DISPUTES UNDER WTO

INTRODUCTION

GATT (The General Agreement on Tariffs & Trade) was an international organization created in

1947 to reduce trade barriers through multilateral negotiations. GATT was replaced by WTO in

January 1995. As on May 2012 WTO has 155 member countries

WTO (World Trade Organization) headquarters, Geneva, Switzerland the WTO is the only

international organization dealing with the global rules of trade between nations. Its main

function is to ensure that trade flows as smoothly, predictably and freely as possible. The result is

assurance. Consumers and producers know that they can enjoy secure supplies and greater choice

of the finished products, components, raw materials and services that they use. Producers and

exporters know that foreign markets will remain open to them.

The result is also a more prosperous, peaceful and accountable economic world. Virtually all

decisions in the WTO are taken by consensus among all member countries and they are ratified

by members' parliaments. Trade friction is channelled into the WTO's dispute settlement process

where the focus is on interpreting agreements and commitments, and how to ensure that

countries' trade policies conform with them. That way, the risk of disputes spilling over into

political or military conflict is reduced. By lowering trade barriers, the WTO’s system also

breaks down other barriers between peoples and nations. At the heart of the system — known as

the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large

majority of the world’s trading nations, and ratified in their parliaments. These agreements are

the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing

member countries important trade rights. They also bind governments to keep their trade policies

within agreed limits to everybody’s benefit.

The agreements were negotiated and signed by governments. But their purpose is to help

producers of goods and services, exporters, and importers conduct their business.

The goal is to improve the welfare of the peoples of the member countries.

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Disputes

WTO has disputes as unders

1) Textile & Clothing

2) Agriculture subsidies

3) Trade & labour standards

4) Trade & Environment

5) Electronic Commerce

6) Singapore issues

1)Textile & Clothing

Agreement on Textiles and Clothing

The Agreement on Textiles and Clothing (ATC) and all restrictions thereunder terminated on

January 1, 2005. The expiry of the ten-year transition period of ATC implementation means that

trade in textile and clothing products is no longer subject to quotas under a special regime

outside normal WTO/GATT rules but is now governed by the general rules and disciplines

embodied in the multilateral trading system. The texts reproduced in this section do not have the

legal standing of the original documents which are entrusted and kept at the WTO Secretariat in

Geneva.

Recalling that Ministers agreed at Punta del Este that “negotiations in the area of textiles and

clothing shall aim to formulate modalities that would permit the eventual integration of this

sector into GATT on the basis of strengthened GATT rules and disciplines, thereby also

contributing to the objective of further liberalization of trade”;

Recalling also that in the April 1989 Decision of the Trade Negotiations Committee it was

agreed that the process of integration should commence following the conclusion of the Uruguay

Round of Multilateral Trade Negotiations and should be progressive in character;

There are 9 Articles in the Agreement

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Summary of the dispute

Complaint by the United States.

On 4 October 1996, the US requested consultations with Argentina concerning the imposition of

specific duties on these items in excess of the bound rate and other measures by Argentina. The

US contended that these measures violate Articles II, VII, VIII and X of GATT 1994, Article 2

of the TBT Agreement, Article 1 to 8 of the Agreement on the Implementation of Article VII of

GATT 1994, and Article 7 of the Agreement on Textiles and Clothing.

On 9 January 1997, the US requested the establishment of a panel. At its meeting on 22 January

1997, the DSB deferred the establishment of a panel.

Panel and Appellate Body proceedings

Further to a second request to establish a panel by the US, the DSB established a panel at its

meeting on 25 February 1997. The EC and India reserved their third-party rights. On 4 April

1997, the Panel was composed. The report of the Panel was circulated on 25 November 1997.

The Panel found that the minimum specific duties imposed by Argentina on textiles and apparel

are inconsistent with the requirements of Article II of GATT, and that the statistical tax of three

per cent ad valorem imposed by Argentina on imports is inconsistent with the requirements of

Article VIII of GATT.

On 21 January 1998, Argentina notified its intention to appeal certain issues of law and legal

interpretations developed by the Panel. The report of the Appellate Body was circulated to

Members on 27 March 1998. The Appellate Body upheld, with some modification, the Panel’s

findings and conclusions.

The Appellate Body report and the Panel report, as modified by the Appellate Body, were

adopted by the DSB on 22 April 1998.

Implementation of adopted reports

At the DSB meeting on 22 June 1998, Argentina announced that it had reached an agreement on

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implementation with the US, whereby Argentina would reduce the statistical tax to 0.5% by

1January 1999, and cap specific duties on textiles and apparel at 35% by 19 October 1998.

