WTO: 2012 NEWS ITEMS

WTO PUBLIC FORUM: 24—26 SEPTEMBER 2012

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NOTE:
THE WTO’S NEWS COVERAGE OF THE PUBLIC FORUM ON ITS WEBSITE AND SOCIAL MEDIA PAGES SUCH AS FACEBOOK AND TWITTER IS NEWS ITEM IS DESIGNED TO HELP THE PUBLIC FOLLOW PROCEEDINGS AND IS NECESSARILY SELECTIVE.

MORE COMPREHENSIVE ACCOUNTS OF THE SESSIONS WILL BE PUBLISHED ON THE PUBLIC FORUM PAGES SOON AFTER THE EVENT.

WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE THE CONTENTS ARE ACCURATE, IT DOES NOT PREJUDICE MEMBER GOVERNMENTS’ POSITIONS.

  

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Public Forum 2012
Programme

  

In welcoming participants to the Public Forum, Director-General Pascal Lamy said that “the rules of the game — whether in the trade sphere, in the economic sphere, in the environmental or food security spheres — a nd indeed across all areas of international policy making, are in need of adjustment.”

He said that “this year’s forum will deal with a vast array of challenges that you, yourselves, have brought to the house of trade. Over a three-day period, we will be hearing from you on issues as diverse as trade and the environment and the regional Free Trade Agreements.”

The former President of the Swiss Confederation, Ms Micheline Calmy-Rey, in the Forum’s inaugural speech, said that “multilateralism is failing on many fronts and is clearly unable to deliver in these very difficult times we are witnessing across the globe.”

As an example, she said that “the inability of the WTO Members to agree on the conclusion of the Doha Round is certainly a setback that is very difficult to understand particularly within the context of the current crisis.”

Ms Calmy-Rey commended “the excellent work done by WTO to monitor protectionist pressures,” adding that the multilateral trading system “can help (WTO Members) contain extreme protectionist measures.”

 

Session 2: Is Multilateralism in Crisis?

Director-General Lamy and Ms Calmy-Rey were also members of the inaugural panel session on “Is Multilateralism in Crisis?”

During the panel’s discussions, Mr Lamy said that multilateralism is not in good shape because it is 20 years outdated. With all the changes in the world and in globalization, the current system shows it cannot adjust to it and the present economic crisis does not help, he said.

Ms Calmy-Rey said that the international institutions do not reflect today’s realities and that there is a big need for reform.

H.E. Sheikha Lubna Al Qasimi, Minister of Trade of the United Arab Emirates, also considered that present day rules are not up-to-date and need upgrading.

But to the question from the moderator, Mr Andrew Harvey, former BBC presenter, on whether the panellists were optimistic or pessimistic for the future of multilateralism in about five years’ time, Chile’s Senator Ricardo Lagos, Ms Calmy-Rey and Mr Nicholas Staheyeff, Vice Chairman and CFO of eBay International, said they were optimistic.

Ms Al Qasimi said she was “carefully optimistic” and Mr Lamy said he was “carefully pessimistic”.

On his assessment for the future, Mr Staheyeff said that the future multilateral system will need to learn to cope with increased volatility in trade and economic conditions and be “ready for a bumpy ride”.

There were not many solutions given to the problem.

Mr Lagos mentioned that countries will have to learn to give up some sovereignty, and Ms Calmy-Rey said that because many issues are solved at the international level, if countries want to have more influence in the world they’ll have to play internationally.

Mr Lagos also made a passing reference to the fact that the five members of the UN’s Security Council do not reflect today’s realities.

The work of the WTO was discussed, in particular the importance of this institution to remove frictions, the negotiations on trade facilitation to facilitate customs procedures and to remove “trade obstructions”, the fight against protectionism through its monitoring mechanism and also its work to encourage more financing for trade.

Ms Calmy-Rey also said that the WTO system of common rules and disciplines is a good example for other international organizations.

