G7 Information Centre
Summits |  Meetings |  Publications |  Research |  Search |  Home |  About the G7 and G8 Research Group
Follow @g7_rg

Analytical Studies

Country Objectives for the Genoa Summit Meeting 2001
Euorpean Union

Contents:
Political Data
Economic Data
Objectives for G8 Genoa Summit 2001

Political Data

The Commission:

President of European Commission: Romano Prodi
Vice-President of the European Commission – Administrative Reform: Neil Kinnock
Vice-President of the European Commission – Relations with the European Parliament, Transport and Energy:  Loyola de Palacio
EU Commissioner for Competition: Mario Monti
EU Commissioner for Agriculture, Rural Development and Fisheries:  Franz Fischler
EU Commissioner for Enterprise and Information Society: Erikki Liikanen
EU Commissioner for Internal Market, Taxation and Customs Union:  Frits Bolkestein
EU Commissioner for Research: Philippe Busquin
EU Commissioner for Economic and Monetary Affairs: Pedro Solbes Mira
EU Commissioner for Development and Humanitarian Aid: Poul Nielson
EU Commissioner for Enlargement: Gunter Verheugen
EU Commissioner for External Relations: Chris Patten
EU Commissioner for Trade: Pascal Lamy
EU Commissioner for Health and Consumer Protection: David Byrne
EU Commissioner for Regional Policy: Michel Barnier
EU Commissioner for Education and Culture: Viviane Reding
EU Commissioner for Budget: Michelle Schreyer
EU Commissioner for Environment: Margot Wallstrom
EU Commissioner for Justice and Home Affairs: Antonio Vitorino
EU Commissioner for Employment and Social Affairs: Anna Diamantopoulou

European Parliment

President of the European Parliament:  Nicole Fontaine

European Council

EU Presidency (1st half of 2001): Goran Persson- Sweden, Prime Minister
EU Presidency (2nd half of 2001): Belgium
EU Secretary General: Javier Solana

Economic Data

N.B.:  Euro-zone: Belgium, Germany, Greece (from January 2001), Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal and Finland. euro-zone data up to end 2000 cover the eleven Member States; with Greece's entry into the euro-zone from the beginning of 2001, they cover the twelve Member states. The euro-zone is treated as an entity regardless of its composition.

N.B.: EU15 is composed of the Euro-zone countries plus the remaining three members of the EU: the United Kingdom of Great Britain, Sweden, and Denmark.

Inflation

Euro-zone annual inflation rose from 2.9% in April 2001 to 3.4% in May 2001, Eurostat – the Statistical Office of the European Communities in Luxembourg – reports. A year earlier the rate was 1.9%.

EU15 annual inflation rose from 2.6% in April 2001 to 3.1% in May 2001. A year earlier the rate was 1.7%.

EEA annual inflation rose to 3.1% in May.

Inflation in Member States

In May 2001, highest annual rates were in the Netherlands (5.4%), Portugal (4.9%) and Spain (4.2%); lowest rates were in the United Kingdom (1.7%), France (2.5%) and Denmark (2.8%).

Compared with April 2001, annual inflation rose in thirteen Member States and fell in two. Compared with May 2000, the biggest relative rises were in the United Kingdom (0.5% to 1.7%), the Netherlands (2.0% to 5.4%), Sweden (1.3% to 3.1%) and Germany (1.5% to 3.6%); the only relative fall was in Ireland (5.1% to 4.1%); in Denmark (2.8%), the rate was unchanged.

Lowest 12-month averages up to May were in the United Kingdom (1.0%), Sweden (1.7%) and France (1.9%); highest were in Ireland (4.9%), Portugal (4.0%) and Spain (3.9%).

USA and Switzerland

Annual inflation rose from 1.2% to 1.8% in Switzerland and from 3.3% to 3.6% in the USA. These indices are not strictly comparable with EU harmonized indices.

