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MEMO/03/73

Brussels, 27 March 2003

Trade and Enlargement - A Sectoral Overview

Mutual recognition Agreement MRAs

    What are the benefits which will arise out of the adoption of the acquis by the new Member States?

    The trade facilitation and access to third country markets advantages which MRAs have brought to Community exporters will extend to New Member States.

    Conversely, the same kind of advantages would accrue to the exporters of the third countries with which the Community has concluded MRAs as regards their exports to the new Member States.

    What does implementation of the Common Commercial Policy (CCP) by acceding countries entail?

    New Member States will automatically participate in international agreements to which the Community is a party. This includes MRAs, with the ensuing obligations to have in place a suitable mechanism for the designation of Conformity Assessment Bodies (CABs).

    Their actual ability to do so, in certain MRA (e.g. Switzerland), has been built up already before accession by the conclusion of Protocol to the Europe Agreements on Conformity Assessment (PECAs) between the Community and various applicant Member States, which are based upon the implementation of the acquis and which are designed to align the conformity assessment systems of the applicant countries on the Community one. In other MRAs, new Member States will need to demonstrate knowledge of the regulatory requirements of the third Party in order to designate CABs.

    How will the obligations towards third countries be respected?

    The obligations of the MRAs will become immediately applicable upon accession in the new Member States.

    The MRAs include safeguard mechanisms to ensure that such technical competence exists and is adequate: verification visits, peer reviews, etc. These will also automatically apply to new Member States upon accession.

    Third country specific issues

    MRA co-signatories could question the technical ability of new Member State's CABs to certify products to the technical requirement of the importing country. New Member States will need to demonstrate knowledge of the regulatory requirements of the third Party in order to designate CABs. However, the mechanism of the PECAs and the Community's technical assistance are designed to solve this problem in the context of the Internal Market, and will therefore also address it in the cases of MRAs based on the acquis communautaire.

For further information on MRAs please click here :

http://trade-info.ec.europa.eu/tbt/index.cfm

Trade Defence Instruments

    The Instruments

    The EU has exclusive competence in the area of trade defence. Consequently, there is no Member State legislation in this field. The EU has three main trade defence instruments (TDI) at its disposal to ensure fair trade: the anti-dumping (AD), anti-subsidy (AS), and safeguard instrument (SFG).

    In addition, the EU has recently introduced two further instruments, namely the regulation on protection against injurious pricing of vessels (this instrument remains unused pending the entry into force of the OECD Shipbuilding Agreement) and the transitional product-specific safeguard mechanism (planned to enter into force on 22 February 2003), which implements provisions contained in China's WTO Accession Protocol.

    The EU trade defence instruments and the secondary legislation based thereon are all in conformity with the EU's international obligations, in particular those arising out of the WTO. In many instances, the EU law even goes beyond WTO obligations.

    As well as applying TDI, the Commission offers support to EU exporters and Member States which face third country TDI cases.

    What happens in the field of trade defence upon accession?

      The legal framework changes

        Upon accession, the new Member States automatically become part of the EU single market and consequently are subject to the EU Common Commercial Policy. This means that the EU's general legal framework supersedes that of each new Member State and is automatically applicable. For trade defence instruments, this framework is made up of two parts:

        the basic regulations for each existing instrument, the main ones being AD, AS and SFG; and

        trade agreements with non-EU countries which contain TDI clauses.

      and so do the individual measures in force

        In practice, this implies that individual measures will change:

        No TDI measures are possible within the EU as the Member States constitute one single market. EU-15 measures vis-à-vis the new Member States will no longer be applicable and vice versa. The same goes for measures in force among new Member States or by new Member States against third countries other than the EU.

        TDI measures by new Member States against third countries cease to apply; they are superseded by TDI measures in force in the EU-15 against third countries, and these will be applicable to imports into the new Member States, i.e. in the EU-25.

