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.

While fairly good quality at low prices is always welcome, China's exports have also raised much concern, to say the least. People may enjoy the fairly good quality at low prices, but they may also feel threatened.

EU citizens are also not agreed on whether China is an economic threat or an opportunity. While some countries such as Germany and Sweden capitalise on the opportunities by exporting capital goods, eastern Europe with traditional exports such as shoes and textiles have reason to fear “unrealistic” Chinese prices. Believe it or not, there is this awe of European entrepreneurs for Chinese workers when it comes to setting up operations in China. It has been said admiringly that they “don’t drink, work one day after another, don’t demand much, and are obedient”.

All this will provide talking points for the planned EU-China summit next month where delegates may see a huge row as they discuss the implications of globalisation for EU-China relations and ways to handle the Chinese conundrum. Far from playing Chinese chequers, the EU would do well to send a clear message that it stands stolidly behind the champions of free trade even if seeming politically inexpedient to do so.

International negotiations on treaties are also high politics and have demonstrated repeatedly the impact of realpolitik. A case in point might be what Tyler Cowen described in the blog:

The Law of the Sea Treaty

Ratifying the Convention might make us look more cooperative, but that is too vague a reason to justify it.  The Convention also would make it legally easier for the U.S. Navy to pass through foreign waters, although in a pinch this probably would not matter much. 

The real issue these days is stopping the Russians from claiming most of the Arctic, at least the sea lanes, and this is why the Bush administration now supports the treaty.  We'll then have international support, or at least the pretext of such support, for telling the Russians they can't colonize the Arctic.  That's it, that's the whole real reason for supporting the treaty and jumping into bed with the UN.  But hey, I can sympathize with stopping the Russians.

How to better balance intellectual property rights protection under TRIPS and public health concerns has long been one of the hot topics in WTO negotiations. Currently China's top-level legislature is debating the amendment to TRIPS so that countries may produce and export drugs to other countries in dire trouble with or without due licenses and authorization from the manufacturers or dealers.Apparently, China may approve the amendment.

Very unusually, China "resolutely opposes" the anti-dumping investigation by the U.S. Department of Commerce into Chinese magnetic rubber, a spokesman of the Ministry of Commerce said on Wednesday.

The spokesman said it was the sixth anti-dumping probe by the U.S. targeting Chinese products in less than a year. Chinese industries have shown "strong discontent" at these probes being initiated so frequently by the U.S., he said.

By launching these investigations, the U.S. has abused WTO regulations and run counter to its own policies and conventions, said the spokesman.

It is harmful to developing healthy and win-win bilateral trade ties between China and the U.S., he said.

The U.S. side has been sending "wrong signals" to its domestic industries and had put both sides under great pressure, he said.

China hopes the U.S. will drop the probe as soon as possible to avoid negative influences and meanwhile retains the rights of a WTO Member, said the spokesman.

The U.S. Department of Commerce started an anti-dumping probe into Chinese magnetic rubber on Oct. 12.

Source:Xinhua

EU, US and Japan Accuse Beijing of "Breaking WTO Promises"

GENEVA: The United States, the European Union and Japan yesterday demanded answers from China on what they said were its failures to open up its markets to greater foreign competition. Representatives of the world's three biggest economic powers were disappointed by China's refusal to provide serious explanations of how it was living up to the promises it made when it joined the World Trade Organisation in 2001, according to trade officials present at the review meeting at WTO headquarters.

Peter Mandelson said the EU should align policy closely with Washington and be ready to take cases against China to the WTO.

Once a committed supporter of free trade, Peter Mandelson has issued an internal document illustrating the great pressure he is under to toughen his stance  on China. This comes as Europeans have become increasingly concerned about the scale of Chinese imports and their effect on jobs. In Mandelson's document, he argues that "to some extent the Chinese juggernaut is out of control" and that the European Union is "sitting on a policy time bomb."

