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OFFICE OF TRADE NEGOTIATIONS O T N U PD A T E

Is s u e:

M a rc h 2 0 1 0

WTO – AN UPDA TE

Towards a Doha Round ‘stock taking’ concluding the Doha Round by 2010 outlined by Pascal
Lamy during the December 2009 session of the General
The World Trade Organisation Director General, Mr Pascal Council. As implied by the nomenclature, the exercise
Lamy recently announced to the WTO General Council that is intended to allow the officials of member states to
the stock taking exercise scheduled to begin at the end of assess the extent to which it would be feasible to
March whould not include the participation of the Ministers conclude the Round by 2010.
of Trade.
The stock taking scheduled at the end of March 2010, is
It has been suggested that this pronouncement has been preceded by a number of activities which are meant to
spurred from the lack of progress at the political level at this infuse new momentum towards the conclusion of the
juncture in overcoming the Doha impasse and conclude the Round and to help close the gaps being zzz in relation
Round. Indeed, the WTO already teeters on the precipice of to the major pillars of the negotiations, in particular
a legitimacy crisis. Therefore, it may be prudent of DG Lamy Agriculture and NAMA.
not to convene a top level political stock taking exercise that
is unlikely to make much progress. On the other hand, the At the beginning of February, some bilateral and
failure to convene this exercise may not augur well for the multilateral exchanges were held amongst Senior
conclusion of the Round by the end of 2010. Officials and Ministers. They were useful in engendering
improved understanding on various member state
The stock taking exercise in question is part of the mandate positions. Progress in Geneva at the Senior Official level
which emerged from the November 30- January 2 2009 on NAMA, was limited to the discussions on non-tariff
Seventh WTO Ministerial Conference to conclude the barriers. In Agriculture, there have been some
Round by September 2010. That political mandate was exchanges on major issues including the Special
elaborated in the strategy detailed in the road map towards Safeguard Mechanism and Preference Erosion, as well

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
as the related issues of the treatment of Tropical Products. In contrast, the fear amongst the developed country
However, the results of discussions on these and other members of the WTO is that the SSM would be abused
negotiation pillars such as Trade Facilitation and Services if its application is not disciplined by specific criteria and
have not been enough to engender great optimism conditions. Such conditions and criteria relate to
regarding the conclusion of the Round by year end. establishing the exact thresholds and triggers for the
application of the SSM.
With respect to the SSM, for example, the G33 countries
recently tabled new proposals. Unfortunately, the new G33 In assessing the extent to which the SSM issue is the
proposals have not been well received in some circles and source of the impasse in the Round, the SSM may be
have served as fodder for controversy rather than as a regarded as an issue wrapped in a political and
bridge to the impasse. philosophical dynamic rather than in a technical one.
Resolution of this matter is considered by many of the
The SSM is a mechanism which would allow developing WTO members as a litmus test of the extent to which
countries to restrict imports temporarily by raising tariffs to the Round will fulfil its pro-development mandate.
protect domestic farmers from import surges and price
declines. At present, but the Agriculture Agreement has a At the invitation of the President of the Swiss
Special Agricultural Safeguard (SSG). This safeguard can Confederation, 17 Ministers in charge of WTO affairs
be triggered by import surges or price declines without a and the WTO DG met in Davos, Switzerland on January
need to prove injury or negotiate compensation. It can only 30 2010 to assess the status of the Round and the
be applied to products that had quotas and other solutions to the impasse. Interestingly, this meeting,
quantitative restrictions converted to tariffs under the which was attended by a representative of the United
Uruguay Agreement. Like the SSG, the SSM would be States, struck some consensus that that members
triggered by a significant import surge or price decline, remain committed to resuming negotiations on the basis
without any need to test injury, negotiate compensation. In of what already has been tabled in the negotiations,
contrast to the SSG, the SSM would be available to rather than on starting from completely new positions
developing countries not otherwise eligible to use the SSG which would unravel the substantive progress attained
because these countries did not switch from quotas to across the negotiation pillars. This seems inconsistent
tariffs under the Uruguay Agreement. with the implications of the comments delivered by the
US during last year’s Seventh Ministerial Conference.
While it would appear that there is little difficulty with the During the Conference, US Trade Representative Ron
broad principle of the utility of the mechanism, there is Kirk suggested that it is anticipated that economic
controversy about its technical specifics. The major activity generated by Brazil, China, India, Russia and
sticking points relate to the extent to which developing South Africa would be responsible for 60% growth in
countries should be allowed to raise tariffs above the world goods trade. On this premise, he suggested
bound rates committed to under the Uruguay Round, and further that securing considerable market access to
the rules of procedure which would administrate the these emerging country markets during the Doha Round
implementation of that mechanism. The G33 group has is justifiable. It was thought that this suggestion was
been pressing for maximum flexibility in raising tariffs. meant to signal a US interest in reversing the implicit
They have also been concerned about ensuring that the agreement reached amongst the WTO members in the
implementation and operation of the SSM would be Round regarding the flexibilities to be awarded to G33
simple. and NAMA-11 countries which was already incorporated
in the draft Agriculture and NAMA texts.

