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WTO Reviews Transparency Mechanism For RTAs

by Ulrika Lomas, Tax-News.com, Brussels

15 February 2011


The World Trade Organization's Negotiating Group on Rules, on February 4, 2011, commenced its review of the WTO Transparency Mechanism for Regional Trade Agreements (RTAs) by considering two proposals: one from the United States for the consideration of all RTAs under a single WTO Committee; and one from Ecuador for procedural adjustments to the mechanism.

The transparency mechanism, revised last in December 2006, provides for the early announcement of any RTA, from concerned parties to the WTO secretariat, which then discloses it to member states. Members then review - and if necessary modify - the WTO's decision, and replace it with a permanent mechanism.

In the case of the United States' request, the nation's authorities cited the problem of disagreement between some members over the forum in which some RTAs should be considered under the transparency mechanism, and instances of 'dual notifications'. To resolve this problem, US authorities called for the implementation of the transparency mechanism to be entrusted to the Committee on Regional Trade Agreements, without predujice to members' rights.

Since December 2006 two bodies have been entrusted with reviewing RTAs; the Committee on Regional Trade Agreements, which reviews RTAs falling under Article XXIV of General Agreements on Tariffs and Trade, and Article V of the General Agreement on Trade in Services (GATS); and the Committee on Trade and Development, which considers RTAs falling under the Enabling Clause, where one or more of the RTA's signatory country is classified as a developing nation.

Secondly, to promote the smooth operation of the transparency mechanism, Ecuador has proposed a number of procedural adjustments. It said that communications to the WTO about an RTA should take the form of joint notes signed by all parties to that RTA, and that one of these parties would be entrusted with submitting information needed for the consideration of the RTA by members.

India questioned whether the Group could consider the United States' proposal, which it said went beyond the mandate of the Group. It said that in informal consultations, the understanding of members was that the review of the mechanism would only lead to minor adjustments and not what it saw as a fundamental change in the operation of the mechanism as proposed by the US.

The Chair, Dennis Francis, said that members, in deciding to start the review of the mechanism, did not restrict the scope of the review in any way.

Egypt, Argentina, China, Bolivia and Brazil said that the role of the Committee on Trade and Development would be undermined if the consideration of RTAs between developing countries would be moved to the Committee on RTAs.

India said that without prejudice to its view regarding the standing of the US paper, it believed that the proposal would unravel past agreements establishing the Transparency Mechanism. It saw no problems with the respective roles of the two committees on RTA matters.

The European Union, Turkey, Korea, Japan, Switzerland, Colombia, Australia, New Zealand, Canada, Chile and Costa Rica supported the US proposal, and its consideration by the Group.

A number of delegations welcomed Ecuador's proposal. The European Union said it offered useful solutions while New Zealand said it offered sensible suggestions. Chinese Taipei and Korea said the “joint notes" procedure could result in delays, while Switzerland said the RTA parties themselves should decide on how they wished to notify information.

Regarding systemic issues related to RTAs, Bolivia tabled a proposal to amend the main RTA provision of the GATT 1994, Article XXIV, to include wording on special and differential treatment for developing countries contained in Article V of the GATS. It said that in RTAs involving developed and developing countries, the principle of less-than-full-reciprocity and longer implementation periods should be accorded to developing countries.

Venezuela, India, Nicaragua, St. Lucia (on behalf of the African, Caribbean and Pacific Group of States) and China expressed general support for Bolivia's proposal.

Switzerland expressed reservations, saying developing countries negotiating an RTA chose to do it and are free not to agree to the final result. It said that there were already special provisions for developing countries in the GATT 1994, including Part IV. The Swiss position was generally shared by the European Union, Australia, New Zealand, United States, Canada, Japan and Canada.

Bolivia said that its proposal stemmed from actual experience in negotiating RTAs, when developed countries denied its requests for special and differential treatment.

A further meeting is scheduled for March 7, 2011.

TAGS: tax | free trade agreement (FTA) | Chile | India | Nicaragua | Venezuela | export duty | World Trade Organisation (WTO) | trade treaty | Australia | China | Colombia | Ecuador | agreements | Bolivia | Brazil | Canada | Costa Rica | Egypt | New Zealand | Switzerland | United States | import duty | trade | Argentina | Japan | Turkey | free trade zone

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