Suggesting that China has "failed to respond to a policy of cooperation and dialogue," Mandelson says it is less desirable or necessary than in the past "to distinguish European policy from American policy."

Nevertheless, before EU ever joins with US against China, the EU may have to first weigh against two factors: the EU's presumed WTO obligation to promote free trade, and any possible adverse effect that could result from such a "trade war", if any.

The WTO has just put online a webcast of a debate it held on the subject of 'making trade work for development.' The speakers are Carolyn Deere, Director of the Global Trade Governance Project, Oxford University, and Rosalea Hamilton, founder of the Jamaica's Institute of Law & Economics at the University of Technology.

As a positive response to China's huge demand and supply gap in short- and middle-ranged civil aviation market, China has long vowed to develop its own short- and middle-range civil aircraft. Now China formly announced its decision to subsidise the small, remote and rural airports and some routes to boost the regional air travel.

The annual JCCT--the bilateral trade and commercial talk annually held between China and US--is going to be held on December 11 this year, followed closely by U.S.-China Strategic Economic Dialogue (SED), said China's People's Daily.

As revealed by the news, the hot issues between US and China during the past year such as trade protectionism, intellectual property rights protection and product safety will probably be tackled during the meetings.

A really intresting report from the ICTSD BioRes section seems to indicate that United States' disgruntlement with the EU's Emissions Trading Scheme could result in a dispute being brought to the WTO. 

 

US SAYS EUROPEAN AVIATION EMISSIONS TRADING SCHEME TO END UP AS WTO DISPUTE

The EU and US have recently clashed over the legality of including international aviation in the European emissions trading scheme.

The EU, which is a major champion of legally-binding measures to address climate change, has set up an emissions trading scheme as one of the main measures to reach its commitment reductions under the Kyoto Protocol. The scheme currently covers industry, with aviation set to be included, potentially as early as 2010. The US opposes a scheme under which its airlines would have pay up when landing and departing from Europe. This schism caused tension at a recent meeting of the International Civil Aviation Organisation (ICAO), which ended in acrimony with Europe filing a reservation allowing it to side-step a resolution calling for mutual agreement from third parties with regard to regional emissions trading schemes.

Tri-annual ICAO meeting addresses global warming

Meeting in Montreal from 18-28 September, the ICAO Assembly addressed, among other, issues related to climate change. The Assembly, while falling short of adopting global guidelines to limit greenhouse gas emissions from the aviation sector, decided to establish a working group on aviation and climate change. This group will be charged with looking at, among other, voluntary measures, possibilities for technological advances in aircraft and ground-based equipment, more efficient operational systems, improvements in air traffic management, positive economic incentives, and market-based measures to achieve reductions in emission of greenhouse gases.

At its last meeting in 2004, the Assembly had issued a resolution supporting regional emissions trading schemes. At the 2007 Assembly, however, participants drafted a resolution saying that regional emissions trading schemes should be based on 'mutual consent' when involving aircraft from third parties. In practice, this would require negotiating separate agreements with all third parties.

EU to push ahead with emissions trading

The European group filed a "reservation" against the ICAO resolution, meaning they are ready to go ahead with including aviation in their emissions trading scheme. "Whilst Europe is committed to multilateral action to address the effects of aviation emissions, mutual agreement is not a pre-condition for the implementation of market-based measures," according to the written reservation of the group.

The forty-two states of the EU and the European Civil Aviation Conference, ECAC, further said that "the programme put forward for agreement at this Assembly is unambitious, piecemeal and lacking in credibility on market-based measures (both greenhouse gas emissions charges and emissions trading)." The statement asserted that the regional emissions trading scheme was "fully consistent with … international obligations, in particular the key principles of sovereignty and non-discrimination. Europe intends to pursue these policies and adhere to these principles."

US hints at trade dispute

Referring to the differences over the reach of the European emissions trading scheme, C. Boyden Gray, US ambassador to the EU, said "The Europeans are confident of their legal authority and people on the other side are equally confident of their position. It sounds like a lawsuit to me. I don't see how it's going to get resolved politically."

