The World Trade Organization (WTO), as a heart of the international trading system, has been based on the principle of free, multilateral and non-discrimination, providing a dispute settlement mechanism with fair trade rules. As such, it has promoted efficient resource allocation through trade and investment, substantially improving world economic welfare.
As cross border corporate activities grow, the WTO framework is taking on a role of critical importance for companies becoming a vehicle for promoting further liberalization, strengthening existing rules, and developing new rules to improve the international business environment. Therefore, strengthening the WTO system will be vital to the further development of the world economy.
Keidanren strongly calls for the Japanese Government, in its policy proposal entitled 'Towards the Implementation of Strategic Trade Policies' published in June, 2001, that Japan should remain strongly committed to promoting the multilateral trading system centering around the WTO and regional trade agreements as central pillars of its trade policy. At the same time, Japan must demonstrate strong political leadership in its strategic trade policy proactively advancing domestic structural and systemic reforms. In particular, we believe that it is one of the most important objectives of our trade policy to promote further liberalization, to strengthen existing rules and to develop new rules at the WTO.
Japanese industries call for the launch of a comprehensive new round of negotiations at the Doha Ministerial to be held in November this year. To achieve this goal, we will cooperate together the industries of the U.S., Europe and other countries.
Keidanren also believes that the needs of developing countries must be fully accommodated in the new round to ensure that the benefits derived are extended equitably to all WTO member countries. In the same context, developed countries will need to actively engage in capacity-building. This includes efforts to assist developing countries in implementing the Uruguay Round agreements, developing human resources necessary to participate in future negotiations and creating the domestic legal infrastructure needed to promote trade.
Given this basic understanding, Japanese industries strongly request that the WTO Member Countries reach a consensus on the modalities and duration of negotiations, as well as the negotiation agenda at the Doha Ministerial conference.
Keidanren will present its positions on individual items on the negotiation agenda through the course of the negotiations and will actively work towards its positions being realized both at home and abroad.
The best negotiation mode would be a "single-undertaking" whereby all WTO Members would reach a consensus on a packaged agreement covering all items on the agenda.
However, the possibility of applying plurilateral agreements should not be a priori excluded. We consider that plurilateral agreements could be formed on certain items, according to the progress of the negotiations. In that case, it would be eligible to ensure a critical mass in terms of participation.
The negotiations should be concluded within three years from the launch date, while aiming for the earliest possible conclusion. Ministerial Conferences should be used for interim progress reviews. Different conclusion dates should also be possible taking into account the nature of the particular item or agreement.
Developed countries should pay due consideration to the issues being faced by developing countries, such as implementation issues and balance of rights and obligations. The negotiations should aim to achieve liberalization that enables developing countries to benefit from the multilateral trading system. To that end, special and differential treatment should be given to developing countries, particularly LDCs, as an essential part of negotiations.
Keidanren also affirms that capacity-building through technical assistance should be packaged with negotiations in an effective way to assist developing countries to consistently implement their agreements. Developed countries would then be expected to take the lead in providing carefully-tailored support in various areas for developing countries.
Japanese industries commit themselves to cooperate with the government and bring the knowledge and know-how which private enterprises have built up in contribution to developing countries.
In addition to the built-in agenda, Japanese industries strongly urge the inclusion of industrial tariff reductions, investment, anti-dumping, electronic commerce, intellectual property rights, and trade facilitation on the agenda of the new round.
As for the other items, we do not necessarily disagree with its inclusion to the negotiating agenda. However, due consideration among all WTO members would be necessary.
Liberalization negotiations on trade in services and agricultural products, which were already launched from the year 2000, will need to be incorporated into the new round.
As the activity of services economies increases, trade in services is playing an ever more important role in the world economy. Accordingly, Japanese industries have high expectations of the roles a New Round can play in accelerating on-going services negotiations. We put strong emphasis on the abolishment and/ or reduction of measures, namely (i) limitations on foreign capital ratios, (ii) citizenship and residence requirements for company executives and employees, (iii) foreign remittance regulations, (iv) performance requirements and (v) domestic procurement requirements for materials and services, through a course of negotiations. We also urge all WTO members to endeavor towards withdrawing all MFN exemptions from their lists in accordance with the Annex on Article II Exemptions. In addition, further works on rule-making issues, such as the development of the horizontal disciplines, notably transparency, on domestic regulations are necessary.
(Note: With regard to further information on Keidanren's position on the negotiations on trade in services, please refer to the "Expectations on the WTO Negotiations and Requests for Liberalizing Trade in Services" produced in March 2000 and the "Position Paper on the WTO Negotiations for Liberalizing Trade in Services" produced by the Japan Services Network (JSN) in November 2000.)
With regard to trade in agricultural products, as the market economy spreads globally, there are opinions that trade in agricultural products should not be negotiated as an exception. Developing countries are particularly interested in agricultural trade. An active approach should be taken to opening the markets of Japan and other developed countries.
