COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT AND THE ECONOMIC AND SOCIAL COMMITTEE THE NEW TRANSATLANTIC MARKETPLACE D. COMPONENTS OF THE NTMA 8. FREEING TRADE IN GOODS OF TECHNICAL BARRIERS Technical barriers still hamper Transatlantic trade Differences of law, procedure and practice on both sides of the Atlantic at present cause many technical barriers to the free movement of goods. Barriers typically arise from a divergence in obligations concerning: information and labelling of goods; technical specifications or performance requirements relating to goods and their packaging; specifications concerning tests and test procedures with which goods must comply; any declarations or certificates that have to be provided; accreditation of bodies entitled to carry out tests or issue certificates; and marking of goods to indicate their conformity with requirements. Technical specifications agreed by standards bodies, or arising de facto from the practices of major market players, are also a potential source of trade barriers, where voluntary compliance with them brings marketing advantages. Such divergence, whether it arises at the regulatory or other levels, may reflect different positions as regards the desirable level of security, the means used to achieve that level, and the method chosen to demonstrate conformity with the requirements. Nevertheless, there is no unavoidable reason why such legitimate differences should act as barriers to trade. What should an NTMA achieve in this respect The key to barrier-free trade is to achieve a climate of public confidence in the safety and security of products placed on the market, on either side of the Atlantic. Where the EU and the US share similar concerns and aims regarding the protection of public health, safety, consumers and the environment, this should be achievable. The NTMA should work towards this goal by developing a framework for convergence of law, procedure and practice involving the various legislative and regulatory bodies, as well as for the application of the principle of mutual recognition. To this end, and taking due account of the need to preserve our high level of protection for health, safety, consumers and the environment, the NTMA should aim to create conditions in which goods legally marketed in the territory of one party can, as far as possible, move across the Atlantic and be marketed in the territory of the other without facing further formalities or duplicate requirements. The regulatory structures of the parties are the guarantee of the integrity of their domestic markets. Without them, those markets could not be maintained. Therefore the NTMA cannot avoid facing the issue of convergence. Yet the prize is great enough to justify the effort involved. It is essential to ensure that the NTMA is implemented in a way consistent with the fundamental requirements concerning protection of human, animal and plant life or health and the environment laid down in the EC Treaty. To this end, all measures under the NTMA aimed at removing technical barriers to trade in goods relating to these areas should at least maintain our existing high level of protection.. It should furthermore be recognised that both the EU and the US maintain all the rights, granted to them under the WTO SPS-Agreement, including to establish a level of sanitary and phytosanitary protection which is higher than the level resulting from international health standards. There should be provision for the possibility to take specific safeguard measures when necessary. [top of section] [back to contents] How can these objectives be pursued An appropriate combination of convergence of law, procedure and practice and of the application of the principle of mutual recognition (which, moreover, are complementary and not mutually exclusive) will have to be found for different categories of goods. The aim of an NTMA should be to seek the most ambitious and trade liberalising such combination, while meeting the requirements in sensitive areas set out in the previous paragraph. The EU should also be able to develop further its levels of protection in these areas, while taking into account the differences that may exist in regulatory approaches and traditions. Convergence of law, procedure and practice is the key to ensuring that similar public policy concerns are not pursued through radically different and sometimes incompatible means, thus giving rise to avoidable and undesirable barriers to trade. Convergence can be achieved in different ways, and notably through regulatory co-operation and through harmonisation. To the extent that those public policy concerns are already being pursued through different means on the two sides of the Atlantic, there is room for acceptance of such alternative means to achieve them, insofar as the levels of protection which are to be achieved are equivalent. This can be achieved through different techniques or a combination of them, such as mutual recognition of technical requirements; mutual recognition of conformity assessments; or resort to a supplier’s declaration of conformity. The public confidence needed to guarantee success to the NTMA means that effective implementation of commitments on both sides will be crucial. This will require co-operation between regulatory authorities at the appropriate level, covering such issues as consultation and administrative co-operation, a