JULY 2008 PACKAGE: BRIEFING NOTES
The Negotiating Group on Rules covers anti-dumping; subsidies and countervailing measures, including fisheries subsidies; and regional trade agreements.
Other briefing notes:
> Director-General's letter to journalists
> Non-agricultural market access (NAMA)
> Intellectual property
> Other Doha issues
> Aid for Trade
> Jargon buster
> Country groupings
- The negotiations are aimed at “clarifying and improving disciplines” under the Agreements on Anti-Dumping, and on Subsidies and Countervailing Measures.
- Participants also aim to “clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries”.
- The negotiations are also aimed at “clarifying and improving disciplines and procedures under the existing WTO provisions applying to regional trade agreements”.
In general, dumping occurs when the price of a product sold in the importing country is less than the price of that product in the market of the exporting country. Under the WTO, members can impose anti-dumping measures if they can show that the dumped imports are harming the domestic industry producing the “like” product. More than 3,200 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 159 in 2007. Although anti-dumping was traditionally used primarily by developed countries, developing countries such as India, South Africa, Argentina and China now account for the majority of anti-dumping actions.
An informal group of 15 participants (Brazil; Chile; Colombia; Costa Rica; Hong Kong, China; Israel; Japan; Korea; Mexico; Norway; Singapore; Switzerland; Chinese Taipei; Thailand; and Turkey), calling themselves "Friends of Anti-Dumping Negotiations" (FANs), 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. They have tabled many proposals for tightening disciplines on the conduct of anti-dumping investigations.
The US and other major users of anti-dumping have emphasized the importance of ensuring that anti-dumping measures remain effective in addressing unfair trade. They have also proposed a number of amendments to the anti-dumping and countervailing rules.
Subsidies and countervailing measures
The negotiations in subsidies and countervailing measures relate to two related subjects: the multilateral disciplines governing the provision of subsidies by members, and the disciplines on the use of countervailing measures against subsidized imports. With respect to multilateral subsidies disciplines, there have been a increasing number of WTO disputes in recent years, relating for example to commercial vessels, regional aircraft, large civil aircraft, and cotton. With respect to countervailing measures, some 202 countervailing-duty investigations have been initiated since 1995. The number of initiations has gone down from a peak of 41 in 1999 to 11 in 2007.
Although there have been fewer proposals on subsidies than on anti-dumping, a wide range of proposals have nevertheless been submitted regarding prohibited subsidies, actionable subsidies and export credits. Many proposals made in the anti-dumping negotiations, such as with respect to injury determinations and investigation procedures, may also be relevant in the context of countervailing measures.
An informal grouping of members calling themselves the "Friends of Fish" (including Australia, Chile, Ecuador, Iceland, New Zealand, Peru, Philippines and the US) 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 overfishing. Japan, the Republic of Korea and Chinese Taipei, on the other hand, have expressed scepticism over the link between subsidies and over-fishing. The focus of the discussions has evolved significantly since the beginning of the Doha 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 Group has also extensively discussed special and differential treatment for developing countries.
The WTO Ministerial Conference in Hong Kong, China in December 2005 directed the Group “to intensify and accelerate the negotiating process.” and also mandated the Chairman to prepare consolidated texts of the Anti-Dumping and Subsidies Agreements “that shall be the basis for the final stage of the negotiations.”
The chair of the Negotiating Group on Rules, Amb. Guillermo Valles Galmés of Uruguay, on 30 November 2007 circulated to members his first draft consolidated texts on anti-dumping and subsidies and countervailing measures, including fisheries subsidies. The Chair's texts propose a number of changes in the Anti-Dumping Agreement, including the automatic termination of all anti-dumping duties ten years after the date of imposition. They also contain a new “public interest” provision requiring investigating authorities to take account of the views of industrial users, suppliers to domestic industry, and consumer organizations. The texts would also allow the practice of “zeroing”, which was ruled illegal by the Appellate Body, in certain limited circumstances, and would recognize the legality of measures against attempts to circumvent anti-dumping duties. A new Annex provides for periodic review (similar to trade policy reviews) of members' anti-dumping policy and practices.
The texts propose, for the first time in GATT/WTO, a special set of rules to discipline fishery subsidies, which are considered by some to be a main cause of depletion of fish stocks all over the world. These disciplines are contained in a proposed new Annex VIII to the Subsidies Agreement. The texts propose a prohibited category, which include subsidies for construction of new fishing vessels and those for operating costs of fishing. LDCs are exempted from the new disciplines. Developing countries are given substantial flexibilities, especially for small-scale fishing in their territorial waters. Exceptions to the disciplines are conditioned on the existence of fisheries management programmes.
A series of informal meetings from December 2007 to May 2008 revealed sharply-conflicting views in the Group on many issues in the texts. For example, a large number of members, including the FANS, have urged removal of any possibility for “zeroing”. On the other hand, the US has underlined the importance of this issue in its overall consideration of the Doha Round results. On fisheries subsidies, India, Indonesia and China proposed new texts giving greater flexibility to developing countries. Canada and the EU have joined Chinese Taipei, Korea and Japan in calling for the exemption of small fishing operations of developed countries from the new disciplines. Many delegations considered that the draft texts did not contain a satisfactory balance and have urged the Chair to issue a revised text.
The Chair, on 28 May 2008, issued a comprehensive working document reflecting the current state of play in the rules negotiations. He said this is an interim step, pending the tabling of a revised text by the Chair.
Regional trade agreements
The world faces the prospect of 400 regional trade agreements (RTAs) by 2010 and the challenge is to ensure they contribute to the health of world trade. It is estimated that more than half of world trade is now conducted under agreements of this kind. An "early harvest" in this area was the adoption by WTO members in December 2006 of a mechanism to enhance the transparency of RTAs.
The Group is expected to resume discussions on "systemic issues" regarding RTAs, such as: how to interpret the WTO requirement that RTAs cover "substantially all the trade"; regulations that could restrict trade such as rules of origin under preferential schemes; and how regional agreements relate to development.