Japanese industries strongly call for drastic reductions in industrial tariffs so as to allow the efficient allocation of resources through free trade.
Modalities: The tariff barriers of member countries will need to be effectively lowered through a combination of the following negotiation modes: (1) the request-offer formula, whereby interested countries present each other with wish-lists for tariff reduction or elimination; (2) the formula-cut approach, whereby all countries cut their tariffs based on a certain numerical formula; (3) peak tariff cuts, namely lowering high tariffs that are significantly greater than the average tariff rates; (4) the zero-for-zero formula, which has all members cutting all tariffs in certain sectors; (5) the redressing of tariff escalation, whereby tariffs are set progressively higher the greater the degree of processing; and (6) the elimination of "nuisance tariffs", which is, for example, low tariff rates of five percent or less.
We also call on the U.S. and the EC countries to bring their weighted average bound tariff rates, 3.5% and 3.6% respectively, down to the same level as Japan (1.5%), and to slash protectionist tariffs which heavily outweigh tariffs on other items-for example, those levied by the U.S. on commercial vehicles (25%) and by EC countries on some home appliances (e.g. 10-15%). Tariff reduction and elimination should also be actively pursued for agricultural products, textiles and other items of particular concern to developing countries.
Developing countries should raise their bound rates to close to 100 percent. Transitional periods should be established and other measures designed to encourage these countries to progressively lower their average bound tariff rates to the level of developed countries, taking into full consideration the domestic social policy objectives and the stage of economic development of the particular country concerned.
In terms of information technology-related products currently experiencing worldwide market expansion, with a view to contributing to the development of e-commerce, efforts should be made to significantly boost the number of countries participating in the Information Technology Agreement (ITA). In addition, taking proliferating information technology-related products into consideration after the conclusion of the ITA, the effective elimination of tariffs on a wide range of items, for example all electronics products, is necessary.
Cross-border investment has contributed enormously to the development of the world economy, developing countries included. Not only has it facilitated the movement of corporate management resources, it has also encouraged technology transfer and job creation. However, the world still lacks a multilateral legal framework for investment. Japanese industries strongly urge the development of international investment rules within the WTO. Investment in such a case should be defined as the foreign direct investment and exclude sectors stipulated under the General Agreement on Trade in Services (GATS).
Specifically, rules must be developed with regard to: (1) investment protection; (2) transparency; (3) most-favored-nation (MFN) treatment; (4) national treatment; (5) market access; and (6) dispute settlement.
In addition, the possibility should be left open of discussing special and differential treatment for developing countries, technical cooperation and capacity-building for developing countries, and the relationship with existing bilateral investment treaties and regional trade agreements.
Development of investment rules: These rules should benefit all member countries, particularly the developing countries hosting the investment, and should therefore respond flexibly to the needs of developing countries. For example, following suit with the GATS, consideration should be given to adopting a "positive commitment" formula which allows countries to select at their own discretion those areas in which they will liberalize market access and national treatment, thus avoiding placing excessive obligations on member countries.
Apart from the development of investment rules, with regard to TRIM (Trade-Related Investment Measures), we urge all the member countries to implement the Agreement on Trade-Related Investment Measures and WTO decisions concerning this agreement. Developed countries should actively engage in capacity-building through technical cooperation with developing countries, especially LDCs, to eliminate TRIM.
Note: The European Commission submitted a paper on the new round ("State of Play and Strategy for the New WTO Round") to the Article 133 Committee in December 2000, describing plurilateral agreement as the best approach for investment rules.
In the case of trade in services, GATS has a provision (Article 1.2 (c)) on so-called Mode 3 (foreign commercial presence), which, in the case of the services industries, effectively amounts to foreign direct investment and guarantees MFN treatment and transparency. Furthermore, to the extent that members have made commitments in their schedules of specific commitments, national treatment and market access are also guaranteed. GATT, on the other hand, which handles trade in goods, does not have the equivalent provision, and does not guarantee through international rules these treatments for foreign commercial presence established by manufacturing industries. Therefore, when developing investment rules, consideration should be given to the possibility of progressive investment liberalization in the trade in goods area through the introduction of a GATS liberalization formula.
Anti-dumping (AD) measures are permitted as exceptions to the MFN treatment, which stands as a key principle in the WTO system. But, the recent surge of AD abuse by some member countries for protectionist ends has led to growing instances of international business activities being hampered. Strengthening the rules contained in the AD Agreement would ensure the fair and appropriate application of AD measures, allowing the maintenance of a predictable and stable international trading system. Member countries should agree that the AD Agreement (Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994) be reviewed and, where necessary, revisions made to clarify rules with a focus on strengthening AD disciplines. On the other hand, while the basic principles of the AD Agreement will need to be reviewed, it would be acceptable to maintain these for the meantime.
