MEETING OF THE WTO COMMITTEE ON TRADE AND DEVELOPMENT,

UNCLAS GENEVA 000932 PASS USTR FOR VERONEAU, ROHDE, SHACKLEFORD EEB/TPP/MTAA FOR CRAFT USDA/FAS/ITP, MTND USDOC FOR ITA E.O. 12958: N/A TAGS: ETRD WTRO USTR SUBJECT: MEETING OF THE WTO COMMITTEE ON TRADE AND DEVELOPMENT, OCTOBER 16, 2008 ¶1. SUMMARY: WTO Members held a meeting of the Committee on Trade and Development (CTD) on October 16, 2008, followed immediately by a Dedicated Session of the CTD on Regional Trade Agreements (RTAs). During the regular CTD meeting, the EC and Norway were again questioned on the implementation of their respective GSP programs by Brazil, India and Pakistan. A presentation was provided by UNCTAD concerning the focus of its work on commodities. Discussion of a proposed transparency mechanism for preferential trade agreements was reviewed in light of the recent circulation of the proposal by the proponents as a JOB document. The notification of the Gulf Cooperation Council Customs Union as an Enabling Clause Agreement was discussed, with the United States and the EC pressing for this agreement to be notified under Article XXIV of GATT 1994. In a dedicated session of the CTD, the United States and the EC posed follow-up questions to Egypt and Turkey on their Free Trade Agreement notified under the RTA Transparency Mechanism. END SUMMARY. EC GENERALIZED SYSTEM OF PREFERENCES ¶2. Pakistan, Brazil and India repeated their concerns that the EC has still not adequately answered their questions, and noted disappointment that new questions posed at the July CTD were yet to be answered by the EC. Brazil noted that they were still waiting to review the EC's 2007 data, and once received, they would review the data to formulate a bilateral request. The EC responded that they had entered the last quarter of the current 3 year GSP scheme, and thought that all follow-up concerns had been resolved. The EC distributed a new fact sheet as a room document at the meeting which provided internet links to information on its GSP scheme. The EC added a new element related to good governance to their "GSP Plus Arrangement", and noted that interested countries needed to apply for this new scheme. The Chair noted that he would continue informal consultations and that the issue will stay on the agenda for the next meeting. NORWAY GENERALIZED SYSTEM OF PREFERENCES ¶3. Brazil again questioned Norway's new criteria for designating beneficiary countries for its GSP program, noting that differentiation should be carefully considered in light of the Enabling Clause. India noted that there are possible systemic issues with Norway's GSP scheme, and that they want to see a process that is objective and does not lead to differentiation. Pakistan also noted systemic concerns, and asked for further clarification on why the UN population criterion is a necessary criterion for beneficiary eligibility. Norway provided additional responses to Brazil's follow-on questions in a room document (later circulated in WT/COMTD/65/Add.3). Brazil and India noted that they would review the new replies and engage with Norway bilaterally and may also want to review the issue further at the next meeting. COMMODITIES - PRESENTATION BY UNCTAD ¶4. Samuel Gayi of UNCTAD's Special Unit on Commodities provided a presentation on UNCATD's work program on commodities (in accordance with the Accra Accord). His presentation noted that UNCTAD's commodities work would be carried out under three pillars: Research and Analysis, Intergovernmental Process, and Technical Cooperation (and in coordination with other international and regional actors, and relevant international commodity bodies). In these three areas, UNCTAD would continue to play a key role in addressing the trade and development problems associated with the commodity economy in all commodity sectors - agriculture, forestry, fisheries, metals and minerals and oil and gas. UNCTAD would also monitor developments and challenges in commodity markets and address links between international commodity trade and national development, particularly with regard to poverty reduction. UNCTAD would also enhance its efforts to help commodity-dependent developing countries to harness development gains from the current commodity boom; deal with trade and development problems related to commodity dependence. He also noted the establishment of a new Special Unit on Commodities (SUC) (i.e., former Commodities Branch of the Division on Trade in Goods and Services),and that the SUC is under the direct responsibility of the Secretary General. TRANSPARENCY IN PREFERENTIAL TRADE ARRANGEMENTS (PTAs) ¶5. The Chair noted his continued consultations