22 September 1998 A4-0000/98

DRAFT REPORT

on the communication from the Commission to the Council, the European Parliament and the Economic and Social Committee: The New Transatlantic Marketplace (COM(98)0125 - C4-0271/98)

Committee on External Economic Relations

Rapporteur : Mrs Erika Mann

PART A : MOTION FOR A RESOLUTION

PART B : EXPLANATORY STATEMENT

PART A : MOTION FOR A RESOLUTION

A. MOTION FOR A RESOLUTION 4

Opinion of the Committee on Foreign Affairs, Security and Defence Policy

Opinion of the Committee on Economic and Monetary Affairs and Industrial Policy

Opinion of the Committee on Legal Affairs and Citizens' Rights

Opinion of the Committee on Employment and Social Affairs

Opinion of the Committee on the Environment, Public Health and Consumer Protection

Opinion of the Committee on Culture, Youth, Education and the Media

By letter of 13 March 1998, the Commission forwarded its communication on the New Transatlantic Marketplace to the European Parliament.

At the sitting of 27 May 1998 the President announced that he had referred the communication to the Committee on External Economic Relations as the committee responsible, and to the Committee on Foreign Affairs, Security and Defence Policy for its opinion. At the sitting of 14 July 1998 the President announced that he had referred also the communication to the Committee on Economic and Monetary Affairs and Industrial Policy, the Committee on Legal Affairs and Citizens' Rights, the Committee on Employment and Social Affairs, the Committee on the Environment, Public Health and Consumer Protection and the Committee on Culture, Youth, Education and the Media for their opinions.

At its meeting of 23 April 1998 the Committee on External Economic Relations appointed Mrs Erika Mann rapporteur.

The Committee on External Economic Relations considered the Commission communication and the draft report at its meetings of 4 June 1998, ..........

At the latter/last meeting it adopted the draft legislative resolution by ... votes to ..., with ... abstention(s)/unanimously.

The following took part in the vote/were present for the vote: ..., chairman/acting chairman; ... (and ...), vice-chairman/vice-chairmen; ..., rapporteur; ..., ... (for ...), ... (for ... pursuant to Rule 138(2)), ... and ....

The opinions of the Committee on Foreign Affairs, Security and Defence Policy and the Committee on Committee on Economic and Monetary Affairs and Industrial Policy, the Committee on Legal Affairs and Citizens' Rights, the Committee on Employment and Social Affairs, the Committee on the Environment, Public Health and Consumer Protection and the Committee on Culture, Youth, Education and the Media are attached.

The report was tabled on ... .

The deadline for tabling amendments will be indicated in the draft agenda for the relevant part-session/is ... noon/a.m./p.m. on ... .

Resolution on the communication from the Commission to the Council, the European Parliament and the Economic and Social Committee: The New Transatlantic Marketplace (COM(98)0125 - C4-0271/98)

The European Parliament,

- having regard to the Transatlantic Declaration on EC-US relations of 22 November 1990),

- having regard to the New Transatlantic Agenda (NTA) adopted in Madrid on 3 December 1995, and to the accompanying Joint EU-US Action Plan,

- having regard to the Transatlantic Business Dialogue (TABD) Chicago Declaration (9 November 1996) and to the results of the TABD Conference in Rome on 6-7 November 1997,

- having regard to the results of the EU/US Summits of 16 December 1996, 28 May and 5 December 1997, 18 May 1998 and to the preceding Senior Level Group reports,

- having regard to the results of the NTA Conference entitled "Bridging the Atlantic: People to people links" held in Washington on 5-6 May 1997,

- having regard to the WTO declarations in Singapore (13 December 1996) and Geneva (19 May 1998)

- having regard to Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee: The New Transatlantic Marketplace)

- having regard to its resolutions of 15 May 1997 on the suspension of the WTO dispute settlement procedure as regards the Helms-Burton Act), 18 September 1997 on the negotiations between the Commission and the US Administration on the Helms-Burton Act), 20 November 1997, on the New Transatlantic Agenda (EU-US relations)), 15 January 1998 on transatlantic trade and economic relations and 16 September 1998 on transatlantic relations/ECHELON system,

