RULES NEGOTIATIONS

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China's proposal (TN/RL/GEN/194) elaborates on ideas first set out in an earlier proposal on trade remedies submitted in April. In introducing the paper, China said SMEs were important for creating job opportunities and promoting economic development and that WTO members needed to help create an environment for SMEs to facilitate their participation in international trade. However, SMEs face many difficulties and bear a heavy burden in responding to anti-dumping (AD) and countervailing (CV) proceedings, including difficulty in obtaining qualified professional assistance from lawyers or experts due to high costs. Because of their lack of experience and expertise, these proceedings often lead to unfavourable or even excessively high duty rates for SMEs, resulting in a worse-off situation for them in international trade.

While Article 6.13 of the WTO's Antidumping Agreement (ADA) and Article 12.11 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement) recognize the special needs of SMEs, these provisions are insufficient to cover all the problems SMEs face, China argued. As a result, special provisions need to be written into the agreements to help SMEs further, including better access to information on trade remedy investigations, granting SMEs reasonable extensions to deadlines for submitting information to investigating authorities, providing assistance to SMEs in responding to requests for information, and ensuring that results of an investigation are not less favourable to an SME if the information for an investigation is provided to the SME's "best abilities". 

While most delegations that took the floor recognized the problems faced by SMEs in participating in, or responding to, trade remedy investigations and the constraints they face, many expressed concerns about creating different legal obligations for firms depending on their size.  One particular concern was the large discretion given to investigating authorities under the Chinese proposal to determine what firms qualify as SMEs; one delegation noted that an SME may be a firm with several hundred employees or less, or several thousand employees, depending on the member.

Several delegations said that, rather than creating new rules, members should look at how to make existing provisions under Articles 6.13 of the ADA and 12.11 of the SCM Agreement more effective. One delegation pointed out that it was important to look at the issues faced by SMEs not only as targets in trade remedy investigations but also as victims of unfair trading practices; another reiterated its belief that there was no common basis from which the Negotiating Group on Rules could constructively engage on trade remedies, including the issues outlined in China's latest paper.

EU proposal on improving disciplines for subsidy notifications

The European Union  responded to various questions regarding its proposal (TN/RL/GEN/188) first presented to members last July. The proposal seeks to crack down on what the EU earlier described as the dismal record of members in notifying their subsidy programmes, a fundamental obligation set out under Article 25 of the SCM Agreement.

Among the alternatives presented in the EU proposal are a rebuttable presumption that non-notified subsidies cause adverse effects and are thus actionable under WTO rules, or that such a presumption would arise in any event where the non-notified subsidy had been counter-notified; and a mechanism whereby non-notified subsidies that were subject to countervailing action as reflected in a member's semi-annual report would be subject to a supplemental notification prepared by the WTO Secretariat.     

While nearly all the members who spoke supported the idea of improving subsidy notifications, they also expressed mixed views on the EU proposal.  Some welcomed what one delegation described as the EU's "bold ideas" to address the chronic problem of non-reporting of subsidies, but others continued to express reservations with the EU's  rebuttable presumption. This, they argued, would unfairly shift the burden of proof to the subsidizing member to show that the support was in line with WTO rules. Several said the EU proposal could pose particular problems for developing country members and that the problem of non-notification was mainly due to capacity constraints in these members.

 Further background on the WTO rules negotiations and previous news items on the talks are available here.

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