Bridges Weekly Trade News Digest • Volume 5 • Number 34 • 9th October 2001

Approval Of Cotonou At WTO Ministerial Now In EC’s Hands

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After a 19-month blockage, the WTO Council for Trade in Goods (CTG) finally agreed at a 5 October meeting to commence the examination of a waiver request for the EC-African, Caribbean and Pacific (ACP) Partnership agreement, also known as the Cotonou Partnership Agreement. The examination will take place through a Working Party, clearing the way for a subsequent approval of Cotonou’s predecessor, the Lomé Convention, at the approaching WTO Ministerial Conference currently scheduled to take place in Doha, Qatar on 9-13 November. In addition, Members addressed a further extension of transition periods for Trade- Related Investment Measures (TRIMs) as requested by several developing countries.

The new ACP-EC Cotonou Agreement Working Group must now consider the waiver request within a 90-day period starting 5 October. After the review, a report is to be submitted to the Ministerial Conference (see Article IX 3.b of the Marrakesh Agreement establishing the WTO) so that a decision could be taken to grant the waiver this year before the November Ministerial.

Central and Latin American banana producers Ecuador, Colombia, Honduras, Guatemala, and Panama have previously blocked the EC’s request for a waiver due to differences over the EC’s proposed new banana import regime (see BRIDGES Weekly, 20 March 2001), which reserves a banana quota exclusively for ACP countries. Although the ongoing banana dispute had recently been settled formally by the EC agreeing on Understandings on banana trade with Ecuador and the US, discussions persist on the exact provisions of the revised EC implementing legislation. Due to these remaining discrepancies, Latin American countries, as well as Canada and the US, announced they would raise these unresolved issues during the Working Party’s review of the waiver request.

According to one WTO official, however, this step can be regarded as a real "breakthrough", taking into account that during the last CTG meeting before the WTO summer break, the Latin American complainant countries made clear their dissatisfaction with the information submitted by the EC on its draft legislation implementing the Understandings.

Gabon, on behalf of ACP countries, welcomed this decision but said that "its smile is a bitter one due to the many ups and downs during the consideration of the waiver request in the past 19 months." It was also reported by a WTO official that ACP countries were especially disappointed that in this case two groups of developing countries had been fighting against each other for an additional quota on 100,000 tons of bananas, although there had been no real dissent on the Cotonou agreement with all Members principally sharing the view that the especially poor ACP countries "really deserve it."

As the Latin American countries expressed their readiness to tackle the Cotonou agreement during the examination procedure, much will now depend on the EC’s ability to implement the new banana regime as agreed with Ecuador and other Members in order to shepherd the new EC-ACP arrangement through in Doha.

TRIMs extensions

Addressing the second Trade-Related Investment Measures (TRIMs (2+2)) extension requests by Argentina, Colombia, Malaysia, Mexico, Pakistan, Philippines, Romania, and Thailand, Members agreed to suspend the CTG meeting for further consultation, and to resume after the suspension early next week.

During its last 31 July session, the CTG had adopted decisions granting an additional two-year transition period (from January 2000 to December 2001) for developing countries which so request. Moreover, the CTG agreed to provide the option of extending the period for another two years (January 2002 to December 2003) that would be subject to certain criteria such as the submission of a phase-out plan for the TRIMs measure at stake. This refers to the so-called 2+2 formula for resolving TRIMs implementation difficulties hammered out late last year by Ambassador Carlos Perez del Castillo, then Chair of the CTG (see BRIDGES Weekly, 21 November 2000).

Under the TRIMs Agreement, developing countries are required to phase out trade-restrictive restraints on foreign investment, such as local content requirements, by 1 January 2000.

Next meeting

Addressing another issue of major relevance for developing countries, the CTG will convene on 12 October to review the implementation of the WTO Agreement on Textiles and Clothing.

"Moore Hails Implementation Breakthrough," WTO NEWS, 1 August 2001; ICTSD Internal Files.