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Intervention by Ms Paula Lehtomäki, Minister for Foreign Trade and Development in the Committee on International Trade (INTA) of the European Parliament
December 18, 2006

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Honourable Chairman, Ladies and Gentlemen,

I am glad to be here in the INTA Committee for the second time during the Finnish EU Presidency. It has been an active six months in the field of trade policy - not everything we had hoped for, but in many ways expected.

Our normal work - such as contributing to the management of the multilateral trading system, dealing with bilateral issues, disputes or trade defence measures - has been more or less business as usual. I think that we have managed our work and ran the show in a commendable way, including cooperation with the European Parliament. But this is, of course, for others to judge.

In the following, I will touch upon three sets of issues: DDA, external aspects of competitiveness and finally trade and development. I leave many other important issues to be taken up during the discussion.

DDA

Ladies and Gentlemen,

At the outset, the Doha Round was the main trade policy issue of our Presidency, and very much so during the first month of the Presidency. As we all remember, there was a strong attempt to move the Round forward in July. The EU took an active and constructive role in the process. The Council remained united in its support to the Commission, and the Commission, in particular Commissioner Mandelson, worked hard to identify solutions.

But unfortunately, July was not successful. The negotiating partners were unable to bridge the short gap which would have been needed to keep the negotiations moving on. One important reason for this was that major players finally could not bring themselves to making compromises. The Director General Pascal Lamy made the decision to freeze the Round. As a consequence, the beginning of the autumn season was spent not doing very much at all on the DDA.

We started returning to the negotiating table only in November. And the return has really been so-called fireside chats - a soft resumption, as it has been called, too - on how to restart the process rather than substantive negotiations.  Very much informal and tentative. In Geneva, the chairmen of the Negotiating Groups and the Director General, together with WTO Members, are seeking ways to advance. There are informal meetings in different capitals, also on ministerial level. So far results have been limited. The political will needed for compromises has not manifested itself.

The EU has continued to play a key role in the efforts to return to the negotiations. Our position on the substance remains the same as it was in the summer at the beginning of our Presidency. That is, the EU cannot be the only one - once again - to make new concessions to keep the Round moving on. It is very clear to us that other partners need to do their part.

After Christmas, there will be a period of a few months - possibly up to March - during which it will be possible to restart the Round in more concrete terms. If this period is lost, and at the same time the United States does not prolong its Trade Promotion Authority that ends next July, the prognosis for the Round is not very good. But we must all be optimists and not self-defeating and keep firmly in mind that multilateral trade rounds and agreements are really the best and most efficient way of organising our trading relations with the rest of the world.

Trade and external competitiveness

Honourable Chairmen, Ladies and Gentlemen,

In parallel to the DDA negotiations, the past few months have witnessed an active discussion on the other priorities of the EU's trade policy. This discussion has been conditioned by the tightening circumstances of global competition. As it is widely known, the EU is facing an ever more competitive external environment. The structural changes in the global economy have opened up a host of new opportunities, but are also posing new challenges.

It is increasingly understood that an effective policy to foster European competitiveness cannot be restricted to internal European measures only. Such a policy must also cover the Union's external trade and economic policies. A substantial part of the value-added of European firms is currently created outside the EU's borders. This means that paying attention to these external conditions is of crucial importance for the EU’s competitiveness as a whole.

During the Finnish EU Presidency, the discussion on the so-called external aspects of competitiveness moved forward in a significant way. I believe that the Commission's Communication on "Global Europe" and the subsequent Council Conclusions clarified a number of important principles and priorities in this field. They will serve us as a fundamental groundwork as we work on to improve the efficiency of our trade policies.

One significant element of these policy documents is the idea that trade policy must increasingly take into account the global nature of business activities. European markets must be kept open to both exports and imports and the EU's trade policy must strive to support a favourable business environment in different parts of the world. As global competition tightens, the EU cannot turn inward but must instead adopt an ever more active policy of openness at home and abroad.

