European Union holds 15th annual WTO trade policy review
Pago Pago, AMERICAN SAMOA — The United States of America is one of the participants on the 15th Trade Policy Review of the European Union this week,
Day two of this meeting was chaired by Ambassador Saqer Abdullah Almoqbel (Saudi Arabia).
A Geneva Trade Official in connection with Samoa News, shared the following outcomes of day two:
The European Union responded to the main concerns raised by over 60 members over the two days of the EU's 15th WTO Trade Policy Review (TPR) held on 5 and 7 June. Most interventions took place on the first day (see below) but a handful of members requested to take the floor again on the second day, including the United States, China, Japan and the Russian Federation.
The European Commission Director for Trade, Sabine Weyand, went back to Brussels after the first day and it was EU Ambassador, João Aguiar Machado, who took the floor to address the issues mentioned by other members at the beginning of the TPR.
He said to be pleased with the positive mentions of the EU recent submissions on reinforcing the WTO deliberation on global trade policy challenges. He noted that the capacity of the WTO to provide the right responses requires reinvigorating the functions of negotiation and dispute settlement, but also facilitating deliberation between the members to create the necessary consensus and conditions for the organization to engage in rule-making and ensure that the WTO remains the key international forum for global trade governance.
The Ambassador welcomed that other members aligned with the UE proposed topics for deliberation that are central challenges for the WTO, such as trade and climate, trade state intervention in industrial policy, as well as trade and inclusiveness. Issues on which the WTO wants to further engage in the coming months in the run up to MC13, to be held in February 2024.
Responding to the concerns about a more inward-looking EU, the EU representatives said that facts speak for themselves as most members reported of increasing trade volumes in their exchanges with the EU and recognized efforts by Brussels on inclusiveness and development, particularly under the General System of Preferences (GSP) and the duty free and quota free facility under the "Everything but Arms" (EBA) mechanism, which have contributed not only to increase the exports from developing and least developed countries, but also helped diversify their trade and create jobs.
Understandably, Ambassador Machado said, there is a lot of interest in EU's regulatory developments, particularly when it comes to global challenges on the green and digital transitions. We have heard the clear message that you want the European Union to listen and to take your concerns into account, said the Ambassador, who noted the 27 will remain committed to transparency and non-discrimination as a key principle of their law-making rules and practices, ensuring full consistency with WTO obligations.
Regarding customs policy, he stressed that the customs union is an exclusive competence, meaning that there is one single customs union code applicable uniformly in all EU member states who are in charge of its implementation.
In this context, he recalled that the EU has recently put forward a proposal for an ambitious and comprehensive reform of the EU Customs Union. The objective is to simplify customs procedures processes for businesses, especially for the most reliable operators by embracing digital transformation. The reform will simplify customs procedures, replacing traditional declarations with a smarter data led approach to import monitoring.
Responding to concerns on new policy tools such as the anti-coercion instrument, the enforcement regulation or the foreign subsidies regulator, he said that like many other members the EU is concerned by the risks of global trade fragmentation, weaponization of trade and the threat of a global subsidy rates.
That is why the EU decided to equip itself with tools that are appropriate to deal with these new risks without losing sight of the full compliance with the WTO rulebook.
As regards subsidies, he drew members' attention to the rigorous and transparent state aid policy of the EU that continues to be enforced. It will continue to be the case to respond to the current crisis and it will be implemented following strict criteria on a temporary basis.
To the concern raised by some members on the global arrangements on sustainable steel and aluminium, he responded that negotiations are ongoing with the aim to encourage low carbon intensity production and trade and to restore market-oriented conditions globally. The arrangement will be open to partners, he added.
On agriculture, the EU took note of the critics about EU's agricultural tariffs being too high.
The Ambassador reiterated that the EU is an open market for agri food trade, and one of the top three global importers of agri food products worth 172 billion euros in 2022. Moreover, agriculture imports have risen more than 13% in value compared to the last review period, despite the disruption caused by the COVID outbreak, and Russia's aggression against Ukraine, said Ambassador Machado.
He also noted that the EU is a very marginal user of the agriculture special safeguards, and it has never applied volume-based safeguards. In addition, in the review period, price-based safeguard has been further reduced from six to three tariff lines.
