Report on
Practical Training with
Permanent Mission of Pakistan to the WTO
Held from 13-24 March 2006
MUHAMMAD ARSHAD LODHI
Assistant Chief
WTO Wing
Ministry of Commerce
Contents
Meeting with expert on Rules Negotiation / 2
Meeting with Rules Division on Subsidies / 4
Meeting on Agreement on Safeguard / 6
Meeting in South Centre on Fisheries Subsidies / 7
Negotiation Group on Rules Meeting regarding fisheries subsidies / 8
Meeting of Negotiation Group on Rules to discuss proposals regarding circumvention and sunset / 8
Dispute Settlement Body Meeting / 9
TRIPS Council’s Meeting / 10
TBT Workshop / Conformity Assessment / 11
Trade Policy Review of United States / 12
Schedule of meetings and discussions / 14
Introduction
1. Ministry of Commerce nominated me to attend the practical training with Permanent Mission of Pakistan to the WTO for two weeks from 13 to 24th March 2006 Under the Capacity Building Project for the officers of Ministry of Commerce with the assistance of World Bank.
2. Pakistan Mission to the WTO arranged meetings with experts of WTO and other related organizations. I am very grateful to all officers and staff of the Mission as despite heavy workload they were very kind, cooperative, and helpful during my stay in Geneva. I really appreciate the very positive attitude of the Mission.
3. This practical training has enabled me to understand the concepts of Rules and to analyze the cases of antidumping, subsidy & countervailing and safeguards under the WTO disciplines to protect domestic industry and exporters as well to clarify the issues in which I felt difficulty during my job. I have also got tips of techniques for the WTO negotiations as well as knowledge on current negotiations and where Pakistan is and most important what type of feedback Pakistan Mission needs from its country during negotiations. Proceeding of DSB was also new for me. Trade Policy Review, TRIPS Council meeting and TBT Workshop will be helpful in my future work. Updating of knowledge is a continuous process. This practical training built up/ broadened my understanding/ vision on trade issues and would help me to perform better with confidence particularly the WTO and multilateral trading system. As such the training facility was useful to me to learn new techniques and to improve the analytical foundation of work and this would add to the intellectual capital of my organization. In short, this training course is imperative for organization as well as my country and me as I have got changed with new energies and enthusiasm.
4. During my attachment, I attended meetings and held discussions in the following subjects:
i) Negotiations on Rules;
ii) Anti-dumping;
iii) Subsidies and Countervailing Measures;
iv) Safeguard Measures;
v) Fisheries Subsidies;
vi) Negotiation Group on Rules;
vii) Dispute Settlement Body;
viii) TRIPS Council;
ix) Workshop on Conformity Assessment; and
x) US Trade Policy Review.
Meeting with expert on Rules Negotiation
5. I met with Mr. Johann Human, Counsellor, Rules Division, in the WTO Secretariat. The issue of current negotiations on rules, inter alia, was a main agenda during the meeting.
6. Regarding on going negotiations he stated that at the Fourth Ministerial Conference in Doha, Qatar, in November 2001 WTO member governments agreed to launch new negotiations. They also agreed to work on other issues, in particular the implementation of the present agreements. The entire package is called the Doha Development Agenda (DDA). .
The negotiations take place in the Trade Negotiations Committee and its subsidiaries, which are usually, either regular councils and committees meeting in “special sessions”, or specially-created negotiating groups. Other work under the work programme takes place in other WTO councils and committees.
7. WTO Members agreed at the Doha Ministerial Conference to launch negotiations in the area of “WTO Rules”. These negotiations relate to the following subject matter:
· the Agreement on Implementation of ArticleVI of GATT1994 (better known as the Anti-dumping Agreement);
· the Agreement on Subsidies and Countervailing Measures and, in this context, WTO disciplines on fisheries subsidies; and
· WTO provisions applying to regional trade agreements.
8. There are in total 19-21 subjects listed in the Doha Declaration, depending on whether to count the “rules” subjects as one or three. Most of them involve negotiations; other work includes actions under “implementation”, analysis and monitoring.