--Excerpt from:  Eurostat-the Statistical Office of the European Communities in Luxembourg,

News Release No. 66/2001, June 18, 2001, May 2001: Euro-zone annual inflation up to 3.4%; EU15 up to 3.1%, Available online at http://europa.eu.int/comm/eurostat/Public/datashop/print-product/EN?catalogue=Eurostat&product=2-18062001-EN-AP-EN&mode=download

Account Deficit

The first estimates for the first quarter of 2001 put the EU15 external current account deficit at 16.7 billion euro, as compared with a deficit of 17.7 billion euro in the first quarter of 2000 and a deficit of 15.0 billion euro in the fourth quarter of 2000.

In the first quarter of 2001 the EU15 external balance of trade in services recorded a deficit of 2.3 billion euro as compared with a deficit of 1.4 billion euro in the first quarter of 2000 and a deficit of 3.2 billion euro in the fourth quarter of 2000. 

This provisional data, issued by Eurostat, Statistical Office of the European Communities in Luxembourg, will be subject to revision.

--Excerpt from:  Eurostat-the Statistical Office of the European Communities in Luxembourg, News Release No. 65/2001, June 14, 2001, First estimates for the first quarter of 2001: EU15 current account deficit 16.7 bn euro; 2.3 bn euro deficit on trade in services, Available online at: http://europa.eu.int/comm/eurostat/Public/datashop/print-product/EN?catalogue=Eurostat&product=2-14062001-EN-AP-EN&mode=download

External Trade Deficit

The first estimate for euro-zone trade with the rest of the world in April 2001 was a 3.0 billion euro deficit, compared with a surplus of 0.2 bn in April 2000. The revised2 March 2001 surplus was 3.2 bn, against +3.6 bn in March 2000. euro-zone trade recorded a deficit of 5.6 bn for the first four months of 2001, compared with -1.8 bn in 2000.

The first estimate for April 2001 extra-EU15 trade was a 10.4 billion euro deficit, compared with -8.4 bn in April 2000. In March 2001 there was a revised2 deficit of 5.7 bn, against -4.0 bn in March 2000. There was a deficit estimated at 35.7 bn in the first four months of 2001 compared with -32.7 bn in 2000. The figures come today from Eurostat, Statistical Office of the European Communities in Luxembourg.

Year on year trade growth was steady in April 2001, with all flows growing by around 10%.

EU15 January-March 2001 detailed results

EU15 trade flows grew across all main product groupings except exports of crude materials and energy. The energy deficit continued to increase (-29.1 bn in Jan-Mar 2001 compared to -25.5 bn in Jan-Mar 2000), while the trade balance for machinery and vehicles has improved (+12.7 bn compared with +7.4 bn).

EU15 trade flows with all its major partners grew, except for exports to Turkey and imports from Japan. The most notable increases were in exports to Russia (+42%), China (+31%) and the Czech Republic (+25%) and in imports from the Czech Republic and Poland (both +25%), Russia and China (both +23%) and Hungary (+22%).

EU15 trade with the USA was characterised by a slight increase in the EU surplus (+7.9 bn in Jan-Mar 2001 compared to +7.6 bn in Jan-Mar 2000) while EU15 trade with Japan showed a decrease in the EU deficit  (-8.7 bn compared to -10.0 bn). The highest EU15 trade deficit in the first three months of 2001 was recorded with China (-11.6 bn) and the highest surplus was registered with the USA.

Year on year trade grew in all Member States, except Portugal and Sweden, and Luxembourg (for exports). Germany registered the largest surplus (+19.7 bn euro); Ireland had the second largest surplus (+7.9 bn), with the value of exports 50% greater than imports. The United Kingdom registered the largest deficit (-15.5 bn), followed by Spain (-8.7 bn).

--Excerpt from:  Eurostat-the Statistical Office of the European Communities in Luxembourg, News Release No. 68/2001, June 20, 2001, April first estimates, March revised results:Euro-zone external trade deficit 3.0 bn euro in April 2001; 10.4 bn euro deficit for EU15, Available online at: http://europa.eu.int/comm/eurostat/Public/datashop/print-product/EN?catalogue=Eurostat&product=6-20062001-EN-AP-EN&mode=download

GDP Growth

Euro-zone and EU15 GDP both grew by 0.5 % during the first quarter of 2001, compared to the previous quarter, according to first estimates out from Eurostat, the Statistical Office of the European Communities in Luxembourg. These figures follow a rise of 0.6 % both for the euro-zone and the EU15 in the fourth quarter of 2000.

