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I. Now Is the Time for WTO Members To Make the Necessary Political Decisions
II. Key Areas Covered by the DDA negotiations: Nippon Keidanren's Position
III. Challenges Remaining After Completion of the DDA Round
The current round of World Trade Organization negotiations remains at an impasse, and the deadline for their conclusion (end of 2006) is only about half a year away. This stalemate is a matter of deep concern to Nippon Keidanren (Japan Business Federation) and other business communities worldwide, and we are calling on WTO members to show the political leadership needed to bring negotiations to a successful conclusion.#1 Nevertheless, major member countries are dueling with one another, pointing out the supposed weak points of their counterparts' arguments, and refusing to compromise because other members refuse to compromise. The business communities of many countries are growing increasingly concerned.
The time has come to make mutual concessions that will break the deadlock and actually reap benefits from the agreements that have already been reached so far. Through "the July 2004 Package" and the December 2005 Hong Kong Ministerial Declaration, WTO members agreed on the direction of trade liberalization, regardless of difficult decisions had to be made at home, even though differences of opinion still remained. But to change these agreements into solid achievements, and to enjoy the advantages these agreements can bring, members must stop asking their counterparts to make unreasonable concessions. It is of course important to agree on a high level of trade liberalization, but final agreement cannot be achieved without each member pursuing a rational approach and making concessions of its own.
At the present time, the three major points of contention are:
To reach a successful conclusion by the end of 2006, modalities should be established on market access for agricultural and non-agricultural products by the end of this month (June 2006). Then, by the end of the following month (July), members should submit (i) their comprehensive draft schedules of concessions on tariffs for both agricultural and non-agricultural products, based on these modalities, (ii) their second round of revised offers for services negotiations, (iii) consolidated texts of the Antidumping Agreement revisions, and (iv) first full draft of agreement for a trade facilitation.
The Trade Promotion Authority (TPA) of the US president, which gives him the authority to ask Congress to accept negotiation results in their entirety, will expire at the end of June 2007. This means that if modalities is not achieved by the end of June, and if their comprehensive draft schedules are not submitted by the end of July, and if negotiations do not end in a successful conclusion by the end of the 2006, the US Congress will not be able to ratify any eventual agreement that is reached. The United States is a major WTO member, making this a critical issue. The problem is that it is highly unlikely that Congress will extend the TPA simply for the sake of the WTO Round.
The United States has not budged from its position that it cannot accept any agreement it considers not sufficiently high level. But a successful conclusion to negotiations during 2006, before TPA expires, would most certainly be advantageous to the United States as well, because it would be able to benefit from the results of negotiations achieved to date.
To ensure that all WTO members, including the United States, benefit from the results of negotiations, members must do what it takes to reach a successful conclusion this year. Otherwise, negotiations could be postponed until next year or even later.
Any postponement of a final agreement would further extend the timeframe not only for liberalization in 150 member countries and regions (reduction of tariffs, elimination and reduction of subsidies, relaxation of investment rules, etc.), but also for the establishment of trade liberalization rules (publication and implementation of simplified trade procedures, stronger antidumping rules, etc.).
Delaying agreement could also erode confidence in the global WTO system itself, especially at a time when many countries are pursuing their own varieties of trade liberalization and rules through regional free trade agreements or economic partnership agreements. If confidence in the WTO were to fade, it would become even more difficult to achieve multilateral liberalization and establish multilateral rules, and this in turn could erode confidence in the already established WTO dispute settlement mechanism and reduce the effectiveness of enforcement provisions.
After the 2003 Ministerial Conference in Cancún, determination was made to conclude negotiations by January 2005. This deadline has already been extended once. Further postponement of the opportunity for the world's nations to enjoy the benefits of global trade liberalization would seriously impact the global economy and the economies of WTO members. We urge all members to keep this in mind, and to take the political decisions needed to reach an agreement. We ask them, also, to obtain support for those political decisions by explaining to their people the advantages of reaching an agreement. It is important not to step back on liberalization already taken, but to do what is possible to move things forward, if even only slightly.
The following sections explain Nippon Keidanren's position on political decisions WTO members should make, and the advantages to be obtained through compromise.