At the DSB meeting on 26 May 1999, Argentina announced that Decree 108/99, pursuant to

which no import transactions covered by the statistical tax shall be taxed in excess of the

amounts agreed between it and the United States, would enter into force on 30 May 1999.

ARGENTINA – TEXTILES AND APPAREL1 (DS56)

PARTIES AGREEMENT TIMELINE OF THE DISPUTE

Complainant United States GATT Arts. II and VIII

Establishment of Panel 25 February 1997

Circulation of Panel Report 25 November 1997

Respondent Argentina Circulation of AB Report 27 March 1998

Adoption 22 April 1998

1. MEASURE AND PRODUCT AT ISSUE

• Measure at issue: (i) Argentina's system of minimum specific import duties, known as “DIEM”,

on textiles and apparel (under which textiles and apparel were subject to either a 35 per cent ad

valorem duty or a minimum specific duty, whichever was higher); and (ii) statistical services tax

imposed on imports to finance “statistical services to importers, exporters and the general

public”.

• Product at issue: Imported textiles and apparel.

2. SUMMARY OF KEY PANEL/AB FINDINGS

• GATT Art. II (schedules of concessions): The Appellate Body found Argentina's measure was,

in fact, inconsistent with Art. II:1(b). It held that “the application of a type of duty different from

the type provided for in a Member's Schedule is inconsistent with GATT Art. II:1(b), first

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sentence, to the extent that it results in ordinary customs duties being levied in excess of those

provided for in that Member's Schedule.” In this case, the Appellate Body concluded that “the

structure and design of the Argentine system is such that for any DIEM ... the possibility remains

that there is a “break-even” price below which the ad valorem equivalent of the customs duty

collected is in excess of the bound ad valorem rate of 35 per cent.”

• GATT Art. VIII (fees and formalities): The Appellate Body upheld the Panel's findings that the

statistical tax on imports violated Argentina's obligations under Art. VIII:1(a) “to the extent it

results in charges being levied in excess of the approximate costs of the services rendered as well

as being a measure designated for fiscal purposes.” The Appellate Body also rejected Argentina's

argument that the Panel had violated DSU Arts. 11 and 12.7 based on the Panel's failure to

consider Argentina's IMF obligations as set forth in a “Memorandum of Understanding” between

Argentina and the IMF. The Appellate Body held, inter alia, that Argentina failed to show “an

irreconcilable conflict” between the Understanding and GATT Art. VIII, and that no other

international agreements or understandings

regarding the WTO and IMF justified a conclusion that a Member's IMF commitments prevail

over its GATT Art. VIII obligations.

3. OTHER ISSUES

• Panel's right to seek expert advice (DSU Art. 13): The Appellate Body found that the Panel

acted within the bounds of its discretionary authority under DSU Art. 13 when it did not accede

to the parties' request to seek the advice of the IMF on Argentina's statistical tax. It noted that

while an IMF consultation might have been useful, the Panel did not abuse its discretion by

declining to engage in such a consultation. (It also noted that the only provision that requires

consultations with the IMF is GATT Art. XV:2.)

• Review of a revoked measure: The Panel declined to review a revoked measure (revoked after

the panel request but before its establishment), when Argentina raised an objection to the Panel's

examination of such a measure.

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2) Agriculture subsides

Agriculture: fairer markets for farmers

The original GATT did apply to agricultural trade, but it contained loopholes. For example, it

allowed countries to use some non-tariff measures such as import quotas, and to subsidize.

Agricultural trade became highly distorted, especially with the use of export subsidies which

would not normally have been allowed for industrial products. The Uruguay Round produced the

first multilateral agreement dedicated to the sector. It was a significant first step towards order,

fair competition and a less distorted sector. It was implemented over a six year period (and is still

being implemented by developing countries under their 10-year period), that began in 1995. The

Uruguay Round agreement included a commitment to continue the reform through new

negotiations. These were launched in 2000, as required by the Agriculture Agreement.

The Agriculture Agreement: new rules and commitments

The objective of the Agriculture Agreement is to reform trade in the sector and to make policies

more market-oriented. This would improve predictability and security for importing and

exporting countries alike.

The new rules and commitments apply to:

Market access — various trade restrictions confronting imports

Domestic support — subsidies and other programmes, including those that raise or guarantee

farmgate prices and farmers’ incomes

Export subsidies and other methods used to make exports artificially competitive.

