WTO Industrial Goods Talks Inch Forward on NTBs

21 July 2010

Negotiators working to reduce barriers to trade in manufactured goods as part of the troubled Doha Round talks took some more baby steps last week towards agreeing on how to address non-tariff measures as part of an eventual WTO accord.

While tariffs used to be the principal obstacle to trade in manufactures, they are rapidly being superseded by countries' differing regulations, health and safety standards, labelling requirements, and other rules that products need to meet in order to be sold in their territory. Existing WTO agreements - on sanitary and phytosanitary measures, technical barriers to trade, and import licensing procedures, to name a few - set out some principles governing such regulations, to ensure that they are not more trade-restricting than strictly necessary.

The Doha mandate for the negotiations on non-agricultural market access (NAMA) calls for reducing "non-tariff barriers" (NTBs), particularly on products of export interest to developing countries.

With WTO members deadlocked on what is now the main difference in the NAMA talks - whether large developing markets like China, Brazil, and India will participate in voluntary initiatives  to slash tariffs deeply across entire industrial sectors - officials have focused on NTBs for much of the past year.

"We have not yet reached consensus on all issues... but we are on the move," said Swiss WTO Ambassador Luzius Wasescha, who chairs the NAMA negotiations, following three days of consultations with various groups.

Although the pace of progress has been glacial, members have been responding to each others' concerns and questions across a range of issues, from a proposed "horizontal mechanism" for quickly mediating trade irritants arising from non-tariff measures, to specific proposals for NTBs confronting trade in auto products, electronics, and chemicals. They also discussed a work programme that some countries are seeking on trade in "remanufactured goods," the definition of which remains contested.

Horizontal mechanism

With varying degrees of enthusiasm, members welcomed an attempt by Colombia, Hong Kong, Singapore, and Thailand to bridge gaps on the creation of an optional-use horizontal mechanism that would seek to mediate NTB-related trade blockages without going to the WTO's expensive and time-consuming formal dispute settlement procedures. Although it is favoured by a wide range of developed and developing countries, the US has been sceptical of the approach, preferring instead to have the issues taken up in relevant WTO non-negotiating "regular" committees.

The four members, which belong to a group of countries that have dubbed themselves the "middle grounders," suggested a hybrid approach that would see NTB-related disagreements go simultaneously to both a horizontal mechanism and the appropriate committee. (JOB/MA/35)

The US did not provide substantive comments on the paper, trade diplomats reported. Several delegations said that they would forward the proposed compromise on to their capitals.

Wasescha called the proposal a constructive effort to find a way forward, and urged the four-country group to continue its work.

Remanufactured goods

Government policies affecting trade in "remanufactured goods" - used products that have been refurbished and provided with a warranty - have been a contentious issue in the talks on NTBs.

Pointing to several obstacles to trade in such products, Japan, the US, and Switzerland have been pushing for a work programme in the Council for Trade in Goods that would involve reviews and seminars on NTBs affecting remanufactured goods.

Several developing countries, including India and Brazil, are wary of relaxing constraints on trade in such goods, fearing that, warranties notwithstanding, they might be less durable than new ones, compromise health and environmental objectives, and undercut domestic producers with second-hand wares soon be destined for the scrap heap.

One negotiator noted to Bridges that part of the problem was that there was no agreed definition of a remanufactured good, either at the WTO or in many countries' national legislation. Furthermore, while in the rest of the negotiations countries first identified specific NTBs and then proposed policies to deal with them, in the case of remanufactured goods, advocates were "putting the cart before the horse."

Wasescha referred to the disagreement about what constituted a remanufactured good, pointing to uncertainty over whether "reused, recycled, refurbished, or reconditioned" ones should qualify.  "We came to come to the conclusion that cosmetic surgery was more refurbishing than remanufacturing," he joked.

He reminded members that the objective was not to define the remanufacturing sector, but rather to address non-tariff measures in the sector. "We have to look at the measures preventing the exchange of such products, and identify whether the obstacles can be addressed with existing tools or whether new ones are necessary," he said.

International standards: how far to go?

WTO members have also been discussing proposals concerning specific industrial sectors, including automotive products, electronics, and chemicals.

One of the big questions has been the role given to international standards. The EU would like WTO members to harmonise their national regulations with international standards. The US has focused more on ensuring transparency about the way regulations are developed and made public - inadequate transparency complicates things for traders.

Members had a fruitful discussion on the proposals, raising questions for further work, Wasescha reported to the committee. But they still needed to reach key decisions about fundamental underlying issues, he added.

"The vision is that we are moving towards a global market - but we are not yet there," he said.

"A global market will need global standards."

Most members agreed that the starting point for the discussions on international standards and trade should be a set of principles established in 2000 by the WTO's Committee on Technical Barriers to Trade, he said. Those principles set out guidelines for the development of international standards, to ensure that standard-setting is transparent and open to the participation of, and input from, developing countries.

"We will need a definition of the level of ambition," Wasescha said. "Do we only focus on the application of the principles enunciated by the TBT committee in 2000? Do we move further, and open a dialogue with standard-setting bodies? Do we fix criteria for standard setting bodies to be recognised by the WTO as those that stick to [these] principles? Do we have a multilateral dialogue on standards, involving trade policy specialists, regulators, and standard-setting bodies?"

He invited presentations from members to explain the various issues at stake in the realm of standard-setting, and said that NTBs would be the focus during the next NAMA week, scheduled for 27-30 September.

ICTSD reporting.

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