EU Statement at the 15th Trade Policy Review of the United States, 14 December 2022
Chair,
On behalf of the European Union, I would like first to welcome the Delegation of the United States, led by Ambassador Pagan, and thank the WTO Secretariat and the Government of the United States for their respective reports.
The European Union and the United States have the largest bilateral trade and investment relationship and enjoy the most integrated economic relationship in the world. The EU and US trade about 1.2 trillion euros worth of goods and services each year. Together, the EU-US trade represent 18% of the World trade in goods and services. It is an artery of world trade and creates jobs and growth on both sides of the Atlantic. It is something we need to treasure, nurture and develop where we can.
I am pleased that following some complicated years, the EU and the US have been able to improve our trade relations. We found temporary solutions for major trade disputes and have started to build a positive bilateral agenda, notably through the Trade and Technology Council (TTC).
This partnership has become even closer following the Russian aggression against Ukraine, which sees the EU and the US, along with many other WTO members, allied in our unwavering support to Ukraine.
The US has had a defining role in shaping the global trading system since the early days of the GATT and in developing the rules that underpin international economic relations today. This has helped drive much of the enormous growth and increases in prosperity across the world over the last decades to the benefit of all WTO members including the EU and without a doubt the US itself.
The actions of the United States matter, and its trade policy decisions deeply affect its trading partners, particularly those where strong trade and investment ties imply a particular degree of economic integration, such as with the EU.
Despite of the success of MC12, the multilateral trading system embodied by the WTO continues to need serious reform across its three core functions – negotiation, monitoring and deliberation, and dispute settlement – to ensure that it is up to the challenges of the XXI century. The EU counts on the full commitment of the United States to revitalise the multilateral trading system. We must maintain the positive momentum and ensure that MC13 keeps WTO reform on the right track.
The EU believes that modernising the WTO is the best guardrail against fragmentation, and the most direct way for us all to benefit from global trade.
We take note from the Government report that the US “supports a WTO reform agenda that reflects the priorities of a worker-centred approach one that protects our planet, supports improved labour conditions and living standards, and contributes to shared prosperity”. We welcome these intentions, and we invite the US and all Members to pursue these objectives together and not separately or at the detriment of other Members. As a key player in the global trading system, we expect the US to be ready to invest political capital in reforming the WTO in a manner that reinforces the multilateral rules-based trading system.
We also take note that the US considers that the WTO dispute settlement has not met the needs of WTO Members. The European Union will not engage in this forum on a debate relating to WTO dispute settlement reform but it is clear that a functioning and effective dispute settlement system is critical for the credibility of the WTO as a rules-based institution. For the EU, WTO dispute settlement reform is therefore a matter of priority. We treat very seriously the commitment, made at MC12, on having a fully and well-functioning system by 2024. In order to achieve this objective, clarity is needed as soon as possible on the types of reforms that the US is seeking. The EU will engage with any reform effort as long as it respects the core features of the dispute settlement system. This includes the right to appeal review before a standing adjudicative body. We hope and expect the US will be fully invested in this effort.
Despite the shared objectives that I have just mentioned, we continue to have serious concerns about the impact of some US policies on trade: there continue to be strong inward-looking tendencies in US trade policy, favouring domestic sectoral interests.
The EU, along with other WTO members are for example very concerned about the recent adoption of the Inflation Reduction Act.
While we welcome the adoption of the Act as a major step in the US’ fight against climate change, we have serious concerns with some of its provisions.
Many of the generous subsidies provided for in the Act tilt the playing field in favour of the US producers in key technology sectors including, but not limited to, the automotive sector. Certain elements of the legislation - such as those subsidies dependent on the use of domestic goods and domestic production – are discriminatory and need to reconcile with US’ WTO obligations. The Act risks being detrimental to the economic interests and industrial competitiveness of the EU and of other WTO Members, and risk making the green transition more costly, for tax payers and consumers. I hope that the US delegation will remain ready to engage in a frank and open discussion on this issue and the impact that this legislation has on the rest of the world.
Chair,
In this regard allow me to highlight a couple of the key written questions the EU has submitted to the United States.
On the IRA, how will the United States ensure that the legislation is implemented or modified in a way to ensure it remains in compliance with its obligations under the WTO Agreements, and advances the green transition in the US without distorting the international level playing field for its trading partners?
As regards US government procurement, we remain concerned about the limitations introduced through the "Buy American" legislation. Indeed, by imposing local content requirements to US government procurement contracts, the "Buy American" rules close the US procurement market to certain EU exports.
On agricultural support, there has been a steep increase in product specific trade distorting support since 2018/19 for key commodities (notably maize and soybeans) which has pushed the overall total US Agricultural Marketing Service (AMS) very quickly close to its AMS limits. Given the trade-distorting nature of this support and the negative effect on international markets, we are looking for reassurances that this trend is not going to continue.
So, to conclude, at this moment, it is more important than ever for US to conduct a trade policy and work together with its partners in the WTO, notably on the issue of WTO reform in the spirit of the WTO rules.
Chair,
The European Union looks forward to continuing to work with the United States in a sense of shared responsibility to strengthen the multilateral trading system.
On behalf of the EU, I wish the United States a productive 15th Trade Policy Review.