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WTO Members Conclude Deal on Trade Facilitation, Agriculture, LDC Issues

Tuesday, December 10, 2013
Sandler, Travis & Rosenberg Trade Report

The World Trade Organization concluded Dec. 7 its first-ever multilateral trade liberalization agreement, focusing on trade facilitation, agriculture and developing country issues. The WTO was also given 12 months to prepare a work plan on resolving other Doha Round issues and approved the accession of Yemen as the body’s 160th member.

Trade Facilitation. According to the WTO, the legally binding trade facilitation agreement has the objectives of accelerating customs procedures; making trade easier, faster and cheaper; providing clarity, efficiency and transparency; reducing bureaucracy and corruption; and using technological advances. It also has provisions on goods in transit, an issue particularly of interest to landlocked countries seeking to trade through ports in neighboring countries. There will be assistance for developing and least-developed countries to update their infrastructure, train customs officials and meet other costs associated with implementing the agreement.

The Office of the U.S. Trade Representative states that disciplines addressed in this agreement include the following.

- publication of laws, regulations and procedures
- Internet publication of practical steps to import, export and transit goods
- providing information on new laws and regulations before their implementation
- providing advance rulings
- enhanced rights of appeal
- notifications of detained goods
- disciplines on fees and charges
- penalty disciplines to prevent conflicts of interest
- pre-arrival processing of goods
- use of electronic payment
- use of guarantees to allow rapid release
- promoting risk management
- creating authorized economic operator programs
- procedures for expedited shipments
- quick release of perishable goods
- reduced documents and formalities
- utilizing common customs standards
- promoting the use of the single window
- uniformity in border procedures and documents
- temporary admission of goods
- simplified transit procedures
- customs cooperation

According to USTR, the Organization for Economic Cooperation and Development estimates that this agreement can cut trade costs by nearly 15% for low-income countries and 10% for high-income countries. Other studies estimate that it could have total global economic benefits of between $400 billion and $1 trillion.

It is anticipated that the WTO General Council will adopt the text of the agreement by July 31, 2014. Press sources state that it could enter into force for those countries that accept it in approximately two years.

Agriculture. WTO members agreed to shield public stockholding programs for food security in developing countries so that they will not be challenged legally even if a country is in danger of breaching its domestic support limits for these programs. However, USTR states that this freedom from challenge will only be available to members if their programs do not distort trade and if they meet certain transparency conditions to share the details of their support mechanisms. This interim solution will remain in place until there is a permanent one, which a new work program aims to produce within four years.

On the administration of persistently under-filled tariff-rate quotas, members agreed on a combination of consultation and providing information when TRQs are under-filled. The U.S., Barbados, the Dominican Republic, El Salvador and Guatemala reserve the right not to apply this system after six years.

The WTO states that other agreed-to provisions (1) add some development and land-use programs to the list of general services that are candidates for being allowed without limit because they cause little trade distortion, (b) make a political commitment to reducing export subsidies in agriculture and keeping them low, and (c) improve market access for cotton products from LDCs, with development assistance for production in those countries.

LDCs. A new monitoring mechanism has been established to review the implementation of special and differential treatment provisions, which allow developing countries different timetables or other flexibilities to meet their WTO commitments. This mechanism will provide a regular opportunity for members to engage in practical, evidence-based discussions that will highlight challenges and promote the sharing of best practices with regard to S&D provisions to make sure they are properly encouraging trade and economic growth for developing country partners. 

Members also agreed on four LDC-specific elements. 

- Developed country members pledged to seek to improve their duty-free/quota-free market access for LDCs by the next WTO ministerial conference. USTR states that in doing so it will carefully consider the impact on LDCs that benefit under existing U.S. preference programs. The decision also encourages more advanced developing-country WTO members who are in a position to do so to provide DF/QF market access or improve their existing DF/QF coverage.

- The decision provides guidelines that members may draw on when developing or modifying their rules of origin for non-reciprocal preference programs for LDCs (e.g., the Generalized System of Preferences). The guidelines recommend that preferential rules of origin and the related documentary requirements be as transparent, simple and objective as possible.

- WTO members agreed to operationalize the LDC services waiver, which requires WTO members to give preferential treatment to LDC services and service suppliers.

- Members agreed to enhance transparency and monitoring in relation to trade-related aspects of cotton in the WTO. Members will meet twice each year to study the latest information and discuss the latest developments on market access, domestic support and export subsidies for cotton, particularly from LDCs.

Other WTO Work. In other areas of the WTO’s work aside from the Doha Round negotiations, members agreed to (1) not bring non-violation cases (concerning the technical question of whether there can be legal grounds for complaint about loss of an expected right under the WTO’s intellectual property agreement, even when the agreement has not been violated) to the WTO dispute settlement process, (2) extend their agreement not to charge import duties on electronic commerce, (3) have the WTO Committee on Trade and Development consider proposals on small economies and make recommendations to the General Council, (4) reaffirm their support of the Aid For Trade program, and (5) continue examining the link between trade and transfer of technology and make possible recommendations on steps that might be taken to increase flows of technology to developing countries.

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