The Guardian has an interesting article on the EU's Emissions Trading Scheme [ETS], a mechanism designed to reduce greenhouse gas emissions by businesses based in Europe. As a bit of background, the ETS is a 'cap and trade' scheme which grants firms based in Europe permits to produce an agreed amount of greenhouse gases. If firms emit more than they have been granted in permits, they may buy permits from other firms which have not reached their emissions quota. If they emit less than the amount they have been allocated, they may sell their unused permits on at a profit. The idea behind the scheme is that it is meant to grant an economic advantage to firms which reduce their greenhouse gas emissions. However, one significant problem with the ETS is that the recent economic downturn has seen firms reduce their output, and as a consequence, the amount of greenhouse gases they have emitted. This, combined with the granting of free permits to some of the biggest polluters, has resulted in something of a bonanza for Europe's steel producers. The Guardian reports that certain large steelmakers have a large surplus of ETS permits which may be sold on under the scheme. Concerns have therefore been raised as to whether the generous grant of free emissions permits to some of Europe's biggest emitters could represent a subsidy to producers. The Guardian report is reproduced in full below;

 

Steelmakers hold millions of EU pollution permits

• Steel industry main beneficiary of European emissions trading
• Three Mittal plants hold 15% of surplus permits, study reveals

• Terry Macalister
• guardian.co.uk, Wednesday 9 September 2009 18.30 BST

Steelmakers such as ArcelorMittal have become huge beneficiaries of the European Union's emissions trading scheme, making tens of millions of pounds out of free carbon permits, research shows.

Just three plants in Belgium, Spain and Romania, all controlled by Lakshmi Mittal, Britain's richest man, are sitting on 15% of the surplus permits handed out by the EU, according to official figures obtained by the Sandbag environmental campaign group.

"The scale of the benefits enjoyed by the steel industry make it look like the ETS is being used as a hidden subsidy to the sector," said Bryony Worthington, the founder of Sandbag.

The price of carbon has plunged over the last 12 months, partly because the slowdown has reduced output and emissions, but also because the EU handed out too many free permits to industry.

The ETS allocates certain companies allowances for the carbon they emit, and is supposed to force them to buy additional permits to pollute if they do not cut their emissions. Most of the heaviest polluters and users of carbon permits are power companies such as Drax, which runs the coal-fired facility in north Yorkshire of the same name, and Elektrownia Belchatow of Poland.

But Worthington said the EU statistics showed steel plants such as Germany's Integriertes Huttenwerk Duisburg was sitting on 10.8m permits, Glocke Salzgitter 5.1m and Belgium's ArcelorMittal Gent 4.3m. She feared this demonstrated steel companies were masters of lobbying the EU to ensure they benefited at a time when permits can be traded at €15 (per tonne).

ArcelorMittal admitted that it remained in dialogue with policymakers about the future shape of the trading scheme on the basis that it could raise the cost of production in Europe and therefore represent a "threat" to outside competitors.

The steel group denied it was exploiting the ETS and was not prepared to confirm or deny that it was holding any particular number of surplus permits.

//

• guardian.co.uk © Guardian News and Media Limited 2009

 

 

 

 

 

An interesting report from the International Centre for Trade and Sustainable Development [ICTSD];

 

After years of hesitation, WTO Members have decided to look into private sector product standards, which developing countries in particular blame for penalising their exports.

The decision was taken at an October meeting of the Committee on Sanitary and Phytosanitary Measures (the SPS committee), which has grappled with the issue since 2005.

The WTO’s SPS agreement seeks to ensure that Members’ food safety and other health-related measures are based on science and do not unduly restrict trade. The agreement’s Article 13 requires governments to “take such reasonable measures as may be available to them to ensure that non-governmental entities within their territories […] comply with the relevant provisions of this Agreement.” A number of developing countries argue that this clause obliges governments to ensure that product certification and labelling schemes run by commercial or other private entities are consistent with WTO rules. Others, especially developed countries, say that the Article 13 text quoted above is not legally binding, and that they have no authority over private certification schemes that go beyond the SPS framework.

Despite the ongoing debate, delegates decided in October to move forward on the issue. With input from relevant international organisations, the WTO secretariat will prepare a report, which will compile and analyse information provided by Member countries on specific export products that they have identified as being affected by private standards.

The main reason for developing countries’ concern is the proliferation of non-governmental standards, which are often arbitrary and work against their exporters, who lack the capacity to fulfil the criteria. For instance, many developing country suppliers have difficulties in complying with the requirements of supermarket chains with regard to how a given good is produced rather than just delivering a finished product that fulfils government-mandated norms.

 

According to the International Centre for Trade and Sustainable Development [ICTSD], the first shipment of 'sustainably produced' biofuel is on its way from Malaysia to Europe;

The first shipment of ‘sustainable' palm oil left Malaysia for the Netherlands this week, but some conservationists argue that the system used to certify the oil is not strong enough to prevent environmental damage.

Four years ago, a coalition of industry groups and the environmental NGO WWF set up the Roundtable on Sustainable Palm Oil, or RSPO. The purpose of the initiative was to develop a certification system to counter growing criticism that palm oil production destroys wildlife habitat, causes widespread forest loss and releases huge quantities of greenhouse gases into the atmosphere.

More than 28 million tonnes of palm oil are produced around the world each year. The oil is found in a variety of foods, including margarine, cooking oil, potato chips, cakes, and cookies. It is also an ingredient in many cosmetics, soaps, shampoos and detergents. Recently, palm oil has also begun to be used as a biofuel.

Over the past two decades, areas undergoing palm oil cultivation have grown by about 43 percent, according to RSPO - mostly in Malaysia and Indonesia, where deforestation pressures are already high.

