Clash in NAMA talks on proposed export-tax rules
7 June, 2006
Kanaga Raja (SUNS), Geneva, 1 June 2006
A wide division among members which had emerged in previous meetings was again evident on the European Union's proposal on disciplining export taxes. Several developing countries criticized the EC proposal, arguing that export taxes are a right and a legitimate tool for developing countries to use to meet their development goals.
The EC's proposal is in the form of a draft text for a WTO agreement on Core Disciplines for Export Taxes (TN/MA/W/11/add. 6). It contains ten articles.
Article 1 proposes the elimination of all forms of export taxes that, according to the EC, create unfair advantages to domestic industries involved in international trade at the expense of other WTO members' producers because it restricts the availability of raw materials for processing. One product that the EC has often mentioned is leather.
The EC said that not all the export taxes are targeted and made a distinction between trade-distorting taxes and 'legitimate' export taxes like those applied in the context of Balance-of-Payments requirements or the environment.
According to trade officials, Argentina (which has consistently opposed the elimination of export taxes) strongly criticized the EC proposal and said that twelve countries (the NAMA-11 group of developing countries plus Cuba and Malaysia) have submitted a document rejecting the EC proposal.
Countries that spoke up at the meeting against the EC proposal to eliminate export taxes included Argentina, Malaysia, Indonesia, Brazil, Pakistan, Cuba, India and Venezuela.
Among the points made by those opposing the proposal are that export taxes are a right and a legitimate tool for developing countries; they help increase fiscal revenue and stabilize prices; there is no legal basis for a negotiation; there is no explicit mandate for a change in WTO rules on this issue; and they are not a Non-Tariff Barrier (NTB).
The EC proposal was supported by Canada, the US, Switzerland and Korea. According to Canada, export taxes disrupt trade and their application is not legitimate if they are imposed to enhance domestic supply or limit exports.
The US said that even if the issue is not part of the mandate of the negotiations, the Group has to give solutions to problems and this is a trade problem.
The Chair of the negotiations Ambassador Don Stephenson of Canada said that while it is true that there is no explicit mandate for a negotiation involving export taxes, it is also true that there is an implicit mandate to deal with trade-distorting practices.
Stephenson however acknowledged that there is no consensus on the issue, 'and that's where this issue sits'.
At the meeting, Japan presented a revised proposal containing text for enhanced transparency on export restrictions (TN/MA/W/15/Add. 4).
Japan considered that the WTO Agreements have very specific reference to import licensing, but are not specific on export licensing. It proposed an agreement for export licensing that is very similar to the one on import licensing.
Japan said its proposal is for new procedural rules for transparency to deal with the present imbalance, and that it is not proposing a change of rules or to go against the legitimate export restrictions as foreseen in the WTO agreements.
According to trade officials, several developing countries (Cuba, Malaysia, Indonesia, and Venezuela) spoke up, stating that they do not consider this issue as an NTB. The proposed agreement would imply new obligations for members and this is not the right time to discuss this issue, they stressed.
The US said that, as a transparency issue, the text-based proposal was overly complicated and it should be simpler.
There were mixed reactions to another proposal by the EC for a WTO problem-solving mechanism (similar to the Dispute Settlement Understanding) to deal with NTBs. The US asked how much value-added a mechanism like this would have. Other countries expressed caution or concerns (Mexico, Switzerland, and New Zealand).