- having regard to the public hearing held on 24 June 1998 by the Committee on External Economic Relations on "extra-territorial laws as unilateral sanctions"

- having regard to the report by the Committee on External Economic Relations and the opinions of the Committee on Foreign Affairs, Security and Defence Policy, the Committee on Economic and Monetary Affairs and Industrial Policy, the Committee on Legal Affairs and Citizens' Rights, the Committee on Employment and Social Affairs, the Committee on the Environment, Public Health and Consumer Protection and the Committee on Culture, Youth, Education and the Media (A4-0000/98),

A. whereas relations between the EU and the US are based on common interests in the economic, political and security fields, and in the fields of environmentally sustainable development and social cohesion, as well as a common perception of world-wide responsibilities, dependencies and needs,

B. whereas the EU and the US share common values, ranging from democracy, human rights, economic philosophy, social stability to environmental concerns and cultural sovereignty, as well as a common security policy,

C. whereas the transatlantic relationship is one of the most open and independent in the world, and constitutes, for both partners, the most important economic link in terms of trade, investment and technology exchanges,

D. whereas employment, on both sides of the Atlantic, depends to a significant extent from maintaining free flows of goods, services, capitals and people between the EU and the US,

E. whereas the increased instability on financial markets and the recession in certain economies (notably in East Asia) highlights the need for stronger co-operation between the EU and the US, which constitute the strongest area of economic and financial stability in the global market,

1. Welcomes the creation of a Transatlantic Economic Partnership, as set out in the Joint Statement agreed at the EU/US Summit (London 18 May 1998);

2. Takes note that the TEP will be implemented by cooperative actions and formal trade negotiations, in the context of a joint Action Plan, identifying areas for common actions (both bilateral and multilateral), with a timetable for achieving specific results;

With regard to formal trade negotiations

3. Stresses the importance of achieving positive results in the area of technical barriers to trade in goods, in particular by means of new mutual recognition agreements (MRAs) for certain products and sectors, and a reinforced regulatory dialogue;

4. Considers that the extension of the MRAs to new sectors and products, and the recognition of "functional equivalence" of technical or other regulatory requirements should involve not only consultations between the Commission and Council's "113 Committee", but also adequate information and participation of the European Parliament;

5. Considers, in particular, that the conclusion of a "framework agreement" on MRAs would constitute an external agreement of significant importance, under the 1984 Stuttgart Declaration, and entail the EP's participation in the procedure;

6. Considers furthermore that bilateral negotiations on services should aim at creating new opportunities for business and consumers of both Parties, through the mutual recognition of requirements, qualifications ea.; that the European Parliament should be adequately informed of sectors which would be involved in MRAs; takes note that certain services, and in particular architects and engineers, are considered at present for inclusion in negotiations;

7. Underlines that bilateral EU/US liberalization in the field of services should comply strictly with multilateral rules, and in particular article VII GATS;

8. Approves the principle of negotiating a further opening of EU and US markets for government procurement, on the basis of progressive elimination of exceptions to commitments taken in the context of the WTO agreement on government procurement, and the EU/US 1995 agreement; recalls, in this context, the report by the Committee on External Economic Relations, which highlighted the need to monitor closely the implementation of the agreement and to inform the European Parliament on this subject;

9. Stresses the importance of negotiations in the field of intellectual property, aiming to reach not only facilitations in the field of procedures for obtention and enforcement of patent rights, but also increased protection of geographical indications;

With regard to cooperative actions

10. Considers that the EU and the US should closely co-operate within multilateral organisations, and in particular within the WTO, in preparation of the 1999 Ministerial Conference; welcomes in particular the proposal to set up a regular and structured dialogue at ministerial and official level;

11. Draws the attention to the fact that common EU/US approaches in preparation of the new WTO negotiations should be sought, involving in particular specific dialogue on dispute settlement, general standstill, implementation of WTO agreements, services, agriculture, trade facilitation, industrial tariffs, technical barriers to trade, intellectual property, investment, competition, government procurement, trade and environment, accession to the WTO, developing countries, electronic commerce, core labour standards;

12. Points to the need to address, within the joint Action Plan, (in addition to measures included in formal agreements to be negotiated) a series of bilateral initiatives, dealing with issues of particular importance for transatlantic relations;

