RESTRICTED WT/TPR/S/317 18 May 2015 (15-2598) Page: 1/212 Trade Policy Review Body TRADE POLICY REVIEW REPORT BY THE SECRETARIAT THE EUROPEAN UNION This report, prepared for the twelfth Trade Policy Review of the European Union, has been drawn up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from the European Union on its trade policies and practices. Any technical questions arising from this report may be addressed to Messrs John Finn (tel: 022 739 5081), Pierre Latrille (tel: 022 739 5266), Xinyi Li (tel: 022 739 5579), Roger Kampf (tel: 022 739 6218). Document WT/TPR/G/317 contains the policy statement submitted by the European Union. Note: This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on the European Union. This report was drafted in English. WT/TPR/S/317 • European Union - 2 - CONTENTS SUMMARY ........................................................................................................................ 8 1 ECONOMIC ENVIRONMENT ........................................................................................ 11 1.1 Recent Economic Developments.................................................................................. 11 1.1.1 Overview of GDP growth ......................................................................................... 11 1.1.2 Structural reforms ................................................................................................. 13 1.1.2.1 Fiscal governance improvement ............................................................................ 13 1.1.2.2 Labour market reforms ........................................................................................ 14 1.1.2.3 Current account imbalance ................................................................................... 16 1.2 Trade Performance ................................................................................................... 17 1.2.1 Intra-EU trade ....................................................................................................... 17 1.2.2 Extra-EU trade ...................................................................................................... 18 1.3 Foreign Direct Investment ......................................................................................... 23 2 TRADE AND INVESTMENT REGIME ............................................................................ 26 2.1 Legal and Institutional Framework .............................................................................. 26 2.2 Trade Policy Objectives and Consultation ..................................................................... 27 2.3 Trade Agreements and Arrangements .......................................................................... 28 2.3.1 WTO .................................................................................................................... 28 2.3.2 Regional and preferential agreements ....................................................................... 29 2.3.2.1 Reciprocal preferences ......................................................................................... 29 2.3.3 Unilateral preferences ............................................................................................ 30 2.4 Investment Regime .................................................................................................. 32 2.4.1 Business environment ............................................................................................ 32 2.4.2 Foreign investment regime ...................................................................................... 33 2.5 Aid for Trade ............................................................................................................ 34 3 TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 35 3.1 Measures Directly Affecting Imports ............................................................................ 35 3.1.1 Customs procedures ............................................................................................... 35 3.1.2 Customs valuation ................................................................................................. 38 3.1.3 Rules of origin ....................................................................................................... 39 3.1.3.1 Non-preferential rules .......................................................................................... 39 3.1.3.2 Preferential rules................................................................................................. 39 3.1.4 Tariffs .................................................................................................................. 41 3.1.4.1 WTO bound tariffs ............................................................................................... 41 3.1.4.2 MFN tariffs ......................................................................................................... 41 3.1.4.3 Tariff suspensions and tariff rate quotas ................................................................. 44 3.1.5 Internal taxes collected at the border on imports ........................................................ 45 3.1.6 Import controls and restrictions ............................................................................... 45 3.1.7 Contingency measures ........................................................................................... 46 3.1.7.1 Overview ........................................................................................................... 46 WT/TPR/S/317 • European Union - 3 - 3.1.7.2 Anti-dumping and countervailing ........................................................................... 47 3.1.7.3 Safeguards ........................................................................................................ 50 3.1.8 Technical regulations and standards ......................................................................... 50 3.1.9 Sanitary and phytosanitary measures ....................................................................... 55 3.1.9.1 Live animals and animal products .......................................................................... 57 3.1.9.2 Plants and plant products ..................................................................................... 58 3.1.9.3 Rapid Alert System for Food and Feed .................................................................... 58 3.1.9.4 The SPS Committee of the WTO ............................................................................ 59 3.2 Measures Directly Affecting Exports ............................................................................. 59 3.2.1 Export procedures and requirements ........................................................................ 59 3.2.2 Export taxes, charges, and levies ............................................................................. 59 3.2.3 Export prohibitions, restrictions, and licensing ............................................................ 59 3.2.3.1 Dual-use items export control regime ..................................................................... 59 3.2.4 Export credit, insurance, and promotion .................................................................... 61 3.2.5 Waste shipment trade regime .................................................................................. 62 3.2.6 Diplomatic measures .............................................................................................. 62 3.3 Measures Affecting Production and Trade ..................................................................... 64 3.3.1 Subsidies .............................................................................................................. 64 3.3.1.1 EU level support ................................................................................................. 64 3.3.1.2 State aid ............................................................................................................ 65 3.3.1.3 Public service obligations and services of general economic interest............................ 70 3.3.1.4 Crisis-related state aid ......................................................................................... 71 3.3.2 Competition policy and regulatory issues ................................................................... 73 3.3.2.1 Overview ........................................................................................................... 73 3.3.2.2 Antitrust ............................................................................................................ 73 3.3.2.3 Mergers and acquisitions ...................................................................................... 78 3.3.2.4 International cooperation ..................................................................................... 79 3.3.3 Taxation ............................................................................................................... 80 3.3.3.1 Income tax ........................................................................................................ 81 3.3.3.2 Corporation tax ................................................................................................... 82 3.3.3.3 Value added