Talks between G4 collapse putting Doha Round in the balance once again

On 21 June 2007 in Potsdam, Germany, Doha Round trade talks between negotiators from the EU, the US, Brazil, and India (the “G4”) broke down amidst persistent divisions on cutting industrial tariffs and farm subsidies. According to Brazilian Foreign Minister Celso Amorim, “it was useless to continue the discussion”. Before the breakdown, EU Trade Commissioner Peter Mandelson had said that the Potsdam meeting “cannot finish the Doha Round, but it will determine if Doha can be finished”. However, predictably, WTO Director-General Pascal Lamy tried to downplay the significance of the collapse of the talks: “Prior convergence among these Members would have been helpful to pave the way towards multilateral convergence,” he said. “But helpful does not mean indispensable. This negotiation is an endeavour among the 150 Members of the WTO”. A meeting of the WTO General Council is scheduled from 26 to 28 July.

The aim of the talks between the G4 countries was to reach a breakthrough agreement that might help push the Doha Round talks forward. Trade officials have already said that a framework deal would be needed by the end of July for enough time to finish the technical work on a final agreement by December. If a framework deal is not agreed upon before the end of July, while this would be unlikely to signal the abandonment of the Doha Round, its conclusion would likely be delayed for several more years. The US administration’s Trade Promotion Authority (“TPA”), which enables it to negotiate trade deals that may be accepted or rejected, but not amended by the US Congress, expired at the end of June. The TPA promotes freer trade by giving other countries confidence that the agreements they negotiate with the US will not be subject to subsequent renegotiation; and unless there is at least an outline agreement on the table, the TPA’s renewal is unlikely.

Focus: proposal by WTO Members to eliminate tariffs on sporting equipment, environmental goods and certain other products

Sports equipment traders should take note of a proposal tabled, on 5 April 2007, by six WTO Members (Japan, Norway, Singapore, Switzerland, Taiwan, and the US) to remove tariffs on imports of sports equipment as part of the ongoing Doha Round of trade talks on non-agricultural market access (NAMA). The agreement would take effect once a critical mass of  WTO Members, representing at least 90% of global trade in sports equipment, agree to sign the deal.

The categories of sports goods covered by the proposal include gym equipment, fishing gear, tennis rackets, roller skates, motor boats, skis, balls, and safety headgear. If the tariff relief is adopted, the US and other developed countries would be expected to eliminate tariffs on sports equipment over a period of five years. Developing countries would either be given longer implementation periods or the right to maintain some tariffs on certain select products.

The proposed agreement on sports equipment should be viewed in the wider context of a readiness by WTO Members from developed countries (including the EU) to reduce tariffs on certain groups of products further than what is generally agreed on with regard to all products. Other sectors in respect of which WTO Members have been considering harmonisation or removal of tariffs include: auto parts and automobiles, chemicals, electronic products, jewellery, raw materials, health care products and hand tools. Furthermore, the EU along with several other developed countries has been pushing for the elimination of tariffs on imports of environmentally-friendly goods and climate change-related products.

Focus: WTO Members fail to make progress on further tariff cuts for IT equipment

On 29 May 2007, CompTIA, the Computer Technology Industry Association, issued a position paper on the Information Technology Agreement (ITA). It called upon the European Parliament and the Commission to re-assess the interpretation of ITA classification rules so as to take into consideration the state of contemporary Information and Communication Technology before the ITA agreement is “undermined” by customs officials “taking advantage of” ten-year old ICT classification schemes that have not been updated in line with recent technological advances.

The ComptTIA position paper follows the failure to achieve a breakthrough in discussions on 28 and 29 March 2007 between WTO Members at the Information Technology Symposium concerning the ITA. The IT industry will recall the significant achievement that was reached in 1996 by 29 WTO Members, all of whom agreed to eliminate, on a reciprocal basis, import tariffs on nearly 200 IT products, such as semiconductors, computers and telecommunications equipment. Today, over 70 WTO Members, including the Australia, Canada, China, the EU’s 27 Member States, Japan, and the US, together representing about 97% of world trade in IT products, have agreed to abide by the ITA.

However, participants from industry at the Symposium noted that the ITA has still only been accepted by a minority of the WTO’s 150 Members, and that the agreement failed to adequately address non-tariff barriers that hinder trade in IT products. The electronics community will also be apprehensive as to the lack of effective mechanisms within the ITA for keeping pace with technological changes in the industry. The problem of product convergence under the ITA was raised by several representatives from the IT industry, arguing that more advanced versions of products such as multifunctional printers and PC monitors should also be covered.

At the end of the Symposium, industry representatives indicated their support for a possible challenge by WTO Members of the EU’s customs classification of IT products. However, industry groups are concerned that this process could last several years. The US has indicated that all options are on the table to resolve the issue, thereby leaving available the option of seeking formal WTO consultations against the EU.

The next meeting of the WTO’s ITA Committee is scheduled for September. In the meantime, officials from the UK’s Department for Business, Enterprise and Regulatory Reform (BERR) have met several times with the IT industry, particularly to discuss set-top boxes and LCD monitors.