WTO RULES/REGIONAL TRADE AGREEMENT NEGOTIATIONS, JULY

UNCLAS GENEVA 001840

SIPDIS

PASS USTR FOR ALLGEIER, DWOSKIN, HAFNER
STATE/EB/OT FOR CRAFT
USDA/FAS/ITP FOR SHEIKH, MTND/HENKE, FAA/SE/WILSON
USDOC FOR ALDONAS, SPETRINI, JACOBS

E.O. 12958: N/A
TAGS: ETRD USTR WTRO
SUBJECT: WTO RULES/REGIONAL TRADE AGREEMENT NEGOTIATIONS, JULY
2005



1. Summary/Overview: The Negotiating Group on Rules met on July
25 for a single day to discuss the Regional Trade Agreements
(RTAs) element of its mandate. The first half of the day was in
formal session and addressed so-called "systemic issues," i.e.,
possible clarifications and improvements to current RTA
disciplines, while the second half of the day focused on
"transparency", in particular what kinds of subsequent reporting
should be required of WTO Members after the WTO had performed its
review. On the whole, Members are presenting more defensive
concerns in the systemic discussions, in effect supporting a weak
approach to, or even specific dilution of, current disciplines.
In the Fall, the chair will start a series of informal meetings
with Members to try to identify which systemic issues need
clarification for the Hong Kong ministerial.


2. With respect to systemic issues, there were no further
comments on the Australia and EC papers on how to measure the
GATT requirement that RTAs eliminate tariffs on "substantially
all the trade" between RTA partners. However, at the end of the
meeting, Japan formally objected to the use of tariff lines as a
measure of substantially all trade, thereby placing itself in a
more explicitly recalcitrant position in the negotiations along
with other countries whose RTAs have major exemptions for
agriculture trade (Switzerland, Norway, etc.). In doing so,
Japan showed that its years of being a defender of strong RTA
rules were over, and by comparison, made the EU look serious
about GATT disciplines.


3. The NG Rules then considered the paper submitted by
China (TN/RL/W/185),which called for special and differential
treatment (S&D) for developing country partners to RTAs with
developed countries in meeting the "substantially all trade"
coverage requirement of GATT Article XXIV, and in being eligible
for phase-outs longer than ten years. At the same time as
calling for S&D, the Chinese delegate recognized the relevance of
tariff lines to determine coverage, called for developed
countries not to be eligible for phase-outs longer than ten
years, and supported applying the newly clarified rules to
agreements currently in force. Many developing countries agreed
with the developmental aspects of China's paper. Japan and
Canada, which have expressed concerns in the past about broad S&D
provisions, tried to suggest that the S&D discussion should be
deferred until it was clearer how the NG Rules intended to
clarify the rules. While many Members, including the EU, agreed
with the proposal to make longer phase-in periods available only
to developing countries, Hong Kong China and the United States
noted that developed country Members might also have "exceptional
circumstances" that warranted longer than ten years under the
1995 WTO Understanding on Article XXIV.

4. Following up on a paper the ACP filed over a year ago, the
delegate of Barbados made a statement at the end of the
discussion on systemic issues which emphasized S&D elements for
those developing countries in the process of negotiating with
developed countries (converging with China's paper in a way that
the China delegation later told US delegates had not been
intended.) The ACP proposal is widely understood to aim at
ensuring that ACP Members could have relatively low levels of
tariff elimination in the RTAs they are currently negotiating
with the EU to replace its unilateral preference program for the
ACP countries (maintaining preferential access for bananas, sugar
and other products of interest to other developing countries.)
The Ambassador of Colombia reacted sharply against introducing
new means to discriminate against other developing countries,
explaining that it had undertaken a study of all the EC-ACP
agreements, back to the Treaty of Rome, and announcing that she
would be presenting a paper on her findings.

5. During the afternoon, the NG Rules took up transparency
issues, working off a Chairman's list of questions about the
nature of periodic or subsequent reporting of significant
modifications, with the United States trying to keep the content
and periodicity of reports to a minimum, emphasizing only the
need to report significant changes, and others such as Hong Kong
and Taiwan pushing for more frequent and analytical approaches.
The Chair said that for the fall, he would issue a revised paper
reflecting the NG Rule's progress on the transparency issue
overall. Shark