Three main issues face agriculture negotiations:
Market access and domestic support are two of the three main points of contention mentioned above. In other words, the key to successful negotiations is progress in agricultural liberalization.
The general direction for domestic support and market access was agreed upon in "the July 2004 package" and at the Hong Kong Ministerial Conference. If negotiations move in this direction, considerable progress can be achieved in negotiations on improving market access, reducing trade-distorting domestic support and export competition, and strengthening rules.
WTO negotiators have already agreed that trade-distorting domestic support will be reduced according to a tiered formula. Under this formula, members having higher levels of trade-distorting domestic support will make greater overall reductions. It has also been agreed that, for ordinary products, tariff reductions will be achieved through deeper cuts in higher tariffs (i.e., a tiered formula, four bands for structuring tariff cuts). It has also been agreed that, for sensitive products, access should be improved through a combination of tariff reductions and tariff quota commitments. And, with regard to export competition, agreement that the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect to be completed by the end of 2013 has already been reached.
One point of contention is domestic support, especially with regard to reduction rates for each type of domestic support, and Blue Box policies (additional disciplines for a "new" Blue Box). Debate over market access tends to focus on the size of tariff cuts for ordinary products, the appropriate number of tariff lines to be treated as sensitive, and Tariff Cap. Debate is quite contentious on all of these issues, but agreement is possible if WTO members in favor of improving market access tackle issues objectively and find realistic solutions that stand a chance of being adopted.
Of course, all WTO members must have the right to maintain policies that are essential for domestic reasons. But at the same time, moving ahead with domestic structural reforms will make compromise possible. We ask all parties to recognize this fact, accordingly make political decisions in the direction of trade liberalization, and to reach agreement with their partners within the WTO process.
Japan is promoting domestic reform measures in line with the Basic Plan for Food, Agriculture and Rural Areas, a reform introduced by the Cabinet in March 2005 to establish policy mechanisms that do not depend excessively on cross-border measures.#2 Nippon Keidanren supports efforts targeting greater agriculture competitiveness for Japan and structural reform of the sector. It also strongly urges all WTO members to move forward resolutely with their own necessary domestic reform measures.
Non-agricultural market access (NAMA) is the third major point of contention at the new Round. Since the other two issues are of an agricultural nature, NAMA is a matter of greater and more direct interest to Nippon Keidanren.
Compromise in the current round of negotiations would result in both developed and developing countries (except the least developed) cutting tariffs extensively for all non-agricultural products, in accordance with a tariff reduction formula under which the higher the tariff, the steeper the cut.#3 High tariff rates for some products are maintained by both developing and developed countries, and the advantages of all WTO members making across-the-board tariff cuts for non-agricultural products would be great.
At the Hong Kong Ministerial Meeting, agreement was reached on the Swiss formula with coefficients. Also, the following was included in the Report by the Chairman of the Negotiating Group on Market Access, which was annexed to the Hong Kong Ministerial Declaration: "During the informal discussions... the coefficients which were mentioned for developed Members fell generally within the range of 5 to 10, and for developing Members within the range of 15 to 30."
Nippon Keidanren supports adoption of the Simple Swiss Formula for tariff reduction (under which the higher the tariff, the greater the reduction) because tariffs would be cut not only in developing countries but also in developed countries in cases where high tariffs remain. Nippon Keidanren calls for the coefficient level to be as low as possible for developed countries, and calls also for a level for developing countries that would result in a lowering of applied tariff rates. The coefficient should be in the 5 to 10 range for developed countries,#4 and 15 for developing countries. At the present time, tariffs applied by developing countries on products Nippon Keidanren is most interested in are in a range of around 10 to 20%. The paragraph 8 flexibilities given developing countries in "the July 2004 package" should be accorded here, too, to promote formula-based tariff cuts.
Developed countries (including Japan) and newly emerging economies making up the core group of negotiating partners(G6) need to fully understand the challenges facing developing economies and play a leadership role in negotiations, realizing that they benefit more greatly from the advantages of liberalization of global trade and should therefore propose more ambitious tariff reduction levels.
Nippon Keidanren also calls on WTO members to continue working hard to eliminate or harmonize tariffs for each sector (zero-for-zero approach and harmonization), in parallel with the above mentioned formula approach. This would raise the effectiveness of market access improvements to be achieved through formula-based tariff reductions.
