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									                            BRUSSELS MONITOR
               A Weekly Review of EU Trade Policy Developments Affecting Japan
                                                                                                                                  17 July 2009

                               IN THIS ISSUE

  I.      WTO Watch
          EU and US discuss various WTO and bilateral trade issues

  II.     European Union: Trade
          Negotiations on free trade agreement between EU and Korea arrive at a conclusion of

  III. EC Competition
       LCD makers face investigation by the European Commission

  IV.     European Union: Regulatory
          Impending changes in the EU mobile phone market set to attract more customers

  V.      Dumping Watch
          Conclusion of partial interim review - graphite electrode systems

  VI.     The Week Ahead
   A.     Council
   B.     WTO
   C.     OECD

Brussels Monitor is a product of the Japan Fair Trade Center in cooperation with the international trade practice of the Belgium law firm of Van
Bael & Bellis. All questions concerning its content should be addressed to:

                                                               Van Bael & Bellis
                                                               Avenue Louise 165
                                                            B-1050 Brussels, Belgium
                                                              TEL: 32-2-647-7350
                                                              FAX: 32-2-640-6499


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 I.      WTO Watch

 EU and US discuss various WTO and bilateral trade issues

 On 13 July 2009, a European Commission press release announced that US Trade Representative
 (“USTR”) Ron Kirk and EU Trade Commissioner Catherine Ashton have held discussions in
 Washington DC on various WTO and bilateral trade issues. According to the press release, both sides
 have agreed to intensify their bilateral engagement in order to find solutions that will bring
 meaningful economic benefits to workers, consumers, and businesses on both sides of the Atlantic.

 In a joint statement issued upon the conclusion of the bilateral discussions, Commissioner Ashton
 and USTR Kirk said: “At our first meeting in March [2009], we pledged to redouble our efforts to
 resolve bilateral trade disagreements, some of which we have been discussing for many years.
 Through intensified bilateral engagement, we believe we can find solutions that bring meaningful
 economic benefits to stakeholders on both sides. We instructed our negotiators to identify and exploit
 new opportunities for market-opening and economic integration.”

 Commissioner Ashton and USTR Kirk added that, two months ago, the EU and the US registered
 their “first success” under efforts to intensify bilateral engagement by reaching an agreement on the
 long-standing beef hormones WTO dispute. According to the two officials, the conclusion of this
 agreement “underscored that even disagreements that have persisted for many years can sometimes
 be set on a course towards resolution through pragmatic, problem-solving approaches”.

 In their meeting, Commissioner Ashton and USTR Kirk also discussed steps that the US and the EU
 could take to facilitate the lifting of EU emergency measures, last modified in 2008, requiring that all
 US shipments of long-grain rice be tested prior to entering the EU market for the trace presence of a
 biotech rice product approved in the US but not in the EU. Discussions on this issue among the
 agriculture and trade experts of the European Commission and the US government will continue in
 the coming weeks.

 The two trade officials said that they also exchanged ideas on possible steps to address the WTO
 dispute regarding Section 110(5) of the US Copyright Act (the so-called “Irish music” dispute),
 which relates to music licensing. In addition, the two sides agreed to initiate a “practical dialogue” on
 the trade implications of regulation of chemicals on both sides of the Atlantic, and also discussed the
 recent European Commission Trade Barrier Regulation Report on US online gambling and its
 implications for the WTO rights and obligations of the parties involved.

 The “continuing efforts” of the EU and other WTO Members to reach an agreement on the terms of
 the EU’s importation regime for bananas (which has triggered the WTO’s most long-standing
 dispute) were also discussed, according to the statement released by Commissioner Ashton and
 USTR Kirk. The two officials said that they “share an interest in resolving longstanding disputes on
 banana trade on terms acceptable to all concerned parties, and will work with all parties to this end”.

 The two sides said they plan to closely monitor each of the issues discussed with a view of reviewing
 progress on bilateral relations in September. They added that their discussion also touched upon how
 to cooperate better in preventing bilateral disputes as well as on preparations for the October meeting
 of the Transatlantic Economic Council (“TEC”). Commissioner Ashton was quoted as saying that the
 European Commission is “very encouraged that the [Obama] administration wants to continue the

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 TEC”, which was established during the Bush administration during Spring 2007 to promote greater
 trans-Atlantic trade and investment.

