TWN Info Service on WTO and Trade Issues (Nov18/12)
22 November 2018
Third World Network

South countries strongly oppose joint proposal on WTO notifications
Published in SUNS #8796 dated 15 November 2018

Geneva, 14 Nov (D. Ravi Kanth) - Many developing and poorest countries on Monday opposed a proposal circulated by the United States and five other countries for enhanced transparency and notification requirements in World Trade Organization (WTO) agreements, saying that it would impose "punitive measures and sanctions" and burdensome requirements on members, trade envoys told SUNS.

At a meeting of the WTO's Goods Council, many developing countries, particularly the African Group, spoke against the proposal circulated by the United States, the European Union, Japan, Costa Rica, Chinese Taipei and Argentina for enhancing transparency and for strengthening the notification requirements.

The joint proposal by the six countries stemmed from a draft prepared by the Trilateral Group - the US, the EU, and Japan - for the proposed rule-making reforms at the WTO, without any mandate. (See SUNS #8780 dated 24 October 2018).

Later, it gained ground at the recently-held informal trade ministerial summit of 13 countries in Ottawa, led by Canada, the EU, Japan, Australia, and Brazil among others, who had also called for strengthening transparency and notification requirements at the WTO.

In their proposal (Job/GC/204) circulated on 1 November, the US, the EU, Ja pan, Costa Rica, Chinese Taipei and Argentina made a strong case that "transparency and notification requirements constitute fundamental elements of many WTO agreements and a properly functioning WTO system, and thus of Members' obligations."

The proponents complained about "the chronic low level of compliance with existing notification requirements under many WTO agreements."

Therefore, they called for strengthening transparency and notification requirements.

Instead of pursuing the issue either at the Doha negotiating body or the General Council, the proponents brought the issue to the WTO's Council for Trade in Goods.

The proposal has listed the following WTO Agreements that 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.

It 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 proposal, 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.

It argues 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 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 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 for rice and wheat.

Subsequently, the US also filed another counter-notification against India on cotton, challenging India's notification on cotton subsidy programs.

In short, the proponents are seeking to undermine the "sovereign" functions of a WTO member country by filing counter-notifications and by resorting to a heightened form of naming and shaming, said a trade envoy, who asked not to be quoted.

During the WTO's CTG meeting, the African Group issued the strongest statement yet on the deleterious implications of the proposal circulated by the US, the EU, Japan, Costa Rica, Chinese Taipei, and Argentina.

The African Group, which includes more than 50 countries, said while the Group agrees that "transparency and compliance with notification obligations in the WTO are important," it presents them "with numerous and serious difficulties."

The African Group said "first, and most importantly, it [the proposal] proposes a series of punitive measures and sanctions without having offered a proper assessment of the varied reasons why Members do not or are unable to comply with their notification obligations."

It is well documented in several studies that several developing and poorest countries lack appropriate institutions for collecting data and complying with timely requirements.

"For many of us, the heart of the problem is the lack of institutional capacity to comply with notification requirements on technically complex matters," the African Group said.

It pointed out that "this should be evident in the WTO Notification Compliance Reports that sets out reasons why some developing and least developed countries are unable to meet their notification requirements."

According to the African Group, the second biggest difficulty arising from the proposal circulated by the US, the EU, Japan, Costa Rica, Argentina, and Chinese Taipei is that it shifts the burden of implementation "disproportionately on developing and least developed countries."

Consequently, "countries that are least able to comply with existing commitments" will be severely penalized, instead of being supported and
assisted, the African Group argued at the meeting.

More disturbing, several poor countries are "in arrears and have already lost access to WTO resources and support," the African Group said in its statement.

The proponents who are calling for enhanced transparency and notification requirements also failed to provide adequate special and different treatment flexibilities, the African Group maintained.

"The special and differential treatment provisions are woefully inadequate, " the African Group said, maintaining that "they do not provide any solution to the real reasons that many countries are unable to comply with their notification obligations."

The "idea of limited time extension for notification and vague offers of technical support do not provide any comfort," the African Group argued.

More dangerously, "the idea to enhance the role of the Secretariat in notifications would open the way for actions that could both compromise the Secretariat's impartiality in the work of the organization and pressure Members to comply with notification requirements in ways that impinge on national sovereignty," the African Group argued.

Commenting on the issue of counter-notifications as suggested by the proponents, the African Group said "the idea of introducing counter-notifications in some WTO Agreements will simply create a new source of division and conflict between Members."

The African Group characterized the proposal as "a negotiating proposal that will introduce significant changes to current agreements," maintaining that "any substantive negotiating proposal must obtain a negotiating mandate that is agreed by all Members."

Further, "a negotiating mandate would also need to establish a negotiating body in which to pursue the negotiations," the African Group said.

It reminded the proponents that "there is no negotiating mandate on this matter and the CTG is not a venue for negotiations."

"According to the Marrakesh Agreement, "The Council for Trade in Goods shall oversee the functioning of the Multilateral Trade Agreements in Annex 1A". In principle, the role of the CTG is to implement existing agreements, not to engage in discussions that would change or add to those obligations," the African Group said.

Against this backdrop, the African Group said it cannot support the proposal. "Nevertheless, we may be able to agree that the CTG engage in an assessment of compliance of existing notification obligations and on the real reasons for non-compliance," it argued.

The African Group said the proposal is unlikely to get "the support it needs so long as there is no clarity on the more fundamental and more urgent question on the future of the Appellate Body and Dispute Settlement Mechanism, which we view as an indispensable part of a proper functioning WTO system."

At the WTO's Goods Council meeting, the US underscored the need for improving WTO notifications so as to facilitate negotiations on a strong footing.

The EU defended the joint proposal, saying that it formed part of its comprehensive paper for modernizing the WTO in all three pillars - the negotiating function, the dispute settlement system, and the strengthening of the Secretariat, specifically on the transparency and notifications side.

Japan maintained that the rules-based multilateral trading system was founded on transparency and predictability involving strong compliance and notification obligations.

China criticised the proposal, saying that there is not one single country that has completely fulfilled all the notification obligations as set out in the WTO agreements.

Punitive approaches for improving compliance notifications is not a good option, China said. Beijing sought to know whether the sponsors of the proposal will also file their respective notifications on how they implemented their services commitments.

In short, the developing and poorest countries need to remain vigilant about the combined assault by the US, along with other industrialized and developing countries, who want to transform the multilateral WTO into a plurilateral trade body, said trade envoys who asked not to be quoted.