RSPO says that its certification system can help ensure that such production is carried out

"The upcoming arrival of this first batch of oil is a small but significant step towards having all the world's palm oil produced in a socially and environmentally sustainable way," said Jan Kees Vis, President of the RSPO, Reuters reported.

Some environmentalists agree.

"The arrival of RSPO certified palm oil in Europe is an important milestone," Rodney Taylor of WWF said. "With the RSPO's certification system up and running, companies now have the means to buy responsibly."

Several European companies, including Unilever, Sainsbury's and Albert Heijn, have already promised to buy RSPO-certified palm oil, WWF said in a press release.

But not everyone believes that the certification system will have a significant effect on the ground. Environmental NGO Greenpeace released a report last week that criticised the scheme as hypocritical and called on the palm oil industry to take stronger action.

"Many RSPO members are taking no steps to avoid the worst practices associated with the industry, such as large-scale forest clearance and taking land from local people without their consent," Greenpeace said. "On top of this, the RSPO actually risks creating the illusion of sustainable palm oil, justifying the expansion of the palm oil industry."

"The RSPO...must support a moratorium on deforestation and pressure the Indonesian government to take urgent action," Bustar Maitar of Greenpeace said. "Furthermore, the RSPO standards must be tightened to ensure that members stop deforestation and peatland clearance in all of their operations."

ICTSD reporting; "First ‘sustainable' palm oil on way to Rotterdam," REUTERS, 12 November 2008.

 

The move is interesting as it comes at the same time as the proposed European 'Renewables Directive' is being discussed by the European Parliament. The Directive, if adopted, would mark the formal introduction of sustainability criteria for imported and domestic biofuel in the EU. As noted on our sister blog, it is not entirely clear whether the terms of the proposed Directive would be compatible with WTO law. The Directive and the RSPO scheme also mark a continued tension existent in international environmental governance that is the effectiveness of voluntary regulatory schemes vis-a-via compulsory government mandated interventions. 

 

Reports indicate that the China - Financial Information Services dispute was setted.  For details see the press releases of the complainaints:  U.S., EU, Canada.  There are related links on those pages with background facts and the memorandum of understanding.

This may be a follow-up on DS270, or it may be something new:

Manila may file an international trade complaint against Canberra if it fails to submit an import risk report covering Philippine bananas, an agriculture official said last week.

I can't figure out if this is going to be a full-fledged WTO dispute:

Turkey’s dream to become a global boron hub has dissolved with the European Union’s decision to categorize boron a toxic substance. In a counter action, Turkey is preparing to file a lawsuit with the World Trade Organization, or WTO, against the EU.

Turkey and the United States are the world's largest producers of boron, with Turkey holding almost 72 percent of the world’s boron potential and estimated reserves of just over 3 billion tons.

Turkey’s annual exports of boron, which is heavily used in producing detergents, glass and ceramic, add up to $40 million and the country had plans to one day obtain billions of dollars from exports by becoming a global boron hub. However, despite Turkey’s objections, the EU has classified boron as “toxic for reproduction.”

The decision, which is expected to be detrimental to 70 percent of Turkey’s boron and derivative exports, may also shape the country’s export to countries outside the EU.

Turkey, which has been objected to the WTO sanctions twice before, has submitted an application to the WTO for the first time, asking for action on the grounds that the directive would limit free trade.

The language suggests a possible complaint, but it is a bit vague, and I wonder if it is a less formal action like raising it in a committee meeting. 

 

Reuters reports that the Thai - Cigarettes case (not the old GATT one, but rather DS371) is likely to have a panel established on Nov 17.

For those of us with long enough memories, we will still remember Tuna/Dolphin I, the dispute between Mexico and the US, in 1990/91, about restrictions on the sale of Mexican tuna by the US due to the high mortality rate of dolphins when Mexican fishermen went fishing for tuna. Then there was Tuna/Dolphin II, in 1994, a similar dispute between the US and the EEC. Now, since Oct 24, 2008, we have Tuna/Dolphin III, between the US and Mexico again. Reuters is running a story on the dispute that can be downloaded here.

When trade disputes fester like this over many decades, it usually means that a protectionist lobby has managed to entrench itself so deeply into the decision-making processes of the competent regulator that almost nothing can shake it lose. In this case, because in 1990 and today, Republicans were and are still (just) ruling the roost, I am betting that the lobby in question aint Greenpeace, the World Wildlife Fund or Friends of the Earth. It really can only be US tuna fishermen or their industry representatives.

Tuna fishing seems to be a pretty hot topic right now. The Economist was also running a story last week about how blue fin Tuna had basically been fished to extinction in the Mediterranean. That story can be viewed by clicking here.

Reuters reports that the EU is appealing the U.S. - Continued Zeroing (DS350) panel report.

Mexico has filed a request for consultations against U.S. measures related to tuna.  If this case goes to a panel, it will be interesting to see how this issue is dealt with by a WTO panel as compared to the way previous measures in this area were dealt with by GATT panels.

A new working paper on Mode 4 of the General Agreement on Trade in Services [GATS] - which covers the presence of natural persons - is available on the WTO website. Since accurate statistics on GATS Mode 4 are not virtually non-existent, this working paper seeks to remedy this lacuna by providing a statistical conceptualisation of Mode 4. Its asbtract is reproduced below;

 

 

Despite initial doubts as to her experience and ability, on 22nd October the European Parliament confirmed Baroness Catherine Ashton as the new EU trade Commissioner. Preferring to be called 'Cathy', her appointment marks two firsts for women; she is the UK's first female Commissioner as well as Europe's first female Commissioner for trade.

From Reuters:

"Earlier this week, I sent a letter to China's Minister of Commerce expressing concern about potential WTO-illegal subsidies and indicating that USTR has begun to prepare a potential WTO dispute settlement request to challenge such measures if China does not act promptly to eliminate them," U.S. Trade Representative Susan Schwab said.

