WTO: PROPOSALS TABLED ON FOREST TARIFF, NON-TARIFF BARRIERS TO TRADE

Draft negotiating text on accelerated liberalisation of tariffs on forest products and disciplining forest-related non-tariff barriers (NTBs) to trade were presented during the WTO Negotiating Group on Non-agricultural Market Access (NAMA) the week of 17 April. During an informal meeting organised by the proponents of accelerated liberalisation of forest trade during NAMA week, Canada presented a proposal which sketches out the parameters of a so-called "sectoral initiative" on forests. In the proposal, Canada and other proponents of the initiative, which currently includes Hong Kong, New Zealand, Thailand and the US, would reduce their tariffs on imports of forest products more than that required by the general NAMA formula. On NTBs, a Japanese proposal presented during the formal negotiating session calling for increased transparency in export restrictions could affect developing countries' ability to put in place log export bans or quotas to prevent unsustainable and illegal logging or to promote value-added processing of natural resources.

Sectoral initiatives: forest liberalisation text tabled

During the NAMA week of negotiations, Canada presented a first draft of text for a sectoral initiative on accelerated tariff liberalisation in the forest sector. The draft, which was supported by their co-sponsors Hong Kong, New Zealand, Thailand and the US, outlines how those signing onto the agreement would reduce their tariffs on specified products more than that required by the overall NAMA formula for tariff reductions (see Bridges Trade BioRes, 29 April 2005). It proposes to cover products in five forest categories, including wood; plywood; wood pulp; paper and paperboard; books and newspapers; and wooden furniture. Under the tariff reduction suggested in the submission, developed countries signing on could reduce their tariffs to zero and developing countries could reduce to an as-yet-to-be determined "x" tariff rate.

However, the paper leaves open by what date countries would have to reduce tariffs and how developing countries could have better, "special and differential" (S&D) treatment. S&D treatment options include possible exemption from the initiatives for some sensitive products for particular countries; credits for participation in the initiative in the overall NAMA formula; and longer implementation periods or different implementation patterns for developing countries.

Notwithstanding the high participation at the informal meeting, the proponents encouraged more countries to commit to the initiative in order to reach the "critical mass" of participating countries, which should represent around 90 percent of world trade in forest products (see Bridges Trade BioRes, 17 March 2006). The current proponents cover an estimated 37 percent of the trade. For participation to even approach the 90 percent target, the EC, Japan and China, all of whom are major importers and exporters of forest products, would have to join the initiative. However, Japan has in the past said that it is not interested in getting involved because accelerated liberalisation of trade in forest products could have an adverse impact on sustainable use of forests (TN/MA/W/15/Add.1).

While most developing countries have been reluctant to formally get involved in the process, Thailand and others have been sympathetic because participation could enhance developing countries' abilities to attract foreign direct investment, reduce the cost of inputs to value-added production, and could increase south-south trade. The parameters of the formula, and the flexibilities for developing countries, could also strongly impact on South-South trade as well as the pervasive use of tariff peaks (high tariffs on sensitive products) and tariff escalation (when tariffs are low for raw or unfinished materials, somewhat higher for semi-finished products and highest for finished products) in forest trade.

Negotiations are continuing on other sectoral initiatives, including on fish products (see Bridges Trade BioRes, 17 February 2006). The possibility of creating initiatives that allow lower tariff reductions in sensitive sectors has been proposed by Turkey (in the context of textiles trade) and supported by several developing countries. However, in a submission to the NAMA group on 20 April, Singapore, supported by the US and Canada, objected to this proposal, arguing that sectoral initiatives should only go "over and above" the tariff cuts required by the NAMA formula.

Export restrictions, taxes to be restrained: implications for natural resources?

The Japanese proposal (TN/MA/W/15/Add.4) calls for the creation of a new agreement on enhanced transparency in export restrictions, listing wood and minerals as two sectors where the need for related rules has been raised. Several developing countries questioned Japan's motivation behind the proposal, fearing that the proposed rules might try to limit countries' flexibilities to use export restrictions. They argued that export bans, restrictions and taxes are legitimate policy tools to, for example, prevent illegal logging, promote sustainable forest management and encourage value-added processing of fish and forest products. One observer speculated that Japan might in fact be attempting to reduce the prices of primary inputs to production, including natural resource products such as minerals, fish and forest products, by making it easier for developing countries to export them as raw materials.

A proposal from the EC addresses the related issue of export taxes -- which are also used to prevent or control the export of natural resource products in some countries -- and presented a draft agreement on the issue that calls on all WTO Members to eliminate their export taxes, "as well as internal taxes and other charges" on products that are going to be exported.

Background

WTO Members continue to struggle with how the WTO should deal with NTBs. Many Members have notified policies, regulations or other measures to the NAMA Negotiating Group that they consider to constitute NTBs. Several of these notifications concern measures adopted to promote environmental, social and developmental public policy objectives. While WTO Members note that many of the NTBs that have been notified to the Group are legitimate public policy measures, it is still unclear how they will be examined to determine whether they are legitimate, what criteria could be used in this process and what the WTO should do to address the measures -- which in some cases are national policies or legislation -- if they are found to be "illegitimate". Members are also unclear on whether they should address all these notified measures horizontally, that is, by the type of measure, or vertically, in terms of the affected sector.

The Japanese and EC proposals are available at http://docsonline.wto.org

ICTSD Reporting; "EU, Japan propose new WTO treaties to prevent export taxes," TWN, 24 April 2006.