 II.     European Union: Trade

 Negotiations on free trade agreement between EU and Korea arrive at a conclusion of sorts

 On 10 July 2009, the European Commission presented the EU’s 27 Member States with a final
 compromise text of a planned free trade agreement (“FTA”) with South Korea. The draft represents
 “the final compromise package”. Trade diplomats from EU Member States reportedly provided their
 tentative assent to the agreement, although several requested more time to study the details of the
 proposal. Three days later, following talks that took place in the meantime, the parties appear to be
 even closer to finalising the agreement.

 Indeed, on 13 July, President Lee Myung-bak of South Korea announced that negotiations on the
 FTA had been concluded. Prime Minister Fredrik Reinfeldt of Sweden (his country holds the six-
 month rotating Presidency of the European Union), sounded more cautious, saying that there might
 still be some outstanding questions in respect of which some follow-up is necessary before it is
 possible to say that the deal is ready to sign.

 Two issues in particular were said to still cause controversy: duty drawback and rules of origin.
 Under a duty drawback scheme, Korean carmakers are apparently able to import cheap components
 and have all import duties paid on those parts reimbursed if they are in cars destined for the EU
 market. In the week leading up to 10 July, ACEA – the European car makers’ association – repeated
 its concern that this would open the door for cheap imports from China and other Asian countries. It
 is also feared that manufacturers will be encouraged to take their factories out of Europe to places
 such as South Korea.

 Demonstrating strong support for the deal, the Commission rejected ACEA’s criticism. Referring to
 duty drawback concerns, the Commission stated that, among other matters, the deal included a
 safeguard clause that would be triggered if the foreign content of South Korean exports to Europe
 rose significantly.

 The latest version of the agreement would make 97% of trade between the two governments duty-
 free within five years, phase out the EU bloc’s 10% tariff on Korean cars in three to five years and
 eliminate an 8% duty on European cars over the same period.

 It is expected that the agreement will be translated into the Member States’ official languages and
 initialled in September or October 2009. Thereafter, the Council will have to formally make a
 decision, with the agreement then having to be ratified by all 27 legislatures before being
 implemented. Implementation is hoped for during 2010, but could even occur as far away as 2011.

 III.    EC Competition

 LCD makers face investigation by the European Commission

 On 13 July 2009, the European Commission confirmed that, in May 2009, it sent a Statement of
 Objections (“SO”) to a number of companies active in the supply of liquid crystal display (“LCD”)

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 panels, concerning their alleged participation in a cartel in violation of Article 81 EC. The
 Commission has not named the companies involved.

 LCD panels are made of a lower glass plate (a “thin-film transistor”) and an upper glass plate (a
 “colour filter formation”) with liquid crystal injected between the two plates and placed in front of a
 light source to serve as a screen on an electronic device. The thin film transistor LCD is a variant of
 LCD that uses thin film transistor technology to improve the image quality of flat monitors. LCD
 panels are mainly used in displays for mobile telephones, portable music players, digital cameras,
 monitors for notebook and personal computers, and televisions.

 An SO is a formal step in Commission antitrust investigations in which the Commission informs the
 parties concerned in writing of the objections raised against them. The addressee of an SO can reply
 in writing to the SO, setting out all facts known to it which are relevant to its defence against the
 objections raised by the Commission. The party may also request an oral hearing to present its
 comments on the case. The Commission may then take a decision on whether or not the conduct
 addressed in the SO is compatible with the EC Treaty’s antitrust rules. Sending an SO does not
 prejudge the final outcome of the procedure.

 IV.     European Union: Regulatory

 Impending changes in the EU mobile phone market set to attract more customers

 Mobile phone makers will soon be affected by industry’s commitment to provide a common charger
 for mobile phones sold in the EU from 2010 onwards. On 5 June 2009, ten of the world’s largest
 manufacturers signed a Memorandum of Understanding (“MoU”) with the European Commission, to
 produce a common phone charger and mobile phones compatible with this charger. The signatory
 companies, namely, Apple, LG, Motorola, NEC, Nokia, Qualcomm, Research in Motion, Samsung,
 Sony Ericsson and Texas Instruments, collectively occupy 90% of the mobile phone market in the
 EU, where there are approximately 450 million mobile phones in circulation.

 The stated advantage of this MoU is two-fold. First, customers will purportedly pay less for new
 mobile phones because a new charger need not be included with every purchase. Second, since this
 charger can be re-used for different phones, there will be fewer redundant chargers leading to
 reduced environmental waste.

 Mobile phone manufacturers should particularly note that these new mobile phones are to be fitted
 with a micro-USB port and it is only data-enabled phones (those that provide e-mails and internet
 access) that will be directly compatible with the new charger. Older telephones (i.e., those only able
 to send texts and make calls) will require an adaptor to connect to the common charger. Therefore,
 besides providing a business opportunity for USB manufacturers, this new agreement could also
 benefit producers of the adapters required for older phones.

