India and South Africa circulated a communication to members of the World Trade Organization (WTO) General Council, arguing that the WTO moratorium on customs duties on electronic transmissions has “catastrophic” impacts on developing countries’ economic growth, jobs, and the attainment of the SDGs. In another communication, a group of WTO members highlighted “the overall benefits” of duty-free electronic transmissions.
The WTO e-commerce moratorium, which bans countries from imposing customs duties on electronic transmissions, dates back to 1998 when ministers at the Second Ministerial Conference adopted the Declaration on Global Electronic Commerce, calling for the establishment of a work programme on e-commerce, which was adopted later that year. Since then, at every Ministerial Conference, WTO members have agreed “to maintain the current practice of not imposing customs duties on electronic transmissions.”
The WTO Work Programme on Electronic Commerce defines “electronic commerce” as the “production, distribution, marketing, sale or delivery of goods and services by electronic means.” According to a recent WTO report, the enforcement of social distancing, lockdowns, and other measures to address the COVID‑19 pandemic resulted in an uptake in e-commerce, including online sales and streaming of videos and films.
In March 2020, India and South Africa circulated a communication, outlining the implications the moratorium has on developing countries, including: tariff revenue losses; impacts on industrialization; impacts on the use of digital technologies like 3D printing in manufacturing; as well as losses of other duties and charges. The countries argue that the moratorium is “equivalent to developing countries giving the digitally advanced countries duty-free access to [their] markets.”
According to a UN Conference on Trade and Development (UNCTAD) article, in 2017 alone, the potential tariff revenue loss to developing countries due to the moratorium was USD 10 billion. The article further notes that removal of the moratorium could provide policy space for developing countries to regulate imports of electronic transmissions and generate annual tariff revenue of up to 40 times greater than that in developed countries.
A communication from Australia, Canada, Chile, Colombia, Hong Kong, China, Iceland, the Republic of Korea, New Zealand, Norway, Singapore, Switzerland, Thailand, and Uruguay, circulated in June 2020, highlights a paper by the Organisation for Economic Co-operation and Development (OECD) titled, ‘Electronic Transmissions and International Trade: Shedding New Light on the Moratorium Debate.’ The members state that, according to the paper, “the overall benefits” of duty-free electronic transmissions “outweigh the potential forgone government revenues” due to the moratorium. The members recommend that these findings be considered in the current discussions on the extension of the moratorium.
A decision on whether or not the moratorium should continue will be taken at the 12th WTO Ministerial Conference (MC12). Originally scheduled for June 2020, the Conference has been tentatively postponed until June 2021.
A new information note published by the WTO Secretariat highlights how trade in goods and services has been affected by temporary border closures and travel restrictions linked to the COVID-19 pandemic.
It describes how the cross-border mobility of individuals plays an important role in both the cross-border provision and consumption of services and in manufacturing value chains.
The paper notes that sweeping travel barriers introduced in the early stages of the pandemic have given way to more fine-tuned policies aimed at allowing through “essential” foreign workers, or creating quarantine-free “travel bubbles” among partners. Nevertheless, mobility barriers have had a particularly heavy impact on tourism and education services, as well as on trade in goods, due to their effect on transport services and on information and transaction costs.
The paper notes that international cooperation has a potentially important role to play in minimizing the economic impact of mobility restrictions. For instance, exchanging information on lessons learnt about mobility restrictions and trade could help WTO members foster greater resilience in the face of future crises. Such an exercise could help with identifying options to implement travel measures that meet public health protection objectives while minimizing the negative effects on trade.
International trade and investment have always relied on the cross-border mobility of individuals.
To contain the spread of COVID-19, many WTO members imposed temporary border closures and travel restrictions. The severe restrictions on cross-border movement are not motivated by trade considerations but by public health reasons. Nevertheless, they have had a significant impact on trade. In several members, initial sweeping travel barriers have been replaced by more fine-tuned policies, aimed at allowing the movement of “essential” foreign workers, or creating “travel bubbles” permitting quarantine-free mobility among partners.