The agreement does allow governments to support their rural economies, but preferably through

policies that cause less distortion to trade. It also allows some flexibility in the way commitments

are implemented. Developing countries do not have to cut their subsidies or lower their tariffs as

much as developed countries, and they are given extra time to complete their obligations. Least-

developed countries don’t have to do this at all. Special provisions deal with the interests of

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countries that rely on imports for their food supplies, and the concerns of least-developed

economies.

“Peace” provisions within the agreement aim to reduce the likelihood of disputes or challenges

on agricultural subsidies over a period of nine years, until the end of 2003.

Market access: ‘tariffs only’,

The new rule for market access in agricultural products is “tariffs only”. Before the Uruguay

Round, some agricultural imports were restricted by quotas and other non-tariff measures. These

have been replaced by tariffs that provide more-or-less equivalent levels of protection — if the

previous policy meant domestic prices were 75% higher than world prices, then the new tariff

could be around 75%. (Converting the quotas and other types of measures to tariffs in this way

was called “tariffication”.)

Numerical targets for agriculture

The reductions in agricultural subsidies and protection agreed in the Uruguay Round. Only the

figures for cutting export subsidies appear in the agreement.

Developed countries - 6 years: 1995-2000

Developing countries - 10 years: 1995-2004

Tariffs average cut for all agricultural products

-36%

-24%

Minimum cut per product

-15%

-10%

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Domestic support total AMS cuts for sector (base period: 1986-88)

-20%

-13%

Exports value of subsidies

-36%

-24%

subsidized quantities (base period: 1986-90)

-21%

-14%

Least developed countries do not have to make commitments to reduce tariffs or subsidies.

The base level for tariff cuts was the bound rate before 1 January 1995; or, for unbound tariffs,

the actual rate charged in September 1986 when the Uruguay Round began.

The other figures were targets used to calculate countries’ legally-binding “schedules” of

commitments.

The tariffication package contained more. It ensured that quantities imported before the

agreement took effect could continue to be imported, and it guaranteed that some new quantities

were charged duty rates that were not prohibitive. This was achieved by a system of “tariff-

quotas” — lower tariff rates for specified quantities, higher (sometimes much higher) rates for

quantities that exceed the quota.

The newly committed tariffs and tariff quotas, covering all agricultural products, took effect in

1995. Uruguay Round participants agreed that developed countries would cut the tariffs (the

higher out-of-quota rates in the case of tariff-quotas) by an average of 36%, in equal steps over

six years. Developing countries would make 24% cuts over 10 years. Several developing

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countries also used the option of offering ceiling tariff rates in cases where duties were not

“bound” (i.e. committed under GATT or WTO regulations) before the Uruguay Round. Least-

developed countries do not have to cut their tariffs. (These figures do not actually appear in the

Agriculture Agreement. Participants used them to prepare their schedules — i.e. lists of

commitments. It is the commitments listed in the schedules that are legally binding.)

For products whose non-tariff restrictions have been converted to tariffs, governments are

allowed to take special emergency actions (“special safeguards”) in order to prevent swiftly

falling prices or surges in imports from hurting their farmers. But the agreement specifies when

and how those emergency actions can be introduced (for example, they cannot be used on

imports within a tariff-quota).

Four countries used “special treatment” provisions to restrict imports of particularly sensitive

products (mainly rice) during the implementation period (to 2000 for developed countries, to

2004 for developing nations), but subject to strictly defined conditions, including minimum

access for overseas suppliers. The four were: Japan, Rep. of Korea, and the Philippines for rice;

and Israel for sheep meat, whole milk powder and certain cheeses. Japan and Israel have now

given up this right, but Rep. of Korea and the Philippines have extended their special treatment

for rice. A new member, Chinese Taipei, gave special treatment to rice in its first year of

membership, 2002.

Domestic support: some you can, some you can’t

The main complaint about policies which support domestic prices, or subsidize production in

some other way, is that they encourage over-production. This squeezes out imports or leads to

export subsidies and low-priced dumping on world markets. The Agriculture Agreement

distinguishes between support programmes that stimulate production directly, and those that are

considered to have no direct effect.

Domestic policies that do have a direct effect on production and trade have to be cut back. WTO

members calculated how much support of this kind they were providing per year for the

agricultural sector (using calculations known as “total aggregate measurement of support” or

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“Total AMS”) in the base years of 1986-88. Developed countries agreed to reduce these figures

by 20% over six years starting in 1995. Developing countries agreed to make 13% cuts over

10years. Least-developed countries do not need to make any cuts. (This category of domestic

support is sometimes called the “amber box”, a reference to the amber colour of traffic lights,

which means “slow down”.)

