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Cross-Retaliation in TRIPS: Options for Developing Countries

Camille Russell — Fri, 05 Jun 2009 14:40:32 +0000

Cross Retaliation in TRIPS: Options for Developing countries
by Frederick M. Abbott

The possibility for developing WTO Members to suspend concessions in the field of trade-related intellectual property rights (TRIPS) to redress an injury suffered with respect to trade in goods or services is a trade issue receiving increasing attention. Cross-retaliation is expressly contemplated by the WTO Dispute Settlement Understanding (DSU). WTO arbitrators have so far approved TRIPS cross-retaliation on two occasions: in favour of Ecuador against the European Communities (EC) and Antigua against the United States (US).

Cross Retaliation in TRIPS: Options for Developing Countries examines many legal questions raised by cross-retaliation in TRIPS and seeks to provide some answers to them. It analyses the cross-cutting issues raised by external commitments and national IPRs-related rules, and looks at each major categories of IPR to suggest practical approaches to suspending (or not suspending) them.

Beyond these legal and practical problems, the paper underlines that the main obstacle facing the less powerful WTO Members in seeking to implement cross-retaliation in TRIPS is likely to be political in nature, in the form of pressures from industry groups and governments of more powerful Members. WTO Members contemplating cross-retaliation in TRIPS should be aware that this will be no easy task.

This paper is produced jointly under ICTSD’s Programme on Dispute Settlement and Legal Aspects of International Trade and the Programme on IPRs and Sustainable Development. While the former aims to explore realistic strategies to maximize developing countries’ capability to engage international dispute settlement systems to defend their trade interest and sustainable development objectives, the latter seeks to achieve a more development oriented and balanced IP system and to identify options for developing countries to ensure that IP norms are supportive of their public policy objectives.

The author, Frederick M. Abbott, is Edward Ball Eminent Scholar Professor of International Law, Florida State University College of Law.

Hacia Una Lista Potencial De Bienes Ambientales Para Sudamérica

Mahesh Sugathan — Fri, 06 Mar 2009 15:23:41 +0000

Es evidente que el concepto de “desarrollo sostenible”, aún con sus detractores, se ha instalado de manera definitiva en las agendas políticas nacionales e internacionales. Y una de las discusiones más interesantes que se dan dentro de la búsqueda permanente de esta forma casi universalmente aceptada de desarrollo, es cómo generar una dinámica y sinergias positivas entre el comercio internacional y una adecuada protección del ambiente y la conservación de los recursos naturales, sustento básico de mucho de este comercio en la mayoría de economías de países en desarrollo.

Esto a su vez se inserta en un contexto internacional donde la agenda de la Organización Mundial de Comercio (OMC) y los Acuerdos de Libre Comercio que se multiplican alrededor del mundo, intentan definir el rumbo y la dinámica de los intercambios comerciales entre las regiones y países.

Frente a la OMC y estos procesos de liberación comercial, los Acuerdos Multilaterales de Medio Ambiente (AMUMA) plantean retos y desafíos en la medida que las posiciones de los países desarrollados-orientadas a incrementar niveles y estándares de protección ambiental -se contraponen a la posición de los países en desarrollo que encuentran en estos mismos Acuerdos algunos escollos (por ejemplo en el ámbito laboral, productivo y comercial) que se perciben como limitantes para las posibilidades de progreso social y económico.

Dentro de la OMC, entre los múltiples temas que se abordan y, especialmente como parte de la Ronda de Doha, se encuentra precisamente, cómo compatibilizar la necesidad de promover un crecimiento económico en el tiempo (muchas veces presionando sobre el ambiente y los recursos naturales) al mismo tiempo que se mantienen o mejoran niveles de protección ambiental que permitan el mantenimiento de los sistemas ecológicos y, en general, un medio saludable para los seres humanos.

El trabajo de Jaime García “Hacia una Lista Potencial de Bienes Ambientales para Sudamérica: Criterios para una Perspectiva de Desarrollo Sostenible”, ofrece un análisis bastante pormenorizado de una de las variables más controvertidas dentro de los debates internacionales al interior de la OMC y otros foros. A saber, cómo entender la noción de “bienes ambientales” de manera que permita a los países en desarrollo- especialmente a los países andinos -posicionarse mejor en estas discusiones y sacar ventaja de un hecho incontrastable: una riqueza en términos de biodiversidad a nivel de ecosistemas, especies y recursos genéticos. Paradójicamente, esta enorme riqueza contrasta con niveles de pobreza alarmantes en estos países que inciden en una continua degradación ambiental y la disminución de la calidad de vida en general.