commitment to implement the necessary legislation and an effective dispute settlement system. [top of section] [back to contents] In which sectors/products can this be pursued The parties will need to identify early in the negotiating process a sufficient number of candidate sectors/products to produce eventually a balanced and mutually interesting result. In order to be credible to the business community, there would also need to be an early and sufficient reduction of any unnecessary or duplicate regulatory burden on business, through a critical mass of concrete commitments. Longer-term actions would be developed on the basis of these. The search for convergence and mutual recognition can be pursued as a priority in those industrial sectors/products where there is an important existing interest to Transatlantic industry, such as telecoms, chemical products and motor vehicles. In a number of these sectors, work is already under way in international fora, such as the International Telecommunications Union for telecoms equipment, the International Conference for Harmonisation for medicinal products, or the UN-ECE for motor vehicles and tyres. Effective implementation on international standards is another way forward towards a higher level of convergence. Whereas the necessary arrangements are in place in Europe, the use of international standards is insufficient in the US. In still other areas there may be scope for building on existing mutual recognition of tests and certificates, and upgrading the level of agreement to a higher level of liberalisation. A number of agriculture-related issues which fall outside the WTO agreement could be dealt with in the context of the NTMA. In this respect, the soon to be adopted EU-US Veterinary Equivalency Agreement offers the most suitable framework to intensify and deepen mutual efforts to arrive at more convergence in the area of veterinary issues while at the same time maintaining each sides’ high level of health protection. Extending the scope of the Veterinary Agreement to cover questions like animal welfare, phytosanitary issues or other questions relevant in the trade of food could be foreseen. The field of biotechnology is highly sensitive. This should not discourage us from addressing it under the NTM. Systems for facilitating the exchange of scientific information relating to such products would be a first step to build confidence and to promote the greatest possible common approach between the EU and US. [top of section] [back to contents] 9. TARIFF ELIMINATION Tariff barriers remain an obstacle both to Transatlantic trade and to trade between the EU and its other trading partners. For industrial tariffs, although the average level of industrial tariffs in OECD economies is low, a variety of tariff peaks remain. The most effective way to remove these tariffs is on a multilateral basis. However, it has often been necessary in the past for a number of WTO members to show leadership within the multilateral system by offering to reduce their tariffs on an MFN basis if the largest possible critical mass of others follow suit, so as to minimise the risk of free riding and maximise the liberalising effect and the economic benefits for the EU. This happened during the Uruguay Round, where there were a number of Quad initiatives for tariff reductions, and on the Information Technology Agreement (ITA). The NTM would build on that approach by offering a conditional political commitment to work toward the elimination, by 2010, of all industrial tariffs on a MFN basis. The two Parties could agree to go to zero provided a critical mass of trading partners joins. This condition would need to be spelled out, either in terms of broad geographical coverage or as a percentage of world trade (as was done in the ITA). The commitment would only turn into an actual tariff elimination if a critical mass of countries in addition to the EU and US were prepared to make those reductions. However, the prize of zero industrial tariffs would be an attractive reason for trying to achieve that critical mass. Such an initiative would play directly into comprehensive tariff negotiations during the next global WTO negotiations. It will serve our joint interests in achieving meaningful tariff reductions from third parties within a set timeframe. This is in addition to the benefits of removing remaining tariffs between the EU and US. Fish and fish products are not industrial products in the strict sense. While these products are not excluded from the NTMA in principle, the specificity and sensitivity of the fisheries sector may require a selective approach and the current Council debate on the Commission Communication on the Future of the Market in Fisheries Products in the European Union will have to be taken into account. Regarding agriculture a WTO process is already under way in Geneva (Analysis and Information Exchange, A.I.E.) to prepare the resumption of negotiations on agriculture which are scheduled to start at the end of 1999. The negotiations will shape future trade in agriculture. As the WTO Agreement on Agriculture is already fairly comprehensive, covering internal support, subsidisation and market access (including tariffs), and future negotiations can be expected to at least mirror such an approach, a parallel process in an NTM context would not be helpful. Furthermore, it must also be borne in mind that not only