Transcript The General Agreement on Trade in Services (GATS)

Regional and Bilateral
Trade Agreements
Lance Graef
www.nathaninc.com
Some terms
• Regional and bilateral FTAs and preferential trade agreements are
exceptions to Article I of GATT/WTO (MFN)
• Free trade agreements
– Reciprocal
– Bound (committed in a schedule)
 Disciplined safeguard action
– Subject to dispute resolution
• Preferential trade arrangements
– Unilateral
– Not scheduled
 Expedited safeguard actions
– Not subject to dispute resolution (except as provided for the
preference offering country)
2
WTO exceptions for RTAs/PTAs
• Goods
– Article XXIV
 Cover substantially all trade
 Not raise barriers to non-members
 Implement in 10 years
– Enabling Clause
• Services
– Article V
• Doha Round Rules Group
3
RTAs—pluses and minuses
• Economic benefits
–
–
–
–
–
Trade creation
Larger market (returns to scale)
Attractive to FDI
Lower prices due to tariff elimination
Increased efficiency resulting from greater competition
• Economic costs
–
–
–
–
–
Trade diversion
Rise in prices if absorbed in tariff cut
Complex difficult to implement rules especially rules of origin
Revenue loss
Structural adjustment within the RTA
4
Pluses and minuses
(continued)
• Non-economic benefits
–
–
–
–
Faster liberalization
Greater certainty (locking in reforms)
Related stability for investors
Increased bargaining power
• Non-economic costs
– Increased demands on limited government resources
5
Rise of non-MFN trade
• WTO estimates of trade flows under RTAs and
PTAS
– 40% of world trade 1988 – 1992
– 42% 1993 -1997
• WTO 10th Anniversary Report
– Exceeds 50 percent
– 176 FTAs notified since 1995
 150 currently in force
 Estimated 70 more in place
6
New generation FTAs are
different
Old Generation
–
–
–
–
Import substituting
Limited coverage
Non-compliance
Lacked political
commitment
– Weak secretariats
– Limited private sector
role
New Generation
– Trade creating
– Comprehensive
coverage
– Dispute settlement
– High commitment
– Strengthened
institutions
– Private sector
involved
7
Classification matrix for free trade
agreements
Closed
WTO
WTO (+)
Open
Maintain high external
tariffs; basic commitments
to lower duties
Lower external tariffs; basic
commitments to lower duties
Maintain high external
tariffs; make commitments
to reforms that go beyond
the WTO
Lower external tariffs; make
commitments to reforms that
go beyond the WTO
(Services, investment laws,
IPR, trade facilitation,
dispute settlement)
(Services, investment laws,
IPR, trade facilitation, dispute
settlement)
Weaker
Weaker
Stronger
8
What is to be done
• First best solution is successful completion of
the Doha Round
• Second best to make RTAs trade creating
– and not prevent multilateral liberalization
• Clarify Article XXIV in the Doha Round
9
Trends in Mozambique’s Trade with
SADC—the Agenda
Mozambique exports by
destination, 1999-2004
(Million Dollars)
1999
2000
2001
2002
2003
2004
121.6
119.9
156.4
173.3
256.6
295.4
SADC (minus electricity)
58.8
52.9
99.1
78.0
143.4
193.1
EU
74.0
93.6
448.4
336.0
656.8
1012.7
EU (Minus Aluminum)
74.0
33.4
64.8
32.7
89.2
97.7
Select Developing Countries
45.8
31.3
16.9
29.3
28.7
105.7
Select Developed Countries
24.1
33.3
37.2
67.8
25.5
23.0
Transition Countries
0.0
0.0
0.0
0.2
0.0
16.2
Other
5.3
85.9
44.2
75.4
76.3
50.9
Total
270.8
364.0
703.1
682.0
1043.9
1503.9
Adjusted Total
208.0
236.9
262.2
283.4
363.1
486.6
SADC
Source:INE
11
• Most of the increase in total exports has come from aluminum and
electricity
– Aluminum exports begin in 2000 and have risen to 915 million
– Electricity exports have increased 40 million in the same time period
• If these are deducted from the total
– Have more than doubled
– Recovered strongly from 2002 decline
• Exports to SADC have more than doubled but increased only
slightly as a percentage of adjusted export from 37 to 39 percent
• Exports to developing countries have increased significantly
• Exports to the EU are up strongly
12
Mozambique’s exports to SADC
(non-electricity), 1999-2004
(Million Dollars)
1999
2000
2001
2002
2003
2004
Malawi
4.8
11.0