According to Grey, the EU should focus on stemming emissions from its transportation system, "before sort of distracting everybody with airlines, which is a pretty small fraction, at the moment, of the transportation sector."

Airline industry groups diverge over scheme

The airline industry has supported a global approach to emission reductions; Global airlines group IATA has called for a voluntary but global emissions trading scheme. According to David Henderson of the Association of European Airlines, "Air-emissions trading is better than a fuel tax. We can support an aircraft-emissions scheme provided it is a well-designed scheme that treats everybody equally. What we don't want is a scheme that has only a tiny impact on global emissions and damages the competitiveness of European airlines."

Following the ICAO meeting, James May of the Air Transport Association of America, on the other hand, said "The European States have indicated their intent to unilaterally impose such measures on the airlines from other countries, contrary to the will of every other country in the world and contrary to international law. If they persist, there will no doubt be a legal battle."

Green groups slam ICAO

Environmental groups, on the other hand, came out strongly against the ICAO. João Vieira of Transport and Environment, a Brussels based environmental group, said "After a shameful decade of obstruction and inaction ICAO must now be stripped of its environmental responsibilities. The EU has recognised that it must now take the lead in cutting emissions from the most polluting form of transport on the planet."

"After 10 years of posturing, this assembly's clear failure sounds the death knell for any ICAO role in environmental protection," added Dr. Werner Reh, aviation expert for Friends of the Earth Germany. "ICAO chooses to ignore the very significant growth in greenhouse gas emissions by airlines and the clear need for taxes, emission charges or emission trading schemes."

The Kyoto Protocol recognised the International Civil Aviation Organisation (ICAO) as the forum that should be taking the lead in developing action to stem global greenhouse gas emissions from aviation.

Background

The aviation sector contributes around two percent of global carbon dioxide emissions. However, when indirect effects from other pollutants as well as cloud formation are added, aviation contributes up to nine percent of radiative forcing, or global warming effect. Aviation is also one of the fastest-growing sectors. Emissions have doubled since 1990 and are projected to further grow by 3.5 percent annually.

The aviation industry is heavily subsidised by the public sector, starting with development and manufacture. Major disputes at the WTO have involved such subsidies, pitting Brazil and Canada against each other over support to Embraer and Bombardier, and the US currently challenging subsidies paid to Europe's Airbus, and Europe simultaneously going after subsidies paid to US manufacturer Boeing. Airports are also subsidised, while international tickets and jet fuel are exempt from taxes.

While the bulk of internationally traded goods are transported by water, roads and rail, aviation also plays an important role. Currently, organic and environmental groups are considering whether to start labelling products based on their carbon footprint, which would particularly target air-freighted goods. Meanwhile, others have warned against punishing air-freighted products from developing countries, as this could counteract important trade-led development opportunities for countries vulnerable to the effects of climate change (see Bridges Trade BioRes, 22 June 2007).

"US envoy: EU risks new trans-Atlantic trade fight by including airlines in emissions program," AP, 25 September 2007; "EU Clashes With US Over Airline Emissions Trade," REUTERS, 24 September 2007; "EU emissions trading plan set for takeoff despite transatlantic rift," EUROPEAN FEDERATION FOR TRANSPORT AND ENVIRONMENT RELEASE, 28 September 2007; "Aviation Industry Rejects Europe's Climate Emissions Trading System," ENS, 2 October 2007.

On 9 October, the European Commission announced that it would not be renewing quotas on Chinese textiles products which were put in place over two years ago. The quotas, which will expire at the end of this year, will instead be replaced by a 'double checking' monitoring system which will track the levels of exports from China and imports to the EU and thus provide a clearer picture of trade patterns.