are there fundamental structural differences between agriculture in the US and the EU; domestic policies of the two parties are also radically different. Complete free trade would therefore be difficult, if not impossible, to imagine, without a degree of prior harmonisation of our respective policies, which is likely to be unacceptable to either side This is why agricultural tariffs and subsidies cannot be included in the NTM negotiation. [top of section] [back to contents] 10. SERVICES A Free Trade Area (FTA) for services would be an ambitious liberalisation initiative. It would need to meet GATS rules, covering "substantially" all services sectors (as defined in the GATS) including sectors such as telecommunications, financial services, business and professional services and transport. We should aim at the elimination of all restrictions to the right of establishment, either immediately or, for the most difficult areas, over a transitional period. As regards cross-border services, the objective should be to establish clear obligations to liberalise such trade. The services element of the NTMA would combine two main approaches to achieve effective liberalisation: Liberalisation of market access on the basis of host country control: Substantially all restrictions to market access and to national treatment should be eliminated within a certain period, for all the covered sectors. For some highly regulated sectors progress may be particularly difficult on cross border services and the NTMA would concentrate on the right of establishment of a commercial presence. The agreement would in principle apply to all modes of delivery (including in particular cross-border services and consumption abroad). Elimination of regulatory obstacles on the basis of mutual recognition: Taking into account the importance of non-discriminatory regulatory barriers in certain sectors and also for certain cross-border transactions, the agreement would envisage the mutual recognition of qualifications, regulations and other requirements. [top of section] [back to contents] i) Elimination of restrictions to market access and to national treatment An NTMA would aim at eliminating remaining restrictions on national treatment and market access (both through establishment in the form of subsidiaries, branches, or representative offices; cross-border provision of services; and purchase/consumption of services abroad) scheduled by both partners in GATS. It would be based - unlike the Internal Market, and with the exception of cases where mutual recognition for regulations is achieved - on the application of host country rules and host country control. As regards the US, it should bind both the Federation as well as the States, and should offer a degree of market access similar to that offered by the EU. It would result in benefits for EU industry in the US, such as: a. New public procurement possibilities, in particular for the highly competitive EU construction services sector, and equal access for the subsidiaries of EU companies to public funded research programmes in the US. b. More opportunities to provide on a cross-border basis banking, securities and certain insurance services (such as large industrial risks) into the US, and a substantial relaxation of current rules that prevent EU financial conglomerates from establishing, for instance, banking and insurance operations in the US. The EU and US should continue to support IOSCO. c. Greater certainty of access to the US maritime transport services sector, where the EU industry has a strong position. Other objectives would include the phase out of the different obligations for US Government-owned or financed cargoes to be carried on US-flag commercial vessels, and other restrictions, but it must be recognised that these are sensitive issues. d. Elimination of nationality restrictions and non-transparent licensing procedures at State level for professional services, and in particular for certain legal and medical services, as well as other restrictions regarding a number of business services such as personnel placement services; e. Ensuring non-discriminatory access of European operators to provide satellite-based telecommunications services in the US, including satellite personal communications services (S-PCS) and one-way satellite transmission services. Elimination of the remaining restrictions to direct ownership in US telecommunications services (limitation to 20 % of direct foreign shareholding for radio licenses) and coverage of postal services, without undermining internal EU policy making on services of general economic interest. f. Access to the energy services sectors through opening the possibility for the establishment and acquisition of companies, mainly in the areas of transmission and distribution of gas and electricity, including facilities supplying ancillary services, and in the context of recently adopted EU directives. g. Elimination of remaining restrictions in other sectors such as quality services (testing, inspection and certification) and environmental services. [top of section] [back to contents] For the majority of sectors effectively covered by the GATS, this should pose no particular problem. A wide sectoral coverage and a high degree of liberalisation should contribute to the achievement of an overall balance and to increase the attractiveness of such a deal. However, it must be recognised