Plan de Acción

Page 3 (Para 1.6)

In promoting free, fair and open trade, the European Union has always been fully committed to a strong, rules-based multilateral trading system recognising the utmost importance of fighting all forms of protectionism, including as regards non-tariff trade barriers, ensuring better market access, promoting appropriate investment conditions (see paragraph 1.3 above), enforce and promote intellectual property rights – and opening up public procurement markets.

Questions:

1．In the context of slow economic recovery, instability of the Euro and the impact of sovereign debt crisis, has the EU taken measures and utilized corresponding internal mechanisms to ensure its decisions and enforcement measures not inconsistent with its obligations within the WTO framework?

EU reply: The continuing financial and economic crisis has been addressed by intense and sustained action by the European Union's institutions and national governments. All have been working closely together to support financial stability, to put in place a stronger governance system for the future and to strengthen the necessary conditions to boost growth and employment. In the face of the crisis, important decisions were taken in the course of the year that considerably enhanced the Union's capacity to address the crisis and to move beyond it ( for more details see: the TPR government report point (2), para 20-33 and the WTO Secretariat report, chapter 1, section 1.1.2). For doing so, the EU systematically uses its internal coordination mechanism to ensure that trade-related decisions and measures remain in full compliance with WTO rules. The Trade Policy Committee in the main body whom such issues are being discussed if need be.

2 THE EUROPEAN UNION IN A CHANGING WORLD Page 5 (Para 2.17)

On 13 December 2011, the European Council and the European Parliament adopted a set or legislative measures to reform the Stability and Growth Pact. This set of measures is known as the 'Six-Pack' and it aims at strengthening the procedures to reduce public deficits and address macroeconomic imbalances. In 2012, the first implementation of these measures significantly strengthened budgetary surveillance and introduced the Macroeconomic Imbalances Procedure to prevent and correct macroeconomic imbalances, both of which are backed up by the possibility of financial sanctions for euro area Member States. The 'Six-Pack' also included a proposal for a Directive defining minimum requirements for national budgetary frameworks to ensure that Member States' fiscal frameworks are fit to respect the EU rules

Questions:

2．What is the main content of the "Six-Pack"? And how has it been implemented?

EU reply: The European framework of economic and budgetary surveillance was overhauled in December 2011 with the adoption of a package of six legislative proposals (known as the six-pack) designed to address the weaknesses revealed by the economic and financial crisis. It comprised three Regulations strengthening the European budgetary surveillance framework (the SGP - Stability and Growth Pact), two Regulations introducing a new surveillance procedure for

macroeconomic imbalances and a Directive imposing minimum standards for Member States' national budgetary frameworks which has been implemented and applied ever since.

The legislative package drastically reinforced the preventive arm of the SGP by introducing an expenditure rule anchoring expenditure growth to the medium-term growth rate of potential GDP. The legislation also introduced the possibility of sanctions early in the process. Countries will now face lodging an interest-bearing deposit of 0.2% of GDP if their underlying budgetary position is not strong enough. The new legislation also provides for stronger action to correct gross policy errors within the corrective arm of the SGP and a new quantified rule requiring those Member States that exceed the debt threshold of the Maastricht Treaty to reduce the excess rapidly. The launch of an Excessive Deficit Procedure (EDP) can now result from unfavourable government debt developments as well as from high government deficits. The introduction of the reverse qualified majority rule significantly strengthens the Commission's hand in decisions relating to sanctions on euro area Member States. Whereas in the past, such decisions required the support of a qualified majority in the Council, in future, a qualified majority would be required to halt the sanction proposed by the Commission.

The six-pack also included the adoption of a Directive to be implemented by the Member States defining minimum requirements for national budgetary frameworks to ensure that Member States' fiscal frameworks are fit to respect the EU rules.

A major weakness of the pre-crisis surveillance arrangements was the lack of systematic surveillance of macroeconomic imbalances and competitiveness developments. The six-pack introduced a new Macroeconomic Imbalances Procedure (MIP) to close this gap: a new surveillance mechanism aiming to prevent macroeconomic imbalances and to identify and allow the timely correction of any emerging competitiveness divergences. It is based on an alert system that uses a scoreboard of indicators and in-depth country studies to identify imbalances and launch a new Excessive Imbalance Procedure (EIP) where necessary. The new procedure is backed up by enforcement provisions in the form of financial sanctions for euro area Member States which do not comply with the EIP.

3．Are there any problems encountered during the implementation of the "Six-Pack"? If yes, how are they solved?

EU reply: The Commission will conduct a review on the functioning and implementation of the various regulations strengthening the stability and growth pact and introducing the macroeconomic imbalances procedure, publishing a report on this by 14 December 2014. The report shall evaluate inter alia the effectiveness of the regulations and the progress in ensuring closer coordination of economic policies and sustained convergence of economic performances of the Member States. Where appropriate, this report shall be accompanied by proposals for amendments to the regulations.

