Gabon Announces Final Deal Reached with WTO Members on Tariff Changes

Commerce Minister Gabriel Tchango noted that Gabon made adjustments to its tariff lines on imports of non-agricultural goods in order to match the CEMAC common external tariffs. This resulted in 38 per cent of its tariff lines, or 2,131 tariff lines in total, exceeding the maximum (“bound”) rates agreed to by Gabon in its WTO schedule of commitments.

Mr Tchango said the issue had been a point of contention since 1995 and was raised in WTO trade policy reviews of Gabon in 2001, 2007 and 2013. In 2008, Gabon commenced negotiations under Articles XXIV and XXVIII of the General Agreement on Tariffs and Trade (GATT) to compensate WTO members for the adjustment.

The negotiations will result in Gabon raising its bound tariffs on 2,159 lines and reducing bound tariffs on 2,626 lines, leading to an average bound rate of 18.08 per cent on imports of non-agricultural goods, the minister said.

The United States and the European Union both confirmed they reached agreement with Gabon on compensation, with Japan and Morocco welcoming the conclusion of the negotiations.

At the same meeting, Jordan submitted a request to extend the phase-out period for export subsidies provided to domestic producers, namely small- and medium-sized enterprises (SMEs), until the end of 2022. The current WTO arrangement, which will expire at the end of 2015, allows Jordan to provide this kind of export subsidies in the form of partial or total exemption from income tax of profits generated from certain exports.

Jordan’s Secretary-General of the Ministry of Industry, Trade and Supply, Ms Maha Ali, noted the request for extension would be limited to tax exemptions for SMEs, and that the request was justified by the “persisting severe regional and international circumstances” her country was facing, including “unprecedented regional volatility” which has resulted in the closure of more than 1,000 factories and the loss of almost 14,000 jobs since January 2013.

Kuwait, Bahrain, Oman, Qatar, Saudi Arabia, Turkey, Egypt, Tunisia, China and Korea all voiced support for Jordan’s request, given the challenges the country continues to face. Japan, the US, the EU, Australia, New Zealand and Canada said they were sympathetic to Jordan’s plight but would like Jordan to consider other relief measures besides export subsidies, which are one of the most harmful trade-distortive measures and prohibited under WTO rules. These members said it was also unfair to other developing countries that have phased out their export subsidies, and noted the decision by the WTO’s General Council in 2007 to extend the phase-out until the end of 2015 was granted on the condition that the deadline not be extended again beyond that date.

Also at the meeting, the EU voiced concerns about Armenia’s request to modify its WTO commitments in order to harmonize its tariffs with that of partners in the Eurasian Economic Union (EAEU). Armenia signed the treaty of accession to the EAEU on 10 October and will apply the EAEU’s Common Customs Tariff upon domestic ratification of the treaty, most likely in January. The EU said Armenia’s request implies revision of its entire tariff system, with more than 6,500 tariff lines concerned, and asked Armenia to submit a revised request with additional details. Japan said Armenia’s request raised systemic questions, given the extent of the proposed tariff increases and the large number of tariff lines affected. 

Armenia replied that it was ready to enter into negotiations with WTO members on possible compensation under Articles XXIV and XXVIII of the GATT.

The EU, the US and Japan expressed continued concern with what they described as growing protectionism in the Russian Federation, concerns that were also echoed by Korea, Australia, Canada, Ukraine, Chinese Taipei and New Zealand. The EU said the experience of Russia in the WTO to date has been “disappointing” and said the fact that the EU had already initiated four WTO dispute proceedings against Russia pointed to “systemic problems”. The EU also deplored what it said was the frequency of Russia’s resort to protectionist measures, citing, among other things,  Russian subsidies for automobile producers, safeguard measures targeting imported harvesters, and excessive import duties on various goods. Concerns were also expressed regarding different export taxes on oil shipped to the Far East and to the EU. 

The US noted concerns with what it said was Russia’s growing trend to adopt discriminatory policies against imports affecting goods such as pharmaceuticals, medical devices and agricultural products. Japan cited Russia’s decision last April to raise tariffs on imported TVs as going against its commitments in APEC (Asia Pacific Economic Cooperation) and the G-20, while Ukraine cited “serious concerns about systemic noncompliance” with Russia’s WTO commitments, including the lack of scientific justification for sanitary restrictions on imported farm goods.

The Russian Federation replied that most of the interventions made were similar to those in previous Goods Council meetings. Russia said it is always ready for constructive dialogue and encouraged members to engage in bilateral discussions on the problems cited if such problems exist. Russia noted that on 1 September it revised its duties and reduced tariffs on items which had been of concern to some WTO members.  Russia insisted its sanitary restrictions, safeguard on imported harvesters and other measures were in full compliance with its WTO commitments.

The Russian Federation for its part expressed concerns about recent association agreements concluded by the EU, in particular the agreement the EU concluded with Ukraine. Russia said its preliminary review of the agreements show some elements, especially those concerning the free circulation of goods, were in conflict with other free trade agreements and may conflict with WTO legal requirements. Russia said the association agreements were clear evidence of the fragmentation of, and a direct threat to, the multilateral trading system. Russia also hit out at Ukraine’s anti-dumping measure on imports of ammonium nitrate from Russia, saying it had serious concerns about the method for calculating the margin of dumping and adjustments made in regards to gas pricing. The EU responded that its association agreements were fully compatible with WTO rules while Ukraine said it received a number of questions from Russia about the anti-dumping measure and was working hard to provide answers.

Nigeria once again came under scrutiny for its restrictions on imports of fishery products as well as local content requirements in the oil and gas sectors. On the former, Chile, the EU, Iceland, Norway, the US and Uruguay all noted the impact Nigeria’s import licensing requirements and quotas were having in reducing imports from their producers, while on the latter the EU, the US, Australia and Japan all asked Nigeria to respond to longstanding questions about apparent local content requirements. In regards to fisheries, Nigeria said it was still in consultations with domestic stakeholders in formulating a new policy for the sector, while on oil/gas it said its policies provide a good balance between national aspirations and participation by international investors in the sector. Nigeria also noted ongoing inter-ministerial consultations on the questions raised.

A number of WTO members continued to question various restrictions imposed by Indonesia on imports and exports of goods. The EU, the US, Japan, Korea, Canada, Australia, New Zealand and Chinese Taipei cited restrictions on agricultural and horticultural products, mining products and high-tech goods such as cellular phones, among other Things. Japan in particular cited an Indonesian regulation which would impose an obligation on shopping centres and modern retail shops to ensure 80 per cent of products in their outlets are of domestic origin, and the country’s new Mining Law, which prohibits the export of raw materials such as nickel ore. The US, the EU and Japan encouraged new Indonesian President Joko Widodo to improve the business and investment climate in his country but Japan added it would seriously consider taking additional steps under WTO dispute settlement rules to address its concerns about the Mining Law as long as the current situation remains unchanged.

Indonesia replied that some of the import measures were justified by safety, security, health and environmental concerns but that it remained committed to continue working in the WTO and other forums to find a solution to the concerns while respecting its development objectives.

The meeting was chaired by Bulgaria’s ambassador to the WTO, Atanas Atanassov Paparizov, who was appointed to replace Sweden’s former WTO ambassador Joakim Reiter as Goods Council chairman.

Background

The Goods Council is responsible for the workings of the General Agreement on Tariffs and Trade (GATT), the WTO’s main agreement governing trade in goods. The Council oversees the work of the committees, working groups and working parties on sectors of activity covered by the GATT, including agriculture, market access, subsidies, trade remedy measures and others.