Transcript No Slide Title

WTO, NAMA, DOHA and ITA
AETIC Trade Acqui 22 September 2008
by Hans Driessen Océ-Technologies B.V. Netherlands
Contents
1. WTO Section
1.1
1.2
1.3
1.4
1.5
Mission
History
GATT
Uruguay Round
WTO
2. NAMA and NTB’s
2.1
2.2
2.3
What is NAMA
Definitions Tariff
Swiss Formula
3. DOHA
4. ITA
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Mission WTO
“The WTO is the only international organization dealing
with the global rules of trade between nations.
Its main function is to ensure that trade flows as
smoothly and freely as possible”
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History WTO
Attempt to create an International Trade
Organization shortly after WW II (Havana Charter)
Attempt failed, however, 23 countries agreed to
reduce tariffs in a “General Agreement on Tariff and
Trade” or GATT: 23 founding members, or so called
“Contracting Parties”
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GATT signed in 1947
GATT is aiming on reduction of tariff barriers related
to trade in goods only.
GATT still is base for all subsequent trade
agreements
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GATT
Article 1: Most-Favoured-Nation treatment:
Conditions applied to the most favoured nation (the one with the
least restrictions) apply to all nations. No discriminations between
MFN’s
MFN in EU
EU: See B. General rules concerning duties
1. The customs duties applicable to imported goods originating in
countries which are Contracting Parties to the General Agreement
on Tariffs and Trade or with which the European Community has
concluded agreements containing the most-favoured-nation tariff
clause shall be the conventional duties shown in column 3 of the
schedule of duties. Unless the context requires otherwise, these
conventional duties are applicable to goods, other than those
referred to above, imported from any third country.
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GATT - some
important articles
Article VI:
Anti dumping (less than a normal value) and
countervailing duties (to compensate export subsidies)
Article VII:
Customs value (in those days “sold or offered for sale”)
Article IX:
Marks of origin
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GATT follow-up
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Signatories agreed to further liberalize trade (tariffs)
 Signatories agreed for special provisions for less
developed countries as well
 8 rounds of negotiations completed.
 During Tokyo round (end seventies) Non Tariff
Measures for first time on agenda
 Last one was Uruguay round which lasted 87 months
 At present Doha round is held. Meanwhile also taking
up 80 months (to August 2008)
 Doha more or less failed in July 2008
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Uruguay Round
Early 80’s economic recessions:
Resulting in a system of increased protection through
subsidies on agricultural trade and bilateral market
sharing agreements with competing countries
Increased importance of global trade
Increased importance of trade in services (no trade
agreements for that in those days)
Deteriorating system of trade policy
leading to:
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Necessity to start a new round: Uruguay Round in 1986
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Uruguay Round
Completed in 1993 (60 agreements in 550 pages!!)
Ambitious program:
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Include services
Capital
Intellectual property
 Reform Trade in sensitive areas such as Textiles
and Agriculture (price-distorting farm subsidies and
quota systems)
Original GATT updated and WTO was established and
began as of 1 January 1995 (Marrakesh agreement)
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Uruguay Round
Uruguay round also gave a number of deadlines to be
completed for pending issues, one of which:
1998: Rules of origin: Work program on harmonization
of rules of origin to be completed (20 July 1998)
This expired already a while ago.
The good news: It also led to a swiftly agreed deal for
freer trade in Information Technology that was signed
in December in Singapore during Ministerial Conference,
called ITA (Information Technology Agreement)
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Main activities:
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WTO
Organization for liberalizing Trade (and permitted
exceptions)
Forum for Governments to negotiate Trade agreements
Body to settle Trade disputes
It operates a system of Trade rules
while
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protect consumers
prevent the spread of diseases
Possibly leading to trade barriers
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Focus on three major areas of Trade:
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WTO
Trade in Goods
Trade in Services
Trade related aspects of IPR (Intellectual Property
Rights)
Principle of “National Treatment”, giving others the
same treatment as the national ones.
System of gradually introduced changes through
progressive liberalization. Developing countries usually
have more time to introduce new agreements.
System promotes predictability, stability and
transparency through official publications.
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WTO
WTO nothing more than set of rules.
Principles of Trading System:
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Without discrimination
MFN principle (not discriminate as well between
domestic and foreign products)
As freely as possible (also NTB’s included): open, fair
and undistorted
Predictable (bound commitments)
More competitive
More beneficial for Less Developed Countries
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WTO
Decision making process through consensus
Top is the Ministerial Conference which meets once
every two years.
