Bridges Weekly Trade News Digest • Volume 9 • Number 12 • 13th April 2005

Rules Negotiations Focus On Anti-Dumping And Fisheries Subsidies

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The formal meeting of the WTO Negotiating Group on Rules got under way on 11 March, following a long informal session on anti-dumping issues earlier that day. During the session, which ran until 13 April, Members focused on negotiations related to anti-dumping (AD), subsidies and countervailing measures (SCM).

Egypt calls for clarification in the anti-dumping negotiations

With regards to anti-dumping, countries discussed an Egyptian proposal (TN/RL/W/175) on "material retardation," a term that refers to the stultifying effect that the dumping of foreign goods can have on the development of a domestic industry. The General Agreement on Tariffs and Trade article on anti-dumping (GATT Article VI), and Article 3 of the WTO AD Agreement (which pertains to the implementation of GATT Article VI), provide for trade sanctions against dumping if it "causes or threatens material injury to an established industry" in the importing country or "materially retards the establishment of a domestic industry." However, the AD Agreement leaves the concept of "material retardation" undefined. The Egyptian proposal identifies elements — a definition, and tests — of what needs to be done to clarify the AD Agreement’s provisions on material retardation, so that countries with without highly developed industries "can seek remedies against injurious dumping."

Egypt’s submission highlighted the problems faced by developing countries that have underdeveloped domestic industries. The AD Agreement does not allow companies that have not begun to make a particular product to request an anti-dumping investigation against dumped competing goods — even if they claim that dumping is "materially retarding" their potential development. Furthermore, the AD agreement does not adequately provide for dealing with anti-dumping investigations in the case of market disruption arising from the privatisation of large state-owned companies in conjunction with an influx of dumped goods in the wake of import liberalisation. The proposal notes that the AD Agreement does not adequately ensure that newly-privatised companies can "initiate investigations to remedy the negative effects of dumped imports," since the shift from a non-market situation to a market one makes it hard to assess whether dumping is causing material injury.

The Egyptian proposal contended that the concept of material retardation should not be limited to new domestic suppliers, but should extend to all domestic industries characterised by a limited level of development.

During the discussions, Members acknowledged that there was a need for clarifying the AD Agreement with regards to material retardation, and praised Egypt for bringing up the issue. They did, however, raise questions regarding the relevance of privatisation in this context and expressed concern regarding how an established industry could suffer material retardation without suffering material injury. Egypt said it would come back with more precise definitions at a later stage.

Issues relating to anti-dumping were also discussed in the 7 April meeting of the WTO Committee on Anti-Dumping Practices. Members debated China’s anti-dumping legislation, and the US asked Indonesia, Mexico, Malaysia and India for an update on various ongoing anti-dumping investigations. The Committee elected Ms Frida Collste of Sweden as its new chairperson. The next meeting of the Anti-dumping Committee is scheduled for 2 November 2005.

Concrete suggestions in fisheries subsidies discussions

Among other proposals to be considered during the session is a paper on fisheries subsidies disciplines submitted by Brazil (TN/RL/W/176). The Brazilian proposal is one of very few in fisheries subsidies discussions to make concrete suggestions about incorporating S&D within disciplines on fisheries subsidies. Delegates report that the proposal was well received during the informal talks, even though some of the concepts will need further elaboration.

According to Brazil’s submission, "developed countries should assume a higher level of responsibility and bear the greatest part of the burden resulting from a broader prohibition on fisheries subsidies aimed at restoring stocks or keeping them at a sustainable level of exploitation." It specifies that new disciplines should take into account the economic difficulties facing poor economies, and assist developing countries in establishing a sustainable fisheries sector. It would also permit capacity-enhancing subsidies in developing countries so long as they do not extend beyond the level compatible with a sustainable level of exploitation, nor provide incentives to illegal, unregulated and unreported fishing. The paper also suggests that fees paid by other governments to access a Member’s waters, as well as assistance to disadvantaged regions dependent on fisheries, should be considered permissible subsidies in developing countries; this would be a form of S&D.

The proposal puts forward an exhaustive list of permissible subsidies to be available to all Members (and not just developing countries), including financial contributions to management services, the adoption of environmentally-friendly fishing equipment and support to compliance with safety standards. This category of non-actionable subsidies, the ‘green box,’ would also include, under specific conditions, subsidies to small-scale fishing and to capacity reduction. All subsidies not falling under the green box would be prohibited. The paper also calls for certain subsidies to remain available to least developed countries for a period of ten years.

Delegates report that the Brazilian submission was relatively well received by China, US and New Zealand. Japan, Korea and Chinese Taipei, however, expressed scepticism. Members asked Brazil to provide several clarifications about the concepts in the paper. Sources state that the paper’s main contribution to the discussions was the overall idea on how to integrate S&D considerations within disciplines on fisheries subsidies.

Members also discussed a New Zealand submission on subsidies to management services (TN/RL/GEN/36) as well as a paper from the EU (TN/RL/W/178) on the enforcement of fisheries subsidies disciplines.

The next meeting of the Negotiating Group on Rules is scheduled for 17-18 June and will deal with regional trade agreements.

ICTSD reporting.