Brexit Extension to Oct Discussed in WTO

After the European Union and the United Kingdom agreed to give themselves more time to finalize the UK’s departure from the EU, WTO members at the 11-12 April meeting of the Goods Council called on the two parties to use the extension to resolve concerns over planned adjustments to the EU’s tariff rate quotas (TRQs) for agricultural products which could affect market access. The Council also took up other trade concerns, compliance with notification obligations, and elected a new chair for 2019.

Twenty-two WTO members once again voiced their position against the proposal of the EU and the UK to split up existing TRQs, which are prized by traders due to the lower tariffs these confer to goods that fall within the quotas. These members were of the view that apportioning the existing TRQs would reduce the level and quality of access they currently have to the EU and UK markets and change the balance of concessions between WTO members. They reiterated statements raised in the November Council meeting that the proposed TRQ adjustments would in some cases lead to smaller volumes of exports not commercially viable for traders. They also underlined that without clarity on what the UK's access to the EU market will be after Brexit, it may be the case that members will have to compete against the UK. Members once again drew attention to WTO principles which discourage members from leaving trading partners worse off and that require appropriate compensation to be negotiated.

The EU and the UK thus must make full use of the Brexit extension until the end of October to negotiate TRQ adjustments that do not prejudice WTO members' current market access, the Council was told by the 22 members raising the issue. In response, the EU said they shared members' concerns over the uncertainty surrounding the UK's departure. The EU said it followed WTO procedures for the TRQ negotiations and will continue to hold talks in good faith.

Transparency proposal

The Goods Council discussed an evolving transparency proposal aimed at improving members' compliance with their obligation to submit information on subsidies, trade barriers and other policies. Canada and New Zealand have signed on as the latest co-sponsors of the revised proposal, joining Argentina, Australia, Costa Rica, the European Union, Japan, Chinese Taipei and the United States. Over 30 members took the floor during discussions of the proposal, highlighting the importance of transparency as a fundamental pillar of the WTO and signalling continued engagement on the matter.

The US introduced the latest revisions, noting that the document reflects suggestions members have made in bilateral talks and three past meetings of the Council. The proposal remains important as WTO members' compliance with notification obligations has been inadequate, thus undermining the proper implementation of WTO agreements and making it hard to engage in negotiations, the US said. Japan said that, as this year's G20 Summit host, it was doing its best to get an outcome on the proposal.

A number of members, however, remained concerned about various aspects of the proposal even as they lauded some of the revisions. A punitive approach foreseen in the proposal could lead to a decrease in the quality of the notifications if members resort to incomplete or unclear notifications to meet transparency obligations. A number of members also reiterated that administrative measures would further marginalize developing and least-developed country (LDC) members that find notification requirements too burdensome, noting that special and differential treatment should be granted to these members. Others questioned why the proposal was only limited to agreements related to goods and did not cover services and intellectual property.

Co-sponsors of the proposal said they stand ready to engage in further discussions to move the matter forward.

Palm oil for biofuels

Malaysia and Colombia, supported by Costa Rica, Indonesia and Thailand, reiterated their complaints against EU Directive 2018/2001, which they said was discriminatory against biofuels and bio-liquids that use palm oil. The directive concerns the promotion of the use of energy from renewable sources and entered into force in December 2018. Members were of the view the directive was arbitrary, lacked scientific basis, and failed to give special consideration to developing members that had already invested in sustainable methods of production.

The EU said the directive did not ban any specific biofuel, but rather established rules on how to calculate the achievement of the EU renewable energy targets, including in the transport sector. The EU noted that its market remained open to palm oil and that imports of this product had increased in volume in the previous year.

Indica rice

Cambodia, an LDC, called on the EU to restore duty-free treatment to their exports of Indica rice. The EU had reinstated customs duties of 175 euros per tonne on the country's rice shipments as of 18 January 2019 amid an import surge. Cambodia was of the view the measure did not meet WTO rules for safeguards and that it will negatively impact the country's growth and development. It further said the measure undermines a WTO rule which requires that duty preferences be granted in a non-discriminatory manner. Myanmar, Indonesia, Thailand, China, Lao PDR and the Philippines voiced their support for Cambodia.