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
During the Davos meeting, it was also agreed that Though, bananas has of late been treated as a
member states need to build improved awareness of the standalone issue in the WTO Agriculture negotiations, the
benefits of global trade and the expansion of resolution of the issue has always been inextricably linked
liberalisation at the multilateral level for economic to an agreement on the treatment of 62 agricultural
stability, recovery and job creation in domestic markets. products subject to preference erosion.
Without building this appreciation at the domestic level,
it is likely that domestic electorates will continue to place During the Seventh WTO Ministerial, such a deal was
great pressure on member states wherewithal to make struck. With respect to bananas, an agreement was
necessary concessions to break the impasse. In the reached between Europe, the ACP and MFN banana
interim, countries across the WTO membership are suppliers that outlines a tariff reduction schedule
likely continue to find challenges in investing any more beginning in late 2010 where Europe would cut its MFN
political collateral towards the conclusion of the Round. tariff from €176 per tonne to €148 per tonne in phases to
€114 by 2017. The deal also accommodates a
These recent activities do indicate that the challenge of contingency in the event that the Doha Round is not
breaking the impasse lies precisely where DG Lamy has resolved by 2013. In such an event, the tariff would
located it – in a paucity of political will. Resolution of remain fixed at €132 for a maximum of two years (until
NAMA and Agriculture issues is technically feasible. The 2015). Thereafter, the rate is scheduled to drop
question still remains regarding the extent of the political immediately to €127 per tonne and subsequent
will to meet the mandate laid during the 2009 Seventh reductions would continue until the rate reaches €114 in
Ministerial Conference. 2017. In addition, the Parties agreed that all pending
disputes on this matter would be dropped and that there
The danger for CARICOM in this situation is that the would be no further requirement for Europe to make
longer negotiations are protracted, the risk of the additional tariff reductions on bananas in the Doha
unravelling of implicit agreements of interest to Round.
CARICOM increases. Areas of particular interest to
CARICOM include flexibilities for small and vulnerable This deal on bananas was pursued in parallel to another
economies (SVEs) in Agriculture and NAMA. In agreement on the treatment of tropical products and
addition, the extension of the Round also endangers preference erosion. This agreement provides for the
CARICOM’s current stake in the deal on the treatment phased tariff reduction of the 62 designated products over
of tropical products and preference erosion that was a period of ten years with a two year moratorium. Under
struck on the margins of the Seventh WTO Ministerial. this rubric, agricultural products further designated as
sensitive products would have a seven year period to
implement tariff reductions. Some of the 62 preference
erosion products will have 8 year or 10 year
The Package deal - Settling the Treatment of
implementation periods. Whereas products such as
Bananas and Preference Erosion
arrowroot, rum, sugar cane all have an 8 year
The settling of the treatment of bananas was for the implementation period whilst unstemmed tobacco, cigars
European Union a matter to be concluded in order for and roasted coffee have a 10 year implementation period.
the EU to be in compliance with the WTO ruling on the
long standing dispute between itself and a group of Latin Overall, this deal falls short of what the affected
American countries. Additionally, settling this issue was CARICOM and other ACP countries would have
of some import to the EU’s trade negotiations with the preferred. In the case of the treatment of preference
erosion products bananas, it was hoped that a longer
Andean Community which were started in 2006.

