|
||
|
TWN
Info Service on WTO and Trade Issues (Sep25/07) Trade:
North-South battle at WTO over "level playing field" issues Geneva, 10 Sep (D. Ravi Kanth) -- The facilitator overseeing the World Trade Organization reform track on "level playing field (LPF) issues" has scheduled a meeting for 24 September, in what appears to be a move aimed at creating new disciplines on transparency, notifications, industrial subsidies, and state-owned enterprises that are seemingly based on the "trilateral agenda" of the United States, the European Union, and Japan, among others. In contrast, the unresolved issues raised by developing countries - such as farm subsidies, policy space, historical asymmetries, capacity concerns, and the effective implementation of special and differential treatment (S&DT) - are being brushed aside, said people familiar with the development. Although the WTO's Agreement on Subsidies and Countervailing Measures (ASCM) comprehensively addresses the issue of industrial subsidies, the US, the EU, and Japan have for several years cobbled together what is commonly referred to as the "trilateral agenda". This agenda appeared to target China on grounds of its alleged opaque subsidies for state-owned enterprises, said people familiar with the development. In opposition to the LPF issues, developing countries over the past two years have consistently demanded that long-standing issues be addressed, including resolving the issue of farm subsidies, granting policy space for their industrial development without burdensome barriers, and removing other asymmetries in the negotiations, said people who asked not to be quoted. The LPF agenda has seemingly run into a major divide between the powerful industrialized countries on one side and a large swath of developing countries, including China, on the other, said people familiar with the development. FACILITATOR'S EMAIL Against this backdrop, the facilitator for LPF issues, Ambassador Elmer Jose German Gonzalo Schialer Salcedo of Peru, sent an email (ICN/GC/REFORM/7) on 7 September informing members about the scheduled meeting on 24 September. In the email, seen by the SUNS, the facilitator says: "Our last session highlighted a range of issues and concerns, and Members suggested that a mapping exercise could help organize the discussion and identify areas for further consideration." Without naming the proponents - which would have clearly revealed where they are coming from - the facilitator said that "in particular, [the] proponents were invited to reflect on the questions raised during the July session and consider whether further explanation of the objectives, legal basis, practical operation and development implications of their proposals would help advance the discussion." "For ease of reference," the facilitator writes, "I have prepared an informal snapshot of what I heard during our last session, bringing together and organizing the ideas and views currently on the table." He claimed that the table "is intended simply for reference and does not seek to assess or prioritize the views expressed." However, the table, contained in a restricted room document (RD/GC/Reform/2), seen by the SUNS, appears to conflate the issues, said a trade envoy who asked not to be quoted. "DIVERSIONARY TACTICS" "Instead of offering a clear statement of the questions/concerns raised by the members and answers offered by the proponents, the facilitator seemingly adopted a diversionary tactic by preparing a conflating matrix, which is rarely seen in WTO negotiations," the trade envoy said. Under the sub-heading "Focused consideration of specific issues," the facilitator states: "As we have heard, level playing field means different things to different Members, and a range of perspectives has already been put forward." The facilitator maintained that "following the presentation of any new proposals and initial reactions, I would suggest that we begin to delve into specific issues, one at a time." He argued that "the intention is not to narrow the discussion prematurely, but rather to begin synthesizing what is on the table, deepen our understanding of issues and, where possible, identify areas for further consideration and practical approaches." Ambassador Salcedo said that it is his sense that "transparency, notifications and compliance could provide a useful entry point for this phase of our discussion," adding that "these issues appear across a number of the contributions and could offer an opportunity to explore practical approaches to strengthening transparency and compliance with notification obligations, including how notification design, incentives and practical support might help address capacity constraints and other concerns raised by Members." The US has repeatedly called for a strong regime of transparency, notifications and compliance measures, including penal provisions - a demand shared by other industrialized countries. To dispel doubts that the issue of transparency and notifications is being taken up first, the facilitator said that "this proposed starting point is not intended to establish a hierarchy among the issues raised or to suggest that these areas are more important than others." He clarified that "rather, it is intended to provide a manageable starting point for deeper engagement, while leaving space to take up other themes and questions identified by Members as the discussion progresses." The facilitator set a time limit of three minutes "for exchanges among Members" and "interventions." THEMATIC SNAPSHOT In the restricted room document (RD/GC/Reform/2), the facilitator states that "during the July session, I heard recurring calls for a more structured and focused approach to our discussions, including by organizing the issues raised in Members' written and oral interventions into broader themes." He acknowledged that "at the same time, it was clear that Members do not, as yet, share a common understanding of what constitutes a "level playing field"." He said that "the concept has different meanings for different Members, and differing views were expressed regarding the scope and framing of this track of work." He prepared a "matrix", claiming that it is "an informal snapshot of how I heard the discussion during the 29 July session." Ambassador Salcedo maintained that "it brings together and organizes, for Members' ease of reference, the ideas, views, concerns and possible approaches that were raised in the discussion. It is not intended to reconcile different views, draw conclusions, or suggest any particular interpretation of Members' positions." However, a detailed examination of the matrix reveals that the facilitator seemingly deliberately conflated the issues by providing a corporate framework of breaking the issues down into short answers, instead of setting the ground in a hard negotiating framework, said several trade envoys who asked not to be quoted. The facilitator said that he grouped the views under the following broad themes: 1. Transparency, notifications and compliance; 2. Scope and conceptual framing; 3. Industrial policy and industrial subsidies; 4. State-owned enterprises; 5. WTO disciplines and remedies; 6. Agriculture, fisheries and historical asymmetries; 7. Development and policy space; 8. Unilateral measures, security exceptions and environment-related measures; 9. Dispute settlement and enforceability; and 10. Other issues, including MSMEs, services, digital trade and