 

 

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Session 3: The Trans-Pacific Partnership: A Quest for a 21st Century Trade Agreement

The panel of this book launch session included some authors and two of the editors. Each panel member elaborated a particular element of the Trans-Pacific Partnership (TPP) Agreement and offered hopes of what is achievable in a twenty-first century, high-quality agreement.

The moderator and one of the three editors, Dr Deborah Elms, explained that “twenty-first century, high-quality” means going beyond bilateral arrangements and addressing the “noodle-bowl problems” of overlapping preferential trade agreements (PTAs).

Mr Stuart Harbinson, former ambassador and WTO senior official, thought the jury was still out in terms of what the TPP can produce with respect to trade in services, but he saw it as a “pathfinder agreement”. Perhaps it might act as a catalyst that could work back into the WTO to re-energize services negotiations.

Mr Aik Hoe Lim, a WTO official, reiterated the importance of focusing on benchmarks if the TPP is to be high quality — suggesting a template based on the North American Free Trade Agreement (NAFTA). However, a twenty-first century trade agreement should also deal with twentieth-century issues. He believed there was a need to take a business-oriented approach which reflected the commercial reality.

Mr Sebastian Herreros of the Economic Commission for Latin America and the Caribbean (ECLAC) described how the TPP interacts with regional measures in Latin American countries. He warned that what the TPP has to offer them is still highly speculative and dependent on which other countries join.

With over 400 PTAs in existence, WTO Chief Economist Patrick Low revealed that each WTO member belonged to an average of 13 – which is hardly optimal. The question is what role could the WTO play in achieving greater coherence. He suggested looking at the possibility of taking what is out there and finding ways of “multilateralizing” it.

 

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Session 4: Book presentation: The Ashgate Research Companion to International Trade

The purpose of the session was to address different topics covered in the book with relation to the future of multilateralism.

First, there was an overview of advantages and challenges with regard to the multilateral trading system. The main challenges, such as national sovereignty and co-operation, national authorities and supply chains and macroeconomic imbalances as well as tensions within countries, were named.

Regarding difficulties concerning the conclusion of the Doha Round, panellists pinpointed tariffs, non-tariff barriers and improvement in rules regulating them. Notwithstanding the aforementioned challenges, it was also mentioned that despite the crisis of 2007-08 protectionist measures were triggered due to global supply chains.

The panellists also discussed responses to power shifts, the evolution of the dispute settlement mechanism, and suggested that the WTO should be more flexible responding to systemic challenges and proceed by legislation, not litigation.

Panellists also referred to institutional challenges with regard to the increased number of players and issues interacting with old issues of the political economy of trade.

The regional approach covered in chapters dedicated to China and South America was raised from a Latin American perspective and how political economy manages to overcome very important issues, such as job protection and distributional issues.

Explained through an historical perspective, trade liberalization of up to 100 per cent for many Latin American countries was highlighted as a way to reform their import substitution policies of the 1980s, eliminating balance of payments problems, monopolies and high exchange rates, diversifying the export base with value-added goods and services and providing better jobs.

Green protectionism was specifically addressed within the topic of protectionism as a powerful alliance to seek rents. An example was provided with regard to a labelling requirement determining the harvest method for all wood products including even recycled ones in order to stop illegal trade in wood proposed by some countries.

Even though the Doha Round is in crisis, the WTO works well,  the session concluded, with many countries wanting to accede and WTO members making effective use of the dispute settlement system.

 

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Session 5: Trade and Africa’s Agricultural Policy in 2025: Possible Ways out of a Debacle

The session examined the current challenges that African agricultural policy is facing, with a view to reflecting upon how trade policy could better address them, in particular the issue of food security. The conclusions revolved around the idea that Africa’s agricultural sector has potential, and yet it is not fully exploited.

All speakers converged on the idea that Africa holds the key to its own sustainable development due to diversity in resources and existing opportunities for regional trade agreements; and yet poverty, hunger and malnutrition persist, particularly in rural areas. Alongside the challenges due to natural disasters and climate change, Africa is said to be facing a democratic deficit combined with government inefficiencies and a lack of political will, leading to a policy vacuum. Future challenges were identified at both the macro and micro level.