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
implementation period of 12 years would have been countries still have preferential access to the EU market
awarded. In the case of bananas, it was hoped that the not only with respect to bananas but all goods through
MFN tariff reduction would not be as deep. Under the Economic Partnership Agreements. In light of the state
new arrangement, Europe would not be obliged to of play of the Doha Round, many developing countries
reduce tariffs any further under the current Round. have been pursuing their market interests through
However, this does not preclude deals on deeper bilateral trade agreements, particularly with developed
banana tariff reduction made between Europe and non- country trade partners. With respect to the EU-ACP
ACP banana producers at the bilateral level – that is, in EPAs, ACP countries have had an opportunity to go
Europe’s negotiations with Central America and with the beyond market access and secure developmental
Andean Community. Securing less steep MFN tariff partnerships and cooperation with EU which should help
reductions at the multilateral level would have been, for them become more competitive in the EU and global
CARICOM and ACP banana producers, a very welcome markets. CARIFORUM has taken this arrangement
buffer against competition from non-ACP banana beyond goods and have secured benefits in Services
producers in both the European and global banana and Investment. Regional trade agreements (RTAs) are
markets. likely to be pursued much more aggressively amongst
both developed and developing nations. For the
In this context, CARICOM and the rest of the ACP would Caribbean, while securing trade interests through
be mindful of recent developments which have occurred developmental bilateral arrangements with developed
since the deal on Bananas was struck. Ecuador, a country trading partners would continue to be a priority,
primary banana exporting country, has expressed there are limits to the extent to which this may be
interest in resuming negotiations in the EU. Ecuador is a possible with all developed country trade partners of
member of the Andean Community which was engaged interest to the Caribbean region.
in trade negotiations with the EU. However, Bolivia and
Ecuador walked away from those negotiations in 2007 That said, it is encouraging to note that CARICOM has
and 2009, respectively. Europe and the other Andean started the negotiations with Canada of a Trade and
Community members, Columbia and Peru, concluded Development Agreement. It is also heartening to note
negotiations on March 1, 2010. The successful that the US is at this time considering the modification of
completion of these negotiations has resulted in even the substance of its existing unilateral trade
better market access for banana producers from the arrangements with developing countries. This was
Andean Community and consequently increased expressed on February 25, 2010 by Deputy US Trade
competition to banana exports from the ACP. Representative Demetrios Marantis who indicated that
the US Administration was currently considering
Nonetheless, the package deal does allow ACP negotiating EU-styled reciprocal EPAs as a possible
countries to lock-in the treatment of bananas at the strategic approach to the reform of its unilateral
multilateral level, providing some level predictability and preference programs including the Generalized System
insulation from preventing the vagaries of multilateral of Preferences which expires at the end of 2010.
disputes. With respect, to the deal on preference
erosion products, affected CARICOM and ACP Though bilateral arrangements are useful, it is arguable
countries are dependent on the successful conclusion of that these are complements rather than substitutes for a
the Doha round to bring legal certainty to the reformed and secure multilateral trade framework which
arrangement which was stuck on this specific issue. would facilitate the effective participation of developing
countries in the global trade. The Doha Round therefore
Notwithstanding the details of these deals, ACP needs to be resolved and soon.

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
The Future of CBTPA HOPE Act but also under the CBTPA. Whereas the
HOPE Act will be extended from 2018 to 2022, the bill
proposes to extend CBTPA from 2010 to 2013. The vast
majority of US apparel imports under CBTPA are from
In May 2009, the World Trade Organization (WTO) Haiti and over 80% of US imports of apparel from Haiti
Council for Trade in Goods approved the long standing enter under CBTPA. It is thought that extending the
waiver request from the US on the Caribbean Basin CBTPA program would ensure that Haiti’s apparel
Economic Recovery Act (CBERA). The waiver, which preferential access to the US is secured.
will remain valid until 2014, provides the legal
authorization for CARICOM to export goods covered Alternative legislative options have also been
under CBERA to the US duty-free. considered. For example, the US Senate Finance and
House Ways and Means Committees have also been
The US unilateral, non-reciprocal trade preferences examining the use of legislation that would remove
available to the Caribbean were established under the existing limitations (related to Rules of Origin) on duty
Caribbean Basin Initiative (CBI), which was initially free access for Haitian garments made with third-
launched in 1983 through the Caribbean Basin country fabric. The idea is that by removing the limitation
Economic Recovery Act (CBERA). Those preferences under the Rules of Origin of the preference programs to
were later expanded in 2000 through the US-Caribbean Haiti, its trade and investment relationships with third
Basin Trade Partnership Act (CBTPA), in 2006 (and states could be bolstered which could reenergize the
later in 2008) by the Haitian Hemispheric Opportunity Haitian economy.
through Partnership Encouragement Act (Hope Act).
Notwithstanding such alternatives, the Wyden-Nelson
To operate legally under the World Trade Organization bill would provide benefits to other CARICOM CBTPA
(WTO), the CBERA and CBTPA required a waiver beneficiaries, namely Barbados, Belize, Guyana,
approved by all other WTO Members. The previous Jamaica, Saint Lucia, and Trinidad and Tobago. In the
WTO waiver on CBERA, which is covered under US law absence of a mandate to negotiate a reciprocal trade
through permanent legislation, expired on 31 December agreement with the US, the loss of duty-free market
2005 but the request by the US for the renewal of the access under the CBTPA which covers a range of
waiver was blocked because of objection from a number goods excluded under CBI, would be problematic for
of WTO members, chief among them being Paraguay. CARICOM beneficiaries.
Therefore, prior to the waiver extension in 2009, the US
was for over three years unilaterally implementing However, while the Wyden-Nelson bill has support from
CBERA in the absence of the waiver, which also certain US stakeholders, its fate is uncertain at this time.
covered CBTPA preferences. CARICOM will therefore need to explore the immediate
options – either the CBTPA would need to be extended,
or the scope of CBERA preferences will have to expand
In addition to the expiration of the waiver, the Federal to lock in CBTPA preferences. The latter would allow
legislation of the CPTPA which is not covered by CBTPA preferences to be incorporated into the
permanent US legislation was scheduled to expire in permanent legislation under CBERA therefore
September 2008. However, in May 2008, the US safeguarding those preferences from expiration.
Congress approved the 2007 Farm Bill which extended If CARICOM is to be successful under any of these
CBTPA preferences until 2010. Though Congress options, a great lobbying effort will have to be to
approval of the CBTPA extension brought some comfort

