Download Trade Policy Workshop for MPs in the East African Community

Trade Policy Workshop for MPs in
the East Africa Community
27-28 May 2010, Arusha, Tanzania
Trade Negotiations and Commercial Diplomacy Branch,
UNCTAD, Geneva
Trade Policy Workshop for MPs in the
East Africa Community
Organization of presentation:
1.Structure of the Multilateral Trading System (MTS) from the
GATT 1947 to the WTO (1995), incl main principles
2.Functioning of the MTS:
- Provisions of the GATT and WTO agreements
that could assist in growth and development
- The WTO’s Dispute Settlement Mechanism
3. Successful trade and development strategies for mitigating
the impact of global economic and financial crisis.
UNCTAD
The evolving scope of the multilateral trade agenda
The GATT agenda
The Uruguay Round
1947-1986:
agenda (1994):
agriculture
MARKET
services
ACCESS
TRIPS
for trade in goods
+
+
TRIMS
(non-agric)
environment
=rules on
= rules on some
border measures
domestic policies
The Doha agenda
(2001):
Singapore issues
= rules on more
domestic policies
within the border
within the border
Cross-cutting issues :
AND…
Special and differential treatment and Implementation issues
Technical assistance
LDCs and small economies
Trade, debt and finance, and transfer of technology
The multilateral trading
system can be seen as a
CUBE*:
Level of
liberalisation of
_
Market Access
(border measures)
(tariffs, non tariffs
barriers, rules of
origin, SPS/TBTs,
quotas, AD…)
+
+
_
_
+
Number of countries part of the
multilateral trading system
*original idea developed by Craig van
Grasstek
Depth and number
of issues of domestic
economic policy
(inside the borders)
included in
multilateral trading
system(services,
intellectual property,
investments,
competition,
government
procurement, trade
facilitation….)
The cube changes:
Uruguay Round
(1986-94)
Various
GATT 1947
(till the 80s)
issues of
domestic
policy:
Services
TRIPs
TRIMs
susidies
_
Little intrusion
in domestic
policies
slow
market
access
liberalisa
tion
(plurilateral
codes,
subsidies,
purchases…)
+
_+
from 23 to
approx. 80
countries
+_
fast
market
access
liberalisat
ion
_
_
+ _
from approx. 90 to
128 countries
And keeps changing….
+
+
The evolution towards Doha and
post-Doha
Liberalisation
keeps moving but
it is short in
touching sensitive
issues for
developed
countries
(AD, tariffs peaks,
rules of origin,
standards etc.)
Larger
impact on
domestic
policies:
_
Services,
Singapore
issues
+_
From 153 countries part of the WTO to….?
+
_
+
Industrialised countries consider that their liberalisation regarding market
access has almost reached its maximum limits. Their interests are thus
concentrated on advocating further liberalisation (at and within the borders)
in developing countries.
Evolution of the GATT and the WTO
•
The General Agreement on Tariffs and Trade
(GATT) 1947 came into force in 1948 following
the Havana Conference (1947).
•
It is a multilateral agreement among countries
providing a framework for the conduct of
international trade.
GATT 1947
• Common rules governing trade
• Result of the first round of trade
negotiations
• Schedules of concessions (result of
market access negotiations)
• 23 contracting parties
Three fundamental principles
1. Most Favoured Nation (MFN)
Treatment (Article I)
2. National Treatment (Article III)
3. Publication and Administration of
Trade Regulations-Transparency
(Article X)
Other important provisions
• Article XI. No quantitative restrictions with
some exceptions
• Article XX. Exceptions to all to the GATT
provisions
• Article XXIV. Customs Unions and Free
trade Areas
• Article XXVIII. Renegotiation of tariff
concessions
Trade Negotiation Rounds
Since the Annecy Round (1949), seven Rounds have been
concluded; the last being the Uruguay Round( 1986-1994).
