USCIB Letter to USTR Regarding

New Round of WTO Trade Negotiations

May 10, 2001

Ms. Gloria Blue

Executive Secretary

Trade Policy Staff Committee

Office of the U.S. Trade Representative

600 17^th Street, NW
Washington, D.C. 20508

Dear Ms. Blue:

This is in response to the United States Trade Representative’s Federal Register Notice of April 5, soliciting comments on U.S. objectives and preparations for the upcoming meeting of the World Trade Organization (WTO) Ministerial Conference in Doha, Qatar, on November 9-13, 2001.  The United States Council for International Business (USCIB) is pleased to offer its comments on these important issues, which are essential elements for achieving sustainable development centered on economic growth, which will lead to improved environmental protection and improved working conditions worldwide.

USCIB members seek further liberalization of trade and investment policies as soon as possible at the multilateral, regional and bilateral level.  Further multilateral liberalization is a vital part of this process.  The rules–based multilateral trading system built up through the GATT/WTO since World War II is one of the central pillars of international cooperation and a major driving force for global economic growth.  Only WTO disciplines improve market access for American goods and services on a global basis, and provide common rules that maximize administrative efficiency.  USCIB supports the launch of a broad-based WTO negotiation at the earliest opportunity.

A top USCIB priority continues to be full, timely implementation of Uruguay Round agreements, including tariff reduction commitments.  We strongly oppose any reopening of existing commitments.  Nor should there be all–party implementation extensions for existing agreements.  Overruns of implementation deadlines should continue to be reviewed on a case-by-case basis.  Commitments to improve transparency of national implementation should be redoubled; publication of changes in trade policies and trade regulation should be automatic and prompt.

The attached USCIB statement conveys more detailed recommendations on the elements of a negotiation agenda.  We trust you will find these comments useful, and stand ready to meet with U.S. agencies to discuss our proposals further.

Sincerely,

Thomas M.T. Niles

President

STATEMENT

OF THE

UNITED STATES COUNCIL FOR INTERNATIONAL BUSINESS

On

Recommendations for Broad-Based WTO

Negotiation

In response to the USTR Federal Register

Notice, April 5, 2001

May 10, 2001

USCIB members seek further liberalization of trade and investment policies as soon as possible at the multilateral, regional and bilateral level.  Further multilateral liberalization is a vital part of this process.  The rules-based multilateral trading system built up through the GATT/WTO since World War II is one of the central pillars of international cooperation and a major driving force for global economic growth.  Only WTO disciplines improve market access for American goods and services on a global basis, and provide common rules that maximize administrative efficiency.  USCIB supports the launch of a broad-based WTO negotiation at the earliest opportunity.

A top USCIB priority continues to be full, timely implementation of Uruguay Round agreements, including tariff reduction commitments. We strongly oppose any reopening of existing commitments.  Nor should there be all-party implementation extensions for existing agreements. Overruns of implementation deadlines should continue to be reviewed on a case by case basis. Commitments to improve transparency of national implementation should be redoubled; publication of changes in trade policies and trade regulations should be automatic and prompt. 

WTO Built in Agenda Negotiations on Agriculture and Services

GATS—USCIB is encouraged that a GATS workplan has been approved for the next year.  It is time to begin actual market access negotiations.

USCIB supports the objectives for this negotiation outlined by the Coalition of Services Industries, to which it has contributed. Similarly, we support the following general outcomes:

·         Achieve maximum liberalization of market access in all modes of supply, including cross border supply of services and movement of natural persons, across the widest possible range of services, as soon as possible;

·         Provide rights of establishment with majority ownership and national treatment for US companies operating in foreign markets, so that foreign investors have the same rights as domestic companies in a given market;

·         Promote transparency and regulatory reform, with the objective of committing governments to avoid discrimination against foreign service suppliers in their current and future regulations on services and to open markets to competition on a fair and equitable basis;

·         Focus on creating a free and open commercial environment for the development of electronic commerce;

·         Embrace important sectors that have previously not received significant WTO attention in the liberalization effort, such as express delivery, energy, legal, and advertising;

·         Improve, as a major priority, the quality of commitments in the key sectors of telecommunications and financial services (and also accounting services) where important progress has already been made.

Telecommunications—USCIB members believe that the liberalization of telecommunications services and facilities should continue to be a top priority of governments because of the dual role that telecommunications play as a distinct sector, and as the necessary infrastructure for the delivery or transport of goods and services, including via the Internet and e-commerce. (See the paragraph on e-commerce below and the attached annex for more detailed recommendations on telecommunications and e-commerce.)