Measures with minimal impact on trade can be used freely — they are in a “green box” (“green”

as in traffic lights). They include government services such as research, disease control,

infrastructure and food security. They also include payments made directly to farmers that do not

stimulate production, such as certain forms of direct income support, assistance to help farmers

restructure agriculture, and direct payments under environmental and regional assistance

programmes.

Also permitted, are certain direct payments to farmers where the farmers are required to limit

production (sometimes called “blue box” measures), certain government assistance programmes

to encourage agricultural and rural development in developing countries, and other support on a

small scale (“de minimis”) when compared with the total value of the product or products

supported (5% or less in the case of developed countries and 10% or less for developing

countries).

Export subsidies: limits on spending and quantities

The Agriculture Agreement prohibits export subsidies on agricultural products unless the

subsidies are specified in a member’s lists of commitments. Where they are listed, the agreement

requires WTO members to cut both the amount of money they spend on export subsidies and the

quantities of exports that receive subsidies. Taking averages for 1986-90 as the base level,

developed countries agreed to cut the value of export subsidies by 36% over the six years starting

in 1995 (24% over 10 years for developing countries). Developed countries also agreed to reduce

the quantities of subsidized exports by 21% over the six years (14% over 10 years for developing

countries). Least-developed countries do not need to make any cuts.

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During the six-year implementation period, developing countries are allowed under certain

conditions to use subsidies to reduce the costs of marketing and transporting exports.

The least-developed and those depending on food imports

Under the Agriculture Agreement, WTO members have to reduce their subsidized exports. But

some importing countries depend on supplies of cheap, subsidized food from the major

industrialized nations. They include some of the poorest countries, and although their farming

sectors might receive a boost from higher prices caused by reduced export subsidies, they might

need temporary assistance to make the necessary adjustments to deal with higher priced imports,

and eventually to export. A special ministerial decision sets out objectives, and certain measures,

for the provision of food aid and aid for agricultural development. It also refers to the possibility

of assistance from the International Monetary Fund and the World Bank to finance commercial

food imports.

DOHA DEVELOPMENT AGENDA: NEGOTIATIONS SUMMARY

Doha Development Agenda: Negotiations, implementation and development

The November 2001 declaration of the Fourth Ministerial Conference in Doha, Qatar, provides

the mandate for negotiations on a range of subjects and other work. The negotiations include

those on agriculture and services, which began in early 2000.

In Doha, Ministers also approved a linked decision on implementation — problems developing

countries face in implementing the current WTO agreements.

Ministerial discussions have taken place in Cancun in 2003, Geneva in 2004, Hong Kong in

2005 and Geneva in 2006 and 2008.

Since Doha

The Fifth Ministerial Conference in Cancun, Mexico, in September 2003, was intended as a

stock-taking meeting where members would agree on how to complete the rest of the

negotiations. But the meeting was soured by discord on agricultural issues, including cotton, and

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ended in deadlock on the “Singapore issues”. Real progress on the Singapore issues and

agriculture was not evident until the early hours of 1 August 2004 with a set of decisions in the

General Council (sometimes called the July 2004 package). The Sixth Ministerial Conference in

Hong Kong, December 2005, recorded the progress made in the year and a half since then. The

final declaration included agreement on a range of questions, which further narrowed down

members’ differences and edged the talks closer to consensus. A new timetable was agreed for

2006 and members resolved to finish the negotiations by the end of the year. By then, the

original 1 January 2005 deadline had been missed.

June / July 2006 modalities meetings

The General Council, at its meeting on 27-28 July 2006, supported a recommendation by

Director-General Pascal Lamy to suspend the Doha negotiations.

Director-General's remarks at the informal TNC, 16 November 2006

Informal TNC meeting at the level of Head of Delegation.

July 2008 package

The July 2008 package is a stepping stone on the way to concluding the Doha Round. The main

task before WTO members was to settle a range of questions that would shape the final

agreement of the Doha Development Agenda. Consultations took place among a group of

ministers representing all interests in the negotiations. A series of meetings were held in Geneva

from 21 to 30 July 2008.

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3) TRADE AND LABOUR STANDARDS

Subject of intense debate for several years the issue of trade and core labour standards has been

the subject of intense debate among and within some World Trade Organization member

governments.