 Businesses should expect a new set of harmonised technical specifications related to the micro-USB
 interface. These specifications are to be developed by the mobile phone industry in conjunction with
 the European Commission, European standardisation organisations and related bodies. The
 specifications will provide for a separate certification of mobile phones and of chargers. A new EU
 standard for mobile phones will be introduced, so as to make the use of mobile phones safer, and
 subject to less radio interference. The MoU does anticipate innovation in technology and the
 agreement will therefore be suitably amended in the future.

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 It is worth noting that since an MoU was voluntarily reached, the EU will not introduce legislation on
 the matter. A copy of the MoU is available at:

 In related news, mobile phone usage is expected to increase in the EU due to new legislation that
 decreases roaming costs for EU users of mobile phones. On 18 June 2009, the EU Parliament and
 Council of Ministers adopted Regulation 544/2009, which extends the validity and scope of the 2007
 EU Roaming Regulation (717/2007). As this is a Regulation, it is directly applicable in all 27
 Member States.

 The price ceiling for calls made and received while roaming incrementally decreases on 1 July 2009,
 1 July 2010 and 1 July 2011 and per-second billing has been introduced, so that customers pay for the
 time actually used. The Regulation also institutes a low EU-“SMS” tariff rate of 0.11 cents for
 roaming customers, with effect from 1 July 2009. It also aims to reduce the price consumers have to
 pay for surfing the web while abroad by regulating the price of data downloads as between operators,
 i.e., wholesale prices, at one euro per mega octet downloaded. If cost savings on data downloads are
 not voluntarily passed from wholesale operators to consumers in the next two years, one could expect
 EU legislation requiring that it be done. Finally, it introduces a cut-off mechanism once phone bills
 reach a certain amount, to protect consumers from unknowingly raising them past levels they do not
 wish to pay.

 With the roaming market becoming more competitive in the EU, the telephone hardware industry
 could expect increased phone usage, and perhaps higher sales of mobile phones and their accessories.

 V.     Dumping Watch

 Conclusion of partial interim review - graphite electrode systems

 On 7 July 2009 the Official Journal published Council Regulation 626/2009 concluding the partial
 interim review of the anti-dumping duty on imports of certain graphite electrode systems originating
 in India.

 The product concerned is graphite electrodes of a kind used for electric furnaces with an apparent
 density of 1.65 g/cm 3 or more and an electrical resistance of 6.0 μΩ.m or less, falling within CN
 code ex 8545 11 00 and nipples used for such electrodes, falling within CN code ex 8545 90 90
 whether imported together or separately, originating in India.

 It is recalled that that the measure currently in force is a definitive anti-dumping duty imposed by
 Council Regulation 1629/2004 on imports of certain graphite electrode systems originating in India.

 The request was lodged by Hindustan Electro Graphite Limited (“HEG”), an Indian exporting
 producer subject to the anti-dumping measure in force. The partial interim review was initiated based
 on prima facie evidence provided by the company that, as far as they were concerned, the
 circumstances on the basis of which measures were established had changed and that these changes
 were of a lasting nature.

 HEG was found to be dumping at a de minimis level during the review investigation period. It was,
 however, noted that while the dumping margin established for the company concerned in the original
 investigation was 22.4%, the anti-dumping duty presently in force against this company was 0%.

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 This results from the fact that there are parallel countervailing duties in force on imports of the
 product concerned. In these circumstances, the finding of de minimis dumping had no immediate
 impact on the level of the measures currently in force. Therefore, the Council decided to conclude the
 partial interim review without amending the level of the anti-dumping measure in force.

 Council Regulation 626/2009 entered into force on 8 July 2009.

 VI.     The Week Ahead

 A.      Council

 •       24-25 July 2009: Informal Environment Council (Åre)

 B.      WTO

 •       21-22 July 2009: APEC Meeting of Ministers Responsible for Trade, Singapore

 C.      OECD

 •       22-23 July 2009: Round Table on Sustainable Development, with the participation of
         the Secretary-General. Singapore.

 •       23-24 July 2009: Sustainability of Bio-based Products, workshop organised by the
         Environment Directorate. Montreal, Canada.

 •       23-24 July 2009: International Society of Quality of Life Studies, conference organised by the
         ISQOLS within the framework of the Global Project on “Measuring the Progress of Societies”.
         Workshop on Measuring Subjective Well-being: An Opportunity for NSOs? Florence, Italy.


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