Compared to the first quarter of 2000, GDP grew by 2.5 % in both the euro-zone and the EU15 during the first quarter of 2001, after having recorded a growth of 2.9 % in both areas in the previous quarter.

Growth of household final consumption expenditure and drop of investments

Compared to the previous quarter, the growth of household final consumption expenditure slightly accelerated during the first quarter of 2001, reaching 0.3 % in the euro-zone (compared to +0.2 % in the fourth quarter of 2000) and 0.4 % in the EU15 (+0.3 % in the previous quarter). Investments dropped by 0.9 % in the euro-zone and 0.7 % in the EU15 during the first quarter 2001, after having recorded a growth of 0.3 % and 0.5 %, respectively, during the fourth quarter of 2000. Moreover, in the first quarter of 2001, export growth recorded a significant deceleration in the euro-zone and in the EU15 (+0.1 % and +0.2 %, respectively, after a growth of +3.0 % and +2.7 % during the fourth quarter of 2000), while imports dropped by 1.5 % and 0.9 % (+2.7 % and +2.4 %, respectively, in the previous quarter).

Industry recorded the strongest growth

During the first quarter of 2001, the growth of the total gross value added remained stable at 0.7 % both in the euro–zone and in the EU15. Compared to the first quarter of 2000, the total gross value added grew by 2.8 % in the euro–zone and by 2.9 % in the EU15.

Compared to the previous quarter, Industry (including energy) recorded the highest growth among all branches during the first quarter of 2001, with a 1.5 % rise in the euro–zone and a 1.3 % rise in the EU15. Trade, transport and communications grew by +0.9 % and +0.8 %, respectively, and Financial and business services by +0.7 % and +0.9 %. Construction recorded the lowest result among all branches dropping by 1.3 % in the euro–zone and by 1.5 % in the EU15.

US growth: +0.3 % during the first quarter of 2001

The US economy grew by 0.3% during the first quarter of 2001, confirming the results of the fourth quarter of 2000. Growth of household final consumption expenditure remained stable at 0.7 %, while investments accelerated (+0.6 % compared to +0.4 % in the fourth quarter of 2000). Exports and imports continued to decrease, the drop being more significant in imports (-2,3 %) than in exports (-0.4 %).

Compared to the fourth quarter of 2000, GDP in the US grew by 2.6 % compared to 3.4 % in the fourth quarter of 2000.

--Excerpt from:  Eurostat-the Statistical Office of the European Communities in Luxembourg, News Release No. 63 /2001, June 8, 2001, First estimates for the first quarter of 2001:Euro-zone and EU15 GDP up by 0.5%; +2.5% compared to the first quarter of 2000, Available online at: http://europa.eu.int/comm/eurostat/Public/datashop/print-product/EN?catalogue=Eurostat&product=2-08062001-EN-AP-EN&mode=download

Unemployment

euro-zone seasonally-adjusted unemployment fell to 8.3% in April 2001 from 8.4% in March 2001, Eurostat – Statistical Office of the European Communities in Luxembourg reports. In April 2000 it was 9.0%.

The EU15 unemployment rate fell to 7.6% in April 2001 from 7.7% in March 2001. In April 2000 it was 8.4%.

Lowest rates were registered in Luxembourg (2.4%), the Netherlands (2.4% in March), Austria (3.7%) and Ireland (3.8%). Spain's 13.1% remained the EU's highest rate.

In the last twelve months, the most important relative falls were recorded in the Netherlands (from 3.2% to 2.4% in March), in Sweden (from 6.2% to 4.9%), Ireland (from 4.4% to 3.8%) and France (from 9.8% to 8.5%).

