COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT AND THE ECONOMIC AND SOCIAL COMMITTEE THE NEW TRANSATLANTIC MARKETPLACE E. OTHER ASPECTS OF THE INITIATIVE 15. IMPLICATIONS FOR EU COMMON POLICIES As regards the Common Commercial Policy the NTMA does not envisage the preferential removal of tariffs. It could instead result in the total elimination on a MFN basis of industrial tariffs, if sufficient reciprocity from third countries were forthcoming. The NTMA is aimed at reducing costs for businesses, facilitating trade, increasing market opportunities and improving economic efficiency. In this respect it is fully consistent with the general goals of the EU Industry Policy as contained in Art. 130 of the EC Treaty. In the area of trade in goods, the main policy concerned is the Internal Market, in particular as regards the free movement of goods. EU policy in this area is based on the strict limitation imposed by the Treaty in Articles 30-36/EC on the scope for Member States to restrict the free movement of goods. Such restrictions, as interpreted by the case law of the European Court of Justice, are confined to a list of imperative requirements (such as public health, safety, consumer protection and the environment) and are subject to restrictive conditions (such as proportionality). Where Member States impose technical requirements in accordance with these principles, free movement of goods is maintained by the mutual recognition of laws, supported if necessary by approximation of these laws at Union level. This means that a product legally placed on the market of one Member State should be accepted on the market of another, without having to meet further requirements. There are a number of mechanisms aimed at preventing the emergence of new barriers, such as the Information Directive 83/189 and Council Decision 3052/95. In the light of the importance that the EU attaches to the Internal Market and to its progressive introduction in the CEECs (Central and Eastern European countries), any external initiative needs to be compatible with those objectives. [top of section] [back to contents] This is not a proposal to extend the Internal Market to the US. However, the principles of convergence and of mutual recognition of law, procedure and practice, set out in this Communication as the means to reach the Union’s objective of freeing Transatlantic trade in goods from technical barriers draw upon elements of the Internal Market approach. The process of convergence is likely to require some change in EU law, procedure or practice. The same would obviously apply on the US side. Bilateral convergence should be pursued in close connection with wider international co-operation, in line with long-standing EU policy and the recommendations of the WTO-TBT (Technical Barriers to Trade) Agreement. Insofar as the development of international standards would be involved, mainly in the International Standards Organisation (ISO) and the International Electrotechnical Commission (IEC), the necessary arrangements are in place for their adoption by the European standardisation bodies CEN (Comité Européen de Normalisation), CENELEC (Comité Européen de Normalisation Electrotechnique) and ETSI (European Telecommunications Standards Institute). Overall, therefore, the results of agreeing international standards under the New Transatlantic Marketplace should be manageable within the existing structures. [top of section] [back to contents] As far as mutual recognition is concerned, a Mutual Recognition Agreement (MRA), covering a number of industrial sectors, was initialled between the EU and the US in 1997 and is scheduled to be formally concluded and implemented in 1998. This MRA only concerns mutual recognition of conformity assessments and provides for goods produced on one side of the Atlantic to be tested and certified there, to the technical requirements of the other side. Implementation and enforcement of this Agreement will necessitate close co-operation with the Member States’ authorities. The legal relationship between the MRA and an NTMA will need to be clarified. In general terms (and more in particular where more than just conformity assessments are concerned) mutual recognition of law, procedure and practice will require close scrutiny of the regulatory approach followed on either side of the Atlantic, taking full account of public policy objectives. The impact of any differences of approach in this respect between the EU and the US (for instance as regards the use of preventive requirements, compared with resort to producer’s liability) will need to be considered. The objective of this will be to maintain public confidence that the requirements of protection of health, safety, the consumer and the environment, which are at the foundation of the Internal Market, are not impaired. In the area of trade in services, the NTMA should focus firstly on liberalisation based on national treatment and - unlike in the case of the Internal Market - the application of host country rules, and on the elimination of restrictions to market access. This will imply that within the EU, as of course within the US, remaining restrictions on the right of establishment in any form of commercial presence (subsidiaries, branches, representative offices, etc.) will have to be eliminated in full conformity with GATS rules. [top of section] [back to contents] The NTMA would not alter the rules governing the functioning of the Internal Market, nor imply its extension to the US. US firms will benefit from the Internal Market rights only once they meet the non-discriminatory criteria established by the EC directives (applicable in the same way to EC companies), except in those cases where under the NTMA we voluntarily agreed to mutual recognition or harmonisation. Third