TWN Info Service on WTO and Trade Issues (Oct18/18)
25 October 2018
Third World Network

US-EU-Japan's intrusive transparency proposal targets South
Published in SUNS #8780 dated 24 October 2018

Geneva, 23 Oct (D. Ravi Kanth) - The United States, the European Union, and Japan are preparing the ground at the WTO for imposing the most intrusive transparency and notification requirements, including naming and shaming of countries failing to comply with timely deadlines, in what appears to be an enveloping trilateral initiative for targeting China and other developing countries at the global trade body, trade envoys told SUNS.

In a four-page draft proposal for a General Council (GC) decision, obtained by SUNS, the three sponsors have argued that they want to "strengthen and enhance transparency and improve the operation and effectiveness of notification requirements" in order to address "the chronic low level of compliance with existing notification requirements under many WTO agreements."

The proposed draft decision, which is not yet available to all WTO members, covers "existing notification requirements" so as to "recommit to providing complete and timely notifications under the WTO Agreements within the remit of the Council for Trade in Goods."

It has listed the following WTO Agreements which will be subjected to the proposed transparency and notification requirements:

(a) Agreement on Agriculture;

(b) Agreement on Implementation of Article VI of the GATT 1994 (Anti-Dumping);

(c) Agreement on Subsidies and Countervailing Measures;

(d) Agreement on Safeguards;

(e) Understanding on the Interpretation of Article XVII of the GATT 1994 (State Trading);

(f) Agreement on Implementation of Article VII of the GATT 1994 (Customs Valuation);

(g) Agreement on Import Licensing Procedures;

(h) Agreement on Rules of Origin;

(i) Agreement on Preshipment Inspection;

(j) Decision on Notification Procedures for Quantitative Restrictions;

(k) Agreement on Trade Related Investment Measures;

(l) Agreement on the Application of Sanitary and Phytosanitary Measures;

(m) Agreement on Technical Barriers to Trade.

The draft proposal says that "appropriate committees, working groups or other bodies, such as the Working Group on Notification Obligations and Procedures (Working Group)" will "assess and report annually to their designated supervisory bodies on Members' compliance with notification obligations" for the above agreements.

The committees will also suggest "appropriate steps to reinforce compliance with the notification requirements under such agreements (for example, by carrying out notification workshops), and to make recommendations, as appropriate, on means by which greater compliance can be encouraged and achieved."

The General Council, according to the draft decision, will "instruct the Working Group to meet before [x date] to develop recommendations on improving Member compliance with notification obligations under the agreements" listed above.

The trilateral proposal says that "the Working Group will consult with appropriate committees, other working groups and bodies as appropriate, and consider both systemic and specific improvements that can help Members improve compliance with notification obligations."

In addition, the proposed Working Group "will also consult with the WTO Secretariat as appropriate, including the WTO Institute for Training and Technical Cooperation (ITTC) to assess the contribution of WTO trade-related technical assistance to improving notification compliance, as well as the Central Registry of Notifications."

The US, which is particularly targeting China and India among others on market access for agricultural products, has insisted on the importance of strengthening and enhancing "the effectiveness of the review process of the implementation of commitments in the Agreement on Agriculture."

Further, the Trade Policy Review Body, according to the draft proposal, will "ensure that beginning in 2019, all trade policy reviews include a specific, standardized focus on the Member's compliance with its notification obligations under [all] the agreements".

More important, the draft proposal calls on members "to provide a counter notification on behalf of another Member concerning notification obligations under the agreements."

Recently, the US had filed a counter notification for the first time against India over New Delhi's notification on domestic support payment programs.

India had dismissed the US' counter notification on grounds that it is baseless and prepared at the behest of its powerful farm lobby, said a trade envoy, who asked not to be quoted.

The draft proposal says that "beginning in [x date], a Member that fails to provide a required notification" under the agreements listed above will be given two years or [720 days] in case if the member had failed to comply with any prior required notification."

The member failing to comply with the timely notification will be "encouraged to submit to the Committee on Agriculture by [x date] of each subsequent year an explanation for the delay, the anticipated time-frame for its notification, and any elements of a partial notification that a Member can produce to limit any delay in transparency."

The member failing to submit timely notifications, according to the draft GC decision, will need to provide an explanation as to why it is unable to submit the notification within the deadline.

The draft says "a developing country Member encountering difficulties to fulfill notification obligations or the information" can seek the Secretariat's assistance for filing the notification.

The draft has proposed several administrative measures in the case of the member failing to comply with timely notifications within a year and not seeking the WTO Secretariat's assistance or not cooperating with the Secretariat.

They include:

(a) After one but less than two full years from a notification deadline, the following measures shall be applied to the Member at the beginning of the second year:

(i) representatives of the Member cannot be nominated to preside over WTO bodies;

(ii) questions posed by the Member to another Member during a Trade Policy Review need not be answered;

(iii) the Member will be assessed a supplement of [x][5] percent on its normal assessed contribution to the WTO budget, to be effective in the following biennial budget cycle;

(iv) the Secretariat will report annually to the Council for Trade in Goods on the status of the Member's notifications; and

(v) the Member will be subject to specific reporting at the General Council meetings.

(b) After two but less than three full years following a notification deadline, the following measures shall be applied to the Member at the beginning of the third year:

(i) the Member will be designated as an Inactive Member;

(ii) representatives of the Member will be called upon in WTO formal meetings after all other Members have taken the floor, and before any observers; and

(iii) when the Inactive Member takes the floor in the General Council it will be identified as such.

(c) The administrative measures shall not apply to Members that have submitted information on the assistance and support for capacity building that the Member requires.

More important, the draft proposal says that "at the beginning of each year when measures will be applied to any Member, the Director-General will notify the Ministers of those Members responsible for the WTO of the administrative measures being applied with respect to those Members."

However, the administrative measures will cease to apply once "any such Member comes into compliance with its notification requirements," according to the draft proposal.

The trilateral initiative began at the WTO's eleventh ministerial meeting in Buenos Aires, in December 2017.

The draft decisions says that "taking into account the decision of Ministers at the 11th Ministerial Conference to recommit to the implementation of existing notification obligations for fisheries subsidies, and recognizing the significant contribution that enhanced fisheries subsidies notifications would make to the negotiation and implementation of prohibitions on harmful fisheries subsidies, the Rules Negotiating Group will develop enhanced notification procedures as part of the ongoing fisheries subsidies negotiations in that body, in consultation with the Committee on Subsidies and Countervailing Measures as appropriate."

In conclusion, it is clear as daylight that the assault on developing and poorest countries, which are already finding it difficult to comply with burdensome notification requirements because of lack of appropriate agencies in most of the countries, will now be subjected to an aggressive form of naming and shaming. Unless they join forces, they will not be able to withstand the current crisis, said trade envoys, who asked not to be quoted.