By: WTO volunteers

Session 32: Speakers assess China, cross-straits relations, and response to crisis

SESSION TITLE: Greater China and the future of the multilateral trading system

China’s rise, how it is adjusting to change, and the Economic Cooperation Framework Agreement with Chinese Taipei came under scrutiny in this session.

Moderator Prof. Jean-Pierre Lehmann from the Evian Group at the International Institute for Management Development (IMD), Lausanne, described China’s importance in global trade. It is investing more abroad than foreigners are investing in China. A major area of discussion is China’s relationship with other emerging economies as well as developed countries. China is driving globalization through trade in capital, goods and services, he said.

The panellist then discussed the future of the multilateral trading system from the points of view of China, Hong Kong China, Chinese Taipei, and the rest of the world. Their perspectives were business, legal, and political.

Prof. Yong Wang from Peking University said China’s rise in the last 30 years was not in isolation. Whilst continuing to support the multilateral trading system, and being active in setting up a regionalized market in east Asia, China is giving up the old economic growth model and trying to restructure its economy, moving from growth generated by external trade, to one driven by the internal market, combined with creating a balance in the internal market.

Arthur E Appleton of law firm Appleton Luff analyzed the China-Chinese Taipei Economic Cooperation Framework Agreement (ECFA) from a lawyer’s point of view. He noted that the agreement has political as well as economic implications. For Chinese Taipei, the agreement is beneficial economically, but it has also sparked a debate within Taiwan’s different political groups. Later moderator Jean-Pierre Lehmann commented that economic and security issues are very import for this dynamic and fragile region.

Prof. James Tang of Hong Kong University looked at China’s emerging since the 1990s, when it was only partially integrated into global economy. The seventh supplement to the China-Hong Kong, China Closer Economic Partnership Arrangement (CEPA) represents a big step forward by the mainland to open up its professional services to Hong Kong, China’s businesses and individuals, which will benefit both large and smaller enterprises. He added that as China becomes more important, the eastern world should work together for a more integrated trade environment. But lack of urgency may be an obstacle, he said.

Michael Garrett from the Evian Group at IMD said the financial crisis has little to do with business and more to do with high debt. He said China has no choice but to rely on its massive production sectors. Both foreign consumers and companies benefit from trade with China, while China also benefits from investing in commodities overseas, which is a new form of trade. He also mentioned protectionism and agricultural issues since they are closely related to the poor.

Inequality was raised in comments from the floor. The consensus was that China is doing much better in terms of working conditions, labour income, etc, following the same path that the present developed countries followed in the past.

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Session 33: Speakers call for wide-ranging assessments of the WTO’s impact

SESSION TITLE: Coherence and incoherence of the international trade regime: Who profits from it? Can we change anything? How?

The impact of countries’ commitments in the WTO should be evaluated in ways that are transparent, independent and publicly available, and take human rights into consideration, panellists said.

These evaluations are even more important than before because other subjects apart from trade are emerging on the international agenda, they said.

Among those at the forefront are the environment, climate change and human rights, and they should be solved globally in a coherent manner, speakers said.

They saw a clear and important link today between trade agreements and the protection of human rights.

They called for evaluations of the impacts on the environment, social wellbeing, trade sustainability and human rights. Only some countries have conducted these: the EU, US and Canada.

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Session 34: Panellists differ on what is needed to double food production

SESSION TITLE: Seeking coherence: How can international agreements influence agriculture and world trade positively for the coming generation in the face of global trends?

Panellist examining what lies ahead for agriculture and trade agreed that the biggest challenge is to double food production in coming decades but disagreed on how this should be done.

Session 34 tackled the extremely current and controversial issue of agricultural trade policy. It mainly focused on the need for coherence between WTO trade policy negotiations and related problems (climate change, to begin with) discussed in other international forums.

The session consisted of two panels, the first giving a broader perspective on the agricultural policy challenges of the 21st century, while the second one expressed the views of farmers’ representatives of six countries from all over the world.

The need to double global food production by 2050, while at the same time keeping an eye on the problem of the climate change and assuring a decent living to the two billion farmers in the world, was unanimously recognized as the number one policy challenge of the century.

Nevertheless, the second panel showed the presence of clearly differing interests, which place rich and poor countries in two opposing groups at the negotiation table.