The Hong Kong Ministerial Declaration stated the agreement, "We recognize that Members are pursuing sectoral initiatives. To this end, we instruct the Negotiating Group to review proposals with a view to identifying those which could garner sufficient participation to be realized. Participation should be on a non-mandatory basis."
Sectors of great interest to Nippon Keidanren include autos and related parts, electronics including digital consumer products, consumer household appliances and office machines, and their components and parts, and chemicals, and also textiles and textile products. We urge members to make further efforts for these sectors. We believe that no delay should be permitted in agreeing upon tariff reduction modalities (the range of products covered, participating countries, final tariff rates, etc.). The number of participating countries should be increased by promoting the participation of both developed countries and major developing countries, to achieve a critical mass.
To boost the effectiveness of formula-based tariff reductions, negotiators must also tackle non-tariff barriers.
The Hong Kong Ministerial Declaration called on participants to submit specific negotiating proposals as quickly as possible. At the present time, identification and classification work is moving forward in areas covered by NAMA negotiations. There is still no agreement on approaches to modalities — whether to favor a horizontal (across all sectors) approach (for export taxes, export regulation transparency, remanufactured products, simplified dispute settlement mechanisms, etc.), or a vertical (sectoral) approach (for automobiles, electronics, etc.).
Nippon Keidanren believes that the above should be further discussed based on specific negotiation proposals submitted by the participants.
We also believe that more intensive discussions should be conducted within the framework of NAMA negotiations regarding the classification of multifunctional electric and electronic products, treating this as a non-tariff barrier issue.
Within the context of a horizontal approach, the facilitator chosen by interested countries indicated that the new non-tariff barrier dispute settlement mechanism proposed by the European Commission (EC) is a suitable solution because it includes a mechanism similar to arbitration. The mechanism includes a provision for settling a dispute within a specific number of days, and its goal is the simple, swift settlement of disputes. A settlement obtained through arbitration is not binding and does not affect a member's right to avail itself of another dispute settlement process, so the new mechanism could exist in tandem with the existing one. Nippon Keidanren intends to study this matter, to determine whether the EC's proposed mechanism would result in swifter settlements and lower costs for corporations.
Service sectors such as financial services, IT, e-commerce and distribution are essential infrastructure for economic development and play a key role in the establishment of integrated supply chains. Because it is so important a sector, trade in services has been ranked as a major built-in agenda issue to be discussed during the current Round. Members should liberalize trade in services, with a view to obtaining maximum advantage from liberalized trade in goods and investment.
Nippon Keidanren welcomes the fact that to conduct plurilateral negotiations agreed upon at the Hong Kong Ministerial meeting, and that a concrete schedule for those negotiations was established. However, 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. Especially trade in services, much time would be required for members to amend their schedules of commitments, so it would be far preferable for negotiations to continue under the schedule decided upon in Hong Kong, aiming for a high level of liberalization of services.
Nippon Keidanren urges all countries to improve the transparency of their domestic regulations by, for example, ensuring the transparency of licensing conditions and introducing public comment mechanisms.
Trade in services differs from trade in goods. Safeguard mechanisms should not be introduced for the following three reasons. First, the positive list approach permits members to choose, in consideration of their own circumstances, which service sectors they will liberalize. Second, it would be next to impossible to objectively determine a loss to a specific domestic industry caused by a rapid increase in imports, since it would be technically difficult to measure the volume of trade in services. Third, the investment climate could lose legal stability and predictability.
In principle, most-favored-nation exemptions were scheduled to be eliminated within 10 years of implementation of the GATS. Even though last year was the 10th anniversary of its implementation, exemptions still remain in many sectors. MFN represents a key element in WTO trade liberalization, and Nippon Keidanren looks forward to seeing efforts to eliminate such exemptions.
Nippon Keidanren welcomes the fact that the plurirateral requests were submitted by the deadline (the end of February 2006), and that plurilateral negotiations have begun. Until that time, the adopted process for request-offer negotiations had been bilateral, but the introduction of a plurilateral negotiation framework is expected to help the parties better understand the content of requests, and this should accelerate and facilitate negotiations.
