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WTO Members Clinch Agriculture Export Competition, Weigh Next Steps for Negotiating Future
International Center for Trade - 19 December 2015
Trade ministers clinched a deal to eliminate agricultural export subsidies this Saturday, following a five-day meet in the Kenyan capital of Nairobi. The WTO Ministerial Conference, the biennial highest decision-making gathering of the multilateral trade system, also agreed a series of other deliverables on farm trade and least developed country issues, while ultimately leaving open the question of how the WTO?s negotiating arm will evolve. The Nairobi package includes new ministerial decisions covering a special safeguard mechanism for developing countries; a decision on export subsidies and other ?export competition? elements; a decision on cotton; public stockholding for food security purposes. The decisions, which are legally binding, represent the ?most significant outcome on agriculture? seen in the WTO?s 20-year history, Azev?do told members.
The agreement disciplining agricultural export competition, for example, has been lauded as ?historic? by trade officials - an achievement that eluded the trade system for 60 years since the GATT imposed similar curbs on export subsidies for industrial goods. Unsurprisingly deep divisions on the subject among members persisted up to the final hours of the ministerial, requiring round-the-clock negotiations. On agricultural matters, despite fundamental differences, members managed to bridge their divides? and achieved a result that is likely to have significant ramifications for farm trade and for least developed countries? participation in global trade flows.
?We recognize that many Members reaffirm the Doha Development Agenda, and the Declarations and Decisions adopted at Doha and at the Ministerial Conferences held since then, and reaffirm their full commitment to conclude the DDA on that basis. Other Members do not reaffirm the Doha mandates, as they believe new approaches are necessary to achieve meaningful outcomes in multilateral negotiations. Members have different views on how to address the negotiations,? the declaration reads.
In effectively acknowledging the opposing viewpoints without reconciling them ? agreeing to disagree - the declaration has shed little light on what lies ahead for the negotiating function of the global trade body, which has long struggled to move out of the shadow cast by the continued lack of resolution in the Doha Round trade talks. The drafting of Part 3 in the ministerial declaration - on the WTO?s future - now presents both a challenge and an opportunity for members, without yet clarity on how to go about them.
?We have to be clear-sighted of the situation we?re in today,? WTO Director-General Roberto Azev?do told members in the closing ceremony. ?We have to face up to this problem. We have to address it.? The ministerial declaration does note some areas of potential agreement, not least in the ?strong commitment? that all members have to continue negotiating the Doha Round issues - while at the same time noting that members do not share the same view of whether they want to continue this work using the existing Doha structure.
The declaration specifically refers to agriculture - domestic support, market access, and export competition - as well as the other two core issues of industrial market access and services as issues where members aim to advance work. It also mentions rules - an area that saw much negotiation but no separate substantive decisions at this ministerial - as well as development and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement issues. The declaration states that this ?future agenda? should include work on the areas
that did see substantive decisions at this ministerial, and that future work will keep development ?at its core? with special and differential treatment ?integral? to it. Officials have now been instructed to ?find ways to advance negotiations,? with regular reports from the Director-General to the General Council, which is the WTO?s highest-making decision body under the ministerial conference.
Hours before the ministerial began on 15 December, conference chair Amina Mohamed, the Kenyan Cabinet Secretary for Foreign Affairs and Trade, had warned that members essentially faced two choices over the coming days that would set the tone for the WTO?s future. ?If we have a successful ministerial it will change because we will have invigorated it, we will have renewed the organization, hopefully modernized it.?
She warned that a far different scenario could await the global trade body should the Nairobi talks fail. ?If we don?t agree then we will see a change, because obviously what the membership will be saying collectively is that the negotiating function of the WTO is broken.? In the months - and years - ahead, questions will likely continue to abound as to what future awaits the various modalities of WTO?s negotiating arm, particularly its multilateral mode when compared to the results seen in other major global governance efforts this past year.
The adoption of the UN Sustainable Development Goals (SDGs) for 2030, as well as the successful adoption of a universal climate deal in Paris earlier this month, had drawn many comparisons to the WTO multilateral negotiations under the Doha Round in the weeks and days ahead of the conference, with officials urging the global trade body?s members to draw inspiration from those processes and results.
One of the notable substantive achievements from this ministerial was the announcement of the conclusion of ?plurilateral? talks among 53 WTO members to expand the product coverage of the Information Technology Agreement (ITA), a critical mass negotiation furthered in parallel to Doha Round talks since its launch outside the formal framework of the WTO ITA Committee three years ago. The completed ITA-II has been heralded for being the WTO?s first tariff-cutting deal since its establishment 20 years ago, with the tariff cuts agreed by the participants set to be extended to the full membership of the global trade body.
An achievement of great significance, the ITA-II involves products currently valued at US$1.3 trillion annually and responds to the continued evolution of the global digital economy. For many, this model of Most-Favored Nation (MFN)-based, open plurilateralism, represented by the ITA-II may become an increasingly more common alternative to multilateral trade agreements under the WTO.
This decision groups together export subsidies with other types of export support instruments that can distort competition: export credits, export credit guarantees and other types of export financing; exporting state trading enterprises; and food aid. When the Doha talks were launched, the EU insisted that these other types of arrangements also be disciplined in parallel to efforts to phase out and ultimately eliminate export subsidies. The EU subsidized exports at very high levels ? reaching ?10 billion in 2000 - and since almost totally curbed.
Historically, the US has been the main provider of export credits and food aid, while Canada, New Zealand and Australia have operated exporting state trading enterprises, some of which have since been privatized. While the EU has discontinued export subsidies for most products, Switzerland, Norway, and Canada still notify support to the WTO, and some developing countries such as India or Turkey also provide this type of support but have not formally notified it to the trade body.
Although the Hong Kong ministerial declaration has said that developing countries should be allowed to provide Article 9.4 export subsidies ? related mostly to marketing and internal transportation - for five years after export subsidies are eliminated, the legal authority for doing so under the Agreement on Agriculture has already expired. Developing countries must also eliminate their export subsidies by the end of 2018. Again, a footnote provides an exception until 2022 for some countries which have notified their support to the WTO.
Given the complex and political nature of issues at stake for the WTO?s poorest members, observers suggested that the conference did mark an important step forward within the multilateral trading system by adopting a set of binding multilateral provisions on preferential rules of origin for least developed countries (LDCs) as well as a new decision on the services waiver.
The first draft decision instructed the WTO Committee on Anti-Dumping Practices make recommendations to report to the General Council on a specific list of topics. This would be done in order to ensure ?maximum possible? predictability and objectivity in implementing the relevant provisions in the Anti-Dumping (AD) Agreement. The Committee on Subsidies and Countervailing Measures would also have been instructed to study these outcomes to determine their relevance and report conclusions to the General Council.
Some industry voices cautioned that the proliferating use of trade remedies could threaten expansion or foreign investment in growing and salient industries, pointing to areas such as clean energy technologies. Other experts considered that the steps proposed by chair?s text would not have been a high-ambition outcome.
The Nairobi ministerial ultimately yielded some substantive decisions for negotiators to applaud ? with China, for instance declaring ?this is a big, big victory. This conference will be remembered for its historic contribution to development.? It also saw a concluded ITA-II, higher participation and a new negotiating approach from developing and least developed economies, the accession of Liberia and Afghanistan and expressions of interest from Somalia and Iran. However, the road ahead for the WTO may still be a rocky one, though also with potential opportunities for creativity if members so choose.
?Members must decide ? the world must decide ? about the future of this organization,? said WTO Director-General Roberto Azev?do during the closing moments of the ministerial. ?The world must decide what path this organization must take. Inaction itself is a decision and I believe the price of inaction is too high,? he added, noting that the year ahead leaves them with a ?very serious task.?