Mr Christian Anton Smedshaug, Senior Adviser of the Norwegian Farmers Union, stressed the severe imbalance between the overproduction of food in the rich countries, consequence of excessively protectionist policies implemented over the past decades, and the chronic scarcity of food which poor countries suffer. He called for a drastic policy change, whose objectives should be:

• to achieve profitable production everywhere

• to release all countries’ production potential

• to pursue “production oriented” rather than “trade oriented” measures, which take into account the incentives that really matter for farmers

Prof. Niek Koning of Wageningen University pointed out that the trade regulations established within the WTO, despite calling for trade liberalization, allow rich countries to heavily protect their agricultural sectors through the exemption given to direct payments.

This policy has led to an increase in the volatility of food prices, which in turn discouraged the investment needed to increase production, especially in poor countries. Policy makers should instead:

• protect, when necessary, national agriculture without “disturbing” international prices

• use international buffer stocks (maybe managed by some international organization) to stabilize food prices in the global markets

• coordinate food and energy markets (by applying restrictions to the use of bio fuels when the grain price exceeds a certain threshold, for instance)

Mr Djibo Bagna, representing farmers from West Africa, recalled that the 2007—2008 food crisis was an evident consequence of the inadequacy of present regulation. He noted that farmers in the US or EU are not happy either. He emphasized the fact that the commitments taken in international forums are often discarded, and that firm political will is needed to address the problem seriously.

The second panel presented the opinions of farmers’ representatives from all over the world.

A European farmers’ representative stressed their opposition to trade liberalization, which would produce unfair competition world markets. In particular, he pointed out the need for stricter requirements, in terms of traceability and food safety, for products coming from developing countries.

A completely opposite opinion was expressed by the representative of farmers from East Africa: policies addressed to raise productivity should be implemented, pushing the sector out of the subsistence trap. Single governments are currently implementing some measures in this direction, and it would be useful to coordinate them at international level, within the WTO.

The Swiss Farmers Union’s representative stressed the importance of “food sovereignty” in European societies. He also called for the coordination of food policies among the different organizations, FAO, WHO and WTO in particular.

The representative of Japanese farmers argued that WTO agreements should recognize the basic right of all countries to produce food and at the same time promote “responsible” investments in agriculture in developing and poor countries.

A Canadian farmers’ representative also emphasized the importance of food sovereignty and the need to secure decent profits for all farmers in the world. At the same time, he claimed that agriculture is different from the other industries, and appropriate policies should be implemented to manage supply and favour local production.

Brazilian farmers expressed, through their representative, exactly the same call for local production. Moreover, the representative asked the international organizations to recognize small farmers at the same level as big food multinationals.

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Session 35: Biofuels discussion highlights complexity of legal and economic angles

SESSION TITLE: Biofuels subsidies and standards: WTO considerations

The session examined which WTO rules are relevant for support to the biofuel sector and how to classify and notify these subsidies under the WTO. Discussions demonstrated the complexity of the issue and the possible differences existing between economic and legal approaches.

International Food & Agricultural Trade Policy Council (IPC) member Stefan Tangermann, formerly of the OECD, reminded participants about the recent rapid increase in biofuel production and land use. He noted that except in some cases like Brazil, this increase had been made possible thanks to government support. The reduction of greenhouse gas emissions was one of the arguments justifying this support, but some people doubted its validity.

Prof. Timothy Josling of Stanford University briefly described pertinent WTO rules under the Subsidies and Countervailing Measures and Agriculture agreements. He noted a discrepancy between the levels of support notified to WTO committees and those calculated by external organisations, like Global Subsidies Initiative (GSI).

The inconsistency can be addressed, for example through a joint examination by the WTO Agriculture and Subsidies committees or better cooperation between the different international organisations involved.

Senior OECD Trade Policy Analyst Ronald Steenblik focused on sustainability standards for biofuels. Government support for biofuels started in the 1970s. Today, fuel-excise tax exemptions, mandated levels of biofuel use, required shares in transport fuels are the measures used worldwide to promote this type of energy.

Studies on biofuel production’s impact on greenhouse gas emissions produced a large variety of results depending on parameters like the type of feedstock used or the direct and indirect land conversion effect, he said. From these studies, Governments have developed biofuel sustainability standards, which would impose minimal conditions — for example in terms of life-cycle greenhouse gas emissions — that determine eligibility for subsidies and mandates.

He concluded that these new standards could raise some issues from a trade point of view, due for example to their complexity, their heterogeneity or their focus on processes and production methods that are not related to specific products.