A significant amount of services trade requires physical proximity between producers and consumers. International mobility to consume or provide services abroad is one way to attain this proximity. Mobility is also important to the operations of services providers who establish a commercial presence in other countries, as well as to those who ordinarily provide services remotely across international borders.
Border measures and travel restrictions have had a particularly heavy impact on sectors such as tourism and education services. COVID-19 has triggered an unprecedented crisis for the tourism sector. In terms of travellers and revenue, international tourism in 2020 is expected to register its worst performance since 1950. In higher education, some institutions are facing a potential drop in international student enrolment of 50 to 75 per cent.
Mobility barriers also significantly affect trade in goods, through their impact on transport services and on information and transaction costs.
Restarting international mobility is unlikely to proceed in a linear fashion. Given the crossborder spill-overs resulting from measures affecting transnational mobility, a case can be made for supplementing domestic action with international cooperative efforts. WTO members may eventually wish to look into building greater preparedness and resilience for future crises, for example starting with information exchange about lessons learnt about mobility restrictions and trade. The exercise could help with identifying ways to implement travel measures that meet public health protection objectives while producing the least trade distortive effects.
The World Trade Organization’s Director General, Roberto Azevêdo announced his resignation effective 31 August of this year. His tenure will end three years into his second four year term which was otherwise due to expire in 2021.
Azevêdo’s departure annouoncement comes in a week where a bill to withdraw the United States from the organization was introduced in the US House of Representatives by the Democratic Chairs of the Transportation & Infrastructure, and Energy and Commerce Committees. This following the introduction of a Joint Resolution to the same effect in the US Senate by Republican Senator Josh Hawley of Missouri.
It comes as the organisation finds its dispute resolution function paralyzed by a US Appellate Body blockade, a potentially existential budget battle looms, its scheduled ministerial conference cancelled and even supportive members eyeing unilateral trade action in contravention of its principles.
At perhaps the most perilous time in its 25-year history, the WTO will be without a formally appointed leader, and the forthcoming selection process for his replacement hands the US yet another opportunity to exercise an effective veto over the organization’s future.
While not likely to be the straw that breaks its back, this unfortunately timed resignation is still a hefty new weight for an exhausted WTO camel whose knees were already trembling. As the kids would say, “It’s not great.”
While opinions on the Roberto Azevêdo’s performance vary, his departure couldn’t come at a worse time, and the process to replace him is both very long and just as susceptible to being held hostage by an ornery member as everything else in the organisation.
As a global champion of rules based trade, the WTO’s ‘DG’ has an important role to play in making the full throated case against the rising tide of export restrictions, protectionism and unilateralism unleashed by the US-China trade tensions and exacerbated by Covid-19. Now is no time for the system to be without its Knight in Shiny Armani.
As the head of the WTO secretariat, the director general was poised to play a key role in steering the organisation through what now seems a near inevitable battle over its budget at the end of the year. If the US once again blocked adoption of the WTO’s budget, it would have been up to him to try and forge a compromise, or make the difficult and controversial decisions required to keep the lights on, staff paid and fondue pot glowing in the face of an unapproved budget.
As the chair of the trade negotiations committee, the director general offers convening power, good offices, and a consensus building voice. With critical negotiations around fisheries subsidies, e-commerce, investment, and WTO reform all hanging in the balance, the absence of a Director-General only further decreases the likelihood of progress (perhaps from Hail Mary Pass to Igloo in Hell).
What happens now – Interim Director-General?
Upon Mr Azevêdo’s departure at the end of August, The rules now require the WTO General Council – a meeting of all WTO Members which serves as its highest decision making-body outside of a ministerial conference to appoint one of the four Deputy-Directors General as an interim director.
This presents a potential hurdle, as the WTO General Council makes decisions by consensus. Therefore, even a single member’s objection could prevent the appointment of an interim leader for the organisation.
