WTO: 2011 NEWS ITEMS

WTO PUBLIC FORUM: 19-21 SEPTEMBER 2011

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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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One such interesting debate was on the implications of the Arab Spring for trade and competitiveness of the Arab world. Director-General Pascal Lamy said he believed that it would ultimately result in more trade openness and integration, both regionally and internationally.

Environment issues were discussed in several sessions, including those on environmental technologies and international carbon flow. A panel tried to answer the question of whether natural resources are a blessing or a curse for a country.

Regarding the issue of rising food prices, panels looked at the role of pesticide standards in this area, commodity speculation in South Asia, and export restrictions.

On the future of the WTO, panels discussed the implications of the impasse in the Doha Round, the future of the development dossier in the WTO, and how developing countries use the WTO dispute settlement system.
  

Session 14: Spring — Implications for Trade and Competitiveness of the Arab World

Zineb Badawi started by saying the focus of the session would be on economic and trade dimensions of what’s happening in Arab countries. Her question was whether the Arab Spring will give way to a summer or to a long autumn?

Abdel Bari Atwan, Editor of Al-Quds al-Arabi, said that there is an emergence of a new Middle East. Beyond economic hardship, the Arab Spring is an issue of needed dignity and respect for Arab populations. He questioned the role of the media in post-revolution countries, pointing out that tourists are easily alarmed by some unprofessional reporting or talk shows. He doubted the ability of wealthier Arab countries to help, saying these countries are too worried about domestic revolutions to give money to Egypt and Tunisia (although they are willing to help fellow monarchies like Jordan and Morocco). In addition, they are already busy buying US bonds.

Nagib Sawiris, former Chairman & CEO of Orascom Telecom, echoed similar worries about the situation post revolution, sharing views about the inability for oil-rich countries to help. He said in Egypt secular and liberal forces are six-month old babies in the face of an 80-year-old organized extremist party. Mr Sawiris said that investors risked being even more spooked by political uncertainty than tourists. Total direct investment in Egypt by foreigners this year has been “zero”, he said. Investors are waiting to see the restoration of law and order, general public safety, and policy certainty.

Taleb Rifai, Secretary-General of the World Tourism Organization, said he will not ask the impatient youth to be more patient but expressed confidence that “in due time,” the revolutions would bear economic fruit, although it would be naive to expect too much in the immediate short term. For him money is not the issue, the challenge is to produce the right government. He said regional integration is a real issue and noted that many of the autocrats of the region preferred to engage in trade relations with Europe or Japan rather than among each other. For tourism, however, people travelled within the region. He also indicated that trickling-down of wealth is unlikely to happen unless governments are transparent and accountable.

Nahida Nakad, Director of the Arabic Language Channel, France 24, pointed to the role of the media in the low turnout of tourists to the region. She noted that the Algerian government had in effect bought social peace by providing people with more money. She noted that international aid is necessary to help build institutions in post-revolution Arab countries.

WTO Director-General Pascal Lamy focused on the lack of regional integration in the Arab region compared with all other regions of the world. He highlighted some of the steps needed to rebuild the post-revolution countries. He expressed the opinion that the Arab Spring would ultimately result in more trade openness and integration, both regionally and internationally. Mr Lamy noted that the former autocratic regimes engaged in trade for rent-seeking processes, and the benefits from the fairly solid rates of economic growth failed to trickle down. Structural change will need to happen, he said. Referring to North African countries, he noted they suffer from a “colonial” trade pattern, and are heavily reliant on European markets, whereas increased regional trade and economic links would have made the region more resilient. He indicated that unlike other parts of the world, money to fund a Marshall Plan for the region is not an issue.

Many other issues were raised in the debate. Several pointed to other experiences of smoother transitions, such as in Morocco. Many questions pointed to how the international community should help. Panellists indicated optimism and pessimism about what happens next. Mr Lamy said the international community cannot help if there are no clear paths and plans.

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Session 15: — The Evolving International Trade Order: Global Sourcing and New Challenges to the WTO System

A mix of academics and consultants discussed the inappropriateness of rules based on 19th century trade patterns to cope with complex global supply chains, and about conflicting legislation, concluding on a need for harmonization on several fronts, preferably based on a bottom-up approach.