The EU said the duty-free treatment had previously been granted unilaterally under the Everything But Arms scheme, an EU Generalized System of Preferences (GSP, which includes provisions allowing the use of measures to safeguard EU producers from import surges). The EU said the measure is temporary and will be progressively reduced over three years. There is no breach of WTO rules, the EU said.

Cobalt and titanium oxide

Six members (the Russian Federation, Australia, the US, Canada, Mexico and the Philippines) raised issue with an EU regulation on the classification, labelling and packaging of chemicals, which classified cobalt and titanium dioxide as hazardous substances. This could have an impact on exports of paint, toys, plastics, food, cosmetics, prostheses and other medical devices, stainless steel and nickel to the EU, the members said. The Russian Federation, which requested that the issue be included in the agenda of the meeting, questioned the EU on the scientific basis, trade restrictiveness and transparency of the measure.

According to the EU, the regulation is based on the opinion of the European Chemicals Agency and all pertinent information is available publicly.

Plastic waste and other scrap materials

The Dominican Republic expressed concern over Jamaica's ban on single-use plastic products and Trinidad and Tobago's proposed restrictions on the marketing and importation of polystyrene plastic. The Dominican Republic questioned Jamaica on the discretion given to national authorities to regulate the domestic industry. It also asked Trinidad and Tobago whether both domestic and imported products would be treated similarly under the same measure. The US also expressed concern over the two measures while Honduras and Guatemala likewise raised issue against Trinidad and Tobago's draft policy. In response, Jamaica said it will relay the matter to its capital while Trinidad and Tobago said it will notify the measure once details are finalized.

In addition, seven members (Australia, Canada, Dominican Republic, EU, Korea, New Zealand and the US) reiterated their concern over China's restrictions on imported scrap materials destined for recycling. Members once again said not enough time was given for industries to make adjustments and that this has forced enterprises to dispose of otherwise valuable, recyclable commodities. China responded that it has suffered from huge amounts of solid waste exported to its country and that it hoped exporting countries could instead shoulder their international responsibilities to manage their own waste.

Quotas on pulses

Six WTO members stepped up their complaints against India's quantitative restrictions on imported pulses such as lentils, peas and mung beans after India on 29 March decided to extend the measure for another year. Australia, Russia, the US, the EU, Canada and Ukraine questioned the measure's consistency with WTO rules.

India said that the measure aims to alleviate the distress imports cause to Indian farmers and also to safeguard food and livelihood security. The procedure for the allocation of the import quotas will be published shortly, India said.

New Chair

The Goods Council elected Ambassador José Luis Cancela Gomez (Uruguay) as its new chair, following a 28 February meeting of the WTO General Council where the consensus on new chairpersons for WTO bodies was noted.

As for the chairs and vice chairs of the Goods Council's sub-committees, consultations will continue with members to achieve consensus on the slate of names.

Other issues

Members continued discussions on how to improve the functioning of the Goods Council amid concerns previously expressed over the lack of time members have to prepare responses to trade concerns raised at meetings, the repetition of statements at meetings of the Council and other WTO bodies, and different expectations from members on how a concern would be considered at the meeting. The new chair will continue consultations with members on this matter.

On the work programme on electronic commerce, Chad on behalf of the LDC group indicated that they would hold an internal workshop on how LDCs can keep up with changes brought about by e-commerce. They aim to better understand the opportunities and challenges posed by e-commerce, Chad said.

Jordan, meanwhile, announced the termination of its export subsidy programme which has been on the agenda of the Council for four years. It has now withdrawn its standing request to discuss at the Council a waiver to extend this subsidy programme.

Members also took up other issues and trade concerns on the 34-item meeting agenda, including those raised in previous meetings. The full agenda of the meeting is available here.