that some areas are particularly sensitive. In the audio visual sector, the exception which the EU secured in the Uruguay Round, by combining MFN exemptions and the absence of commitments on national treatment and market access in the GATS agreement, must be fully preserved and therefore excluded from the NTMA negotiations. The NTMA will not impact on the current aviation discussions (June 1996 Mandate) aimed at establishing a common aviation area and which will develop in parallel. This involves substantial expansion of the air transport services open to airlines of both sides. It covers market access in a wide sense, through the conclusion of an open market agreement ensuring equal access to each other’s market and inter alia lifting US restrictions to foreign ownership of US carriers. An NTMA could also provide a useful opportunity to improve some of the features of GATS. For instance, the adoption of a negative listing system (everything is liberalised except for what is listed) as a method of securing liberalisation commitments as well as increased transparency; and, possibly, the introduction of generic rules for investment and the movement of people (in particular service providers, intra-company transferees, business visitors and key personnel). The NTMA could also break new ground by including in the liberalisation process sectors which are so far excluded from the GATS basic rules (maritime transport) or which have not been subject to much attention in the past (e.g. energy services), for which liberalisation in the EU is recent. In addition, the national treatment provisions should fully apply to the public procurement of services, which are provided either on a cross-border basis or on the basis of a local establishment: at present, Article XIII of GATS excludes the application of the national treatment and most favoured nation provisions to the public procurement of services. This is an area where the EU has already opened its market on a generally non-discriminatory basis, and where considerable new business opportunities could be created for EU service suppliers because of the present existence of significant US discriminatory laws and practices based on different Buy America provisions. [top of section] [back to contents] ii) Mutual recognition of regulations The agreement should make use of the opportunities provided for by the GATS to conclude agreements for the mutual recognition of qualifications, licenses, or regulations and other requirements concerning the provision of services in certain sectors. In many services sectors, it is domestic regulation that now constitutes the main barrier to foreign businesses or individuals. The sectors that lend themselves most to MRAs are professional services, educational and training services, and financial services. In the few areas where they have been concluded so far, MRAs in the field of qualifications have been carried out between professional bodies responsible for governing the different regulated professions. The situation in the EU, with at least fifteen authorities responsible for governing each profession, and the US, where often every state has its own authorities, means that mutual recognition in any of the professional areas is complex. For instance, recent negotiations between the UK and US accountancy bodies have proved difficult because there are many authorities seeking recognition in each other’s territory. The splintered responsibilities in this sector might make it ripe for the two transatlantic partners to try to set up a framework of binding rules within which the responsible authorities (including professional bodies) could achieve mutual recognition. Taking into account the differences in education and training between and within both the EC and the US, a model which is close to the EC’s General System of mutual recognition of qualifications would provide flexibility to require aptitude tests or adaptation periods in case where there are substantial regulatory differences. A network of administrative cooperation, applicable to all regulated professions covered by the agreement, could oversee the functioning of the system and help solve problems. The WTO Guidelines for Mutual Recognition Agreements or Arrangements in the Accountancy Sector could also be used as a model. [top of section] [back to contents] In the financial services sector examples where mutual recognition of regulations and possibly home country supervisory control (probably combined with additional market access elements) could be explored and form a balanced package for both sides could be: a. The conditions for the operation of branches. A greater convergence of regulations and strengthening of co-operation and exchange of information between EU and US regulators and supervisors and could enable the establishment of bank branches without endowment capital requirements or lending or other operational limits based on the branch capital. The agreement could include the ability to operate branches in more States (in particular, the so-called inter-State de novo branching). Similar facilities could be provided for in the insurance and securities areas, where there are particular difficulties in establishing branches in the US. The EC’s financial services directives - as well as Article 59.2 of the Treaty of Rome- contain specific provisions allowing for negotiations leading to granting third