García describe claramente cómo los países desarrollados han logrado (con matices) definir y precisar lo que son bienes ambientales y plantear para ellos, por ejemplo, la eliminación de aranceles. Estos países entienden claramente las implicancias de diferenciar entre definiciones tradicionales de “bienes ambientales” (donde tienen ventajas en las negociaciones internacionales) que incluyen la gestión de la contaminación, la generación de tecnologías limpias y métodos de producción más eficientes y definiciones más amplias que podrían incluir productos ambientales tales como fibras controles biológicos, productos no maderables del bosque, productos resultantes de eco-negocios, entre otros, donde los países en desarrollo tiene más bien mejores posibilidades por explotar en estas mismas negociaciones.

En ese sentido, los países sudamericanos, en esencia, no han logrado por distintas razones tales como el desinterés político, limitadas capacidades institucionales y hasta desconocimiento de la relevancia de los temas, armonizar sus posiciones y en algunos casos tienen una participación casi nula o muy poco relevante en el contexto de las negociaciones internacionales donde se discute sobre los bienes ambientales y el comercio.

Esto último, como lo sugiere el autor, hace evidente una limitada articulación entre actores de la sociedad civil, el sector empresarial y productivo y el Estado en la evaluación de opciones y generación de estrategias para sacar ventajas en el ámbito de las negociaciones comerciales internacionales (especialmente en la OMC) de una mayor riqueza potencial en cuanto a bienes ambientales casi connaturales al medio geográfico y ecológico de estos países.

El trabajo de García se hace también bastante digerible en la medida que incluye una serie de conclusiones y recomendaciones pertinentes al tema de los bienes ambientales. Los anexos y especialmente a bibliografía utilizada ofrecen una herramienta útil para profundizar y ampliar el análisis de los temas.

Jaime García es Economista y catedrático de la Universidad de Lima y su investigación fue financiada a través del Programa de Bienes y Servicios Ambientales del Centro Internacional para el Comercio y el Desarrollo Sostenible (ICTSD) con sede en Ginebra, Suiza y que a su vez ha sido apoyado por el Ministerio de Relaciones Exteriores de Luxemburgo.

Sin duda, el trabajo de García constituye un excelente esfuerzo por sistematizar y sintetizar información y datos relevantes para a partir de ello proponer algunas reflexiones que deben contribuir a despertar el interés de los países y sus diferentes actores en los procesos de negociación comercial- ambiental internacional, con particular énfasis en las actualmente un tanto lentas negociaciones en el ámbito de la OMC.

Trading Profiles and Developing Country Participation in the WTO Dispute Settlement System

Sheila Sabune — Thu, 18 Dec 2008 11:22:46 +0000

Why a specific group of countries dominates WTO disputes has been one recurrent question by many observers. Reasons for such an imbalance can be found in the difference in trade composition, volume of trade, income levels, aid levels, and legal capacity between active and inactive members. In order to favor the participation of weaker partners in the DSU system, the paper introduces two interesting potential scenarios, using an economic model, in which LDCs would take collective action to overcome this problem.

Does Legal Capacity Matter? Explaining Dispute Initiation and Anti-dumping Actions in the WTO

bkraus — Thu, 18 Dec 2008 11:10:04 +0000

At present, there is virtually no systematic assessment of the issues of legal capacity and there is limited empirical evidence about how it affects patterns of trade disputes and import protection. This paper explores how in the case of antidumping, the level of legal capacity affects patters of dispute initiation and underlying anti-dumping protection among WTO members.

Developing Countries, Countermeasures and WTO Law: Reinterpreting the DSU against the Background of International Law

bkraus — Thu, 18 Dec 2008 10:30:24 +0000

Developing countries relying on the DSU are particularly troubled by the ineffectiveness of countermeasures as a means to ensure compliance by major trading partners. The difference in trade value often proves suspension of concessions to be detrimental to the retaliating developing country’s domestic market leaving countermeasures not only ineffective but even counterproductive. This paper aims to explore realistic strategies to maximize developing countries’ capability in engaging the WTO dispute settlement system to defend their trade interests and sustainable development objectives.

Implications for Japan of the July 2008 Draft Agricultural Modalities

Tamara Asamoah — Tue, 18 Nov 2008 15:21:37 +0000

In contrast to the EU, which took a defensive position in the Uruguay Round but has been playing a more active role in the current Doha Round, Japan has maintained the defensive position it has taken in previous Rounds.