Philippe Orban, Director of Tax and Legal Advisors at KPMG Brussels, commented on how the decentralized use of the harmonized system makes it difficult to apply at the global level. Conflicting guidelines and interpretations on classification, even among the 27 European states adopting common tariffs, expose the system to subjectivity and make it increasingly difficult for global businesses to handle.

A comment from the audience suggested that due to the complex nature of current trade patterns, a narrower regulation framework could become a straightjacket and would not facilitate its application. Conversely, another speaker mentioned the danger of cherry picking among too many applicable rules and interpretations.

Prof. Claire Kelly, from Brooklyn Law School, praised the WTO for promoting discussions on value-added trade. She noted the current importance of intermediary products in global supply chains, the subjective nature of most tests used to identify them, and the different approaches to determine the basis value for ad valorem duties. She noted how national agencies often adopt contradicting views in regard to transfer pricing, such as tax authorities assuming inflated prices, customs assuming deflated ones. Finally, she suggested more use be made of trade networks, in which businesses, academics, regulators etc. could confront problems from the bottom up, citing as an example the EU consultations on rules of origin and the OECD experience with studies on transfer pricing.

The debate touched upon questions on rules of origin, such as the possibility of adopting an origin of convenience, the relevance of the concept itself and the fact that a “made nowhere specifically” would often best describe present products.

Prof. Jorge Viñuales, from the Graduate Institute of International and Development Studies, looked at the overlaps and conflicts between trade and investment rules. The main implications of moving the lens towards investment rules, specifically in relation to restrictions of movement, would be the direct right of action investors have against the state adopting the measure and the impossibility for the state to centralize proceedings in a class-action manner, as happens at the WTO. He noted that national trade policies have to be considered from the point of view of both trade and investment rules, illustrating how border adjustments for subsidies such as those for carbon neutralisation would be better justifiable under trade law, while import restrictions might be more acceptable under investment law. This regulatory mismatch between both regimes could originate several investor claims against states.

Therefore, he concluded on the need for sustained effort to harmonize trade and investment regulation in those areas where they overlap, while allowing them to keep their distinctiveness so as to avoid conflation. He highlighted the specificity of admission to bilateral investment treaties (BITs), which are not extended to investors of other states, and the danger of extrapolating trade law reasoning to these provisions.

During the debate, another speaker wondered whether any attempts at such harmonization were undertaken, and Prof. Viñuales said he had not heard of any such attempts. However, he pointed to signs of awareness of this issue, such as in the model BIT of Canada that includes a provision stipulating that actions taken by Canada in pursuance of WTO decisions should not be considered a breach of the BIT.

Ms Konstantina K. Athanasakou, Associate at White & Case, commented on the challenges that global supply chains pose for trade regulation, especially in the context of environmental technology. She noted that the WTO Trade & Environment Committee studies the way trade can help disseminate and promote investment in technology, but only one proposal on environmental goods is centred on having technology as its component.

The debate also raised questions about the limit between official regulation and private norms, such as codes of conduct in global supply chains, and how enforceable they are.

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Session 17: The Future of Trade in Financial Services: Safeguarding Stability

Lori Wallach, Director of Public Citizen Global Trade Watch, stated the need to move towards a more robust regulation of financial systems to avoid the next financial crisis. Current WTO rules on financial services do not reflect the new context post-financial crisis, she said. Ms Wallach called for an institutional review of the WTO to bring rules in sync with reality. She discussed how liberalization implied deregulation and possibilities of establishing domestic prudential norms.

On safeguarding stability, Sanya Reidsmith, Legal Adviser with Third World Network, discussed capital management control measures and assessed their success. She examined Malaysia, Thailand, China and the Republic of Korea, which had adopted these measures to mitigate the financial crisis. She concluded that the results demonstrate that these measures work.