10.3
10.3
32.8
49.3
Swaziland
5.2
0.6
0.7
0.5
17.6
2.7
42.9
44.0
83.4
59.2
81.7
129.0
Zimbabwe
5.4
0.4
3.6
4.5
4.7
7.1
ABMLND
0.4
0.6
1.0
3.4
6.9
5.1
58.8
52.9
99.1
78.0
143.4
193.1
RSA (minus electricity)
Source:INE
13
Products of export interest in
SADC
• South Africa – fish, coconut oil, pimentos,
pigeon peas, bananas, guavas/mangoes,
grapefruit, oilcake, lumber
• Malawi – coal, beans, maize, tobacco, cooking
oil
• Zimbabwe – coal, fish, wheat flour
14
Disappointments
• Declines in some traditional exports
– Tires, apparel, wood products
• Expected non-traditional exports have not
appeared
– Footwear
– Recorded agricultural trade with Malawi
– Sugar to SADC
15
Recommendations for the SADC
Agenda
•
Accelerate tariff reductions
– Implementation by Malawi, Zimbabwe
– Current decision to eliminate duties under 5% is best efforts and doesn’t
address backloaded products of export interest to Mozambique in Non-SACU
offers
– Revisit sensitive list (drawn up 4 years ago)
•
Liberalize rules of origin
– Single transformation to replace MMTZ quotas
•
SPS Protocol
•
Services
– Transport
– Tourism
•
Accession offers Angola, Madagascar
•
Common External Tariff
16
Relationship of SADC to other
negotiations (overlapping agreements)
• EPA negotiations (EU would like an agreement with a
Customs Union)
 BLNS part of SACU
 de facto partners in RSA/EC agreement
 Negotiating FTA with US
 Tanzania part of EAC
 Four SADC members negotiating EPA with ESA (Malawi,
Mauritius, Madagascar, Zambia)
 RSA not participating
 SADC 14 committed to Customs Union (2010 not 2008)
• Bilateral negotiations by Mozambique
– Malawi, Zambia, Zimbabwe
– Should there be a SADC “enabling clause”
17
Economic Partnership Agreement
• ACP and GSP Plus
– Export Products
 Fisheries
 Sugar
– Rules of Origin
 Apparel
– Safeguards
– Services
– Capacity Building/Development
19
Relationship to other
negotiations and events
• ESA EPA negotiations include SADC partners
• SADC Customs Union
• GSP/EBA Reform in EU
– Still an option to withdraw
20
Mozambique’s assignment
• Negotiating strategy for non-agricultural and
fisheries market access
21
Export Trade
Exports, 1999-2004
(Thousand Dollars)
1999
2000
2001
2002
2003
2004
270.8
364
703.1
682.0
1,043.9
1,503.9
Aluminum
0.0
60.2
383.6
361.3
567.6
915.0
Electricity
62.8
67.0
57.3
95.3
113.2
102.3
0.1
0.2
31.3
Total Exports
Natural Gas
Agriculture
87.0
82.7
79.5
80.1
119.5
193.4
Fisheries
74.8
99.6
99.6
66.5
95.9
106.8
Other Goods
46.2
54.6
83.2
78.7
147.6
155.1
Source: INE
23
Preferential Arrangements—GSP,
EBA, AGOA
EU GSP January 2006
• GSP Plus
– General scheme covers 7200 products (300 new in
agriculture and fisheries)
– Duty free access for the poorly diversified
 5 largest products must account for 75% of total exports
and
 Less than 1% of total EU GSP imports provided that
beneficiary ratifies and implements 27 international
conventions (human rights, labor standards, etc.)
– Graduation
 Share exceeds 15% of total GSP, 12.5% for apparel
– Rules of Origin
• EBA
25
EBA
• EBA and GSP rules of origin the same
• EBA exceptions to duty free/quota free
– Tariff on bananas for LDCs will be free in January
– Tariff on sugar will disappear July 2009
– Quota for LDC will expand from 74 thousand tons in (MY
2001/2002) to 197 thousand tons (MY 2008/2009)
26
AGOA
• Mozambique participation low and declining
– Apparel declining
– Offset by tobacco appearing ??
27
Exports, Destinations, and
WTO Negotiations
Agricultural exports
Agriculture
87.0
82.7
79.5
80.1
119.5
193.4
Cotton
20.2
25.8
18.3
19.4
37.3
33.6
Tobacco
2.6
7.8
9.1
4.9
21.5
40.9
Sugar
5.5
4.3
8.0
22.3
16.1
48.1
Oilseeds
2.9
1.3
1.7
2.1
8.7
12.5
Cashew
33.1
20.0
13.8
13.2
10.1
29.2
Coconut oil
5.3
3.6
6.2
2.0
2.7
6.6
Vegetables
9.5
2.0
0.6
3.2
1.9
4.1
Oilcake
2.8
6.5
16.2
2.4
4.5
5.2
Wheat Flour
0.0
0.2
0.4
2.2
6.3
4.3
Maize
1.2
1.6
1.6
1.7
1.4
3.1
Tea
0.2
1.0
0.3
0.5
1.8
2.2
Other fruit and nuts
0.0
0.0
0.0
0.0
0.3
0.8
Cut flowers
0.0
0.0
0.0
0.0
0.1
0.2
Other agriculture
3.7
8.6
3.2
6.2
6.7
2.5
29
Destinations for key exports
Developed
Peas & Beans
Developing
x
Regional
x
Bananas
?