·       Basic Telecommunications—USCIB seeks improvements in existing basic telecommunications commitments as well as first-time commitments from WTO members.  Moreover, USCIB members believe there should be full liberalization by a date certain, broader national treatment and market access commitments, and a reduction or elimination of foreign ownership restrictions.  In addition, all WTO members should fully implement the “Reference Paper” on basic telecommunications services.

·       Value Added Services—USCIB advocates further liberalization in the provision of value-added services, including broader market access commitments that cover the full range of value-added services, timelier implementation dates, a reduction or elimination of foreign ownership restrictions, and commitments from additional countries. USCIB does not support application of the “Reference Paper” on basic telecommunications services to value-added services.

Advertising—USCIB members also seek further liberalization of GATS commitments in the advertising sector.  Currently, we are working on developing those specific objectives.

Agriculture¾Farmers are not the only commercial interests with stakes in this negotiation. Processed foods now account for an increasing amount of trade in agri-food products globally and these products must become a top priority during the agricultural negotiations. The negotiation should cover all agricultural products and policies and seek to achieve:

·         Additional tariff reductions from applied rather than bound rates; elimination of tariff peaks and tariff escalation; more zero-for-zero agreements and further elimination of tariff-rate quotas;

·         Elimination of export subsidies on primary agricultural products;

·         Further substantial reductions in domestic price support programs and progression toward green box programs;

·         Strengthened disciplines on state trading enterprises to ensure they operate in a more transparent and less trade-distorting manner.

In addition to new market access commitments, WTO should complete full implementation of existing commitments in agricultural trade.

Non-Agricultural/Industrial Market Access

Tariffs—USCIB endorses the National Foreign Trade Council’s call for the elimination of all tariffs on industrial products, through a series of progressive tariff reductions leading to zero in all WTO members by a definitive end date.  This goal should be the centerpiece of a new Round. To this end, USCIB members seek agreement on new initiatives to reduce tariff and non-tariff barriers, to complete the unfinished Uruguay Round zero for zero tariff negotiations and the Information Trade Agreement II; and to expand the participation in zero-for-zero and harmonization agreements.

Existing Agreements and Work Programs

TRIPS—The primary objective must remain full implementation and enforcement of the TRIPS agreement and a commitment to oppose any weakening of that agreement.  While many WTO member states have taken steps to comply with their TRIPS obligations, others have not.  In light of these conditions, USCIB believes that any consideration of new IPR norms must be postponed until we achieve the primary goal of securing compliance with already negotiated commitments.  Therefore, USCIB opposes the inclusion of intellectual property in a new Round of WTO negotiations.

SPS—There is no evidence that the existing WTO Agreement on Sanitary and Phytosanitary (SPS) Measures is not working as it was intended.  It should not be reopened. Sound science and risk assessment are the proper foundation of a credible health and safety regulatory regime.

Subsidies—USCIB urges a close review of trade-distorting subsidies, including state-owned enterprises.

Rules of Origin—WTO should complete the work on non-preferential rules of origin based to the maximum extent possible on tariff shift rules and without burdensome paper or component tracking requirements; it should consider the scope for simplifying and harmonizing preferential rules.

Government Procurement—USCIB continues to support approval of a WTO agreement on transparency in government procurement.  Such an agreement would establish basic procedural guarantees for all WTO members and would apply to all procurement, including central and subcentral government authorities as well as state-owned enterprises.  This type of agreement would provide a foundation for further needed improvements in the Agreement on Government Procurement in terms of increased membership, broader sector coverage, e.g., in services, and better transparency.

Technical Barriers to Trade (TBT)—USCIB continues to seek clarification of the TBT Agreement’s application to ecolabeling programs. The proliferation of multicriteria ecolabeling programs remains a matter of serious concern because such programs can impede innovation, mislead consumers and create barriers to trade.

Development and Related Issues

Special and Differential Treatment—USCIB opposes further “special and differential treatment” for LDCs. LDC implementation issues should be addressed through improved coordination of technical assistance that is targeted on capacity building for implementation of specific commitments, and through differing phase-in periods for prospective commitments.

