Session 2 : FROM TRADITIONAL TO “NEW” TRADE ISSUES: HOW TO SELECT THEM FOR TRADE NEGOTIATION POSITION PAPERS? Jakarta, Indonesia 27-28 February 2018 Wenguo Cai Director, International Programs Partner: The Conference Board of Canada Project Executed by:
Presentation Outline (1) Negotiating Traditional Issues: Industrial goods, Agriculture, Services and Trade Rules (2) New Negotiating Issues: Investment, Competition Policy, Government Procurement, SOEs, Gender Equality, etc. (3) How to select and prioritize the traditional and new trade issues and to prepare trade negotiation position papers?
Identify Identifying T ing Traditio aditional Issues nal Issues for FT or FTA Ne A Negotia gotiations tions • Seeking WTO + Commitments/Concessions ➢ Industrial Goods (tariff and NTBs) ➢ Agriculture (MA, subsidies and TRQs) ➢ Services (including E-Commerce and Movement of Natural Persons) ➢ Trade Rules and Regulations
Traditional aditional Issue Issues s – Indus Industrial G trial Goods oods • Possible Areas for Improvement ❖ Reduction of bound rates (reduce “water”) ❖ Non-tariff barriers – reduction & elimination ❖ Rules of Origin (RoO) – simplification and harmonization – cross cumulation ❖ S ectoral liberalization (e.g. chemicals) ❖ Duty-free and Quota-free for LDCs ❖ Plurilateral Agreements: ▪ Information Technology Agreement 2 (ITA 2) ▪ Environmental Goods Agreement (EGA)
Traditional aditional Issues Issues – Ag Agricult ricultur ure • Agricultural Trade Negotiations ❖ Agriculture is more sensitive than industrial goods ❖ Agricultural market access negotiations are linked with food security issues ❖ Agricultural negotiations are also linked with poverty reductions (farmers) and gender equality (many women and girls are working in the agricultural sector) ❖ Agriculture is closely linked with SPS issues ❖ Agriculture is also linked with environment and sustainable development.
Traditional aditional Issues Issues – Ag Agricult ricultur ure • Possible Areas for Agricultural Negotiations ❖ Elimination of export subsidies ❖ Reduction of domestic support/subsidies ❖ Administration reform of “tariff - rate quotas” (TRQ) ❖ Permission for developing countries to stockpile food for food security purposes ❖ Intellectual property rights – geographical indications ❖ Expanding the list of “Green Box”?
Traditio aditional Issues nal Issues – Ser Services vices • Services Negotiations in FTAs ❖ General Agreement on Trade in Services (GATS) ❖ Seeking GATS plus commitments/concessions ❖ Revisit to the GATS delivery modes: ➢ Mode 1: Cross-border supply ➢ Mode 2: consumption abroad ➢ Mode 3: Commercial presence ➢ Mode 4: Movement of natural persons Mode 5: ??? – still under research ❖ Services Sectors/Sub-Sectors: CPC
Traditio aditional Issues nal Issues – Ser Services vices • Services Schedules – Positive Listing ❖ GATS-type Services Schedule: only services included in the schedule enjoy preferential treatment ❖ Advantage: (1) Developing countries are familiar with the GATS-type approach; (2) more predictable ❖ Disadvantages: (1) need to amend it each time FTA partners want to liberalize a service; (2) UNCPC does not cover all services – classification is a problem ❖ Horizontal versus sectoral specific commitments ❖ Three columns: (1) MA limitations, (2) NT limitations & (3) Additional Commitments ❖ Specific commitments: None, Unbound and something in between (to be specified)
Traditio aditional Issues nal Issues – Ser Services vices • Services Schedule – Negative Listing ❖ All services except those listed in the schedule are subject to foreign competition ❖ Advantages: (1) new services are automatically covered; (2) normally leading to deeper liberalization ❖ Disadvantages: (1) may risk committing something unknown; (2) many developing country negotiators are not familiar with the negative listing approach. ❖ FTA partners have the right to regulate – in the end, all the services are subject to the regulatory framework – do not worry too much about being over-committed.
Traditio aditional Issues nal Issues – Ser Services vices • Services Scheduling – Negative Listing ❖ Non-conforming measures (inconsistent measures) to be listed in the schedule ❖ Standstill – Previous liberalizations cannot be made more restrictive now or later ❖ Ratchet – Future liberalizations will be locked in without a turning back – cannot challenge decisions and choices made by previous governments ❖ With standstill and ratchet, no reversal of services liberalizations ❖ A few sectors could be reserved: for example, social services – but most sectors are open.
