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Hong Kong, China - 2005

HONG KONG WTO MINISTERIAL 2005: BRIEFING NOTES

RULES: AD, SCM INCLUDING FISHERIES SUBSIDIES
Negotiations to clarify and improve disciplines

The Negotiating Group on Rules was established by the Trade Negotiations Committee in February 2002. In the Doha Declaration, “rules” covers three subjects: anti-dumping (known in the WTO as GATT Article 6); subsidies and countervailing measures, including fisheries subsidies; and regional trade agreements. (Regional agreements are handled in a separate briefing note.)

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Contents
> Director-General’s letter to journalists
> The Doha Development Agenda
> Agriculture
Cotton
> Services
> Market access, non-agricultural products
> Intellectual property (TRIPS)
> Trade facilitation
> Rules: ad, scm including fisheries subsidies
> Rules: regional agreements
> Dispute settlement
> Trade and environment
> Small economies
> Trade, debt and finance
> Trade and technology transfer
> Technical cooperation
> Least-developed countries
> Special and differential treatment
> Implementation issues
> Electronic commerce
> Members and accessions
> Members
> Bananas
> Statistics, Textiles and Clothing
> Statistics, Facts and Figures
> Jargon buster, Country groupings
> Jargon buster, An informal guide to ‘WTOspeak’


The Doha mandate back to top

The declaration sets out the following mandate on the WTO’s Anti-Dumping and Subsidies Agreements:

“In the light of experience and of the increasing application of these instruments by members, we agree to negotiations aimed at clarifying and improving disciplines under the Agreements on Implementation of Article VI [i.e. 6] of the GATT 1994 [i.e. the Anti-Dumping Agreement] and on Subsidies and Countervailing Measures, while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into account the needs of developing and least-developed participants. In the initial phase of the negotiations, participants will indicate the provisions, including disciplines on trade distorting practices, that they seek to clarify and improve in the subsequent phase. In the context of these negotiations, participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries. We note that fisheries subsidies are also referred to in Paragraph 31.”

  

Since then … back to top

During the first phase of negotiations, participants pointed to the provisions in the two WTO agreements that they would like to clarify or improve in the subsequent phase. From the 141 submissions tabled, most of them on the Anti-Dumping Agreement, the chairman issued a compilation of issues and proposals. During the second phase after Cancun, the Group began meeting in informal sessions to consider more detailed and specific “elaborated proposals”. The frank and detailed exchanges gave the Group a clearer idea of what exactly the proponents were seeking, and at the same time provided the proponents valuable feedback on what proposals may or may not attract broad support. In the spring of 2005, the chairman launched the third phase of negotiations by adding bilateral and plurilateral consultations for rigorous consideration of legal texts of proposed amendments to the relevant Agreements. He also established a technical group open to all participants to work on a standard anti-dumping questionnaire. Such a questionnaire could significantly reduce costs and increase predictability for both the investigating authorities and the exporters.

  

Anti-dumping

More than 2,600 anti-dumping investigations have been launched since WTO came into being in 1995. Anti-dumping initiations rose from 157 in 1995 to 364 in 2001 but have decreased since then to 213 in 2004. In every year of the 1995-2004 period, developing countries have been the leading users of this trade defense instrument. During this period as a whole, developing countries (plus a few transition economy countries) conducted 1,639 such investigations, as compared to 1,008 for developed countries.

A number of members believe that the existing Anti-Dumping Agreement should be improved to counter what they consider to be an abuse of the way anti-dumping measures can be applied, which in their view is indicated by the substantial number of dumping actions imposed each year and the growing number of WTO disputes in this area. An informal group of 15 participants (Brazil; Chile; Colombia; Costa Rica; Hong Kong, China; Israel; Japan; Rep of Korea; Mexico; Norway; Singapore; Switzerland; Chinese Taipei; Thailand; and Turkey), calling themselves “Friends of Anti-Dumping Negotiations” (FANs), have tabled many proposals for tightening disciplines on the conduct of anti-dumping investigations.