13. Considers, in this context, that in the sector of regulatory cooperation, consultation in the earliest possible stages of drafting regulations should involve enhanced exchange of technical and scientific informations;

14. Welcomes furthermore, the proposal to create an early warning system in the field of food safety, in order to ensure exchange of information at an early stage of planned legislation; points to the difficulties in the sector of biotechnology and to the need to strengthen considerably consultations and exchange of information in this field;

15. Stresses the need for progress in the field of investments, and recalls its resolution of 16 September 1998, stating that US extraterritorial legislation, and in particular the Helms-Burton and d'Amato Acts, remain unacceptable to the European Union and asking the US Congress "to act speedily in order to eliminate such legislation and, in any case, to grant the waivers requested";

With regard to the TEP organizational framework

16. Welcomes the proposals to create, on the basis of existing NTA structures, an organisational framework designed to develop the new approaches defined in the TEP statement and Action Plan;

17. Understands that this effort would involve more frequent and regular Ministerial meetings, as well as a more precise definition and organization of the tasks of the Senior Level Group and the institution of specific working groups or committees, in particular the field of mutual recognition;

18. Recalls however its resolution of 15 January 1998, stressing the role of parliamentary bodies in monitoring negotiating processes (including "administrative arrangements") and remarking that "issues of democratic accountability will become crucial as economic interdependence and regulatory convergence between both sides of the Atlantic is developed to its true potential";

19. Insists therefore on the need to enhance considerably Inter-Parliamentary co-operation between the European Parliament and the US Congress, building on the experience of the present EP/US inter-parliamentary Delegation; a EP/US Congress "joint parliamentary committee" should therefore be closely involved in the setting up and implementation of the TEP;

20. Instructs its President to forward this resolution to the Commission, the Council, the governments of the Member

PART B : EXPLANATORY STATEMENT

B - EXPLANATORY STATEMENT

1. Introduction

On 15 January 1998, the European Parliament approved a resolution on transatlantic trade and economic relations, in which it stressed) "the importance of a comprehensive vision, framework, road map, timetable and target date" for completion of The New Transatlantic Market place (NTM). This initiative, to be implemented within the New Transatlantic Agenda (NTA)" should be geared to the highest standards of environment and consumer protection, and take account of the social dimension involved". Furthermore), it considered that "closer EU/US political and economic cooperation with development of common approaches to both economic policy and regulatory problems will require the setting up of a comprehensive institutional framework (e.g. a treaty) between the two partners, involving greater interparliamentary co-operation". The European Parliament noted however that) "concluding EU/US preferential economic agreements would risk undermining the open multilateral system and the WTO, and that the EU should encourage the US to favour multilateral approaches over regionalism".

In its Communication to the Council, the European Parliament and the Economic and Social Committee on "The New Transatlantic Marketplace") the Commission proposed to launch negotiations for an agreement to achieve the following objectives):

i) a widespread removal of technical barriers to trade in goods through an extensive process of mutual recognition and/or harmonisation, promoting both consumer and business interests;

ii) a political commitment to eliminate by 2010 all industrial tariffs on a MFN basis, through multilateral negotiations, provided that a critical mass of other trading partners do the same;

iii) a free trade area in services, bearing in mind the criteria and requirements established by the Council;

iv) liberalisation beyond multilateral or plurilateral agreements in the areas of government procurement, intellectual property and investment.

The Commission proposal was discussed at the General Affairs Council of 27 April, which decided to "take forward the New Transatlantic Agenda signed in 1995, taking full account of Member States' sensitivities with the aim of promoting multilateral liberalisation, as well as enhanced bilateral cooperation by progressively reducing or eliminating barriers that hinder the flow of goods, services and capital". However, with regard to the Commission Communication, "a number of Members of the Council expressed broad support while others expressed specific concerns, and France reiterated its opposition". It also remarked, with regard to the Helms-Burton and ILSA Acts, that a satisfactory solution "is a condition for developing transatlantic trade".

