Position Paper Free trade. Sustainable trade. BALI AND BEYOND: For a Palpable Progress of WTO Negotiations Executive Summary Global challenges In times of immense challenges, economic operators worldwide are waiting impatiently for negotiators to show leadership and demonstrate the ability of the World Trade Organization (WTO) to really deliver. The current trade rule book is not adequate to keep pace with the quickly transforming business realities. Whilst bilateral trade agreements generate important economic advantages, multilateral solutions should be privileged over less ambitious arrangements. The highest level of harmonisation can only be achieved at the WTO level. WTO matters The WTO is important for both shaping and implementing global trade rules. Given today s complexity of supply chains, competing trade agreements and certain protectionist tendencies, the WTO, as the unique trade organisation with almost global coverage, is the ideal forum to meet the challenges. Expectations for Bali Beyond Bali The upcoming 9 th Ministerial Conference (3 to 6 December 2013) in Bali is not doomed to fail but can deliver if negotiators overcome their rigid and narrowed approach. An Agreement on Trade Facilitation remains a key priority for the European distribution sector as it would diminish bureaucratic obstacles at the border and significantly reduce import costs. With regard to the impasse of the Doha Round and the current weakness of the multilateral system to act in response to new business realities, creative pathways should be explored: - Assess the future and possible deliverables of the Doha Round - Simplify the handling of rules of origin - Strengthen the WTO secretariat - Include non-doha issues on the agenda - Promote mutual recognition of standards - Control conformity of free trade agreements with multilateral rules November 2013 About the FTA: The Foreign Trade Association (FTA) is Europe's premier association for trade policy and global supply chains. It brings together over 1,200 retailers, importers, brand companies, and national associations, with a combined turnover of 600 billion Euro.
A) INTRO: Multilateralism is key International trade is going through a profound and accelerated transformation. This is mainly due to changed trade patterns, the globalisation of supply chains, the advance of new technologies, the servicification of our economies, and the call for more sustainability in cross-border commerce. All of these changes are taking place in a by now multi-polar world. A key development was the launch of the Doha Development Agenda (or Round) in 2001, which aimed at reforming the international trading system. However, the Doha Round seems to be doomed to failure since it is not producing significant results and since it does not manage to keep pace with business dynamics and rapidly changing trade patterns. In reaction to this failure, we could observe in recent years the fast rise of bilateral and regional trade agreements. WTO statistics say that the number of preferential trade agreements grew rapidly between 1990 and 2013, from around 70 to today 575 of which around 380 are already in force. 1 The Foreign Trade Association (FTA) is highly supportive to bilateral and regional trade agreements because these help to facilitate commerce and remove obstacles at and behind the border. Whilst we encourage the pragmatic approach of concluding a dynamic bilateral trade policy, the European trade sector insists on the crucial importance of pushing forward the multilateral trade agenda and avoiding a gradual fragmentation of the world trade system. The simple fact is that a successful outcome of WTO negotiations would provide a framework with a generalised set or rules applicable globally. B) TRADE SECTOR: Added-value of the WTO negotiations The multilateral trade rule book must keep pace with current developments such as the increasing volume of world trade and European retailers and wholesalers have a considerable share in these flows and growing trade disputes over technical and nontrade aspects: GLOBAL VALUE CHAINS: GVC and the complexity of international trade patterns require simple trade rules at a global level which are frequently adapted to the most recent developments. Given the reality of international supply chains and production processes, there is no going back to isolated domestic trade policy actions as today s market structures impose multilateral coordination and open borders. SPAGHETTI BOWL EFFECT: The proliferation of trade agreements causes important punctual benefits for economic operators However, the opaque tangle of overlapping and sometimes conflicting economic and legal provisions in the different agreements 1 www.wto.org/english/tratop_e/region_e/region_e.htm FTA Foreign Trade Association 1
is also source of fragmentation of rules and leads to a lack of transparency. In contrast, global solutions generate a higher level of legal and planning certitude. PROTECTIONISM: Recent publications by the WTO and OECD 2 point at the constant rise of measures restricting or potentially restricting international trade. The effect of these protectionist policies is a matter of grave concern: according to the WTO, the combined damage caused by all newly introduced measures corresponds to almost three per cent of global trade in goods. Particularly worrying is that G20 countries, and mainly key developing economies, remain by far the first source of trade impediments. DEVELOPMENT GOALS: Trade is an engine for economic growth and social wellbeing. Developing countries need institutional and practical support to achieve a high level of integration into the world economy. Improving access to global markets for developing countries is one of the key ideas of the Doha Development Agenda With regard to these evolutions, the WTO as the overarching global organisation for trade is best placed to create simple and worldwide applicable rules and to effectively support trade development in poorer countries. More multilateralism in trade and even more binding international rules are needed to protect economic policymakers against themselves and the protectionist temptation. All in all, the conclusion of the Doha Round or more realistically, the conclusion of parts of the package would be the right choice and a tremendous step forward in facilitating international trade and in defeating the current economic instability. C) BALI IN SIGHT: The trade sectors expectations The Ministerial Conference, which takes places every two years, is the highest decisionmaking body of the WTO and brings together top government officials as well as interested stakeholders representing business