This on-going debate has directed increasing attention to the important links between the internal and external European policies on enhancing competitiveness, and underlined the often inseparable nature of the two. This entails that an effective policy aimed at fostering competitiveness must cover both internal and external measures. We need an integrated, coherent approach to domestic and global challenges in order to ensure that our common trade policy continues to contribute in an optimal way to European well-being.

The Council Conclusions recognised that with the WTO negotiations remaining as a priority for the EU, there is a clear need to develop in parallel new arrangements that complement the multilateral system. These include a new generation of ambitious free trade agreements, with emphasis on regulatory issues. Among others, ASEAN countries, India and South Korea were identified as priority targets for these new FTAs.

We were also happy to reach an agreement on a Minimum Platform on Investment for the EU's Free Trade Agreements, as investments are a key component in developing the EU's third-country relations. This comprehensive approach will improve the Union's ability to tackle the whole spectrum of business activities in the global economy.

Does this all imply that the EU is making a choice between multilateralism and bilateralism in its trade relations?  In my view, the answer to this question is clearly negative. Unlike it is sometimes argued, multilateralism and the various geographically more restricted arrangements are not necessarily mutually exclusive. With economic globalisation, the need for transnational governance has been continuously increasing. In this context, different types of cooperative arrangements are needed to perform different tasks. The EU must take actively part in this global development, while at the same time taking due care of that the operation of the multilateral system is not endangered.

Trade and development

Ladies and Gentlemen,

Enhancing the coherence and effectiveness of the EU's external action has been one of the priorities of the Finnish EU Presidency. In this context, the thematics of trade and development has been very much in focus. As a matter of principle, and turning this principle into concrete action, we have highlighted the importance of supporting developing countries' integration into and participation in world trade.

The Finnish EU Presidency organized the first ever Joint EU Trade and Development Ministers' Session as part of the October 2006 General Affairs and External Relations Council (GAERC). The main topic of the Joint Session was Aid for Trade. The meeting was very timely since the WTO General Council had approved just a week earlier the recommendations of the WTO Aid for Trade Task Force on how to put the Aid for Trade initiative into operation.

The Council Conclusions on Aid for Trade, adopted by the Trade and Development Ministers Session, endorsed the WTO-based Aid for Trade initiative and gave a strong commitment to its implementation as part of the EU's development policies. As the world biggest donor, the EU needs to take firm action in implementing its Aid for Trade commitments. This is crucial for the credibility of the whole Aid for Trade initiative. One of the first steps, as mandated by the October Conclusions, is to prepare next year a Joint EU Aid for Trade Strategy.

It is clear that Aid for Trade can only be a complement to domestic and international trade-related policy reforms. Therefore, trade policy was also at the centre stage at the Joint Trade and Development Ministers' Session. The Ministers strongly voiced that our present challenge to get the suspended WTO talks back on track is an important development issue, as well.

Despite the strong linkage of Aid for Trade to the WTO negotiations, it is important to keep in mind that Aid for Trade is neither part of the single-undertaking nor solely limited to multilateral trading system. The capacity of developing countries to trade is a fundamental development issue in its own right. Aid for Trade is also relevant for regional and bilateral trade agreements. In fact, trade-related support is one of the key issues in the on-going Economic Partnership Agreement (EPA) negotiations between the EU and African, Caribbean and Pacific (ACP) countries. This is why the October Council Conclusions also focused on the EU's Aid for Trade policies towards the ACP countries. This was one way how the Finnish Presidency wished to contribute to the successful finalisation of the EPA negotiations in 2007.

Honourable Chairman, Ladies and Gentlemen,

Although we could not witness a breakthrough in the DDA negotiations during the Finnish EU Presidency, several other significant openings in the trade policy field - as I have just described - were launched in the EU during the past six months. Competitiveness and coherence considerations were implanted for good - I hope - in the realm of the EU's trade policy. Thus, the work is very much in progress, both in terms of the DDA as well as other aspects of our common trade policy.

I wish to thank you, Mr Chairman, and your fellow members of the INTA Committee for your dedication to the cause of trade policy and for the cooperation the Finnish EU Presidency has enjoyed during this autumn season. And I hope that we can continue our constructive cooperative relationship in the future, as well.

Thank you - and I am now ready to address your questions.