The EU/US Summit (London, 18 May 1998) decided however to launch a major initiative in order to break down barriers to trade across the Atlantic and to pursue multilateral liberalisation ("Statement on establishing a Transatlantic Economic Partnership"); furthermore, an "Understanding on Disciplines on investment in expropriated properties "was concluded dealing in particular with certain problems caused by US unilateral sanctions.

The Transatlantic Economic Partnership (TEP), designed to build on the NTA's achievements, comprises a series of multilateral and bilateral elements; it aims, in particular to remove those regulatory barriers that hinder market opportunities, both for goods and for services, through "the mutual recognition of testing and approval procedures, the equivalence of technical and other requirements and, in certain areas, where appropriate, the progressive alignment or, where possible, the adoption of the same standards, regulatory requirements and procedures adopting internationally agreed standards where possible", as well as through "the intensification of the dialogue between scientific and other expert advisers, standard setting bodies and regulatory agencies" .

Within the NTA, a Plan identifying areas for common actions and a timetable for achieving specific results will be set).

2. The EP analysis, in its resolution of 15 January 1998, was based on a series of considerations which completely retain their validity in the present situation. In particular, the central consideration that the transatlantic link "can no longer be taken for granted, and has to be both strengthened and put on a more structured institutional basis to ensure greater economic well being and security for the citizens in the next century" retains its full validity, and suggests that the EP should take the initiative and indicate a suitable framework for this development.

The objectives of the negotiations

The Commission has adopted on 16 September 1998 draft negotiating directives which are, at present, being discussed by Council, but which have not been transmitted to the EP, as existing procedures) only foresee formal communication of the "essential elements" of the mandate after its adoption by Council.

From preliminary information given orally by the Commission, it can be assumed that the objectives envisaged in the TEP statement imply the following procedures: a joint Action Plan will be established by the Commission and the US Administration identifying areas for common actions, with a timetable for achieving specific results. The objectives of the plan will be pursued through cooperative actions (both multilateral and bilateral) and by means of formal negotiations in certain sectors. The Plan will also address the general organisational structures needed to implement the agreed actions.

In synthesis:

A) the Commission will enter into negotiations with the US, on behalf of the Community and its Member States, with regard to technical barriers to trade in goods, services, government procurement and intellectual property, in view of concluding formal agreements in these sectors. Negotiations will be, as usual, conducted in consultation with the 113 Committee and in accordance with Council directives

B) With regard to cooperative actions, the Plan provides for close cooperation in multilateral negotiations (in particular in the WTO), by means of a regular bilateral dialogue, and identifies specific areas for common initiatives (implementation of WTO agreements, dispute settlement, services, agriculture, trade facilitation, industrial tariffs, IPR, investment, competition, government procurement, intellectual property, consumer and plant health and biotechnology; environment; labour and electronic commerce); in addition certain bilateral actions would also be implemented.

3. With regard to formal negotiations

a) technical barriers to trade (TBT) in industrial goods

The aim of negotiations would be to define a new MRA model (sometimes referred to as "MRA plus"), which would go beyond the existing practice of mutual recognition of testing and certification procedures; a new "framework" would therefore be negotiated, as well as a first (and adequately balanced) list of sectors on which specific agreements would have to be found.

The sectors for negotiation would be chosen, on the EU side, by the Commission in special consultation with the 113 Committee.

The two main instruments for removing barriers would be

- to seek agreement on the "functional equivalence"of both parties' technical and regulatory requirements, in order to allow imports without formalities additional to those which should be met in the exporting party. The sectors concerned by this approach would be specified in annexes to the agreement;

- where "functional equivalence" does not seem attainable, a progressive alignment of standards and procedures should be sought, in particular through common action in international standardisation activities;

- procedures will be defined for regular consultations between the Parties, by means of a Joint Committee and specialized sub-committees, as well as for extending the agreement to other products or sectors.

b) services

In the area of services, negotiations should aim at creating new economic opportunities through mutual recognition of requirements and other regulations, in order to keep additional requirements for service suppliers to a minimum; this would involve furthermore, where necessary, elimination of both market access restrictions and discriminations with regard to national treatment.