and civil society. Precisely because expectations are low about the potential outcome of this summit, energetic steps must be taken to achieve an unexpected success. With regard to the up-coming 9 th WTO Ministerial Conference, taking place in Bali (Indonesia) from 3 to 6 December 2013, the European trade sector calls for tangible success and sincere commitments which go beyond pure rhetoric and empty words: TRADE FACILITATION: The harmonisation and simplification of customs procedures through a Trade Facilitation Agreement has been a main priority for the FTA for more than a decade. This Agreement would propose concrete measures to reduce procedures and controls at the border and, thus, reduce costs and safe time when moving goods across national borders. Such a set of rules would deliver benefits to both economic operators and customs authorities and would reduce total trade costs by almost ten per cent. 3 2 www.wto.org/english/news_e/news13_e/igo_17jun13_e.htm www.oecd.org/daf/inv/investment-policy/9thg20report.pdf 3 www.oecd.org/regreform/facilitation/ FTA Foreign Trade Association 2
AGRICULTURAL NEGOTIATIONS: The key to a successful conclusion of Doha is agriculture, while this sector only represents ten per cent of world commerce. Therefore, WTO Members should strive for a deal on at least certain pieces of the agriculture negotiations. NEW ACCESSIONS: WTO members should create a positive environment to push forward the on-going accession talks, notably with Algeria, Ethiopia, Kazakhstan and Serbia. The objective of global coverage for WTO rules should prevail. D) THINK BEYOND BALI: What next? Whilst we encourage substantial progress at the Bali summit, we should not have overly ambitious expectations concerning the stalled Doha Development Round. Therefore, pragmatic and creative solutions must be brought forward on how to shape a modern WTO rule book and how best serve business interests in 2014 and beyond. HONEST ASSESSMENT: WTO Members should nominate a High-Level Working Group, equipped with a robust mandate, to take stock and analyse the current situation. Based on the outcome, the decision should be made to: (1) continue negotiations for a single undertaking by defining a clear time table; (2) envisage a Doha light agreement, comprising the low hanging fruits and preparing the ground for conclusion of the remaining chapters at a later date; (3) facilitate the launch of plurilateral agreements, following the example of the Trade in Services Agreement (TISA), with the ultimate goal of multilateralising the obtained achievements later on; (4) officially declare failure of the Doha Development Agenda and start a completely new Round with new objectives and refreshed ambitions. RULES OF ORIGIN: Today s economic reality of global supply chains, condensed in the slogan Made in the world, should lead to a net simplification of rules or origin. Handling the current system of rules of origins, which is characterised by a high level of complexity, is burdensome and requires administrative expertise. To drastically ease customs declarations and reduce costs at the border, FTA recommends the systematic use of non-preferential rules of origin, according to which the last substantial transformation would be decisive. REFORM OF WTO SECRETARIAT: A broad institutional reform of the WTO should be envisaged to strengthen its procedural capacities and to support the enforcement of the multilateral rule book. The WTO secretariat could be conferred with additional powers: (1) independently assess the coherence of bilateral trade agreements with WTO principles (extension of current Article XXIV GATT); (2) capacity of the WTO secretariat to table proposals and shape the agenda of WTO meetings; (3) possibility to request an explanation of vote from WTO members blocking decisions. GET ON WITH NON-DOHA TOPICS: The global trading system is evolving constantly and the current WTO structures do not allow policy makers to formulate prompt answers to the numerous new challenges in cross-border commerce. Today, certain crucial business aspects do not sufficiently figure on the negotiation agendas, such as the progress of new technologies, the servicification of world trade, sustainability and trade, and intellectual property rights. WTO members should push for an inclusion of these issues in international trade talks. FTA Foreign Trade Association 3
MUTUAL RECOGNITION: In the long-term, WTO members should work on a broad spectrum of sectors in which standards, rules and procedures are mutually and automatically recognised. Based on the Cassis de Dijon -principle 4, a system should be envisaged in which safety, healthy, sanitary and phytosanitary norms valid in one entity would be recognised in the other entity. To ensure a high level of consumer and environment protection, minimum standards should be defined by international standard-setting bodies. At a first stage, such an initiative could be designed as a plurilateral agreement bringing together countries with a strong interest in mutual recognition. PREAMBLE: In line with Article XXIV GATT, in every preamble of a preferential trade agreement should be explicitly stated that the content of the agreement is not inconsistent with WTO provisions and that the signatories strive for translating the content of the agreement into a multilateral context. The WTO Secretariat should have power to investigate on conformity with multilateral rules. * * * For further information about this Position Paper, please contact: Pierre Gröning Trade Policy Advisor pierre.groening@fta-intl.org Direct tel.: + 32 2 741 64 03 About the FTA FTA s mission is to promote the values of free and sustainable trade for its members within Europe and worldwide. The FTA strives for a liberal international framework for trade and is dedicated to improving the international supply chain in terms of corporate responsibility. As a large association of more than 1,200 European and international retailers, importers, brand companies and national associations, with a total turnover of more than 600 billion Euro, the FTA represents companies of all types and all sizes from more than 22 countries, including chains of supermarket, fashion brands, departments stores, discounters and online sellers. www.fta-intl.org www.bsci-intl.org 4 EU Cassis-de-Dijon ruling (1979): To ensure free circulation of goods in intra-eu trade, the European Court of Justice defined the principle of mutual recognition, according to which a product lawfully marketed in one EU member state (and not subject to Union harmonisation) should be allowed to be marketed in any other EU member state. FTA Foreign Trade Association 4