Geneva  - The European Communities should further liberalize its services and agricultural sector to achieve a robust recovery from the downturn leading to sustained economic growth, the World Trade Organization said in a report Monday.

Liberalization of services should be done at both the internal EC level and with third countries. The WTO secretariat, in its trade policy review, also said the EC should reduce tariffs on agricultural imports and subsidies on exports.

This would advance the full establishment of the EC internal market, the WTO said.

The services sector is the backbone of the EC economy, with manufacturing taken up a smaller and decreasing part of GDP.

Real GDP growth in the EC was 3 per cent on an annual average during 2006-07, which the WTO deemed to be a generally good performance.

This, however, fell to an estimated 1 per cent in 2008 partly due to the global financial crisis. Growth is set to further contract in 2009.

The EC accounts for some 17 per cent of world merchandise trade, the WTO said, and is the world's leading exporter and the second-largest importer of goods.

The EC trade policy review is conducted every two years.

Recent WTO meetings on the services sector concluded, a spokesman told reporters on Monday, that problems leading to the global financial crisis did not stem from deregulation related to the liberalization of trade in services as pushed through in previous agreements of the global body. (dpa)