Currently, labour standards are not subject to WTO rules and disciplines. But some WTO

member governments in Europe and North America believe that the issue must be taken up by

the WTO in some form if public confidence in the WTO and the global trading system is to be

strengthened. These member governments argue that the rights such as: the freedom to bargain

collectively, freedom of association, elimination of discrimination in the workplace and the

elimination workplace abuse (including forced labour and certain types of child labour), are

matters for consideration in the WTO. Several member governments have suggested that the

issue be brought into the WTO through the formation of a working group to study the issue of

trade and core labour standards. Bringing the matter to the WTO, these member governments

believe, will provide incentives for WTO member governments to improve conditions for

workers around the world.

This proposal is among the most controversial currently before the WTO. Most developing

countries and many developed nations believe the issue of core labour standards does not belong

in the WTO. These member governments see the issue of trade and labour standards as a guide

for protectionism in developed-country markets. Developing-country officials have said that

efforts to bring labour standards into the WTO represent a smokescreen for undermining the

comparative advantage of lower-wage developing countries.

Many officials in developing countries argue that better working conditions and improved labour

rights arise through economic growth. They say that if the issue of core labour standards became

enforceable under WTO rules, any sanctions imposed against countries with lower labour

standards would merely perpetuate poverty and delay improvements in workplace standards.

The issue of trade and labour standards has been with the WTO since its birth. At the Ministerial

Conference of the General Agreement on Tariffs and Trade held in Marrakesh in April 1994 to

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sign the treaty that formed the WTO, nearly all ministers expressed a point of view on the issue.

The Chairman of that conference concluded there was no consensus among member

governments at the time, and thus no basis for agreement on the issue.

At the first WTO Ministerial Conference in Singapore in December 1996 the issue was taken up

and addressed in the Ministerial Declaration. At Singapore, Ministers stated:

“We renew our commitment to the observance of internationally recognized core labour

standards. The International Labour Organization (ILO) is the competent body to set and deal

with these standards, and we affirm our support for its work in promoting them. We believe that

economic growth and development fostered by increased trade and further trade liberalization

contribute to the promotion of these standards. We reject the use of labour standards for

protectionist purposes, and agree that the comparative advantage of countries, particularly low-

wage developing countries, must in no way be put into question. In this regard, we note that the

WTO and ILO Secretariats will continue their existing collaboration.”

Since taking office in September 1999, WTO Director-General Mike Moore, has met twice with

ILO Director-General Juan Somavia. Mr. Moore has said he looks forward to co-operating with

Mr. Somavia and other officials from the ILO. He has also been clear that the WTO will be

guided by Ministers on the issue of trade and core labour standards.

Existing collaboration between the WTO and the ILO includes participation by the WTO in

meetings of ILO bodies, the exchange of documentation and informal cooperation between the

ILO and WTO Secretariats.

Since the Singapore Ministerial Conference, the ILO has taken two significant steps in

addressing the issue of workers’ rights. In 1998, ILO member governments adopted the ILO

Declaration on Fundamental Principles and Rights at Work and its Follow-up. Under this

declaration, ILO member governments endorsed some basic principles which are included in the

core ILO Conventions. (These conventions are the fundamental workplace rights including:

freedom of association and recognition of the right to collective bargaining; elimination of all

forms of forced labour; the effective abolition of child labour and the elimination of

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discrimination in hiring and employment practices.)

ILO Member Governments agreed to respect and promote these Core Conventions even if they

have not ratified all of them. As a follow-up, the ILO will issue annual reports in which ILO

officials will obtain information from governments which have not ratified all of the conventions

on any changes that may have taken place in national laws or regulations and which may impact

these fundamental labour rights.

In 1999, ILO member governments agreed to prohibit and eliminate the worst forms of child

labour. Member governments defined the worst forms of child labour as all forms of slavery,

child prostitution and pornography, the use of children to traffic in drugs and work which is

likely to harm the health, safety or morals of children.

ILO member governments said they recognized that child labour is largely a function of poverty

and that the long-term solution to elimination of exploitative and harmful child labour is through

sustained economic growth.

A recent World Bank study estimated that less than 5% of child workers in the developing world

are involved in export related activities.

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4) Trade and Environment

Through its goals, rules, institutions and forward-looking agenda, the WTO provides an

important means of advancing international environmental goals.

Sustainable development and environmental protection are goals of the WTO.

Allowing for the optimal use of the world’s resources in accordance with the objective of

sustainable development and seeking to protect and preserve the environment are fundamental to

the WTO. These goals, enshrined in the Preamble of the Marrakesh Agreement, go hand in hand

with the WTO’s objective to reduce trade barriers and eliminate discriminatory treatment in

international trade relations. For WTO members, the aims of upholding and safeguarding an

open and non-discriminatory multilateral trading system, on the one hand, and acting for the

protection of the environment and the promotion of sustainable development, on the other, can

and must be mutually supportive. Trade liberalization and stable and predictable trade conditions

support the environment.