Systemic/Institutional Issues

Dispute Settlement—The WTO Dispute Settlement System has worked well to ensure compliance with WTO obligations.  There are some areas that need improvement, in particular, full and expeditious implementation of dispute panel results.   WTO members should comply with their WTO obligations and implement fully and expeditiously the WTO dispute rulings. The failure to implement is a serious concern to business because of the potential harm to business caused by WTO authorized retaliation. The outstanding EU/US disputes demonstrate that governments should consider carefully whether or not to launch a dispute settlement case, and should rely increasingly on mediation and arbitration for dispute resolution.

USCIB supports a clarification of certain ambiguous provisions in the WTO Dispute Settlement Understanding; in particular, clarification of the procedures to be used in establishing whether a compliance measure meets the requirements of a dispute panel ruling.

USCIB also supports procedural changes to improve transparency of the dispute settlement process. We support improving the WTO derestriction process to include timely release of the agenda and minutes to WTO meetings, submissions to panels and the Appellate Body, and the reports of panels and the Appellate Body.  All dispute settlement submissions and reports should be unclassified and available to the public unless a panel decides in consultation with the parties to designate all or part of a document as confidential. We also support public release of the interim report. USCIB also takes the view that private parties and organizations should be allowed to submit written materials to panels and to the Appellate Body.  However, review of such amicus briefs should be left to the discretion of the panel and the Appellate Body, and there should be rules to avoid overwhelming the panel with unrequested submissions. Further details are set forth in our letter submitted July 7,2000, in response to a previous Federal Register notice.

Extending WTO Membership—We strongly support the need to build a truly global membership for the WTO.  It is particularly important to bring the larger economies that stand outside the system into the WTO.  At the same time, it would be very damaging to the WTO to permit a two-tier set of rules.  All prospective members, regardless of size and importance, must comply with established WTO disciplines and commit to comparable trade liberalization for goods and services.  While new members may be permitted, on a case-by-case basis, to phase in the implementation of WTO commitments, they must  commit to WTO rules and to commercially significant liberalization at the time of accession.  WTO disciplines cannot be effective unless such undertakings are carefully specified and implemented promptly.  We urge expeditious completion of China’s accession on this basis, and renewed efforts to complete the negotiations for Russia’s accession.

Regional Free Trade Agreements— USCIB firmly supports the WTO principle that all regional agreements should be GATT and GATS compatible in accordance with WTO rules.  This principle is particularly important in the present period of vigorous regional and bilateral trade negotiations, as well as the pending enlargement of the E.U.  To this end USCIB offers several recommendations:

·         The U.S. should strongly support the work of the WTO Committee on Regional Trade Agreements to review such arrangements to encourage their compatibility with WTO agreements.

·         The U.S. should insist that if such agreements increase protection against non-parties, the non-parties must be compensated in accordance with Part 6 of Article XXIV.

·         While bilateral and regional agreements offer opportunities to address issues that cannot be reached through multilateral agreements, the U.S. should be circumspect about creating precedents on non-commercial, domestic governance issues that will make achievement of multilateral trade liberalization more difficult.

The Singapore Work Program Issues

Investment—A comprehensive agreement on rules with high standards for investment and the elimination of barriers to entry may take some time to achieve.   Nevertheless, the WTO should begin the process to achieve this objective in stages.  Initially, WTO should establish obligations for transparency of a host country’s rules and its rule-making process governing foreign investors and their operations; provide for non-discriminatory treatment of the operations of foreign investors, and enforce TRIMS obligations. Subsequently, WTO rules on investment should be expanded to provide for: non-discriminatory treatment on entry; the removal of barriers to entry; investor protections found in our bilateral investment treaties to include the transfer of profits of capital and expropriation protections. These protections should be accompanied by investor to state as well as state to state dispute settlement procedures.  To ensure success of this second stage, preparatory work should be given more emphasis.

Competition—The proceedings of the International Competition Policy Advisory Committee after the Seattle Ministerial further demonstrated a broad industry consensus that this issue is not ripe for negotiation in the WTO. The WTO should continue discussions on the relationship of trade and competition policies to bring more understanding and cooperation to these issues.           

Customs Facilitation—USCIB seeks binding WTO rules for improved Customs trade facilitation, simplified trade procedures and promotion of internationally agreed standards.  These rules should build on existing WTO agreements, recommendations in the revised Kyoto Convention and other facilitative instruments, such as those of the UN and its Specialized Agencies.  WTO could provide further assistance  for developing economies by creating a framework for organizations such as the IMF, World Bank, WCO and UNCTAD to make an active contribution to development through Customs modernization.