General Director of the Central Bank of Ecuador, Andres Arauz, spoke about Ecuador’s experience of the financial crisis and domestic measures taken to mitigate the consequences of the crisis. He urged the audience to think about the functioning of the global monetary system and the multilateral agreements in today’s context and that financial commitments should not be taken solely within the GATS universe. He shared the view of scholars and practitioners that the financial crisis is due largely to deregulation. Mr Arauz suggested that policies countries take in relation to the financial crisis must be transparent, that asymmetry is necessary regarding fiscal resources of government money available for these issues, that developing countries do not have “federal reserve advantage” and how exchange rate policy can create distortions in developing countries.

Etienne Vlok, Director of the South African Labour Research Institute, discussed the importance of financial stability for trade unions, how growth of the financial sector in South Africa resulted in growing inequalities and called for a “new space to implement new policies” regarding labour and global trade. 

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Session 18: Advancing Trade and Environment in the Absence of Negotiations

Regardless of the Doha outcome, the relationship between trade regime and environmental governance remains a pertinent future topic. This session looked at the interactions between trade and environment, examining the view that they involve both complementarity and conflict.

Prof. Robert Wolfe, of Queens University, said that the importance of the Transparency Mechanism is often ignored; compliance is inconsistent; best in Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT); next step is accountability. He referred to the relative success of G20 monitoring, with an active Secretariat verifying rather than just waiting for information. He queried the use of carbon labels and suggested making fuller use of the Trade Policy Review mechanism to review sustainable development considerations.

Prof. Jorge Viñuales, of the Graduate Institute, said that WTO and MEA (multilateral environmental agreements) trade rules have not been fully exploited, and that a change of mind-set is needed. He said that the trade regime was the mainland to which environmental law was an immigrant rather than an equal. The WTO chose a highly restrictive interpretation in EC – Biotech case, he said. Environmental treaty language, he stated, is becoming more specific as to the relationship between different norms, i.e. Nagoya Protocol in 4.1.

Ms Katharina Kummer, of the Basel Convention Secretariat, proposed that the WTO and Basel secretariats and industry associations work together. Regarding e-waste, she said that the traditional approach was to prohibit and restrict trade in waste, the legal criticism being that this was not GATT compatible. She said that the practical problem is that enforcement is incredibly difficult and expensive and trade is forced underground. E-waste contains large amounts of valuable metals that could be extracted in standard-compliant facilities, she said.

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Session 19: What Happens to Development after Doha?

Despite opposite views of the panellists on the hypothetical death of the Doha Round, this session consensually recalled how crucial the development issue was for least-developed countries (LDCs) and developing countries. Considering the way forward, multilateralism was regarded as a fundamental value.

Jean-Pierre Lehmann, Professor of International Political Economy at IMD & Founding Director of The Evian Group @ IMD, moderated the session. He began by asking whether the WTO was an obstacle or a vehicle of development in the context of what he called "the slow death of the Doha Round".

For Manzoor Ahmad, Independent Consultant and Former Director of the Food and Agriculture Organization Liaison Office, the Doha Round has a huge potential for LDCs regarding industrial goods, agriculture, trade facilitation, and fisheries subsidies. If it fails, the most fragile countries will be left out of the international economic system. He suggested that Pascal Lamy should do the same as Arthur Dunkel during the Uruguay Round and take the initiative to put a text on the table.

Michaela Dodini, representing the EU, insisted on the fact that she did not agree with the proposition of this session that we were now in an "after Doha" scenario. While recognizing the difficulties in the negotiations, she asserted that the EU was not giving up on the Doha Round and that concrete deliverables were not only doable but necessary for LDCs. She also described the important unilateral contribution of the EU towards development besides the WTO, thanks to the EU GSP (generalized system of preferences) or Aid for Trade initiative (EU is one of the main donors).

According to Debapriya Bhattacharya, Special Adviser on LDCs at UNCTAD, said that talking of a post-Doha is not very optimistic. We would not be confronted by a WTO-related problem but rather a more general governance problem. He asserted that we should have a minimum package for LDCs during the December Ministerial Conference. He said that development matters should not be held hostage to market access issues.

During the Q&A with the audience, a participant called for a solution to the cotton issue, while another participant called for concrete results in the field rather than lengthy and costly discussions in Geneva. Somebody questioned whether it was still relevant that the WTO continues to use the system of Rounds in its institutional framework.