Page 6 (Para 2.21)

The Banking Union would take the form of a Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM)……

Questions:

4．What are the details of the SSM and SRM mentioned in the Secretariat Report? And what measures will the EU take to ensure a smooth functioning of the Mechanisms?

EU reply:

Details of the SSM and SRM in the Secretariat report

A major point on the Commission's regulatory agenda is the Banking Union project. The Banking Union entails four major elements: a single rulebook, a Single Supervisory Mechanism (SSM), a European deposit guarantee system, and a European resolution framework for banks.

1.The SSM would apply to all the euro-area member States and is open to the participation of other Member States who wish to embark on a path of deeper integration. Non-euro-area member States may decide to join the SSM by establishing close cooperation between their competent authorities and the European Central Bank (ECB). In that case they may, on an equal footing with the euro-area Member States, participate in the activities of the newly created Supervisory Board which is in charge of planning and executing the supervisory tasks conferred upon the ECB.

The Council of the European Union agreed on a position regarding the SSM Regulation on

13 December 2012 (http://ec.europa.eu/commission_2010-

2014/barnier/headlines/news/2012/12/20121213_en.htm). The regulation gives key supervisory tasks and powers to the ECB over all the credit institutions established within the euro area and the Member States which decide to join the SSM. The ECB carries out its tasks within an SSM composed of ECB and national competent authorities. The ECB shall have particular responsibility for direct supervision of banks having assets of more than EUR 30 billion or whose total assets constitute at least 20% of their home country's GDP or which have requested or received direct public financial assistance from the European Financial Stability Facility (EFSF) or the European Stability Mechanism. National supervisors will have responsibility for less significant banks, while the ECB may at any time decide to directly supervise any bank at any time. The governance structure of the ECB will consist of a separate Supervisory Board supported by a steering committee, the ECB Governing Council, and a mediation panel to solve disagreements that may arise between national competent authorities and the Governing Council. The SSM is envisaged to be fully operational by September 2014. To allow for a smooth transition to the new mechanism, the ECB may extend the deadline.

After the establishment of the Single Supervisory Mechanism, the Commission intends to progress on next logical step towards a the Banking Union, i.e. a Single Resolution Mechanism (SRM) built around a Single Resolution body, which will involve all relevant actors and a single resolution fund. The SRM should mirror the SSM and cover all banks in the Euro area. The Commission plans to table a proposal for the Single Resolution Mechanism before summer 2013.

The Commission is also working with the Council and the European Parliament for a swift adoption of the pending proposals on Deposit Guarantee Schemes and Bank Recovery and Resolution, which will complement the single rulebook in the banking sector applicable across the European Union A2: What measures will the EU take to ensure a smooth functioning of the Mechanisms?

The EU is committed to strengthening its arrangements in the financial, fiscal, economic and political domains in order to overcome the crisis in a sustainable way and to restore confidence. The Banking Union is at the forefront of the EU vision for a deep and genuine Economic Monetary Union.

The agreement on the Single Supervisory Mechanism (SSM) is already a key success. The next step is to agree on the proposals for a Recovery and Resolution Directive (BRRD) and for a Deposit Guarantee Scheme Directive (DGS). Well advanced is the Commission's work on a proposal for Single Resolution Mechanism that would allow for bank resolution at the centralized level and applying common tools for resolution at European level to banks in Member States supervised by the SSM.

Page 7 (Para 2.28)

The Single Market remains the European Union's most important vehicle for growth and job creation. …… The European Commission launched an ambitious process to give new momentum to the Single Market. Following the Communication on the Single Market Act adopted in April 2011, as a response to the crisis and the need to foster growth, the European Commission adopted a second Communication, Single Market Act-II, on 3 October 2012.

Questions:

5．Has the EU introduced relevant legislative proposals or drafts concerning the Single Market Act II?

EU reply: All relevant information regarding proposals and implementation in relation to the Single Market Act-II agenda can be found here : http://ec.europa.eu/internal_market/smact/news/index_en.htm.

6．Could the EU please describe the details of the implementation of the Single Market Act-II and its impact on the market?

EU reply: Same as reply above to q 5 Page 10 (Para 2.48)

On 9 November 2011, the European Commission adopted the Communication on "Small Business, Big World - a new partnership to help SMEs seize global opportunities". This Communication aims to establish a more coherent and effective European Union strategy for supporting SMEs in international markets and to make better use of existing resources. To reach these objectives, the new strategy sets out 6 fields of action: strengthening and mapping the existing supply of support services; creating a single virtual gateway to information for SMEs; making support schemes at EU level more consistent; promoting clusters and networks for SME internationalisation; rationalising new activities in priority markets; leveraging existing EU external policies.

Questions:

7．Would the EU please inform the latest progress made with respect to the internationalization of SMEs and the implementation of the policies as stated in the Communication? Are there important experiences and lessons that the EU would like to share?