E-Commerce—USCIB does not believe there is a class of services that can be labelled electronic commerce and thus negotiated separately. However, we seek broad liberalization and elimination of obstacles to trade in goods and services, and the effective and timely implementation of the TRIPS Agreement, all of which will play a critical role in creating digital opportunities through improved infrastructure, greater choice at lower costs and improved efficiency.  Moreover, we urge that governments make permanent the commitment against Customs duties on electronic transmissions; agree to refrain from imposing restrictions or unnecessary domestic regulations that could hinder the continued growth of e-commerce; and continue the work program on electronic commerce.

Other Issues

Trade and Environment¾USCIB is fully committed to the protection of the environment.  Economic development through increased trade liberalization will promote that objective. The U.S. should emphasize cooperative agreements parallel to, but separate from trade agreements, and technical assistance to build national infrastructure.  Multilateral Environment Agreements (MEAs) are the appropriate instrument to address global and regional issues.  USTR should be involved in MEA negotiations to monitor their trade impact and to ensure that trade measures are included only when necessary for the purposes of the agreement and that they are “least trade restrictive.”  USCIB supports continued WTO efforts to clarify the relationship of WTO rules and MEAs.

Trade and Labor—USCIB strongly supports efforts to secure increasing worldwide respect for core labor standards.  Trade and investment have helped raise living standards around the world and are engines of development and growth through the economic activity they generate, which transfers technology and skills, and improved labor, health, safety and environmental conditions. The International Labor Organization (ILO) is the appropriate body for promoting improved labor standards.  The U.S. Government should center its efforts to raise respect for core labor standards on the ILO, using, inter alia  the ILO Declaration on Fundamental Principles and Rights at Work.  This will strengthen the ILO’s ability to deal with violations of core labor standards.  Other related projects such as the International Program for Eliminating Child Labor should have continued strong funding.

USCIB remains strongly opposed to discussion of labor standards in the WTO.  The actions at the Seattle Ministerial and since demonstrate that most countries strongly resist additional WTO consideration of this issue, and are not prepared to change labor policies to conform to trade agreements.  They perceive any effort to link trade and labor in the WTO as a protectionist measure that threatens their comparative advantages. Tensions generated by further debate on this issue will jeopardize important U.S. economic objectives in the WTO.  USCIB totally rejects any attempt to amend WTO rules to permit countries to use trade measures to sanction violations of workers rights by other countries.

USCIB Response to April 5, 2001 Federal Register Notice

On Objectives for the Doha Ministerial and the WTO’s Future Work Program

Electronic Commerce and Telecommunications

May 10, 2001

This addendum builds upon the general provisions addressed in USCIB's recommendations for a broad-based WTO Negotiation in response to the April 5, 2001 Federal Register Notice.

We urge the U.S. government to make maximum efforts to take full advantage of the opportunities provided by the Doha Ministerial to advance electronic commerce, basic telecommunications, value-added services and computer and related services.  Simultaneously, the United States should continue bilateral and regional negotiations that will advance trade liberalization,

With respect to the WTO's future work program and all other negotiations providing opportunities to address electronic commerce, basic telecommunications, value-added services and computer and related services, USCIB proposes the following general negotiating objectives:

Ø       to promote the development of the domestic and global infrastructure that is necessary to conduct e-commerce;

Ø       to promote the development of trade in goods and services via e-commerce;

Ø       to prevent the establishment of new barriers to e-commerce during and after the GATS 2000 negotiations; and

Ø       to promote increased liberalization for   basic telecommunications and value-added services.

ELECTRONIC COMMERCE

Because e-commerce is a new and dynamic medium for the delivery of goods and services, it needs comprehensive consideration to ensure its true potential. In this regard, USCIB members believe the following comments and negotiating objectives should be part of an ongoing dialogue among businesses, governments, and other stakeholders during the GATS 2000 negotiations and any new round.  Interim progress on the objectives at the Doha Ministerial and by way of bilateral or regional trade agreements, would be most welcome.

Liberalization, complemented by transparency, competition, and regulatory reform are critical to economic growth and stability.  Moreover, providers, users, and consumers stand to benefit from greater competition, choice, and convenience.

The success of WTO negotiations will depend on the active participation of developing countries.  The elimination of obstacles to trade in goods and services and the effective and timely implementation of the Trade Related Aspects of Intellectual Property (TRIPS) agreements will play a critical role in the economic development of developing countries and in the seizing of digital opportunities through improved infrastructure, greater choice at lower costs, and improved efficiency.  Therefore, USCIB strongly believes that liberalization should occur at the earliest opportunity and underlines the need for the GATS 2000 negotiations to extend effective market access on a mutually-beneficial basis.