Traditio aditional Issues nal Issues – Ser Services vices • Possible Key Areas for Advancing Services Negotiations under FTAs ❖ Market access (sectoral liberalization – not much progress at WTO) – now TiSA ❖ Domestic regulatory policies ❖ Electronic commerce ❖ Movement of natural persons
Traditiona aditional l Issu Issues es – Rules ules • What to Negotiate on Trade Rules? ❖ trade remedies (antidumping, countervailing duties and safeguards) ❖ rules of origin ❖ customs procedures/trade facilitation ❖ technical barriers to trade ❖ sanitary and phytosantory measures ❖ intellectual property rights ❖ transparency in administration of trade rules ❖ consultations of dispute settlements, etc. ❖ labour and environment for some FTAs
“New” Negotiating Issues • What are “new” trade negotiating issues? ❖ “Singapore Issues” ✓ Investment ✓ Competition Policy ✓ Government Procurement ✓ Trade Facilitation (Agreement reached in Bali) ❖ Other “New” Issues ✓ Labour Cooperation (not so new) ✓ Environmental protection (not new) ✓ SOEs ✓ Gender Equality ✓ Other new issues
“New” Issues - In Investment estment ❖ There are three areas on investment of WTO (working group on investment, TRIMs and GATS) ❖ FTA negotiations on investment have gone beyond: ❖ The right of governments to regulate ❖ More precise and minimum investment protection standards (removing ambiguities of standards open to abuses or excessive interpretations) ❖ Create an independent investment court system (a permanent tribunal and an appeal tribunal) ❖ Strengthen dispute settlement proceedings – more transparent and impartial manner ❖ Investment facilitation proposed at the WTO Ministerial Conference in Buenos Aires (MC11)
“New” Issues – Competition P Competition Polic olicy ❖ Restrictive business practices in the Havana Charter ❖ WTO working group on competition after Singapore ❖ Doha Mandate: Exploring a Multilateral Competition Framework ❖ The WG became inactive after the Cancun Ministerial - no work on competition policy during the DDA ❖ Key WTO discussions include transparency, non- discrimination, procedural fairness, cooperation on competition, technical assistance and capacity building, and dispute settlement ❖ Many FTAs include the competition policy chapter ❖ Key provisions include transparency, adoption of competition law, core principles of competition, procedural fairness, cartels and anti-competitive practices, designated monopiles, SOEs, and dispute settlement
“New” Issues – Go Gover ernment nment Pr Procu ocurement ement ❖ Government procurement is a huge market ($17 trillion for international competition) ❖ WTO GPA is a plurilateral agreement with 19 parties and 47 members/10 members are in the accession process ❖ Revised WTO GPA – covering goods, services and construction services ❖ Indonesia is an observer to the WTO GPA. ❖ Market access – list of entities: central government, sub- central and SOEs ❖ Regional FTAs include GPA: NAFTA Chapter 10; CETA Chapter 19; TPP Chapter 15 ❖ EU is currently studying the Indonesian GP market and barriers to market access for IEU-CEPA
“New” Issues – SOE SOEs ❖ GATT Article 17 – State Trading Enterprises ❖ Definition – “ any corporate entity recognized by national law as an enterprise, and in which the state exercises ownership, should be considered as an SOE.” ❖ SOEs in Canada: very few - EUD, Canada Post, CBC/Radio Canada; SOEs in Indonesia: quite many: Telkom, Bank Mandiri, PLN, Sarinah, Garuda, etc. ❖ New FTAs include the SOE chapter – more disciplines for SOEs – ensuring fair competition between private sector enterprises and SOEs ❖ Key provisions include: more transparency; non discrimination; commercial consideration only; no commercial assistance (subsidies for example), etc .
Other “New” Negotiating Issues ❖ Labour ❖ Environment ❖ Gender equality ❖ Indigenous people ❖ SMEs ❖ Others???
Selecting/Prioritizing Negotiating Issues in Your Position Papers • Identify and Prioritize the Key Issues ❖ There are many traditional and new negotiating issues in FTAs – Issues are also different - selecting the right ones Some comprehensive business associations may wish to cover most traditional and new issues Other sectoral business associations may wish to select a few more relevant ones for their positions • Determine/Assess Your Offensive or Defensive Positions ❖ Depending on the interest of your members, your positions could be offensive or defensive or mixed – an impact study is the key
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