NAMA, Services and TRIPS: Possible Outcomes and Implications for Mediterranean Products

1. Tim Josling Stanford University NAMA, Services and TRIPS: Possible Outcomes and Implications for Mediterranean Products

2. Motivation • Put Agricultural talks in the perspective of DDA as a whole • Indicate state of play in non-agric parts of DDA • Suggest significance of outcomes in other areas to Med agric products

3. Non-Agricultural Agenda • NAMA (all but HS01-24 and hides, cotton, but including fish) • Services • TRIPS • Trade Facilitation • Rules • DSU

4. NAMA: overview • Non-agricultural market access talks have been going slowly • Level of ambition depends on agricultural talks (linked in HK Para 24) • Modality of tariff cuts controversial: • EU and US suggested Swiss Formula • Brazil, Argentina and India favored “modified Swiss formula” that maintains relative tariff levels • Issues of unbound tariffs, preferences, sector-specific agreements and NTBs have also proved difficult

5. NAMA: Framework Agreement • Reduce (or as appropriate eliminate) tariffs • Reduce/eliminate tariff peaks, escalation • Lower tariffs “in particular” on products of export interest to developing countries • S&DT and “less-than-full reciprocity” required • Non-linear formula reductions on a line-by-line basis: no a priori exclusions • Sectoral agreements OK if non-dicriminatory

6. NAMA: modalities • Draft of modalities circulated week of June 19 • Tariff cuts using Swiss Formula 10/15 • Reductions from bound rates (or some multiple of MFN rates for unbound tariffs) • Credit for autonomous liberalization since base period (2001) • Conversion to ad-valorem rates and binding those rates (cf. agriculture) • Take into account needs of those with non-reciprocal preferences, and those that rely on tariff revenue for public expenditure

7. NAMA: modalities • Flexibility for developing countries through • (a) smaller cuts for [10] percent of the lines, if this does not exceed [10] percent of the value of imports • (b) Keep unbound and make no cuts for [5] percent of lines, if less than [5] percent of the value of imports • SVEs get extra flexibility • No tariff cuts required by LDCs but they are encouraged to bind tariffs • Notify, categorize and negotiate reductions in NTBs (set up NTB Resolution Mechanism?)

8. NAMA: significance for agriculture • Necessary for political “balance” • EU, US need better access into emerging markets • Japan also keen to get something in return for agricultural concessions • Can exacerbate economic “balance” • Agricultural tariffs will be more distortive • Sets future challenge for agricultural tariffs

9. Services: Overview • Negotiations mandated in UR and incorporated in DDA • Request and Offer approach used to liberalize market access for services • Some discussion of rule changes (e.g: adding a safeguard for service trade) • Some reluctance on behalf of developing countries to engage in further liberalization

10. Services: Framework • Negotiations to center on “offers” of sectors to liberalize • “High quality” offers, progressively “higher levels of liberalization”, no a priori exclusions • Focus on services of export interest to developing countries (e.g. Mode 4) • Conclude negotiations on rule-making in services • Offer targeted assistance to developing countries

11. Services: Progress so far • Few significant offers of service liberalization • Collective requests (e.g. legal services) tried • End-July date depends on Agriculture, NAMA progress • Little progress on Mode 4 (labor movement) • Some progress on disciplines on domestic service regulations

12. Services: significance for agriculture • Political balance: • EU needs improved market access for services to offset concessions in agriculture • India and Brazil under pressure to open up service markets • Economic impact on labor adjustment • Significance for global food service firms • Med products influenced by labor movement

13. TRIPS discussions • TRIPS Council responsible for negotiation on some mandated issues • Public Access to Medicines • Geographical Indications (GIs) • Negotiations ongoing (in TRIPS) on multilateral list for wines and spirits • Discussions continuing about extension of coverage of “additional” protection beyond wines and spirits

