The United States has been a strong supporter of the European Union (EU) enlargement process.  The EU expanded from 15 to 25 members on May 1, 2004, with the accession of 10 Central and Eastern European and Mediterranean countries (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia).  On January 1, 2007, the EU expanded further with accession of Romania and Bulgaria.  While this continuing expansion of the single European market presents important opportunities for U.S. exporters, it has also had negative commercial consequences in some instances.  Under Articles XXIV: 6 and XXVIII of the General Agreement on Tariffs and Trade 1994 (“GATT”)”, the United States is entitled to compensation from the European Communities (EC) to offset some of these consequences.  

Chief among the U.S. concerns relating to the continuing enlargement are EU requirements for new Member States to :

• increase tariff rates as they apply the EU common external tariff;
  
• withdraw or modify services market access commitments or changeMFN exemptions under the General Agreement on Trade in Services (“GATS”) to align them with the European Communities’  existing GATS commitments;
  
• apply certain non-tariff barriers (such as sanitary and phytosanitary measures or other technical barriers), which can severely reduce U.S. market access, especially for agricultural exporters. 

The United States is also pursuing the expansion of EU tariff-rate quotas to account for the inclusion of new EU Member States.  Further, the United States is working to ensure that the new Member States abide fully by the terms of the WTO Agreement on Government Procurement, the WTO Agreement on Trade in Civil Aircraft, and various bilateral U.S.-EU agreements.

On March 22, 2006, the United States and the EC signed a bilateral agreement under GATT rules providing for compensation for breaking of tariff bindings as a result of the EU’s May 2004 enlargement.  As part of the agreement, the ECUnion opened new country-specific tariff-rate quotas for U.S. exports of boneless ham, poultry, and corn gluten meal.  It expanded existing global tariff-rate quotas for food preparations, fructose, pork, rice, barley, wheat, maize, preserved fruits, fruit juices, pasta, chocolate, pet food, beef, poultry, live bovine animals and sheep, and various cheeses and vegetables.  It also permanently reduced tariffs on protein concentrates, fish (hake, Alaska Pollack, surimi), chemicals (polyvinyl butyral), aluminum tube, and molybdenum wire.  These changes went into effect in July 2006.

In December 2006, the United States and the EC again entered into negotiations under GATT rules in anticipation of the accession of Romania and Bulgaria to the EU.  USTR seeks to conclude an appropriate bilateral compensation agreement and ensure that its benefits are implemented as soon as possible.  Under WTO rules, WTO Members with a claim for compensation have six months following the breaking of tariff bindings to negotiate compensation or, failing agreement on compensation, to withdraw equivalent concessions. On March 22, 2007, USTR requested public comment by April 19, 2007 on a proposed list of goods imported into the United States from the European Union which the United States could withdraw concessions if the two sides did not reach agreement in their consultations.  In May 2007, the EC requested, and WTO Members supported, an extension of rights to withdraw equivalent concessions for an additional six months, i.e., until December 31, 2007  

Interested stakeholders are encouraged to call (202)395-3320 for more information on the status of these issues.  The relevant Federal Register notices are included below.