Fighting against Protectionism: The View from the Front Line March 27th, 2009 Naoko Munakata *All opinions expressed in this presentation are solely those of the author. Creeping Protectionism?: Overview of Trade Barriers 1. Tariff Raises 2. Import Restrictions 3. Mandatory Standards 4. Government Procurement 5. AD/CVDs The Spread of Trade Barriers Based in part on press reports. EU ・Reinstated tariffs on cereals (Wheat 0→8%, Barley 0→20%) ・Reinstated dairy export subsidies ・Considering changes to classification of IT products Russia (undergoing WTO accession process) ・Raised Tariffs on new & second hand cars, steel products, agricultural machinery etc. U.S. ・”Buy American ” clauses inserted in economic recovery bill (amendments to keep international obligations added) China ・Tariff raises for bean products and pork Ukraine 13% “surcharge” on almost all imports signed into law India ・Raised tariffs (Steel 0→5%, Soybean oil 0%→25%) ・Mandatory standards on certain steel products (delayed for year ) Indonesia ・New mandatory standards for steel products announced Ecuador ・ Tariff raises for 940 products, new standards tests etc. Argentina ・Import licenses newly required for textiles, metal products etc. AD/CVDs(1): On the Increase? 300 Economic Recovery 08 Global Financial Crisis Economic Expansion Asian Financial Crisis (no. of cases ) 01 Dotcom Bubble burst 97 Economic Expansion Increase? 200 100 0 95 96 97 98 99 00 01 02 03 04 05 06 07 AD/CVDs(2): DDA Rules Negotiations Improving & strengthening AD rules would prevent abuse. No agreement yet on “zeroing” or the “sunset clause”. AD Friends (15 members) Japan Thailand Singapore Korea Brazil Norway Eager to prevent AD abuses. ・Prohibit “zeroing” practices. ・Impose time limits on AD measures (“Sunset”). + Chile, Hong Kong, Mexico, ChineseTaipei, Columbia, Costa Rica, Israel, Turkey, Switzerland Developing members ・Requesting S&D. ・Fears complication of AD rules. U.S. EC ・Middle ground position. ・Prefers status quo except for improved transparency. ・Insists on legalizing “zeroing” Developing Countries’ Concerns More room for subsidies than trade barriers under G20 commitments. Cannot afford subsidies. Rich countries’ subsidies could cause larger trade distortion. Types of Subsidies (For companies) Bailouts R&D incentives Wage support (For consumers) Financial support for purchases (vouchers, tax rebates, etc.) What to Do About Subsidies? Strengthened disciplines ? Safe harbor ? Transparency & peer pressure • Non-sector specific • Non-discriminatory Ways to Fight Protectionism Monitoring & peer pressure Safe harbor ? Time limits ? Standstill ? Concluding the DDA The Doha Round : Progress to Date 2 Main Issues left: SSM (Ag) and Sectorals (NAMA) Final Agreement Establishment of Modalities Progress of Talks Outline of Modalities Generally Accepted Unofficial Ministerial (Postponed) G20 Summit Unofficial Ministerial (Geneva) Unofficial Ministerial (Davos) G4 Ministerial(Potsdam) G6 Ministerial(Geneva) G6 Ministerial(London) Formulation of Modality Texts G6 Ministerial(Davos) Hong Kong Ministerial ASEAN+3 Ministers’ G4/G6 Ministerial Meeting Unofficial Ministerial (Davos) Unofficial Ministerial General Assembly (Davos) Framework Agreement Seattle Ministerial Cancun Ministerial Discussion of specific numbers based on texts No. of brackets in Chairs’ Texts : 279 → 11 Ag & NAMA Chairs’ Texts Discussion of basic structure of possible texts Scope of the negotiations fixed Doha Ministerial 2001 02 03 04 05 06 07 08 09 10 * Warning : This chart is simplified for visual purposes and is not intended to be a precise depiction of the status of negotiations. Political Pressure within the U.S. February 26th: 54 Representatives’ Letter to President “A new agenda needed to replace outdated DDA” March 5th: President, American Farm Bureau Federation “Doha like a tractor stuck in the mud” March 9th: Chairmen of House & Senate Ag Committees “Doha dead in the water” “Start over again from scratch” U.S. Still Reviewing its Trade Policy March 2nd: The President’s Trade Policy Agenda “DDA is unbalanced” March 9th: Ron Kirk at Confirmation Hearing “Promote U.S. values through trade” March 14th: President Obama with President Lula “The goal is not to go backwards” March 18th: Gary Locke at Confirmation Hearing “Fair trade more than free trade” WTO Rounds and Economic Trends Blairhouse Agreement(92.11) 86 94 01 Uruguay Round Doha Round Trade Growth GDP Growth 1980 1990 ※Growth in trade shown on left hand scale, growth in GDP shown on right hand scale 2000 2010 Trade-related Events Apr.2nd Nov.15th G20 London Summit G20 Washington Summit Nov. Dec.12th Jan.31st MM Postponed Davos (Unofficial MM) Dec. 2009 Jan. Feb. Jan.26th Mar. March26th WTO DG’s Report Jun.24th-25th Jul.21st-22nd OECD Trade MM APEC Trade MM Apr. Assembly of U.S. trade team May Jun. WTO Official MM? Jul. Year end Indian Elections (by May 16th) WTO DG’s Revised Report 14