        This approach, consisting on the one side of an automatic and immediate extension of the trade defence measures to the new Member States and, on the other side, by the lapsing of trade defence measures imposed by new Member States was applied at the last Community enlargement.

      …as well as on-going investigations

        Any ongoing TDI investigations (new cases, reviews etc.) in the new Member States concerning imports from the EU or third countries, will lose legal value and will therefore not be continued.

        The investigations which are on-going in the EU will continue to be pursued except for those related to the new Member States.

      What is the role of third parties and what are their rights upon enlargement?

    Economic operators in the EU-25 may request reviews of any extended third country measures where warranted.

    Third countries or third country exporters to the EU may ask for reviews of the EU-15 measures extended to the new Member States upon accession if they can show that circumstances have changed due to enlargement. Such enlargement-specific reviews may be lodged once accession has taken place. This ex post approach is not novel, as it was already implemented during the last enlargement. For this purpose, it is envisaged to publish a notice about the modalities shortly after enlargement.

    Third country exporters to the EU may also request refunds for any transactions which are not dumped. Such a possibility exists already in the current set-up but will also be available after enlargement. Furthermore, exporters may also request the suspension of measures on the basis that injury would not be likely to recur.

    Practical implications of enlargement

    Although the number of acceeding countries is larger than in the two previous enlargements, the impact of enlargement on EU trade defence measures should not be exaggerated. The extension of EU trade defence measures to the new Member States will not automatically vary the dumping and injury parameters which form the basis of every EU AD or AS measure. Thus, enlargement will not necessarily render such measures inadequate in an enlarged Community.

    One intuitively simple way to illustrate this is that the total economic activity in all candidate countries is lower than 10% of that of the EU-15 so it would appear from this perspective that the results of the dumping or injury determinations reached for the EU-15 would be representative also for a EU-25 context. Such a general conclusion may not apply in each and every case (in specific cases measures may be too high for the EU-25, in others too low) but it certainly helps to set the problem in its adequate framework.

    While EU trade defence measures are extended to the new Member States, it should be stressed that all trade measures in force by new Member States will no longer be applicable.

For further information on EC trade policy instruments, please click here :

http://ec.europa.eu/trade/policy/index_en.htm

or contact the ICP at:

Antidumping-icp@ec.europa.eu

or phone: +32-2- 296 32 01

Steel

    How will the obligations towards third countries be respected?

    All EC legislation in the field of trade in steel will become immediately applicable in the new Member States upon accession.

    What are the benefits which will arise out of the adoption of the acquis by the new Member States?

    Extension of the Single Market will simplify trade within the enlarged EU region. The application of common competition, state aid and environmental disciplines will remove trade distortions and will lead to a cleaner environment in new Member States.

    Extension of the Common Commercial Policy to new Member States will facilitate external trade. New Member States will bring their tariffs down to EU levels. A single set of trade rules will facilitate third country operators' dealings with EU countries. Third countries will benefit from the application of MFN or preferential trade arrangements within a zone accounting for 20% of world trade.

    What does implementation of the CCP by acceding countries entail?

    General: new Member States will automatically participate in international agreements to which the Community is a party. This includes commercial policy measures specifically applied to steel products as well as to the steel-related aspects of bilateral trade and co-operation agreements with third countries.

    Common External Tariff: new Member States will apply the CET. EU steel tariffs are already low and will decrease annually until they are eliminated as from 1 January 2004 in line with Uruguay Round commitments.

    Subsidies: a particular EC state aid rules in the field of steel similar to that set up by the ECSC Treaty following expiry of ECSC treaty continues to be applied.

    The sectoral acquis: the EC acquis in the field of trade in steel products currently encompasses bilateral steel agreements with Russia and Kazakhstan; autonomous measures on imports from Ukraine; double-checking surveillance with certain associated countries; and a safeguard measure on 7 steel products, which could be repealed before 1 May 2004 depending on international developments.

