Success in the Doha Development Agenda (DDA), would further promote trade, thus greatly contributing to the development of the global economy, and benefiting developed and developing countries alike. Although the original goal which was to reach a comprehensive agreement by the end of 2004 now appears difficult to achieve, in order to reach the agreement with a single-undertaking formula, Members will have to be flexible in their ongoing efforts to promote negotiations, keeping in mind the experiences gained through the Cancún Ministerial Conference and addressing the issues facing developing countries.
The Japanese business community hopes that an agreement will be reached by the end of July on a framework for agriculture and non-agricultural market access, that such an agreement will spur on overall negotiations, and that Members will exercise a strong commitment to the process, making positive political decisions with regard to other important matters, such as the Singapore Issues.
Nippon Keidanren will fully use the fruits of this mission, and actively work towards achieving definite progress in upcoming negotiations by promoting policy dialogues with the relevant people and organizations. It will also further strengthen its ties with business federations in developed and developing countries.
A framework agreement on agriculture is a prerequisite for revitalizing the DDA, and Nippon Keidanren therefore calls on all Members, including Japan, to arrive at a positive political decision regarding this issue. Furthermore, Nippon Keidanren considers it important, when promoting liberalization, to maintain a balance between the rights and obligations of both exporting countries and importing countries.
Nippon Keidanren considers it important to adopt a formula for reducing high tariffs, as well as eliminate or harmonize sectoral tariffs, and calls for a zero-for-zero and/or harmonization approach in such sectors as consumer electronics and electric appliances, motor vehicles, and textile. Remaining non-tariff barriers should be entirely eliminated as possible while the liberalized business activities of domestic and foreign corporations should be ensured. In developing countries, many items are not yet covered by the Harmonized System (HS) Codes, and should lift their HS Code cover rates to as nearly 100% as possible.
Overall progress in the DDA is of primary importance, and it would therefore be preferable for the four Singapore Issues to be discussed separately where necessary. This does not mean, however, that issues that will not be brought forward for negotiation in the immediate future should be taken off the discussion table at WTO.
Nippon Keidanren strongly urges that negotiations be launched at the General Council meeting, and that an agreement be reached as an essential part of the single undertaking. Trade facilitation rules should be drawn up with the participation of all Members, covering wide aspects of trade-related procedures including custom procedures, with an objective to clarify and improve relevant aspects of the General Agreement on Tariffs and Trade (GATT) Articles V, VIII, and X.
Nippon Keidanren remains convinced of the need for establishing investment rules within WTO. If the investment rule making is removed from the single undertaking, pragmatic approaches related to the circumstances of the negotiations need to be taken, considering the utmost importance of promoting overall progress in the DDA.
Liberalization of trade and investment, as well as trade facilitation, will result in greater inflows of foreign capital, leading to further economic development, more jobs, technical transfers, and other benefits. For these reasons, developing countries should be also keen to participate in the DDA. Developed countries should be willing to offer developing countries incentives for doing so, and more accommodating approach should be considered with regard to issues high on the agenda of developing countries, and with regard to supporting capacity-building efforts and special and differential treatment (S&D) provisions according to the capacities of developing countries.
All trade in services sectors play a key role in the establishment of integrated supply chains. Countries that have not yet submitted initial requests and offers -mainly developing countries- should do so promptly. Members that have made submissions -mainly developed countries- need to consider improving the content of their initial offers and should also continue to raise liberalization levels. Nippon Keidanren calls for Members to make liberalization commitments that enable the unhindered worldwide movement of highly skilled natural persons involved in specialist and technical fields. Nippon Keidanren also calls for Members to go beyond their schedules of specific commitments to ensure the transparency, simplification and expedition of their immigration regulations and procedures.
The spate of arbitrary, protectionist antidumping measures imposed in recent years has destabilized the international trading system. Nippon Keidanren strongly urges that negotiations on a concrete proposal for a revised agreement would progress, in light of the results achieved to date through studies conducted by the negotiation group on rules.