technology transfer. Under each theme, the facilitator further organized Members' contributions according to: (i) the considerations or concerns identified; (ii) concrete tools or approaches that were suggested or could provide possible avenues for further exploration; (iii) a description of the tools or approaches and the perspectives expressed in relation to them; and (iv) comments or questions raised, including matters that may require further clarification or consideration. Claiming that the 11-page document "is not intended to be exhaustive," the facilitator said that "the organization of the views under the different themes is simply an informal way of organizing what I heard and should not be understood as implying any hierarchy among the issues raised, or as constituting an assessment, endorsement or agreed characterization of the ideas or positions presented." Ambassador Salcedo said: "Nor does the organization of the discussion under a particular theme imply that Members share a common understanding of the issue or of how it should be addressed." BRIEF SUMMARY On each issue, the facilitator divided the matrix into four elements: "considered concerns," "concrete tool/ approach," "description of concrete tool/approach," and "comments or questions." Transparency & notifications On "transparency & notifications" - which is constantly raised by the US - the problem has been that many countries fail to provide timely notifications with enough detail, making it hard to monitor trade policies. The US, along with a few other countries, has adopted the practice of filing counter-notifications, as it did against India on rice and wheat subsidies - which New Delhi challenged in the meetings of the Committee on Agriculture. The US and other industrialized countries have called for strengthening compliance, including simplifying reporting formats while offering technical assistance. However, developing and least-developed countries opposed some of these burdensome and penal proposals on grounds that they lack capacity, said people familiar with the development. Clearly, many developing countries and LDCs have repeatedly argued that non-compliance is often due to a lack of capacity, not bad faith. The US and some industrialized countries seemingly suggested penalties for non-notified measures, while some cautioned against automatic punishments without due process, said people familiar with the development. Scope & definition The LPF issues, as the facilitator acknowledged, lack a clear definition of what constitutes such issues, said a person who asked not to be quoted. Many developing and some least-developed countries have seemingly underscored a broad canvas for LPF issues covering agriculture, development, and historical imbalances. But the major industrialized countries, particularly the US, the EU, and the G10 farm-defensive countries led by Japan and Switzerland, want a focused agenda on industrial subsidies and state-owned enterprises (SOEs) to keep the work manageable. Industrial subsidies & policy The US, the EU, and Japan have seemingly repeatedly argued that large-scale subsidies and non-market policies can create overcapacity and harm other countries' industries - a charge directed against China, said people familiar with the development. To address this issue, some members argued for assessing the negative trade effects of subsidies and identifying "good" support that aids development (e.g., R&D, infrastructure) versus "bad" subsidy support that is opaque or discriminatory. The main tension has been that developing countries want to protect their policy space for industrialization, while advanced economies want tighter rules against what they claim are distortive subsidies. State-owned enterprises (SOEs) It is well known that as part of the "trilateral agenda" of the US, the EU, and Japan, the existing ASCM rules do not fully cover SOEs, which can act in non-commercial ways. Consequently, the major industrialized countries - the US, the EU, and Japan, among others - have reportedly called for new disciplines on commercial considerations and transparency, drawing from existing WTO provisions and free trade agreements. However, several countries, including China, maintained that SOEs are not inherently a problem and opposed using rules from accession protocols (which were negotiated under pressure) as a benchmark for all WTO members. Dispute settlement & enforcement On dispute settlement and enforcement, the problem has been the stymieing of the WTO's enforcement function because of the US unilateral decision to make the Appellate Body dysfunctional since December 2019. Without a two-tier dispute settlement system - as existed before December 2019 - the reforms have no credibility, said a trade envoy who asked not to be quoted. Consequently, several countries have suggested linking the LPF issues to the restoration of a fully functioning two-tier dispute settlement system, namely the Appellate Body. Also, without a strong dispute settlement system, countries fear that new rules will be enforced unilaterally by powerful nations, as has been the case for the past two years, when the US imposed unilateral tariffs on countries while members had no recourse to securing trade-related justice without a functional Appellate Body, said several trade envoys who asked not to be quoted. Agriculture & fisheries For many developing countries, agricultural subsidies and tariffs remain a major imbalance, as the US and the EU, along with the G10 countries, seem to remain opposed to any reform of farm subsidies, said people familiar with the development. Against this backdrop, many farm-exporting countries called for mapping LPF concerns (e.g., domestic support, tariffs), while some developing countries pressed for outcomes on food security and development. Many developing countries insisted that agriculture is key in the LPF agenda; others argued it should be handled in its existing dedicated committee to avoid duplication. Development & differentiation The problem is that the same rules treat unequal members unfairly. To address this problem, developing countries have repeatedly called for a development-sensitive approach, preserving policy space for industrialization and food security. Unilateralism & environmental measures For the past two years, unilateral tariffs, security exceptions, and new climate-related trade measures have become commonplace in global trade. Clearly, these measures have not only undermined predictability but have also disproportionately burdened weaker members. However, several industrialized countries warned against expanding the LPF agenda to include every single contentious issue, as this risks making it unmanageable. Other issues (MSMEs, services, digital trade) The problem identified under the subheading of MSMEs (micro, small, and medium enterprises) is high compliance costs, while developing countries struggle to benefit from services and digital trade. The solution suggested is to reduce compliance burdens (e.g., through digitalization), improve access to technology, and examine support measures in services. In crux, the LPF issues raised by the powerful industrialized countries like the US, the EU, and Japan have generated fierce opposition, with developing countries proposing their development-oriented agenda - which has now become a proverbial millstone around the necks of the former, said people familiar with the development. +
|
||
