COUNCIL FOR TRADE IN GOODS

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  • Goods Council news
  • Statement by DG Azevêdo

  

Over 40 members - including the 28 members of the European Union - took the floor on the issue following the entry into force of the "Presidential Proclamation on Adjusting Imports of Steel into the United States". The proclamation imposes a 25% ad valorem tariff on imported steel and a 10% tariff on aluminium articles as of 23 March.

The US measure is inconsistent with the General Agreement on Tariffs and Trade (GATT) and the WTO Agreement on Safeguards, said China, which, along with Russia, had requested for this issue to be taken up at the meeting. China was of the view that the US measure did not take into account information demonstrating how steel and aluminium imports would not affect national security. China called on the United States to refrain from taking unilateral measures, follow WTO rules and uphold the multilateral trading system. China indicated it would undertake all necessary measures to safeguard its legitimate rights and interests.

The Russian Federation said the new tariffs exceed the bound rates the United States had committed to under WTO rules. It further noted that several WTO members would be exempted from the new US measure and sought further clarification on this exemption and how the measure can be justified under WTO rules. The Russian Federation said it was looking forward to constructive dialogue with the US.

Other members also reserved their right to protect their interests as provided under WTO rules, including the European Union, which said that the US measure cannot be justified using the WTO exception for issues of national security (GATT Article XXI). The European Union said this national security exception did not allow for the imposition of restrictions with the objective of sustaining domestic industries.

The other members who took the floor to raise issue with the new US measure and call for the upholding of the multilateral trading system were Japan; Venezuela; Brazil; New Zealand; Turkey; Korea; Hong Kong, China; Singapore; Thailand; Pakistan; Norway; Australia; India; El Salvador; Switzerland; Paraguay; Guatemala; and Kazakhstan.

In response, the United States said that its Secretary of Commerce, in its investigations pursuant to Section 232 of the Trade Expansion Act of 1962, had found that quantities of imports and circumstances of global excess capacity for producing steel and aluminium "threaten to impair the national security". Tariffs, as noted in the US President's proclamations, are necessary to address the threat.

The United States pointed out that the President's proclamations authorized the provision of relief from the new duties on steel or aluminium articles determined not to be produced in the United States in sufficient amounts or of satisfactory quality. The Department of Commerce published requirements and procedures on 19 March for requesting such exclusions and submitting objections to exclusion requests. Moreover, on 22 March, the President issued proclamations removing, for a period of time, the application of additional tariffs with respect to certain countries with which the United States has a "security relationship", the United States said.

US transparency proposal

The Goods Council also considered the United States' revised proposal to enhance transparency and strengthen notification requirements. Members had earlier discussed the first version of the proposal at the 10 November meeting of the Goods Council ahead of the 11th Ministerial Conference (MC11) in Buenos Aires; however, no decision was taken at MC11.

The United States, introducing its revised proposal, said it had made changes to reflect that it is no longer seeking a Ministerial outcome but rather a General Council decision. It said it removed explicit provisions pertaining to notifications concerning technical barriers to trade and specific enhancements proposed for fisheries subsidy notifications. The US said, however, that is has maintained the administrative measures it had previously proposed for WTO members that fail to provide a required notification after a certain time.

All members who took the floor reiterated their agreement that enhancing transparency and improving members' compliance with notification requirements were important objectives. However, many were of the view that the proposed administrative measures were punitive and would not necessarily encourage compliance with the notification obligations, particularly when technical capacity to draft these notifications was lacking. Some members opposed the proposal's suggestion to have the WTO Secretariat involved in drafting counter-notifications. Several, meanwhile, welcomed the US proposal for reviving a working group dedicated to improving notification compliance and updating the handbook on notification obligations.

China's draft law on export controls

A number of WTO members expressed concern over China's draft export controls law, which is intended to consolidate various existing export control provisions into a single document. Japan, the United States and the European Union sought more information on the implications this could have in relation to WTO rules. Japan, which initiated the discussion, noted that the draft made mention of export controls on rare earth minerals, which are essential in many industrial products.

China, in response, gave assurances that it intends to honour its WTO commitments as well as results of previous WTO dispute settlement decisions. China's previous export restrictions on rare earth minerals had been deemed inconsistent with WTO rules in an earlier dispute.