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Session 20: 21st Century Regional Trade Agreements: The Trans Pacific Partnership and its Implications for the Multilateral Trade System

Deborah Elms, Head of the Temasek Foundation Centre for Trade & Negotiations, said that the Trans Pacific Partnership (TPP) Agreement is an Asia-Pacific regional trade agreement currently being negotiated among nine partners (United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Viet Nam). The agreement builds on the Trans-Pacific Strategic Economic Partnership Agreement (P4) between Brunei, Chile, New Zealand and Singapore. She said that the TPP is more than a traditional trade agreement (it is referred to as a "high quality 21st century agreement"); it will also deal with behind-the-border impediments to trade and investment. The TTP is different from existing agreements in terms of the following: market access for goods (no exclusions including sensitive products in agriculture;  no special provisions for textiles and phasing out quantitative restrictions over time); liberal rules of origin (providing new opportunities for exporters to tap into global supply chains); and services (more sensitivities allowed and moving away from WTO modalities). It is intended, she said, that the TPP be a living agreement that remains relevant to emerging issues and allows for membership expansion. Expanded membership of the TPP is desirable; however, those seeking membership would need to demonstrate commitment to early and comprehensive liberalisation so as to maintain the momentum that has been generated by existing TPP parties.

Ann Capling, from the University of Melbourne, said that the TPP addresses concerns about regional architecture that would exclude US and Chinese economic dominance. The TPP is an attractive vehicle for multilateralising regionalism, she said, and could serve as a catalyst for broader developments. The TPP has different commitments on rules for different countries, longer implementation time for developing countries and contains regulatory coherence. She referred to the following stumbling blocks: contentions provisions; US congressional deadlock (2007 PTAs still not ratified); Japan’s political difficulties; and the potential to be seen as dictating terms to China.

Meredith Kolsky Lewis, from Victoria University, said that to serve as a model for a future FTAAP, the TPP will have to be an agreement that other countries are interested in joining. The TPP agreement is not the only option available for Asia-Pacific regionalism, and if the TPP is not sufficiently attractive, one of the other visions for regional economic integration may instead fill the role. China, for example, would like to see ASEAN + 3 serve this function and Japan prefers ASEAN + 6 because it would include more economies to counterbalance China. The TPP agreement has the potential to act as a building block towards further liberalization, and to multilateralize some of the fragmentation resulting from the panoply of FTAs today.

Patrick Low, Director of the WTO’s Economic Research and Statistics Division, said that on average, each WTO member belongs to 13 PTAs. There are two possible tracks: top-down approach (through the WTO) and bottom-up (through efforts such as the TPP). For the top-down approach, he said, it would be a relatively costless consolidation; the WTO could negotiate barriers multilaterally; and assist PTAs to comply with multilateral rules. As a bottom-up approach, the TPP is attempting to expand geographically and generate deeper commitments.

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Session 21: The Difficulties that Businesses Face as a Result of a Varying Set of Rules of Origin: Case Study Mexico

Rodriguez Torres, International Logistics Manager of Acero Prime, spoke of Mexico’s free trade agreements (FTAs) with 49 countries, which has led to complexity because rules of origin differ between FTAs. He said there was a need to keep track of a whole variety of legislation and issues when importing goods.

Douglas Garfield, Senior Director of Global Customs and Trade of PepsiCo Inc., spoke about the importance of businesses be involved in negotiations of rules of origin from the early stages and communicating interests to governments. On the question of confidentiality, Mr Garfield viewed this as a key issue in rules of origin and called for a balanced solution which satisfies the rules of origin requirements without violating confidentiality. Finally, he stated how FTAs are important to businesses and how supply chains were modified so as to meet with FTA requirements.

Sanchez Chao, a Partner at a law firm in Mexico, saluted Director-General Lamy’s invention of “Made-in-the-World” and the insufficiency of rules of origin in this context. He stated that the complexity of the rules stemmed from the system itself. With a set of rules for each issue, complexity intensifies in the area of non-preferential origins, which knows no procedures and Custom authorities resort to regulatory arbitrage in this domain. Mr Chao emphasized the need to adopt a chapter regulating this.