9. He stated that in Hong Kong Ministers directed the Group to intensify and accelerate the negotiating process in all areas of its mandate, on the basis of detailed textual proposals before the Group or yet to be submitted, and complete the process of analysing proposals by Participants on the AD and SCM Agreements as soon as possible, therefore the Chairman will table text in July 2006. Prior to proposed Chairman’s text on rules; two more meetings of the negotiation group on rules will be held on 1st May and June 2006. Therefore, it will be more appropriate if Pakistan submit proposals on rules by 20th April 2006 which can be discussed in May meeting. He also gave me a list of proposals put forth by the various Members so far.
Meeting with Rules Division on Subsidies
10. A meeting held with Mr. Mark Koulen, Counsellor, Rules Division, WTO Secretariat and discussed the issue whether Pakistan can grant subsidy or not under the discipline of Agreement on Subsidies and Countervailing Measures.
11. The WTO agreement on subsidies and countervailing measures defines two categories of subsidies: prohibited (red light) and actionable (yellow light). It originally contained a third category: non-actionable subsidies (green light) for regional development, environment, etc. This category was extended for five years w.e.f. January 01, 1995, ending on 31 December 1999, and was not extended (Article 31 of ASCM).
12. Prohibited subsidies: subsidies that require recipients to meet certain exports targets, or to use domestic goods instead of imported goods. These are specific subsidies and need not show adverse effects, there withdrawal is must. Otherwise these can be challenged in the WTO dispute settlement procedure. These subsidies are prohibited for all WTO members except those export subsidies mentioned in Annex-VII in which case these are actionable subsidies
13. Actionable subsidies: subsidies other than prohibited and also specific (which is limited to, an enterprise or group of enterprises; an industrial sector or group of industries, or a designated geographical region within the jurisdiction of the granting authority; export subsidy or import substitution subsidy) are actionable subsidies. In this category the complaining country has to show that the subsidy has an adverse effect on its interest. Otherwise the subsidy is permitted. The agreement defines three types of damage they can cause:
(i) One country’s subsidies can hurt a domestic industry in an importing country;
(ii) They can hurt rival exporters from another country when the two compete in third markets.
(iii) Domestic subsidies in one country can hurt exporters trying to compete in the subsidizing country’s domestic market.
14. Potential remedy is that removal of adverse effects; withdrawal of subsidy; or compensation; or countervailing duties. Subsidies can be challenged in the WTO dispute settlement procedure.
15. Prohibition For Pakistan: Pakistan cannot grant import substitution subsidy (subsidies contingent upon the use of domestic over imported goods, are prohibited "red" by Article 3 of the SCM Agreement). The transitional period for allowing these subsidies was upto 31-12-1999.
16. Flexibilities available to Pakistan: Pakistan can grant export subsidies, defined in Article 3.1(a) i.e. subsidies contingent on export performance, till either:
(i) Pakistan’s per capita GNP remains less than US$1000 (Annex – VII of ASCM). At present Pakistan’s per capita GNP is $737/- as on 30-6-2005.
(ii) Pakistan attains export competitiveness in a particular product i.e. its share in the world trade of that product become at least 3.25% for two consecutive years. Once this happens Pakistan would need to phase out such export subsidies on this particular product over an eight years period.
Moreover, according to Annex VII (of ASCM), the de minimis level is 3 per cent for Pakistan and for other Members, the de minimis level is 2 or 1 per cent.
17. De minimis subsidies: the WTO agreement on Subsidies and Countervailing Measures defines these as subsidies amounting to less than 1%. Authorities investigating the effect of an alleged subsidy are required to terminate their enquiries immediately if the volume of the subsidy falls into this category. If developing countries are involved, the de minimis level is set at 2% in the case of individual countries. If developing countries covered under Annex – VII of the Agreement on SCM are involved, the de minimis level is set at 3% in the case of individual countries. The provision also applies if the volume of subsidized imports of the same product from developing countries with a share of less than 4% of imports exceeds 9% of total imports of the same product by the country making the investigation
Meeting on Agreement on Safeguard
18. A meeting was held with Mr. Hiromi Yano, Legal Officer, Rules Division, WTO Secretariat. Mr. Yano is dealing with Agreement on Safeguard. He introduced trade remedy laws and described recent trends and developments in the use of Safeguard measures – with brief comparisons with other trade remedy instruments and indicated reasons due to which safeguard is less frequently used by WTO Members.