In April 2001, the unemployment rate of the under-25s was 16.4% in the euro-zone and 15.3% in the EU15. This compares to 17.5% and 16.5% respectively a year earlier. In April 2001, it ranged from less than 6% in the Netherlands (in March), Austria and Ireland to about 25% in Spain and about 30% in Italy (in January).

US unemployment stood at 4.5% and the Japanese rate at 4.8%.

Eurostat estimates that in April 2001, 11.4 million men and women were unemployed in the euro-zone and 13.2 million in the EU15. These are seasonally-adjusted figures in line with ILO criteria.

--Excerpt from:  Eurostat-the Statistical Office of the European Communities in Luxembourg, News Release No.  61/2001, June 6, 2001, April 2001: Euro-zone unemployment fell to 8.3% ; EU15 down to 7.6%, Available online.

Education

Education levels have been rising in all the countries of the EU for more than 30 years. For instance, whereas less than half those aged 50 to 64 in 1999 in the EU had completed upper secondary education, this proportion was more than 70% for those aged 25 to 29. Despite this improvement, nearly one in five of those aged 18 to 24 was still leaving the education system on or before completing lower secondary education. Two reports (Eurostat, Statistics in focus , Population and social conditions, no 6/2001 "Education in the regions of the European Union" and Eurostat, Statistics in focus , Population and social conditions, no 7/2001 "Educational attainment levels in Europe in the 1990s - some key figures") published by Eurostat, the Statistical Office of the European Communities in Luxembourg, present the trends in education levels in the Member States in the 1990s and the situation in the regions of the EU at the end of the 1990s:

Nearly 90% of young Danes complete upper secondary education

While, for the EU as a whole in 1999, 71% of young people aged 25 to 29 had completed upper secondary education, this figure was over 80% in Denmark (89%), Sweden (87%), Finland (85%), Austria (85%) and Germany (83%). Portugal (35%), Spain (58%) and Italy (60%) had the lowest rates.

This improvement was recorded in all Member States and was accompanied by a certain narrowing in the differences between the various countries, since it was the countries in the south of the EU (Portugal, Spain, Italy and Greece), in which the education levels were lowest in 1999 amongst those aged 50 to 64, which showed the most rapid improvements, notably amongst young people aged 25 to 29.

Finland and Sweden top of the list for higher education qualifications

In 1999, higher education qualifications represented an EU average of 21% of the population aged 25 to 64. Finland and Sweden had the highest proportion of higher education qualifications in 1999, with rates of 31% and 29% respectively. The proportion of higher education qualifications amongst the population aged 25 to 64 was lowest in Italy and Portugal (10% each) in 1999, but also in Austria (11%), where the percentage of persons aged 25 to 64 having completed higher education (75%) was nevertheless above the average for the EU (60%).

In the EU, the proportion of higher education qualifications was slightly higher amongst men aged 25 to 64 than amongst women, with rates of 22% and 19% respectively in 1999. This situation is common to most Member States, notably Germany, where 28% of men held degrees compared with 18% of women. In contrast, 34% of Finnish women aged 25 to 64 had higher education qualifications, compared with 28% of Finnish men.

Nearly one young Portuguese in two leaves school after completing lower secondary education

Despite the notable progress in education, just over 20% of young Europeans aged 18 to 24 left school on or before completing lower secondary education, which is in most cases the end of compulsory education. However, there are major differences between the Member States.  Whereas in Sweden (with a rate of 7%), Finland (10%), Austria and Denmark (12% each), only one young person in ten left school at this stage, it applied to more than one young person in four in Italy (27%) and Spain (29%) and almost one young person in two in Portugal (46%).

This early end to schooling was more frequent amongst men aged 18 to 24 than amongst women in all the Member States, with the exception of Germany and Austria.

Major differences in education levels amongst the regions

Some differences in education levels amongst the population of the EU emerge more clearly at regional level. For instance, the percentage of persons aged 25 to 59 having completed only lower secondary education in 1999 ranged from under 10% in the new German Länder to 80% or more in all the Portuguese regions except Lisbon and the Tagus Valley.