Details

USTR Comments on Final WTO Information Technology Agreement
United States Trade Representative ? December 19, 2015
On Wednesday, the United States and its WTO partners announced an expansion of the ITA, an agreement that will phase out hundreds of tariffs on information technology exports all over the world. Ambassador Froman commented on the landmark agreement:
?Expanding the Information Technology Agreement (ITA) to cover a wide array of additional products promises to be a major boost to U.S. technology exports and the jobs that support them. It?s great news for the American workers and businesses that design, manufacture, and export state-of-the-art technology and information products, ranging from high-tech healthcare devices to advanced semiconductors to software media. It also importantly demonstrates that the WTO can deliver results with pragmatic approaches and helps build momentum for our ongoing talks in Nairobi. ITA expansion will eliminate hundreds of tariffs on billions of dollars in additional American technology exports all over the world.?

For Full Statement


Earlier on Wednesday, Minister of Commerce Gao Hucheng of China and USTR Froman released a joint statement outlining areas of consensus reached during bilateral negotiations of the WTO ITA between the United States and China.
For the joint statement, visit: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/december/joint-statement-trade-ministers
USTR Releases Special 301 Review of Notorious Markets for 2015
United States Trade Representative ? December 19, 2015
On Thursday, USTR Froman announced the findings of the Special 301 Out-of-Cycle Review of Notorious Markets for 2015, which highlights specific physical and online markets reported to be engaging in and facilitating substantial copyright piracy and trademark counterfeiting.
USTR Froman: ?Tens of millions of American jobs and several trillion dollars of our gross domestic product rely on American creative and innovative industries. Our Notorious Markets List is a unique tool that highlights key examples of markets all over the world - increasingly digital markets - that are linked to significant infringement of American businesses? intellectual property rights. The 2015 List has a special emphasis on emerging marketing and distribution tactics in Internet-based counterfeiting, which reportedly not only harms legitimate trade but poses risks to consumer health and safety.?
Deputy USTR Robert Holleyman: ?This Notorious Markets List illustrates the seriousness of copyright piracy and trademark counterfeiting in online marketplaces. The 2015 report underscores the need for accountable governments everywhere to take on these forms of piracy and counterfeiting ? including by using the numerous TPP standards that address piracy and counterfeiting as a benchmark.?
For Full Statement


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