The liberalization of IT and e-commerce will serve as a springboard for further development of the global economy. Nippon Keidanren urges Members to commit full liberalization in computer-related services as well as value-added telecommunications services within the trade in services negotiations. A prompt announcement that the moratorium on customs duties regarding online/electronic/digital transactions be made permanent and activating the work program on e-commerce are important. Furthermore with regard to the treatment of software, it is strongly recommended that the GATT should be applied to online/electronic/digital transactions.
| Basic Stance | |
| Basic Position Regarding Focal Areas Towards the End of July | |
|
(1) Trade in agricultural products (2) Non-Agricultural market access (3) Singapore Issues (4) Issues regarding Developing countries | |
| Other High Priority Areas | |
|
(5) Trade in services (6) Antidumping (7) E-commerce | |
| Conclusion | |
A multilateral approach within the WTO is the foundation of the international trading system. However, ministerial declaration was not issued at the Cancún Ministerial Conference, and negotiations have most unfortunately been stalled since then.
Success in the Doha Development Agenda (DDA), would further promote trade, thus greatly contributing to the development of the global economy, and benefiting developed and developing countries alike. Although the original goal which was to reach a comprehensive agreement by the end of 2004 now appears difficult to achieve, in order to reach the agreement with a single-undertaking formula, members will have to be flexible in their ongoing efforts to promote negotiations, keeping in mind the experiences gained through the Cancún Ministerial Conference and addressing the issues facing developing countries.
Meanwhile, WTO Members continue to spare no effort in their negotiations and aim to reach a framework level package by the end of July 2004. The Japanese business community hopes that an agreement will be reached by the end of July on a framework for agriculture and non-agricultural market access, that such an agreement will spur on overall negotiations, and that Members will exercise a strong commitment to the process, making positive political decisions with regard to other important matters, especially the Singapore Issues, trade in services, antidumping, IT and e-commerce.
A framework agreement on agriculture is a prerequisite for revitalizing the DDA, and Nippon Keidanren therefore calls on all Members, including Japan, to arrive at a positive political decision regarding this issue. Furthermore, Nippon Keidanren considers it important, when promoting liberalization, to maintain a balance between the rights and obligations of both exporting countries and importing countries.
Japan should make a decision based on national interest, including both consumers and producers. Nippon Keidanren appreciates the Government of Japan's effort in responding to the Uruguay Round accords by introducing liberalization. Japan should implement reforms in domestic agricultural policy that boost competitiveness, while at the same time reconsider the way of border measures, such as tariffs, and domestic supports, to make further improvements to market access. (For a more discussion on Nippon Keidanren's position regarding structural reform of agriculture, see Urgent Proposals for Strengthening Economic Partnerships, released March 2004).
For its part, the United States should significantly cut its export subsidies and export credits, and also consider the way of less trade distorting support of domestic agriculture, with a view to revising the Farm Security and Rural Investment Act of 2002. The EU, too, should significantly cut export subsidies within a predetermined time limit. In this regard, Nippon Keidanren welcomes EU's proposal for the flexibility to reduce its own export subsidies, and USA's indication of flexible stance in this area. Canada and Australia, key members of the Cairns Group, are conducting monopoly practices for exports of wheat and other agricultural products, but Nippon Keidanren maintains that disciplines on export state trading must be established at the WTO. We hope that Brazil, India, and other G-20 members will play a strong role in promoting a framework agreement for the agricultural sector. We call on developed countries to correct their own trade-distorting measures, but at the same time, developing countries should pursue liberalization based on enhanced competitiveness over the mid to long term.
With regard to cotton issues, which developing countries have a great interest, Nippon Keidanren urges all those concerned to come to a prompt decision within the agriculture negotiations.
Non-agricultural market access is, along with agriculture, an important issue in the DDA that should be resolved through negotiations and decisions by Members. Developed and developing countries need to move toward reducing or eliminating the many high-tariff items that still remain, as well as a wide range of non-tariff barriers, in order to ensure both economic development through liberalized trade and an effective distribution of resources.
Formula for reducing high tariffs should be adopted within frameworks that will be agreed upon. Furthermore, Nippon Keidanren considers it important to eliminate or harmonize sectoral tariffs, and calls for a zero-for-zero approach in such sectors as consumer electronics and electric appliances, and for harmonization and a zero-for-zero approach in motor vehicles, and for harmonization of textile. After elimination of tariffs through formulas and sectoral approaches, we welcome the Members to agree to the supplementary measures mediated by zero-for-zero approach, harmonization, and the request/offer process. Although there are some products for which particular countries will find it difficult to reduce tariffs-for example, forestry and fishery products in the case of Japan-it is nevertheless important that all members, including Japan, take the appropriate steps to move negotiations forward.