Below that is the General Council and working groups
reporting to the GC.
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Questions WTO?
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NAMA: Non-Agriculture Market Access
Scope: Simply everything, except Agriculture.
Large part of worldwide trade
NAMA negotiations successful in Uruguay Round:
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What is NAMA
some 50% cut in tariffs to the developed countries
new tariff bindings (maximum duties or “ceiling level”)
leading to:
Sharply increased predictability for Trade
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What is NAMA
Also referred to as Industrial products or manufactured
goods
Major step ahead in Uruguay Round for market access
to developed countries
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Tariffication:
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Relatively high duties on sensitive products: For
industrialized countries tariffs of 15% and above
Tariff escalation
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Used in Agriculture to convert quotas etc into tariffs so to
have better coverage and more transparency
Tariff Peaks:
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Definitions tariffs
Higher tariffs on semi finished products and higher on
finished products. Protects domestic processing industries,
but discourages the developments thereof
Tariff Binding (or Bound rates)
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Ceiling level for maximum level for levying duties
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Countervailing duties:
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Definitions tariffs
Additional duties to counter export subsidies
Anti Dumping duties:
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Additional duties for products sold at unfairly low prices
(usually lower than sales price in home market)
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Reduction in tariffs
As of Tokyo Round formulas as alternative to product
cuts
Mathematical Formula to calculate the effect if tariff
rates will be cut in Trade negotiations is Swiss formula.
System to harmonize existing high and low tariffs to
reach a maximum allowed tariff in a certain period of
time (high tariffs are degressively reduced faster than
lower tariffs).
Alternative to linear tariff cuttings (fix percentage)
proposed by Switzerland during the Tokyo Round.
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Swiss Formula
Swiss Formula: Z = AX / (A+X)
 X = Initial Tariff Rate
 A = maximum final tariff rate and the coefficient (agreed to
represent the level of tariff cutting)
 Z = final tariff rate that result.
Example:
 Coefficient = 30 (final tariff of 30% of existing one) = A
 Initial tariff: 100 %
 Z = 30x100 / (30+100)
 Z = 3000 / 130 = 23% = final tariff rate that results.
or
 Same cut on an initial tariff of 15% (= A)
 Z = 30x15 / 45 = 10% = final rate that results.
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Questions NAMA?
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TBT
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TBT: Technical Barriers to Trade Agreement
 Aiming on elimination of different regulations,
standards, testing and certification procedures
 Agreement on code of practice for standards by central
governments, but also local ones
 Countries should recognize each other’s standards
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NTB
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Definition: Any measure other than tariff that protects
domestic industry through import restrictions.
 No official WTO definition exists
 Most important Non-tariff barriers:
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Import licensing
Rules for the customs valuation of goods
Pre-shipment inspection (Veritas etc.)
Rules of origin: made in, where and how to determine?
Investment
Others
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NTB
How to resolve NTB’s:
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Identify, categorize and examine NTB’s within negotiation
group.
Resolve through bilaterals, on sectoral bases or
multilateral NTB Agreements
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Doha round
Ministerial Conference in Doha (Qatar)
launched new negotiations with 21 subjects in November
2001
Known as DDA (Doha Development Agenda)
Deadline:
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January 2005
New deadline end of 2006
Latest deadline 2008
missed!
missed!
missed again!
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Finally failed during the July session in Geneva 2008
 One on the subjects (again): Rules of Origin
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Doha round
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Negotiations in the TNC (Trade Negotiations
Committee)
 Issues:
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Implementation of current WTO Agreements (Uruguay)
mainly at developing countries
21 subjects in total.
For this lecture 2 main ones:
1. February 2002 the Chairman of General Council decided
in the first TNC that negotiations on NAMA would take
place in a Negotiating Group on Market Access (NGMA)
linked to TNC
2. Completing harmonization of NPRoO
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Doha round and NAMA
DOHA Declaration par 16:
“reduce, or as appropriate eliminate tariffs, including the reduction
or elimination of tariff peaks, high tariffs, and tariff escalation, as
well as non-tariff barriers, in particular on products of export
interest to developing countries”
on all non-agriculture products
How?