An important element of the WTO’s contribution to sustainable development and protection of

the environment comes in the form of furthering trade opening in goods and services to promote

economic development, and by providing stable and predictable conditions that enhance the

possibility of innovation. This promotes the efficient allocation of resources, economic growth

and increased income levels that in turn provide additional possibilities for protecting the

environment. The importance of trade’s contribution to efforts on sustainable development and

the environment has been recognized in such forums as the 1992 Rio Summit, 2002

Johannesburg Summit and 2005 UN World Summit.

Under WTO rules, members can adopt trade-related measures aimed at protecting the

environment.

The commitment of WTO members to sustainable development and the environment can also be

seen in WTO rules. In general terms the rules, with their fundamental principles of non-

discrimination, transparency and predictability, help set the framework for members to design

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and implement measures to address environmental concerns. Moreover, WTO rules, including

specialized agreements such as the Agreement on Technical Barriers to Trade (which deals with

product regulations), and the Agreement on Sanitary and Phytosanitary Measures (which

concerns food safety and animal and plant health), provide scope for environmental objectives to

be followed and for necessary trade-related measures to be adopted. WTO rules set up the

appropriate balance between the right of members to take regulatory measures, including trade

restrictions, to achieve legitimate policy objectives (e.g., protection of human, animal or plant

life or health, and natural resources) and the rights of other members under basic trade

disciplines. For example, GATT Article XX on General Exceptions lays out a number of specific

instances in which members may be exempted from GATT rules. The provision seeks, among

other things, to ensure that environmental measures are not applied arbitrarily and are not used a

disguised protectionism.

Since the entry into force of the WTO in 1995, the WTO Dispute Settlement Body has had to

deal with a number of disputes concerning environment-related trade measures. Such measures

have sought to achieve a variety of policy objectives — from conservation of sea turtles from

incidental capture in commercial fishing to the protection of human health from risks posed by

air pollution. WTO jurisprudence has affirmed that WTO rules do not take precedence over

environmental concerns.

The WTO's dispute settlement allowed a member in 2001 to maintain its ban on the importation

of asbestos so it could protect its citizens and construction workers. In the US — Shrimp dispute,

the WTO pushed members towards a strengthening of their environmental collaboration; it

required that a cooperative environmental solution be sought for the protection of sea turtles

between the parties to the conflict.

WTO institutions advance dialogue and understanding of trade and environment linkages.

The WTO also supports sustainable development and the environment through its specialized

committees and bodies. One unique institutional venue is the Committee on Trade and

Environment (CTE). As a forum for dialogue on trade and the environment, the Committee is an

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incubator for ideas on how to move the discussion forward. Already, this is bearing fruit. Some

issues first raised in the CTE have become fully-fledged negotiations — for instance, on fisheries

subsidies and on the relationship between the WTO and multilateral environmental agreements

(MEAs). Other WTO bodies are also important. For example, the committee administering the

Technical Barriers to Trade Agreement (which deals with regulations, standards, testing and

certification procedures) is where governments share information on actions they are taking and

discuss how some environmental regulations may affect trade.

The Doha Development Agenda and the environment.

The current Doha Round of negotiations gives members a chance to achieve an even more

efficient allocation of resources on a global scale through the continued reduction of obstacles to

trade. The Round is also an opportunity to pursue win-win-win results for trade, development

and the environment. For example, the Doha Round is the first time environmental issues have

featured explicitly in the context of a multilateral trade negotiation and the overarching objective

is to enhance the mutual supportiveness of trade and environment. Members are working to

liberalize trade in goods and services that can benefit the environment. They are also discussing

ways to maintain a harmonious co-existence between WTO rules and the specific trade

obligations in various agreements that have been negotiated multilaterally to protect the

environment. Other parts of the Doha negotiations are also relevant to the environment, for

example aspects of the agriculture negotiations and also disciplines on fisheries subsidies. The

Doha Development Agenda also has a section specifying the priority items in the CTE’s regular

work.

International efforts on the environment.

Since environmental problems often transcend national borders, the response must involve

concerted action at the international level. WTO members have long recognized the need for

coherence amongst international institutions in addressing global environmental challenges. The

current negotiations on the WTO-MEA relationship provide a unique opportunity for creating

positive synergies between the trade and environment agendas at the international level. In

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addition, there is regular and routine contact between the WTO Secretariat and secretariats of

multilateral environmental agreements.