EU policy on palm oil

Seven WTO members (Malaysia, Colombia, Thailand, Indonesia, Guatemala, Costa Rica and Nigeria) expressed concern over discriminatory measures against palm oil imported into the European Union for biofuel. Malaysia, which initiated the discussions, noted that the amendment to a renewable energy directive was adopted by the EU Parliament on 17 January and would mean that biofuels from palm oil would not be counted towards the EU renewable energy targets from 2021.

Malaysia, echoed by the others, said this placed producers of palm oil biofuels at a disadvantage when attempting to access EU markets. Malaysia added that singling out palm oil while not doing the same for other vegetable oils was discriminatory. Furthermore, the proposed amendments will disregard the livelihood needs of farmers in many developing countries as well as ongoing efforts to improve the preservation of forests and biodiversity.

The European Union responded by saying that the amendment's objective is to further reduce the carbon footprint of the transport sector. The European Union further said that there still was no final outcome to the legislative procedure and that it stands ready to work with other countries to strengthen the sustainability of palm oil production.

Viet Nam's automotive regulations

Japan, the United States, Thailand, Canada and the European Union took issue with Viet Nam's "Decree 116/2017", which imposes new regulations on vehicles, noting that it has caused a slowdown in sales of cars in the country. The United States and the European Union called for the decree's suspension. The United States said its companies have not been able to comply with the stricter regulations and, as a result, imports of US automotives into Viet Nam have stopped as of January 2018. Thailand said the decree has had a "serious impact" on automobile trade. Japan urged Vie Nnam to ensure its measures are in accordance with WTO principles.

Viet Nam said the measure was promulgated to ensure consumers' health and to protect the environment. It was of the view that the measure did not discriminate against imported vehicles. It said it would take note of the comments and duly relay them to relevant authorities.

Mexico's customs processing fee

Ecuador expressed its concern over Mexico's imposition of a customs processing fee on certain imports. It was of the view that Mexico's measure was discriminatory as goods from countries which had regional trade agreements or preferential trade arrangements with Mexico were exempted from the fee. Canada expressed interest in the issue.

Mexico, in response, reiterated its explanation from when the issue was raised at its Trade Policy Review. Mexico said that this fee was related to the use of a particular process or document. Mexico further pointed out that Article XXIV of the GATT allowed for trade preferences to be granted under regional trade agreements and other arrangements.

Mongolia's measures on agricultural products

The Russian Federation raised issue with Mongolia's quantitative restrictions and prohibitions on certain imported agricultural products, including wheat flour and milk. It said the restrictions have caused Russian exporters to suffer substantial losses. The Russian Federation noted that the GATT calls for the elimination of quantitative restrictions and urged Mongolia to intensify consultations in order to resolve the issue.

Mongolia replied that the measures are taken for food security reasons as wheat and milk are food staples. Nevertheless, it said it was open to continuing bilateral consultations in order to find a mutually satisfactory solution.

Other trade concerns

Members also took up on 23 March trade concerns that had already been brought up in previous Council meetings, such as India's measures on mung beans and information and communication technology (ICT products), Indonesia's restrictions on imports and exports, United States' measures on imported seafood, certain trade-restricting practices of the Russian Federation, Egypt's manufacturer registration system and China's custom duties on integrated circuits.

The Council also heard updates from Armenia, the Kyrgyz Republic and the Russian Federation about ongoing negotiations for concessions to compensate interested WTO members following changes to Armenia's and the Kyrgyz Republic's tariff schedules as a result of their application of the EAEU Common External Tariff. Members are continuing to negotiate compensation packages.

The Council also agreed to extend the time period to preserve members' rights to withdraw concessions to the European Union for changes in schedules of commitments stemming from Croatia's accession to the EU. The time-period has been extended to 1 October 2018 pending the entry into force of a compensation agreement the EU struck with New Zealand.

Furthermore, the Council took note of two regional trade agreements, heard an update from Jordan on its progress in eliminating its export subsidy programme, and considered a report on the status of notifications members are obliged to make under the provisions of WTO agreements.

The meeting continued on 26 March, the summary for which is available here.

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