The current deputies are Yonov Frederick Agah of Nigeria, Karl Brauner of Germany, Alan Wolff of the United States and Yi Xiaozhun of China. For obvious reasons, neither the US nor the Chinese DDGs are likely candidates for unanimous approval, and it is not impossible to envisage objections to Agah and Brauner as well – either personally or on general principle to sabotage the organisation further.
What happens next – A new Director-General?
Whether an interim DG is appointed or not, the WTO members will need to begin the process of selecting a new Director-General.
The procedure is lengthy and would ordinarily begin nine months before a DG’s term is set to expire. Once the process begins, WTO members have one month to nominate candidates, which must be their own nationals.
After this month is over, the candidates are expected to come to Geneva and meet with the WTO missions. The next seven months are to be spent weening the applicants down to a single final consensus candidate.
Is there politics?
Oh my god yes. While the Director-General has no legal authority to make or enforce the rules, WTO members are still intensely jealous of the position and allergic to any candidate they feel might impede their interests.
Arriving at a single consensus candidate requires a raft of compromises, trades and deals even at the best of times, which of course the current situation is not.
What happens if no consensus candidate can be found?
Theoretically, the rules do allow for a vote by the membership to select a Director-General. However, this procedure is both a measure of last-resort and intended primarily for a situation where the membership is split between two or more valid candidates and agrees by consensus on a vote to break the deadlock.
Were the US or some other member to block all candidates as a matter of principle, they would also likely oppose a vote. Even if a vote could then be forced regardless, it would only fuel the fires of those who argue the WTO has gone rogue.
So what does it all mean?
On its own, this resignation does not fundamentally change the state of play. The WTO is severely weakened, partially paralysed and increasingly in the crosshairs of the US, where concerns about it extend beyond the Trump administration and across party lines.
It does however rob the WTO of an experienced, consensus-approved leader at a time when both the organisation and the cause of rules-based trade desperately need one.
Still, though slim, there is hope the DG selection process might serve to revitalise the organisation. Long rumored candidacies like that of Kenya’s formidable Amina Mohamed, who chaired the 10th WTO Ministerial Conference to a successful conclusion and would be the organization’s first female and first African Director-General, offer a path to a more globally representative future.
The WTO Secretariat has published a new information note looking at how the COVID-19 pandemic has affected e-commerce, including the implications for cross-border trade. It notes the increased use of e-commerce as consumers adapt to lockdowns and social distancing measures and draws attention to several challenges, such as the need to bridge the digital divide within and across countries.
As well as highlighting the uptick in e-commerce during the COVID-19 crisis, the report looks at measures introduced by governments to facilitate e-commerce and some of the challenges facing these initiatives. Governments have worked to increase network capacity, encourage the provision of expanded data services at little or no cost, and lowered or scrapped transaction costs on digital payments and mobile money transfers. The report also looks at ongoing e-commerce discussions in the WTO and how continued implementation of the WTO’s Trade Facilitation Agreement could address some of the challenges brought to the fore by the COVID-19 pandemic.
The report argues that the experiences and lessons emerging from the COVID-19 crisis could be a further incentive for global cooperation in the area of e-commerce, which could help to facilitate cross-border movement of goods and services, narrow the digital divide, and level the playing field for small businesses.
Three years since the Trade Facilitation Agreement (TFA) entered into force on 22 February 2017, WTO members have continued to make steady progress in its implementation. Director-General Roberto Azevêdo, on the occasion of the TFA’s third anniversary, welcomed members’ efforts to ensure traders can reap the full benefits of the Agreement.
The TFA, the first multilateral deal concluded in the 25-year history of the WTO, contains members’ commitments to expedite the movement, release and clearance of goods across borders. As of the TFA’s third anniversary, 91% of the membership have already ratified the Agreement. It entered into force three years ago when the WTO obtained the two-thirds acceptance of the Agreement from its 164 members.