The Committee on Trade and Environment (CTE)

The 1994 Ministerial Decision on Trade and Environment created the WTO’s Committee on

Trade and Environment (CTE), which is open to the entire WTO membership, with some

international organizations as observers. The committee’s mandate is broad, and it has

contributed to identifying and understanding the relationship between trade and the environment

in order to promote sustainable development.

The CTE’s 1994 work programme

The work programme covers a range of relevant issues, from trade and the environment in

general, liberalization and trade barriers, and taxes, to individual sectors such as services and

intellectual property, and relations with environmental organizations.

The Doha mandate

The 2001 Doha Declaration has a section dealing with the committee’s regular work. The focus

is on effects of environmental measures on market access, the relevant provisions of the

intellectual property agreement, labeling requirements for environmental purposes, technical

assistance, sharing expertise for national environmental reviews and environmental aspects of the

Doha negotiations.

The committee: broad-based responsibility

The committee has a broad-based responsibility covering all areas of the multilateral trading

system — goods, services and intellectual property. Its duties are to study the relationship

between trade and the environment, and to make recommendations about any changes that might

be needed in the trade agreements.

The committee’s work is based on two important principles:

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The WTO is only competent to deal with trade. In other words, in environmental issues its only

task is to study questions that arise when environmental policies have a significant impact on

trade. The WTO is not an environmental agency. Its members do not want it to intervene in

national or international environmental policies or to set environmental standards. Other agencies

that specialize in environmental issues are better qualified to undertake those tasks.

If the committee does identify problems, its solutions must continue to uphold the principles of

the WTO trading system.

More generally WTO members are convinced that an open, equitable and non-discriminatory

multilateral trading system has a key contribution to make to national and international efforts to

better protect and conserve environmental resources and promote sustainab le development. This

was recognized in the results of the 1992 UN Conference on Environment and Development in

Rio (the “Earth Summit”) and its 2002 successor, the World Summit on Sustainable

Development in Johannesburg.

The committee’s work programme focuses on 10 areas. Its agenda is driven by proposals from

individual WTO members on issues of importance to them. The following sections outline some

of the issues, and what the committee has concluded so far

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5) Electronic commerce

WTO members are exploring how electronic commerce should be dealt with in the context of the

Uruguay Round Agreements and the WTO, within a work programme established by the WTO

General Council on September 25, 1998.

Work continues on issues needing clarification

The growing importance of electronic commerce in global trade led WTO members to adopt a

declaration on global electronic commerce on 20 May 1998 at their Second Ministerial

Conference in Geneva, Switzerland.

The Declaration directed the WTO General Council to establish a comprehensive work

programme to examine all trade-related issues arising from electronic commerce, and to present

a progress report to the WTO’s Third Ministerial Conference.

The 1998 declaration also included a so-called moratorium stating that “members will continue

their current practice of not imposing customs duties on electronic transmission”.

The work programme was adopted by the WTO General Council on 25 September 1998. It

continued after the Third Ministerial Conference in Seattle, November 1999.

The Doha decision

At the Fourth Ministerial Conference in Doha in 2001, ministers agreed to continue the work

programme as well as to extend the moratorium on customs duties. They instructed the General

Council, in paragraph 34 of the Doha Declaration, to report on further progress to the Fifth

Ministerial in Cancun, in 2003.

Under the work programme, issues related to electronic commerce have been examined by the

Council for Trade in Services, the Council for Trade in Goods, the Council for TRIPS and the

Committee on Trade and Development. During the course of the work programme a number of

background notes on the issues have been produced by the WTO Secretariat and many member

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governments have submitted documents outlining their own thoughts.

After the Doha Ministerial Declaration, the General Council agreed to hold “dedicated”

discussions on cross-cutting issues, i.e. issues whose potential relevance may “cut across”

different agreements of the multilateral system. So far, there have been five discussions

dedicated to electronic commerce, held under General Council’s auspices.

The issues discussed included: classification of the content of certain electronic transmissions;

development-related issues; fiscal implications of e-commerce; relationship (and possible

substitution effects) between e-commerce and traditional forms of commerce; imposition of

customs duties on electronic transmissions; competition; jurisdiction and applicable law/other

legal issues.

Participants in the dedicated discussions hold the view that the examination of these cross-

cutting issues is unfinished, and that further work to clarify these issues is needed.