on transparency in PTAs with the proponents and interested Members and that the current text of the proposal was circulated (on 10/15/08) in document JOB(08)/103. He recommended an open-ended informal dedicated CTD meeting on the draft proposal. Brazil made a brief intervention explaining the history of the proposal and the proponent's support for transparency. Supporting remarks were made by the United States, India and China as proponents of the current proposal. ¶6. The EC, Japan and Canada have participated in informal consultations with the proponents. At the CTD meeting, the EC noted its support for transparency in both PTAs and RTAs and that this new mechanism would be a good compliment to the existing RTA Transparency Mechanism (TM). She noted the need to discuss the form of the decision that will implement the PTA TM. [Note: the EC has noted strong opposition to the PTA TM being implemented on a permanent basis as long as the RTA TM is still operating on a provisional basis. End Note.] The EC also expressed interest in reviewing a mock-up of the factual presentation that will be prepared by the WTO Secretariat under the PTA TM. Japan noted the importance of transparency in PTAs and that it looked forward to continued discussions under the Chair's guidance. Canada thanked the proponents for the informal consultations, and noted its support for the proposal. ¶7. Other countries making interventions included Barbados, Chile, Costa Rica, El Salvador, Mexico, Nigeria and Pakistan. Barbados (possibly on the urging of the EC) noted interest in the PTA TM being implemented only on a provisional basis. El Salvador noted interest in the scope of the proposal discussed in Section A of the JOB document, and an interest in seeing a mock-up of the proposed factual presentation. Others noted general support for the informal discussions the Chair proposed. ¶8. Brazil made additional remarks noting appreciation for Member expressions of support. He noted that a mock-up of the Factual Presentation was under development and urged Members to concentrate on technical aspects in future discussions. He recalled that the General Council decision did not foresee provisional implementation of the current proposal, and noted the different nature of PTAs and RTAs and that the proponents are taking into account the limited experience of the RTA TM with respect to timeframes, for example. The EC also made additional remarks to note that the mandate from the General Council does not mention a mechanism, it only foresees transparency. Arrangements for implementation are currently contained in the JOB document, and that needs to be further considered in future discussions. ¶9. The Chair encouraged Members to differentiate between technical aspects and political aspects of the proposal as discussions moved forward. He closed by noting that he needs to report to the General Council by December and would like to report success by that time. It was agreed that the proposal will be discussed again at the next CTD. DUTY FREE QUOTA FREE (DFQF) MARKET ACCESS ¶10. This is a standing agenda item. Lesotho intervened on behalf of the LDC Group asking those developing countries which have implemented DFQF programs to provide information on those programs in a transparent manner. He noted the LDC's hope that rules of origin will be simple and transparent. He also encouraged developed countries to fully implement their Hong Kong obligations on DFQF. NOTIFICATION OF THE GULF COOPERATION COUNCIL (GCC) AGREEMENT ¶11. The EC and the United States reiterated their concern that the GCC Agreement, which is a customs union, be notified under Article XXIV of GATT 1994 vice the Enabling Clause. The EC noted that there is a sound legal justification that should drive a Member's decision on how to notify an RTA and that this decision is not a simple preference. She noted that Paragraph 2(c) of the Enabling Clause does not authorize the development of customs unions, as customs unions cover non-tariff barriers (NTBs). As Members have not designated any NTBs under Paragraph 2(c),the Enabling Clause is not the appropriate mechanism for notification of a customs union. She reiterated that the GCC countries should notify this agreement under Article XXIV of GATT 1994 and that this issue should continue to be discussed in the Committee on Regional Trade Agreements (CRTA). The United States highlighted that it appeared that some GCC Members may be exceeding their WTO tariff bindings by applying the GCC common external tariff. This would be inconsistent with a Member's obligations under GATT Article II, unless otherwise permitted under the GATT 1994. It