WTO Goods Council Takes up US Request for Full Transparency in Reporting WTO, Fines and Punishment for Non-adherence to Rules Proposed

· Full Loaded 37 Items Agenda Proposed, India on the Mat on Mobiles and ICT Tariff

· Sugar Subsidies from India and China Questioned

· Five Countries Launch Attack on Pulses Duty in India

· US Objects to Restrictions on Scrap Import in China

[Click here for full agenda of the meeting]

The WTO Goods Council on 12-13 November discussed a revised proposal on enhancing members’ transparency and strengthening notification requirements. The proposal had been revised to reflect earlier feedback and is now sponsored by seven delegations. The Council also debated the European Union’s proposed changes to its tariff rate quotas in response to Brexit and took up issues related to technology products and other trade concerns.

The transparency proposal is sponsored by the United States, Argentina, Australia, Costa Rica, the European Union, Chinese Taipei and Japan. It is based on a US submission first circulated for consideration at the 11th Ministerial Conference last December.

The United States, introducing the proposal at the recent meeting, said there ought to be consequences for members failing to meet transparency obligations as a lack of notifications on trade-related policies hinders the functioning of the organization. The proposal is an effort to encourage better compliance with notification requirements, reinvigorate the organization and improve the transparency necessary to facilitate work across different negotiating topics, the US said. Other members behind the proposal similarly emphasized the need to enhance transparency and better monitor the implementation of the WTO agreements.

Thirty-seven members took the floor to respond to the proposal, signalling high interest in the issue. All 37 highlighted the importance of transparency as a fundamental pillar of the multilateral trading system. A number of members said the proposal was a good starting point for further discussions and noted the improvements compared to the previous US proposal on the same issue. Other members took issue with the use of punitive measures on members and noted the need to consider capacity constraints of developing and least-developed countries.

The proponents plan to hold discussions with all other interested members to further improve the proposal.

EU's tariff-rate quotas in response to Brexit

Twenty-eight WTO members expressed concern over the European Union's proposal to adjust its tariff rate quotas (TRQ) for agricultural and industrial goods as a consequence of the United Kingdom's withdrawal from the bloc. Members expressed concern that the EU's proposed TRQ changes would reduce the level and quality of access that WTO members currently have to the EU and UK markets.

Members emphasized that the EU is the world's largest agricultural trader and that the EU proposal would have real commercial implications. Members further noted that the future trading relationship between the EU and the UK was not yet clear and Brexit's impact on third parties' market access thus remained uncertain. In addition, the EU's proposed methodology for calculating the proposed change in TRQs came under criticism. Members highlighted WTO principles which discourage members from leaving trading partners worse off and require appropriate compensation to be negotiated.

The EU confirmed that it had submitted revised data in October for its TRQ renegotiation and recognized that members may need more time to revise or update their claims of interest. The EU said it had received 25 claims of compensation from Brexit's TRQ impact from interested trading partners. The TRQ changes will affect more than 365 tariff lines and is the largest one-time modification of commitments ever undertaken at the WTO.

Restrictions on Chinese technology products

China voiced its concern over the inclusion of a certain Chinese memory chip manufacturer in the US "Entity List of Export Controls". This prohibits US companies from exporting products, software and technology necessary for the operation of the Chinese company based on national security considerations, China said.

China was of the view this restriction violates WTO rules and abuses the national security exemption set out in Article XXI of the General Agreement on Tariffs and Trade. China said the US measure is intended to maintain US dominance in the industry.

The United States, in turn, said this was a law enforcement action meant to protect national security and intellectual property. China replied it was not appropriate for the United States to use export restrictions in lieu of a court ruling on intellectual property rights violations.

China further took issue with Australia's decision to ban goods and services of two Chinese companies from 5G telecommunication projects in Australia. China said it opposed protectionism under the disguise of national security. Australia, in response, said it was committed to safeguarding critical national infrastructure in the telecommunications sector. Australia indicated that its approach is not targeted at any particular country or suppliers from a particular country. Furthermore, the restrictions apply equally to Australian-owned and foreign-owned telecommunication carriers, Australia said.

EU geographical indicators for wine

Argentina and the United States requested the European Union to explain the long wait to obtain permission for using certain traditional terms on labels of wine for export to the EU. They asked the EU to process their respective applications expeditiously.

The EU said it would respond to the matter in due time.

Enlargement of the EU to include Croatia

Contrary to the EU's assertion that it had concluded renegotiations of its commitments to the WTO following Croatia's accession to the EU, the Russian Federation countered that the EU had failed to engage in negotiations with Russia, which the EU had earlier recognized as having a principal supplying interest for certain products.

The EU reiterated its view that the indication of a WTO member as a principal supplier did not automatically entitle a member to a right for compensation for market access changes resulting from Croatia's accession to the EU. At previous Council meetings, when negotiations were still ongoing, the EU had also responded by arguing that the Russian Federation's claim of interest had been submitted past the deadline. Russia was of the view, however, that the procedures should not be so rigid.

Other agenda items

The meeting featured 38 agenda items, an unprecedented number which is said to demonstrate members' confidence in WTO bodies. In addition to the five new trade concerns detailed above, the Council heard 18 other specific trade concerns raised at previous meetings.