In general terms, there were major differences between the regions of the north of the EU and those of the south. In all the regions of Germany, Austria, Sweden, Denmark and Finland, less than a third of adults aged 25 to 59 had completed only lower secondary education, whereas the figure was more than half in almost all the regions of Italy, Greece, Spain and Portugal.

--Excerpt from:  Eurostat-the Statistical Office of the European Communities in Luxembourg, News Release No.  57/2001, May 28, 2001, Education levels in the EU constantly rising …but one young European in five drops out after completing lower secondary education,  Available online at: http://europa.eu.int/comm/eurostat/Public/datashop/print-product/EN?catalogue=Eurostat&product=3-28052001-EN-AP-EN&mode=download


Objectives for G8 Genoa Summit 2001

1) Disarmament, Nonproliferation, Arms Control

The two main issues dominating the disarmament/arms control area are the US National Missile Defense program and the European Rapid Reaction Force. 

National Missile Defense

The National Missile Defense program (NMD) is a US proposal that would use land-based or sea-based missiles to intercept and destroy nuclear missiles.

The 1972 Anti-Ballistic Missile treaty (ABM) restricts tests and deployments of nation-wide strategic anti-ballistic defense systems.  The US is currently consulting its European allies about modifying or abandoning the treaty.  The topic was discussed at the EU-US Gothenburg Summit in June 2001.

The European reaction to the US missile defense system is mixed and there is not a European-wide consensus on the issue.  While some member states appear willing to consider the proposal (most notably the UK, Spain and Italy), other countries harbour concerns about the repercussions to other arms control treaties, the possibility of a renewed arms race, and worsening relations with Russia.  To-date, the EU has not released a policy statement regarding missile defense.

NMD is likely to dominate the G8 Summit since all the main players involved in the dispute will be in attendance.  Although the EU remains divided, some common ground is beginning to develop:

“We are hoping that the United States will continue to play an active role in our partnership and that the United States will be able to resist the temptation of protectionism and unilateralism.”

Rapid Reaction Force (RRF)

The EU's failure to intervene effectively in the Balkan conflict without US assistance raised questions within the EU about the continent's conflict management ability.

In December 2000, at the Nice Summit the European Union agreed to create a EU Rapid Reaction Force of 60,000 soldiers for peacekeeping and humanitarian missions by 2003.  The RRF will not be a standing army and national governments will retain control over their troops if they are deployed.

EU member states have pledged troops to the RRF including Germany (13,500), United Kingdom (12,500), France (12,000), Italy and Spain (6,000), the Netherlands (5,000), Greece (3,000), Finland and Sweden (2,000), Belgium, Ireland and Portugal (1,000), and Luxembourg (500).

President Prodi stated in December 2000 that:

“The union must develop an autonomous capacity to take decisions and, where NATO itself is not involved, to launch and conduct military operations under EU command.”

The three main roles for the RRF are:

  1. Provide assistance to civilians threatened by a crisis outside the EU;

  2. Respond to appeals by the UN for peacekeeping forces;

  3. Intervene to separate warring factions.

The US has raised concerns that a RRF will undermine NATO and endanger the special relationship Washington has with Britain.  In addition, the US is worried that its influence over European defense thinking may weaken.

These fears were clearly expressed by the former US Secretary of Defense William Cohen, when he warned that if the RRF were set up as a competing force, NATO could become “a relic of history”.

EU officials have repeatedly stressed that the RRF is not a substitute for NATO, and that NATO will remain the primary defense organization in Europe.  Instead, the RRF is designed to complement NATO and would only be deployed if NATO were not involved. 

President Prodi stated in January 2001 that:

“An autonomous security capacity will not weaken our security ties with the United States.  On the contrary, it should make Europe a more reliable partner.”

At the G8 Summit, the US has a vested interest in raising the issue the RRF with the EU.  The EU and US will probably engage in a dialogue to clarify and define the roles of NATO and the RRF within the sphere of European security. 

2) Environment

Kyoto Protocol

On April 29, 1998, John Prescott representing the Presidency of the European Union Council of Ministers and Ritt Bjerregaard, European Commissioner for the Environment signed the Kyoto Protocol on Climate Change on behalf of the European Union.