EU reply: Currently the European Commission services are working to implement the Communication. One important element that the Communication mentioned as being the predecessor of new measures was the mapping exercise of the existing support services for SME internationalisation in place at the EU, national and even regional level. The first part of this exercise has been completed and, the Commission is currently developing the SME Internationalisation Portal (also mentioned in the Communication). This portal will work as a one-entry-point for SMEs considering internationalisation activities and where the information collected during the mapping on the existing services is uploaded. The portal will be launched before the end of 2013.

8．What are the specific financing and investment protection policies and measures adopted by the EU to support the SMEs' exploitation of the international market?

9．What is the EU's opinion concerning different views on whether it is SMEs or large enterprises that should be given support for their internationalization?

EU reply: Although not prejudging the role and importance of large companies in the economy in general and particularly in internationalisation, the EU has observed that the SMEs need more help in going abroad.

According to a study commissioned by the European Commission7_{, one could see that, in general,}

the smaller the company the larger are the barriers, both internal and external, to internationalisation. Usually SMEs do not have the proper human and financial resources to conduct international activities, while these problems affect less large companies. Furthermore, the same study shows that public support (e.g. provision of information, trainings, advice and consultancy, etc) can indeed play a role in the promotion of greater internationalisation of SMEs. 55% of internationally active SMEs participating in the study mentioned at least one of the four positive options: no internationalisation without support, earlier internationalisation, more internationalisation or better insight in possibilities on foreign markets with support. All public support offered, also to SMEs, has to comply with the EU state aid rules.

7 _{Study on the level of internationalisation of European SMEs,}

Also, by targeting SMEs, a large part of the EU economy is covered. SMEs in the EU represent 99.8% of all enterprises, contributing with 67.4% to employment and 58.1 to value added8_.

3 KEY DEVELOPMENTS IN EU TRADE POLICY (2011-2012) Page 12 (Para 3.10)

Following the political guidance of the 8th WTO Ministerial Conference, the European Union has been in discussions with other WTO members with a view to making progress on services liberalisation. In participating in plurilateral negotiations on trade in services, the European Union is ready to contribute to an ambitious agreement that would attract broad participation and which could be multilateralised in the future.

Questions:

10．Would the EU please inform its considerations for further opening up services sectors within the framework of the plurilateral negotiations on trade in services?

EU reply: The EU recalls that it attaches great importance to progressing the multilateral talks including on trade in services. Given the current situation of the DDA negotiations and in the spirit of the conclusions of the 8th Ministerial Conference, the EU is actively participating in the Trade in Services Agreement negotiations aimed at contributing to the progressive further liberalisation of trade in services. The EU is pleased that the negotiations are firmly anchored in the GATS and that the structure caters for its future multilateralisation. It is however too early to predict the outcome of the negotiation and the commitments that the EU may take in its framework.

11．European countries have great demand for service in trade of traditional Chinese medicine. The key issues in the liberalization of service in trade of traditional Chinese medicine are the accreditation of qualification and market access of practitioners of the industry. What are the policies and guidelines of the EU to promote the accreditation of qualification and market access of practitioners of the service in trade of traditional Chinese medicine?

EU reply: Traditional Chinese medicine is (at least arguably) a branch of medicine and as such falls under the general service sector of medical and dental care (CPC 9312; more precisely, "general medical services", CPC 93121 and "specialised medical services", CPC 93122).

As concerns the EU GATS commitments for this sector, about three quarters of Member States are 'unbound' for mode 1 (cross-border provision), while a majority of Member States have taken at least partial commitments for the establishment of providers of medical services (eight MS are instead in essence 'unbound'). This entails that Chinese doctors may - in certain MS, subject to prior authorisation or membership of a professional organisation – seek to gain access to the EU market by establishing in one of the MS (or by providing cross-border services in the few MS that are open).

However, GATS commitments (even full commitments) do not preclude individual Member States from subjecting the practice of the medical profession (or other professions, for that matter) to the possession of certain professional qualifications or accreditation (degree, minimum training, admission to the profession in the country of origin fo the provider, etc.). This stems from Article VII GATS, which stipulates that "a Member may [not: shall] recognize the education or experience obtained, requirements met, or licences of certifications granted in a particular country". In the absence of any mutual recognition agreements between the EU and China, the decision to recognise the qualifications of a third country providers rests solely with the individual Member State. This is also confirmed by recital 10 of the Professional Qualification Directive (EU Directive 2005/36 of 7 September 2005). Thus, there are no EU-wide policies or guidelines to promote the recognition of the professional qualifications of traditional Chinese doctors, since this is a matter left to individual Member States.

8 _{SME Performance Review 2012, http://ec.europa.eu/enterprise/policies/sme/facts-figures-} analysis/performance-review/index_en.htm#h2-3.

PART III: OTHER QUESTIONS