The Agreement is unique in that it allows developing countries and least-developed countries (LDCs) to set their own timetables for implementing the TFA depending on their capacities to do so. They can self-designate which provisions they will implement either immediately (Category A), after a transition period (Category B), or upon receiving assistance and support for capacity building (Category C).
As of 22 February 2020, over 90 per cent of developing countries and LDCs have notified which provisions they are able to implement after a transition period, and the ones for which they will need capacity-building support to achieve full implementation of the Agreement. Developed countries committed to immediately implement the Agreement when it entered into force.
Based on members’ notifications of commitments, 65 per cent of TFA provisions are being implemented today compared to the 59 per cent implementation rate recorded on the Agreement’s first anniversary. Broken down, the latest figure equates to a 100 per cent implementation rate for developed members and 64 per cent for developing members. As for least-developed countries, the improvement in the implementation rate is particularly notable at 31 per cent today versus the 2 per cent recorded a year after the Agreement entered into force. The implementation rate for each WTO member can be viewed here.
The Agreement has the potential, upon full implementation, to slash members’ trade costs by an average of 14.3 per cent, with developing countries and LDCs having the most to gain, according to a 2015 study carried out by WTO economists. It is also expected to reduce the time needed to import and export goods by 47 per cent and 91 per cent respectively over the current average.
The role of the private sector in the implementation of the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) will be the focus of the 2015 edition of the Global Facilitation Partnership for Transportation and Trade (GFP) meeting. With the world’s customs administrations currently identifying their respective TFA implementation commitments and setting up National Trade Facilitation Committees, trade and logistics operators can learn how they can participate in such initiatives by attending these sessions.
Organized by the International Trade Centre (ITC) in partnership with the United Nations Conference on Trade and Development, the United Nations Economic Commission for Europe and the World Bank, the event will bring together representatives of the private sector, WTO member states and international organizations to discuss how best support trade facilitation implementation.
The GFP meeting will be held at Palais des Nations, Geneva, on 22 April, and will be divided into three thematic sessions.
The first session, ‘Governments’ Priorities: Strategies for Fostering Private Sector Participation in the TFA Implementation Process’ will look at how governments are planning to implement the TFA.
It will focus on how the private sector is consulted and how an effective participation of the private sector can be facilitated to implement the Agreement.
The second session, ‘Priorities, Perspectives, and Expectations from the Private Sector on TFA Implementation’ will assess how the private sector – including large corporates and small and medium-sized enterprises – view TFA implementation. It will look at the potential benefits from a private-sector perspective, and how the sector can contribute to national and international initiatives to implement the agreement.
The third session, ‘International Organizations’ Co-ordination and Partnership for Supporting TFA Implementation’, will provide an opportunity to share information and experiences on how the TFA can be implemented with public-private partnerships in mind, as how national trade facilitation committees can better support this process.
ITC invites all interested stakeholders to join the GFP meeting at the Palais des Nations on 22 April from 9:00. Click here for link to online registration.
The draft text relating to the outcome on a Trade Facilitation Agreement at 9th Ministerial Conference of the WTO can be located here! It reveals some significant impact and far-reaching implications for the Customs administrations, but to a great extent it will probably be welcomed by the world’s trading community. In the South African context, readers may find Article 11 on “Freedom of Transit” extremely interesting, if not controversial by some members of the establishment. In essence it’s all about being transparent! Source: World Trade Organisation.