Global climate change and the Kyoto Protocol are prominent policy areas for the EU.  In March 2000, the European Commission created the European Climate Change Program (ECCP) to develop policy and an emissions trading scheme in order to ensure that the EU achieves the 8% reduction in emissions target by 2008-12 as outlined in the Kyoto Protocol.

In June 2001, a report from the ECCP indicated that the EU could meet its Kyoto target without undue costs on the European economy.  The ECCP has also created a multi-stakeholder consultative process involving industry, non-governmental organizations (NGOs) and experts from member states to focus on emission reductions and emissions trading within the EU.

The EU has repeatedly reaffirmed its support for the Kyoto Protocol and remains committed to ratifying the Kyoto Protocol in Rio de Janeiro in 2002.  In March 2001, EU environment ministers reaffirmed the EU's commitment to reach an agreement on climate change by the July 2001 conference in Bonn.  President Prodi reaffirmed this position in June 2001 following the Gothenburg Summit between the EU and the US.

The decision by the United States to withdraw from the Kyoto Protocol remains an important point of disagreement between the EU and the United States and is likely to be a major source of contention at the G8 Summit.

The EU Environment Commissioner, Margot Wallstrom, criticized the US decision in March 2001 and her statement underscores the importance that the EU attaches to the Kyoto Protocol:

“The US must understand that this (the Kyoto Agreement) is not a marginal issues for the EU.  It has implications for external relations including trade and economic affairs, and it cannot be played down.”

A further statement by the EU Environment Commissioner in reaction to the June 2001 speech by President Bush on climate change indicates that the EU is likely to proceed with the Kyoto Protocol regardless of the US policy stance. 

“We regret that President Bush continues to reject the Kyoto Protocol. Abandoning the Kyoto Protocol would mean postponing international action to combat climate change for years – and we are already late…The EU ministers have already confirmed that they stand firm behind the Kyoto Protocol and are ready to proceed with the ratification of it. Without the US, the Protocol will be less effective of course since they account for a large part of world emissions.”

The EU refutes key US policy positions by affirming the validity of scientific evidence presented in the IPCC Third Assessment Report, the need for clear targets and timetables for emissions cuts, and the position that developing nations should not be included in the initial round of emission cuts.  In addition, the EU states that abandoning the Protocol is unacceptable and renegotiating a new agreement would result in an unnecessary delay.

Following the Gothenburg Summit in June 2001, President Prodi cited major differences between the EU and the US positions. 

“There is no bigger common challenge for our planet than climate change… We remain deeply concerned about the US position on the Kyoto protocol. We simply cannot go back on the 10 years of international efforts.”

The EU and the US agreed at the summit to appoint a special group to discuss ways to bridge the difference between the two policy positions.

At the G8 Summit, the EU is likely to take a firm line against the US. A statement by President Prodi at the foreign ministers' meeting in June 2001 in Luxembourg indicates an increasingly confident European negotiating position:

“Europe will talk with the United States as equal partners because Europe is already becoming more authoritative and assertive on the stage of world politics.”

3) Health:

In February 2001, the European Commission approved an Action Plan to combat communicable diseases (HIV/AIDS, malaria, and tuberculosis) over the period 2001-2006.  The main elements of the plan include:

President Prodi reinforced the EU's commitment to this issue by stating:

“I congratulate the EU Member States on this timely decision and I call on all our partners (the USA and other developed nations) to join the EU in implementing this plan.”

In June 2001, the European Commission tabled proposals designed to clarify the rules surrounding access to life-savings drugs by needy countries including compulsory licensing, general exceptions, tiered-pricing and pharmaceutical data protection.  The proposals were presented to the WTO members at the Council of TRIPS in June 2001.

The EU Trade Commissioner, Pascal Lamy, stated:

“…We must ensure that needy countries are able to use the flexibility these rules provide to access life-savings drugs at affordable prices.  Whilst we acknowledge that patents are essential to encourage investment in the development of new medicines, we need to interpret and apply the rules in such a way as to support developing countries in their battle against killer diseases.”