Basic telecommunications, value-added services, computer and related services and certain financial services (i.e. payment systems) are critical components of an e-commerce infrastructure.  In both sectors, WTO members have made significant sector-specific commitments, which serve as a basic and necessary foundation for all e-commerce activity around the world.  In the current GATS 2000 negotiations, all WTO members should strive for broader and deeper commitments in all subsectors of basic telecommunications, value-added services, computer and related services and financial services in order to promote the development of the infrastructure needed for e-commerce specifically and global trade generally.

Ø       To promote the development of e-commerce infrastructure, USCIB urges WTO members to:

·              increase membership in the Information Technology Agreement (ITA) and redouble their efforts to conclude the ITA II agreement.  These agreements are important to ensure that all countries have access to the hardware and software necessary to deploy and access the e-commerce infrastructure; 

·              seek full market access and national treatment commitments for the sectors that are associated with the infrastructure needed for business-to-business and business-to-consumer e-commerce; and

·              refrain from imposing new barriers to the development of the e-commerce infrastructure.

Ø       To promote the development of trade via e-commerce, USCIB urges WTO members to:

·         continue to pursue formal recognition in the WTO that current commitments under the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS) and the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), apply to electronic commerce given that electronic commerce is not a new form of trade but rather a new medium for conducting trade in goods and services;

·              agree that the existing GATS classifications should be flexible enough to accommodate technological progress in the delivery of services.  As technology evolves, the interpretation of the existing classifications of services based on this technology should also evolve to capture these advances.  With such flexibility, WTO member countries can ensure that they benefit from the tremendous productivity increases and cost savings associated with the information technology revolution; [1]

·              ensure that electronically delivered products (i.e. goods or services) receive market access and national treatment benefits that are no less favorable than those currently available for such products delivered physically;

·              make meaningful market opening commitments for  all services that can be delivered via e-commerce, whether on a cross-border or consumption-abroad basis; and

·              ensure the effective and timely implementation of TRIPS by all existing and acceding WTO member states.  With the rapid development of digital technologies and electronic services, the need for strong protection and enforcement of intellectual property rights is imperative.  The TRIPS Agreement plays a very important role insofar as it provides minimum standards for such protection and enforcement.

Ø       To prevent the development of new barriers to e-commerce pending the completion of negotiations and beyond, USCIB urges WTO members to:

Ø

·              pursue a standstill commitment not to impose new restrictions that could adversely affect e-commerce during the course of the negotiations;

·              pursue a general agreement for governments to refrain from enacting measures that have the effect of impeding, actually or potentially, international e-commerce;

·              agree that when legitimate policy objectives require domestic regulations, that those regulations will be, to the greatest extent possible, least trade restrictive, transparent and promote an open market environment;

·              make permanent the practice of not imposing customs duties on electronic transmissions;

·              pursue adoption of the recommendations made in the WTO 1998-99 work programme on e-commerce which include the need to avoid unnecessary barriers to e-commerce; and

·              pursue the continuation of  the work programme on electronic commerce within the WTO.

Basic telecommunications

·         Broader market access commitments 

·         Timelier implementation dates

·         Commitments to the “Reference Paper” on basic telecommunications services

·         Reduction or elimination of restrictions on foreign ownership

·         Commitments from additional countries

·              full liberalization by a date certain;

·              removal of foreign ownership restrictions; and

·              adoption of the “Reference Paper” in its entirety.

Value-added services

·              broader market-access and national treatment commitments that cover the full range of value-added services;

·              timelier implementation dates;

·              reduction or elimination of foreign ownership restrictions; and

·              commitments from additional countries.

Moreover, as stated above, USCIB members agree that the “Reference Paper” on basic telecommunications services does not apply and should not be applied to value added services, including Internet services.  However, WTO members should take the necessary steps to prevent anti-competitive practices by public telecommunications network operators and service providers that discriminate against unaffiliated value-added service providers, including Internet service providers, in contravention of the “GATS Telecommunications Annex”.  Adherence to the Annex will help to ensure that all value added service suppliers, including Internet service providers, have non-discriminatory access to and use of the traditional underlying public telecommunications infrastructure necessary for the provision of these services.

We hope that these comments are helpful and we look forward to working with you to achieve progress on the above-stated goals at the Doha Ministerial in November.