A regulatory dialogue would also be established in order to avoid creating new obstacles. The negotiations would aim at concluding a framework agreement containing general principles for mutual recognition, to be implemented through sectoral agreements, selected (on the EU side) by the Commission in consultation with Art. 113 Committee. The sectors concerned would probably comprise, at a first stage, certain services (architects and engineers being possibly the first sector involved).

c) government procurement

With regard to government procurement the Parties would expand opportunities on their respective markets by the progressive elimination of exceptions to access commitments contained in the GPA (government procurement agreement) and the 1995 EU/US agreement. This would involve, expanding the coverage at all levels of government (entities and services included) and, in particular, the removal of most BAAs (Buy American Acts) on the US side, while the EU's commitments should also be adequately strengthened. Electronic procurement opportunities should also be reinforced.

d) intellectual property

On intellectual property (IP), negotiations will aim at reaching the following objectives

- facilitation of obtention of patent rights and reduction of costs

- better protection of geographical indications

- communication of information between respective patent offices.

In the longer term, objectives include obtaining by the US the replacement of its "first-to-invent" system by "first-to-file" system, equivalent protection periods, protection of databases in the US, mutual recognition of patent search processes and results.

4. With regard to common actions

MULTILATERAL

Both parties consider that close involvement of other trading partners is essential for obtaining positive results on our multilateral objectives. The draft action plan therefore provides for a "regular and structured dialogue" in the run-up to the 1999 WTO Ministerial Conference, at political and official level, in view, wherever possible, of establishing common proposals for multilateral negotiations.

It is impossible to examine in detail, within this report, the common actions under examination: the sectors involved at this stage are dispute settlement, standstill, implementation, services, agriculture, trade facilitation, industrial tariffs, technical barriers to trade, intellectual property, investment, competition, government procurement, trade and environment, WTO accession, developing countries, electronic commerce, core labour standards, good governance.

This preliminary examination will concentrate on certain specific subjects where concrete indications will probably be included in the joint action plan.

- on services the parties will cooperate in view of the future negotiations aimed at increasing market access opportunities in all service sectors, in particular to facilitate both movement of persons and electronic trading; additional disciplines should be developed to guarantee a pro-competitive environment for services supply. A multilateral standstill should be implemented at the start of negotiations

- the objective for industrial tariffs would be a substantial further reduction of industrial tariffs across all sectors

- on investments, the objective would be of inclusion on the agenda of the new multilateral negotiations

- on competition, the objectives would include a decision at the 1999 Ministerial Conference on the scope for negotiations within the WTO

- on environment, the Parties would cooperate in defining trade and environmental principles to guide joint action in relevant fora, with a view to incorporating environmental considerations in WTO activities

- on core labour standards, the Parties should support follow-up to the ILO declaration and support WTO/ILO collaboration.

In addition to actions included under bilateral agreements the following elements would be included within the program:

- improved regulatory cooperation, involving consultation at early stages of drafting, and promotion of a common scientific basis for regulatory activities; cooperation in industrial product safety (Rapid Alert System) would be encouraged

- on food safety, plant health and biotechnology, the Parties would enact an early warning system enabling each side to express its views on the legislations envisaged by the other. The EU and the US "contact points" will communicate regularly and exchange programmes for EU and US officials from scientific and technical agencies would be created. A "structured dialogue" in the sector of plant health could also be established. A single group would also monitor activities in the biotechnology sector, in order to avoid present fragmentation, to try to reverse the present trend for a growing number of bilateral disputes and to address their potential trade impact; a similar group in the environment sector would also be set up.

Furthermore

- a Transatlantic Environment Dialogue (TAED) should be launched by the December 1998 Summit;

- the Transatlantic Labour Dialogue, launched in April 1998, should be reinforced, and in particular explore possibilities for establishing voluntary codes of conduct in this sector

- the Transatlantic Consumer Dialogue should be launched in September 1998

- the TEP institutional framework should be reinforced; existing NTA structures would be maintained and enhanced (in particular through regular cabinet meetings and a better definition of the mandate of the Senior level group); specific institutions would be established furthermore within the sectoral agreements.

Finally, the Parties would actively and fully support the current efforts of the EP and the US Congress to increase their cooperation on TEP-related issues and to contribute to the TEP process.

5. Conclusions

The conclusions to be drawn from this analysis of activities in the context of the Transatlantic economic partnership are contained in the proposal for a resolution.