    Third country specific issues

    The quantitative restrictions fixed in the bilateral steel agreements with Russia and Kazakhstan are in force until 31 December 2004, unless either country accedes to the WTO in the meantime. As provided for in both agreements, the quantitative restrictions will have to be increased upon enlargement in order to reflect the increase of the Single Market.

For further information on trade in steel in the EC, please click here :

http://ec.europa.eu/trade/goods/steel/index_en.htm

Shipbuilding

    How will the obligations towards third countries be respected?

    The obligations of the Common Commercial Policy will become immediately applicable upon accession.

    What are the benefits which will arise out of the adoption of the acquis by the new Member States?

    Extension of the Single Market will harmonise the application of common competition, state aid and environmental disciplines and will lead to a cleaner environment within the enlarged EU region.

    New members states will be bound by the result of the OECD negotiations which are expected to be concluded by the end of 2005. They will benefit from the international rules on normal competitive conditions in the shipbuilding and repair industry.

    What does implementation of the Common Commercial Policy by acceding countries entail?

    General: new Member States will automatically participate in international agreements to which the Community is a party. This includes commercial policy measures specifically applied to shipbuilding as well as to the shipbuilding-related aspects of bilateral trade and co-operation agreements with third countries.

    Common External Tariff: New Member States will apply the general exemption contained in the CET.

    Subsidies: Enlargement of the EU will bring candidate countries within EU state aid rules for shipbuilding.

    Third country specific issues

    In the framework of the EU WTO complaint, New Members will benefit of the measures that could be taken after the DSB decision.

For further information on the EC's shipbuilding policy, please click here :

http://ec.europa.eu/trade/goods/ship/index_en.htm

Textiles and Clothing

The new Member States will have to take over the Community's trade policy in the field of textiles and clothing. The acquis consists essentially of the EC's integration programmes under the Agreement and Textiles and Clothing (ATC), administrative arrangements with certain WTO-members, bilateral agreements with non-WTO members and autonomous measures vis-à-vis countries where no agreement exists.

    What does this imply for the relations of third countries with the future EU members?

      Benefits for third countries

        In general, third countries will benefit from the fact that a single regime, that of the EC, will apply to the new Member States upon accession. This will lead to administrative facilitation and increased transparency. All this should be felt positively by operators from third countries. Concerning tariffs, third countries will in general profit from the generally much lower tariffs of the EC, which new Member States will apply as of accession.

      Impact of adoption of acquis communautaire

        Since the acquis is increasingly being determined by the provisions of the ATC, to which all acceding countries are already parties, the accession of these countries to the EU will not lead to major changes for third countries.

        Under the ATC, all quantitative restrictions on trade in textiles are due to be phased out by 1 January 2005. The new Members will therefore abandon their own restrictions and take over the EC's for the eight months between 1 May 2004 and 31 December 2004. The enlarged EC's quantitative restrictions will therefore be increased to reflect enlargement.

        The same shall apply to bilateral arrangements with non-WTO members under which the EC maintains quantitative restrictions.

For further information on the EU's textiles policy, please click here :

http://ec.europa.eu/trade/goods/textile/index_en.htm

Audio-Visual Policy

The EC audio-visual policy pursues a twofold objective: (1) establish and ensure the functioning of the Community internal market for audio-visual services, by creating the conditions necessary for the free movement of television broadcasts within the EC; (2) strengthen the competitiveness of the European audio-visual industry and promote its unique contribution to the expression of the European cultural diversity.

The EC audio-visual policy also constitutes a central element in a wider European audio-visual area for which the Council of Europe has developed regulatory and financial support instruments.

    The main instruments of EC audio-visual policy are:

    • Regulatory framework

    The "Television Without Frontiers" (TWF) Directive (89/552/EEC as modified by Directive 97/36/EC) establishes the legal frame of reference for the free movement of television broadcasting services in the Union in order to promote the development of a European market in broadcasting and related activities, such as television advertising and the production of audio-visual programmes.