WTO Deputy Director General Harsha Vardhana Singh recalled that biofuel subsidies could be analysed from an economic or a legal point of view. The WTO was based on sound economic consideration but had to focus on the legal approach. The range of measures at stake was very large, and so was the range of WTO agreements that could be pertinent, he said

From an economic point of view, the fundamental question to ask was whether these subsidies were desirable. From a WTO point of view, the question to ask was whether these subsidies were respecting the different criteria set in the areements.

This difference of perspective could also explain the difference between GSI figures and data notified to the WTO. He then reminded the participants that a quick conclusion of the Doha Round would bring very effects for the biofuel industry, through outcomes such as reductions of tariffs, reductions of trade distorting domestic agricultural support, non tariff barriers and environmental goods and services negotiations.

Finally, Mr Singh said there is no big discrepancy in WTO notifications, especially in the Subsidies Committee where all subsidies must be notified. Of course more progress can still be made, he added.

Following a question from the floor on biodiesel classification as an industrial product, Tim Josling confirmed his view that it would be more coherent to classify it as an agricultural product.

Whether ethanol subsidy could be considered as granting support to agricultural products in the sense of the Agreement on Agriculture was not easy to answer, Mr Josling said. He noted that such subsidies could raise world prices, benefiting producers from other countries. On the other hand, importing countries might complain.

Speakers agreed that from an economic point of view, different energy sources should be compared by looking at the marginal impact on carbon footprints, but they added that such an approach would be difficult to translate into regulations.

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Session 36: Panel looks at the double-edge sword of anti-dumping actions

SESSION TITLE: Antidumping Regime: A view From the competition policy perspective

This session discussed the many linkages between antidumping regimes and the competition policy, noting that emerging economies tend to be the major users of antidumping currently, as a safety valve in the face of trade liberalization.

Most panellist were not in favour of a multilateral agreement on competition, due to the difficulty of coordination and the lack of serious competition policy watchdogs in most countries.

Mexican Federal Competition Commission President Eduardo Pérez Motta, set the scene by saying that in essence antidumping regimes and competition policy are mutually supportive but that in reality conflicts can arise. He also added that predatory pricing is usually one of the toughest in applying competition policy.

Prof. Seung Wha Chang of Seoul National University asserted that antidumping duties, allowed under the WTO regime, are a clear deviation from the non-discrimination (MFN) principle. It creates restrictions on cheaper products in reality, because trade law tend to promote producers’ interests. On another note, Prof. Chang argued in favour of some sort of multilateral cooperation and coordination, that could take the form of a multilateral agreement on competition

The World Bank’s Bernard Hoekman inserted a touch of political economy into this discussion, indicated that the real issue here is trade liberalisation and competition policy. He said if he’s asked what’s the rationale behind antidumping policy, the answer would be “it’s all about protection”.

Because there was a lot of liberalisation taking place, the safety valve was picked up by antidumping as an instrument for trade policy. Now a lot of emerging countries are using it this way (major user now is India). One reason for this, tend to be that countries less integrated into global value chains have incentives to use Antidumping.

Furthermore if you look into the figures almost 50% of antidumping is against China, because China is very competitive, so in reality it’s not about competition policy but about “Import Management”.

Mr Hoekman was doubtful of any argument about the usefulness of a multilateral agreement on competition

Prof Allan Fels, Dean of the Australia and New Zealand Scholl of Government, enriched the discussion with his extensive experience, including in his capacity as former co-chair of the OECD Trade and Competition Committee. He referred to the Australia New Zealand experience of having only competition policies saying that many companies, particularly from Australia have different global value chains and that’s why they regard antidumping equivocally.

He also adhered to some of the political economy arguments mentioned earlier and said that antidumping tends to be considered as temporary protection (that can last for years) and he also agreed that India and emerging economies as a whole are the bigger users of antidumping nowadays. He agreed that predatory behaviour remains a tough nut to crack in competition policy implementation.

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Session 37: Focus on services and infrastructure to reach development goals, speakers say

SESSION TITLE: Achieving the Millennium Development Goals in Africa:
Should services linkages be expanded?

The session focused on the existing linkages between infrastructure development, services and achieving Millennium Development Goals in Africa. The speakers agreed that no improvements in the development goals could be reached without more attention given to strengthening the services sector. They said the dynamics of the liberalization process and the enhancement of regional cooperation should be considered carefully.