I haven't seen any news articles about it, but it looks like the Philippines' complaint against Thailand's fiscal measures related to cigarettes is going ahead.  Here's the panel request: http://www.worldtradelaw.net/pr/ds371-3(pr).pdf

The latest zeroing related WTO decision (DS350) is out.  Here is a version without the arguments: http://www.worldtradelaw.net/reports/wtopanels/us-continuedzeroing(panel).pdf Here is the full version: http://www.worldtradelaw.net/reports/wtopanelsfull/us-continuedzeroing(panel)(full).pdf

More zeroing decisions on the way soon.

I woke up this morning to find that Peter Mandelson, the EC Trade Commissioner,  had been replaced by someone almost unknown outside of Westminster, Catherine Ashton.

Most of the press have focused on what this means for Gordon Brown's fragile tenure at No. 10, but I'm more concerned what this could actually mean for Doha.

Will Baroness Ashton have the technical mastery of the details required to sit down and negotiate over the minuteai of trade effects? Will she have the political resoluteness and credibility to stand up to attempts by French President Nicolas Sarkosy to lampoon her? If not, an already troubled trade Round might not have any real hope of staying afloat.

Unfortunately, it all bodes rather well for those forces who would gladly see the Round collapse.

A few news sourced have been reporting recently on the recent US decision to join the so-called the Trans-Pacific Partnership, or P4, by announcing last week that it would enter into FTA negotiations with New Zealand. Up to now the P4 has included New Zealand, Singapore, Chile and Brunei, but with the US entering the fray, this loose association of countries really starts to acquire some critical mass. The New Zealand Herald has a report on the US announcement, which can be downloaded here. The Australian newspaper also covered this development seeing it as a significant strategic boost for New Zealand’s export interests over those of Australia. Its coverage can be seen here.

Coverage of the announcement in Inside US Trade, as well as the above cited article from the NZ Herald, highlighted the lack of enthusiasm and even outright hostility to any proposed negotiations on the part of the US diary sector, which understandably feels threatened by NZ dairy farmers. The US National Milk Producers Federation (NMPF) will undoubtedly be lobbying for dairy to be excluded completely from any talks, but this is something that USTR would probably not welcome due to the systemic implications this could have for future FTA negotiations it might conduct with other trade partners. The US is generally hostile to the exclusion of any sector as a whole, given that its export interests are so broad, and it usually argues that to do so would run counter to the “substantially all trade” language contained in GATT Article XXIV, the legal basis on which it is able to conclude free trade agreements and still comply with its multilateral trade commitments under the WTO.

Inside US Trade was also citing the National Cattlemen’s Beef Association (NCBA) as an organization that will be hostile to the talks, but speculated that they would be fairly low key in any criticism of USTR, given how much the agency has done for them in Korea recently.

If one takes the trouble to visit the website of the NMPF, one can see that they have attempted to put together a fairly vigorous defense of their position, which is to exclude dairy from the FTA with New Zealand and thus from the P4 process, accusing the New Zealand dairy industry of ”excessive manipulation of dairy markets globally and in the US”. Although the statement goes on to provide some details on the structure of the New Zealand dairy industry, where one company controls over 90 percent of the milk produced, it does not expound on how exactly NZ goes about excessively manipulating global dairy market, or for that matter, the US dairy market.

A number of studies have shown that the US dairy industry is one of the most protected and that the sector is thus one of the most distorted on the whole market for agricultural commodities. One such study was conducted by the Cato Center for Trade Policy Studies, by Sallie James, and can be downloaded here. The subsidies and supports US dairy producers get and the welfare losses and global market distortions these cause are beyond all justification. But it’s not just the US. Dairy farmers in Canada and of course, the EU, also benefit from a lavish and complex system of price supports and trade protectionist measures which keep prices artificially high and cause tax payers and consumers enormous losses. In fact dairy farmers in New Zealand are probably some of the least protected and subsidized in the developed world and the New Zealand dairy market is probably one of the least distorted.

Any move towards liberalization of dairy markets should be welcomed, at least by those of us who consume milk products. Moreover, with Chinese milk exports almost irreparably damaged due to the recent contamination scare, exports of dairy products to markets that have pulled Chinese milk products off their shelves can only expand, and this will certainly benefit dairy exporters outside of China who have the extra capacity to cater to these new market access opportunities.  

A 2006 study sponsored by the United States Department of Agriculture, examines the projected impacts of trade liberalization on the US dairy markets. It’s not all bad news for US dairy farmers. The report notes that “compared with several other regions, the impact of world dairy trade liberalization in the United States are quite modest”. In fact, the report goes on to predict that the multilateral dismantling of many trade-distorting policies in the dairy sector would actually see US milk producers gain to the tune of some $419 million.

Of course the liberalization proposed under an FTA with New Zealand is not that examined in the USDA-sponsored report, but that report did show one thing, and that is that US dairy farmers are essentially in a position to compete, and to do so effectively and successfully, if, like other sectors, they would be forced to adjust to rather than being shielded from the realities of the market.

Returning to the P4 process, it has interesting implications geopolitically, not least because Peru, Vietnam and Australia have all expressed an interest in joining. What this might result in, is the establishment of a rapidly liberalizing and more closely integrating core within APEC, which may or may not set the pace for others in the 21 Member block. Although closer economic integration and cooperation has been much discussed within APEC, so far it has not managed to evolve into anything more than a best practices club, and the P4 process could be just the impetus that the block needs to get moving.

The WTO has posted two new DS docs:  The China - Auto Parts notice of appeal and the consultations request in U.S. - AD/CVD on Certain Products from China.

