Speech by Commissioner Mandelson to the Trade Committee of the EP

Today I will give you an update on DDA and talk about China and textiles. Aware that you have scheduled an oral question on this subject at the end of April when we can return to the subject once again.


WTO - DDA

Let me start with some thoughts on where I think we are in the WTO talks on Doha. It is a most complex game. But it is also where big economic benefits lie, both for us and for developing countries alike.

A substantive step forward on modalities by the end of the year in Hong Kong is critical in order to bring the Round to a successful conclusion by 2006. This remains our key objective for 2005.

We must inject ambition and a sense of urgency in the Round. While respecting the principle of special and differential treatment for developing countries, which is at the heart of this Round, WTO members must offer real new market access opportunities in manufactured goods and trade in services. It is not about agriculture alone. It is a package, one that we cannot disentangle, otherwise it risks unravelling. I have made this clear on many occasions to our trading partners. The Round cannot be limited to the interests of one group of WTO countries.

Since the beginning of the year I have tried to inject some oomph in these talks. The meeting of trade ministers in Mombassa two weeks ago was useful to the extent it pushed this rebalancing of the negotiations one notch further, but it has not entirely dispelled my concerns about the disconnection between the stated ambition of all WTO members and the current stage of negotiations. Much work lies ahead of Hong Kong.

This is true first and foremost for tariff reduction in industrial goods. A consensus has now emerged that this issue must now move, and that tactical positions must yield to real negotiations. We are now converging towards a set of common principles that must underpin these negotiations. Ministers in Mombassa agreed that the tariff reduction rule to be set by Hong Kong (we need a "first approximation" of this by July), should both ensure real cuts in tariff schedules of members, in other words create new real market access opportunities for our industries, and reflect the capacity of individual members to contribute. Formula which brings greater reduction in the higher tariff levels while giving appropriate flexibility to particular developing countries.

Much work lies ahead on agriculture too. As far as border protection in agriculture is concerned, it was agreed that the important issue of the calculation of ad valorem equivalents to other forms of tariffs would be resolved within a clearly identified timeframe. This was right from our side: it shows that we will provide our partners with the proper transparency which is a necessary prelude to meaningful negotiations on tariff reductions, but in a way which does not weaken our hand in these talks. Agriculture is complex, knotty and needs intensive work, but I made clear my firm views that progress in this area must be accompanied by progress elsewhere, both in order to achieve balance within the agriculture component of the negotiations itself, and to secure a package deal across other areas.

On Services, I made clear that progress here is vital, but must reflect the varying situation of developing counties and be a key contributor to the development thrust of the Round. I think we achieved widespread agreement on this.

This helped greatly in terms of achieving a convergence of views and interests between industrialised countries and emerging economies, which in my view lies at the heart of the Round. The same goes for a number of issues concerning the "rules" of international trade, and in particular for rules relating to the facilitation of trade. Services and rules are not North/South issues. They are also South/South issues. We have to address the need for tightening of disciplines such as Trade Defence and anti-dumping rules.

I was also pleased to see more widely a renewed focus on development issues. You all know my strong commitment to the development dimension of the DDA. The December Hong Kong Ministerial is one of the events that can help ensure that 2005 makes a difference in terms of development and fight against poverty (alongside the Gleneagles G8 Summit and the UN High-Level Event to be held in September). We want to see this Round make a real contribution to poverty reduction. In Montana, I focused on four areas for the DDA's development agenda where I wanted to make progress : a much needed pro-development outcome on Special and Differential Treatment; the provision of adequate levels of effective development assistance; the delivery of better market access for developing countries; and a development friendly reform of origin rules.

Before turning to China and textiles, I should like to record my thanks to this Committee and in particular your Rapporteur Mr Javier Moreno Sanchez for the very good draft report which has been produced on the DDA. It shares our objectives and supports the Commission's approach and I can assure you that this support is very much appreciated by me and my officials.


Visit to China (24-27 February 2005)

As you know I was recently in China where my key message was to call on my Chinese hosts to play a responsible role in international trade.

China has the right to benefit from its accession to the WTO. Equally it must be mindful of the impact its growing weight in the international trading system is having, and the need to show restraint so as to head off any possible backlash against this.

On the DDA, I stressed to the Chinese the need for a more pro-active role by China. They will host a Mini-Ministerial Meeting in July, prior to HK Ministerial in December. In terms of substance we have many common interests such as agriculture, NAMA, rules, trade facilitation. I also made it clear that we want China to make better offers, in particular in services and development (special & differential treatment). Although they were prudent, and clearly attached to their Newly Acceded Member Status, the Chinese appeared to understand that there was no such thing as a free lunch. We agreed to intensify contact between our teams of senior negotiators.

I raised our concerns about some aspects of the implementation of their WTO commitments, particularly on new legislation on imports of car components, and the construction, banking and telecoms sectors.

In relation to textiles, I explained my view that there could be no question of us going back to the old quota system, and that safeguards would only be used as a last resort if large scale trade disruption is being clearly demonstrated. That is still my view. However, we have a common interest in ensuring a smooth transition to the post quota system. In order to increase clarity and predictability I intend to publish guidelines which set out clear "danger zones".

If Chinese import levels in any sector were to reach such danger zones, we would investigate these further, with a view to determining their impact in terms of disruption of trade flows, possible injury to EU industry and the likely impact on producers in vulnerable developing countries - not forgetting of course the positive impact that this development should have on consumers. I have, today, begun inter-service consultation within the Commission to take forward this approach.

The decision on whether or not to go further and impose defensive measures would be a complex one that requires careful analysis of a series of factors - and not one that should be resorted to lightly nor automatically. What I want to do is identify where the alert levels ought to be. We are analysing the first figures coming in on imports from China and I am in close and active contact with the Chinese authorities - both in Beijing and in Brussels - in order to explore ways of handling the transition. During my meetings in Beijing, Chinese Ministers said they were already aware of the importance of finding a solution have already put in place licensing and other measures that are intended to decelerate export growth. My aim is for trade to find an acceptable equilibrium beyond the initial surge following liberalisation that we are witnessing now. We agreed to consult intensively on this issue. I am fully conscious of the political importance it has for several of our Member States.

On the enforcement of Intellectual Property rights, the Central authorities, Vice Premier Wu Yi, in particular, have launched an action plan on this. We agreed to set up an EU-China working group to exchange experiences at working level.

As you know the Chinese are very keen on Market Economy Status. I indicated that I understood the political importance of this for China but stressed that MES is not a political, but rather a technical issue with concrete criteria against which progress can be measured. I expressed readiness to work on this issue intensively, but indicated that China needed to continue to show progress in the areas outlined in the preliminary opinion issued by the Commission in June 2004.

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