The International Practice of the European Communities: Current Survey I. World Trade Organization Selection of WTO Director and composition of WTO bodies As we reported in our previous report,4 the WTO took off with a rough start. It took until 21 March 1995 for a compromise to emerge on the person of the Director- General. The composition of other offices, such as the Textile Monitoring Body set up under the Uruguay Round Textiles Agreement, proved to be equally contentious. A major dispute arose around the composition of the Appellate Body. Under the new WTO dispute settlement rules, a standing seven-member Appellate Body can hear appeals against panel reports. Initially, the United States strongly pressed for two Americans on the Appellate Body. The Community reacted by claiming a many seats as the US would secure. Other WTO Members overwhelmingly disagreed with both trade blocks, arguing that these proposals implied that the rest of the world would be left with only three seats. In the end a compromise was found whereby the seats are divided over one EC national (Mr Claus-Dieter Ehlermann) one US citizen (Mr James Bacchus), one Japanese (professor Mitsuo Matsushita), Uruguayan citizen (Mr Julio Lacarte Muro), a Philippino (Justice Florentino Fe liciano), a New Zealand national (Mr Christopher Beeby), and an Egyptian (Dr Said El-Naggar). Development of an EU Code of Conduct on Trade Issues As a consequence of the European Court of Justice's Opinion 1/94,5 the Commission has been negotiating a code of conduct for Community and Member States in the WTO. The Court had determined that the competence to deal with the TRIPs and GATS agreements resided both with the European Community as such and with the EC Member States. No agreement has yet been reached on the issue. Compensation for accession In view of the accessions of Austria, Finland and Sweden to the Community, the United States, followed by scores of other states, requested compensation negotiations. When Austria, Finland and Sweden joined the Community on 1 January 1995, they replaced their own customs tariffs with the EC's Common Customs Tariff. In many cases, this effectively meant that tariffs for products imported into the three new EC Members became lower than they otherwise would have been. In some instances, however, the EC tariffs are higher than the original Austrian, Finnish or Swedish tariffs. Article XXIV:6 of GATT 1994 provides in case of such enlargements an opportunity for the countries 'with which such concession was initially negotiated' and those having 'a principal supplying interest' (Article XXVIII) to request negotiations if 'any rate of duty' is increased 'inconsistently with the provisions of Article II.' The Community, while denying that on balance, the accessions impaired benefits to the US or to any third country, adopted provisional compensation measures in the form of tariff quotas with reduced tariffs for a variety of products.6 In December 1995 the United States and the Community reached an agreement on compensation for the enlargement. The EC agreed to implement the 1997 tariffs for industrial products also in 1996. The acceleration will not affect the negotiated tariffs for 1997, 1998 or 1999. For some products, such as semiconductors and newsprint, a special deal has been concluded. By virtue of the MFN principles the concessions are valid for imports from any country. Negotiations with Canada, Australia and some other states have also been concluded. Negotiations on Financial Services Negotiations on financial services continued throughout the first half year of 1995. However, the objective of a global agreement by 30 June was not reached. Main stumbling block for the United Stated remained the - in its opinion - disappointing market access offers of several key developing countries. Thanks to an initiative of the Community the negotiations were not entirely in vain; most participants concluded the agreement shortly after the 30 June deadline. The agreement has been concluded for a period of approximately 17 months. Further negotiations should lead to a permanent agreement. The United States has indicated it intends to join these follow-up negotiations. Shipbuilding The OECD Agreement on normal conditions in commercial shipbuilding was adopted.7 The agreement, valid between OECD countries, prohibits uncompetitive conditions in the shipbuilding sector. The EC adopted legislation allowing it to take measures against uncompetitive shipbuilding by other OECD or by non-WTO Members (see section 4.6, infra). New-generation trade issues Newly emerging topics on the international trade agenda include the trade/environment, trade/labour and trade/competition relationships. Discussions on all three topics has not gone much further than the initial stage. As far as the environment and labour issues are concerned, many - mostly Asian - countries have strong apprehensions about the possibility of protectionism in disguise. As far as environment and trade is concerned, such concerns are shared by the US Administration. Trade and environment is one of the priorities for the WTO Ministerial Meeting in December 1996 where the necessity of multilateral environmental agreements will be addressed. In March 1995, France issued a memorandum on the linkage between trade and labour policies. The French Government's memorandum noted that there is a rowing trend, both within the Community and elsewhere, toward the acceptance of some minimum labour standards in international trade. The French stance was supported by the United States. The remaining EC Member States on the other hand, have not yet agreed on a common approach. 'Me Commission is currently working on a study of social standards and trade, which it hopes to finish toward the Summer of 1996. 4 Edwin Vermulst and Bart Driessen, 'Commercial Defence Actions and Other International Trade Developments in the European Communities IX: 1 July 1994-31 December 1994'.6 EJIL (1995) 287 at 288. 5 See in 6 EJIL (1995) 287 at 288. 6 Regulation No 3361/94, OJ (1994) L 356/5, corr. In OJ (1995) L 68/34, extended by OJ (1995) L 150/97. 7 OJ (1995) C 355.
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