Bloomberg reports:

China filed a World Trade Organization complaint against the U.S. over duties imposed on imports of Chinese steel pipe, some tires and laminated woven sacks, saying the levies violate global trade rules.

A Reuters piece is here. 

The EU may be reviving its complaint (DS352) against Indian alcohol taxes/duties:

The European Union is gearing up to sue India again at the WTO claiming that it is still keeping European wine and spirits out of its huge market with high taxes, trade diplomats said today.

Five years on from the WTO Decision to permit developing countries without manufacturing capacity to import generics from abroad under compulsory license, Rwanda has finally succeeded in securing permission to go ahead and place an order for a patented HIV/AIDS medicine with a Canadian pharmaceutical company. This from BRIDGES

 

RWANDA SHOULD RECEIVE CUT-PRICE HIV/AIDS DRUGS IN SEPTEMBER, FIVE YEARS AFTER 30 AUGUST DECISION

In July 2007, Rwanda became the first country to announce its intention to use WTO procedures to import a cheap generic version of a patented HIV/AIDS medicine from Canada. Nearly ten months have passed since then, but not a single tablet of the lifesaving drug has yet been delivered to the African country.

The delay appears to be the combined result of complexities in the WTO rules, the Canadian implementing legislation, and Rwandan government practice.

In any event, the wait may soon be over.

A significant barrier to imports of the drug from Canada fell last week when the Rwandan government awarded a tender to Apotex, a Toronto-based generics manufacturer, to supply it with 'Apo-TriAvir', a combination of three patented HIV/AIDS medicines.

Apotex now expects to complete production of the drug and start exports by September or October, said Elie Betito, the company's director of public and government affairs. This timeline was confirmed by Anita Asiimwe, the director in charge of HIV/AIDS in the Rwandan health ministry, who said that the first shipment was expected on 30 September.

Betito explained that the additional months were necessary because Apotex had to wait until it was sure that it had won the competitive tender before starting production. The generics maker had procured active ingredients and determined a price for the treatment last fall, which will shorten the production process.

Although Apotex had initially expected the tender process to take place in late 2007 or early this year, it did not receive the Rwandan government's verdict until 7 May. "We don't really know why it took four or five more months than it should have," Betito said.

Asiimwe said that she could not speak to the delay, since procurement fell outside her jurisdiction. However, she assured Bridges that it did not cause any patients to go without treatment, since Rwanda had adequate stockpiles of the drug from other suppliers.

If Apo-TriAvir shipments do start by September, it would be well over a year after Rwanda notified the WTO in July 2007 that it planned to import 260,000 packs of Apotex's drug from Canada (see BRIDGES Weekly, 25 July 2007, http://www.ictsd.org/weekly/07-07-25/story2.htm).

That notification triggered processes set out in the so-called '30 August Decision', a 2003 accord by WTO Members establishing procedures for poor countries with limited pharmaceutical manufacturing capacity to import generics produced elsewhere under compulsory licence. The decision established terms for waiving the requirement for generic drugs produced without patent-holders' consent to be "predominantly" for a country's domestic market.

Health activists complained that the administrative requirements set out in the 30 August Decision waiver were so onerous that countries would have difficulty using it at all, let alone rapidly to address emergencies.

As per those requirements, Canada in October 2007 notified the WTO TRIPS Council of its intention to export the drug to Rwanda, providing information about the licences Apotex had received from the patent-holders and the Canadian patent office for the components of the triple drug cocktail, as well as about a website created by Apotex outlining the quantity of medicine and the distinguishing characteristics aimed at ensuring that generics are not illegally diverted into other markets (see BRIDGES Weekly, 10 October 2007, http://www.ictsd.org/weekly/07-10-10/story4.htm).

Following this, it became possible for Rwanda to issue a competitive tender for the purchase of the drug, as required by domestic law whenever the government buys medicines. Other bids for the tender could have come from companies in India or other developing countries where the components of Apo-TriAvir are not eligible for patent protection, since they would not need licences (whether compulsory or voluntary)to produce generics.

In an interview with Bridges last year, the Rwandan health ministry's Asiimwe explained that Kigali went through the 30 August Decision procedure -- even though it could have directly imported generics from elsewhere -- because it wanted to bring Apotex in as "a quality generic manufacturer" to compete with the other bidders for the tender. This week, she stressed that Apotex's bid had the best price, too.

Apotex's 7 May press release announcing that it had won the Rwandan government tender said that it would provide Apo-TriAvir at cost, at a rate of 19.5 cents (US) per tablet. The three brand name components would cost $6 per dose if bought individually, the statement claimed.

With the path seemingly clear for Apo-TriAvir exports to Rwanda under the 30 August Decision, Apotex's Betito expressed hope that other countries would follow Rwanda's example. However, he repeated his company's call for the Canadian government to simplify its law for exporting drugs via the WTO procedure. Under the Canadian Access to Medicines Regime, he said, if another country tried to import the same drug, Apotex would have to repeat the entire process, right down to hiring lawyers to seek voluntary licences from the brand-name manufacturers that hold the patents on the components of the drug.

Richard Elliott, executive director of the Canadian HIV/AIDS Legal Network, welcomed the announcement that the Rwandan government had chosen to import Apo-TriAvir, but also reiterated that it was necessary to remove "unnecessary hurdles" from the Canadian legislation. "What we need is a straightforward system that is user-friendly for both developing countries and for generic manufacturers in Canada."

"Instead of requiring separate negotiations and a separate licence for each country and each order of medicines," he advocated a 'one-licence solution' that would authorise a company to produce the same drug for export to any country that submits notifications to the WTO.

Despite calls for reform from the generic pharmaceutical industry and public health campaign groups, Canada's industry ministry in December 2007 ruled out any changes to the access to medicines regime.

