WTO Ministerial Section • Volume 5 • Number 37 • 30th October 2001

New Implementation Draft - Another Round For Gains Or Grounds To Refrain

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[Note: all relevant Ministerial texts discussed in this article are available at http://www.ictsd.org. For all tiret references, please refer to 'G-7' paper on implementation at: http://www.ictsd.org/html/weekly/26-06-01/story2.htm.]

On 27 October, General Council Chairperson Stuart Harbinson released the anxiously awaited second version of the draft Decision on Implementation-Related Issues and Concerns. After a month of intensive negotiations since the first draft was released (see BRIDGES Weekly, 9 October 2001), this text was put forward as the final draft heading into the upcoming Fourth Ministerial Conference in Doha. Also released on 27 October was a Compilation of Outstanding Implementation Issues Raised by Members, essentially a text compiling the outstanding implementation issues not listed in the draft Decision.

While various issues have been discussed as being the proverbial ‘deal- breaker’ to moving ahead with a ‘comprehensive’ new round — something the Quad-led (Canada, Japan, EC, and US) industrialised Members eagerly seek — the meaningful resolution of longstanding implementation issues sits at the core of developing countries’ requirements to accept such a round. Based on the negative reactions to the first draft from developing country delegates, ranging from "needing more work" to expressing "profound disappointment", sources said far greater concessions were needed in the second draft if it was to satisfy developing country Members’ misgivings. However, with much of this draft replicating the first, one trade source indicated that the initial feedback was "extremely, extremely negative" - with one Least- Developed Country (LDC) delegate going so far as to say "it’s as if we did not exist!"

Some gains from first draft

A few issues had been resolved within their respective committees during the month span between the two drafts. On 28 September, the Committee on Agriculture came to agreement with respect to Article 10.2 — related to export credits, the decision on net-food importing developing countries, and tariff quotas (G/AG/11). Also, on 24 October, the Committee on Sanitary and Phytosanitary Measures (SPS) approved a decision on recognising the equivalence of different food safety and animal and plant health measures.

After a mid-October meeting in Singapore (see BRIDGES Weekly, 16 October), many delegates started referring to a "development round" rather than a ‘new round’ or ‘future work programme’. One area of the text that trade sources noted as "somewhat reflecting this professed perspective" is the inclusion of two measures for development aims in the Agreement on Subsidies and Countervailing Measures (SCM). Tiret 69, relating to Article 8 of the SCM Agreement, "takes note of the proposal" to allow certain measures for achieving "legitimate development goals" to be considered as non-actionable subsidies (i.e. not coming under reduction commitments or eligible for dispute settlement). This proposal, however, is to be addressed under outstanding implementation issues (paragraph 13), and thus will not be decided at Doha, but rather by the end of 2002 (see paragraph 13 details below). A further allowance for pursuing "development needs" comes from an LDC proposal, which deals with allowances for export subsidies [exemptions from Article 3.1(a)] to provide flexibility to finance LDC exporters, "consistent with their development needs." It goes on to stipulate that the eight-year phase out period upon achievement of "export competitiveness" begins "from the date export competitiveness exists", rather than upon entry into force of the WTO Agreements.

After the release of the original draft, many developing country Members noted that a great number of their most pressing concerns were not addressed, nor were any parameters defined for their redressal. As a result, paragraph 13 of the implementation text agrees that outstanding implementation issues will be addressed in accordance with paragraph 12 of the Ministerial Declaration (these outstanding items are listed in the Compilation of Outstanding Implementation Issues Raised by Members). On this issue, paragraph 12 (b) of the Ministerial Declaration stipulates that these items "shall be addressed […] by the relevant WTO bodies, which shall report to the Trade Negotiations Committee (TNC) […] by the end of 2002 for appropriate action." (The TNC is the body empowered to supervise new negotiations arising out of the launching of a new round.) This essentially sends such issues back to their respective subsidiary bodies for further consideration, contrary to calls by many to put them on a special fast track. One trade source indicated that concerns still persist however, as to whether these decisions will be adopted independently or form part of a single undertaking.

Some losses from first draft

One of the few gains developing country Members noted in the original Harbinson implementation text was related to eligibilities for LDC exemption from subsidy removal commitments when their GNP per capita rises above $US 1000 in 1990 dollars (tiret 67) (see BRIDGES Weekly, 2 October). The original draft stated that this exemption would expire only after GNP had reached the agreed level for three consecutive years. This caveat is not present in the second draft. In addition, it stipulates that this decision will only enter into effect once agreement is found for the methodology for calculating 1990 dollars, or "not later than 1 January 2003". This, sources say, effectively delays its implementation.

With respect to rules of origin for clothing and textiles (ATC), tirets 19 & 29 in the first draft gave the ATC committee the right to examine rules of origin changes "before they are applied". This authority to review prior to application of the changes is also not present in the second draft.

On suspected fraud in customs valuation, (Article VII of GATT 94), tiret 56 of the original draft stipulated that exporters should offer cooperation, including information on the export value of the good. The revised version now qualifies that endeavour with "where possible".

Doing a disappearing act

One item that no longer appears in either the draft decision, or the outstanding issues document is tiret 85 - relating to GATS mode 4 (movement of natural persons). A quick reference acknowledging work already undertaken is made in the Ministerial Declaration on proposals submitted including, inter alia, movement of natural persons - but nothing else. Sources say this is because Indian Ambassador Narayanan told the General Council that if this provision were not strengthened it might as well be removed.

"New Draft WTO Declaration Will Finesse Difficult Issues," INSIDE US TRADE, 26 October 2001; ICTSD Internal Files.