Ambassador Fernando De Mateo y Venturini insisted on the need to balance the rules of origin so that countries do not benefit unduly from trade agreements and to protect against protectionism through rules of origin. He underlined the problem of the proliferation of rules of origin dependent on the FTAs in place and how rules of origin are a “spaghetti bowl” affecting imports and need to be untangled. In order to solve the “spaghetti bowl”, there needs to be a diagonal accumulation between all agreements in place, he said.

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Session 22: Encouraging Innovation and the Deployment of Environmental Technologies

This session provided an opportunity for information-sharing and discussion on the topic of eco-innovation and environmental technologies, in particular efforts of governments and policymakers to give support to this sector.
 
Setting the scene, Mrs Vesile Kulaçoğlu (WTO) observed that the proliferation of green measures on the international landscape was significant, including measures such as technical requirements and government support programmes. Some governments were also considering policies aimed at the removal of trade and other barriers to innovation.
 
Mr Xavier Leflaive (OECD) commented on different policy mixes adopted by governments to promote eco-innovation.  Some governments focused on supply-side policies (research, development and demonstration of environmental technologies), while others pursued approaches including both supply and demand-side policies (stimulating demand for environmental technologies). Mr Leflaive noted that younger firms tended to be stronger eco-innovators than incumbent firms. He also emphasized the importance of engaging and supporting developing countries in this sector, including by helping to build absorptive capacity to reap the benefits of eco-innovation.

Professor Nicholas A. Ashford (MIT) emphasized the role of government in encouraging eco-innovation, including the need for governments not to be captured by the interests of incumbent firms as they consider the policy mix they wish to pursue. Professor Ashford said it is particularly important to foster fundamental change in terms of processes and systems underpinning eco-innovation. With respect to trade barriers related to environmental requirements, Professor Ashford suggested that they may assist in generating eco-innovation by disrupting markets.

The experience of China with respect to demand and supply-side policy approaches to promote eco-innovation was explored by Dr Li, Wanxin (City University Hong Kong). She noted the substantial increase in Chinese government funding for eco-innovation, as evidenced through the growing profile of eco-innovation in China’s Five Year Plans. The development of pollution havens and the relocation of industry within China was also explored by Dr Li.

Questions from the floor addressed the challenges of developing stringent environmental regulations that encourage both incumbents and new entrants to innovate, the role of markets in and market scope for eco-innovations, and the relationship between green economy, eco-innovation and job creation.

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Session 23: Rebalancing the Right of Importers and Exporters: How to Address Agricultural Export Restrictions?

Bipul Chatterjee of CUTS International said that existing multilateral rules are weak and do not reflect the reality. Food export restrictions have no impact, either on a short-term basis nor on a long-term basis, where a reduction in the production of certain food grains will occur and both consumers and exporters will suffer. Mr Chatterjee stated alternatives to export restrictions must be found through tax rate quotas or viable tariffs.

Dmitri Ryklo, General Director of the Institute for Agricultural Market Studies, gave a domestic view of Russian grain export restrictions — export restriction measures taken may be for other economic reasons beyond food security and domestic measures were necessary to deal with volatility of food prices in order to avoid the ban on exports. Mr Ryklo demonstrated that trade restrictions on exports had a positive effect on Russia’s trade. He suggested that countries improve domestic grain production, grain stocks statistics, domestic crop insurance systems and the creation of a foreign grain export obligations fund enabling countries to fulfil their international obligations in case of default.

Debapriya Bhattacharya, of the Centre for Policy Dialogue (Bangladesh), said that food security issues are caused by trade restrictions, but also food shortages and least developed countries are sensitive to food export bans since prices increase as a result. He said that monetary solutions to food security issues are futile and that FTAs should not contain provisions on export restrictions.

Arancha Gonzalez, speaking in her personal capacity, pointed out that export restrictions are not a new phenomenon, nor a minor issue (“domino effect” as a result of measures taken) and that there is no easy solution. The food security problem must be tackled domestically, she said, and existing WTO mechanisms should be used effectively by members instead of engaging in new multilateral negotiations.

Delegations of the US, Egypt, Japan and the Netherlands agreed that there was a need to strengthen WTO rules in this respect and that there was a need for co-operation between importing and exporting countries.