The panellists called on African governments to rethink the process of production to adjust it to demand, to strengthen farmers’ capacities, and to invest massively in areas such as infrastructure in order to develop local industries.

At the international level, the question of global governance was touched upon by the speakers who called for increased market access for African products.

In this respect, the WTO has a critical role to play by further integrating the region into the multilateral system, through negotiations with other WTO members, and through the conclusion of the Doha Round.

However, one of the speakers remarked that the question of regional trade must first be addressed before even mentioning multilateralism. Another panel member stated that ultimately, the only viable route must be one of multi-stakeholder concerted action. 

 

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Session 6: Plurilaterals and Bilaterals: Guardians or Gravediggers of the WTO?

A panel of ambassadors to the WTO, representatives of the US and EU chambers of commerce plus the WTO’s Chief of Staff discussed the relevance of plurilateral agreements to the construction of multilateralism.

Speakers agreed that “bilateral, plurilateral and multilateral  agreements are like children, you have to like them all”. However, there was a discrepancy in the views over the necessity to advance the Doha Round.

A panellist recalled that there are different types of plurilateral agreements. First, Regional Trade Agreements (RTAs), and second coalitions of the willing like the Information Technology Agreement (ITA) and the Government Procurement Agreement (GPA). As pointed out by the WTO Chief of Staff, the Tokyo Round was the golden age of plurilateral agreements. But the international community has felt the desire to go back to the Single Undertaking in the Uruguay Round for reasons of fairness and inclusiveness.

Plurilateral and bilateral agreements are building blocks for multilateralism

The main argument here is that the three types of agreements reinforce each other:

  • First, they constitute an alternative to the multilateral negotiations in the WTO that are undermined by the slowness of the negotiations in the Doha Round.
  • Second, regional agreements are particularly relevant to small developing countries which prefer step-by-step trade liberalization. An example was Costa Rica,  which progressively opened its telecommunications sector.
  • Third, coalitions of the willing have proven to be great successes like the ITA. The Japanese representative proposed extending such agreements to the environmental goods sectors.
  • Fourth, preferential trade agreements (PTAs) are not a threat to the WTO as only 16% of world trade is made under PTA regulation. The  rest is exchanged through Most Favoured Nation rules.

 

PTAs impede regulatory convergence of trade standards

PTAs undermine the development of an international playing field for negotiations, which would strengthen multilateralism. A recent report from the Asian Development Bank shows  that many firms are unable to adapt their standards to PTAs’ regulations. Moreover, plurilateral agreements threaten the multilateral trading system if they are designed for strategic purposes.

Going further

In the current situation, business sector representatives expressed their frustration and their willingness to go further on trade liberalization, outside of the Doha Development Agenda framework.  In their view, agreement on services and trade facilitation (TF) would be more than welcome. They also expressed willingness to have an agreement on import tariffs on machinery and chemical goods. Finally, they insisted on the need for transparency in future agreements and cited as a counter-example the ACTA agreement.

Questions

The WTO Chief of Staff stressed the need for countries to advance on multilateralism, pointing out that 40% of exports contain imported goods. The business sector representative called for BRICs to negotiate as they will in five years’ time rather than how they were five years ago.

A member of a French NGO denounced trade agreements between countries of different economic sizes, referring  specifically to the agreement on dairy products between EU and India. The Euro-Chamber answered that Indians were benefiting from the chemical goods agreements. Mexico added it had benefited a lot from NAFTA agreement.

 

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Session 7: The End of the North Atlantic Hegemony: Rise of New Global Economic Powers

Is the new balance of power the reason behind the impasse today?  This was the question that participants in Session 7 “The End of the North Atlantic Hegemony: Rise of New Global Economic Powers” tried to answer.

