TWN Info Service on WTO and Trade Issues (July09/16)
20 July 2009
Third World Network

India submits proposals on strengthening the WTO
Published in SUNS #6739 dated 13 July 2009

Geneva, 10 Jul (Kanaga Raja) -- India has proposed that the forthcoming seventh Ministerial Conference of the World Trade Organization (WTO) end November should address some systemic issues with the aim of improving the functioning and efficiency of the WTO as a rules-based system, and make the system more useful, relevant, vibrant and user-friendly.

Towards this end, India has submitted a set of five proposals, in a communication (WT/GC/W/605, dated 2 July 2009) to the upcoming General Council meeting on 28-29 July.

The communication is in the context of India's stated intention at a General Council meeting on 26 May 2009 to submit a few proposals that it considered important from the perspective of improving the functioning and efficiency of the WTO as a rules-based system.

India's first proposal relates to trade information based on member notifications. The proposal calls on Ministers to direct the setting up of a project to enhance the Integrated Database to include in an appropriate format non-tariff data, based on the current notification obligations under WTO Agreements.

[Trade experts and former negotiators have been noticing, and commenting, that many of the agreements have provisions requiring members to notify regularly - such as on agriculture supports/subsidies, and regulatory changes in respect of services - and the scheme of the Marrakesh agreement envisaged the various committees to exercise oversight. However, in the preoccupations of launching the Doha Round, and attempts to conclude it, via mini-ministerial meetings etc, an important aspect of routine technical work has been neglected.]

The project, India said in its communication, should be designed to be efficient and effective by inter alia limiting additional resource requirements; optimising the design and structure of present notification systems; enhancing co-operation with related multilateral agencies; and providing technical assistance to developing countries, in particular the LDCs.

India noted that in the realm of trade information, there is a significant gap in the information available on non-tariff measures (NTMs). Closing this gap is of particular importance to governments as well as for trade operators.

While the WTO is uniquely placed as the biggest repository of certified trade information about its members' regimes through its system of notifications under various WTO agreements, at present, this information has at best archival value because of the way information is submitted and stored. "It is incomplete, not comparable amongst members or even timely."

What is needed is better integration and coherence in database form and more effective public visibility of the existing information, said India, voicing the view that such an exercise need not be resource intensive.

The second proposal relates to re-vitalizing WTO Committees. The proposal points to direction from Ministers to include in the agenda of formal WTO Committee meetings inter alia - monitoring of recent developments in members on the trade disciplines covered by the committee, based on a compilation by the Secretariat of developments between formal meetings and verified by the member concerned; regular discussions on general developments in the areas covered by the committee, including in the presence of outside experts; and through adoption of appropriate procedures, discussion on and resolution of low threshold specific trade concerns in small group settings.

"Given the widely perceived declining utility of the committee work, it is imperative that measures to revitalise them be adopted," said India, suggesting some ways on how the committees can be re-invigorated.

One way is that the recent exercise in the TPRB (Trade Policy Review Body) of the WTO of monitoring developments in the trade regimes of various members has proved to be a useful tool for all members, particularly the developing countries that have an inherent disadvantage in gathering such information. This practice could be formalized and be made a regular agenda item for all formal meetings of all trade related WTO Committees.

"Along with member notified measures, the Secretariat may make factual presentation on developments in various members on the disciplines covered by a committee. The Secretariat may base its factual report on information gathered from publicly available and reliable sources and after the gathered information being verified by the member concerned."

Another way to improve the relevance of the WTO Committees may be to include on the agenda, on a mandated basis, a discussion on the current practices and developments in the trade disciplines covered by a particular Committee. It may be considered to invite outside experts to present their views on such developments. Such a topical discussion will keep members abreast of the latest developments, said India.

According to the communication, one other measure would be to enable the Committees to discuss and offer possible solutions to the specific trade concerns of members. As a forum to discuss and resolve the specific trade concerns, it is important that members have access to at least a limited committee process right through the year and not just the periodical formal committee meetings.

"Working procedures that balance the need for confidentiality, to meaningfully discuss and resolve a specific trade concern, with that of transparency, i. e. information to the membership as a whole about the issue and its resolution, has to be devised and adopted."

Finally, said India, keeping the above in view, members may like to review the frequency of the WTO meetings. The frequency of the meetings refers to both the formal meetings as well as informal meetings. These could be increased to allow discharge of its work efficiently.

The third proposal concerns the WTO's engagement with Regional Trade Agreements (RTAs).

The proposal states: "Directions from Ministers to monitor the developing trends in RTAs and develop non-binding best practice guidelines for reference while negotiating new RTAs. To ensure robust and regular monitoring, the two transparency mechanisms should be implemented on a permanent basis; the Secretariat to produce an Annual Review of RTAs based on the factual reports; and members to discuss trends and formulate non-binding best practices in the CRTA (Committee on Regional Trade Agreements)."

