirements, including voluntary schemes"
simplification
of
labelling
The Directorate General for Trade wants to include the EU's eco-label scheme in market
access negotiations. As this is a government-led scheme, harshly attacked by the forestry
industries particularly in Canada, the EU fears that a complaint might be presented to the
WTO's to be dealt with by the WTO's dispute settlement mechanism. The outcome of a
challenge to the eco-label scheme would be very unsure. Therefore, the Commission under
its WTO negotiating agenda proposals for environment is seeking to ensure the WTO
recognises the EU ecolabel scheme as WTO compatible. The Commission would be more
likely to obtain WTO recognition for the eco-labelling scheme under a new negotiation
round.
The EU ecolabel scheme deals with products varying from washing machines
to paper. Forest NGOs have been concerned about the eco-label scheme as
its criteria for forest management are extremely weak, based on the Helsinki
criteria for European forests and related statements for non-European forests.
Although the EU and Japan, as well as the APEC study on non-tariff measures confirm that
voluntary non-governmental certification schemes should not be considered non tariff
measures, Commission services are discussing the possibility of establishing a framework
for certification at EU level. This could create the same problems the EU is facing with its
eco-label scheme. However, it is fair to say that not much support exists within the
Commission to establish such a framework.
The Commission is preparing a tender for an in-depth analysis of trade and investment
barriers encountered in certain non-Community countries and in different sectors, including
mechanical woodworking, paper and pulp.
Agriculture sector.
It is common knowledge that agriculture, through its impact on land-use patterns, has a great
impact on forests. Agriculture is part of the so-called ‘built-in agenda’ and liberalisation
negotiations are starting in Geneva. Most countries are demanding that the EU abolish its
agricultural export subsidies under the Common Agricultural Policy (CAP). A lot of pressure
has also been applied for the EU to abolish its domestic support measures -which are part of
CAP-, including direct payments to farmers. Many environment and development NGOs
have campaigned against the CAP because of its detrimental impacts on developing
countries' economies. The EU still maintains high import tariffs for many agricultural
products, thereby further discriminating against developing countries. Most NGOs therefore
want the EU to move away from production-related direct support towards more sustainable
rural development schemes. As the farmers lobby is strong in many European countries this
is a tough battle.
Although some agricultural liberalisation could be environmentally and socially beneficial,
reforms should be carefully crafted to allow support measures related to social and
environmental objectives (i.e. for the protection of forest and biodiveristy and other rural
development schemes).
NGOs were disappointed by the outcome of the 1999 CAP negotiations, which formed the
basis of the EU's position on agriculture liberalisation. Environment NGOs had lobbied for
less production subsidies and more environment protection measures. However, the amount
of direct support was not reduced, the EU did not cut down on its export subsidies and the
financial envelope for sustainable rural development was disappointing.
Sustainability Impact Assessment (SIA)
An instrument is being developed that, it is hoped, will permit an evaluation of the economic,
social and environmental effects of trade liberalisation: a sustainability impact assessment.
The Directorate General for Trade held a meeting on the results of its preliminarySIA[4],
prepared for the Seattle ministerial. NGOs presented a joint statement to the Commission
strongly criticising the methodology and process followed.
The methodology that has been developed attempts to combine both quantitative (e.g.
regression analysis) and qualitative (e.g. case studies) impact assessment techniques.
However, due to the time constraints faced by the consultants, the preliminary SIA is based
on common sense judgment derived from the literature review and discussions with
"experts".
Forests are not the main focus of the SIA. However, reference to the impact of further trade
liberalization on forests is recognized under the section on tariff liberalization of nonagricultural products. The SIA also concludes that tariff escalation can contribute to an
increase in environmental pressure in terms of natural resources. Higher tariffs on plywood
than logs may contribute to an increase in the extraction rate from forests in exporting
countries. The study also points out that further liberalization is likely to have negative
environmental impacts in resource-based industries if increased trade liberalization
encourages increased rates of depletion of natural resources, such as fish stocks and
forests.
EU Bilateral and Regional Agreements
Bilateral
The bilateral agreements agreed by the EU with South Africa and Mexico both support the
EU's comprehensive trade liberalisation approach: investment, government procurement
and competition are all included. However, environment protection and the recognition of
Multilateral Environment Agreements are notable through their absence. A free trade
agreement also exists with Canada since 1998.
Regional agreements
The EU is negotiating a bilateral agreement with Mercosur. It is also in the process of
negotiating a Euro Mediterranean free trade zone with its 12 Mediterranean partner
countries.
On 3 February 2000 the European Community (EC) and 71 African, Caribbean and Pacific
(ACP) States (i.e. the 'former colonies') concluded negotiations on a Partnership Agreement
(PA) aimed at the establishment of a new framework for their future relations. The
Agreement will, inter alia, regulate trade between these two groups of countries, as well as
the political dimension of their relations, their development cooperation strategies and their
financial cooperation subsequent to the expiration of the fourth Lomé Convention on 29
February 2000.
The trade provisions of the new ACP-EC PA, which will enter into force on 1st March 2000,
cover a period of 8 years (Art.37.1) in preparation of a WTO-compatible regime. The Parties'
ultimate objective is to integrate the ACP States successfully into the world economy and the
multilateral trading system. At the end of the preparatory period, the Parties will conclude a
new trading arrangement that will be fully compatible with their WTO obligations; they will
progressively remove barriers to trade between them and enhance cooperation in all areas
relevant to trade (Art.36. 1 and 2).
In the meantime, a waiver has been requested from the WTO regarding the preferential
treatment given by the EU to the ACP countries.
[1] DG Trade website, agreement in 2000 Mexico 1 March
[2] http://mkaccdb.eu.int/mkdb/. Note: this data base is only accessible from the 15 European member states
[3] Text of decision 2 18/1/2000
[4] The aim of the study is to develop a methodology to assess the sustainability of WTO trade liberalization (Phase I) and to
apply it to a broad assessment the EC's proposals for the New Trade Round (Phase II). The SIA aims to analyze the
economic, environmental and social impacts of trade liberalization and their implication for sustainable development. It
covers 15 different issues, from agriculture, through tariffs on non-agricultural products, to investment and relations between
the WTO and multilateral environment agreements. The trade-off for this breadth of analysis is the lack of depth of each
sector analysis (Oxfam, Save the Children, Actionaid and WWF critique of the SIA).