Many of the members' questions referred to the EU's common agricultural policy and its new green ambitions. He indicated that as a result of the ambitious past reform, the vast majority of the EU's common agriculture policy support — around 85% — qualifies as WTO non trade distorting green box, which is not the case for its main trade partners.
Numerous interventions mentioned the EU pesticide policy in particular, the setting of maximum residue levels (MRLs), to which the Ambassador responded that the objective of the overall policy framework is to ensure the safety of EU consumers.
On the Green Deal, he stressed this policy is a central driver of EU policymaking and in line with its international commitments, and more specifically the Paris Agreement.
Listening to the interventions by other members reaffirmed the EU in its conviction that it has to be cautious on how these policies are designed and implemented to minimize potential negative spill over effects.
On the Carbon Border Adjustment Mechanism (CBAM), he said it is not a trade measure, but a climate oriented environmental policy to ensure the EU can its climate targets.
CBAM will be applied to imported products in an even handed and non-discriminatory manner based on their actual emissions. Any effective carbon price paid outside of the EU will be taken into account and the phasing of CBAM will be gradual; no financial adjustments will be paid before 2026, he said.
Finally, he recalled that the EU new regulation on deforestation free products will be published on 8 June. In response to the many questions in this regard, he emphasized that given the cut-off date of 31 December 2020, the vast majority of current agricultural production will be considered deforestation free under the new regulation.
The United States looks forward to working constructively with the EU to better understand the approach and impacts of climate and environmental policy on its trade policy and hopes that the EU will work with the rest of the membership with an open mind as all members seek to adapt trade policies to meet these global challenges, said the US representative.
Acknowledging the different approaches to dispute settlement under the WTO, the US stressed the EU's close cooperation in finding solutions to a number of long-standing trade related disagreements between the two sides.
The US reiterated interest in continuing to work together across a range of issues, including ensuring uniform application of customs administration across EU member states.
The US said it looked forward to a continued close partnership with the EU and its member states in reforming the WTO and it appreciated the EU leadership in the WTO, including consideration of the environment, climate change and state intervention in the global marketplace, said the US representative.
Japan took the floor to thank the EU for its responses on the restrictions of Japanese food introduced after the Great East Japan Earthquake, noting that the EU is currently discussing a review of the restrictions. They hope that the related measures will be eliminated through the review, based on the scientific evidence of human health risks, said the Japanese representative.
China stressed the full engagement of the EU in multilateral activities and its leading role in advancing WTO reform. However, China raised again its concerns about the EU anti-coercion policy, which in its view opens another door for the EU to use unilateral actions, effectively constituting a potential coercion of other members and even companies.
Also, China stressed that whether it is CBAM or export control or other initiatives, the specific measures adopted by EU for the purpose of defending its own interests shall not undermine the benefit of others, especially developing members. China called on the EU to avoid taking unilateral actions which completely run counter to the WTO rulebook.
The Russian Federation reiterated the EU has violated its transparency obligations within the WTO as it decided to ignore advanced written questions by this delegation — "evidently out of political pettiness," said the Russian representative.
In Russia's view it is also contradictory that Brussels warns of the dangers of trade weaponization while at the same time blocks international payments to Russian exporters, bans the use of foreign seaports, imposes restrictions on freight transport, as well as on insurance and legal services, inevitably leading to increasing cost of logistics and food prices.
The Russian representative added that while EU consumers still may allow themselves to pay more for food, for many poor countries price hikes a real disaster.
He also recalled that Russia's fertilizers on which restrictions are being imposed ensure a production of 117 million tonnes of wheat and 440 million tons of corn, which is enough to feed about a half a billion people worldwide.
Although the EU did not respond to questions submitted by the Russian delegation, the Ambassador referred to the similar concerns raised by a high number of members.
These included the "dubious and unilateral character" of CBAM, the "doubtful consistency" of the so-called environmental relatives policies with WTO rules, the anti-coercion instrument and its negative effect on the multilateral trading system; the compatibility of the global arrangement on sustainable steel and aluminium with WTO rules, and the negative spill overs of "anti-Russian and unilateral restrictions" on other WTO members economies and major world markets.