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Session 24: Trade and Natural Resources – Curse or Blessing?

The session revolved around the question of whether natural resources are a curse or a blessing for a country, and the role of parliamentarians in promoting democratic, anti-corrupt, transparent, environmental and development-friendly policy on trade in natural resources.

Roberta Piermartini, WTO Senior Economist, introduced five characteristics about natural resources noted in the WTO World Trade Report 2010 – exhaustibility, uneven geographic distribution, dominance of natural resources, externality and market volatility. She concluded that natural resources could only be a blessing when they are well regulated. The panel also noted figures from the World Trade Report that trade in natural resources has grown exponentially and that half of resources are found in countries with low per capita incomes.

Piet van der Walt, Member of Parliament of Namibia, spoke about the problems that a resource-rich developing country like his country is facing. He called for more investment in education, more intra-regional trade in Africa and the use of GATT Article XX to restrict natural resources exports.

Jörg Leichtfried, Member of the European Parliament, explained Norway’s model of using natural resources for social benefits, while noting that oil endowment can also result in underdevelopment of other industries. He advocated parliamentary influence to promote democratic and fair distribution of wealth, a legal system against speculation, etc.

The panel also discussed the role of multinational mining companies, including a new generation of Chinese and Indian companies, and agreed the importance of balance with local small and medium enterprises, regulation and environmental standards. On the topic of whether every country should have access to natural resources, the panel agreed that export policy is not the first best choice to conserve natural resources, and such policy should be implemented carefully. The WTO dispute case on raw material export restriction was mentioned.

During the Q&A session, comments touched on the corruption problem and need for industry upgrading in Africa. Questions were raised about WTO rules on trade restrictions and why the WTO cannot have a new set of rules on natural resources trade. A Chinese delegate commented that China was not unable to use Article XX due to unfair accession commitments.

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Session 25: Are FAO/WHO Pesticide Standards Distorting Trade and Increasing Food Costs?

This session explored the current development and content requirements of FAO/WHO pesticide standards, the negative impact of these standards as well as the compatibility of these standards with WTO agreements (SPS Agreement, TBT Agreement and TRIPS Agreement). 

During this session, speakers outlined the changes in the procedures for the development and application of pesticides standards by FAO/WHO. The presentations highlighted, from different perspectives (legal, scientific and private sector), how the “new procedure” standards, as currently implemented, promote monopolies among pesticide producers, limit the diffusion of technology, increase production costs and limit the availability of pesticides for farmers, thereby impacting on their production and sustainability. 

It was emphasized that although FAO/WHO pesticide standards are of a non-mandatory nature, members may incorporate these recommendations into their national regulations, thereby making these standards mandatory and possibly resulting in the restriction of the trade of generic pesticides. From a legal point of view, speakers argued that the FAO/WHO pesticide standards do not conform with the core principles of transparency and harmonization as highlighted in the TBT Agreement and SPS Agreement. In addition, speakers also observed that the current pesticide standards involve an intellectual property component, by way of the inclusion of a trade secret protection element, which has no time-limit. As such, there is no indication of when the market will be freed for other pesticide producers. One of the solutions identified to tackle this issue is for members of FAO/WHO to advocate a change in the procedures.

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Session 26: Dispelling the Myths of Developing Country Participation in the Dispute Settlement Mechanism

Developing countries with regional trade agreement (RTA) dispute experience are the most frequent WTO users relative to trade volume. Developing countries lack the ability to retaliate but that does not vitiate the value of the WTO Dispute Settlement Mechanism.

Dispute settlement activity is concentrated among main users, 60 per cent for six members and 90 per cent for 14 so most are absent, especially least-developed countries. Furthermore, 90 countries which have not initiated disputes make up 5 per cent of world trade, which is equal to Brazil. “Developing countries” may no longer be a valid category, and is certainly not homogenous.

Central America has experience with RTA disputes; this pattern has transferred to the WTO, breaking the taboo of intra-developing country claims. This makes sense because a neighbour is a natural market.

It is time to move beyond the same old story: many developing countries do not have classical capacity deficit, i.e. lack of knowledge and inability to access specialized lawyers. ACWL has both subsidized and capped fees for users. On the other hand, some countries have limited resources to be diverted further due to the proliferation of preferential trade agreements (PTAs).