Economic multilateralism today confronts two opposing realities — globalization is moving the world to greater integration, but on the other hand, multilateral processes designed to facilitate integration in the past are deadlocked, said Mr Ujal Singh Bhatia, former Indian Ambassador to the WTO and member of the Appellate Body.

Dr Arthur Appleton, Partner at Appleton Luff International Lawyers, said that the trade machinery is not adequate to resolve problems when the trade reality is changing. The old system aimed at benefiting developing countries no longer works. New issues like investment, non-tariff barriers and the environment should be introduced.

Dr Shuaihua Cheng of the International Centre for Trade and Sustainable Development (ICTSD) advocated the engagement of stakeholders in international policy making. What he calls “three horses” — governments, business community and non-governmental organizations — should all play an important role in multilateral solutions.

Dr Jean-Pierre Lehmann, Founder of the Evian Group @ IMD, said that the world has changed dramatically while the trade institution has not. The rise of China, the global supply chain, the telecommunication revolution called for a new WTO. The Doha Round should be buried, he said.

 

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Session 8: LDCs at the Crossroads: Status Quo or Sustainable Development?

The session  revolved around the issue of how least-developed countries (LDCs) could address the challenges stemming from the need to restructure their economies with the view to promoting sustainable development  in the context of emerging shifts in trade and investment flows and changes in their  institutional arrangement.

The session in particular addressed two questions:  how LDCs could diversify their export base, and also create a predictable and transparent economic framework. The panel was generally of the view that  although export diversification remained a necessary ingredient for  development, it was not a sufficient component and needed to be assessed within the broader context of competitiveness,  structural transformation and  multilateral /bilateral policy coherence.

With regard to the question of  how LDCs could diversity their export base, the panel emphasised the heterogeneity of  LDCs and the need to look at  export diversification, both in products and process.  The panel agreed however,  that export diversification should be linked to the creation of a sustainable employment structure.

A  panellist  noted that the rise in African LDC exports was predominantly in commodities, such as minerals and oil,  with almost no processing and thus there was an opportunity  to move  to the next step in the value chain. He, however, cautioned against African LDCs being pushed into the “raw materials” corner via the enhanced partnership with emerging economies.

Some commonly identified constraints for export diversification were cited as being : i) a poor regulatory environment;  ii) supply-side constraints such as  an infrastructure deficit; iii) lack of private entrepreneurship; and iv) the global economic and financial crises. Some opportunities for promoting exports in LDCs were identified as being the growth of regional and sub- regional trade (particularly intra-African trade) and global value chains.  Panellists also noted the marginalisation of LDCs in services trade and stressed that for landlocked LDCs the focus should not be on improving market access but rather  on the  GATT Article 5 “ Freedom of Transit”  provision.

Discussing the creation of a predictable and transparent economic framework , panellists  stressed the importance of WTO accession for the remaining LDCs as this  would create a framework for a secure business and foreign investment climate and “lock-in” domestic reforms.  The panel also  agreed on the importance of developing a coherent and flexible policy framework not only at the WTO but also in other fora such as the UN (particularly in line with the Istanbul Programme of Action for Least Developed Countries) and the World Bank.

 

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Session 9: Perspectives on Sustainability: Renewable Resources, Trade and WTO Governance

This session highlighted a number of issues that demonstrate the unsettled relationship between sustainability and trade in natural resources. The panel offered a multidisciplinary approach that, through its use of examples, crystalized into a discussion of the ability of the WTO system to address the challenges of sustainable development in a shifting global economy.

The panel observed that the manner in which the WTO governs trade in natural resources continues to develop, and is complicated by factors such as population growth, supply chain diversification, the planet’s bio-capacity and fundamental questions about the distribution of responsibility for sustainable development. Such factors are further complicated by the difficulties associated with identifying and measuring specific problems with trade in natural resources. For example, the panel referred to whether trade in natural resources could be treated as a homogenous topic, or whether a proper discussion mandates that such trade be identified in terms of the specific commodity or industry in question. It also recognized that existing WTO norms may not equip members with the regulatory autonomy to address issues of sustainability associated with trade in natural resources.