Ambassador Darlington Mwape of Zambia described his country’s situation and the obstacles it faces to achieve the millennium goals. He said those goals could not be achieved by relying on foreign aid.

Trade should be the main driver of development and poverty alleviation but it is heavily affected by shortcomings in transportation, storage and communications. Zambia, shares these problems with other landlocked countries, he said.

The ambassador suggested that the challenges posed by energy power inefficiency could be tackled by making use of the potential of natural resources. Furthermore, he indicated that liberalization represents an important step to strengthen the services sector but it has to be preceded by effective legislative reform. Therefore, openness should not be considered a panacea, he said. Commenting, Mali delegate Mr Abdoulaye Sanoko agreed.

Likewise, UNCTAD’s Kalman Kalotay said the state is important for balanced and long-lasting growth of the infrastructure in Africa.

Focusing on the impact of transnational corporations’ foreign direct investment, he showed that most of the investment was exclusively related to resource extraction.

On the other hand, local private investment has not played a significant role, he said, adding that that uncertainty due to poor infrastructure represents a major constraint to foreign investment in Africa.

Commenting, the WTO’s Dale Honeck suggested a topic for future debate: could the increased predictability of applying the General Agreement on Services increase investors’ confidence in sub-Saharan Africa?

The issue of enabling tourism to help alleviate poverty sparked a lively debate among participants. Overseas development institute’s Jonathan Mitchell and Mr Honeck argued that tourism could be managed strategically in order to reach the Millennium Development Goals.

Mr Mitchell called for a proper analysis of the value chain generated by tourism. Much of the earnings are still gained by travel operators and lack of infrastructure frequently constrains the capacity of a least-developed country to take advantage of its tourist attractions, he said.

Prof. Abdul Barkat of Dhaka University pointed out the almost complete absence of infrastructural improvements within the Millennium Development Goals’ indicators. He suggested that aid-for-trade should represent an essential contribution for development in Africa and it should be a challenge for the WTO to raise awareness on this issue.
Prof. Barkat echoed other speakers in calling for region- wide strategy and planning.

Contributions from the floor mostly stressed how over the past decades has focused on trade in goods with little consideration given to the service sector.

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Session 38: Making sense when a topic is discussed in many places: TRIPS-CBD

SESSION TITLE: The (elusive?) quest for coherence in global negotiations and norms: the case of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Convention on Biological Diversity (CBD)

The debate about the relationship between the WTO’s intellectual property (TRIPS) agreement and the Convention on Biological Diversity (CBD) has recently received renewed attention because of proposals and negotiations in various forums. A key question is: how to ensure “consistency” between these various debates.

• The discussion on the relationship between the TRIPS Agreement and the CBD has recently intensified in the light of the CBD negotiations for a future international regime on “Access to Genetic Resources and the Fair and Equitable Sharing of the Benefits from Their Use”.
  
  At the same time, at the World Intellectual Property Organization, the Inter-governmental Committee on Intellectual Property and Genetic Recourse is involved in “text-based negotiations with the objective of reaching agreement on a text of an international legal instrument(s)”.

• As the number of forums discussing this issue increases with a wide range of interests, those involved may find it difficult to ensure the various discussions are coherent and support each other.

•  The issue raises a number of questions. How can coherence be achieved? Is coherence desirable? What precisely does it mean for the discussions in different forums to support each other? What is the role of the international system, in particular the WTO, with regard to the lack of coherence?

• The issues discussed include: (i) the method of measuring coherence between the trade, intellectual property and biodiversity regimes; (ii) Switzerland’s perspective of the interface between various negotiations; (iii) the problems of coherence and the remaining challenges with regard to pathogens materials; and (iv) intellectual property and biodiversity in regional trade agreements.

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Session 39: Safety nets needed as countries adjust to trade opening, speakers say

SESSION TITLE: The role of trade in fostering a recovery that is supportive of employment

The relationship between trade and employment is complex and safety nets must be available for the losers, this session heard.

Among the points made:

• Trade opening too soon may risk eliminating certain industries in developing countries.

• What is on the table in the Doha Round is not meaningful for the US because offers in non-agricultural market access (NAMA) talks would add only 0.1% to US and EU GDP.

• Developing countries are being asked to give up more in NAMA than what developed countries will have to give in agriculture.

• Many negotiators are not afraid of opening up to the US; their real fear is China.

• The Jordan-US free trade agreement has an ILO clause, which made it easier to remedy labour abuses.

• There was perfect income equality in China in 1970 but no one wants to go back to that.