It is difficult to take political decisions about going to dispute. A member may be scared to challenge a donor, or want to protect preferences. Equally, it may have a high dependence on certain markets, or fear short-term consequences.

A lack of market power means an inability to coerce directly; there have been various proposals in the WTO Dispute Settlement Body but this problem does not invalidate the value of the WTO Dispute Settlement Understanding. There is a very high level of implementation, i.e. Reto Malacrida’s study suggests that compliance is generalized.

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Session 27: Global Production Networks: What do They Mean for Trade and Employment?

As part of the “Made in the World” sub-theme, the session presented the results of different studies on the impact of trade on jobs and labour conditions. Results are mixed and further analysis is needed before drawing conclusions.

Hubert Escaith, Chief Statistician of the WTO’s Economic Research and Statistics Division, commented on fears of offshoring that tend to re-emerge in times of crisis.

Professor Will Milberg, Professor and Chair at the Department of Economics at the New School for Social Research, New York, said that fears might not be totally unfounded and presented the results of a study on the links between offshoring, economic security, employment and growth. His conclusions point to a link between labour market regulations, financial market regulations and trade. Offshoring can under certain circumstances raise the profit share in the short run, but longer-term benefits will depend on the labour market regimes and how profits are reinvested.

Robert Stehrer, Deputy Director of Research, Vienna Institute for International Economic Studies, illustrated the EU’s WIOD (World Input-Output Database) project. Data seems to indicate that there is no clear-cut response on whether offshoring has had a totally positive or negative impact on labour demand. He noted that most of the offshoring seems to have a higher impact on the medium-skilled workers, but the need remains for further research that looks at different variables.

Hildegunn Nordas, Senior Trade Policy Analyst, Trade and Agriculture Directorate, OECD, posed the question of whether deepening the division of tasks makes economic sense and what are the driving forces behind trade in tasks. She favoured a division of tasks that followed a Toyotaist approach rather than a Taylorist one and warned against the dangers of confusing division of tasks with division of labour.

Esther Busser, Deputy Director of the ITUC-CSI Geneva Office, raised some of the concerns on global production networks, focusing in particular on the working conditions in Export Processing Zones. The overall concerns were that the increase in competition might put pressure on employment conditions and wages, that trade in tasks would not spur structural transformation and technological development in developing countries and that tariffs and industrial policies, by facilitating specialization in tasks, impair the process of industrialization in developing countries. There was also a concern that multinationals and FDI might pressure governments to implement weaker labour legislations and higher investors protection.

Mr Escaith asked the panel to look at the issue from the perspective of a developing country and asked for views on how globalization of value chains could promote development. The panellists noted that there had been success stories of countries, especially in Eastern Europe and Asia, that had gained from engaging in global value chains. But not all countries had been able to seize the opportunities offered by global value chains and this led to consideration of the fact that a one-size-fits-all approach cannot be applied. Ms Busser added that industrial policy for economic development requires a range of instruments, some of which might need to be of a protective nature.

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Session 28: International Carbon Flows: Sustainability, Trade and Climate Change

The session discussed the pros, cons and challenges of adopting a consumption-based carbon emission accounting model instead of the prevalent production-based view.

Dr Graham Sinden, Senior Strategy Manager with the Carbon Trust, introduced the session, noting that adopting this approach would change the perspective on distribution of emissions between countries, changing responsibilities towards climate goals.

  Doaa Abdel Motaal, Counsellor for the Office of the Director-General of the WTO, praised the panel for addressing this important issue, which has not been sufficiently on the trade agenda so far. She demonstrated that a shift in approach would not alter the list of countries on the top of the emission scale, a relevant change being only the fact that developed countries would be seen as importing emissions, while developing ones export them. She noted that the 7 per cent decrease in production emissions claimed by developed countries as a result of Kyoto was actually not achieved when a consumption view is adopted.

Diane Simiu, Bureau des Marchés Carbone, Ministère de l’Ecologie, France, discussed a Carbon Inclusion Mechanism aimed at keeping the EU industries at the same footing as its competitors and avoiding transfer instead of reduction of emissions. It would operate by automatically calculating allowances to be surrendered based on existing customs information.