Keeping with the theme of the WTO Public Forum, panellists and attendees discussed how the multilateral system might address these difficulties. Some proposals considered the use of existing legal instruments, such as dispute settlement, which may encourage clarification of unsettled areas of law. Other proposals focused on reform of the WTO, through renegotiation and amendment of existing norms, or through institutional reform of the WTO according to which regional blocs would conduct multilateral negotiations.

 

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Session 10: The Multilateral Trading System in the 21st Century: Interaction between Trade and Competition Policy

The panel addressed several issues arising from the link between trade and competition by stressing the beneficial effects that the implementation of competition rules provides.

Mr Pradeep S. Mehta (moderator of the session) pointed out that the Havana Charter already included competition provisions, which were not included in the GATT.

When analysing the implementation of competition rules by different countries, all panellists acknowledged the substantial improvement that has taken place in the last two decades. Back in 1995, only about 35 countries had implemented competition rules into their legal systems. The fact that currently 123 countries (including many developing countries) are members of the International Competition Network proves that there is an increasing awareness of the importance of competition law in relation to international trade.

Panellists stressed the need for developing countries to adopt competition law provisions in order to fight against the numerous international and export-based cartels, which usually target developing countries. The strongest argument in favour of the adoption of competition rules is the high cost that the lack of these rules entails for consumers.

Another issue that was raised was the role of state-owned enterprises (SOEs), which have been highly controversial.

It was further highlighted that bilateral and regional trade agreements are nowadays the instruments that have been more commonly used in order to enact competition rules at an international level.

Finally, despite advocating in favour of the trade-competition linkage, several panellists made clear that the WTO may not be the most appropriate forum for enforcing competition law provisions given the current difficulties. Nevertheless, it was suggested that the WTO could jointly work with UNCTAD, which has been highly active in promoting the interaction between trade and competition.

 

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Session 11: How Can the WTO Dispute Settlement System Influence Dispute Settlement Within Regional Trade Agreements and Bilateral Investment Treaties?

The session focused on a discussion on whether modelling of dispute settlement provisions after the WTO dispute settlement (DS) mechanism in regional and bilateral agreements will help harmonize multilateral and bilateral/regional regulation, or might it generate more fragmentation and greater risk of conflicting outcomes that would create problems for governments and traders. The speakers provided their comments against different backgrounds and answered questions from the audience after their individual presentations.

Prof. Giorgio Sacerdoti moderated the discussion and set the tone of the afternoon by stressing that there are several ways in which the WTO DS mechanism could influence regional trade agreements (RTAs) and bilateral investment treaties (BITs). He then noted that there is scarcity in the number of cases that are brought under the ambit of jurisdiction of RTAs and BITs, and posed the question, “does this mean that there is no good system of dispute settlement under existing RTAs?”

Mr Fernando Pierola stressed that states are more inclined to bring disputes under the auspices of the WTO due to the following reasons: the WTO has a well-established jurisprudence; it has an excellent track record in dispute management; and considering the aspect of effective compliance, the WTO DS mechanism being multilateral in nature, is a more practical choice.

Mr James Baxter explained that among the reasons for Prof. Sacerdoti’s observation are that firstly, there is a conscious preference for maintaining an adherence to the primacy of the WTO system, and secondly, there is little practical incentive for exploring the full potential of dispute settlement under RTAs, especially among countries that rarely resort to formal dispute settlement. Mr Baxter stated however that overall experience to date suggests that the WTO’s dispute settlement system has actually influenced approaches to dispute settlement taken in RTAs in East Asia, including ASEAN.

Prof. Gabrielle Marceau provided examples of both where the WTO DS system could really be of help in RTAs and cited examples as well of instances where the WTO “borrowed” from existing RTAs. She stressed the importance for member states and negotiators to look into the need to address the relationship between RTAs and the WTO DS system, and also touched on why the WTO case law cannot just simply be exported into investment situations. Prof. Marceau summed up her arguments by stating that the bottom line is that what matters often when it comes to the choice of forum for disputes is the quality of adjudicators, and the quality of the dispute settlement system.

