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Info Service on WTO and Trade Issues (Jun20/11) Geneva, 11 Jun (D. Ravi Kanth) – Major developed countries have escalated the pressure on developing countries to agree to a revised draft WTO General Council (GC) decision on enhanced transparency and notification requirements, trade envoys told the SUNS. At a virtual meeting of the Council for Trade in Goods (CTG) on 10 June, the United States along with the European Union, Australia, Canada, Japan, New Zealand, Chinese Taipei and Argentina re-introduced a revised draft GC decision on enhanced transparency and notification requirements with punitive measures for non-compliance. Several developing countries – South Africa, China, India, and Thailand among others – firmly opposed the revised draft decision on grounds that it is inconsistent with the WTO provisions. The developing countries called for a “cooperative approach” based on their developmental priorities. They said it is unfortunate that the latest revised draft decision is being introduced at a time when the developing countries are being ravaged by the Covid-19 health crisis, said several participants after the CTG meeting. During the virtual CTG meeting on 10 June, nine countries – Canada, Colombia, Costa Rica, Hong Kong-China, New Zealand, Norway, Singapore, Switzerland, and Uruguay – introduced a proposal to discuss trade measures imposed in the wake of the Covid-19 pandemic, according to the participants who attended the meeting. The proponents called for lifting restrictions and other trade measures imposed in the contexts of the Covid-19 pandemic, as well as enhanced transparency requirements. South Africa and several other developing countries said “COVID-19 is an unprecedented crisis that is stretching resources of Members” and “developing countries and LDCs (least-developed countries) are facing serious constraints relating to the implementation of response measures and economic recovery”. The developing countries opposed the proposal seeking more binding commitments, including the call for preparation of a factual report by the Secretariat. “The Covid-19 pandemic has become an opportunity to try to impose binding commitments at each meeting,” said a trade envoy, who asked not to be quoted. At the CTG meeting, several standing items were discussed such as China’s complaint against prohibitive US measures on communication equipment and services, US measures regarding market access prohibition for ICT (Information and Communications Technology) products, US export control measures for ICT products, and the EU’s proposed modification of tariff rate quotas among others. The US flatly rejected the Chinese complaints on grounds of security concerns. The United Kingdom came under intense pressure from the US, Australia, Brazil, Canada, China, New Zealand, Russia, Switzerland, and Uruguay among others during the discussion on London’s “draft goods schedule and proposed UK’s goods schedule and proposed TRQ (tariff rate quota) commitments”. These countries pressed the UK to enter into Article XXVIII consultations without delay for negotiating their specific market access concessions and compensation, said another participant, who asked not to be quoted. The European Union also faced severe criticism from the US and other farm exporting countries on its sanitary and phytosanitary (SPS) measures. Korea, for the first time, called for a discussion and “authoritative interpretation of the Enabling Clause to provide greater legal certainty to non-reciprocal preferences granted by developing country WTO members to least developed countries”. But several developing countries, including South Africa, Turkey, and China among others, sharply criticized the Korean proposal for an authoritative interpretation of the Enabling Clause of 1978, saying that it would raise serious systemic concerns, said a participant, who asked not to be quoted. South Africa said pointedly that “the Enabling Clause is an important provision in the WTO in recognition of differences in levels of development among WTO Members.” “The Enabling Clause allows contracting parties to accord differential and more favourable treatment to developing countries taking into account the development, financial and trade needs of developing countries and LDCs,” South Africa said. Further, the waiver on “Preferential Tariff Treatment for Least-Developed Countries waives GATT Article I and provides a means for developing-country Members to offer preferential tariff treatment to products of least- developed countries,” South Africa said. “This is in keeping with the need for positive efforts to be designed to ensure that LDCs secure a share in the growth in international trade commensurate with the needs of their economic development as entailed in the Marrakesh Agreement,” it argued. “Whereas we welcome the proposal by the Republic of Korea providing for an authoritative interpretation to the Enabling Clause which in essence takes away the need to renew the waiver every 10 years,” South Africa said that “my delegation is still analyzing the proposal and will revert with more concrete views on the proposal.” On the US-led campaign for enhanced transparency and notification requirements, the United States, the European Union, Australia, Canada, Japan, New Zealand, Chinese Taipei, Israel, and Argentina demanded consensus on this standing agenda item which had cropped up at several previous General Council and CTG meetings among