country branches the freedom to provide cross-border services within the EU; b. The mutual recognition of mutual funds for cross-border marketing between the US and the EU - a long-standing EU request from the EU asset management industry, as well as the mutual recognition of prospectuses in particular in cases of public offers of securities and for the listing of securities in a stock exchange; c. The exemption from the application of detailed US regulations and jurisdiction to trade in securities by US residents in non-US securities markets; d. An additional relaxation of rules restricting EU financial conglomerates from having banking and non-banking financial subsidiaries in the US, for instance to avoid cases where the affiliation under a single holding company of a bank and an insurance company may lead to compulsory divestment of either the banking or the insurance operations in the US; e. Further regulatory cooperation on payment systems with a view of establishing a transatlantic payment instrument. f. There is scope for strengthening the process of co-operation and exchange of information between supervisory authorities, for instance regarding the consolidated supervision of financial groups [top of section] [back to contents] 11. GOVERNMENT PROCUREMENT Procurement accounts for between 10 and 15% of combined GDP and any serious effort to create an NTMA should therefore address this sector. The inclusion of government procurement in the NTMA should result in the extension of full national treatment between the parties. The NTMA provides an opportunity to completely liberalise the two respective public procurement markets in a way which is fully consistent with WTO rules, without creating new trade obstacles to third countries. The NTMA should go beyond what is laid down in the Government Procurement Agreement (GPA) in order to extend market access. It should not be necessary to impose common detailed procedural rules as existing national rules provide for the necessary levels of transparency and legal recourse in procurement once extended to the other party. For the EU, at "above threshold" levels, this would not present specific difficulties as the market is already open. At "below threshold" levels, it would suffice for the EU to commit itself to an exchange of national treatment and a guarantee of fair and transparent treatment of all suppliers and service providers from both parties. For the US, it would require, de jure, disapplying all federal "Buy American" preferences for EU goods, and extending exemptions for SMEs and minority enterprises to cover EU companies. Access to US electronic procurement systems (by which a large majority of SME preferences in particular are operated) and the application of preferences at sub-federal level would also need to be addressed. In addition, the question of the interpretation of the application of the security exception in defence-related procurement could be addressed to ensure an even-handed approach. In particular, the NTMA should address the following: a. eliminating exceptions from national treatment in areas already covered by commitments under the WTO Agreement on Government Procurement and the EC-US agreement of 1995. b. completing geographic and entity coverage. c. elimination of existing sanctions. [top of section] [back to contents] 12. INTELLECTUAL PROPERTY In the area of patents, the US is the only country in the world which continues to use the anachronistic first-to-invent system. The rest of the world follows the first-to-file approach. It is obvious that a system which relies on the uncertain moment of the invention is extremely demanding in terms of evidence for all inventive activities and creates the potential for extensive and highly costly litigation. Furthermore, the coexistence of different systems leads to interface problems. The issue has been discussed for many years. Its importance is highlighted by the fact that it has figured for years on top of the TABD agenda and that the TABD has recommended a change to adopt the first-to-file approach in the US. No progress has been achieved up to now. As recommended by the TABD, measures should be taken to significantly reduce the high costs of obtaining and enforcing patents. The problem of high litigation costs is of a general nature in the US, but turns out to be particularly burdensome in the area of patents, mainly because of extensive pre-trial discovery procedures and, to some extent, the trial of patent cases before a jury. Alternative ways of settling disputes should be examined, without changing the system as such. An estimate or study on litigation costs should be carried out, since it is difficult at present to quantify costs in absolute figures in the absence of systematic, reliable and mutually agreed statistics. Based on the results of such a study, the objective should subsequently consist of progressively reducing the costs. Today, if an inventor applies for a patent at the European Patent Office (EPO) and the US Patent and Trademark Office (USPTO), such patent applications concerning the same invention are completely examined by both offices. This implies that full search reports to find out the relevant state of the art are made twice, with the associated costs for the applicants. Discussions have already been initiated among the offices concerned to improve the exchange of information on technical