 Through mathematical formula (Tokyo round) or product by
product (Uruguay Round)?
 Decision made to work on “modalities” but missed the deadline
of 1 August 2003.
 Members agreed on new target date of December 2005
(Ministerial Conference at Hong Kong)
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Doha round
DDA General Council decision on 1 Aug 2004
(July package), adopts the framework set out in
Annex B. (called “NAMA Framework”)
Framework to determine modalities in Market Access for NonAgricultural products
 Simply put: Which non-agricultural products are in scope?
 Future work amongst others :
 The formula
 Flexibility for developing countries
 Non-ad valorum duties shall be converted to ad valorum
 (Simply put: what to work on)
Reaffirmed again on reducing or eliminating tariffs
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NAMA Framework reaffirmed at Hong Kong
Ministerial Declaration in 2005 in Paragraph 13-24
Status as per July 2008, by Ambassador Don
Stephenson*:
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*
Doha round
July 2008 Package to settle range of questions
Series of meetings held in Geneva 21-30 July 2008
Scope to be defined
Don Stephenson: Ambassador of Canada and Chairman of the Negotiating
Group on Market Access
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Scope to define modalities presented on
10 July 2008 (3rd revision):
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Doha round
Product coverage: Fish, Oils, Silk, Cotton and the like.
Nothing of chapters High-Tech (already in ITA)
Coverage based upon HTS chapters (2002 version)
No High-Tech, no Automotive and the like
Of course: there is no High-Tech exports of developing
countries
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Doha round
Final text of the NAMA modalities (July 2008)
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Tariff reductions through “Simple Swiss” Formula with
separate coefficients for developed and developing
countries
One option for developed countries, three for developing
countries (rule based)
Anti concentration mechanism (preventing entire sectors
from tariff cuts)
Overall the approximately 40 members applying the Swiss
formula (others have special provisions), account for 90%
of NAMA trade
Non-tariff barrier proposals (for many sectors!)
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Doha round
Why it failed:
Almost agreed on everything except a SSM: Special
Safeguard Mechanism:
The extent to which developing countries would be
able to raise tariffs to protect local farmers from import
surges (often caused by export subsidies: unfair
competition)
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Next steps?
Elections in the US, elections India, Lost of momentum
will all influence ongoing talks. Developing countries
are suffering most
Result: More focus on increased number of bilateral
agreements
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Doha round
EU-Korea, EU-Asean, EU-India, EU liberalizing trade
with Japan in non tariff talks
US-Korea, US-Malaysia, many many more
Undermining the importance of WTO, critics say.
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Questions Doha?
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ITA Declaration
Agreement made during Ministerial Conference in
Singapore 1996, implemented in 1997.
Started with 29 participants, covering 80% of world
trade in IT products; now to 70 signatories, covering
97% of world trade
Product coverage specified in 2 annexes:
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Annex A: HS Headings
Annex B: Positive list of specific products
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ITA Declaration
18. Taking note that a number of Members have agreed on a
Declaration on Trade in Information Technology Products,
we welcome the initiative taken by a number of WTO
Members and other States or separate customs territories
which have applied to accede to the WTO, who have agreed
to tariff elimination for trade in information technology products
on an MFN basis as well as the addition by a number of
Members of over 400 products to their lists of tariff-free
products in pharmaceuticals
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ITA Declaration
Most important articles (total just 10 articles):
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Art. 3: Periodic meetings for product review to modify
annexes A and B, due to technological developments
Art. 5: Frequent meetings to consider any divergence
among members in classifying IT products.
Participants agree on a common objective of achieving a
common classification, based on HS nomenclature
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The Dispute 2008
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US and Taiwan and Japan brought case to WTO dispute
settlement body.
 US is blaming EU to classify IT products incorrectly (in
headings out of ITA scope) as well as ignoring
technological developments (convergence) by
classifying these out of ITA headings
 EU argues that US c.s. does not want to negotiate,
according ITA agreement and already pushing for
months to start reviewing the goods concerned
 EU also counters issue that products were not in scope
in original Agreement (printers as example)
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The Dispute 2008
State of Affaires:
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60 days consultation period (informal negotiation to
reach consensus) failed
WTO forced to take a legally binding decision
Outcome difficult to predict
Very important issue to follow for IT and CE Industry
Also crucial for possible new signatories, such as Brazil,
Mexico or South Africa
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Questions ITA
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