At their 10th Ministerial Conference in Nairobi last December, trade ministers agreed to continue work under the WTO’s existing Work Programme on Electronic Commerce. They also instructed the General Council to hold periodic reviews, based on the discussions in the Goods Council and other WTO bodies, in its sessions of July and December 2016 and July 2017 and to report back to the next Ministerial Conference.

Following an invitation from the Goods Council chair, Ambassador Hamish McCormick (Australia), to engage in discussions, Canada, China, the EU, Japan, Korea, Switzerland and the US urged members to make more effective use of the Work Programme, to promote digital economic growth and to reinforce the openness that had allowed the Internet to become a dynamic force for economic growth, to increase access to best technologies, and to bolster the Internet’s ability to facilitate commerce in digital products, services and physical goods. 

Several proponents said they were working on a “mapping” paper identifying elements of substance and position. Korea welcomed the broad support for the MITKA workshop on e-commerce held on 5 July, while the US noted its new discussion paper on e-commerce outlining trade-related policies that can contribute to the flourishing of trade through electronic and digital means.

China said its agencies were positively considering how to craft rules on e-commerce and that it would be an active participant in discussions on the issue. 

 

New trade concerns

• The Russian Federation, echoed by China, raised a concern before the Goods Council regarding the EU’s anti-dumping (AD) practices and the methodology it used in its investigation into cold‑rolled flat steel imports from Russia and China. According to the Russian Federation, the EU rejected the data submitted by Russian exporters and instead requested confirmation and clarification of data that had never before been requested. The Russian Federation also questioned the manner in which the EU investigating authority determined the export price for the targeted goods, which it considered to be artificially low. The EU responded that its AD investigations met high quality standards, that it had already provided responses to these concerns, and that its methodology was in compliance with WTO rules.
• New Zealand raised concerns about tariffs imposed by Sri Lanka on skimmed milk and milk powder that were in excess of the country’s WTO ad valorem bound rate of 20%. Sri Lanka acknowledged the breach and indicated that it would address the issue with a view to bringing these duties into conformity with its bound rates by mid‑2016, but said that the application of the higher duty had not resulted in a reduction of imports.
• New Zealand also raised concerns about various measures adopted by some provincial authorities in Canada regarding the sale of wine. Specific concerns were raised regarding regulations implemented by British Columbia (BC); these authorize the sale of BC wines on regular grocery store shelves, while imported wines were subject to different restrictions. A similar situation occurred with regard to wine and spirits in Ontario. Australia, Chile, the EU, Mexico and the US all shared these concerns with regard to the measures, which constitutes less favourable treatment to imported wines.

Canada replied that its government was engaged with the concerned WTO members and was also working closely with the provinces so as to ensure the consistency of their policies with Canada’s international trade obligations. The BC measure concerning the exclusive sale of wine at certain locations had existed for many decades and was "grandfathered" through many trade agreements to which Canada was a party, it noted.

 

Previous trade concerns

The Council considered seven additional trade concerns that had already been brought to its attention at its meeting in April 2016 and during previous Goods Council meetings:

• Nine WTO members (Japan, the EU, the US, Brazil, Korea, New Zealand, Australia, Chinese Taipei and Norway) said that despite some recent progress, Indonesia continued to maintain an array of measures affecting the import and export of goods, including import licensing requirements, unique technical regulations and conformity assessment procedures, preshipment inspection requirements, export restrictions, port entry restrictions, retail distribution restrictions and local content/domestic manufacturing requirements in sectors such as telecommunications and energy. Indonesia replied that it had addressed some of the concerns raised and that it was in the process of adopting major reforms which would create a better business environment. Indonesia ensured members it was strongly committed to adherence to WTO rules.
• Eleven WTO members (Japan, the US, Korea, the EU, Peru, Canada, Switzerland, Mexico, Chile, Guatemala and Colombia) also reiterated continued concerns about trade-restrictive measures in Ecuador, including restrictions imposed for balance of payments and environmental purposes, which have affected a variety of goods, most notably imported automobiles and phones. While the members recognized Ecuador’s efforts to recover from the recent earthquake that struck the country, they said this did not appear to justify the extension of some of the measures. Ecuador repeated that its restrictions on automotive imports were aimed at combatting emission of greenhouse gases. Concerns about balance of payments and phone restrictions should be addressed in the relevant WTO committees, it added.
• Nine WTO members (Japan, New Zealand, Korea, the US, Chinese Taipei, Australia, Canada, the EU and China) asked India to justify its minimum import prices (MIPs) on imported steel and trade restrictions on some agricultural goods, notably apples. India said its MIPs were temporary and a response to a surge in steel exports by some major steel producers. On apples, ports that have been recently opened (Chennai, Kolkata and Kochin) have adequate food safety and quarantine facilities in place, India said.
• Ukraine was joined by the EU, Canada, the US, Turkey, Australia, Japan and Korea in voicing continued concerns over new and existing trade-restrictive measures imposed by the Russian Federation. The newest Russian actions include the extension of import prohibitions on agricultural imports for a further 18 months, the extension of restrictive measures on goods in transit bound for the Kyrgyz Republic and the ban on transit of goods from Ukraine to Kazakhstan and the Kyrgyz Republic. According to Russia, the measures are in full compliance with the WTO agreements.
• Nearly a dozen WTO members (including the US, the EU, Iceland, Norway, Uruguay, Australia, Argentina, Chinese Taipei and Japan) expressed concerns about various measures in Nigeria which were restricting imports. A central concern was the decision by the country’s central bank in June 2015 to prohibit foreign exchange transactions for imports of more than 40 product categories. Nigeria said the government was engaged in an extensive reform process and was doing everything possible to address the many challenges the country faces, but said more time was needed
• Norway, the US, Switzerland and the EU voiced continued concerns about Ukraine’s customs valuation practices and urged Ukraine to bring its practices in line with WTO requirements. 

 

Other business

• For the third Goods Council meeting in a row, China reminded WTO members that a provision in its 2001 Protocol of Accession, Section 15(a), will expire on 11 December 2016. According to China, this means that, after 11 December, WTO members shall stop using surrogate or analogue country methodologies in anti-dumping investigations against Chinese imports, and determine the dumping margins on the basis of the prices and costs reported by Chinese companies. China urged members still using these methodologies to stop doing so in a timely manner so as to safeguard the authority and seriousness of the multilateral trading system.

The United States responded that the expiration of Section 15(a)(ii) of China’s Protocol of Accession does not require members to automatically grant China market economy status (MES); in fact, the Protocol makes clear that the question of China’s MES is based solely on an assessment of the facts on the ground in China in light of each member’s domestic rules for making such an assessment. More specifically, the US said, Section 15 (d) of the Protocol states that only if China establishes MES under a member’s domestic law does Section 15(a) expire in its entirety. This differs from the expiration of Section 15 (a)(ii) on 11 December. In addition, the US said, there is little doubt that China’s market reforms have fallen short of the expectations held by many members when China joined the WTO. The US said this is particularly evident in the steel and aluminum industries, where China’s pervasive interventions had led to a significant overcapacity in global supply that is threatening the viability of competitive firms in these industries around the world.

In response to the US comments, China said that expiration of Section 15(a)(ii) did not imply an automatic recognition of MES but would eliminate the legal basis of the discriminatory surrogate methodology.

• Japan registered its interest in China’s increased rate of import taxes on personal effects (hand luggage). This tax, as implemented in April 2016, comprised the customs duty, an import value added tax (VAT), and a consumption tax. In the case of certain products, the new applicable rate of import taxes appeared to exceed the aggregate amount of the above‑mentioned three elements, Japan said. Japan asked China to clarify whether the amount of the simplified import tax was higher than the aggregate amount of ordinary customs duty and other internal taxes for the same products. China said it would convey the concerns to Beijing for further consideration.
• Ukraine reiterated concerns it had raised in the April 2016 meeting regarding trade restrictions imposed by the Russian Federation on Ukrainian goods transiting through Russian Federation territory. These were detailed in a document (G/C/W/726) circulated a few days prior to the meeting. Australia, Canada, the European Union, Japan, Norway, Turkey and the United States echoed these concerns. The Russian Federation said its measures were WTO‑compliant.

 

Next meeting

The next meeting of the Council is scheduled for 17 November.