The second round of revised offers is due to be submitted by the end of July 2006. We call on all members to obtain maximum effect from bilateral and plurilateral negotiations and promote liberalization. The deadline should be respected to ensure the favorably progress of request-offer negotiations. We also call on members who have not yet submitted revised offers to do so, at the latest, by the July 31 deadline, and to ensure that their revised offers commit to a high level of liberalization.
Furthermore, to promote negotiations on trade in services, it would be preferable to place priority on specific sectors being negotiated.
Investment
The provision of services through Mode 3 (a commercial presence abroad) is an essential function of companies involved in trade in services. Furthermore, investment in the service industry is closely linked to investment in the manufacturing industry in term of supply chains. For these reasons, and also to strengthen the competitiveness of manufacturing industries in host countries, a high level of liberalization should be achieved for services provided through Mode 3, including the elimination of foreign investment restrictions and limitations on the nature of entities.
Movement of natural persons
Smooth, unhindered trans-national movement — whether the movement of 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 therefore calls for the establishment of a regime that enables the unhindered worldwide movement of highly skilled natural persons involved in specialist and technical fields. We call especially for members to make liberalization commitments in the following areas: all intra-corporate movements, including those of executives, directors, managers and specialists, and those for the purpose of education, training and skill development; movements based on the individual contracts or on contracts between corporations of natural persons working in specialized or technical fields; and temporary stays.
IT-related services / Telecommunication services
Nippon Keidanren strongly urges members to move forward with:
With regard to telecommunications services, Nippon Keidanren calls on members to liberalize schedules of specific commitments based on the Basic Telecommunications Agreement. In particular, impediments such as restrictions on foreign capital ratio and discriminatory domestic regulations should be eliminated. Furthermore, the Reference Paper should deal only with basic telecommunications services, and not added-value telecommunications services.
With regard to computer-related services, Nippon Keidanren urges members to comprehensively liberalize all sub-sectors and modes. IT services using computers and network facilities should be classified as computer-related services and therefore liberalized.
Newly emerging services spanning multiple sectors should be liberalized, in accordance with existing commitment schedules, through full liberalization commitments for basically all related sectors (such as computers, telecommunications, and consulting services). Furthermore, it would be preferable for countries that have submitted joint requests in plurilateral negotiations to ensure that their own offers unconditionally reflect the requested liberalization measures.
Financial services
Nippon Keidanren urges all members to improve the commitments of their schedules based on the Understanding on Commitments in Financial Services. In particular, members should abolish all discriminatory measures functioning as actual barriers that impede the entry of foreign financial institutions in various financial service sectors, including but not limited to foreign equity caps, restrictions on the establishment of branches and subsidiaries, nationality or residence requirements for directors and employees, geographical limitations, restrictions on scope of business, restrictions related to reinsurance (such as mandatory cessions to specified insurance or reinsurance suppliers), and economic needs tests.
Maritime transport services
Member countries should commit to a high level of liberalization of maritime transport services, as called for in the plurilateral requests. It is also important that members liberalize international maritime transport services and maritime auxiliary services, and ensure non-discriminatory access to and use of port services.
Distribution services
Nippon Keidanren calls on members to relax restrictions on foreign ownership, restrictions on the establishment of a commercial presence, and restrictions on use. As the distribution service industry is inseparable from the manufacturing industry, to ensure free distribution of both self-produced products and non-self-produced products, it is particularly important to strengthen international competitiveness. In addition, although maintenance, repair, wholesale and retail services are not distribution services per se, they are closely related to the supply chains of manufacturing industries and should therefore be liberalized, and restrictions on land ownership should be eliminated.
Energy services
A common understanding has been reached on the collective request in energy services, and Nippon Keidanren calls for the request to be respected as much as possible and for liberalization efforts to proceed, while taking into consideration the issue of energy security.
Audiovisual services
Even some developed countries have implemented almost none of their commitments. Nippon Keidanren calls for substantial improvements to members' schedules of specific commitments. It is especially important that domestic regulations discriminating against foreign service suppliers be relaxed.
Construction services
Nippon Keidanren calls on members to liberalize restrictions on foreign equity caps on business forms, and domestic regulations that discriminate against foreign service suppliers.