The specific elements of the AD Agreement which need to be reviewed are as follows: (1) Determination of Dumping (Article 2); (2) Determination of Injury (Article 3); (3) Investigation Procedures (Articles 5 and 6); (4) Price Undertakings (Article 8); (5) Imposition and Collection of AD Duties (Article 9); (6) Review of AD measures (Article 11); and (7) Dispute Settlement (Article 17). Other elements should also be examined where necessary.
Other elements which should be dealt with include a public interest provision and the anti-circumvention measures which have been introduced by some member countries despite the lack of provision under the AD Agreement.
In addition to the above reviews, given the surge of AD measures applied by developing countries in recent years, member countries should actively engage in capacity-building to encourage the AD authorities in these countries to implement the AD Agreement appropriately.
The lack of substantive progress in WTO discussion on e-commerce since the Seattle Ministerial is highly lamentable. E-commerce has grown enormously around the world since the Uruguay Round. The WTO should, therefore, undertake an e-commerce program from a short- to long-term perspective to ensure that the legal framework of the WTO contributes to and encourages the sound global development of e-commerce initiated by the private sector.
To elaborate and accelerate the Work Program on Electronic Commerce, Keidanren requests that WTO Members agree to establish a task-force at the Doha Ministerial that would provide a forum to facilitate discussions on e-commerce in a consecutive and efficient manner. The task-force would focus primarily on cross-cutting issues with a view to promote the global development of e-commerce.
In addition to establishing a task-force, we further requests that an agreement be reached on the basic principle outlined below. In the event that an item emerges on which members cannot reach consensus at the Doha Ministerial Conference, that item should remain under consideration by the e-commerce task-force or some other appropriate committee.
Given the increase of world trade accounted for by products and services embodying intellectual property, the institutionalization of intellectual property rights by developing countries is becoming an urgent issue in maintaining a sound trading order. It is necessary that developing countries and least-developed countries (LDCs) fulfil the TRIPS transitional period. We strongly hope that developed countries will bolster their support for the development of the relevant legislation and execution mechanisms, as well as for educating and raising the awareness of the public, to help developing countries set in place their IPR systems. Similar capacity-building should be actively extended to those countries applying for WTO membership to ensure their smooth implementation of the TRIPS Agreement on accession.
Transparent and stable international rules are needed for patents. The WTO should work on the international harmonization of patent systems in cooperation with WIPO, such as the institution of a first-to-file system as an international rule and the introduction of an early disclosure system.
We strongly request that Member Countries agree to launch work on the creation of a basic rule of trade facilitation. The aim of the rule should be to lighten the burden placed on business by trade-related procedures and to boost the administrative efficiency of member governments. The rule should cast a wide net over trade procedures, customs procedures included, and be grounded in the basic principles included in the relevant GATT/WTO agreements, such as transparency, legitimacy, predictability, minimum necessary regulation, and non-discrimination. Work by other international institutions should be drawn upon in forming these rules.
Capacity-building will be essential to promote trade facilitation which satisfies the interests of the private sector. We also believe capacity-building should be packaged with rule making efforts. More specifically, a useful approach would be to develop a technical assistant program to build domestic capacity in collaboration with international institutions such as the United Nations Conference on Trade and Development, the World Bank, the International Monetary Fund and the World Customs Organization. Developed countries should also be encouraged to actively pursue technical cooperation at the bilateral or regional level in regard to simplifying and shortening customs clearance procedures and tariff refund systems, as well as promoting the introduction of IT.
Further discussion is needed on the consistency of the WTO Agreement and MEAs. It should, however, be understood that the trade-restrictive measures based on those MEAs which have international consensus (Montreal Protocol on Substances that Delete the Ozone Layer, Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal, Convention on International Trade in Endangered Species of Wild Fauna and Flora, etc.) are respected in the context of the WTO.
We support the consideration of basic rules on competition policy to prevent trade-restrictive behavior and the abuse of extra-territorial application of competition law. However, given the fact that many developing countries do not have a competition law, special considerations would have to be given to developing countries. In this context, capacity-building is a useful tool to assist developing countries.
Member countries also have to discuss the competition restriction aspects of trade remedies.
Participation in the Agreement on Government Procurement should be expanded. It will also be imperative to develop transparency rules in this area.
Discussion on this issue should be led by the International Labour Organization, which has primary responsibility for labor issues. Keidanren believes that the WTO is not an appropriate organization to deal with labor issues, as its original mandate is to promote the multilateral trading system.
Japanese industries ask that WTO Member Countries cooperate towards launching a broad and well balanced new round which satisfies the interests of all the WTO Member Countries, in particular, developing countries, notably LDCs, small economies, and transition economies. Japanese industries are prepared to extend their unstinting cooperation to this end.