would appear, therefore, that if GCC Members seek to apply tariffs beyond their bindings, the GCC Agreement would need to be an FTA or customs union consistent with Article XXIV, and, accordingly, would need to be promptly notified in accordance with paragraph 7(a) of that Article. The United States requested that the issue be added to the CRTA agenda for its November meeting. ¶12. The representative of Saudi Arabia noted that they would need to review the comments made but that it still believed that the GCC has the right to notify under the Enabling Clause, and that the issue should not be addressed at the CRTA meeting. Kuwait supported the intervention by Saudi Arabia and noted that the issue should be closed. Brazil noted that the issue raises systemic concerns, and that the issue should be addressed further in writing. Brazil also noted past precedence for customs unions being notified under the Enabling Clause. ¶13. The Chair concluded that the CRTA will decide if the issue is discussed at its November meeting, and that the CTD will need to revert back to the issue at the next CTD meeting. DEDICATED SESSION ON REGIONAL TRADE AGREEMENTS: EGYPT - TURKEY FREE TRADE AGREEMENT ¶14. This meeting was the first dedicated session of the CTD to examine an RTA under the RTA Transparency Mechanism (document WT/L/671). Turkey and Egypt gave introductory remarks, noting their appreciation for the Secretariat preparing the Factual Presentation of their FTA and thanking the Members for their questions. They also made general statements in support of the multilateral trading system and that FTAs complement the multilateral process and can facilitate further liberalization particularly among developing countries. They provided general details on the agreement itself (as outlined in the Factual Presentation) and noted that the FTA has stimulated investment and created opportunities for local resources to remain competitive. The United States and the EC posed follow-up questions on this FTA. ¶15. The United States requested additional information be provided on Turkey and Egypt's written reply to question 13 in WT/COMTD/RTA/1/2. The United States asked that given Article 1.5 of the TBT Agreement specifically excludes from the scope of the TBT Agreement provisions any "SPS measure" as defined in Annex A of the SPS Agreement, how are Parties expected to ensure, under Article 11 of the RTA, that their SPS measures are consistent with the rules and procedures of the TBT Agreement? Egypt and Turkey replied that the SPS Agreement is not sufficient in scope, thus believe they also need to include reference to the TBT Agreement applying under this article of the RTA. ¶16. The United States requested additional information be provided on Turkey and Egypt's written reply to question 16 in WT/COMTD/RTA/1/2. The United States requested further elaboration on how this agreement covers substantially all trade without agriculture being covered and how the use of diagonal cumulation meets Article XXIV requirements? Egypt and Turkey replied that the Parties don't believe there is any threshold for "substantially all trade", and thus believe that the overall percentage of trade liberalization covered by the agreement, even with limited agriculture coverage, is not very low. Also, article 10.3 of the RTA foresees further bilateral liberalization taking place in the future. Diagonal cumulation is allowed for under the RTA and is compatible with the EU model, meaning the protocol of rules of origin is compatible with the EU system. [Note: Egypt and Turkey explained after the meeting that all of the countries in the Euro-Med region that have FTAs among themselves and which also have FTAs with the EU use this form of diagonal cumulation. Egypt and Turkey are not the only countries engaged in this practice in the Mediterranean region. End Note.] ¶17. The EC noted that on several accounts, the coverage of this RTA goes beyond the simple reduction of tariffs and includes the coverage of NTBs. As such, it appears this agreement would have warranted a notification under Article XXIV. Egypt and Turkey replied that the "development dimension" of this RTA was taken into account when deciding how to notify it. Nothing in Article XXIV prohibits notification under the Enabling Clause. The Parties believe it is a privilege provided to developing countries to notify their RTAs under the Enabling Clause. ¶18. The Chair requested that Members provide any additional written questions by 23 October 2008 [Note: The United States submitted written questions. End Note.] Replies from Egypt and Turkey were to be submitted by 6 November 2008. ALLGEIER