Air transport services
With regard to the three so-called soft rights areas — selling and marketing of air transport services (with the exception of pricing), computer reservation system services, and aircraft repair and maintenance — Nippon Keidanren urges all members to implement their schedules of specific commitments. And, with regard to hard rights, we believe that the current bilateral system should be maintained.
One aim of trade facilitation negotiations is the establishment of a new agreement regarding provisions set out in GATT Articles V (Freedom of Transit), VIII (Fees and Formalities connected with Importation and Exportation), and X (Publication and Administration of Trade Regulations). It would be most beneficial if members, including developing countries, agreed on new binding trade facilitation rules. Current rule negotiations are attempting to deal with such problems as complicated regulations that lack transparency, sudden changes in legislation, expensive fees, arbitrary tariffs, and excessive demands for documentation. If these types of problems are resolved, the private sector would enjoy direct benefits, including lower costs and more efficient operations.
The Hong Kong Ministerial Declaration stated the following agreement: "In carrying out this work and in tabling further proposals, Members should be mindful of the overall deadline for finishing the negotiations and the resulting need to move into focused drafting mode early enough after the Sixth Ministerial Conference so as to allow for a timely conclusion of text-based negotiations on all aspects of the mandate." Members are now discussing specific proposals from member countries, and Nippon Keidanren urges them to submit their proposed texts before the end of July deadline.
Nippon Keidanren earnestly hopes that members will ensure the establishment of rules that are as ambitious and specific as possible, from the point of view of the private sector, whose trade operations are directly affected by provisions set out in trade facilitation rules.
To encourage developing countries to accept these standards, developed countries should offer support for the identification of priority issues, as called for by developing countries, and should promptly consider and act in identifying the modality of adjustment mechanisms for technical assistance provided according to the order of priority.
The following are priority issues considered especially important by the member companies of Nippon Keidanren to whom we sent questionnaires, mostly in September 2005:
In addition to tackling these three priority issues, negotiations should also aim for the adoption of measures that lead directly to the acceleration of procedures and a reduction in costs (for example, through the publication of standard customs clearance times, the establishment of pre-arrival clearance and preliminary examination systems, and a system ensuring explanations in the event documentation is not accepted).
The Negotiating Group on Rules is now examining subsidies, countervailing duties, regional trade agreements (RTA), and a revised Antidumping Agreement.
Arbitrary or protectionism-oriented antidumping measures have been implemented frequently in recent years in both developed and developing countries, and preventing the common use of such measures has become an urgent issue for the private sector. Nippon Keidanren therefore earnestly requests that provisions of the Antidumping Agreement be clarified and tightened.
The Hong Kong Ministerial Declaration called on members to take into account the need to avoid the unwarranted use of anti-dumping measures, to limit the costs and complexity of proceedings, and to strengthen the due process, transparency and predictability of such measures and proceedings. The Declaration also mandated "the Chairman to prepare, early enough to assure a timely outcome within the context of the 2006 end date for the Doha Development Agenda ... consolidated texts of the AD and SCM Agreements that shall be the basis for the final stage of the negotiations." Members are presently examining the proposals submitted by members, so that the Chairman can submit them by the end of July. Nippon Keidanren looks forward to the proposed texts being submitted by the deadline, as planned.
In negotiations so far, most issues that Nippon Keidanren considers important have been raised, and we welcome this fact. We have stressed that antidumping measures should not be permanent, that there is a need to mitigate the excessive effect of an antidumping measure, and that a quick end to unjustifiable investigations should be ensured. (For further information, please refer to the sectoral analysis in A Successful Hong Kong Ministerial Conference Can Still Save the Doha Development Agenda: Political Leadership Needed from All WTO Members, issued by Nippon Keidanren on September 20, 2005). Nippon Keidanren requests that members take the above into account when drawing up their texts, by proposing rules that are as clear and trade liberating as possible.
Further advances in digitalization and globalization will promote the development of new business models and the evolution of trade patterns. For this reason, too, members should take comprehensive, targeted steps to liberalize their IT and e-commerce sectors, and to establish non-restrictive rules.#5 Nippon Keidanren strongly urges that the reinvigoration of Work Programme on Electronic Commerce agreed upon at the Hong Kong Ministerial Meeting be realized. It is also important that developed countries support the efforts of developing countries as they work to computerize their own societies and eliminate the digital divide.
