EU, Japan propose new WTO treaties to prevent export taxes, restrictions

In a move that has upset many developing countries, the European Union and Japan have recently proposed new treaties in the WTO to prevent or restrict the use by WTO members of export taxes and export restrictions.

The European Union submitted a new proposal on export taxes to members last Friday at the final session of the week-long NAMA negotiations. Citing the Doha and Hong Kong Ministerial Declarations, the EC argued in its proposal that this 'is in accordance with the mandate agreed among WTO Members to reduce or as appropriate eliminate non-tariff barriers (NTB) in the negotiations on market access for non-agricultural products.'

It also presented a separate proposal on an institutional mechanism to deal with complaints regarding NTBs.

During the week, Japan (also in the context of the NTB discussions) also circulated its proposal for a new WTO agreement on export restrictions (TN/MA/W/15/Add. 4). It said it intended to 'submit a formal text-basedproposal by end April 2006 so as to establish a new Agreement as a final result of the Doha Development Agenda.' (JOB(06)/21/Rev. 1)

The US is seemingly supportive of these initiatives by the EC and Japan and has included them in their proposed language on NTBs as part of overall NAMA modalities.

Several developing country members including Argentina, Brazil, Malaysia, Venezuela and Indonesia have raised objections against these proposals. They pointed out that export restrictions and taxes are simply not part of theNTB agenda and the current round of negotiating.

In the draft WTO Agreement on Export Taxes proposed by the EC, all members are to eliminate their export taxes, 'as well as internal taxes and other charges on products exported that are in excess of those imposed on likeproducts destined for internal sale.'

Some possible exceptions are contemplated in the draft agreement for developing and least developed countries. According to the EC proposal, for developing countries, 'export taxes of maximum [x] percent for a limited setof products to be determined through request and offer' could be maintained.

For the least developed countries, they can bind their existing export taxes and to stipulate up to a maximum [y, (greater than x)] percent export taxes they currently do not apply.

The use of these export taxes is to be included in their respective lists of Schedules.

Nonetheless, 'no later than 5 years after the entry into force of this Agreement, Members shall begin negotiations with the aim of gradually phasing out all remaining export taxes listed in Members' schedules,'according to Article 10 of the EC draft WTO agreement on export taxes.

While it may seem untimely to introduce a whole new agreement at this stage of the negotiations, the EC seems compelled even now to address the unfair advantage given to domestic industries caused by export taxes at the expenseof 'infant industries in developing countries.'

Japan is more candid in this regard. It sees a 'real problem' with export restrictions affecting their importation of certain products 'particularly with respect to mineral resources.' (JOB(06)/21/Rev. 1)

This has led the Japanese to propose the following disciplines: '(I) procedures for publication of rules and administration of export restrictions; (ii) notification procedures to a Committee; and (iii) publication of relevant statistics, such as domestic production.' (TN/MA/W/15/Add. 4 dated 18 April 2006, to which the draft agreement on export restrictions is appended).

Apart from this agreement on export taxes the EC is also proposing the institutionalizing in the WTO of a brand new mechanism to deal with future NTBs complaints.

In a meeting with several delegations last week, the EC presented its concept paper entitled 'Improving WTO Means to Reduce the Risk of Future NTBs and to Facilitate Their Resolution' providing a relatively detaileddescription of how this mechanism would look like.

Arguing that the existing WTO system does not accord sufficient options for dealing efficiently with NTB complaints, the EC proposed a 'horizontal mechanism, in the form of a procedure for problem-solving in the area ofNTBs' that it said can assist countries in reaching mutually agreed solutions.

The basic idea is to have at the disposal of members the option of convening an expert panel to help resolve the NTB in question between the contending parties. It is envisaged that the expert panel may provide advisory opinionsand propose solutions for the parties' consideration.

However, according to the proposal, any party unwilling to implement the proposed solutions by the panel is expected to state its reasons for not doing so. Nonetheless, 'the mechanism is without prejudice to the DSU and Members' rights and obligations thereunder.'