TWN Info Service on WTO and Trade Issues (Nov11/01)
1 November 2011
Third World Network

WTO General Council approves Vanuatu accession
Published in SUNS #7249 dated 28 October 2011

Geneva, 27 Oct (Kanaga Raja) - The General Council of the World Trade Organization (WTO) on 26 October, amongst others, approved the accession package of Vanuatu, thus clearing the path for its membership in the organization.

The General Council also took up the report by the Chair of the Trade Negotiations Committee (TNC) and matters pertaining to the upcoming eighth WTO ministerial conference (MC8).

According to trade officials, the General Council approved the report of the Working Party on the Accession of Vanuatu, the Protocol of Accession and the schedules of commitments.

Vanuatu will now have to ratify the accession package by 31 December 2011, and 30 days after ratification, it will become the WTO's 154th member.

Providing some background to Vanuatu's accession process, trade officials said that the Working Party was established in 1995, following Vanuatu's application for membership, and the General Council had approved all the Working Party documents in 2001, but Vanuatu asked for a time-out for political reasons to re-assess the package.

In 2008, it requested the process to be restarted. In the months of April and May 2011, the process was concluded and the accession package from 2001 was updated to reflect changes in the legislation in Vanuatu since then, said trade officials.

Speaking on the issue at the General Council, Director-General Pascal Lamy said that this is an historic day for Vanuatu. They have made a strong signal with their pledge for the principles of openness, predictability and stability, and the country is now on a more stable and predictable path. It also represents a solid insurance policy against protectionism which is vital in these uncertain global economic times, he added.

The Deputy Prime Minister of Vanuatu, Ham Lini Vanuaroroa, said that it is a happy moment for the government and people of Vanuatu. It has been difficult to get some of the reforms through parliament, particularly as they pertain to issues such as state trading enterprises, trading rights, sanitary and phytosanitary agreements, TRIPS and services, he added.

According to the WTO, Vanuatu will apply an average final bound rate of 39.7% (43.6% for agricultural products and 39.1% for industrial products). All of Vanuatu's tariffs are bound and 85% of tariff lines are either at 35% or 40%.

Several delegations, who spoke on the item, noted that Vanuatu is the first country to accede to the WTO since 2008, and it is the first Least Developed Country to accede since 2004. A number of delegations said that this lengthy gap underscores the importance of streamlining and operationalising the guidelines that were created at the 2002 General Council meeting.

Bangladesh, Australia, the Dominican Republic, the US, Mexico, Barbados, New Zealand, the EU, Pakistan, China, Japan, Chinese Taipei, Canada, Nepal, India, Tunisia, Turkey and Brazil were among those who spoke welcoming Vanuatu's accession to the WTO.

Under the agenda item of report by the Chairman of the Trade Negotiations Committee (TNC), Director-General Lamy, who is also the TNC Chair, told the membership that although a number of delegations said that the elements that he had outlined were not yet ambitious enough or specific enough, he sensed broad support for these elements which Members acknowledged reflected the prevailing reality of the negotiations.

(At an informal TNC meeting held on 21 October, Lamy had said that the Doha talks are at an impasse and that it was unlikely that negotiations on all elements of the Doha agenda can be concluded in the near future. He said that he sensed some convergence emerging around the idea of advancing the talks in areas where progress can be achieved by reaching agreements on specific issues ahead of delivering on the full Doha single undertaking. See SUNS #7246 dated 25 October 2011.)

In his report to the General Council, the TNC Chair said that he also sensed convergence on the centrality of the development dimension in the phase ahead including delivering for LDCs as a priority under any paragraph 47 exercise.

(Paragraph 47 of the Doha Declaration states: "With the exception of the improvements and clarifications to the Dispute Settlement Understanding, the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations.")

"Although in principle, several delegations said that they were open to exploring different approaches in our work ahead, a number of them also emphasized that such approaches needed to be consistent with the Doha mandate and not undermine our established principles and practices which had served us well - transparency, inclusiveness and the centrality of the multilateral process," said the TNC Chair.

Finally, he added, views were also exchanged on the role that the WTO could play in responding to emerging global challenges including its role in keeping protectionism at bay in this current global macroeconomic situation.

"What we need now are concrete steps to generate trust in the ability of the WTO family to keep moving forward our agenda. To meet this credibility test, we have to keep working across the entire WTO agenda by looking at and beyond MC8. We obviously are not there yet and we will need to keep working hard with the General Council Chair over the coming weeks," said Lamy.

Speaking on the trade finance issue, Lamy said that while trade finance received a preferential regulatory treatment under the Basel I framework, in recognition of its safe, mostly short-term character, the implementation of Basel II proved difficult for trade, notably because of the rules governing risk-weighting, and in particular the confusion between a country's risks, and the risks associated to single operations.

He noted that the Basel Committee has announced a number of flexibilities which were not there in Basel II in order to avoid harming trade finance with poor countries. "So, that is good news for trade, not only North-South trade but also South-South trade and we know we need to do more in this field."

(On 25 October, the Basel Committee on Banking Supervision adopted two technical changes to the Basel capital adequacy framework concerning the treatment of trade finance that the BCBS said will help promote trade with low-income countries. See SUNS #7248 dated 27 October 2011.)