Furthermore, remaining non-tariff barriers should be entirely eliminated as possible through request/offer and through sectoral and horizontal approaches, while the liberalized business activities of domestic and foreign corporations should be ensured.
In developing countries, many items are not yet covered by the Harmonized System (HS) Codes. Those that are member states should take it upon themselves to lift their HS Code cover rates to as nearly 100% as possible. Tariff reduction or elimination would be the best course, while taking into consideration member states' respective stages of economic development and social policies.
Given the rapid advances and merging of boundaries in IT-related technologies and services, expanded membership of the Information Technology Agreement (ITA) should be sought and tariffs eliminated on a wide range of goods.
Nippon Keidanren is of the opinion that it is significant to establish rules for the four Singapore Issues-trade facilitation, investment, transparency in government procurement, and competition-in order to eliminate the trade and investment barriers currently hampering corporate activities and to ensure a stable business climate. However, overall progress in the DDA is of primary importance, and it would therefore be preferable for the four Singapore Issues to be discussed separately where necessary, and for a decision to be made at the WTO General Council meeting in July to launch negotiations on issues on which Members are more likely to reach agreements. This does not mean, however, that issues that will not be brought forward for negotiation in the immediate future should be taken off the discussion table at WTO, and they should rather remain but as issues to be addressed later within WTO.
Clarification, simplification, and harmonization of trade procedures would benefit all those involved with trade. These steps would not only reduce the burden placed on the business community but would also boost the administrative efficiency of Members. Virtually all members have indicated an understanding of the significance of such benefits. Nippon Keidanren therefore strongly urges that discussions be conducted on the modalities of negotiations regarding trade facilitation rules, that these negotiations be launched at the General Council meeting in July, and that an agreement be reached as an essential part of the single undertaking.
Trade facilitation rules should be drawn up with the participation of all members, and clarify and improve relevant aspects of the General Agreement on Tariffs and Trade (GATT) Articles V (Freedom of Transit), VIII (Fees and Formalities Connected with Importation and Exportation), and X (Publication and Administration of Trade Regulations). Rules should be based on such principles as transparency, simplicity, and standardization, and should cover wide aspects of trade-related procedures.
Developing countries should actively participate in the effort to establish trade facilitation rules. However, because of their lack of adequate infrastructure and human resources, they should also be offered opportunities to promote capacity building. Furthermore, flexibility will be required when considering the referral of a dispute to a settlement body, as in the case of non-compliance due to a lack of capacity.
The Asia Pacific Economic Cooperation Conference (APEC) and other international forums and bodies are presently promoting trade facilitation, and this indicates the importance of proceeding with trade facilitation at multiple levels-multilateral, regional, bilateral,-and of promoting these efforts in a complementary and strategic fashion. Furthermore, the Japanese government should take the lead in modernizing Japan's own trade procedures, as one way to show energetic initiative in the effort to establish trade facilitation agreement within the DDA. (For a more detailed discussion of this issue, see Requesting a Prompt Establishment of WTO Trade Facilitation Agreement, released April 2004).
Trade and investment are now closely linked and therefore, there is a strong need to liberalize investment and create investment rules. Multilateral investment rules within WTO can be reviewed and augmented during future rounds of negotiations, meaning that such rules have the potential of ensuring greater stability, transparency, and predictability of the investment environment than could be achieved through bilateral investment treaties (BITs).
When creating investment rules, the development policies of developing countries should be fully considered, with the principles of liberalization and transparency to the extent acceptable for developing countries. (For a more detailed discussion of this issue, see Toward the Creation of International Investment Rules and Improvement of the Japanese Investment Environment, released July 2002).
Nippon Keidanren remains convinced of the need for investment rules within WTO. If the investment rule making is removed from the single undertaking and postponed, alternative proposals from the perspective of pragmatic approaches related to the circumstances of the negotiations need to be made, considering the utmost importance of promoting overall progress in the DDA. The consideration of plurilateral agreements by interested major developed and developing countries might be one of the options.