In 1992, at the end of the Uruguay Round negotiations, the EU instituted reforms, significantly lowering support prices for grain and beef and compensating farmers by paying them directly. Lowering prices enabled the EU to allow the volume of subsidized exports to be reduced through reductions in surpluses.

The EU has subsequently continued its reform process. In the 2000 reform, it reduced the support price of cereals by 15 percent, and in the 2003 reform reduced the support prices on dairy products, with the price of skimmed milk powder being lowered by 15 percent and that for butter by 25 percent.

In the 2005 reform, the EU finally reduced the support price for sugar (previously unchanged for 40 years) by 36 percent, and switched to direct payments corresponding to 64 percent of the price reduction. For these reasons, the EU could make a commitment to eliminate export subsidies for sugar, dairy products, cereals and beef, and could tolerate 100 percent tariff caps in the current Doha Round of negotiations.

Since the 1960s, price support has dominated Japan’s agricultural policy, supporting farmers’ incomes but placing a huge burden on consumers. In order to maintain high prices, Japan has had to rely on tariffs and non-tariff measures so as to isolate its domestic market from the international market.

In the Uruguay Round, the country resisted tariffication and resorted to special treatment stipulated in Annex 5 of the Uruguay Round Agreement on Agriculture (URAA), compensating for not tariffying rice by providing more minimum access than would have otherwise been required. Japan, however, finally recognized that it could no longer bear the excessive minimum access burden and applied tariffication in 1999.

The Japanese position in this Round has not changed much from the Uruguay Round, since the country has not changed many of its domestic policies. In 2000, Japan introduced direct payments for farmers in disadvantaged regions. In 2007, it changed the 70 percent of deficiency payments for wheat, barley, sugar and some other dry farming products into green box payments. These policy reforms, however, did not change the domestic prices of agricultural products. Japan therefore has to continue to rely on high tariffs in order to maintain those prices and protect its agricultural sector.

To what extent would a successful conclusion of this Round along the lines of the Revised Draft Modalities paper issued by the chair of the agriculture negotiations, Ambassador Falconer, require changes in Japanese agricultural policies?

How much increased market access is likely to be generated as a result of tariff cuts and tariff rate quota expansion? Could Japan play a more aggressive role in the world market, taking advantage of the expansion of market access generated in other countries?

This paper makes attempts to address these issues by exploring the implications of the Revised Draft Modalities paper.

In addition to quantitative analysis of the extent to which tariffs would be reduced, this paper attempts to analyze the probable and possible effects of the paper on Japanese agriculture and agricultural policies, taking into accounts recent developments in the world market.

The first section of the paper gives an overview of the current state of Japanese agriculture and agricultural policies, insofar as these relate to the disciplines introduced in the Uruguay Round Agreement on Agriculture (URAA). The second section reviews briefly the Japanese positions in this Round. The next three sections discuss in more detail the implications of the domestic support, market access and export competition modalities.

The following section tries to point out several legal drawbacks to the proposed commitments on subsidies, the lack of disciplines on export tax, and the overly lenient disciplines on export quantity restrictions. It also refers to some environmental concerns which are just as important as trade concerns. The final section makes an overall assessment of the impacts of the suggested modalities on Japan.

Implications of the July 2008 Draft Agricultural Modalities for Sensitive Products

Ammad Bahalim — Mon, 21 Jul 2008 09:54:43 +0000

One of the most contentious issues in the current WTO Doha Round of agricultural trade negotiations is the flexible treatment for sensitive products, as it may significantly alter countries’ overall balance of gains and losses. As sensitive product talks have become extremely complex, ICTSD has commissioned Ariel Ibañez, María Marta Rebizo and Agustín Tejeda of the Fundación INAI in Argentina to analyse this aspect of the chair’s July 2008 draft modalities text and make the issue more accessible to a wider audience.

This study summarizes the key issues and methodologies used in the negotiations; it employs a set of indicators and domestic consumption data to identify tariff lines likely to be declared sensitive; and it suggests which countries are most likely to be affected. The work also looks at how different scenarios will lead to varying degrees of market opening through quota expansion and specifies which exporting countries and products will be most affected.

*Due to the number and breadth of tables generated by this paper they are also available as a seperate file included in this post.

How Will the May 2008 “Modalities” Text Affect Access to the Special Safeguard Mechanism, and the Effectiveness of Additional Safeguard Duties

Patrick Lunt — Sun, 01 Jun 2008 06:18:44 +0000

The revised draft modalities text circulated in May 2008 by the chair of the WTO negotiations on agriculture represents a major advance in the effort to secure a consensus agreement in the Doha Development Round negotiations. The draft includes the latest version of the special safeguard mechanism (SSM), which was originally proposed by the G-33 to provide developing countries with a simplified and more effective tool to address import volume surges and price depressions. Understandably, the proposal has been criticized by countries with export interests, who fear it could be abused by importers and could distort normal trade flows among countries. As a result, the SSM draft text contains many provisions on which no agreement has yet been reached, even though it has narrowed down differences on some of the less controversial aspects of the measure.

This study attempts to assess the extent to which the proposals contained in the latest draft text would affect countries’ ability to access the SSM, and the extent to which it would be effective in bridging the gap between domestic and international prices. For this purpose, a simulation model was developed utilizing monthly data on imports of 27 agricultural commodities in six developing countries from 2000 to 2005. These monthly data were used as proxies for individual shipments.

In order to determine the extent to which countries would have access to the SSM, the study calculated the percentage of months during which the volume or price-based SSM would allow additional safeguard duties to be applied, based on varying levels of thresholds and other conditions. To measure the effectiveness of the SSM, the study first calculated the number of “problematic months” – those during which import prices plus bound tariffs fell below domestic prices by more than ten percent. The effectiveness rate was considered to be the percentage of problematic months in which additional safeguard duties could be applied and could prop up import prices beyond this ten percent threshold.

The study first analysed a ‘baseline scenario’, which adopted a number of the provisions of the SSM draft text, such as the lower settings for ‘thresholds’ and higher ones for the additional safeguard duties (or ‘remedies’) that countries would be allowed to impose. In this scenario, the SSM was accessible in an average of about 4½ out of every twelve months, but was effective in only one out of every four “problematic” months. Adjusting thresholds and remedies to mid-range levels did not have major effects on access and effectiveness rates, indicating some room for compromise on these aspects. Changes in thresholds however tended to have more discernible effects on the quality of the SSM than alterations in remedy levels. Notably, effectiveness rates did not exceed 46 percent of “problematic” months in any scenario, pointing to the limited utility of the measure even under the most ideal parameter settings.

Imposing caps based on Doha Round starting bound tariffs, current Uruguay Round bindings or applied tariffs clearly had a more debilitating effect, with access rates effectively cut in half, and the effectiveness rate plunging from the baseline level of 27 percent to only 2 percent of “problematic” months. Countries with relatively low tariffs were particularly vulnerable to such caps, which effectively limited remedial duties to the extent of tariff cuts per year in absolute percentage terms. Further simulations indicate that caps in the form of percentages of bound tariffs or absolute percentage points may yield less controversial results, although the actual effect will depend on the tariff profile of a country.

The proposed option allowing for foreign currency exchange adjustments in case of abnormal depreciation of the local currency did not significantly influence access or effectiveness rates. The 12-month maximum imposition period for the volume-based safeguard, coupled with the chair’s proposal for applying the price-based safeguard on a shipment-by-shipment basis, appeared to be superior to a 6-month or end-of-year alternative imposition period, although not by an overly significant degree. The ‘cross-check’ requirement, which disallows the use of the price-based safeguard if imports are declining, had a perceptible impact on access rates but affected the effectiveness of the SSM less significantly.

Given the fact that safeguard duties cannot be imposed on imports falling within tariff rate quota (TRQ) commitments, access and effectiveness rates may be enhanced if TRQs created in the Uruguay Round are not carried over to the Doha Round. This will however require, at the very least, a lowering of bound tariffs to in-quota levels and verification as to whether such a unilateral move is compliant with WTO rules. Finally, reclassifying special or regular products as ‘sensitive’ had detectable effects on the performance of the SSM, mainly due to the creation of new TRQ commitments, but access and effectiveness rates did not vary much with changes in the degree of deviation from the normal tiered tariff reduction formula.

Value Chains and Tropical Products in a Changing Global Trade Regime

Patrick Lunt — Thu, 01 May 2008 14:02:24 +0000

In the last decade, the commodity issues have re-emerged as central to development initiatives and poverty alleviation strategies. The objective of this Issue Paper by Charles Mather is to contribute to this debate by providing an analysis of the value chains of four tropical commodities (bananas, sugar, cut flowers and palm oil) in a rapidly changing global trade environment. The author seeks to provide insights on the different ways the significant changes occurring in the structure and governance of commodity chains ultimately affect producers’ income and production sustainability. He also suggests recommendations to improve these two variables.

The value chain approach has become an increasingly important framework for examining changes in the global trade of commodities and their implications for primary producers. Rather than describing the broad patterns of global exchange and assessing their consequences for producers and consumers exclusively through market mechanisms and equilibrium price changes, the global value chain (GVC) framework encompasses the production, processing, distribution and marketing of specific globally-traded commodities, and identifies the main stakeholders involved at each stage. It also highlights governance patterns (how these different stages are coordinated) and specifies the role of lead firms in determining market access, defining products and value across the chain (Schmitz, 2005).

The commodity studies in this paper focus on four themes: changes in the geography of production, changes in chain governance, new developments in trade agreements and their impacts on primary producers in different developing countries, and initiatives towards sustainable production, ethical trade and worker welfare. With regard to changes in production, the paper provides insights into new developments in the production of bananas, sugar, palm oil and cut flowers, which have been driven by changes in trade agreements and new investment patterns. In several of the commodities concerned, an important development has been the rise of new low cost producers who will play a role in shaping the global market for these commodities.

This paper was produced under an ICTSD dialogue and research project which seeks to address the opportunities and challenges of the full liberalisation of trade in tropical and diversification products, and explores possible areas of convergence between different groupings and interests in WTO negotiations. The project seeks to generate solutions-oriented analyses and possible policy responses from a sustainable development perspective.

Trade Effects of SPS and TBT Measures on Tropical and Diversification Products

Patrick Lunt — Thu, 01 May 2008 12:06:53 +0000

The 2004 Framework Agreement reached during the Doha Round notes that the full implementation of the liberalization of trade in tropical agricultural products is “overdue and will be addressed effectively in the market access negotiations.” However, the way in which the commitment is to be implemented, and even the identification of such products, remains far from clear.

Multilateral discussions on the full liberalization of trade in tropical and diversification products have focused almost exclusively on the reduction of tariffs, and tariff escalation for those products and the overlap with the mandate on preference erosion. There has been no debate and analysis on NTBs and more specifically on SPS measures and technical barriers to trade (TBTs). This is surprising, since as the following paper reveals, imports of tropical and diversification products from African, Caribbean and Pacific (ACP) countries and some Latin American countries are particularly affected by SPS and TBT measures.

The following work, entitled “Trade Effects of SPS and TBT Measures on Tropical and Diversification Products,” also reveals that ACP countries are the exporters for which the most sectors are influenced negatively and significantly by SPS measures and TBTs. As such, this paper represents a contribution to a knowledge-based discussion in this area.

This study analyzes the trade effects of SPS measures and TBTs on tropical and diversification products. The authors examine to what extent and for what products SPS and technical requirements under public law represent barriers for exports of tropical and diversification products to enter developed countries’ markets, namely the European Union (EU), the United States (US), Japan, Canada, Australia and Switzerland. The objective of the study is also to generate solution-oriented analyzes and to identify possible policy responses.

By way of introduction, the paper provides information on the SPS and TBT agreements, the private sector requirements and NTBs to trade. The paper presents case studies documenting the effects of SPS and TBT measures on producers and exporters. These cases studies are based on surveys and interviews. They focus on production and export of bananas and pineapples in Ecuador, bananas, melons and pineapples in Costa Rica, coffee in Ethiopia and cut flowers in Kenya.

The paper provides a statistical analysis of SPS and TBT measures applied by main developed countries on their imports of tropical and diversification products. Results of the surveys and case studies are not easily generalized. The main advantage of the statistical analysis is to be more exhaustive. This analysis reveals information on the types of measure used (authorizations, technical measures), the motives to impose SPS and TBT measures on tropical and diversification products, the number of notifications by country, the stringency of SPS and TBT measures, and the affected exports. Furthermore, the paper presents econometrical estimations of the trade impacts of public standards through the gravity equation.

Finally, the paper describes the existing technical assistance programmes to help farmers and exporters of developing countries to conform with SPS and TBT requirements adopted by main developed markets. It assesses their strengths and weaknesses, and it provides recommendations to improve their efficiency. The paper analyses how the Aid for Trade initiative can help developing countries to meet these standards. Additional policy responses resulting from the study are also suggested.