TWN Info Service on WTO and Trade Issues (Aug15/02)
3 August 2015
Third World Network

Little progress on Rules outcome for Nairobi, says Chair
Published in SUNS #8074 dated 3 August 2015

Geneva, 30 Jul (Kanaga Raja) -- The Chair of the WTO Negotiating Group on Rules reported at an informal meeting on 29 July that members have made little progress in finding consensus on an outcome in the rules negotiations for the upcoming tenth Ministerial Conference (MC10) to be held in Nairobi, Kenya this December.

Referring to his country's famous track athletes, the Chair, Ambassador Wayne McCook of Jamaica, said that members were aiming to finish a sprint by December but have not yet completed the heats which would allow them to get to the starting blocks for the final run.

Instead, said the Chair, the work done so far has been a "training session" where members have submitted technical papers and have learned quite a bit as to what other members see as important for the negotiations.

According to trade officials, the Chair concluded, "We're not at a point where we can use what has been done as a basis for decisive steps."

The Chair pointed to the divide in the discussions on Rules, namely that one group of members believes that rules must be part of any outcome in Nairobi, while another group believes that rules should not be part of any outcome in the absence of progress on the "core" issues of agriculture, non-agricultural market access (NAMA) and services.

The Chair acknowledged that members are likely to return for work on the rules negotiations in September without a work programme "road map" for advancing the negotiations.

However, Ambassador McCook emphasised, the work programme was a means to the end of achieving the ultimate goal of completing the Doha Round.

"It is my hope and expectation that you will all be reflecting carefully on the role you envision for rules in the (Doha Round) over the summer break, and that you will return in the fall ready to resume work towards achieving a successful outcome at MC10," said the Chair.

NEW PAPERS FROM THE FANs GROUP AND EU

According to trade officials, the negotiating group discussed two new papers, one from the Friends of Anti- dumping Negotiations (FANs) group (TN/RL/W/259), and the other from the European Union (TN/RL/W/260).

The FANs proposal on anti-dumping (AD) negotiations was co-sponsored by Chile, Costa Rica, Hong Kong-China, Israel, Japan, Republic of Korea, Norway, Singapore, Switzerland, and Chinese Taipei.

The FANs had earlier submitted a proposal on elements of transparency and due process in AD proceedings, which was discussed at a Rules Group meeting in June (see SUNS #8051 dated 29 June 2015).

According to the new proposal, the FANs consider that transparency and due process should constitute deliverables in the AD part of the work programme.

Without transparency and the observance of due process, interested parties cannot make an effective defense of their interests and investigating authorities cannot make well-founded determinations.

Improvements to transparency and due process would reduce the number of WTO dispute settlement cases, and would benefit both interested parties and investigating authorities, said the paper.

According to the FANs, the Rules Group should also consider enhancing predictability of the AD measures in order to reduce the burden on investigating authorities, to prevent unintended distortions to international trade, and to protect the legitimate interests of parties involved in international trade.

The issues enhancing predictability would also form deliverables in the work programme as appropriate, it said.

An exporter should be able to predict what kind of pricing behaviour may give rise to initiation of an AD proceeding and the imposition of AD duties. AD measures should also be limited to the extent necessary to remove injury to the domestic industry, said the paper.

The FANs further said that the need for clearer rules is evidenced by the large volume of requests for dispute settlement consultations regarding individual Members' AD legislation and proceedings.

"We already have seen approximately 100 requests for consultation on AD proceedings, 30 of which have been made since 2010; and nearly 50 panel reports have been issued pursuant to such requests in the last 20 years."

After two decades of experience with the application of the current AD Agreement, it has become increasingly more evident that rules need improvement, it said.

The FANs has proposed that improvements should be considered in the AD Agreement, in particular: To clarify the factors and conditions in determining how long exporters are to be subject to an AD duty. AD measures should not be imposed longer than necessary to remove the effects of injury; to clarify opportunities to participate in the AD proceedings for parties in the domestic and international supply chain which would directly or indirectly be affected by AD duty; to set forth common rules on the maximum level that AD duties may be imposed; and to set forth common rules on the minimum conditions for conducting investigations, considering that some price differences and fluctuations are a normal part of trade, and that small quantities of imports compared to domestic market do not have a significant adverse impact on the domestic industry.

In its paper on transparency in the rules negotiations, the European Union considers that an outcome from negotiations on Rules is of paramount importance for ensuring fair and open trade.

While the EU said it is attached to improving substantive disciplines, the necessity for re-calibration across all negotiating pillars suggests that the immediate focus of work should be on improving transparency. While satisfying the overall objective of aiming for realistic and doable approaches, improving transparency would also be a useful basis for further rules work in the future.

However, the EU deems that an outcome of the DDA should include a roadmap to continue negotiating better and more modern rules in fields that are becoming more and more relevant in today's trade. This will involve a reflection not only on how to improve existing rules on subsidies, anti-dumping and regional trade agreements, but also exploring whether some of the rules that are currently negotiated in plurilateral and bilateral agreements - and respond to what traders need - can be developed or consolidated at multilateral level.