    To this end the Directive provides for the Community co-ordination of national legislation in the following areas: law applicable to television broadcasts; promotion of the production and distribution of European works; access of the public to major (sports) events; television advertising and sponsorship; protection of minors; and the right of reply.

    • Support programmes and actions

      • * The MEDIA Programme

      Aims at strengthening the competitiveness of the European audio-visual industry with a series of support measures dealing with training of professionals, development of production projects, distribution and promotion of cinematographic works and audio-visual programmes.

    MEDIA brings support both before and after production, by co-financing (a) training initiatives for professionals, (b) the development of production projects (feature films, television drama, documentaries, animation and new media), as well as (c) the distribution and promotion of European audio-visual works.

      The current MEDIA PLUS Programme (2001-2005) is endowed with a budget of € 400 million, which consists of € 50 million for training of audio-visual professionals and € 350 million for development, distribution and promotion of audio-visual works.

      • * Participation of the candidate countries in the MEDIA PLUS Programme

      The MEDIA Programme is open to the participation of candidate countries and Parties to the Council of Europe Convention on Transfrontier Television, subject to prior examination of the compatibility of their national legislation with the Community acquis, in particular with the TWF Directive.

      The European Commission has adopted a series of decisions to enable candidate countries to participate in the programme, in 2002 or 2003 depending on each individual case. Cinema professionals in these countries and their audio-visual industries will therefore be able to use the MEDIA programme to develop, distribute and promote their work, and also for training measures.

      The nine candidate countries affected by these decisions are: Bulgaria, Cyprus, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Slovakia and Slovenia.

      Each new country participating will make a financial contribution to the programme, partly through its national budget and the rest via the PHARE programme.

      Cined@ys has been launched in 2002, with 40 TV stations, 250 screening venues in more than 24 different countries, including 55 cinemas from the Europa Cinemas network, 18 film institutes, film festivals and events in over 200 cities across Europe. Special programmes in 24 European countries and 200 cities with screenings of European films are organised. 40 of the main public and private-sector television channels showed nearly 200 films and organised debates and interviews on Europe's cinematographic heritage and the current situation in the sector. Finally, some fifteen festivals taking place in Europe around the same time as Cined@ys were associated.

      • Does enlargement affect international obligations towards third countries?

      Both the EC and acceding countries have no commitments on audio-visual services under the WTO/GATS.

    What are the benefits of enlargement for third countries in the field of trade in services?

    The increased transparency and legal predictability of the rules applying to audio-visual would be in the advantage of suppliers from third countries. In particular, the Broadcasting Directive establishes and creates the conditions necessary for the free movement of television broadcasts. The rules of the Directive, notably as regards Member States' jurisdiction broadcasters, will reinforce legal predictability.

To know more about the EC's audio-visual policy, please click here :

http://ec.europa.eu/avpolicy/index_en.htm

For more information about enlargement and audio-visual, please click here :

http://ec.europa.eu/avpolicy/extern/enlar_en.htm

Agriculture

    What are the benefits which will arise out of the adoption of the acquis by the new Member States?

    At this stage of the process, it is not possible to evaluate in detail the agricultural trade impact of enlargement on third countries. This is not because of enlargement per se, but rather because of two other processes which will be running concurrently: CAP reform and the ongoing WTO negotiations on agriculture. Both will have an important bearing on the agricultural sectors of the acceding countries once they become EU members.

    What has been the outcome of accession negotiations in the field of agriculture?

    The first outcome is the current Member States and the future new Member States have agreed that with a few transitional arrangements the entire agricultural acquis will apply in the future new Member States from the date of accession (1st May 2004). The main transitional arrangement relates to direct payments. In the future new Member States these will be phased in, starting at 25% of the level then pertaining in the EU15 and rising to 100% in 2013. The future new Member States have the possibility of topping up the EU direct payments in one or other of the following ways:

    • either topping up the EU direct payments to 55% in 2004, 60% in 2005 and 65% in 2006 and from 2007 up to 30 percentage points above the applicable level in the relevant year.