For its part, although WTO negotiations is the fundamental of international trading system, Japan should actively pursue the establishment of BITs and Economic Partnership Agreements (EPAs) with major countries and regions creating systematic frameworks whose objectives include the protection and liberalization of investment and the establishment of dispute settlement mechanisms.
Member states need to reaffirm that liberalization of trade and investment, as well as trade facilitation, will result in greater inflows of foreign capital, leading to further economic development, more jobs, technical transfers, and other benefits.
For these reasons, developing countries should be also keen to participate in the DDA. Furthermore, developed countries should be willing to offer them incentives for doing so, and more accommodating approach should be considered with regard to issues high on the agenda of developing countries (particularly the liberalization of movement of natural persons and more open markets for agricultural products), and with regard to supporting capacity-building efforts and special and differential treatment (S&D) provisions according to the capacities of developing countries.
In this regard, Nippon Keidanren is eager to offer its assistance, taking advantage of the know-how and experience of Japan's private sector.
All trade in services sectors, including financial services, IT, e-commerce and distribution, play a key role in the establishment of integrated supply chains. Members must spare no effort liberalizing trade in services, in order to gain maximum advantage from liberalized trade in goods and investment.
Some members are participating in trade in services negotiations while keeping an eye on the extent of progress in other areas, especially agriculture and non-agricultural market access. However, because of the advantage of liberalizing trade in services, Members should take an active role in pushing forward with trade in services negotiations, regardless of the circumstances surrounding other negotiations.
Domestic regulations
Nippon Keidanren urges all countries to improve the transparency of their domestic regulations and to avoid introducing regulations that require more burdensome than necessary to ensure the quality of services.
Emergency Safeguard Mechanisms (ESM)
Nippon Keidanren welcomes the decision by the Working Party on GATS Rules that the negotiations on ESM are extended up to an indefinite date.
It is extremely regrettable that only around 40 countries have submitted initial offers, and that the deadlines set have not been met.
Developing countries should be made more aware of the advantages of liberalized trade in services and the procedures encompassing special commitments, and that they and other countries that have not yet submitted initial requests and offers should do so promptly. Members that have made submissions-mainly developed countries-need to consider improving the content of their initial offers and should also continue to raise liberalization levels. To make these efforts more effective, it would be worthwhile to consider setting new milestones.
Horizontal issues: the movement of natural persons
The smooth, unhindered international movement of natural persons- whether goods, services, people, capital, or information-leads to efficient business activities, but the movement of natural persons has not been liberalized as much as the movement of other such resources.
Nippon Keidanren calls for the establishment of a regime that enables the unhindered worldwide movement of highly skilled natural persons involved in specialist and technical fields. Nippon Keidanren calls especially for member states to make liberalization commitments in the following areas: (a) all intra-corporate movements, including those of executives, directors, managers and specialists, and for the purpose of education, training and skill development; (b) movements based on the individual contracts of natural persons working in specialized or technical fields; and (c) temporary stays.
The movement of natural persons is being negotiated as one mode of trade in services, but since highly skilled persons occupy other fields in addition to trade in services, Nippon Keidanren calls on Members to open their doors to highly skilled persons in all fields. One issue attracting much interest among developing countries is the liberalized movement of unskilled workers. Developed countries should consider gradually liberalizing the entry of unskilled workers and at the same time, developed countries should improve domestic institutional infrastructure towards the movement of unskilled workers. Nippon Keidanren also calls for Members to go beyond their schedules of specific commitments to ensure the transparency, simplification and expedition of their immigration regulations and procedures. (For a more detailed discussion on this issue, see Trade in Services Negotiations, WTO: Proposal Concerning the Movement of Natural Persons, released June 2002)
Nippon Keidanren recommended on April this year that the Japanese government consider taking the following steps to increase its acceptance of foreigners working in specialized and technical fields: (a) loosen restrictions governing residence status; (b) lengthen the number of years permitted for residence; (c) indicate why in specific cases Certificates of Eligibility are granted or refused, and release relevant information; (d) simplify and accelerate procedures for determining residence status; (e) promptly sign social security agreements; and (f) establish a system promoting the permanent residence of highly qualified workers (in other words, a type of "Green Card" system). Nippon Keidanren hopes that other Members, too, will take these recommendations into consideration when establishing domestic measures facilitating entry into their respective countries. (For a more detailed discussion of this issue, see Recommendations on Accepting Non-Japanese Workers, released April 2004)
Sectoral issues
The spate of arbitrary, protectionist antidumping measures imposed in recent years has destabilized the international trading system and has hurt not only exporters but also user industries and consumers of importing countries. Strengthening the disciplines of the Antidumping Agreement would prevent the imposition of antidumping measures, and thus prevent reducing the effects of market access improvements, such as tariff reductions, and would also promote the exports of developing countries, thereby contributing to their economic development.