14. TRIPS discussions • List of GIs for wines and spirits was called for in TRIPS • Discussions hung up on question of whether to make the list mandatory or voluntary • EU view is that it be mandatory but with chance to “opt-out” • US view is that list should be a resource that countries could use if they wished in setting their own IP rules • No resolution yet reached

15. TRIPS discussions • Extension of Article 23 protection beyond wines and spirits • Disagreement as to whether it is in the mandate • Disagreement on need for extended protection • Becoming linked with biopiracy and protection of traditional knowledge (“disclosure” of use of biological resources and agreement for benefit-sharing in patent applications) • Possible agreement to make TRIPS Art 29 “supportive” of CBD

16. TRIPS: Significance for agriculture • Links with agricultural talks • EU has insisted on need to get some satisfaction on GIs • “Claw back” list of 41 items (wines, cheeses, meats) that would revert to GIs from generics • Switzerland has indicated tradeoff for tariff cuts (e.g: extension of Article 23 protection for cheese)

17. TRIPS discussions • Links with Med Products? • Register would consolidate bilateral GI deals in wines and spirits • Extension would give added protection to olive oil and other (non-wine) products

18. Trade Facilitation: Framework • Clarify and improve articles on customs procedures • Enhance technical assistance and support of capacity building • Effective cooperation among customs authorities • Match implementation to capacity • Opt-out if support for infrastructure is not forthcoming

19. Trade Facilitation: Progress • Good progress in drafting text • Countries wanting to see evidence of progress in other areas before signing off • Focus on technical assistance (A4T) and on capacity building to look for “win-win” solutions • Deal could come together quickly if the need arose • Agricultural trade could benefit from improved trade facilitation, particularly for perishables

20. Rules: Changes in Articles • Several aspects of the WTO rules have been under discussion in RLG. Some with most application to agriculture are: • Anti-dumping • Industrial subsidies • Fish subsidies • RTAs

21. Rules: Anti-dumping • Controversial issue, sensitive in US • “Friends of Anti-Dumping Negotiations” insisted on negotiations to: • mitigate “excessive effects” of A/D, • prevent A/D measures from becoming permanent, • reduce the cost of cases, • quickly end “unjustifiable” investigations, • Improve and clarify rules on determining dumping and injury • Not much progress reported to date

22. Rules: Industrial Subsidies • Attempt to prohibit inputs (e.g. fuel) from being provided to industries at less than market price • Attempts to prohibit low-cost loans • Restoration of lapsed clause in SCM • Could have direct impact on agriculture, absent another peace clause

23. Rules: Fishery Subsidies • “Friends of Fish” (Brazil and others) argue for total elimination of subsidies for fishing • Developing countries could provide capacity-enhancing subsidies if fisheries were not at risk • Artisanal fisheries could be subsidized even if not sustainable • Small-scale fisheries would be actionable • Japan, Korea prefer red and green subsidy boxes to classify individual subsidies (“bottom-up” approach) as in agriculture

24. Rules:RTAs • Some efforts to clarify Article XXIV • Key Issue: definition of “substantially all trade” – i.e. compulsory inclusion of agriculture in RTAs • Unlikely to get any major clarification in DDA

25. Environment and DDA • Committee on Trade and Environment (CTE-SS) discussing several issues • Definition of environmental goods • Important for NAMA discussions where these goods could get freer (or even duty free) access • Problem with multi-use goods • Issue is whether PPM is relevant to classification • Relationship with MEAs • Could impact agriculture

26. DSU • Discussion of changes in DSU rules have been progressing (in DSU-SS), such as: • Participation of third countries in consultation stage • Rules for withdrawing sanctions in “post-retaliation” phase • Agreement likely as part of the final package

27. Conclusion • Non-agricultural elements of negotiations are lagging • Several useful rule changes and some reduction of policy “water” would be lost if the DDA stalled • Agriculture has held up the talks in other areas • Agriculture would stand to gain indirectly from several of the changes envisaged in the non-agric talks