    • or topping up the EU direct payments to the total level of direct support that the farmer would have been entitled to receive, on a product by product basis, in the new Member State in the calendar year 2003 increased by 10 percentage points.

    Topping-up must be financed principally from national funds, although a proportion of the EU allocation for rural development may be used until 2006.

    The second outcome is that agreement has been reached on the levels that will apply in the new Member States for base areas, reference yields, ceilings for livestock and production quotas.

    The third outcome is that a number of new rural development measures for the period 2004 to 2006 have been agreed which have been specifically designed to support the modernisation and restructuring of the agricultural and food sectors in the new Member States.

    Have transitional arrangements been negotiated?

    A small number of transitional arrangements have been negotiated. These are limited in time, accompanied by a plan for the full application of the particular acquis to which they relate and do not significantly distort competition.

    What was the link between the WTO Agreement on Agriculture and the Accession Negotiations?

    As WTO members, all acceding countries have undertaken commitments under the WTO Agreement on Agriculture (AoA) on:

    • Domestic support: there are three broad categories: an "aggregate measurement of support" (AMS), calculated in money terms, which has to be reduced, the so-called "blue box" support, which does not have to be reduced, but which has to be linked to production limiting programmes, and "Green Box" support which is non trade distorting and therefore not subject to reduction;

    • Export subsidies: base quantities and budget expenditure are laid down, and are subject to reduction; and

    • Market access: WTO members are committed to ensuring a minimum level of imports, either by maintaining prior import possibilities and/or new access arrangements (generally TRQs). In addition all non-tariff measures were "tariffied" (i.e. converted to a tariff on an equivalent basis), and all tariffs were bound and subject to reduction.

    How will the candidate countries' agricultural commitments under the WTO be incorporated into the enlarged EU?

    We are considering the detailed procedure we will follow, in order to combine the respect of WTO rules with the specificities and complexities of enlargement and with the ongoing DDA negotiations.

    Guidance could be provided by the procedure adopted for the previous enlargement (Austria, Finland and Sweden), which took place after conclusion of the Uruguay Round of trade negotiations.

    As far as commitments on domestic support, export subsidies and tariff rate quotas (TRQs) are concerned, it is likely that the EC 25 Schedule will be a consolidation of the existing EC 15 and individual accession countries Schedules.. For the previous enlargement, in the case of export subsidies and TRQs, trade between the various candidate countries and with the EU had been deducted ("netted out") in order to obtain the new consolidated commitments of the enlarged Community.

    For tariffs, the candidate countries will adopt the Common Customs Tariff. If this alignment results in any increases in bound tariff levels, the EC will discharge its obligations under the provisions of GATT Article XXIV:6 regarding all countries with initial negotiating rights or which are principal or substantial suppliers. This article provides for compensation if the alignment process has resulted in increases in bound duties, "…due account being taken of the compensation already afforded by the reduction brought about in the corresponding duty of the other constituents of the (customs) union".

    With regards to the EU's bilateral preferential agreements, these agreements provide for consultation procedures between the parties .

    What will be the effect for third countries of the merging of the WTO commitments of the EU and the new members?

    In general it can be said that the exercise should be of benefit to third countries, and at the very least should be neutral, because of the provisions of GATT Article XXIV:6 [mentioned above].

    Will the new Member States be more trade restrictive as a result of enlargement?

    The provisions of GATT Article XXIV:5(b), with which the enlarged Union must comply, specifically states that "…the duties and other regulations of commerce imposed at the institution of any …union…shall not on the whole be higher or more restrictive than the general incidence of the duties and regulations…applicable in the constituent territories prior to formation of such union…". The EU has respected these provisions in the course of previous enlargements, and will continue to do so in the future.

For more information on the EC's agriculture policy within the WTO, please click here:

http://ec.europa.eu/trade/goods/agri/index_en.htm

For more information on agriculture and enlargement, please click here :

http://ec.europa.eu/agriculture/external/enlarge/index_en.htm


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