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
undertaken. However, success in this will be a challenge
given the current position being taken by the US
Administration to revisit its unilateral preference
programs and the advent of the mid-term Congressional
elections.

*******

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
NEWS ITEMS

International News

EU Concludes FTA Talks with Colombia, Peru

Trade negotiations between the European Union and Colombia and Peru ended on March 1 2010 with the resolution of a handful of
outstanding issues in the nearly three-year-old talks. Meanwhile, talks on a free trade agreement between the EU and Central America saw
another round of negotiations close on 27 February. The chapters on political dialogue and cooperation were concluded successfully,
however some other issues remain unresolved.

Singapore and EU launch FTA talks

SINGAPORE and the European Union (EU) will launch negotiations for a Free Trade Agreement (FTA) to create new trade and investment
opportunities. The first round of talks is scheduled to take place in Singapore from March 8 - 12 2010

WTO sees no tsunami of trade protectionism after financial crisis

World Trade Organization spokesman Keith Rockwell has indicated that the financial crisis has not provoked a tsunami of trade
protectionism as many economists feared. Rockwell further indicated that there has been some slippage with regard to trade policies, but
all those measures together affect no more than 1 percent of global trade.

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
NEWS ITEMS

Regional News

Dominican leader says he is not pushing ALBA’s agenda as CARICOM chairman

CARICOM Chairman, Prime Minister Roosevelt Skerrit has defended his involvement in a recently held Latin American and Caribbean
Unity Summit. Some persons have recently raised concerns over the motives of the CARICOM chairman in the meeting, reasoning that the
forum was ALBA motivated. Skerrit however said that the discussions were not his initiative, though he was involved, rather it was a
program which was entirely based on addressing issues involving the Caribbean community and Latin America.

CARICOM hopeful ahead of discussions with World Bank

The Caribbean Community (CARICOM) will seek to articulate its positions on the major challenges it faces when it holds discussion with
the President of the World Bank at the 21st Inter-Sessional Meeting in Dominica next week. Secretary-General Edwin Carrington says he
expects that discussions between CARICOM’s Heads of Government and World Bank President Robert Zoellick at the March 11th to 12th
meeting will “result in the identification of new and viable approaches to the treatment of some of the major challenges facing our region”.

Upcoming Events

March 2010

04.03.2010 - 04.03.2010 Trade Agreements 101: OTN Private Sector Outreach Series, St. Lucia

08.03.2010 - 11.03.2010 Special Meeting of the ACP-EC Council of Ministers (conclusion of the neg. for the 2nd revision),
Brussels

09.03.2010 - 09.03.2010 Trade Agreements 101: OTN Private Sector Outreach Series, St. Kitts and Nevis

11.03.2010 - 12.03.2010 Twenty-First Inter-sessional Meeting of the CARICOM Conference of Heads of Government, Dominica

13.03.2010 - 13.03.2010 Meeting on University – Business collaboration to promote innovation, Trinidad and Tobago

16.03.2010 - 17.03.2010 Meeting of CARICOM-Canada College of Negotiators

18.03.2010 - 19.03.2010 Technical Working Group on Market Access & Agriculture for CARICOM-Canada negotiations

22.03.2010 - 26.03.2010 Second Negotiating Round for a Trade and Development Agreement between CARICOM and Canada

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org

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