Thierry Berthoud, Managing Director of Energy & Climate Change for WBCSD, discussed direct and indirect carbon pricing mechanisms, highlighting that the EU is the only actor with a cap and trade mechanism while the rest of the world has none. He advocated that the way forward should revolve around national policies being linked and converging, so as to achieve a global carbon price.

  Vicente Yu, Programme Coordinator for Global Governance for Development at the South Centre, affirmed that a consumption approach might present a fairer and more accurate way of looking at emissions and lead to better solutions in the future. He stressed that emissions are in fact shared globally in global supply chains, and that responsibilities can be allocated only if a precise picture can be drawn as to whether emissions are stabilizing, reducing or being outsourced. Finally, he noted that not many windows of opportunity exist during which the consumption approach could be effectively adopted.

The presentations were followed by a debate that discussed issues of emission certification and calculation methods; the calculation of emissions for intermediary goods; and the effectiveness of border adjustment measures in reducing emissions.

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Session 29: Controlling Food Prices in Turbulent Times: An Agenda for South Asia

The recurring theme in this session was food security and stability in South Asia. The session focused specifically on unregulated speculation on agricultural commodities, surplus production in India and the increasing amount of trade barriers such as tariffs and bans in the world market.

The moderator of the session, Arun Goyal, Director of Academy of Business Studies, New Delhi, opened the session by describing the current situation in South Asia. He said that South Asia used to be a region which had the poorest and the hungriest number of people; however, this has changed and South Asia now has a surplus in wheat and rice.

The first speaker, Petko Draganov (Deputy Secretary-General of UNCTAD) emphasized that food security is central to UN efforts. He drew the attention of the audience to data by the World Bank stating that 190 million people in the world were pushed into hunger after the 2008 Food Crisis. He also stressed the fact that the Horn of Africa is currently experiencing its worst famine since the 1980s. He, like other panellists, expressed concerns that the extreme volatility in food prices was deterring producers from making the necessary investments in agriculture, which in turn explains the growing food insecurity. He noted that UNCTAD was proposing a series of measures to prevent price volatility, for example creating adequately resourced safety nets, creating rules for markets to prevent manipulations and price abuse, and investing in more resilient modes of agriculture against climate change and to stimulate agricultural innovation.

Lauren R. Landis gave a brief overview of what the World Food Program (WFP) is doing in building food security in South Asia. Echoing the opening remarks of Mr Goyal, she submitted that South Asia has a very big role to play in matters of food security since it is where the hungriest people are and where the food surplus is. She stressed that the most important element to the WFP is stability of the market and that volatile food prices affect the way the WFP operates. To substantiate her claim, she gave the example of Afghanistan, whereby price increases of food (because of high volatility) drastically decreased the number of people the WFP were able to feed from 7 million to 3.8 million, using the same budget. She ended her presentation by claiming that export restrictions, despite being regulated by the WTO, have in the past decreased the number of lives that can be saved.

From an economist point of view, Sadiq Ahmed of the World Bank gave an overview of what South Asia can do to prevent the increase in food prices. The essence of his submission was based on the notion that South Asian countries have very limited fiscal policy space and as such, their subsidy programmes are becoming unsustainable. He also argued that increasing productivity is the only way of preventing an increase in food prices due to the fact that prices of energy, water and fertilizers are increasing. He also noted that the average level of trade barriers in agricultural goods is very high.

From a business perspective, Vijay G. Kalantri expressed his discontent with the fact that developing countries do not have the level playing field in world trade since they are asked to remove trade barriers for their imports while their exporters are faced with several trade barriers. To support his argument, he cited the case of Indian grapes export to Europe, whereby the whole shipment was refused entry even though only one container had some pests, totally at the expense of Indian exporters. He also mentioned that grants advocated during the early days of the WTO for capacity building were never given out. He emphasized that governments should start regulating markets for commodities and speculation in “market-immature” developing countries like India should have a complete ban on speculation on agricultural products. He ended his presentation by urging the world to help India in building the necessary infrastructure for the betterment of the agricultural industry.

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