India explained that the fact that RTAs are proliferating and most of the global trade is conducted on preferential terms is well documented. The work in the WTO on RTAs which earlier focused entirely on evaluating the RTAs for their compatibility with GATT/ WTO provisions was for long log-jammed. Members could neither definitively establish standards for the examination or evaluation, and even where they had clear yardsticks such as for "reasonable length of time", they could not agree whether indeed the RTAs under examination met the standards or not.

Noting that the RTA Transparency Mechanism was a success, India said that the success of the existing mechanism is reflected by the desire of the membership to design a similar mechanism for the unilateral preferential schemes as well. Even this mechanism, which is not Doha mandated, is close to finalisation. Thereby, all agreements offering preferences of any kind to participants will be covered by the transparency regime in the WTO.

Given the accepted benefits of the RTA Transparency Mechanism and the expectation that the transparency mechanism on preferential schemes will be as useful, Ministers could now agree to implement both on a permanent basis, albeit with in-built provisions for periodic review, said the communication.

The basic problem with examination of RTAs in the WTO has been the lack of a clear understanding amongst the members about the yardsticks on trade coverage; implementation periods; means to evaluate trade diversion, etc. While the work on the substantive issues may continue in the NGR (Negotiating Group on Rules), "it will be useful, in parallel, to put in place measures that will allow us to move further on implementing the Transparency Mechanisms and best utilise the knowledge gathered on RTAs through them."

In this context, said India, it is suggested that the Secretariat be requested to prepare an annual RTA Review. This publication, based on the factual presentations prepared by the Secretariat of individual RTAs, will inter alia review horizontally, across RTAs, the trends in content and structure of the RTAs that have come into effect during the year concerned.

Based on the trends detected in the annual reviews, members in the CRTA may examine from an educative perspective ways to reduce the adverse impact of RTAs on multilateral trade. Aspects like trade coverage/substantially all trade; reasonable length of time; non-trade issues; preferential rules of origin, etc. can be examined. To the extent that there is consensus, the outcome could be a series of non-binding "best practices/guidelines" on various elements/aspects of RTAs for reference by members in negotiating future RTAs.

The fourth proposal tabled by India relates to an omnibus legal instrument for preferential market access to LDCs. The proposal states: "Direction from Ministers for establishing a 'Steering Group' or a subsidiary body under the General Council to comprehensively examine all WTO-related instruments allowing members to grant preferential access to LDCs. Following such examination, members to consider; propose and adopt a single instrument that would address all forms of preferential market access for LDCs."

Within the GATT/WTO, members have provided special and differential treatment for Least-Developed Country members (LDCs) on a preferential basis under a variety of legal instruments and agreements. These preferential schemes have evolved over time both from the perspective of coverage, depth of concessions and the members granting the concessions, said India.

Highlighting several existing instruments that provide legal coverage for preferential market access for LDCs, the communication said that the multiple and sometimes overlapping instruments have different types of legal coverage and a variety of procedural requirements. This, combined with differential levels of market access commitments made in favour of LDCs, has created an environment of uncertainty both for the LDC preference receivers and the members granting or establishing such preferential market access schemes, said India.

It noted as an example, that just on the procedural front, the developed country GSP schemes under the Enabling Clause are notified in the CTD (Committee on Trade and Development) while developing countries will have to notify their schemes through the Council for Trade in Goods under the cover of the Decision contained in WT/L/759. The implementation of the DFQF (duty-free, quota-free market access) Decision is being notified to the CTD.

For the purposes of certainty, predictability and transparency on all aspects of preferential market access for LDCs, an Omnibus Legal Instrument is necessary, stressed India. The final proposal concerns the need to reaffirm the primacy of international standards and standard setting for WTO obligations.

It calls for a "Statement from Ministers in the Conference outcome document, reaffirming the provisions relating to the need to adopt international standards in respect of sanitary, phytosanitary and technical barriers to trade, stressing the need for members to primarily base domestic regulations on such international standards for all trade in goods. Encourage increased participation in international standard setting activities."

India argued that lack of common product standards and framing of technical regulations on national rather than international standards is increasingly a major hindrance to a smooth flow of trade. Arguably, alignment of standards amongst the membership and reduction of costs related to adherence, i. e. conformity assessment procedures, will bring about the most significant benefit to world trade.

A reaffirmation by Ministers will be an important signal to the membership that the increasing divergence from international standards and conformity assessment/testing practices is a matter of concern and it is time to roll back the complications brought about by the divergent national regulatory regimes, said India. +