NAMA, Services and TRIPS: Possible Outcomes and Implications for Mediterranean Products

Tim Josling Stanford University

Motivation • Put Agricultural talks in the perspective of DDA as a whole • Indicate state of play in non-agric parts of DDA • Suggest significance of outcomes in other areas to Med agric products 2

Non-Agricultural Agenda

• NAMA (all but HS01-24 and hides, cotton, but including fish) • Services • TRIPS • Trade Facilitation • Rules • DSU 3

NAMA: overview – Non-agricultural market access talks have been going slowly – Level of ambition depends on agricultural talks (linked in HK Para 24) – Modality of tariff cuts controversial: • EU and US suggested Swiss Formula • Brazil, Argentina and India favored “modified Swiss formula” that maintains relative tariff levels – Issues of unbound tariffs, preferences, sector-specific agreements and NTBs have also proved difficult 4

NAMA: Framework Agreement – Reduce (or as appropriate eliminate) tariffs – Reduce/eliminate tariff peaks, escalation – Lower tariffs “in particular” on products of export interest to developing countries – S&DT and “less-than-full reciprocity” required – Non-linear formula reductions on a line-by-line basis: no

a priori

exclusions – Sectoral agreements OK if non-dicriminatory 5

NAMA: modalities – Draft of modalities circulated week of June 19 – Tariff cuts using Swiss Formula 10/15 – Reductions from bound rates (or some multiple of MFN rates for unbound tariffs) – Credit for autonomous liberalization since base period (2001) – Conversion to

ad-valorem

(cf. agriculture) rates and binding those rates – Take into account needs of those with non-reciprocal preferences, and those that rely on tariff revenue for public expenditure 6

NAMA: modalities – Flexibility for developing countries through • (a) smaller cuts for [10] percent of the lines, if this does not exceed [10] percent of the value of imports • (b) Keep unbound and make no cuts for [5] percent of lines, if less than [5] percent of the value of imports – SVEs get extra flexibility – No tariff cuts required by LDCs but they are encouraged to bind tariffs – Notify, categorize and negotiate reductions in NTBs (set up NTB Resolution Mechanism?) 7

NAMA: significance for agriculture

• Necessary for political “balance” – EU, US need better access into emerging markets – Japan also keen to get something in return for agricultural concessions • Can exacerbate economic “balance” – Agricultural tariffs will be more distortive – Sets future challenge for agricultural tariffs 8

Services: Overview – Negotiations mandated in UR and incorporated in DDA – Request and Offer approach used to liberalize market access for services – Some discussion of rule changes (e.g: adding a safeguard for service trade) – Some reluctance on behalf of developing countries to engage in further liberalization 9

Services: Framework – Negotiations to center on “offers” of sectors to liberalize – “High quality” offers, progressively “higher levels of liberalization”, no

a priori

exclusions – Focus on services of export interest to developing countries (e.g. Mode 4) – Conclude negotiations on rule-making in services – Offer targeted assistance to developing countries 10

Services: Progress so far – Few significant offers of service liberalization – Collective requests (e.g. legal services) tried – End-July date depends on Agriculture, NAMA progress – Little progress on Mode 4 (labor movement) – Some progress on disciplines on domestic service regulations 11

Services: significance for agriculture – Political balance: • EU needs improved market access for services to offset concessions in agriculture • India and Brazil under pressure to open up service markets – Economic impact on labor adjustment – Significance for global food service firms – Med products influenced by labor movement 12

TRIPS discussions • TRIPS Council responsible for negotiation on some mandated issues • Public Access to Medicines • Geographical Indications (GIs) – Negotiations ongoing (in TRIPS) on multilateral list for wines and spirits – Discussions continuing about extension of coverage of “additional” protection beyond wines and spirits 13

TRIPS discussions • List of GIs for wines and spirits was called for in TRIPS • Discussions hung up on question of whether to make the list mandatory or voluntary – EU view is that it be mandatory but with chance to “opt-out” – US view is that list should be a resource that countries could use if they wished in setting their own IP rules • No resolution yet reached 14

TRIPS discussions • Extension of Article 23 protection beyond wines and spirits – Disagreement as to whether it is in the mandate – Disagreement on need for extended protection – Becoming linked with biopiracy and protection of traditional knowledge (“disclosure” of use of biological resources and agreement for benefit-sharing in patent applications) – Possible agreement to make TRIPS Art 29 “supportive” of CBD 15

TRIPS: Significance for agriculture • Links with agricultural talks – EU has insisted on need to get some satisfaction on GIs – “Claw back” list of 41 items (wines, cheeses, meats) that would revert to GIs from generics – Switzerland has indicated tradeoff for tariff cuts (e.g: extension of Article 23 protection for cheese) 16

TRIPS discussions • Links with Med Products?

– Register would consolidate bilateral GI deals in wines and spirits – Extension would give added protection to olive oil and other (non-wine) products 17

Trade Facilitation: Framework • Clarify and improve articles on customs procedures • Enhance technical assistance and support of capacity building • Effective cooperation among customs authorities • Match implementation to capacity • Opt-out if support for infrastructure is not forthcoming 18

Trade Facilitation: Progress • Good progress in drafting text • Countries wanting to see evidence of progress in other areas before signing off • Focus on technical assistance (A4T) and on capacity building to look for “win-win” solutions • Deal could come together quickly if the need arose • Agricultural trade could benefit from improved trade facilitation, particularly for perishables 19

Rules: Changes in Articles • Several aspects of the WTO rules have been under discussion in RLG. Some with most application to agriculture are: – Anti-dumping – Industrial subsidies – Fish subsidies – RTAs 20

Rules: Anti-dumping • Controversial issue, sensitive in US • “Friends of Anti-Dumping Negotiations” insisted on negotiations to: – mitigate “excessive effects” of A/D, – prevent A/D measures from becoming permanent, – reduce the cost of cases, – quickly end “unjustifiable” investigations, – Improve and clarify rules on determining dumping and injury • Not much progress reported to date 21

Rules: Industrial Subsidies • Attempt to prohibit inputs (e.g. fuel) from being provided to industries at less than market price • Attempts to prohibit low-cost loans • Restoration of lapsed clause in SCM • Could have direct impact on agriculture, absent another peace clause 22

Rules: Fishery Subsidies • “Friends of Fish” (Brazil and others) argue for total elimination of subsidies for fishing – Developing countries could provide capacity-enhancing subsidies if fisheries were not at risk – Artisanal fisheries could be subsidized even if not sustainable – Small-scale fisheries would be actionable • Japan, Korea prefer red and green subsidy boxes to classify individual subsidies (“bottom-up” approach) as in agriculture 23

Rules: RTAs • Some efforts to clarify Article XXIV • Key Issue: definition of “substantially all trade” – i.e. compulsory inclusion of agriculture in RTAs • Unlikely to get any major clarification in DDA 24

Environment and DDA • Committee on Trade and Environment (CTE-SS) discussing several issues • Definition of environmental goods – Important for NAMA discussions where these goods could get freer (or even duty free) access – Problem with multi-use goods – Issue is whether PPM is relevant to classification • Relationship with MEAs • Could impact agriculture 25

DSU

• Discussion of changes in DSU rules have been progressing (in DSU-SS), such as: – Participation of third countries in consultation stage – Rules for withdrawing sanctions in “post retaliation” phase • Agreement likely as part of the final package 26

Conclusion

• Non-agricultural elements of negotiations are lagging • Several useful rule changes and some reduction of policy “water” would be lost if the DDA stalled • Agriculture has held up the talks in other areas • Agriculture would stand to gain indirectly from several of the changes envisaged in the non-agric talks 27