countries companies, once incorporated in Europe, already enjoy the benefits of the single market. The general principle that the benefits of the internal market are limited to institutions incorporated in the EU and subject to harmonised internal market rules would not be altered. While US companies wishing to enter the EU market would find it easier, they would still need to comply with the rules prevailing in the Internal Market which have to be followed by every company wishing to operate in the EU (and which could progressively approximate in some areas thanks to regulatory co-operation in the NTMA framework). They would also need to comply with rules applicable in each Member State where no harmonised regulations at Community level exist. The full respect of the public policy objectives pursued by Internal Market regulations and national legislation would therefore be preserved. Progress in the area of Mutual Recognition (of qualifications, regulations and other requirements, supervisory practices, etc.) could result in partially granting benefits allowed under the Market to US companies and service providers without the need to be subject to the relevant EU rules, but with the equivalent US regulations. This would need to be done in such a way that neither imbalances the Internal Market nor distorts conditions of competition. In exchange, EU companies would get equivalent access to the US market. This means that, as the functioning of the Internal Market would not be altered, implications for EU common policies would mainly consist of what could flow from increased competition in the EU market in the different services sectors, and of the need to take advantage of increased market access opportunities for EU companies in the US. [top of section] [back to contents] 16. INSTITUTIONAL ASPECTS Institutional structure In order to ensure the effective realisation of the NTM and its proper functioning, and taking into account the need to preserve the EU’s internal procedures, it will be necessary to create some new institutional structures. What exactly these should be will become clearer as the negotiation progresses. Their articulation with existing NTA structures and other existing EU-US arrangements will need to be carefully considered. It may be appropriate to establish: a joint committee structure (either building on existing structures, or adapting them) which would oversee the implementation of the Agreement; a mechanism for the efficient settlement of disputes; a consultative body bringing together EU and US parliamentarians. Scientific Cooperation It may also be appropriate to establish a scientific consultative body, involving the widest possible exchange of scientific knowledge in the regulatory process, in particular, by bringing together scientists from both sides of the Atlantic. The prevention of disputes One aim of the NTM is to prevent trade disputes arising. The Joint Committee would play an important role here. At a minimum, dispute prevention should be based on: clarity of the parties’ legal obligations under the Agreement; fostering public transparency and support through a structured dialogue, or separate dialogues among interested parties (including consumers, labour and business); reliance on voluntary standards whenever this is possible without compromising public policy concerns; increased regulatory cooperation through notification and consultation procedures between the parties’ public authorities at all appropriate levels when new laws or regulations are being considered; day-to-day administrative co-operation between enforcement and supervisory or monitoring authorities on both sides of the Atlantic. [top of section] [back to contents] Domestic implementation of commitments The benefits of the NTMA for EU and US citizens and firms rest on effective implementation by the parties in their respective legal orders of the commitments undertaken in the Agreement. In turn, these domestic law obligations will be enforceable by each party’s jurisdiction. The resolution of disputes arising under the agreement In the event of disputes between the parties arising nevertheless, in spite of the bilateral and domestic mechanisms described above, there would be a need for an effective bilateral mechanism for resolving such disputes. While the precise institutional nature of such a mechanism would inevitably depend on the kind of obligations it would eventually have to deal with, it should at a minimum: not foreclose the possibility of a consensus-based resolution of the dispute; be based on objective elements; provide legal certainty to the parties (and ultimately to their citizens and firms) as to the extent and content of the rights and obligations under the Agreement; be carried out within a reasonably short time-span so as to enhance such legal certainty; provide assurances that the outcome will be accepted and enforced by the parties. [top of section] [back to contents] Relationship with WTO dispute settlement The above mechanism should be structured in a way which ensures the continued integrity and effectiveness of the WTO dispute settlement mechanism. Nor should it in any way curtail the right of the parties to resort to WTO dispute settlement. The exact relationship between the two mechanisms will depend largely (albeit not exclusively) on the relationship between the substantive rights and obligations for the parties under the WTO and the NTMA respectively. F. CONCLUSION The Commission requests the Council to proceed to an early in depth discussion of this proposal. The Commission will submit draft negotiating directives to the Council for a New Transatlantic Marketplace Agreement covering the elements described above. [back to contents] [previous section] [next section (Annex)] [top of section]