 

From the Commission;

Textile and footwear sector EU and China decide on textile import monitoring system for 2008 Brussels, 9 October 2007

Following from their 2005 Memorandum of Understanding on cooperation in managing the transition to free trade in textiles, the European Commission and the Chinese Ministry of Foreign Trade have decided on a system of joint import surveillance that will operate for one year in 2008 following the end of the import growth caps on ten categories of textiles and clothing from China. The 'double checking system' will track the issuing of licences for export in China and the importation of goods into the EU. This monitoring system provides a clear picture of the likely development of trade patterns and ensures predictability for EU businesses. The arrangement covers the eight most sensitive of the ten product categories covered by the levels agreed in 2005 and that will expire at the end of the year. Although imports of these goods will be closely monitored their level of import will not be restricted by this arrangement. EU Trade Commissioner Peter Mandelson said: "I welcome this further step in the cooperation between the EU and China in ensuring a smooth transition to free trade in textiles. A system of joint monitoring means predictability for EU producers and traders as well as a clear picture of future developments as we make the final step to free global trade in textiles and clothing". The product categories subject to double-checking will be categories 4 (T-shirts), 5 (pullovers), 6 (men's trousers), 7 (blouses), 26 (dresses), 31 (bras), 20 (bed linen) and 115 (flax yarn). The system will be formally adopted by the European Commission in the days ahead. It will be administered by EU Member State licensing offices. Background Following the final stage of global liberalisation on January 1 2005, textile and clothing exports to Europe from China experienced a very rapid surge accompanied by very rapid drops in unit prices. This surge caused serious damage to many EU producers and precluded any realistic possibility of EU producers adapting to new levels of competition. The EU and China negotiated a Memorandum of Understanding that would cap imports from China at agreed levels each year until 2008. The Memorandum also committed both sides to working for a smooth transition to free trade in textiles in 2008. The 2005 agreement has allowed textile and clothing exports from China to continue to grow, but at a rate that has allowed EU producers to adjust to new levels of competition. This breathing space created with China in 2005 until the end of 2007 has provided a further opportunity for EU textile producers to adapt to new levels of competition, invest in technological change and innovation and focus on high value added products. Through its Global Europe strategy the European Commission has focused new efforts and new resources on opening new markets for EU textile exports and reducing the level of counterfeiting of European textile goods. Europe is the world's second largest exporter of textiles and clothing. Frequently asked questions about the liberalisation of trade in textiles and clothing

 

According to the Financial Times, a coalition of developing countries has rejected big tariff cuts on industrial goods, a move which could spell the beginning of the end for the Doha Round.

 

Developing countries rule out Doha cuts

By Alan Beattie in London

Published: October 9 2007 20:13 | Last updated: October 9 2007 20:13

A coalition of developing countries has rejected big cuts in industrial goods tariffs in the troubled Doha round of trade talks, a move the US said could spell the end of the round.

In a paper submitted during the negotiations in Geneva, a grouping including Brazil, India, South Africa and Argentina, as well as all the African members of the World Trade Organisation, said they should not be asked to make bigger tariff reductions than rich countries.

The US and European Union said the proposal was a direct challenge to a draft text published in July by Don Stephenson, the Canadian WTO ambassador who chairs the industrial goods negotiations.

Mr Stephenson suggested ranges for cuts in goods tariffs that would have implied bigger reductions in protection for many developing countries, whose tariffs generally start higher than in rich countries.

Sean Spicer, spokesman for Susan Schwab, the US trade representative, said: “This proposal could signal the end of the Doha round. While the US and others have shown a clear commitment to moving towards a successful outcome, this text marks a significant move in the wrong direction.”

The US has said it will require reductions in goods tariffs in return for offers to reduce its farm subsidies.

While Brussels has also argued that Washington needs to do more to cut farm support, it has concurred that the big emerging market countries need to open their goods markets.

Peter Power, spokesman for EU trade commissioner Peter Mandelson, said: “A text has already been tabled by the chair . . .  Alternative papers are not needed, and we await others at the table to undertake the necessary negotiations.”

Mr Power said it was difficult to reconcile the developing countries’ proposal with Mr Stephenson’s.