X
Grapefruit
X
X
Tea
X
Coconut Oil
X
Sesame
X
Tobacco
?
?
X
Cotton
X
X
X
Sugar
X
X
30
Selected agricultural schedules
EU
India
Japan
RSA
US
Grapefruit
12.8%
100%
10%
4%
1.9c/kg
Tea
Free
150%
12%
170%
Free
Maize
94ECU/ton
NB
12Y/kg
50%
25c/kg
Coconut Oil
12.8%
165%
4.5%
81%
Free
Sugar
339/414/t
150%
103.1Y/kg
105%
$1.46/kg
Cottoncake
Free
100%
Free
33%
.56c/kg
Tobacco
18.4/22.4/t
100%
Free
44%
11.4 -23.9c/kg
Cotton
Free
100/150%
Free
60%
31.4c/kg
31
WTO negotiations on agriculture
• Three Pillars
– Market Access
 High levels of tariffied products
 Minimum market access (TRQs)
– Domestic Support
 Not addressed in RTAs
– Export Subsidies
• Development Dimension
– Cotton
– Flexibilities for developing countries
– Special and differential treatment for LDCs
 Reserve portion of expansion of TRQs for LDCs, especially new
supplier LDCs
32
Exports of non-agricultural goods
Fisheries
74.8
99.6
99.6
66.5
95.9
106.8
Prawns
64.6
91.2
90.2
63.7
75.7
91.7
Other seafood
10.2
8.4
9.4
2.8
20.1
15.1
Other Goods
46.2
54.6
83.2
78.7
147.6
155.1
Wood
9.2
14.3
12.3
17.4
16.0
30.4
unprocessed
7.0
10.8
8.7
14.0
11.0
23.5
processed
2.2
3.5
3.6
3.4
5.0
6.9
Apparel
5.8
6.7
18.1
6.0
13.5
3.9
Coal
0.5
0.4
0.8
0.1
0.5
2.5
Steel containers/cables
0.3
0.4
3.5
0.6
1.0
2.3
33
Destinations for non-agricultural
exports
Prawns
Developed
Developing
Regional
x
x
x
x
X
Logs
Processed Wood
x
X
Apparel
x
X
Plastics
X
Coal
X
Steel Products
X
34
Selected bound NAMA tariff levels
EU
India
Japan
RSA
US
Prawns
18%
Unbound
1%
Unbound
Free
Coal
Free
25%
Free
Unbound
Free
Plastics
6.5%
Unbound
3.9%
30%
3.4-6.5%
Wood in
rough
Free
25%
Free
15%
Free
Plywood
7%
40%
10%
15%
Free
Apparel
12%
Unbound
16.9%
40%
15.9%
Pumps
1.7%
40%
Free
Free
Free
35
Non-agricultural market access
issues
• Level of ambition and flexibilities
– LDCS not expected to make commitments
 Is this good
– Developing country flexibilities
 Lower rate of reduction
 Longer phase-in
 Exemptions
• Sectoral negotiations
– Fisheries
– Wood
• Bound duty and quota free access for LDCs
• Erosion of preferences
36
Other WTO interests
• Services
– Tourism
– Telecommunications
– Other reforms ???
37
Why trade facilitation?
• Increase in competitive position
– Equivalent of reducing tariff on inputs between 26.5
points
• Increase in transparency equals increase in
predictability
– Uniform application of procedures/regulations
– Advance ruling
• Improved investment environment
• Facilitation measures already widely used
– Especially in Asia
38
Trade facilitation mandate
• Clarify and improve GATT to expedite the movement,
release and clearance of goods
– Article V Transit
– Article VIII Fees and Formalities
– Article X Transparency
• Enhance technical assistance/capacity building
– During Negotiations
– Post-Negotiations
• Establish provisions for effective cooperation between
customs and other appropriate authorities
• Facilitation issues
• Compliance issues
39
Trade facilitation mandate
(continued)
• Special and Differential Treatment
– Developing countries and LDCs separate
– LDC’s consistent with administrative/institutional
capabilities
• Take into account implementation capacities
• Including investment in infrastructure
• Negotiations required to address concerns
related to cost implications of proposed
measures
40
All concepts are not new
• Transparency (concepts in the Agreement on
Rules of Origin)
– Notification and Publication
– Advance Rulings
– Appeals
41
Trade facilitation
• Other important proposals/concepts
– Fees and charges
– Reduction in procedures/formalities
– Expedited release in goods
 Pre-arrival clearances
 Risk management
 Post-clearance audits
• Regional agreements
• Transit
42