ICTSD reporting.

 

The rising price of food is a problem of concern to both developed and developing countries alike. In this regard, the European Commission has just completed an investigation which found that only two thirds of the rising price of food in Europe can be accounted for by increases in the cost of ingredients. From the Financial Times;

Mariann Fischer Boel, the agriculture commissioner, released figures showing that the cost of many staples had gone up by more than the value of basic commodities used to make them. Bread increased 10 per cent between February 2007 and 2008, while the near-doubling of the price of wheat should have led to only a 3 per cent rise, the Commission said.

Milk and cheese increased by a third and eggs by 17 per cent over the same period. That should have led to a 12 per cent rise in supermarkets, but the increase was 15 per cent.

The price of cooking oils and fat were up 12 per cent rather than the 8 per cent accounted for by ingredients. Overall, prices that should have risen 5 per cent grew 7 per cent.

Governments have been struggling for ways to control surging prices, which have led to disgruntled voters. The 450m citizens of the European Union in 2005 spent €927bn ($1,440bn, £733bn) on food, according to latest figures from Eurostat, the biggest outgoing after housing for most families. 

The Twelth Ministerial Meeting of the United Nations Conference on Trade and Development [UNCTAD] was held in the Ghanaian capital of Accra on the 20 to 25 April 2008. On the future of UNCTAD as an organisation, a press release issued in the aftermath of the Accra conference;

 'encourages UNCTAD to strengthen its role as the focal point of the United Nations for the integrated treatment of trade and development and interrelated issues in the areas of finance, technology, investment and sustainable development.  It asks the Conference to examine new and long-standing issues that could foster a better understanding of how to maximize the positive impact of globalization on development.  UNCTAD should enhance its work on the special problems of Africa, the least developed countries, small island developing States and land-locked developing countries, as well as on women and other marginalized groups.'

The full Accra Accord can be accessed here.

A news item that has been doing the rounds this month is that the Indian government has decided to institute a scheme offering duty free and quota free access for 02.5% of least developed countries [LDC] exports. From the ICSTD :

Indian Prime Minister Manmohan Singh said that the duty- and quota-free access scheme would cover products that account for 92.5 percent of LDCs' total global exports (and 94 percent of India's total tariff lines). Covered products of interest to African countries in particular - Africa is home to 34 of the world's 50 LDCs -- include cotton, cocoa, sugar cane, and copper and aluminium ores.

Singh made the announcement at the first Indo-African Forum summit in New Delhi on 8 April. At the gathering, South African President Thabo Mbeki, whose country is not an LDC, praised the decision as beneficial for all of Africa. "This will allow us to fight our common enemies - poverty and underdevelopment," he said. "Without this cooperation, our economies would remain localised and fail to grow."

India is hoping to catch up with China in terms of access and influence in Africa. Over the past decade, China has surpassed India in trade with the continent; its trade with African countries amounted to some $55 billion in 2006-07, compared to only $20 billion for India. Like Beijing, New Delhi is eager to gain access to the continent's rich oil and mineral reserves.

WTO Members agreed in December 2005 that all developed countries, and developing countries "declaring themselves in a position to do so," would unilaterally accord unrestricted unilateral market access to exports from LDCs. However, this came with an exception for 3 percent of all tariff lines for countries unwilling to fully liberalise trade; some LDCs at the time said that this would suffice to block many of their very limited number of competitive exports.

Pradeep Mehta, head of CUTS International, told the Financial Express newspaper that New Delhi should ensure that "none of the items which are of interest to Africa find a place in India's negative list" of products for which tariffs would remain in place.

While opening the summit, Indian Prime Minister Singh spoke of the importance of increased market access to the development dimension of international trade. In addition to announcing the new trade preferences, he announced that India would double its line of credit to African nations to $5.4 billion, and begin more than $500 million worth of infrastructure projects on the continent over the next five years.

It is hardly surprising that the ongoing development of agricultural land for biofuel production will effect world food prices. The United Nations Food and Agriculture Organisation [FAO] has confirmed as much, identifying biofuels as one of the factors which have contributed to 40 per cent rise on world food prices in 2007. While not exactly a revelation, the International Centre for Trade and Sustainable Development [ICTSD] have recently published an article which cites a joint report from the FAO and the European Bank for Reconstruction and Development [EBRD]. The joint FAO-EBRD report makes a strong recommendation with regard to one way to meet rising demand for food;

According to these institutions, the "significant untapped agricultural production potential" in Eastern Europe, Kazakhstan, Russian and Ukraine should be unlocked through increased public-private partnerships to facilitate agricultural investment. According to the FAO and EBRD, 23 million hectares of suitable agricultural land has been withdrawn from production in this area of the world. At least 13 million hectares could be returned to production without significant environmental cost. Jacques Diouf, Director-General of the FAO, said that if institutional and financial constraints currently limiting production in the region were to be removed, its cereal output and contribution to world exports would grown to above the seven percent increase in grain production needed between 2007 and 2016.

While putting former agricultural land back into production is only one factor in addressing rising world food prices, with regard to the issue of biofuel production, one wonders to what extent African Carribbean Pacific 9ACP) countries affected by the withdrawal of European price support in the sugar sector have been encouraged to pursue ethanol production.

The International Centre for Trade and Sustainable Development [ICTSD] has an interesting article on how certain African coffee producers are turning to intellectual property protections such as geographical indications [GI] and trade marks to receive a higher price for their product. While the world coffee price has risen considerably in 2008, this follows a period of steady decline in coffee revenues. The ability of developing countries to exploit intellectual property to reap a higher price for their product can only be a positive step in their development.