With regard to the treatment of software, Nippon Keidanren urges that GATT provisions also be applied to online/electronic/digital transactions#6 because, although such transactions use the Internet rather than a physical medium,#7 they are similar to other trade transactions. At the very least, the same levels of liberalization should be secured. Nippon Keidanren also calls for the relevant authorities to announce without delay that the moratorium of customs duties on online/electronic/digital transactions be made permanent.
An acceptance of the need for special and differential treatment (S&D) for developing countries is essential in promoting liberalization and rules negotiations within the framework of any multilateral free trade system that includes developing countries. This issue applies to every sector of the DDA negotiations.
In order to raise the ability of developing countries to adhere to trade rules and participate in the negotiating process, developed countries should provide them with technical assistance, including Official Development Assistance,#8 and for some time Nippon Keidanren has strongly urged that more efforts be done in this regard.
It was with this goal in mind that, before the Hong Kong Ministerial Meeting, the Japanese government issued its Development Initiative.#9 The government should continue with its efforts to raise the effectiveness of its export assistance for developing countries, through the "one village, one product" campaign (an integral part of the Development Initiative) and other programs. Nippon Keidanren intends to support such initiatives as much as possible.
It is also important that the Japanese government strategically demonstrate the advantages offered by the above-mentioned programs, as another way to obtain understanding for Japan and the cooperation of members during negotiations.
The above expresses Nippon Keidanren's keen hope that all WTO members will place priority on working for a successful conclusion to the new Round.
Of course, members will not be able to rest on their laurels after completing the Round — they must still continue working for stability and growth in the global economy. There will have to be another round of expanded sectoral negotiations, targeting further trade liberalization and even more improved rules.
Nippon Keidanren believes other issues remaining to be tackled also include reform of the WTO system itself, and the need for members to take more realistic approaches in WTO negotiations. In this section we will examine some of the challenges facing members after completion of the current Round of negotiations.
Against the backdrop of stalled WTO negotiations, a growing number of countries are signing Economic Partnership Agreements (EPA) and Free Trade Agreements (FTA). Major countries and regions are strategically pursuing EPA and FTA with selected partners, looking for greater and more far-reaching liberalization and improved rules that are more advanced than what can be achieved through the WTO. These countries feel obliged to do this in order to remain ahead in the global competition contest, and to provide their domestic corporations with an environment that lets them become more competitive.
Nevertheless, it is clearly the WTO that has the ability to promote liberalization and rule formation on a global scale, and it is the WTO that provides dispute settlement mechanisms. In other words, support for liberalized and facilitated global economic activities comes from the WTO, and the WTO system contributes to the economic development of member countries. In addition, because the WTO is poised to expand further (for example, Russia is now conducting negotiations with a view to joining), and because the global economy is becoming ever more integrated, the WTO is best positioned to expand liberalized markets under common rules and contribute to the stability of the international politicoeconomy.
Countries should remain aware of the advantages the WTO offers and work to maintain and strengthen the WTO system and negotiating process. EPAs and FTAs are actually recognized as integral parts of the WTO system,#10 and cannot replace the WTO itself.
Nippon Keidanren therefore intends to continue urging members to conclude the current Round, and will continue making proposals and taking action aimed at ensuring the maintenance and reinforcement of the WTO system, the use of existing WTO mechanisms, and necessary reforms.
We call on member countries to cooperate in concluding the DDA Round successfully, and in maintaining and strengthening the WTO system.
Nippon Keidanren has joined forces with business groups in major Western countries, issuing statements, dispatching missions and organizing meetings with them, all with a view to promoting the current Round.
Through these efforts, our respective business communities have formed a consensus on recommendations to WTO members regarding contentious issues, and we have been urging the governments of our respective countries to support the consensus position of the business world.
Nippon Keidanren intends to develop stronger ties with business groups in developing countries as well. In many cases, opinions in developing and developed countries are quite different, especially with regard to the consideration developing countries should be given. Even so, business groups in developing countries recognize that trade liberalization would contribute to the development of their respective countries, and this, too, makes such stronger ties possible. We intend to work with them to develop joint approaches calling for trade liberalization.