Trade officials said that a large number of delegations asked for the statements that they had made at the informal TNC meeting on 21 October to be read into the record of the General Council meeting.

According to trade officials, one of the issues that had came up at the informal TNC was the question of Paragraph 47 of the Doha Declaration. What has happened since then is that there is discord on this paragraph, namely, which issues should be considered as ripe for decision at the Eighth Ministerial Conference (MC8, 15-17 December 2011).

A large number of delegations believe that the LDC issues are the ones that might be subject to a decision at MC8.

The European Union believed that the LDC issues should be the ones on which a decision should be taken (at MC8), and that on Paragraph 47, it believed that trade facilitation and non-tariff barriers (NTBs) in non-agricultural market access are issues that should be included in any topics for discussion, said trade officials.

According to trade officials, the EU also mentioned other issues for which it thinks there should be a process of discussion. In this regard, it highlighted the issues of climate change, investment, competition, food security and energy.

Some countries, on the other hand, said that there are specific ways of introducing new topics for discussion, i.e., through the regular bodies in the WTO. Some mention was made of what Brazil had done on the currency question where this issue was taken up in the Committee on Trade, Debt and Finance.

(At the informal TNC meeting on 21 October, Egypt noted that new 21st century issues are being proposed while urgent 20th century issues are being ignored. The Arab Group said that it was not supportive of the inclusion of contentious new issues. On non-Doha Development Agenda issues, India had said that there is a well-defined system of introducing these issues. See SUNS #7246 dated 25 October.)

Following the report by the TNC Chair at the General Council meeting, a few delegations spoke.

Argentina said that it is very important that we avoid jeopardizing any fragile understandings that we have with respect to the process of preparation for this ministerial, as well as the negotiations. It is very important to recognize the centrality of development. Developing countries do share some key commitments, these being support for the LDCs and special and differential treatment, and the objective of reaching substantial results for developing countries.

With respect to new issues, Argentina said that it is important to revitalize the organization by talking about issues that are relevant but members must go about this in a transparent way, exercising existing practices and there was no need to deliver results on all of these issues at MC8.

According to trade officials, Venezuela said that there was convergence on the points made by the Director-General at the last TNC meeting. With respect to paragraph 47, there is need to avoid having a Christmas tree, i.e, having too many issues hung on the ministerial conference. It is concerned about the ways in which this might be implemented. Any issue that is included must be genuinely concerned with development.

It is also confused about the new topics because it is not clear whether these are new issues or whether it is being linked actively to the Doha Round. There are clearly established procedures to be upheld in order to review new topics.

Peru said that ministers should renew their pledge to fight protectionism and that they should stress the role of the system and trade in economic recovery. There should be guidance given with respect to concluding the Doha Round, and it is important as well that there is strong reference made to the importance of special and differential treatment and of trade-related technical assistance and capacity-building.

With respect to paragraph 47, Peru said that issues on which there has been the greatest convergence are those that pertain to the development dimension.

The Dominican Republic, on behalf of the informal group of developing countries, said that it recognized that in light of the serious economic situation, it is difficult to conclude the Doha Round. It underscored the importance of this round and the vital role that it can play in addressing the crisis, and the development benefits that it can provide to countries.

With respect to paragraph 47 and an early harvest, it said that any agreement that is delivered should be on the most pressing development issues. These are issues that have been on the table for quite a long time - duty-free quota-free market access for LDC products, a services waiver, and domestic support for cotton.

It said that the plurilateral approach has been discussed by some countries, but the priority for the group is to strengthen the multilateral trading system. We must build on the progress made so far with respect to future work, and that means the Doha mandate.

Cuba said that the development dimension must be at the centre.

Concerning the agenda item of the Eighth Session of the Ministerial Conference, an informal General Council meeting was held on 21 October, at which General Council Chair, Ambassador Yonov Frederick Agah of Nigeria, reported on his four rounds of consultations so far on MC8. (See SUNS #7245 dated 24 October 2011.)

Under this agenda item, the Dominican Republic, on behalf of the informal group of developing countries, and Bangladesh, on behalf of the LDCs, were among those that spoke. They asked for a little more time in order to get their proposals ready and generate support for these proposals.

(According to the "gentlemen's agreement", any member pursuing an issue for decision at MC8, but not achieving consensus on it six weeks before the Ministerial, namely 2 November, will not insist on putting the item on the Conference agenda.)

Colombia said that it wanted to see an improved surveillance and monitoring mechanism. It also said that there needs to be prompt conclusion on the negotiations on dispute settlement. It stressed on the development dimension, especially for the LDCs.

The EU said that to not receive sufficient guidance from the ministers is not in the best interest of the WTO and the multilateral trading system. We need to have a clear roadmap for the next two years. It supports the approach of those issues on which you can get consensus, not least the LDC issues. But with respect to emerging global challenges, which the current mandate and the existing rule-book do not address fully, MC8 could propose a work programme.

According to trade officials, in reference to new issues, India was of the view that there are well-established practices and they had to be adhered to.