STARBUCKS TO PROMOTE RWANDAN COFFEE

Starbucks, the international coffee chain, has announced that it will market a unique high-quality coffee from Rwanda. Rwanda is hoping development benefits will flow from this partnership, based on coffee beans that are subject to a Geographical Indication (GI).

Starbucks is to source an exclusive blend of coffee, called 'Rwanda Blue Bourbon,' from a country in which coffee farming was decimated by the 1994 genocide. The chain intends to increase the quantity of its coffee originating in Africa and sees the Rwandan coffee as a marketable response to consumer demands for coffee which is not only high in quality but can also be identified with a specific region or country. The GI associated with the Rwandan coffee means that there is a restriction on the use of the name to a specific place of origin and production method, as in the case of Champagne from France.

Last year, Ethiopia chose another path by deciding to trademark its Sidamo and Harar beans, rather than relying on GIs (see Bridges Trade BioRes 6 July 2007; http://www.ictsd.org/biores/07-07-06/story2.htm). Ethiopia is hoping that the trademarks will bring higher returns for the farmers and lead to more surplus returning to the farming communities from sales by the Starbucks chain. Similarly, the Rwandan farmers are hoping that the purchase by Starbucks of their produce will assist development in their communities.

Rwandan Ambassador to the US Zac Nsenga said the aim of the growers in Rwanda is 'to produce sustainable quality coffee in sustainable quantities while maintaining standards. They are looking for lasting partnerships with Starbucks. In doing this, they aim at achieving sustainable livelihood for their families.' The US Agency for International Development (USAID) has been involved by partnering with Rwandans to upgrade the coffee-farming and coffee-processing infrastructure.

'Starbucks to Sell Exclusive Rwanda Coffee In Europe,' PLANET ARK, 10 March 2008; 'Java Rwanda: Starbucks to Sell Rwandan Coffee,' FOX NEWS, 1 March 2006; 'Product Spotlight: Coffee with a conscience,' FOOD PROCESSING; 'U.S., Starbucks, Rwanda Coffee Partnership Equals Success,' USINFO, 11 April 2006.

The International Institute for Sustainable Development (IISD) has put online an article by Jason Potts 'The Legality of PPMs under the GATT: Challenges and Opportunities for Sustainable Trade Policy.' While the Tuna/Dolphin disputes have cast a long shadow over the GATT permissibility of process and production methods [PPMs] as a way to distinguish between otherwise identical goods, Potts article reaches an interesting conclusion;

Our analysis of the relationship between PPM based measures and the GATT suggests that not only is there no evidence of a legal rule against the use of such measures within the GATT, but even more, that the existence of such a rule would appear to be inconsistent with the essential logic applied in GATT jurisprudence to date.

On 8 February 2008, Ambassador Crawford Falconer, the Chairman of the agricultural negotiations published a set of revised draft modalities on the farm talks. Following on from this, the last month has seen intensive discussions between a select group of importing and exporting countries. The 'big' news is that Ambassador Falconer hopes by the 31 March or earlier to be able to reconvene multilateral farm talks so that representatives of the full membership can explore their options before agreeing to a draft blueprint on the final deal.

While it may be premature to hope for an imminent end to the Doha Round, it is clear that there is significant momentum behind the scenes.

International concern for the detrimental effects of climate change reached a peak in December 2007 with the convening of the UN Framework Convention on Climate Change Conference of the Parties in Bali, Indonesia. At least one partial 'solution' offered to the problem of climate change is the gradual replacement of fossil fuels with plant derived biofuels. In theory at least, increased reliance upon plant derived biofuels could reduce emissions associated with climate change. The logic is that the Co2 asborbed by plants during their growth is then emitted into the atmosphere when the plant is used as a fuel. Biofuel use is 'carbon neutral' in that an equal amount of Co2 is absorbed during growth as is subsequently produced during use as a fuel. The 'problem' is that a life cycle analysis of biofuels reveals that they are commonly far from carbon neutral, with significant amounts of Co2 being released into the atmosphere for reasons such as the frequent land clearances associated with extending the agricultural frontier to make way for biofuel plantations.

Despite such concerns, the European Commission has been at the forefront of proposals to increase biofuel use in the transport sector. A recent memo issued by the Commission has proposed a minimum binding target of 10% biofuel use in the transport by 2020. However, accompanying this proposal is a set of 'sustainability criteria' which seek to take into account enviromental concerns related to increased biofuel use;

The Directive therefore sets out stringent environmental sustainability criteria to ensure that biofuels that are to count towards the European targets are sustainable and that they are not in conflict with our overall environmental goals. This means that they must achieve at least a minimum level of greenhouse gas savings and respect a number of requirements related to biodiversity. Among other things this will prevent the use of land with high biodiversity value, such as natural forests and protected areas, being used for the production of raw materials for biofuels.

Despite the inclusion of such 'stringent environmental sustainability criteria', EU member governments are currently pressurising the Commission to include sustainability standards in a revised version of the 1998 Fuel Quality Directive which relates to the quality of petrol and diesel fuels. According to the website Eur-activ, there are concerns that the introduction of sustainability standards could derail the chances for success of the nearly completed revision to the Fuel Quality Directive.

An additional consideration for the European Commission is the WTO compatibility of the sustainability criteria. While increased biofuel consumption would tend to favour certain developing countries such as Brazil which enjoys significant comparative advantage in the production of ethanol, a recent BioRes report has noted the concerns of some exporters that such requirements could pose a non-tariff barrier to trade.

 

Dear Simon and all,

I am sorry that I have to leave for a while--and actually I have been absent for a hell long time--submission of the dissertation in my university is suddenly made ahead of usual time, and I am in a bloody hurry now. I will come back by middle of March.

While I cannot post news on China and WTO and if you need, you may go to check out People's Daily, China Daily, and CRI for official English news reports. 