19. The instruments of safeguard, anti-dumping and countervailing duty ("CVD") are often referred to as "trade-remedies". This, as is well known, is because these three instruments are provided for under the relevant WTO Agreements as remedies that can be invoked under specific circumstances in order to provide protection to domestic industry from the unwanted effects of certain imports. Compared with anti-dumping and CVD, safeguard is less frequently used by WTO Members. Since the establishment of the WTO (1 January 1995) and until 30 June 2005, a total of 139 safeguard investigations were initiated, and a total of 68 safeguard measures were imposed. These figures are smaller compared to the 176 CVD initiations and 108 CVD measures, and far smaller compared to the 2743 anti-dumping initiations and 1729 anti-dumping measures during the same period (until the end of 2004 for CVD).
20. Trade remedies are important and sometimes controversial instruments in the WTO. In fact, trade remedies account for a substantial portion of disputes in the WTO. Thus, it is not surprising that anti-dumping comprises half of the trade remedy-related disputes ruled on at the WTO. However this does not necessarily mean that anti-dumping is the most "disputed" of the three trade remedy instruments. Broadly speaking, imposition of any trade remedy measures requires the investigation authority to establish certain facts about import and about injury to domestic industry. In addition, in the case of anti-dumping, determination of dumping (dumping margin) is necessary, while in the case of CVD, determination of subsidization is necessary, while in the case of safeguards measures, determination of surge in imports is necessary.
21. Thus, in terms of the number of factors to be analyzed, safeguard investigations are relatively less complex compared to anti-dumping or CVD investigations. A single safeguard investigation (and measure) covers imports from all sources (Article 2.2 of the Agreement on Safeguards, however, Article 9.1 provides exceptions for imports from certain developing countries). As compared to the AD and CVD, despite its less complexity, politically it is very difficult to impose safeguard measures.
22. The most frequent “use” and "users" of the three trade remedies since January 1995 till June 2005, are as under:
Safeguard / Anti-dumping / CVDIndia
(15 initiations, 8 measures) / India
(412 initiations, 309 measures) / United States
(70 initiations, 45 measures)
Chile
(10 initiations, 6 measures) / United States
(358 initiations, 229 measures) / European Communities
(42 initiations, 22 measures)
United States
(10 initiations, 6 measures) / European Communities
(318 initiations, 200 measures) / Canada
(16 initiations, 8 measures)
Jordan
(10 initiations, 4 measures) / Argentina
(193 initiations, 139 measures) / South Africa
(11 initiations, 4 initiations)
Czech Republic
(9 initiations, 5 measures) / South Africa
(191 initiations, 113 measures) / New Zealand
(6 initiations, 4 measures)
23. Due to less complex and less use of safeguard measures, Members showed no interest in its negotiation therefore ministers has not put the Agreement on Safeguards in the Doha Development Agenda (DDA).
Meeting in South Centre on Fisheries Subsidies
24. I met with Mr. Darlin Fonesca-Marti, Project Director, Trade and Development Programme, Non–Agricultural Market Access of South Centre. Mr. Fonesca briefed me on Fisheries subsidy. Fish and fish products provide important livelihoods and trade opportunities in many developing countries, including as a significant source of export revenue, a vital component of domestic food intake and an important provider of local livelihoods, rural development and employment. However, market access barriers continue to pose serious obstacles for these countries to expand their participation in international trade, adding value to their exports and ensuring rural development. In addition, fisheries subsidies in industrial countries have contributed to market distortions, reducing developing countries’ ability to compete with subsidized fleets and often making it economically unviable for poor countries to build up their own fishing industries. Moreover, declining fish stocks, partly resulting from overcapacity – not least due to inappropriately designed subsidies schemes – and ineffective management, have reduced the availability of fish for domestic use and export.
25. In recognition of some of these concerns, WTO Members at the 2001 Ministerial Conference in Doha launched negotiations to improve WTO disciplines on fisheries subsidies, “taking into account the importance of this sector to developing countries’’. As negotiations pick up speed, a clear articulation of the sustainable development dimensions and how to integrate them into the subsidies disciplines remains absent from the debate. At the same time, disciplining fisheries subsidies at the WTO will be insufficient to ensure that trade supports sustainability objectives. Thus, there is a need to take a more holistic approach to policy-making at the fisheries-trade interface.
26. Selected WTO members’ positions on new disciplines of fisheries subsidies are as under: