World Trade Organization (WTO)

Australia will become the newest member of the World Trade Organization (WTO) plurilateral Government Procurement Agreement (GPA). On October 17, 2018, parties to the GPA unanimously approved a decision to welcome Australia as the 48th WTO member to be covered by the GPA.

The GPA is a plurilateral agreement that strives to ensure open, fair and transparent conditions of competition in the government procurement markets. It aims to provide legal guarantees of non-discrimination for the products, services or suppliers of GPA parties in procurement covered by the Agreement.

The Agreement is open to all WTO members, and it is currently binding on the 47 members to the Agreement (19 parties, including the United States, and the EU and its 28 member states). The GPA is composed of two main parts: the text of the Agreement and the coverage schedules. The Agreement applies only to those procurement activities that are carried out by covered entities that are purchasing services or goods of a value exceeding specified thresholds.

Australia will become a member after it submits its Instrument of Accession to the WTO’s Director General. With an estimated overall government procurement market worth USD $78 billion, Australia will add significantly to the current government procurement covered by the other 47 members to the Agreement, which is currently approximately USD $1.7 trillion.

Australia initiated negotiations to join the Agreement three years ago, in September of 2015. At the meeting, the GPA also reviewed the accession bids of China, the Kyrgyz Republic, the former Yugoslav Republic of Macedonia, the Russian Federation and Tajikistan. Other countries with currently pending accession negotiations include Albania, Georgia, Jordan and Oman. See a full list of the GPA members and observers here.

On August 29, 2018, the United States circulated a request for consultations to the World Trade Organization (WTO) members. The US has requested that the WTO help resolve a dispute between the US and Russia concerning additional duties imposed by Russia on certain US goods.

A request for consultations is similar to other forms of dispute resolution. The request for consultations formally initiates a dispute in the WTO. If after 60 days of consultations, the parties have not been able to resolve the dispute, the complainant may request adjudication by a panel.

In its claim initiated earlier this week, the US claims that the additional duties imposed by Russia are inconsistent with provisions of the WTO’s General Agreement on Tariffs and Trade (GATT) 1994, and appear to impair the benefits accruing to the US under GATT 1994. The US claims that Russia is imposing duties on US goods, and that it is not imposing comparable duties on similar products originating in the territory of other WTO members.

The claim also includes a statement that Russia appears to be applying duty rates that are greater than those in Russia’s WTO schedule of concessions. The “schedules of concessions” is a document that reflects specific tariff concessions and other commitments a member gives in the context of trade negotiations.

 

On Monday, July 30, 2018, the World Trade Organization (WTO) released new resources regarding trends in global trade. The resources issued by the WTO are the latest editions of the annual publications of World Trade Statistical Review, Trade Profiles and World Tariff Profiles.

World Trade Statistical Review provides an in-depth analysis of trends in global trade, including the types of goods and services being traded.

Trade Profiles provides a concise overview of global trade by providing key indicators on trade for 197 economies and highlighting the breakdown of exports and imports for each economy.

World Tariff Profiles is a joint publication of the WTO, the United Nations Conference on Trade and Development (UNCTAD) and the International Trade Centre (ITC). The publication provides comprehensive information on the tariffs and non-tariff measures imposed by over 170 countries and customs territories.

Additional information about the publications and additional data can be found on the WTO’s website with links to download the publications.

The Trade Facilitation Agreement (TFA) marked its first anniversary last week. The TFA entered into force on February 22, 2017 when the World Trade Organization (WTO) obtained the required two-thirds acceptance from its members.

The WTO members are continuing to work towards fully implementing the TFA. Implementation of the TFA is expected to have positive effects on international trade, with a particular emphasis on the benefit for developing and least developed countries (LDCs).

One unique component of the TFA is the ability of developing countries and LDCs to set their own timetable for implementation based on that county’s capabilities. Developed countries committed to immediate implementation of Category A commitments from the date the TFA entered into force. Developing countries and LDCs have committed to implementation of commitments that have been designated as Category A, and these countries have more time for Category B and Category C commitments.

According to the TFA Database, as of the one-year anniversary, 107 members have notified their Category A commitments, 49 their Category B commitments and 39 their Category C commitments.

The TFA aims to accelerate the movement of goods between countries by increasing the cooperation between customs and other appropriate authorities on trade facilitation and customs compliance. Read more about the TFA here.

Some of the most important trade partners of the U.S. are raising concerns about the proposed U.S. plan to overhaul its tax code. The finance ministers of Europe’s five largest economies voiced concerns about the tax plan in a letter sent to Treasury Secretary Steven Mnuchin on Monday, December 11, 2017.

The letter was signed by Germany’s Peter Altmaier, France’s Bruno Le Maire, the U.K.’s Philip Hammond, Italy’s Pier Carlo Padoan and Spain’s Cristobal Montoro Romero.

The E.U. leaders are generally concerned that U.S. businesses will gain a competitive edge on international markets once the tax proposal is enacted. In the letter, the leaders voiced concern that the U.S. tax overhaul contains protectionist measures that could violate double-taxation treaties and breach the World Trade Organization (WTO) rules.

The letter mentions certain provisions in both the proposed House and Senate bills. Two provisions in particular have prompted pushback from the E.U. leaders.

First, the 20% excise tax provisions on payments to foreign affiliated companies that is included in the proposed House bill would impact payments that are made for foreign goods or services. The finance ministers said that this could discriminate in ways that are at odds with the WTO rules and impose a tax on profits of non-U.S. companies that do not have a U.S. permanent establishment.

The finance ministers also criticized the anti-abuse tax provisions of the proposed Senate bill. The letter states that the anti-abuse tax provisions would impact genuine commercial arrangements of payments to foreign companies taxed at an equivalent or higher rate than in the U.S. The letter further explains that this could be harmful for international banks and insurers because it would make cross-border, intragroup financial transactions subject to a 10% tax that would be non-deductible. The E.U. leaders are concerned that this would distort international financial markets.

In response to the letter, a Treasury spokesperson said that they “appreciate the views of the finance minsters” and are “working closely with Congress as they finalize the legislation.”

February 22, 2017 marked a major milestone for global trade.  The Trade Facilitation Agreement (TFA) entered into force on February 22nd after the World Trade Organization (WTO) obtained the needed acceptance from two-thirds of its 164 members.  Rwanda, Oman, Chad and Jordan submitted their instruments of acceptance to WTO Director-General Roberto Azevêdo, which brought the total number of ratifications over the required threshold for the TFA to take effect.  This is the most significant multilateral deal that has been concluded in the 21 year history of the WTO.

The TFA seeks to expedite the movement, release and clearance of goods across borders. The TFA also aims to simplify and clarify international import and export procedures and to make trade-related administration easier and less costly. The WTO forecasts that the TFA will create a significant boost for the multilateral trading system.

Implementation of the TFA is predicted to benefit all members and should slash members’ trade costs by an average of 14.3 percent.  Developing countries potentially have the most to gain from the implementation of the TFA.  The TFA is predicted to increase the number of new products exported by developing countries by as much as 20 percent, with least developed countries likely to see an increase of up to 35 percent, according to the study by WTO economists in 2015.

While the critical mass has now been reached, allowing the TFA to become effective, there are several remaining WTO members that may still ratify the TFA.

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In the past two days, two more countries – Peru and Saudi Arabia – ratified the World Trade Organization’s Trade Facilitation Agreement (TFA).  Their ratification followed Mexico and Hondurus, who ratified the TFA earlier this month.

The submission of instruments of acceptance from Peru and Saudi Arabia means that more than 80 percent of the ratifications needed for the TFA to take effect have been obtained.   The TFA will enter into force once two-thirds of the WTO membership formally accepts it.  Now that Peru and Saudi Arabia have accepted the TFA, there are a total of 89 ratifications.

The TFA requires its members to establish and maintain a national committee on trade facilitation to facilitate implementation of the TFA.  Earlier this year, on June 8th, the WTO hosted an experience-sharing event to help members of the WTO identify best practices and the challenges faced by WTO members in establishing or maintaining national trade facilitation committees.

The TFA contains provisions for improving the movement, release and clearance of goods and increasing global merchandise exports.  According to the WTO, the TFA could add USD 1 trillion per year to global trade.  For a brief summary of the TFA, see our earlier post here.  The World Trade Report 2015 is available here.

As U.S. sanctions on Cuba continue to thaw, some long standing disputes have been reignited.  Perhaps chief among them is the decades-old battle over the trademark for “Havana Club” rum.

The original distillery that produced Havana Club rum was expropriated by the Castro regime in the 1960s.  After the original distiller’s trademark registration had lapsed, the Cuban government registered the mark in the United States in 1976.  The Cuban government assigned its rights in the mark to spirit producer Pernod Ricard in 1993.  Meanwhile, distiller Bacardi Ltd., which had fled Cuba in the 1950s, acquired rights to the Havana Club mark from the family of the original distiller in 1994.

After litigation in U.S. courts over the right to use the mark ensued, U.S. Congress passed the Omnibus Appropriations Act in 1998, which included Section 211, known as the “Bacardi Act.” Section 211, which was reportedly crafted at the behest of Bacardi, protected the trademarks of companies which had been expropriated by the Cuban government and, in turn, solidified Bacardi’s claim to the Havana Club mark through its connection to the original distillers.  In 2001, the World Trade Organization found that Section 211 was illegal because it was aimed at a single country, Cuba. The United States has, however, largely ignored the WTO ruling.

As part of the recent reduction of restrictions on Cuba, Pernod Ricard (through a joint venture with Cubaexport) has been been permitted to renew the Havana Club once owned by the Cuban government.  In a recent letter to the U.S. Treasury Secretary and the U.S. Secretary of State, twenty-five members of Congress demanded an explanation as to how OFAC has permitted Cubaexport-Pernod Ricard to renew the Havana Club mark in light of Section 211.  The members of Congress, largely representing Florida districts, are particularly concerned the U.S. government is ignoring Section 211 and is instead choosing to recognize the rights once held by the Castro regime which expropriated the goodwill of the brand decades ago.  Neither the Department of Treasury nor the State Department has yet issued a response.

The Havana Club saga is a cautionary tale which demonstrates that even though formal U.S. regulations are being scaled back, the broader relationship between the countries remains politically charged and full of pitfalls.  Navigating both the black letter regulations and the larger landscape of Cuban-U.S. relations requires skilled advocates and patience as “normalization” continues to take root.

The Trade Facilitation Agreement

On November 17, 2015, Panama became the 52nd WTO member country to ratify the Trade Facilitation Agreement (TFA). The United States has already accepted the TFA. The TFA will enter into force when two-thirds of the WTO’s 161 members have formally accepted the TFA, completed their domestic legal procedures, and submitted instruments of acceptance to the WTO.

What is the TFA and Why is it Important?

The TFA promises to improve trade efficiency and is projected to generate hundreds of billions of dollars in economic activity. The TFA contains provisions for improving trade efficiency by expediting the movement, release and clearance of goods across borders, including goods in transit.

For developing country economies, inefficiencies in areas such as customs and transport can be roadblocks to their integration into the global economy. These barriers can impair their export competitiveness or inflow of foreign direct investment. The TFA intends to enhance transparency and lessen some of the trade burdens for developing country members.

The Sections of the TFA:

  • Section I contains provisions for expediting the movement, release and clearance of goods across borders. It clarifies and improves articles of the General Agreement on Tariffs and Trade (GATT) 1994. It also sets out the provisions for customs cooperation.
  • Section II contains special and differential treatment provisions aimed at helping developing and least-developed countries implement the provisions of the TFA.

The Facility

The Trade Facilitation Agreement Facility (the Facility) was created to support the full implementation of the TFA. The Facility intends to help ensure that the developing and least-developed country members receive the assistance needed to reap the full benefits of the TFA.

Visit the WTO website to learn more about the TFA and the Facility.

The World Trade Organization (WTO) released new editions of its key statistical publications for 2015: International Trade Statistics, Trade Profiles, World Tariff Profiles and Services Profiles.

These publications provide data on world trade, including trends in world trade, trade policy measures, average tariffs imposed by individual economies, basic economic indicators, and key statistics on infrastructure services for approximately 200 economies.

The four publications are available in electronic form on the WTO website.  You can access and download the information regarding Trade Profiles here, and the other three publications here.

The printed versions will be available in mid-November.