The ambassadors of Brazil, India and South Africa, which led the protest, could not be reached for comment.

Copyright The Financial Times Limited 2007

Membership of the world's most famous cartel, the Organisation of the Petroleum Exporting Countries (OPEC), is set to rise to thirteen after it was announced yesterday that Ecuador would be rejoining its ranks after a fifteen year hiatus. The Financial Times has commented on the move as reflective of the growing prestige of OPEC following a steady rise in oil prices over the past few years. With the fortunes of OPEC seemingly on the ascendant, the ICTSD has produced an interesting paper on the application of WTO rules and agreements to the energy sector. It is clear from the ICTSD report that WTO rules on issues such as market access are applicable to the energy sector. With the rise in oil prices showing no signs of abating, it will be interesting to see whether dispute settlement procedures under the WTO are utilised to prise open energy supply sectors.

It is likely that 'success' in the Doha Round will depend upon extracting agreement from India, Brazil, the EC and the United States. It is therefore unsurprising that efforts to drive negotiations forward have increasingly centred upon these so-called G4 group of countries. With this in mind, the Times of India has an interersting report that Pascal Lamy, the Director General of the WTO, has invited Indian Commerce Minister Kamal Nath and US Trade Representative Susan Schwab to meet in London with a view to reaching a breakthrough on the Doha Round.

Euractiv.com has just published an interesting interview with the European Commission's top trade official, David O'Sullivan. The interview, reproduced in full below, reveals the considerable optimism in European trade policy circles that a resolution to the Doha Round stalemate will be reached by the end of this year. In the words of Mr O'Sullivan, 'We are now close to the end point on Doha.' 

 

One of the hottest issues on the EU’s trade agenda at the moment is still the Doha Round. After so many collapses in negotiations and with positions still so polarised, are we any nearer to reaching a compromise that could 'save' the Round? Will the saga ever end? 

Well, I think we all hope that we can bring this Round to a successful conclusion – hopefully this year. 

There are still difficult issues – you’re right that positions are still polarised. But nonetheless, six years, going on seven years, of negotiations have brought us to a point where I think we can see where a reasonable landing zone would be for most of the WTO membership, across most areas of the negotiations. 

So the challenge in the next few weeks will be for people to get the mandate from their national constituencies in order to sign up to that deal and finally bring this Round to a conclusion. 

It is not going to be easy – it could still fail. But I remain convinced that the negotiations have taken us a long way and that we are now close to the end point. 

Where will the concessions come from? Is the EU going to have to make further concessions, notably on agricultural subsidies? 

The EU has already shown a lot of flexibility. Mr. Mandelson has been at the forefront of trying to move these talks forward. We are already very close to the outer limit of what we can do. However, if everyone else makes a final effort, I am sure that we have not said our last word on agricultural issues. 

The EU’s new trade strategy pleads for more global openness, but at the same time, the EU has got high tariffs on agricultural goods. Also, last year the EU introduced the largest number of anti-dumping cases, and lately, Commissioner Mandelson has been talking about the possibility of introducing 'golden shares' to protect some sectors from foreign takeovers. Is the EU really practising what it preaches? 

Yes, we are probably the most open market in the world – open to investment, open to trade in goods. We are the largest importer of products from developing countries and the largest importer of agricultural produce from the developing world – so we are very, very open. 

Of course, there are situations where we have to protect ourselves – anti-dumping cases are an example. But, for example, this year we have not opened one single anti-dumping case and we are not one of the greatest users of anti-dumping by any means. 

On the issue of investment, everyone knows that this is a live issue. People are concerned that companies, which are protected from any takeover in their national context, may be able to use financial leverage to take over and manipulate companies in Europe. 

It is a complex issue. I think what Mr. Mandelson was saying was that we should examine this. And the Commission's view is that, ideally, we would like reciprocal openness everywhere. If we do not find that, then of course we have to look at whether we have to take measures to protect Europe from unfair practices. 

