WTO members discuss ways of improving the transparency of regional trade agreements

WTO members discussed how to improve work on enhancing the transparency of regional trade agreements (RTAs) at a meeting of the Committee on RTAs on April 9-10, 2018 at the WTO, the World Trade Organisation in Geneva, Switzerland. They reviewed five RTAs covering countries in Europe, Asia and Africa. The new chair of the committee, Ambassador Julian Braithwaite of the United Kingdom, presided at this first committee meeting of 2018

“Our work is to ensure that regional trade agreements are consistent with WTO rules and support the multilateral trading system,” said Ambassador Braithwaite in his opening remarks.

Implementation of the RTA Transparency Mechanism

WTO members reiterated the importance of the effective implementation of the RTA transparency mechanism. The mechanism is designed to enhance the transparency of RTAs and improve understanding of their effects on the multilateral system. Under this process, members notify the WTO about their RTAs and these are discussed by the wider WTO membership on the basis of a factual presentation prepared by the WTO Secretariat. Members expressed their appreciation for the support provided by the Secretariat and made further recommendations on how to reinvigorate the Committee’s work.

The chair informed members that a total of 38 early announcements regarding RTAs are currently on the WTO website. He said there are 23 RTAs (involving WTO members only) for which a factual presentation has to be prepared plus an additional 33 RTAs (involving non-members), counting goods and services separately. The Chair said that consultations were continuing with members for which the RTA factual presentation had been delayed due to lack of comments or data from the relevant parties. The chair and the Secretariat urged members to submit information in a timely fashion to enable the Committee to adhere to its work programme.

A recently circulated list of non-notified RTAs identified 72 cases. Several members commented that this list is a useful tool for improving transparency and encouraged the relevant members to notify their RTAs. Some members said they did not agree with the non-consensual methodology used to draw up the list.

Members discussed proposed modifications to the template for notifying changes to an existing RTA. The revised template will be considered for adoption at the next meeting of the committee. The United States proposed ways to improve members’ participation in the consideration of RTAs, including further discussion of non-tariff issues highlighted in the factual presentations, and respecting more closely the deadlines for submissions of data for factual presentations.  Several members suggested that factual presentations could include new sections to reflect emerging disciplines in RTAs, such as e-commerce, investment and intellectual property rights.

The Secretariat presented the new RTA Database, which includes the most up-to-date information on RTAs notified to the WTO, and highlighted the new features recently added to the RTA webpages of the WTO website. Members acknowledged their appreciation of these webpages and discussed how they could be made more user-friendly.

Consideration of specific RTAs

Five RTAs were reviewed by the Committee.

Economic Partnership Agreement between Cote d’Ivoire and the European Union (Goods)

The parties to this agreement described it as a “Stepping Stone Agreement”, which forms an initial framework for an economic partnership agreement (EPA) between the European Union and West Africa.

Under the EPA, the EU has liberalized tariffs for all goods excluding arms and ammunition imports. However, EU tariffs imposed on banana exports to the most remote regions of the EU and sugar exports to French overseas territories will remain for at least ten years. Cote d’Ivoire will liberalize 88.7 % of its tariffs by 2023. The agreement entered into force on 3 September 2016.

WTO members expressed their appreciation of the detailed information provided on regional development within West Africa, which they believed was important to help them understand the agreement.

The factual presentation on this RTA is available here and members’ questions and answers are available here.

Economic Partnership Agreement between Japan and Mongolia (Goods and Services)

The parties to this agreement, which entered into force on June 7, 2016, noted that it constituted a major breakthrough in the trade and investment relationship between the two countries.

Under the agreement, Mongolia envisages liberalization of 82.6 % of the tariffs it imposes on imports from Japan by 2036, while Japan will liberalize 87.7 % of its tariffs imposed on imports from Mongolia by 2031. Japan has also established tariff rate quotas (TRQs) on some agricultural products. Under TRQs, quantities inside a quota are charged lower import duty rates than those outside (which can be high). The agreement also includes commitments on services liberalization, intellectual property, government procurement, electronic commerce and competition.

Members congratulated Mongolia on its first RTA. They praised the ambitious scope of certain chapters in the EPA, such as on e-commerce, and other features, such as financial and telecommunications services. Further information was also sought on how the business environment is being improved as a result of the EPA.

The factual presentation on this RTA is available here and members’ questions and answers are available here.

Agreement on Trade in Services between the Republic of Korea and the Association of Southern Asian Nations (ASEAN)

Parties to this agreement said that it liberalizes trade in services and investment between ASEAN and the Republic of Korea while providing flexibility and special and differential treatment to the newer ASEAN members (Cambodia, Lao PDR and Viet Nam). The date of full implementation was October 14, 2010.

Members noted the relative lack of ambition in the agreement and the modest improvements in services commitments. One member urged the parties to expedite the submission of missing goods data.

The factual presentation on this RTA is available here and members’ questions and answers are available here.

Free Trade Agreement between Turkey and Malaysia (Goods)

Under the agreement, which entered into force on August 1, 2015, Turkey has liberalized around 45 % of tariffs immediately and 85.9 % of tariffs will be duty-free for imports from Malaysia by 2023. Malaysia will liberalize 98.6 % of its tariffs imposed on imports from Turkey by 2023. Malaysia also has tariff rate quotas for imports of poultry and eggs. They have agreed to start negotiations on services and investment liberalization within one year.

One member noted the low level of liberalization of trade in goods, especially in agriculture, but commended other achievements, such as elements of the WTO’s Trade Facilitation Agreement that have been included in the agreement

The factual presentation on this RTA is available here and members’ questions and answers are available here.

Free Trade Agreement between Turkey and the Republic of Moldova (Goods)

Parties to the agreement stressed its potential for strengthening the economic partnership between the two countries and their integration into world markets. Under the agreement, Turkey has liberalized around 60 % of its tariffs immediately while 17.1% of the tariffs will remain subject to duties. Moldova has liberalized 40.3 % of its tariffs immediately and will maintain tariffs on 21.6 % of its imports from Turkey. The agreement entered into force on November 1,  2016.

Members noted the low levels of liberalization, especially in agriculture, and asked about implementation of the FTA, in particular the mechanism on conformity assessment cooperation. The parties indicated they would continue efforts to increase trade liberalization and would focus on trade facilitation, followed by sanitary and phytosanitary (SPS) provisions.

The factual presentation on this RTA is available here and members’ questions and answers are available here.

Follow-up to Nairobi ministerial declaration

The chair pointed out that ministers had instructed the Committee in the Nairobi ministerial declaration of  December 2015 to discuss the systemic implications of RTAs for the multilateral trading system and their relationship with WTO rules. Besides instructions for holding these discussions, the ministerial declaration also called on members to work towards the transformation of the provisional Transparency Mechanism into a permanent one without prejudice to questions related to notification requirements.

One member said that discussion of systemic issues was part of the committee’s mandate and did not need to be raised as a separate issue. Some members supported any discussions that would increase participation in the Committee. Another member expressed strong reservations about discussing RTAs notified under the Enabling Clause or dual notifications in the RTA Committee. The Enabling Clause (i.e. the 1979 Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries) refers to preferential trade arrangements in trade in goods between developing country members.

The Chair said he would consult with members to see how to take the issue forward and would report at the next meeting.

The next CRTA meeting is scheduled for June 19 – 10, 2018.