Nippon Keidanren strongly urges that negotiations on a concrete proposal for a revised agreement would progress, in light of the results achieved to date through studies conducted by the negotiation group on rules.
Nippon Keidanren shares the same concerns as those of interested Members including Japan, with regard to all items presented in the joint papers, and is of the opinion that substantive amendments to the agreement are essential. Nippon Keidanren feels that the detailed joint papers prepared by interested members regarding sunset, review, facts available, lesser duties, zeroing, price undertaking, affiliated parties, determination of normal value should serve as a basis for substantive modification of the agreement, and looks forward to the presentation of such proposals for the other items as well.
As a general rule, procedures employed when imposing any antidumping measure must be rational, fair, compliant with due process, and predictable. Nippon Keidanren calls for a wide-ranging review of all items, particularly those concerning antidumping measures employed in: (a) the calculation of dumping margins; (b) the injury determination; (c) public interest investigation; (d) sunset; (e) reviews. Nippon Keidanren also calls for discussion on the following items, which are not covered in the joint paper of interested Members: (a) material retardation of the establishment of a domestic industry; (b) timing of application of provisional measures; and (c) clarification of rules concerning the relationship with safeguard measure.
The immediate issues in the IT and e-commerce area are: (a) making an agreement of classification issue such as the treatment of software in a trade context, (b) securing market access and national treatment for new IT and e-commerce related businesses expected to emerge in conjunction with technological advances and (c) both developed and developing countries facilitate to make an international agreement to have vital policy measures for the sound advancement of IT and e-commerce.
The issue of whether to levy customs duties regarding online/electronic/digital transactions is unclear because the Cancún Ministerial Conference did not issue a ministerial declaration. Nippon Keidanren calls for a prompt announcement that the moratorium on customs duties regarding online/electronic/digital transactions be made permanent.
We also call for strong initiative to be shown toward further reinvigoration of the work program on e-commerce, which is promoting discussions mainly on cross-cutting issues. With regard to the treatment of software, it is strongly recommended that the GATT should be applied to online/electronic/digital transactions (e.g. downloading), as we recognize formerly as the similar trading transactions as physical goods (e.g. CD-ROM). At minimum, similar levels of liberalization should be applied after the replacement of its delivery measures from physical goods to online/electronic/digital network.
It must be stressed that liberalization of IT and e-commerce, and their international expansion, will serve as a springboard for further development of the global economy. Members should take into account how trade will evolve as digitalization and globalization expand, and should liberalize the IT and e-commerce sectors and establish non-restrictive rules, in order to promote further socioeconomic development in the future. IT and e-commerce are being discussed through trade in services negotiations and the work program on e-commerce, but comprehensive, specific action is needed to liberalize them and related fields, and to create the required rules.
Nippon Keidanren supports the multi-layered trade policy, including bilateral and regional EPAs. We are convinced that Japan, too, needs to strategically promote EPAs. Even so, EPAs must in all cases be consistent with WTO rules, which means that substantially all items need to be liberalized in accordance with Article XXIV of the GATT. Nippon Keidanren considers that multilateral negotiations within the WTO are at the heart of the international trading system.
Given the importance of multilateral negotiations, Nippon Keidanren works hard to promote them and makes timely recommendations. It has already sent missions to the WTO in Geneva on four separate occasions.
Nippon Keidanren will fully use the fruits of this mission, and promote exchanges of opinions with the relevant people and organizations in Japan, and to make recommendations to the WTO Secretariat and negotiators representing developed and developing countries, as well as countries in transition, with a view to achieving definite progress in upcoming negotiations. It will also further strengthen its ties with business federations in developed and developing countries.