Evolution of trade negotiations
• Before Tokyo Round – tariff reductions
• Tokyo Round – clarification of Non Tariff
Measures, participation of developing countries,
various Codes on an optional basis, Dispute
settlement improvements
• UR – GATS, TRIPS, Agriculture, S&D
Treatment, Dispute Settlement Mechanism
Outcomes from the Uruguay Round
• GATT 1947 becomes the GATT 1994
• Marrakesh Agreement establishing the WTO in 1994
• Single package approach
• S&D, but still strict disciplines applied to newly
acceded developing countries and LDCs
• Rule based system, more specific Agreements
(Safeguards, TBT, SPS…)
• Deeper tariff cuts
Special and Differential Treatment (S&D)
Provisions
• Enabling Clause – 20 November 1979 adopted
by GATT Council
• Erosion of S&D Provisions in the Uruguay
Round Agreements
• Today, S&D Provisions only to a large extent
mean longer time frame to achieve the same
objective
• Doha mandate – Strengthen S&D Provisions to
make them more meaningful and enforceable
Contribution of the multilateral trading
system to growth and development - I
•
Trade as a means to an end – meet the MDGs
•
Chapeau of the Marrakesh Agreement
•
Trade policies have to be within the parameters of the
GATT and WTO provisions.
•
Includes efforts to further expand the production base
into higher value-added exports embodying higher
technology and knowledge-based industries( Moving
up the value-chain).
•
Need to constantly undertake self- review of
competitiveness level vis-a- vis other regions and
countries, cost of doing business- like the number of
working days needed to approve a business
license;types of fiscal and tax incentives and other
implementation measures.
.
Contribution of the multilateral trading
system to growth and development - II
Provisions of the GATT and WTO which could be availed of:
1. Agri. Subsidies - ( export Art 9.1; domestic support Art 6.2
& 6.4 )
2. Sanitary and Phytosanitary Measures - Harmonization to
international standards, equivalence; adaptation to
Regional Conditions, Mutual Recognition Agreements.
3. Technical Barriers to Trade- Conformity Assessment( Art 5,
TBT);
4. Private sector participation - crucial & beneficial in the
development of standards and technical regulations.
5. Trade Related Investment Measures( TRIMS)- only to the
LDCs;
6. Special Economic Zones ( SEZ) or Export Processing
Zones ( EPZ)-
Contribution of the multilateral trading
system to growth and development - III
7. Customs Valuation( GATT Art VII), use of transaction value
and other valuation methods as per the CVA.
8. Import Licensing Procedures- automatic and non-automatic
licensing.
9. Use of fiscal and tax incentives under the SCVM
Agreement;
10. Art 27.2( of the SCVM Agreement) industrial subsidies –
for LDC Members.
11. Duty Drawback schemes are allowed under the SCVM
Agreement (footnote 61- schemes allowing for the
remission or drawback of import charges levied on inputs
that are consumed in the production of the exported
product/( making normal allowance for waste). Inputs
consumed in the production process are inputs physically
incorporated, energy, fuels, and oil used in the production
process and catalysts which are consumed in the course of
their use to obtain the exported product. An efficient Duty
Drawback system will help encourage production for
exports.
Contribution of the multilateral trading
system to growth and development - IV
13.Rules of Origin( ROO) - and their use. As a CU, should use
harmonized ROO. Including the provisions of Art^2 ( h)
and Art 3 (d) of Annex II of the WTO Agreement on
ROO.
14. Services sector – new area of growth and expansion.
15. Intellectual Property Rights, notwithstanding the
transitional period till 2013 for implementation of
the TRIPS Agreement and till 2016 for provisions
related to patent protection for pharmaceuticals. This
provides the legal certainties and assurances to
investors, domestic and foreign.
Contribution of the multilateral trading
system to growth and development - V
16. GATT Art V- Freedom of transit
17. GATT Art VIII- Fees and Formalities connected with
Importation and Exportation.
18. GATT Art X- Transparency, including appeals processindependent of the agencies entrusted with administrative
enforcement.
19. The NG on Trade Facilitation- concepts such as the use of
Single Window, risk assessment and release of goods based
on prior information, eliminating the use of pre-shipment
inspection etc.
20. Under the NAMA negotiations, proposals to do away with
the use of consular fees.
Contribution of the multilateral
trading system to growth and
development - VI
21. Trade remedies/ trade defense mechanisms
22. Anti Dumping, safeguards, countervailing measures
duties
23. The Dispute Settlement Mechanism of the WTO
24. Apart from this formal trade adjudication process,
there are also informal channels, such as through
the SPS and TBT Committees- for issues related to
these committees.