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6) Singapore issues

Ministers from WTO member-countries decided at the 1996 Singapore Ministerial Conference to

set up three new working groups: on trade and investment, on competition policy, and on

transparency in government procurement. They also instructed the WTO Goods Council to look

at possible ways of simplifying trade procedures, an issue sometimes known as “trade

facilitation”. Because the Singapore conference kicked off work in these four subjects, they are

sometimes called the “Singapore issues”.

These four subjects were originally included on the Doha Development Agenda. The carefully-

negotiated mandate was for negotiations to start after the 2003 Cancun Ministerial Conference,

“on the basis of a decision to be taken, by explicit consensus, at that session on modalities of

negotiations”. There was no consensus, and the members agreed on 1 August 2004 to proceed

with negotiations in only one subject, trade facilitation. The other three were dropped from the

Doha agenda.

Investment and competition

Work in the WTO on investment and competition policy issues originally took the form of

specific responses to specific trade policy issues, rather than a look at the broad picture.

Decisions reached at the 1996 Ministerial Conference in Singapore changed the perspective. The

ministers decided to set up two working groups to look more generally at how trade relates to

investment and competition policies.

The working groups’ tasks were analytical and exploratory. They would not negotiate new rules

or commitments without a clear consensus decision.

The ministers also recognized the work underway in the UN Conference on Trade and

Development (UNCTAD) and other international organizations. The working groups were to

cooperate with these organizations so as to make best use of available resources and to ensure

that development issues are fully taken into account.

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An indication of how closely trade is linked with investment is the fact that about one third of the

$6.1 trillion total for world trade in goods and services in 1995 was trade within companies —

for example between subsidiaries in different countries or between a subsidiary and its

headquarters.

The close relationships between trade and investment and competition policy have long been

recognized. One of the intentions, when GATT was drafted in the late 1940s, was for rules on

investment and competition policy to exist alongside those for trade in goods. (The other two

agreements were not completed because the attempt to create an International Trade

Organization failed.)

Over the years, GATT and the WTO have increasingly dealt with specific aspects of the

relationships. For example, one type of trade covered by the General Agreement on Trade in

Services (GATS) is the supply of services by a foreign company setting up operations in a host

country — i.e. through foreign investment. The Trade-Related Investment Measures Agreement

says investors’ right to use imported goods as inputs should not depend on their export

performance.

The same goes for competition policy. GATT and GATS contain rules on monopolies and

exclusive service suppliers. The principles have been elaborated considerably in the rules and

commitments on telecommunications. The agreements on intellectual property and services both

recognize governments’ rights to act against anti-competitive practices, and their rights to work

together to limit these practices.

Transparency in government purchases: towards multilateral rules

The WTO already has an Agreement on Government Procurement. It is plurilateral — only some

WTO members have signed it so far. The agreement covers such issues as transparency and non-

discrimination.

The decision by WTO ministers at the 1996 Singapore conference did two things. It set up a

working group that was multilateral — it included all WTO members. And it focused the group’s

work on transparency in government procurement practices. The group did not look at

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preferential treatment for local suppliers, so long as the preferences were not hidden.

The first phase of the group’s work was to study transparency in government procurement

practices, taking into account national policies. The second phase was to develop elements for

inclusion in an agreement.

Trade facilitation: a new high profile

Once formal trade barriers come down, other issues become more important. For example,

companies need to be able to acquire information on other countries’ importing and exporting

regulations and how customs procedures are handled. Cutting red-tape at the point where goods

enter a country and providing easier access to this kind of information are two ways of

“facilitating” trade.

The 1996 Singapore ministerial conference instructed the WTO Goods Council to start

exploratory and analytical work “on the simplification of trade procedures in order to assess the

scope for WTO rules in this area”. Negotiations began after the General Council decision of 1

August 2004.

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Conclusion

For an issue to be linked to the WTO system in an integral way it must be made to meet a strict

test with clear criteria. Issue chosen must be for benefit of members specially developing

countries that form the majority and must be treated in a manner that leads to equitable results.

At present there is no framework as how should new issues enter WTO system. There are strong

pressures from developed countries to add more and more issues in WTO agenda. That could

lead to negative consequences. The immense problem of implementation, economic and social

dislocation that will result in many countries is most inappropriate to place new issues in WTO

system.

Potential new issues should be place in a forum outside the WTO in a broader framework and

should aim for advantages and benefit of member of WTO specially developing countries with

the ultimate goal being equitable and sustainable development.

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Reference

Economics of global trade & finance-m.com part I Johnson & Mascarenhas-manan prakashan

third revised edition august 2014

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