Abstract
For the time being—and possibly for a considerable time to come—developments and prospects for the euro area are quite favorable. This upbeat outlook is underpinned by buoyant activity indicators and a supportive policy mix. High household and business confidence, rising capacity utilization and industrial production, strong job creation, and—so far—employment-friendly wage settlements point to sustained activity in the near term. Moreover, the macroeconomic fundamentals in the euro area appear much sounder than in previous recoveries.
France presently holds the Presidency of the Council of the European Union. The report “Recent Developments in Trade Policies in the European Union,” a companion paper to the staff report discussed in the context of Article IV discussions with the euro area countries, is based on meetings held between Fund staff and officials at the European Commission. My statement therefore represents the Commission’s views on this paper.
The Commission broadly agrees with the thrust of the staff paper. It notes that the Fund supports Commission efforts to work with others in order to facilitate a prompt and effective start to a new set of multilateral trade negotiations.
The Commission is committed to building consensus in support of a new trade Round and to achieving results at Geneva. A successful Round will require trade-offs between WTO members on a variety of issues. A positive outcome can only be achieved if the agenda for discussions includes a sufficiently wide range of topics to allow such trade-offs to be made. This is why the EU does not advocate an incremental approach, where more straightforward issues are dealt with first, or a minimalist approach that would only deal with a limited range of issues.
This comprehensive agenda would, of course, include agriculture. The EU supports further liberalization in this sector, but emphasizes the multifunctional nature of agricultural activity. Concerns regarding human and animal health, the environment and food safety, among other issues, need to be addressed appropriately in this context.
The staff report is critical of the EU’s use of anti-dumping actions. It should be noted that the EU is acting within WTO rules in this area and, moreover, is open to the inclusion of anti-dumping rules in the agenda of a new Round of WTO trade negotiations.
The Commission takes note of the risks of trade diversion from trade liberalization on a regional basis. However, this risk is lessened by the reduction of tariffs on a most-favored nation basis. The Commission therefore highlights the continued reductions in average tariffs applied by the EU, as noted in the report.
The lack of strong progress towards the launch of a new Round of multilateral trade negotiations has not prevented the Commission from taking initiatives to further liberalize trade relations with developing countries. Among other developments, the recent Commission proposal to offer tariff and quota free access to the EU market to the Least-Developed Countries for “everything except arms” represents a further significant step towards trade policies that benefit the poorest countries. We hope that this and other Commission initiatives will act as a spur to others to take similar actions in favor of Least-Developed Countries.