matters related to patents. Contacts should be intensified to reach some degree of acceptance or even mutual recognition of parts of the patent procedures, such as search reports. [top of section] [back to contents] A number of shortcomings exist in the area of government use without the consent of the rightholder, which, in practice, is similar to compulsory licences. While some issues were already addressed in the Uruguay Round, others are still waiting for a satisfactory solution. The aim should be to proceed as for any other compulsory licence. A full patent search should be carried out and the patent holder be informed prior to any government use, except in cases of national emergency. Such use should only be permitted after efforts by the government to obtain authorisation from the rightholder on reasonable commercial terms have not been successful, within a reasonable period of time. The limitations of the internet domain name system are giving rise to legal battles involving national right holders sharing the same trademark. Companies are rapidly becoming aware of the great value of easily memorable internet domain names. Trademarks are territorial, yet names registered under the domain name system are both unique and international. In this context, trademark holders should be provided with the same rights and dispute settlement mechanisms as they have in the physical world. Questions of competent jurisdiction should also be addressed. In the area of geographical indications, it would be desirable either to eliminate altogether or, at least, to reduce the number of indications, which US producers can continue to use under the grandfather/generic use provisions of TRIPs (Article 24 par. 4 and 6), such as, for example, Vermouth, Chablis, Champagne, Chianti, Porto or Sherry. This would contribute to considerably improving the situation of EC rightholders. Bilateral negotiations are underway, but progress is extremely slow. The legal protection of databases requiring substantial investment is currently the subject of multilateral negotiations in WIPO. The Berne Convention and TRIPs provide copyright protection for creative databases, but not as regards databases which are not "original" in the copyright sense. The EU and the US should continue their bilateral dialogue in order to agree on a common approach to the WIPO negotiations, securing a mutually acceptable outcome at the multilateral level as the ultimate goal. Community legislation already offers a higher level of protection. It also provides for the possibility of concluding bilateral agreements on a reciprocal basis with countries offering a comparable protection to EU database makers. The fulfilment of this condition by the US through the adoption of legislation by Congress would lay down the basis for the conclusion of a bilateral agreement, securing a higher level of protection for EU database makers in the US. [top of section] [back to contents] There is scope to improve the protection of textile and clothing designs. The objective should consist of reviewing existing unsatisfactory procedures to ensure a higher level of protection through easy, cheap and short procedures. So far, designs are protected by copyright law, offering an easy access to protection, but making litigation more difficult. Design patents grant better protection, but are less attractive from an economic point of view, since they imply considerable costs and are time-consuming. The details for a concrete proposal still have to be elaborated, depending on the precise definition of interests by EU industry. On artists’ resale rights (droit de suite) the Community should continue its regular contacts with the US Administration with a view to reinforcing this right in the multilateral framework of WIPO. Following the future adoption of a Community Directive harmonising the artists’ resale right, the adoption by the US of an equivalent system would further the establishment of free trade in relation to the twentieth century art market. Finally, taking into account the sensitivity of the subject matter concerned, any broadening of the scope of possible negotiation in the area of intellectual and industrial property rights would require further reflection. [top of section] [back to contents] 13. INVESTMENT On investment it is important to maintain an ambitious approach to develop a Multilateral Agreement on Investment (MAI) whose key features are MFN and national treatment. This agreement would cover market access and protection for investment in both goods and services, as well as for financial assets. As things stand, it would not provide, for preferential "treatment" within free trade areas (as mentioned earlier the interface between a FTA in services and the MAI would thus need to be explored). At the end of that negotiating process, an evaluation should be made of what has been achieved and of what more might be done with the US. For example, this might include: a. a strong investor-to-state and state-to-state dispute settlement procedure, which is the backbone of every bilateral investment treaty. b. improved national treatment (e.g. in-state treatment and access to publicly funded research and development programmes). c. the so-called new issues (such as temporary entry, stay and work of investors and key personnel, senior management and boards of directors, employment requirements, performance