Brussels, 27/02/2007 (Agence Europe) - According to the WTO's latest examination of the European Union's trade policy (the 8th of its kind with the last being in 2004), the economic situation of the EU27 has improved since the economic slowdown during the 2001-2003 period, mainly thanks to private investment and exports. This recovery, notes the report, has led to a fall in unemployment and has been accompanied by strong expansion in the Union's foreign trade situation. The WTO takes the view, however, that recovery will not be lasting unless structural reform is continued, with, in particular, greater liberalisation of services on the internal market and with regard to third countries. Also, it considers that, despite the effort to maintain its markets open, the Union has maintained trade barriers in a number of fields, especially agriculture.
The services sector remains the backbone of the Community economy with a share of over 77% in GDP and employment, while agriculture contributes just over 2%. Welcoming the measures taken to create a true internal services market by 2010, and those taken since 2004 to remedy certain structural problems (action plan for financial services 1999-2005, new strategy for financial services 2006-2010 and action plan for transport 2002-2010), the WTO notes that “further liberalisation of services should improve the efficiency of other economic activities”. The manufacturing sector accounts for about 20% of the Community GDP and for some three-quarters of its merchandise exports, and remains “a major beneficiary of state aid”. The WTO also notes that the Union's “share in global value-added in manufactures has been decreasing, reflecting geographical shifts in international processing activities and their vertical decomposition”. At the origin of the deadlock in Doha Round multilateral talks, agriculture was still over-protected. Implementation of the 2003 CAP reform, mainly through the decoupling of production payments, increases the exposure of farmers to world market signals, the WTO stresses, noting that, as a result, the combined share of market price support relating to output and input (those that are the most trade distorting) fell from 71.7% of support to producers in 2003 to 63.8% in 2005.
Although the Union is the world's leading exporter and the second-largest importer of goods, and “its economy has continued to support global growth by maintaining its market open”, its trade barriers remain substantial “in a few but important areas”, notably agriculture, the WTO points out, noting that certain agricultural products remain protected by customs tariffs of up to 167.2%, and even 427% for some processed products. “Reduction/elimination of export subsidies and tariffs on agricultural imports would benefit EC consumers, improve resource allocation [Ed.: Community resources, the total amount spent for CAP in 2005 accounting for 45.5%], and significantly contribute to the promotion of the world economy”, the multilateral organisation states, giving similar advice in the field of services. The WTO notes in fact that, although the Union remains the world's leading exporter and importer of commercial services, significant barriers to trade in services remain both at the intra-EC level and vis-à-vis third countries. “These include monopolies [Ed.: postal services and energy] and differences in regulation across member states”, WTO notes, saying that “addressing these distortions would boost the overall competitiveness of the economy”. Finally, the WTO welcomes the Union's continuation of a trade liberalisation strategy thanks to negotiations at multilateral, regional and bilateral level as well as its “fundamental” role in the Doha Round of talks. Nonetheless, it fears that “the decision by the Union to launch PTA (preferential trade agreement) negotiations could further complicate its trade regime, and divert interest from the multilateral trading system”. (eh)