According to the EU, despite the fact that the Agreement on Subsidies and Countervailing Measures (SCM Agreement) obliges Members to notify their specific subsidies to the WTO, the level of compliance is poor and, in recent years has actually deteriorated.

The problems of compliance are two-fold: quantitative and qualitative, it said. According to reports prepared by the WTO Secretariat on compliance among Members , 43% of Members failed to make any notification in the last reporting exercise in 2013 compared to 39% in 2011, said the EU paper.

Even though the issue of non-compliance has been subject to repeated discussion in the SCM Agreement bi- annual Committee Meetings since 2009, the situation has not improved, it added.

The EU is of the firm view that it is both appropriate and timely to examine to what extent the current disciplines on transparency, including notifications, in Article 25 of the SCM Agreement could be amended to improve the compliance record of Members at large.

According to the EU paper, several approaches could be considered either in isolation or cumulatively:

(a) Streamlined monitoring of compliance with notification obligations

One could envisage greater involvement of the WTO Secretariat in regularly monitoring the situation and reporting back to Members. For instance, this could include an examination by the WTO Secretariat of the Semi-Annual reports of Members of preliminary and final CVD actions which list the programs countervailed to establish if those programs have been notified by the Member granting the subsidy. Where the subsidies have not been notified, the Secretariat could prepare a notification in the usual format and circulate as a supplement to any notification of the Member granting the subsidy.

(b) Incentives and disincentives

The Membership could reflect whether it would be appropriate that the notification (or lack thereof) would entail consequences for the treatment of the subsidy schemes in question under the disciplines of the SCM Agreement. For instance, it could be envisaged that notified subsidies would benefit from a rebuttable presumption of non-actionability or an increase in the standards for action under the provisions of Part II or Part III of the SCM Agreement (such as de minimis subsidy or serious prejudice thresholds).

Conversely, it could also be envisaged that failure to notify subsidies would lead those subsidies to be presumed as automatically in breach of WTO disciplines and therefore actionable under the provisions of Part II or Part III of the SCM. This presumption would also be rebuttable by the subsidising Member.

The EU said it is aware that the proposals under (b) could be seen as going beyond pure transparency disciplines, but is nevertheless of the view that they would greatly contribute to improve adherence to the transparency obligations.

The EU paper also highlighted some transparency elements relating to anti-dumping, fisheries subsidies and on regional trade agreements.

VIEWS OF MEMBERS

According to trade officials, the proposals received varying degrees of support from the Russian Federation, China, Peru, New Zealand, Vietnam, Saudi Arabia, and Iceland.

However, Turkey, Canada, the United States, Argentina, India, the Philippines, and Brazil said the proposals were still far too ambitious and/or not properly calibrated to the current state of play in the overall Doha negotiations.

Australia said the FANs group paper was based on several contentious claims, including the idea that increased recourse to anti-dumping measures meant increased problems with transparency and procedural issues.

According to trade officials, many members voiced criticism of the proposal in the EU paper calling for strengthened disciplines on subsidy notifications.

India, the Russian Federation, Canada, Argentina, Australia and China said that the EU proposal went beyond the issue of transparency.

The proposal would alter the balance of rights and obligations of WTO members, would unfairly shift the burden of proof of compliance to the subsidizing country, and/or would give the WTO secretariat an unacceptable role in monitoring members' subsidy programmes, they argued.

According to trade officials, some members welcomed the emphasis placed by the EU on improved transparency in fisheries subsidies in order to address state aid that encourage overfishing.

Some, however, expressed caution over the idea that non-notified subsidies should automatically be presumed to be in breach of WTO disciplines.

Fiji, on behalf of the African, Caribbean and Pacific (ACP) group, cautioned against potentially burdensome notification requirements.

Ghana, on behalf of the African Group, said that the EU proposal reflected a significant downscaling of ambitions on the part of the proponents to discipline the most egregious subsidies.

According to trade officials, Turkey said that the overall negotiating climate in the WTO and the country's overall position regarding rules has not changed. Without a clear picture on the core areas of agriculture, NAMA and services, bringing ambitious proposals (on Rules) to the table without achievements in other areas is not realistic at this stage, it said.

Canada said that at this time, the FANs' proposal is not doable or properly calibrated to the overall state of the negotiations.

The US said that while it is open to ideas on improving WTO transparency, evaluating what is feasible is only possible with political breakthrough in the core areas.

In the absence of clear signals from members that they are ready to engage in a ‘doable' outcome, some ideas spelled out in the FANs paper are academic at best and irrelevant at worst, it said. Specifically, the FANs paper's ambition is wildly out of step with discussions in other areas, it added.

According to trade officials, India said that the rules negotiations will have to wait for more clarity in agriculture, NAMA and services. The state of play on the core issues is clear to all.

Noting that there is no convergence on the Work Programme, India said that we are in a worse-off situation than when we started, and prospects for the rules negotiations in the final outcome have become even more bleak.

Unless there is progress on the gateway issues, India sees no role for the rules negotiations. India also said that the EU proposal appears to be very ambitious.