WTO Round Up

4 November 2011

Road to Ministerial appears murky as WTO members explore options

Delegations are pushing to finalise items for inclusion on the ministerial agenda before 2 November deadline. Meanwhile, members are also exploring the option of an "early harvest" for some Doha items in an effort to move past the current negotiating impasse.

WTO Director-General Pascal Lamy, speaking at the Trade Negotiations Committee noted a convergence among members around advancing negotiations "in areas where progress can be achieved." "In other words, I sense a readiness to operationalise paragraph 47 of the Doha mandate, it being understood that this would be a step towards delivering on the entire Doha agenda," Lamy explained. Paragraph 47 refers to the WTO concept of single undertaking, where "nothing is agreed until everything is agreed." However, the paragraph allows for agreements reached at an early stage to be implemented either provisionally or definitively - in other words, an "early harvest." The approach the Director-General discussed would therefore involve moving away from the single undertaking, finding agreement on smaller issues for the time being. Should agreement eventually be reached on all Doha issues, the areas initially agreed upon would be reviewed in the context of the entire Doha package for balance.

The "small steps" suggestion and current state of play drew responses from several members. Some members, including Kenya on behalf of the African Group, marked their disappointment with the current impasse in Doha talks. Australia, speaking on its own behalf, cautioned that the worst outcome is more of the same.

Along the lines of the paragraph 47 suggestion, China urged that "priority should be given to addressing the concerns of developing members" and called upon ministers, developed and developing alike, to put in a concerted effort to "continue to work out something tangible for the [least developed countries, or LDCs]," in line with the development mandate of the Round.

While few specifics were suggested on the "small steps" possible on Doha, the EU did make a series of suggestions for moving past the negotiating impasse. Other EU suggestions included the removal of non-tariff barriers and improved functioning of the Dispute Settlement Mechanism. The EU suggested that members examine the possibility of targeted sectoral initiatives, adding that a number of such proposals are already under discussion in the non-agricultural market access (NAMA) negotiating group.

At the formal General Council meeting on 26 October, the EU proposal drew disapproval from some members, particularly India.

The Dominican Republic, speaking for the informal group of developing countries, stated at the General Council meeting that the group is in the process of working through a number of proposals. The group asked the chair for applying flexibility with regards to the 2 November deadline - a request echoed by Bangladesh on behalf of the LDCs. Along with Bangladesh on behalf of the LDC group and Kenya on behalf of African Group, Costa Rica, the EU, Mauritius on behalf of ACP Group, Switzerland, and Thailand all called for ministerial action on trade and development issues at Friday's meeting.

Vanuatu accession approved by General Council

The General Council approved on 26 October the accession package of Vanuatu; the country applied for WTO membership in 1995 and the Working Party concluded negotiations in May 2011. Vanuatu needs to ratify the deal by April 2012; 30 days after ratification, it would officially be the global trade body's 154th member.

Pressure on China currency and subsidies builds in Washington

The US Senate passed a legislation on 11 October that effectively targets China's valuation of its currency. The vote comes just days after US Trade Representative Ron Kirk announced that Washington had submitted information to the WTO detailing over 200 subsidy programmes that the US claims China failed to notify the global trade body. Tuesday's Senate vote on the currency legislation received bipartisan support, passing 63 to 35. The bill was already expected to pass that chamber, despite calls from Republican leadership and Chinese officials over the last couple of weeks against pursuing this move.

Critics of China's currency policy in the US have long argued that China's strict control of the yuan has led to it being undervalued, creating, in effect, an export subsidy that makes Chinese exports cheaper relative to their foreign counterparts and puts US jobs at risk. Opponents of currency legislation, however, argue that taking on China will only lead to these jobs moving to the next low-cost location, such as Bangladesh or Vietnam, rather than bringing the jobs back to the US.

Meanwhile, Chinese officials have continued their vocal opposition to the legislation, with Vice Foreign Minister Cui Tiankai telling reporters that the bill "in no way represents the reality of the economic and trade relationship between China and the United States, and it might have an adverse impact on the development of the relations between the two countries." Since the 2005 peg ended, the yuan has risen 30 percent against the dollar - a rise that critics say is still insufficient.

The over 200 subsidies that Washington claims Beijing has failed to notify the WTO include also measures affecting trade and investment in green technologies. The US has struggled in recent years competing with Chinese competitors in solar and wind power, with three major solar power companies filing for bankruptcy in the month of August.

This information has been summarized from Bridges Weekly

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