  

Initiations of AD Investigation (1995-2004)
1. India 399
2. United States 354
3. EC 303
4. Argentina 192
5. South Africa 174
6. Australia 172
7. Canada 133
8. Brazil 116
9. China 99
10. Turkey 89
Subject to AD Investigation  (1995-2004)
1. China 412
2. EC-15 400
3. Korea 207
4. United States 151
5. Chinese Taipei 146
6. Japan 117
7. India 107
8. Indonesia 107
9. Thailand 99
10. Russia 94

  

The United States has emphasized the importance of ensuring that anti-dumping actions, and for that matter, countervailing measures (contingency measures--usually duties--applied to offset injury caused by subsidized imports), remain effective in addressing unfair trade. It has proposed a number of amendments to the anti-dumping and countervailing rules.

Developing countries are active in the negotiations, not only as co-sponsors of FANs' proposals. Their submissions and interventions reflect varied interests – some aim at keeping costs and burdens on administrators to a minimum in light of resource constraints, some aim at tightening disciplines, or elaborating rules where there are none, and some have to do with Article 15, “Developing Country Members”. Indeed, “operationalizing” Article 15 was one of the implementation issues that have been referred to the Negotiating Group.

  

Subsidies

While not yet attaining the same level of activity as anti-dumping, work on the Subsidies and Countervailing Measures Agreement has steadily progressed. More than 20 participants have identified issues in this agreement. As of October 2005, the Group had before it 10 “elaborated proposals” on the Agreement, five concerning subsidy disciplines and five concerning subsidy calculation issues for countervailing measures.

On fisheries subsidies, another informal grouping of members calling themselves the “Friends of Fish” (including Australia, Chile, Ecuador, Iceland, New Zealand, Peru, Philippines and the United States) say that subsidies to the fisheries sector—estimated at $14-$20.5 billion annually, or 20-25 per cent of revenues—have led to over-capacity and over-fishing. They argue that because of the sector's special characteristics, fisheries subsidies cause commercial harm — stock depletion which limits other participants' access to the resource – that cannot be addressed by the existing disciplines in the Subsidies Agreement.

Japan, the Rep. of Korea and Chinese Taipei, on the other hand, have expressed skepticism over the link between subsidies and over-fishing. They argue that fish stock depletion is caused mainly by inadequate management of fisheries resources.

The focus of the discussions has evolved significantly since the beginning of the Round: it is no longer on whether there would be any new disciplines but rather on the approach to, and structure of, such disciplines. The proponents of stronger disciplines argue for a broad ban on most subsidies to the fisheries sector, with limited exceptions. The participants on the other side of the issue favour an approach that would prohibit an agreed list of particular subsidies with the identified harmful effects.

Another issue that has arisen in the negotiations is whether, and if so how, any new disciplines should address subsidies to aquaculture. The discussion to date suggests that participants may conclude that it is not necessary to include aquaculture within the scope of the new disciplines, in part because the existing rules of the SCM Agreement could be directly applied to this sector.

The Group has also discussed special and differential treatment for developing countries. Brazil has tabled a proposal for differentiated disciplines and transition rules on fisheries subsidies of developing countries. In addition, a number of small coastal states (Antigua and Barbuda, Barbados, Dominican, Republic, Fiji, Grenada, Guyana, Jamaica, Papua New Guinea, St. Kitts and Nevis, St. Lucia, Solomon Islands, and Trinidad and Tobago) have jointly proposed that they be granted broad exemptions from any new disciplines, pointing to the importance of fisheries in their economies, and the artisanal and small-scale nature of their fisheries sector.

The Doha mandate on trade and environment negotiations (Paragraph 31 of the declaration) notes that fisheries subsidies are part of the “rules” negotiations.

   

Leading Exporters and Importers of Fishery
Commodities, 2002 (US$1,000)

1. China 4,485,274 1. Japan 13,646,050
2. Thailand 3,676,427 2. United States 10,065,328
3. Norway 3,569,243 3. Spain 3,852,942
4. United States 3,260,168 4. France 3,206,511
5. Canada 3,035,353 5. Italy 2,906,007
6. Denmark 2,872,438 6. Germany 2,419,534
7. Vietnam 2,029,800 7. United Kingdom 2,327,559
8. Spain 1,889,541 8. China 2,197,793
9. Chile 1,869,123 9. Korea 1,861,093
10. Netherlands 1,802,893 10. Denmark 1,805,598
Source: FAO

  

For Hong Kong back to top

Participants in the negotiations have expressed a variety of views as to how the Hong Kong Ministerial Conference can best be utilized to facilitate a successful outcome in these negotiations.

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Other material:
> Rules Negotiations
> Doha declaration
> Doha declaration explained
  
> More on: anti-dumping, subsidies and countervail