It is from this perspective that Nippon Keidanren calls on the business communities of all countries, developing and developed alike, to establish stronger relationships among one another so that all can work together for a successful conclusion to the current round of negotiations.
And we urge developing countries that are experiencing rapid economic growth to recognize that they benefit substantially from WTO liberalization. We ask that they offer strong support to other developing countries, and seize the initiative in the promotion of liberalization.#11
In addition to working with business groups in developing countries, Nippon Keidanren also intends to participate in dialogues with other parties, both in Japan and in developing and developed countries, to develop a greater awareness of the need for the WTO. There can be no progress in negotiations without understanding and support from consumers, the agricultural sector, and other members of the general public. After all, negotiations will bring benefits not only to business but to national economies as well.
It is with this in mind that we express the hope that the Japanese government will strenuously pursue its PR activities promoting trade liberalization.
We also urge business groups worldwide to promote dialogue with consumers, farmers' groups and others in their respective countries, with a view to deepening recognition of the benefits of liberalization.
In this last section we raise two issues that we hope member countries will also consider to ensure that the WTO functions effectively as the foundation of the global multilateral trading system.
These are just some of the many issues that should be dealt with in order to facilitate liberalization and rule improvements through the WTO, and they should be discussed in depth after of the current DDA Round. Nippon Keidanren is eager to promote such improvements, and calls on all WTO members and business groups in major countries to work together to maintain and strengthen the WTO system.
Notes:
- Nippon Keidanren's recent WTO policy proposals were published as A Successful Hong Kong Ministerial Conference Can Still Save the Doha Development Agenda: Political Leadership Needed from All WTO Members (September 20, 2005). Nippon Keidanren joined with other business organizations in the publication of Hong Kong Joint Business Declaration: A Call For Substantial Progress Towards Trade Liberalization (November 21, 2005).
- One important measure in the Basic Plan for Food, Agriculture and Rural Areas is the introduction of an across-the-board revenue stabilization scheme, beginning with the 2007 harvest. The current system providing support to all farmers, via price supports for each type of product, is being transformed with a view to achieving overall revenue stabilization.
- The tariff reduction formula for developing countries would be less demanding than that for developed countries. Also, developing countries would have the flexibility to either (a) apply less than formula cuts to up to 10% of the tariff lines for all non-agricultural products provided that the cuts are no less than half the formula cuts and that these tariff lines do not exceed 10% of the total value of a member's imports, or (b) keep tariff lines unbound, or not apply formula cuts for up to 5% of tariff lines provided they do not exceed 5% of the total value of a member's imports.
- To take as an example the 14% tariff applied by the EU on home electric appliances, the coefficient should be reduced to around 3.7 (coefficient level 5 under the Swiss formula). There is a need to eliminate the tendency to make arbitrary tariff classifications.
- For example, the development of authentication and security systems.
- For example, downloading.
- For example, a CD-ROM.
- Japan's new Official Development Assistance Charter specifies that Japan's assistance to developing countries will include "cooperation in the field of trade and investment." However, Japan's Mid-term Policy on ODA, which is supposed to translate the Charter into action, does not specifically mention raising the ability of developing countries to abide by trade rules and participate in the negotiating process within the WTO.
- The Development Initiative pledges a total of US$10 billion in financial assistance for trade, production, and distribution infrastructure over three years, and an exchange of 10,000 trainees and experts in those fields during the same period.
- Article XXIV of the GATT defines customs unions and free-trade areas as places where "duties and other restrictive regulations of commerce... are eliminated on substantially all the trade between the constituent territories..."
- In this regard, newly emerging economies should prepare to adopt the same rules followed by developed countries. There is also a need to prioritize discussions on the issue of graduation criteria (to determine when special and differential treatment (S&D) should terminate for a developing country that has achieved the ability to abide by WTO agreements).
- In one instance, the WTO consensus principle is reversed: The dispute settlement system uses a "negative consensus" rule (a decision of the Dispute Settlement Body panel or the Appellate Body is adopted unless there is a consensus against it). One possible solution to permit members to promote liberalization without 100% agreement would be an approach whereby a member could not prevent a decision if a certain percentage of members were already in agreement, and if the issue did not seriously impact on its interests.