TWN Info Service on WTO and Trade Issues (July10/05)
12 July 2010
Third World Network

Goods Council takes up STE notifications, Members' complaints
Published in SUNS #6960 dated 7 July 2010

Geneva, 6 Jul (Kanaga Raja) -- A meeting of the WTO Council for Trade in Goods on Monday amongst others heard complaints from the European Union over Argentina's move to restrict food imports including from the EU since May 2010 as well as recent changes in Ecuador's tariff system concerning certain clothing items and footwear.

At its meeting, the Goods Council also approved a recommendation (G/STR/7) by the Working Party on State Trading Enterprises to extend until 30 June 2012, the current practice (of every two years) on the frequency of notification of State Trading Enterprises (STEs).

According to Working Party document G/STR/7, Article XVII: 4 of the GATT 1994, and paragraph 1 of the Understanding on the Interpretation of Article XVII of the GATT 1994 require WTO Members to notify their State Trading Enterprises to the Goods Council.

On 9 November 1962, GATT Contracting Parties adopted a decision establishing the periodicity of state trading notifications. The decision provides that new and full notifications of state trading enterprises are to be submitted every three years, with updating notifications to be submitted in the intervening years.

On 11 November 2003, the Working Party on State Trading Enterprises, which reviews state trading notifications on behalf of the Goods Council, adopted a recommendation, subsequently approved by the Goods Council on 26 November 2003, modifying the frequency of notifications on state trading enterprises to new and full notifications on a biennial basis only.

The new frequency of notifications was to be implemented for a trial phase of four years, commencing on 30 June 2004. The Working Party was directed to review the situation in respect of compliance with the new notification obligation and the frequency of notifications at the end of the four year trial phase.

The objective of the review was to determine whether to extend the application of the recommendation, either as drafted or in a modified form, for a further period or an indefinite period.

The Working Party conducted the review and observed that the period of application of the new notification requirement had been too short to provide the clarity needed to determine whether the new frequency of notifications was an improvement. It decided to extend the application of the recommendation for two additional years until 30 June 2010.

The Working Party was directed to review the situation with regard to compliance with the notification obligation and the frequency of notifications at the end of the two-year extension period. Accordingly, the Working Party conducted the review and concluded that a further two-year trial period would be desirable.

The Working Party recommended to the Goods Council that the application of the recommendation be extended for two years, and that this extension shall enter into force as of the year 2010, with a new and full notification being due by 30 June 2012.

Before the expiry of this further trial period of two years, commencing on 30 June 2010, the Working Party shall review the situation with regard to the frequency of notifications with a view to determining whether to extend the application of this recommendation, either as presently drafted or in a modified form, for a further period or for an indefinite period.

Also at the Council meeting, the European Union (EU) voiced concerns over an internal government note in Argentina that the EU said has restricted food imports, including from the EU, since May 2010.

According to trade officials, the EU said that the note has resulted in long delays in the granting of certificates that would enable the release of imports from the EU. According to the EU, it has had a trade-chilling effect in the form of cancellation of long-standing EU orders from Argentinean companies.

The EU further said that it has serious questions about the consistency of the trade restrictions with WTO rules, adding that they also go against Argentina's commitments in the G20 against protectionism.

According to trade officials, among those that shared the EU's concerns were Canada, Colombia, Australia, Japan, Switzerland, Norway and the US.

In response, Argentina said that it would let the facts speak for themselves: during the first five months of this year, its imports from the EU, including food products, have increased substantially.

According to trade officials, Argentina said that its imports of EU juices, pasta, rice, chocolate, canned products and others have all increased. It added that the internal note was intended only for surveillance purposes, and that isolated cases of certain containers from the EU have all been dealt with.

Argentina further said that Members that have expressed concerns should also look at their own practices. It pointed out that it has been trying to export wheat to Japan for many years.

The EU also expressed concerns about recent changes in Ecuador's tariff system on certain goods (clothing, linen and footwear) from an ad valorem system to a mixed system (using both ad valorem and specific duties).

According to trade officials, the EU urged Ecuador to notify them to the WTO. The US, Japan and Canada shared the EU's concerns. China called on Ecuador to notify the changes.

According to trade officials, Ecuador expressed surprise that the EU would bring the matter up, as it said that it has continued to respect its tariff bindings, and that detailed information on these tariff changes are available on the Ecuador government's website.

Japan said that it continues to have concerns about the domestic-content requirements of a renewable energy project in Ontario, Canada, despite the receipt of written answers to its questions from Canada.

Canada said that it is working with the Ontario provincial government to meet the concerns of trade partners.

The Chair of the Goods Council, Ambassador Anthony Mothae Maruping of Lesotho, informed the Council of the notification of the two regional trade agreements to the Committee on Regional Trade Agreements: Free Trade Agreement between the EU and Serbia on goods, and Free Trade Agreement between Korea and India on goods and services. +