requirements, privatisations, investment incentives and corporate practices). [top of section] [back to contents] 14. OTHER POSSIBLE COMPONENTS i) Trade and labour The adoption of core labour standards throughout the world is a shared priority. As a minimum, the EU and US should implement fully the existing ILO conventions in our respective legal systems. In addition as part of the NTM there should be further dialogue between our social partners and greater co-ordination with a view to adopting a common position in discussions on these issues in all multilateral fora. ii) SMEs and Enterprise Policy In the context of the New Transatlantic Marketplace we should promote mutually beneficial partnership activities based on practical initiatives with emphasis in fields such as improving business environment, access to risk capital, enhance entrepreneurship, access to innovation and training and benefiting from trade liberalisation opportunities. iii) Electronic Commerce The NTMA should pay particular attention to the liberalisation of cross-border services when they are provided by electronic means. International trade in electronic commerce raises a number of questions that, to some extent, go beyond those which in the past have been given more relevance in the context of "traditional" trade in services. Traditionally, liberalisation of services has put great emphasis on the market access of economic operators and on national treatment. Electronic commerce requires to go a step further and to place the emphasis on the need for free circulation of services. Electronic commerce may in many instances not only consist in the provision of services across borders but also in the simultaneous provisions of such services to a number of different countries. Thus, the electronic provision of one single service will have to comply with a multitude of national regulatory standards. As a result, we can expect that the major trade obstacles that electronic commerce will face are those resulting from regulatory divergences and from legal uncertainty. These obstacles are not ‘per se’ discriminatory and therefore the problems they create may not just be solved by the application of the national treatment obligation. If the NTMA is to effectively liberalise services provided electronically, it will have to consider (beyond the opportunities already provided by the GATS) the need for mutual recognition of regulatory standards and, in certain cases, for harmonisation of legislation. In addition, the NTMA would have to consider ways to improve the transparency and legal predictability of the rules applicable to electronic commerce. There is a need to extend discussion on the different aspects of electronic commerce to all regions of the world and in a multilateral context, in order to co-ordinate and strengthen the activities of the various international fora and to involve as many countries as possible as well as the private sector. The Commission recently proposed the creation of an ‘International Charter on Global Communications’. iv) Data Protection In the Joint EU-US statement on Electronic Commerce of 5 December 1997, both sides have recognised that the effective protection of privacy with regard to the processing of personal data on global information networks needs to be ensured. In the EU the privacy of individual as regards the processing of their personal data and the free flow of such data is secured by the Data Protection Directive. The Directive requires inter alia that Member States shall only allow personal data to be transferred to third countries where its adequate protection is ensured. In order to avoid existing differences in levels of protections causing disruption to the free flow of personal data, it would be desirable to agree to substantive provision as to the nature of guarantees necessary to secure an adequate level of protection. v) Competition With regard to the possible inclusion of competition policy in the NTMA, a distinction must be made between anti-trust and state aid. On anti-trust, EU and US have successfully developed co-operation in the framework of the bilateral agreement on competition policy of 1991. In 1998, this bilateral co-operation will be strengthened by the conclusion of the EU-US agreement on the application of positive comity in the enforcement of competition law. EU-US co-operation on anti-trust matters will be further developed at its own pace and on its own merits, outside the scope of the NTMA. Regarding state aid, the US has no control and authorisation procedures similar to the ones provided for by Articles 92-94 EU Treaty. The Commission should examine before the NTMA negotiation whether there is a need to negotiate disciplines on state aid as an element in avoiding distortions of competition. vi) Taxation Given the growing influence of preferential tax regimes on the location of capital, the EU and US should address the issue of harmful tax competition. EU Ministers have given a strong signal of determination to tackle this, both within the EU and beyond, in the agreement of 1 December 1997. This includes in particular a code of conduct on business taxation and action to ensure a minimum of effective taxation of savings income. In both cases Member States have undertaken to promote the establishment of equivalent measures in third countries. [top of section] [previous section] [next section] [back to contents]