Best wishes,

Alex Lu 

 

 

 

On January 07, 2008, Canada's International Trade Minister David Emerson said in an interview with CanWest News Service "We're at a stage now where we are probably the only major tourism market in the world which does not have such an agreement. We are getting close, in my opinion, to being treated discriminatorily under the rules of the World Trade Organization." On Thursday that week, Mr. Emerson said again in Beijing that Canada may consider complaining against China in WTO.

But could it be just a gesture of threat, or threat, or the prolude to a likely official WTO complaint? And if in the WTO complaint case, will Canada win out? 

 Global Chinese Press' answer is that "Experts say it is ridiculous", since the tourism agreements that have been signed between China and other countries are all bilateral and are not subject to WTO jurisdiction, although the whole report is in Chinese only, and a bit different from the English one of the same Press. Professor Zhu Xinyan of Capilano College was quoted saying "WTO would have no reason to reject, if Canada raises the case", but "it could be hard and the likeliness of Canada winning the case is very slim".

 

 

'Iron Lady' plans a clean break

Vice Premier Wu Yi has said she will not take any job after her retirement next year and hopes "no one will remember me."

"I've already said explicitly that I will not take any posts either in government departments or social organizations after retirement," Wu, a veteran official who oversees the country's foreign trade, told a meeting of the China Chamber of International Commerce in Beijing on Monday, China News Service reported.

"I hope people can completely forget me."

After having become a GPA observer in 2002, China now officially applied to join the GPA.

Finance Minister Xie Xuren signed a written application on behalf of China for joining the Agreement on Government Procurement (GPA) on Friday.

The signing marked that the country had officially started the process of joining the GPA, according to an announcement posted on the Ministry of Finance website.

It is claimed that the third SED has completed with success.

http://english.china.com/zh_cn/business/news/11021613/20071214/images/11021613_1197587069965_1.jpg

Here are some highlights produced during the SED:

1. Vice premier says China must oppose attempt to politicize trade issues
2. U.S. treasury chief stresses economic interdependence, warns against protectionism
3. Chinese Vice Premier calls for dialogue, consulation at China-U.S. economic talks
4. China says consultation only way to solve trade disputes
5. PBOC governor: CPI surge, U.S. interest rate cuts to influence China policy 
6. China says rapid appreciation of Renminbi not good for the world
7. China calls for expanding trade and investment with U.S.
8. China, U.S. to sign deal on environmental protection in import, export

9. Chinese official urges U.S. to clarify foreign investment policy

10. Vice premier Wu stresses opening up, avoiding trade protectionism

 

Following Washington's May announcement that it was retroactively excluding gambling services from market-opening commitments it made as part of a 1994 world trade deal, recently US reached a "compensation" deal with EU--opened some other markets to EU exports, which signifies the settlement of the dispute under WTO.

But does this mean a modification of schedules under Article 28 of GATT, or could this set a bad precedent for other strong members to buy out their obligations which they don't like to honor any more?

China opened Dec 12, 2007 the largest free-trade harbor area in Tianjin's Dongjiang Bonded Harbour Area, which is the third of its kind.

Dongjiang Bonded Harbor Area is the third of its kind in China, following the operation of Shanghai-based Yangshan Bonded Harbor Area in December 2005 and Dayaowan Bonded Harbor Area, located in Dalian, Liaoning Province, in June this year.

The establishment of the fourth -- Yangpu Bonded Harbor Area in the country's southernmost island of Hainan -- was approved by the State Council in October.

Dongjiang Bonded Harbor Area, close to Beijing and located in the Bohai-rim region, "is designated as the pilot among others to adopt reforms and renovations to promote the opening-up drive," LiKenong, deputy chief of China Customs, said at the inauguration ceremony.

The area is set to enjoy the most favorable policies in taxation and foreign exchange policies and offers comprehensive services in international shipping, distribution, purchase, transit trade and export processing businesses following the practices of international hubs, free ports and free trade zones, according to Li.

China and US signed 14 bilateral commercial and trade agreements and memoranda on December 11, 2007, regarding tour, hi-tech, pharmaceuticals, AIDs and green power, among others. Today, December 12, 2007, the third China-US Strategic Economic Dialogue was jointly kicked off by Mdm Wu Yi and Mr. Paulson.

The 14 instruments are:

--Memorandum of Understanding Between the National Tourism Administration of the People's Republic of China and the Department of Commerce of the United States of America to Facilitate Outbound Tourist Group Travel From China to the United States

-- Guidelines for China-U.S. High Technology and Strategic Trade Development Between the Ministry of Commerce of the People's Republic of China and the Department of Commerce of the United States of America

-- Agreement Between the Department of Health and Human Services of the United States of America and the State Food and Drug Administration of the People's Republic of China on the Safety of Drugs and Medical Devices

-- Agreement Between the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China and the Department of Health and Human Services on the Safety of Food and Feed

-- Memorandum of Understanding on Cooperation with Respect to Trade in Alcohol and Tobacco Between the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China and the United States Department of the Treasury

-- Memorandum of Understanding between the Department of Agriculture and the Department of Energy of the United States of America and the National Development and Reform Committee of the People's Republic of China on Cooperation in the Development of Bio Fuels

-- Protocol Between the Department of Agriculture of the United States of America and the Ministry of Science and Technology of the People's Republic of China on Cooperation in Agriculture Science and Technology

-- Memorandum of Understanding on HIV/AIDS Cooperation between the Ministry of Health of the People's Republic of China and the Department of Health and Human Services of the United States of America

-- Memorandum of Understanding Establishing a US-China Commercial Match-Making Program Between the US & Foreign Commercial Service, International Trade Administration, US Department of Commerce and the China Council for the Promotion of International Trade.

