Cablegate: Meeting of the Wto Committee On Trade and Development,

R 061635Z NOV 08



E.O. 12958: N/A
OCTOBER 16, 2008

1. SUMMARY: WTO Members held a meeting of the Committee on Trade
and Development (CTD) on October 16, 2008, followed immediately by a
Dedicated Session of the CTD on Regional Trade Agreements (RTAs).
During the regular CTD meeting, the EC and Norway were again
questioned on the implementation of their respective GSP programs by
Brazil, India and Pakistan. A presentation was provided by UNCTAD
concerning the focus of its work on commodities. Discussion of a
proposed transparency mechanism for preferential trade agreements
was reviewed in light of the recent circulation of the proposal by
the proponents as a JOB document. The notification of the Gulf
Cooperation Council Customs Union as an Enabling Clause Agreement
was discussed, with the United States and the EC pressing for this
agreement to be notified under Article XXIV of GATT 1994. In a
dedicated session of the CTD, the United States and the EC posed
follow-up questions to Egypt and Turkey on their Free Trade
Agreement notified under the RTA Transparency Mechanism. END


2. Pakistan, Brazil and India repeated their concerns that the EC
has still not adequately answered their questions, and noted
disappointment that new questions posed at the July CTD were yet to
be answered by the EC. Brazil noted that they were still waiting to
review the EC's 2007 data, and once received, they would review the
data to formulate a bilateral request. The EC responded that they
had entered the last quarter of the current 3 year GSP scheme, and
thought that all follow-up concerns had been resolved. The EC
distributed a new fact sheet as a room document at the meeting which
provided internet links to information on its GSP scheme. The EC
added a new element related to good governance to their "GSP Plus
Arrangement", and noted that interested countries needed to apply
for this new scheme. The Chair noted that he would continue
informal consultations and that the issue will stay on the agenda
for the next meeting.


3. Brazil again questioned Norway's new criteria for designating
beneficiary countries for its GSP program, noting that
differentiation should be carefully considered in light of the
Enabling Clause. India noted that there are possible systemic
issues with Norway's GSP scheme, and that they want to see a process
that is objective and does not lead to differentiation. Pakistan
also noted systemic concerns, and asked for further clarification on
why the UN population criterion is a necessary criterion for
beneficiary eligibility. Norway provided additional responses to
Brazil's follow-on questions in a room document (later circulated in
WT/COMTD/65/Add.3). Brazil and India noted that they would review
the new replies and engage with Norway bilaterally and may also want
to review the issue further at the next meeting.


4. Samuel Gayi of UNCTAD's Special Unit on Commodities provided a
presentation on UNCATD's work program on commodities (in accordance
with the Accra Accord). His presentation noted that UNCTAD's
commodities work would be carried out under three pillars: Research
and Analysis, Intergovernmental Process, and Technical Cooperation
(and in coordination with other international and regional actors,
and relevant international commodity bodies). In these three areas,
UNCTAD would continue to play a key role in addressing the trade and
development problems associated with the commodity economy in all
commodity sectors - agriculture, forestry, fisheries, metals and
minerals and oil and gas. UNCTAD would also monitor developments and
challenges in commodity markets and address links between
international commodity trade and national development, particularly
with regard to poverty reduction. UNCTAD would also enhance its
efforts to help commodity-dependent developing countries to harness
development gains from the current commodity boom; deal with trade
and development problems related to commodity dependence. He also
noted the establishment of a new Special Unit on Commodities (SUC)
(i.e., former Commodities Branch of the Division on Trade in Goods
and Services), and that the SUC is under the direct responsibility
of the Secretary General.


5. The Chair noted his continued consultations on transparency in
PTAs with the proponents and interested Members and that the current
text of the proposal was circulated (on 10/15/08) in document
JOB(08)/103. He recommended an open-ended informal dedicated CTD
meeting on the draft proposal. Brazil made a brief intervention
explaining the history of the proposal and the proponent's support
for transparency. Supporting remarks were made by the United
States, India and China as proponents of the current proposal.

6. The EC, Japan and Canada have participated in informal
consultations with the proponents. At the CTD meeting, the EC noted
its support for transparency in both PTAs and RTAs and that this new
mechanism would be a good compliment to the existing RTA
Transparency Mechanism (TM). She noted the need to discuss the form
of the decision that will implement the PTA TM. [Note: the EC has
noted strong opposition to the PTA TM being implemented on a
permanent basis as long as the RTA TM is still operating on a
provisional basis. End Note.] The EC also expressed interest in
reviewing a mock-up of the factual presentation that will be
prepared by the WTO Secretariat under the PTA TM. Japan noted the
importance of transparency in PTAs and that it looked forward to
continued discussions under the Chair's guidance. Canada thanked
the proponents for the informal consultations, and noted its support
for the proposal.

7. Other countries making interventions included Barbados, Chile,
Costa Rica, El Salvador, Mexico, Nigeria and Pakistan. Barbados
(possibly on the urging of the EC) noted interest in the PTA TM
being implemented only on a provisional basis. El Salvador noted
interest in the scope of the proposal discussed in Section A of the
JOB document, and an interest in seeing a mock-up of the proposed
factual presentation. Others noted general support for the informal
discussions the Chair proposed.

8. Brazil made additional remarks noting appreciation for Member
expressions of support. He noted that a mock-up of the Factual
Presentation was under development and urged Members to concentrate
on technical aspects in future discussions. He recalled that the
General Council decision did not foresee provisional implementation
of the current proposal, and noted the different nature of PTAs and
RTAs and that the proponents are taking into account the limited
experience of the RTA TM with respect to timeframes, for example.
The EC also made additional remarks to note that the mandate from
the General Council does not mention a mechanism, it only foresees
transparency. Arrangements for implementation are currently
contained in the JOB document, and that needs to be further
considered in future discussions.

