Trade negotiations & Miscellaneous Flashcards
Trade Negotiations: Introduction
Theoretically: Determined by consensus of all members.
- No weighted system
Reality: Green room negotiations or Mini-Ministerial
-Process of informal negotiations between small group of countries.
Trade Negotiations: Doha Round
Doha development round:
- Development word is just to pacify the developing countries.
Broad aims: Liberalizing
- International trade for agriculture, trade and industry.
Developed countries demands:
-Want developing countries to open up the domestic market for manufactured goods. NAMA (Non-Agricultural Market Access)
-Liberalization of service sector in the fields of education, legal advice and insurance
Trade Negotiations: Summits
July 2008 Package:
To conclude the Doha Development Agenda
Developed countries to end export subsidies by 2013
- Green Box Revisions and tighter monitoring
- Blue Box: Cap on subsidies provided
- Negotiate modalities of Special safeguard mechanism NAMA: Different tariff cuts were specified for developed and developing natons
9th MS Bali 2013:
Interim peace clause was agreed upon and permanent solution was to be found by 2017
Developing countries will have right to recourse to Special safeguard mechanism
10th MS Nairobi 2015:
Multiple agreements
No substantial outcome
11th MS Buenos Aires 2017:
Put off agreement on a draft text on subsidy prohibitions relating to illegal, unreported and unregulated (IUU) fishing and overfished stocks, among other decisions.
To “continue to engage constructively in the fisheries subsidies negotiations”
12th MS Kazakhastan 2020:
To be held
Most favored nation (MFN)
What:
It only means normal trading relation: neither positive nor negative discrimination
Covers not only tariffs but other matters like quotas and other related foreign trade.
Benefits:
No Distortions
A country can import from the most efficient country
Poor countries will have normal trading relations with other countries
Custom rule simplification
No lobbying by domestic companies
Exceptions:
Generalized system of preferences
Trade agreements like FTA, PTA eto
Article XXIV: India and Pakistan
G-20
Group of developing countries
Demands:
- Offensive:
i) Want US to slash its agricultural export and domestic subsidies
ii) EU to reduce tariffs on agricultural goods - Defensive:
i) Special products
ii) Special safeguard mechanism
Special products
Agriculture products of particular importance to farming communities in developing countries for reasons of food security, rural development etc.
Non agriculture market access (NAMA)
It refers to all those products that are not covered by the AoA or GATS constituting bulk of world’s merchandise exports.
Doha called for reduction in tariff and non-tariff barriers on these products by May 2003 but this deadline was missed.
Specific Safeguard Mechanism (SSM)
Was introduced where the developing countries will have the option of temporarily imposing higher tariff rate on the import of an agriculture product, if there is either a surge In import volume or a sharp dip in its import price.
But exact mechanism of its implementation was not specified and India and US fought over it.
Generalized System of Preference (GSP)
It is the exception to the non-discriminating rule of WTO.
It is used for preferential access to LDCs. (least Developed Countries)
Imports from poor countries are allowed at lower/zero tariffs
Anti Dumping Agreement
Dumping:
If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product.
Provisions:
- The agreement allows governments to act against dumping where there is genuine (“material”) injury to the competing domestic industry (dumping > 2% of price, volume > 3% of total imports or 7% of combined imports of complaining countries).
- In order to do that the government has to be able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price), and show that the dumping is causing injury or threatening to do so.
Dumping vs Countervailing Duty (CVD):
Dumping is an action by a company. CVD is applied against subsidies provided by the exporting government - domestic or export.
Agreement on Subsidies and Countervailing Measures (SCM)
It defines two basic categories of subsidies- “prohibited” and “actionable
Prohibited Subsidies:
- The former prohibits all local content subsidies which favor the use of domestic over imported goods.
- SCM provides for the creation of a rapid (three month) dispute settlement mechanism for complaints regarding prohibited subsidies.
- Two categories of subsidies are prohibited the SCM Agreement: 1) Export Subsidies 2) Local Content Susidies
1) Export Subsidies: The first category consists of subsidies contingent, in law or in fact, whether wholly or as one of several conditions, on export performance.
2) Local Content Susidies: The second category consists of subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods.
Actionable Susidies:
- The latter, though not prohibited, can be challenged either through multilateral dispute settlement or through countervailing duties if the imports cause “serious prejudice to the interests of another member”.
- But a subsidy is “actionable” under the context of SCM only if it is “specific” to an enterprise or industry or group of enterprises or industries.
- Alternatively, a subsidy which is “widely available within an economy” is excluded from SCM.
- This means that “subsidies” are restricted to grants, loans, equity infusions, loan guarantees, fiscal incentives, the provision of goods or services, and the purchase of goods.
- They do not include any indirect and trade-distorting structural subsidy by way of “revenues forgone”– lower (than cost recovery) utility tariffs, low land prices, repressed labor market, artificially cheap capital and so on-which are universal in nature.
Information Technology Agreement
It is a plurilateral agreement signed in 1996 among 28 countries which eliminated duties on chips, semi-conductors, computers, IT products etc. Since then such trade has grown to $4 trillion now.
US is seeking to extend this agreement to cover more products which have come into existence since 1996.
The membership includes 73 countries now including India and is expected to be beneficial.
Singapore Issues (1996)
It revolved around 4 Singapore issues on which the developed countries wanted to make negotiations.
1) Investment: It is an extension of TRIMS. Foreign investors should be able to enter member countries with minimal restrictions. It is based on extension of the principle of national treatment.
2) Competition policy: It should encourage competition and not discriminate against foreign companies. It is based on the principle of national treatment.
3) Government procurement: It is based on extension of the principle of national treatment.
4) Trade facilitation. The rules and procedures related to trade facilitation should be similar across all member countries,
