Pascal Lamy

No. 84/03
December 19, 2003

The European Commission today released its nineteenth annual report on barriers to trade and investment in the US, detailing the obstacles that EU exporters and investors face in the US. It highlights those obstacles which the EU believes are affecting the legitimate rights of EU companies to conduct trade with the US. EU Trade Commissioner Pascal Lamy said: "Although the vast majority of transatlantic trade passes unhindered, we need to review regularly those obstacles which exist and pursue action to remove them. This will ensure that business on both sides of the Atlantic benefit from clearer, more transparent trading conditions. This is also why we need to advance in the Positive Economic Agenda adopted in May 2002."  

Since the last such report the EU has successfully challenged the US on a number of trade barriers, notably:  

• US steel safeguard measures, where the WTO ruled in favour of the EU and its eight co-complainants on the US steel safeguard measures (originally imposed in March 2002). The US President finally rescinded these measures on 4 December 2003.
• Foreign Sales Corporation/Extraterritorial Income Exclusion Act (FSC/ETI scheme), where the WTO has authorised the EU to impose countermeasures in case of non-compliance by the US. The EU has now decided to introduce sanctions on 1 March 2004 if the US has not complied by then.
• Byrd Amendment Act, where the WTO set a deadline of 27 December 2003 for the US to bring its Continued Dumping and Subsidy Offset Act (the so-called “Byrd Amendment”) into WTO compliance, a deadline which will not be met since Congress has now closed down for the year.

Despite these rulings, progress on implementing the necessary changes to bring such legislation into line with US WTO commitments is slow. It is also noted that the US has still not repealed the WTO incompatible 1916 Anti-dumping Act. The trend of US non-compliance with WTO Dispute Settlement findings remains a priority area of concern for the EU.  

Several new developments in the course of the last year have also aroused concern in the EU. Above all 2003 has witnessed a continuation of the US tendency to introduce new national security measures that are more trade distorting than necessary. The implementation of the Bioterrorism Act, and in particular the food related provisions of this legislation, have far reaching implications for EU agricultural exporters. There are also new restrictions to US government procurement, for example, as a result of the recent announcement by the US Department of Defense that competition for prime contracts for procurement for the reconstruction of Iraq would be restricted to companies from the US, Iraq, coalition partners and force contributing nations.  

Fundamentally, however, the 2003 Report highlights the fact that in many areas the US has failed to make sufficient efforts to remove long-standing barriers to trade. Although some problems have been improved (for instance the agreement reached on a mutually acceptable way of implementing the provisions of the US Container Security Initiative), others remain just as troublesome as they were in the last Report. In addition, the US is still failing to take the necessary action to implement its bilateral commitments fully under the EU-US Mutual Recognition Agreement and the EU-US Veterinary Equivalence Agreement.  

Given the unrivalled EU-US trade and investment relationship, further US efforts to tackle such problems would be a positive development for both economies. More generally, in addition to removing trade barriers, continued EU-US co-operation will yield significant economic benefits through the creation of additional trade and investment opportunities. Hence the commitment to pursue the Positive Economic Agenda adopted by both parties in 2002.

Background

The EU and the US are each other's main trading partners and account for the largest bilateral trade relationship in the world. In 2001, the total amount of 2-way investment amounted to over EUR 1.5 trillion, with each partner employing about 4 million people in the other. Total investment outflows from the EU to the US for this same year were EUR 108 billion (46% of total EU foreign investment), while EUR 82 billion of US investment flowed into the EU (69.3% of total US overseas investment outflows). In 2002, exports of EU goods to the US amounted to EUR 240 billion (24.2% of total EU exports), while imports from the US amounted to EUR 176 billion (17.7%of total EU imports). Concerning trade in services, exports of the EU amounted in 2002 (preliminary figures) to EUR 124 billion (38.3% of total EU exports) while imports from the US amounted to EUR 111 billion (36.8% of total EU imports).  

The Report is available on the Internet at the following address:  

http://europa.eu.int/comm/trade/issues/bilateral/countries/usa/index_en.htm  

There has also been a limited print run of the Report and printed copies can be ordered from:  

Delegation of the European Commission to the United States
2300 M Street NW, Suite 300
Washington, DC 20037