There is growing concern about such unfair practices coming from China. Also on a day to day basis, people are worried about the increased competition, as they see factories closing and companies moving abroad. Should Europe perhaps be protecting itself more? 

No, I don't think we should. Europe gains massively from the global trading situation. We have a surplus of manufactured products. We are exporting more manufactured products than we are importing by far. We are the big winners of globalisation. 

This is not to say that there are not very real issues of adjustment provoked by that situation, because factories close in one part of Europe and open in another part. 

So, there are distributional issues within member states and there are issues of compensation across member states. We acknowledge this and, for example, we have created the Globalisation Adjustment Fund, which precisely permits member states or workers who have been displaced by trade flows to be compensated. 

These are the kind of measures we need to intensify within Europe. But it is not by closing our frontiers. 

We gain from low-cost imports; we gain from a free-trading environment. But we have to assume the social, political and economic consequences of a policy of openness in terms of adjustment mechanisms – retraining for workers and corrective measures of this kind. 

Is the impact of the increasing world trade on our climate something that worries you? Do you see any solutions? Some people are talking more and more about 'unnecessary' trade – i.e. we do not have to fly many products around the world as we currently do. What do you think of this?

I do not think that trade in itself is detrimental to climate change. It is a question of whether we are pricing the transport costs correctly to reflect any environmental damage that is done when we carry goods from one part of the world to the other. And that is the only issue. 

The idea that you would want to prevent goods from being transported seems to me to approach the problem from a completely wrong angle. 

It is not the trade in itself that is the problem. It is a question of the associated policies – about whether we are using market mechanisms to address the very real issues of carbon emissions and global warming. 

There are other effective ways to address these issues other than any suggestion of reducing world trade. A reduction in world trade would mean a reduction in world economic wealth and increase in poverty and a general deterioration of people's standard of living. 

Will the EU be pushing for a 0% tariff for environmental goods in the Doha Round? 

Yes, this is an important objective for us.

Although US has already raised five dual-investigations (at once anti-dumping and countervailing investigations) against China and that China has just acted alone in mid-September to request for consultations with US for US application of the countervailing measures against China, US now and again started the dual-investigations on imports from China, only that this time Taiwan of China was also targeted:

INTERNATIONAL TRADE COMMISSION

[Investigation Nos. 701-TA-452 and 731-TA-1129-1130 (Preliminary)]


Raw Flexible Magnets From China and Taiwan

 

 

The 2007 WTO Public Forum, closed last Friday, had around 1750 participants and focused on four hot topics: global governance, coherence, economic growth, and sustainable development.

The documents associated with the plenary opening session, including Pascal Lamy's speech, can be found here: http://www.wto.org/english/forums_e/public_forum2007_e/plenary_session_e.htm 

The complete program, links to the audio of conferences and the documents associated with each session can be found at:  http://www.wto.org/english/forums_e/public_forum2007_e/programme_e.htm

With the clock ticking on talks between the EC and the ACP countries to conclude a series of Economic Partnership Agreements (EPA) to replace the preferential trade regime applicable under the Cotonou Agreement, the EU Commissioners for Trade and for Development have hit out at 'the caricultural' anti-poverty campaigners who organised a 'day of action' on 27 September in protest at the ongoing EPA negotiations. Seeking to reassure campaigners that the EPA negotiatons will not be detrimental to developing country interests, the Commissioners issued a press release declaring that;

"Certainly, the EPA negotiations force us to face up to difficult issues. We are rebuilding an economic relationship that has been in place for many years. But that relationship, based on preferences and commodity trade has largely failed to deliver development. No one believes the status quo is working. Africa's dependence on trade preferences and a few basic commodities has seen it fall far behind the poverty reduction and economic growth of Asia and Latin America. Calling for an end to EPA negotiations when there is no credible alternative is playing poker with the livelihoods of those we are trying to help".

With the main bone of contention among anti-poverty campaigners being the 'reciprocal' element of the proposed EPAs and the inclusion of new sectors such as services and governme