-- Credit Agreement for Importing Medical Equipment for Liaocheng People's Hospital Project in Shandong Province under Sino-U.S. Sovereign Guarantee Financing Cooperation between the Export-import Bank of China and HSBC Bank USA

-- Memorandum of Understanding Between the U.S. Department of Commerce, the U.S. Environmental Protection Agency, and the China State Environmental Protection Administration on establishing a forum on technologies and industrial cooperations in environmental protection

-- Memorandum of Cooperation on Implementation of National Environmental Emergency Response Monitoring Project between the State Environmental Protection Administration of China and INFICONINC USA

-- Letter of Intent on Closer Cooperation on National Dioxin Monitoring Project Between the State Environmental Protection Administration of China and Waters Corporation

-- Share Subscription Agreement of GreenGen Company Limited between China Huaneng Group and Peabody Energy

While Chinese currency is under great pressure for appreciation and has strengthened 11.9 percent since the end of the fixed exchange rate with the dollar in July 2005, yuan may be stronger than ever in the future. But another great issue may be the rapid depreciation of US dollars.

"The U.S. wants a strong yuan, but what about the dollar being so weak?'' said Binay Chandgothia, who oversees $2 billion as chief investment officer at Principal Asset Management Asia in Hong Kong. "This will form part of the posturing in the discussions.''

 

China announced December 9, 2007 a long- awaited plan to expand the amount that foreign investors could invest in the domestic market, after the central bank ordered banks to increase to 14.5 percent the percentage of deposits they must set aside as reserves,in stark contrast to the move to force lenders to set aside more money in reserve to curb credit growth.

The amount of capital qualified foreign institutional investors (QFII) can invest is now capped at US$30 billion (HK$234 billion).

Economists and fund managers believe the QFII move, coming amid steps to tighten the macroeconomic situation, is aimed at offsetting potential domestic volatility.

China's first WTO judge Zhang Yuejiao vows to fulfil promise of the job. She said "I will do my best with unwavering impartiality", "You can rest assured that I will do justice to the post," while people familiar with her depicted her as  "She looks petite, soft and easy-going, but she has a very determined will. Once she sets a goal, she will go after it with full force".

Zhang Yuejiao pursued law studies in France and the US, and was the former director of the treaty and law department of the erstwhile Ministry of Foreign Trade and Economic Cooperation (now the Ministry of Commerce) and in different capacities in the World Bank and the Asian Development Bank.

 

Intensive talks in Geneva between US and China over tax breaks given by the latter now finally delivered results that solved the tension. New York Times reports "U.S. Reports Trade Accord With China", while China MOFCOM reproduced an article "China Resolves Key Trade Dispute with US" which was in turn reproduced by Shanghai Daily from, probably, Reuters. 

Xinhua News Agency released on Nov. 5, 2007 that China strongly opposes US import ruling on steel tubes and woven sacks, which is another dual-investigation (anti-dumping plus countervailing) case targeting Chinese products.

While huge trade deals with Airbus and other French companies may cement the bilateral relationship between China and France, there are also negative signs for China-EU relationship cooling down, as analyzed by International Herald Tribune article "The 'China honeymoon' is over" due to "primarily the result of job outsourcing and the ballooning EU trade deficit with China, which is growing at €15 million per hour and likely to rise from €128 billion in 2006 to more than €170 billion in 2007."

French giants Airbus and Areva et al are granted huge deals totalling some 30 billion dollars by China during French President Sarkozy's visit. Airbus also promised to outsource some of the work for the A350-XWB to China companies.

 The visit, and probably the deal, may advance China-France talks to greater depth and usher in a fresh phase for the development of international relations suited for the new century.

Taiwan blocks appointment of Chinese judge at WTO

For the 1st time in WTO history, Taipei has blocked the appointment of an appellate body judge, Madam Zhang Yuejiao, who comes from China, defending that an appellate body judge coming from Mainland China may jeopardize fairness in determining cross-strait trade disputes under WTO.

It is anticipated that this is "likely to aggravate relations between the two rivals."

With the view to "upholding the opening-up policy and safeguarding national economic security" in the WTO era, China's National Development and Reform Center (NDRC), or the top economic development and reform planner, and MOFCOM jointly issued on 7 November the new Industry Guide for Foreign Investment. The new Guide seems to point new directions for some key issues of foreign investment: rare and unrenewable resources exploration, real estate investment, national security sensitive investment, clear and environment friendly investment, financial sector investment, hi-tech development, etc. At the same time, the Guide made it plain that further foreign investment in traditional industries or where China now enjoys obvious comparative advantages, and industries of obvious export orientation will be henceforth discouraged, restricted or forbidden.

For the official release of the new Guide, please check: http://www.sdpc.gov.cn/zcfb/zcfbl/2007ling/t20071107_171058.htm or just 外商投资产业指导目录.

As announced by the WTO, the recent panel hearings in the EC - Bananas, Article 21.5 dispute brought by the U.S. were open to the public.  Unlike some other recent open panel hearings, for this one the public could view the questions from the panel and the parties' answers.  Christine Hohl of HEI attended the hearing and took notes, focusing on these questions and answers and other aspects that were not otherwise made public (as the U.S. and EC oral statements usually are through their respective web sites).  Here are her notes:  http://www.worldtradelaw.net/panelmeetings/bananas215hearing.pdf

China's IPR protection may be a huge issue these days, although surely China has made huge efforts to improve on that.

Aaron Wininger and Peiyu Sun's article "Recent Developments And Routes For Enforcing Intellectual Property Rights In China" seems to offer some excellent basics for China's IPR protection system and legal practices, while Dorsey & Whitney LLP's "China & Hong Kong: Recent developments in intellectual property" offers good briefing on the latest developments in both Hong Kong and Mainland China.