In addition, the EU is encouraging the pharmaceutical industry to commit to a global tiered pricing system in order to make affordable to the poor medicines to combat HIV/AIDS, malaria and tuberculosis.

The EU is supportive of the call for action by the United Nations on April 26, 2001 to address the global developmental, economic and social crises caused by HIV/AIDS, tuberculosis and malaria.   The EU agrees that prevention and effective interventions should be available for all those in need.

At the G8 Summit, the EU is likely to continue to pursue a favourable TRIPS policy towards LDCs and will probably be supportive of initiatives involving alleviating communicable diseases.

4) Trade

General Electric and Honeywell Merger

In October 2000, General Electric (GE) agreed to acquire Honeywell in a $43 billion transaction.  American and Canadian regulators granted regulatory approval while the EU Competition Commissioner, Mario Monti, expressed reservations about the merger.  European law allows the EU to block mergers between companies who conduct more than $225 million in business in Europe. In addition, the EU can block or force changes to mergers if the combined companies have more than $4.3 billion in sales (even if the companies are not based in Europe).

The major concern surrounding the merger was the Commission's fear that GE Capital Aviation Services (Gecas) would favour Honeywell avionics and non-avionic products in the production of new planes.  Gecas is the largest aircraft lessor in the world and buys almost exclusively GE jet engines. 

Originally, GE offered to sell parts of Honeywell that generated about $2.2 billion in sales and to separate the leasing unit from GE Capital.  This proposal fell short of the Commission's wish for the sale of a part of Gecas to either shareholders or industry rivals.  Additional offers included a proposal for GE to sell about 20 percent of Gecas to a noncompetitor but the Commission rejected the offer because it was unclear whether the share block conferred voting rights or could be sold or transferred without GE's consent.

In July 2001, European antitrust officers supported the Competition commissioner's plan to block the GE/Honeywell merger. On July 3, 2001, the European Commission formally prohibited the the GE/Honeywell merger.

The rejection of the GE/Honeywell merger is the first time the EU has blocked a deal that has won US regulatory approval.

In 2000, US regulators acted unilaterally in barring Air Liquid SA and Air Products & Chemicals Inc from buying BOC Group PLC for $12.9 billion after they had obtained EU approval.

The merger has highlighted substantial differences in the manner in which merger review and procedures are conducted in the US and the EU.  At the G8, the failure of the GE/Honeywell merger to win regulatory approval is likely to intensify discussions surrounding a super-national regulatory body that would be charged with approving large, trans-Atlantic mergers. 

‘Anything But Arms' Initiative

In February 2001, the EU approved the European Commission's ‘Anything But Arms' initiative.  This initiative will allow 48 of the word's poorest countries tariff-free access to the EU markets for all products with the exception of arms. In March 2001, duties and quotas were eliminated for most products (with the exception of sugar, rice, and bananas). All other tariffs and quotas will be eliminated by 2005.

At the 3rd United Nations-Least Developed Countries (LDCs) conference sponsored by the EU in May 2001, the EU outlined more trade measures to help integrate LDCs into the global economy. The main initiatives include:

At the G8 Summit, the EU can be expected to expand the initiative to include other countries at the G8 Summit as well as pursue the initiative at the new round of WTO negotiations. Trade Commissioner Lamy stated:

“…the firm steps taken at this conference are a testament to the EU's determination to do all it can to ensure that the interests and needs of developing countries, and in particular the least developed among them, are at the centre of the world trading system and are fully taken on board in the context of a new round of WTO negotiations.”

WTO Negotiations

At the Gothenburg Summit in June 2001, trade liberalization was an important topic of discussion between the US and the EU. The EU and the US are participating in a joint EU-US initiative to create a new round of WTO negotiations to begin in the autumn of 2001 in Qatar.

The major focus between the two parties at the G8 Summit is likely to be the creation of conflict resolution mechanisms in order to avoid future disputes similar to the banana trade dispute.