Key Challenge of the Financial Crisis
Addressing the ‘development crisis’ by
promoting sustained trade and economic
recovery and more equitable, people-centered
and sustainable development.
Global Recession & Poverty Impact
• In 2009, the global economy experienced a deep
recession
• World GDP growth slowed to 1.9% in 2008 &
declined by 2.2 % in 2009
• For 2010, preliminary forecasts suggest a recovery
in global GDP growth of 2.4%. But remains fragile.
No major improvement in socio-economic
indicators.
Trade slump & weak recovery
• A sharp contraction of international trade whose growth, by the end of
2008, turned negative.
• Data for the third quarter of 2009, suggest that international trade has
bottomed out and some rebound is underway.
• But world trade contracted in 2009 by about 12% relative to 2008.
Figure 1. Non-oil imports of the four largest economies, by origin (indexed to January 2007)
Sectoral performances - goods
The decline & subsequent recovery, in global
trade involved all economic sectors.
• US, the largest global importer, showed
some recovery in its imports in 2009.
• China, the lragest exporter, saw its exports
experiencing a stronger rebound in virtually
all economic sectors.
• Commodities prices trend upwards but
remain uncertain.
Sectoral performancs - services
Developing countries are recovering faster
•
But the recovery is slowing down
Global Trade Imbalances
Crisis-mitigation strategies and economic
stimulus
1.
Increasing trade financing
2.
Providing stimulus / bailout packages
3.
Strengthening regulatory & institutional
reform
4.
Improving production & competitiveness
5.
Improving multilateral & regional
arrangements
6.
Enhancing South-South trade
Increasing trade financing
• Limited and unaffordable access to trade
finance reduced global trade
• Interventions by governments and IFIs were
crucial for capital injection, liquidity increase
& risk mitigation support
• South-South cooperative initiatives can ease
access to trade finance, reduce trade costs &
spur investment
Stimulus Package
• US package of $787 billion or 5% of GDP
• China package of $585 billion or 13 of GDP
• Bangladesh package of $500 million or 0.6
GDP
• In EU from 0.2% of GDP in Italy to 2.6% in
Germany
• In Latin America from 0.3% of GDP in Brazil
to 2.2% in Chile
Strengthening regulatory &
institutional reform
• Regulatory failure in a deregulated
environment became manifest by the
financial crisis.
• Hence various reform options aim at a
more stable financial sector that can
provide long-term financing to
productive sectors
• Many also seek greater social efficiency
& equitable markets through regulation.
Strenghtening & diversifying
production & improving
competitivenss
• Countries adopted measures to promote the longterm competitiveness of industries.
• Many sought to identify & produce
competitively new products, & exploit new
markets.
• Used proactive industrial, agricultural and
services policies
.
Improving multilateral & regional
arrangements
Providing greater market access & entry for
exports of developing countries:
•
•
•
•
•
•
Addressing protectionism
Dealing with NTBs
Completing the DDA
Making trade preferences meaningful
Reassessing the MTS linked to MDGs
Ensuring coherence between
multilateralism & regionalism
Enhancing South-South trade
• A vibrant avenue for future trade growth of
developing countries.
• The GSTP is an important tool.
• Financial & monetary cooperation is being
strengthened. Eg. Chiang Mai Initiative( ASEAN)
Impact of crisis mitigation measures
• Measures have helped contain the crisis and its
contagion, & propelled a quick rebound even
though the recovery remains fragile.
• Continuing with recovery measures is thus
important, but pay attention to debt burden.
• Stimulus packages may distort competitive
conditions & influence decision on location of
investment & production.
Sustained and Sustainable growth and
development
Sources of ‘green’ growth production, trade &
development:
a)
b)
c)
Enhancing energy efficiency
Mainstreaming sustainable agriculture,
including organic agriculture
Harnessing the use of RETs, and
d)
Developing sustainable services sectors
Conclusions
1.
Need for more equitable and economically, socially &
environmentally sustainable growth, trade &
development models, with focus on employment
creation.
2.
Ensuring that the fragile recovery is sustained.
3.
Striking a balance between external demand & domestic
demand.
4.
States should be enabled to proactively support building
of capabilities for strengthening and diversifying
production, & trading competitively.
5.
Multilateralism & global coherence & coherence
between the trading, financing & monetary systems
constitute architectural enables ingredients.
Thank You