9. The Chair encouraged Members to differentiate between technical
aspects and political aspects of the proposal as discussions moved
forward. He closed by noting that he needs to report to the General
Council by December and would like to report success by that time.
It was agreed that the proposal will be discussed again at the next


10. This is a standing agenda item. Lesotho intervened on behalf
of the LDC Group asking those developing countries which have
implemented DFQF programs to provide information on those programs
in a transparent manner. He noted the LDC's hope that rules of
origin will be simple and transparent. He also encouraged developed
countries to fully implement their Hong Kong obligations on DFQF.


11. The EC and the United States reiterated their concern that the
GCC Agreement, which is a customs union, be notified under Article
XXIV of GATT 1994 vice the Enabling Clause. The EC noted that there
is a sound legal justification that should drive a Member's decision
on how to notify an RTA and that this decision is not a simple
preference. She noted that Paragraph 2(c) of the Enabling Clause
does not authorize the development of customs unions, as customs
unions cover non-tariff barriers (NTBs). As Members have not
designated any NTBs under Paragraph 2(c), the Enabling Clause is not
the appropriate mechanism for notification of a customs union. She
reiterated that the GCC countries should notify this agreement under
Article XXIV of GATT 1994 and that this issue should continue to be
discussed in the Committee on Regional Trade Agreements (CRTA). The
United States highlighted that it appeared that some GCC Members may
be exceeding their WTO tariff bindings by applying the GCC common
external tariff. This would be inconsistent with a Member's
obligations under GATT Article II, unless otherwise permitted under
the GATT 1994. It would appear, therefore, that if GCC Members seek
to apply tariffs beyond their bindings, the GCC Agreement would need
to be an FTA or customs union consistent with Article XXIV, and,
accordingly, would need to be promptly notified in accordance with
paragraph 7(a) of that Article. The United States requested that
the issue be added to the CRTA agenda for its November meeting.

12. The representative of Saudi Arabia noted that they would need
to review the comments made but that it still believed that the GCC
has the right to notify under the Enabling Clause, and that the
issue should not be addressed at the CRTA meeting. Kuwait supported
the intervention by Saudi Arabia and noted that the issue should be
closed. Brazil noted that the issue raises systemic concerns, and
that the issue should be addressed further in writing. Brazil also
noted past precedence for customs unions being notified under the
Enabling Clause.

13. The Chair concluded that the CRTA will decide if the issue is
discussed at its November meeting, and that the CTD will need to
revert back to the issue at the next CTD meeting.


14. This meeting was the first dedicated session of the CTD to
examine an RTA under the RTA Transparency Mechanism (document
WT/L/671). Turkey and Egypt gave introductory remarks, noting their
appreciation for the Secretariat preparing the Factual Presentation
of their FTA and thanking the Members for their questions. They
also made general statements in support of the multilateral trading
system and that FTAs complement the multilateral process and can
facilitate further liberalization particularly among developing
countries. They provided general details on the agreement itself
(as outlined in the Factual Presentation) and noted that the FTA has
stimulated investment and created opportunities for local resources
to remain competitive. The United States and the EC posed follow-up
questions on this FTA.

15. The United States requested additional information be provided
on Turkey and Egypt's written reply to question 13 in
WT/COMTD/RTA/1/2. The United States asked that given Article 1.5 of
the TBT Agreement specifically excludes from the scope of the TBT
Agreement provisions any "SPS measure" as defined in Annex A of the
SPS Agreement, how are Parties expected to ensure, under Article 11
of the RTA, that their SPS measures are consistent with the rules
and procedures of the TBT Agreement? Egypt and Turkey replied that
the SPS Agreement is not sufficient in scope, thus believe they also
need to include reference to the TBT Agreement applying under this
article of the RTA.

16. The United States requested additional information be provided
on Turkey and Egypt's written reply to question 16 in
WT/COMTD/RTA/1/2. The United States requested further elaboration
on how this agreement covers substantially all trade without
agriculture being covered and how the use of diagonal cumulation
meets Article XXIV requirements? Egypt and Turkey replied that the
Parties don't believe there is any threshold for "substantially all
trade", and thus believe that the overall percentage of trade
liberalization covered by the agreement, even with limited
agriculture coverage, is not very low. Also, article 10.3 of the
RTA foresees further bilateral liberalization taking place in the
future. Diagonal cumulation is allowed for under the RTA and is
compatible with the EU model, meaning the protocol of rules of
origin is compatible with the EU system. [Note: Egypt and Turkey
explained after the meeting that all of the countries in the
Euro-Med region that have FTAs among themselves and which also have
FTAs with the EU use this form of diagonal cumulation. Egypt and
Turkey are not the only countries engaged in this practice in the
Mediterranean region. End Note.]

17. The EC noted that on several accounts, the coverage of this RTA
goes beyond the simple reduction of tariffs and includes the
coverage of NTBs. As such, it appears this agreement would have
warranted a notification under Article XXIV. Egypt and Turkey
replied that the "development dimension" of this RTA was taken into
account when deciding how to notify it. Nothing in Article XXIV
prohibits notification under the Enabling Clause. The Parties
believe it is a privilege provided to developing countries to notify
their RTAs under the Enabling Clause.

18. The Chair requested that Members provide any additional written
questions by 23 October 2008 [Note: The United States submitted
written questions. End Note.] Replies from Egypt and Turkey were to
be submitted by 6 November 2008.


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