others. In their proposal (Job/CTG/14/Rev.3), the proponents called for approval for their draft General Council decision circulated on 5 March. The proponents said that the least-developed countries are being exempted from the proposed administrative measures that are intended for non-compliers of transparency and notification requirements. The administrative measures suggest that from “beginning in 20XX, a Member that has failed to submit a notification within the applicable notification deadline shall be subject to the following measures: (a) Phase 1 Measures shall apply to a Member one year after the expiry of the notification deadline. A Member subject to Phase 1 Measures: (i) Shall be designated as a “WTO Member with notification delay”; (ii) Shall be called upon to speak in WTO formal meetings after all other WTO Members have taken the floor, but before any observers; (iii) Shall be identified as a “Member with notification delay” when offered the floor in the General Council; (iv) Shall have its overall notification compliance reported upon annually by the Secretariat in the Council for Trade in Goods; and (v) Shall not have its representatives be nominated to preside over WTO bodies. (b) Phase 2 Measures shall apply to a Member that has been subject to Phase 1 Measures for one year, and has nevertheless not submitted the relevant notification(s). In addition to the Phase 1 Measures which shall continue to apply, a Member subject to Phase 2 Measures: (i) shall have its notification performance reported upon by the Secretariat annually at General Council Meetings; (ii) may pose questions during Trade Policy Reviews, but Members shall not be obliged to respond; and (iii) shall be assessed a charge to its next annual contribution, and each annual contribution until the relevant notification is submitted. The charge shall be set at the rate of [x][2][3][5]% of its normal assessed contribution to the WTO budget per outstanding notification.” According to the revised proposal, “phase 1 and 2 Measures shall be immediately rescinded when the Member has submitted the relevant notification(s),” and “the charges resulting from Phase 2 measures shall not exceed [Y]% of a Member’s normal assessed annual contribution. The charges collected under Phase 2 Measures should, as far as practicable, be utilized for technical assistance and capacity building to help Members better comply with notification obligations.” Further, “when measures are applied at Phases 1 and 2, the Director-General shall inform the relevant Minister representing that Member,” the proposal has suggested. In a sharp response, South Africa said the revised proposal “remains fundamentally the same” with punitive measures. While transparency is one of the pillars of the multilateral trading system and its role for the functioning of the WTO system, “we cannot agree to any proposal that punishes developing countries who raise legitimate concerns in relation to the challenges they face in meeting their transparency obligations due to limited capacities and resources,” South Africa said. More disturbingly, “the re-introduction of the paper at a time when many developing countries are facing significant challenges related to COVID-19 shows the lack of appreciation of the proponents of the needs of countries who are facing serious economic collapse and are … to focus on saving lives of their citizens as well as looking at economic recovery plans. Instead of using the crisis as an opportunity to foster collaborative effort, we are concerned that a punitive approach is still put forward at a time of an unprecedented crisis,” South Africa argued. Emphasizing that compliance with notification obligations is not just a matter of ticking the boxes, South Africa said “it is a complex process that involves such issues as collection and validation of data and information from various entities within countries and at times goes beyond the capacities of Members.” It said “a cooperative, development oriented and holistic approach will go a long way to promote compliance rather than a punitive approach”, adding that developing countries led by South Africa, India, and China among others had circulated a more pragmatic proposal which aims to bridge the differences and is the best way forward. “We are sensitive to counter-notification by any Member or the Secretariat,” South Africa said, suggesting that “notifications can only be made by the concerned Member and no counter-notifications will be valid.” “The WTO is a member-driven organization and neither the Secretariat or any other Member of the WTO shall have the right to notify information on behalf of another Member unless this possibility has been provided for in existing agreements,” the South African delegate argued, according to participants present at the meeting. Moreover, transparency “is important to all of us and all of us are struggling to fully comply with our obligations for various reasons,” South Africa said. “Any work in this area (concerning transparency and notification requirements) must support developing countries’ ability to address their difficulties through inclusive and mutually agreed approaches, such as through simplified notification formats, longer time-frames and targeted technical assistance and capacity building.” China, India, and several other countries joined South Africa in conveying their opposition to the enhanced transparency and notification requirements.
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