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Session 40: Panel examines the enigmas and contradictions of South-South trade relations

SESSION TITLE: The new geography of trade: South-south agreements, south-south asymmetries and the WTO

In her opening remarks, Ms Adriana Verdier of ICTSD emphasized the importance of south-south trade. She mentioned that trade and foreign direct investment among south countries remained strong and increased despite the recent economic crisis. The trade of value-added items between south-south countries grew by 34% between years 2004-07 alone and this pace is expected to persist in the following years. However, this growth faces various obstacles due to existing trade agreements. A study of the MERCOSUR to be presented in the Session highlights where the barrier in South-South trade lie and the resulting asymmetries.

Mr Rolf Traeger of UNCTAD, provided further data to highlight the importance of south-south trade for least developed countries (LCDs). During the last 15 years, more than 50% of imports of LDCs originated from southern countries and more than 50% of exports of LDCs are targeted to southern countries.

Also, in 2006-2008, developing countries were the origin of foreign direct investments to LDCs via private capital flows. Three quarters of trade from South originates from only 10 developing countries such as China, India, Thailand, Korea, S. Africa and Brazil.

The framework for south-south trade consists of various high level forums, trade preference agreements and bilateral agreements between an LDC and a developing country. Given the differences in economic indicators of south, the bilateral nature of this framework gives rise to institutional asymmetries reflected in bargaining power and terms of agreements.

Unfortunately for the LDCs, the agenda of the bilateral agreements and high level forums is determined by the more powerful and trade preferences are unilateral and non-reciprocal. Mr Traeger recognized that these asymmetries cannot be completely eliminated, but they can be attenuated by offering technical and institutional support to LDCs to construct positive negotiating agenda (e.g. regarding flexible rules of origin, reduced quotas, market access, etc.) and negotiate with biggest developing countries as a bloc rather than individually.

Mr Umberto Celli of the University of San Paolo, Brazil, analyzed the problems within Mercosur originating from its legal framework. Under article 24 and the enabling clause of article 5 of GATT, Mercosur is de facto and de jure a regional trade agreement which has to comply with the WTO rules.

However, Mercosur is not represented to the WTO yet. Nonetheless, it has legal personality and as such none of the countries can take decisions outside it, but this has changed as more and more of its members are embarking into bilateral agreements in the recent years. Lack of harmonized rules for members within Mercosur and unclear agenda regarding services and investments become the source of asymmetries and resulting tensions within Mercosur.

Ms Juliana Peixoto Batista of LATN-FLASCO, Argentina, described the inherent contradiction in regional trade agreements as in the case of Mercosur: on one side these agreements are useful for countries to reduce asymmetries but on the other we have countries that move in a different pace and give rise to increased regionalism.

She defined Mercosur as a regional integration agreement in transition and distinguished two phases of its development: the liberal moment and the post-liberal moment. As its internal agenda is quite limited to a focus on trade and includes very few exceptions, the current consensus is that the agreement needs to do more in addressing asymmetries and allow flexibilities.

She offered the example of the agreement between Mercosur and Israel where more flexible rules of origin and technology transfer were offered for Paraguay and Uruguay and the agreement between Mercosur and India, which adopted isolated measures, but had no planning.

Mr Timothy A. Wise, Director of Policy Research, GDAE, of Tufts University brought to attention the big question: Will the current developing countries behave differently from their developed counterparts toward the LDCs?

To illustrate the rise of asymmetries in regional trade agreements he offered the example of Mexico, for which NAFTA resulted to be a failure in issues related to food security, stimulation of manufactured production, etc.

Mexico’s example is more striking if we consider the circumstances when NAFTA was signed. Mexico had everything a developing country could hope for: access to the greatest world economy at a period of expansion (ie, the US), China had not yet become a member of WTO, etc. but these did not produce the benefits expected. However, there are still elements that have proved beneficial in NAFTA and that should be used in later agreements.

The question and answer session generated interesting related to Mercosur, its similarities and differences with the EU and whether it is aiming at having a supranational authority. Ms Juliana Peixoto Batista reminded the participants of the differing economic and social indicators and the varying asymmetries between the members. A participant from the floor argued that the limited agenda of Mercosur limits also its negotiation opportunities among the member countries. Finally, a comment from the floor brought back “the elephant in the room” — lack of a multilateral agreement framework for investments, which, if available would create significant room for negotiations and to exploit growth opportunities amongst south countries.

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