5) Development

Debt Reduction

The European Commission is the largest contributor to the enhanced Highly Indebted Poor Countries (HIPC) initiative.  In April 2001, the Commission adopted a proposal to eliminate all debt by ACP least developed highly indebted poor countries on Special Loans. The initiative will cost approximately €60 million.

Debt reduction for Least Developed Countries (LDC) combined with the EU's commitment to integrate LDCs into the world economy is likely to be an important agenda item for the EU at the G8 summit.

Other Issues

Digital Divide

The European Union (EU) continues to support initiatives regarding the Digital Divide.  The EU has been a full partner in the DOT force and has consistently supported all the initiatives outlined in the Okinawa Charter on Global Information Society.

In June 2001, the European Parliament called for additional measures to narrow the digital divide between rich and poor countries.

World Economy

The EU currently faces a mixed economic situation. 

The unemployment rates decreased in the first quarter of 2001.

At the G8 Summit, the EU will likely focus on discussions and reaching agreements with the other G8 members on common policies for coping with the economic slowdown the global market.

Trans-national Crime, Drugs and Terrorism

The main concerns of the EU are trafficking of human beings (especially in the form of the sex trade), illegal drug trafficking, and international terrorism.

The Council of Ministers of the EU adopted the STOP program to combat Human Trafficking.  The STOP program aims to encourage and reinforce networks and practical co-operation between persons responsible for action against the trade in human beings and the sexual exploitation of children in the Member States. It also seeks to improve and adapt the training and skills of these persons.

At the G8 Summit, the EU might introduce trafficking of human beings as a new pressing international issue worthy of discussion in this forum, and possibly ask for discussion on a formal international agreement on how to implement previous international treaties condemning this practice.

Conflict Prevention and Human Rights

The European Union firmly believes in the connection between human rights and the absence and prevention of conflict.  At the Human Rights Forum that took place in Brussels between May 26 and 28, 2001, Chris Patten, Commissioner for External Affairs stated:

“Instead of addressing merely the symptoms of conflict, methods must be developed to identify and tackle their root causes.  The link between conflict prevention and the promotion of human rights and democracy is abundantly clear. Just as denying basic rights fans the flames of conflict, helping to guarantee those rights can prevent conflict arising in the first place. In the aftermath of violence, concrete Community assistance can help rebuild society and prevent the recurrence of disputes.”

In the EU's Communication on Conflict Prevention, a series of concrete proposals to improve the performance of the EU in this area is presented, including the creation of EuropeAid to promote the main goals of the EU's Conflict Prevention and Human Rights policy through financial assistance:

At the G8 Summit, the EU will likely focus on promoting the achievement of Human Rights and Democratization in places such as FYR Macedonia, the Middle East and Africa.

Illegal Migration

In October 1999, at the EU Summit in Tampere the EU established its main policy on illegal migration. The policy was further developed in a working paper published in November 2000 that called for further harmonization of policies as well as improved management of migration flows.  The paper reiterated the need for EU countries to work more effectively with source countries of immigration to reduce emigration pressures, as well as to promote the integration of immigrants into EU society. The EU also set up a High Level Working Group on Asylum and Migration to develop Action Plans for the EU.

The issue of illegal migration is a real and pressing need within Europe due to the exodus from the Balkans over the past few years.  Illegal migrants are posing serious problems for police and frontier enforcement forces in countries such as Austria, Italy, Greece and Germany. In Italy, there are fears that the economy will not be able to sustain such large influxes of migrants.

In the context of the G8 gathering, the EU could be expected to raise the issue of illegal migration. However, the issue is unlikely to reach the main agenda, due to the presence of other more pressing topics such as the NMD and the debate over the Kyoto Protocol.

Written by Jason Wong and Oana Dolea, European Union Team, University of Toronto G8 Research Group, June 29, 2001

G8 Centre
Top
This Information System is provided by the University of Toronto Library and the G8 Research Group at the University of Toronto.
Please send comments to: g8@utoronto.ca
This page was last updated February 09, 2007.

All contents copyright © 1995-2004. University of Toronto unless otherwise stated. All rights reserved.