The World Trade Organization General Agreement on Tariff and Trade (GATT) 1994 Article X on Trade Facilitation calls for member country trade regulations to be clearly published. The WTO Self-Assessment Guide (2009) outlines the basic standard for internet Publication as: “A Member shall publish all trade related legislation, procedures and documents on a national official internet site or sites”. Usually called a “Trade Repository” or a “Trade Information Portal” the site facilitates awareness, via the internet, of requirements to enable compliance with customs and other agency requirements for the import or export of goods, using the HS classification of goods as the primary organizing principle for cataloguing and retrieving information
USAID Southern African Trade Hub reports that the government of Namibia expects to have its Trade Information Portal up and running by early 2014. The development of portal is supported by the USAID Southern Africa Trade Hub, under its Partnership for Trade Facilitation facility. The Trade Hub recently supported Namibia in a detailed legislative review of the country’s Customs and Excise Act to align it with global and regional legislation and to provide the legislative foundations for electronic trade facilitation measures, including the Trade Information Portal.
Currently trade-related information is made available across number of websites maintained by each government agency responsible for a particular aspect of trade regulation. The Trade Information Portal will provide a single platform where all trade related information for Namibia is collected in one system and readily available for searching and viewing, which will save time and expense for the trading community. The Trade Information Portal uses the latest technology to provide a comprehensive, accurate and up-to-date source for all regulatory information, which will result in tangible benefits for trade facilitation. No longer will it be necessary to seek advice in person from multiple agencies. Furthermore, conflicting advice and guidelines will be avoided by creating a single authoritative reference point. The savings in time and expense will lessen the overall cost of doing business and reduce the time to import or export goods, contributing to Namibia’s improved standing in doing business indexes and transparency.
A significant part of the coordination and development work in setting up the Trade Information Portal will facilitate and shorten the road map towards implementing an electronic National Single Window which is also under consideration by the Namibia government. Source: satradehub.org
This year’s World Trade Report ventures beyond tariffs to examine other policy measures that can affect trade. As tariffs have fallen in the years since the birth of the General Agreement on Tariffs and Trade (GATT) in 1948, attention has progressively shifted towards non-tariff measures (NTMs). The range of NTMs is vast, complex, driven by multiple policy motives, and ever-changing. Public policy objectives underlying NTMs have evolved. The drivers of change are many, including greater inter-dependency in a globalizing world, increased social awareness, and growing concerns regarding health, safety, and environmental quality. Many of these factors call for a deepening of integration, wresting attention away from more traditional and shallower forms of cooperation. Trade in services is a part of this development and has come under greater scrutiny, along with the policies that influence services trade.
Section A of the Report presents an overview of the history of non-tariff measures in the GATT/WTO. This overview discusses how motivations for using NTMs have evolved, complicating this area of trade policy but not changing the core challenge of managing the relationship between public policy and trading opportunities.
Section B examines the reasons why governments use NTMs and services measures and the extent to which public policy interventions may also distort international trade. The phenomenon of off-shoring and the cross-effects of services measures on goods trade are also considered. The section analyses choices among alternative policy instruments from a theoretical and empirical perspective. Finally, case studies are presented on the use of NTMs in particular contexts.These include the recent financial crisis, climate change policy and food safety concerns. The case studies consider how far measures adopted may pose a challenge for international trade.
Section C of the Report surveys available sources of information on NTMs and services measures and evaluates their relative strengths and weaknesses. It uses this information to establish a number of “stylized facts”, first about NTMs (TBT/SPS measures in particular) and then about services measures.
Section D discusses the magnitude and the trade effects of NTMs and services measures in general, before focusing on TBT/SPS measures and domestic regulation in services. It also examines how regulatory harmonization and/or mutual recognition of standards help to reduce the trade-hindering effects of the diversity of TBT and SPS measures and domestic regulation in services.
Section E looks at international cooperation on NTMs and services measures. The first part reviews the economic rationale for such cooperation and discusses the efficient design of rules on NTMs in a trade agreement. The second part looks at how cooperation has occurred on TBT/SPS measures and services regulation in the multilateral trading system, and within other international forums and institutions. The third part of the section deals with the legal analysis of the treatment of NTMs in the GATT/WTO dispute system and interpretations of the rules that have emerged in recent international trade disputes. The section concludes with a discussion of outstanding challenges and key policy implications of the Report. Source: World Trade Organisation.