Prof. Anne van Aaken observed that is difficult to take away from investors what they have been using extensively, i.e., investor-state-dispute-settlement. But there are signs of the desire to align procedures, evidenced by the constant criticism of the lack of state-to-state DS, lack of use of local remedies and the partial incoherence in interpretation in investment law. Prof. van Aaken concluded by quoting Aristotle when he said, “virtue lies in the middle”.

 

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Session 12: Agricultural Innovation for the 21st Century: Matching the Intellectual Property Framework with Farmers’ Needs
Sub-theme: Food Security

A major theme in this session was the interplay between the incentives for innovation created by intellectual property (IP) rights and concern that the benefits of such innovation be adequately disseminated. Any given seed, it was observed, represented many forms of value, including as a staple crop, commodity, or genetic resource for breeding and biotechnological transformation. This corresponds to various forms of access and ownership of such value, whether physical control of a chattel or patent rights on modifications. Likewise, there are a range of international legal instruments reflecting these differing aspects of values, such as the International Union for the Protection of New Varieties of Plants (UPOV) or, in the WTO context, the TRIPS Agreement. 

The panel addressed the difficulty of appropriating rights to living organisms that are self-reproducing, and the challenge of creating economic incentives to develop new crop varieties. The panel discussed patents and breeders’ rights as possible devices in this context, but undertook critical evaluation of the actual benefits that such IP rights have empirically yielded. There were indications that initially promising innovations were ultimately burdened by strict IP requirements, many “innovations” were merely cosmetic, and that limited crop flows suggested that innovations were not being diffused. Furthermore, arguments were made that traditional and local farmers achieve innovative benefits that are undermined by scientific plant breeding and IP regimes. For example, local storage of genetic crop diversity and traditional cultivation had produced plant varieties that might be more resilient to drought and pests yet were being displaced by potentially inferior hybrids. 

The panel drew attention to the need to give some form of participation to farmers in the design of legal frameworks and to utilize the innovations of farmers that may be uncoordinated with IP regimes. Further, a stated goal was that an ideal IP regime would foster diffusion rather than restriction of the innovations it generated in agricultural production. 

 

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Session 13: TBTs on the Rise: The Future of Consumer Information Labels, Sustainability Standards and Product Bans in the Light of the Latest WTO Case Law

Following the “Talking Disputes” events hosted by ICTSD and WTI Advisors to allow for the discussion of WTO dispute settlement cases, this session raised the crucial question of the rise of technical barriers to trade (TBTs) and the current technical regulation and standard landscape.

The sharp decline of tariffs has been undermined by a shift towards a misuse of non-tariff measures (NTMs), including TBTs. These technical barriers often take the form of product labels and standards as a means of regulating consumer information and addressing undesired product characteristics.

Recent WTO disputes have involved the ’dolphin-safe’ labels for tuna products (“United States-Tuna II”), country of origin labels for meat (“United States-COOL”) and tobacco bans and regulations (“United States- Clove Cigarettes”).

With the ruling on these three disputes this year alone, the Appellate Body has set a precedent in terms of jurisprudence and has raised the legal aspect of the topic from “obscurity to centre stage”, according to Mr Hannes Schloemann, moderator of the session. 

Where do we stand on TBTs and where do we want to go from here?

Overview of the disputes in the TBT area:

  • Among the 45 requests for completion, only four have gone to a “full-fledged dispute”;
  • The main complainants: US, Canada, each with 10 cases, and the EU with only three cases;
  • The main issues in the TBT area: discrimination (Art.2), necessity (Art. 2.2), labelling (Art. 6) and international standards (Art. 2.4).

The recent disputes, including the dispute regarding the ’dolphin-safe’ labels for tuna products ruled to  give less favourable treatment to Mexican products will contribute to informing future policy making in new areas, such as biofuels or animal welfare. 

 

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