OVERVIEW OF DEVELOPMENTS

IN THE INTERNATIONAL TRADING ENVIRONMENT

Annual Report by the DIRECTOR-GENERAL^[1]

 

(Mid-October 2015 to mid-October 2016)

Table of contents

KEY FINDINGS. 3

EXECUTIVE SUMMARY. 7

1   INTRODUCTION.. 9

2   RECENT ECONOMIC AND TRADE DEVELOPMENTS. 10

2.1   Overview.. 10

2.2   Economic Developments. 11

2.3   Merchandise Trade. 13

2.4   Trade in Commercial Services. 17

2.5   Trade Forecast and Economic Outlook. 19

3   TRADE AND TRADE-RELATED POLICY ISSUES. 22

3.1   Overview.. 22

3.2   Trade-Remedy Trends. 26

3.3   Sanitary and phytosanitary measures (SPS) 37

3.4   Technical Barriers to Trade (TBT) 44

3.5   Trade Concerns Raised in Other WTO Bodies. 50

3.6   Policy Developments in Agriculture. 57

3.7   General Economic Support 62

3.8   Overview of Trade Policy Reviews. 64

3.9   Other Selected Trade Policy Issues. 78

4   POLICY DEVELOPMENTS IN TRADE IN SERVICES. 91

5   POLICY DEVELOPMENTS IN TRADE AND INTELLECTUAL PROPERTY. 97

6   TRANSPARENCY OF TRADE POLICIES. 100

ANNEX 1: MEASURES FACILITATING TRADE. 117

ANNEX 2: Trade remedies. 135

ANNEX 3: Other trade-related measures. 160

ANNEX 4: GENERAL ECONOMIC SUPPORT MEASURES. 176

ANNEX 5: MEASURES AFFECTING TRADE IN SERVICES. 187

APPENDIX 1 - PARTICIPATION.. 209

KEY FINDINGS

·                This monitoring report for the reporting period between mid-October 2015 and mid‑October 2016 outlines the persistent challenges faced by the international economy in 2016 that continue to weigh on international trade flows. It shows that the continuing increase in the stock of trade-restrictive measures recorded since 2008 remains of concern.

 

·                The latest reporting period shows a fall in the number of new trade‑restrictive measures introduced at just over 15 per month – a total of 182 for the reporting period – compared to 20 measures per month in the last report for the period between mid-October 2014 and mid-October 2015. While this represents a reduction in the monthly figure compared to the recent peak in 2015, it is actually a return to the trend level for new trade restrictions since 2009.

 

·                The number of new trade-restrictive measures being introduced remains worryingly high given continuing global economic uncertainty and the WTO's downward revision of its trade forecasts, predicting 1.7% world merchandise trade volume growth in 2016, from its earlier forecast of 2.8%. If this revised forecast is realized, this would mark the slowest pace of trade and output growth since the financial crisis of 2009.

 

·                Of the 2,978 trade-restrictive measures recorded for WTO Members since 2008, only 740 had been removed by mid-October 2016. The overall stock of measures has increased by almost 17% compared to the previous annual overview, with the total number of restrictive measures still in place now standing at 2,238.  The rollback of trade-restrictive measures recorded since 2008 remains too slow and continues to hover just below 25%.

 

·                During the review period, WTO Members also applied 216 measures aimed at facilitating trade. At 18 new trade-facilitating measures per month, this represents a slight decrease over the previous report but remains above the 2009-2015 average.  Trade‑facilitating measures recorded by this report include the very first measures implemented in the context of the expanded Information Technology Agreement.

 

·                The monthly average of trade-remedy investigations by WTO Members recorded for this exercise was found to be the highest since 2009. Moreover, the monthly average of trade‑remedy terminations is the lowest since the beginning of the monitoring exercise.

 

·                The continued and persistent challenges faced by WTO Members in the international economy and their consequences for world trade stress the need for WTO Members to work together to resist protectionist pressures. The WTO will continue to provide a predictable, transparent and inclusive framework to assist Members in this endeavour.

 

·                WTO Members must also work together to ensure that the benefits of trade are spread more widely and are better understood. A failure to make the case for inclusive trade could pave the way to increased protectionism in the future.

 

 

Trade-restrictive measures, excluding trade remedies

(average per month)

 

Note:       Values are rounded.

Source:   WTO Secretariat.

 

Trade-restrictive measures, mid-October 2015 to mid-October 2016

 

 

Source:   WTO Secretariat.

Trade-facilitating measures, excluding trade remedies

(average per month)

 

 

Note:       Values are rounded.

Source:   WTO Secretariat.

Trade-facilitating measures, mid-October 2015 to mid-October 2016

 

Source:   WTO Secretariat.

Stockpile of trade-restrictive measures

 

 

Note:       Totals include measures listed in Annex 3 and trade remedy actions.

Source:   WTO Secretariat.

EXECUTIVE SUMMARY

This trade-monitoring report reviews trade-related developments during the period from 16 October 2015 to 15 October 2016.^[2]

The report again outlines the persistent challenges faced by the international economy and for global trade. The overall stock of trade-restrictive measures continues to grow at roughly the same pace as identified in recent reports. Tangible evidence of WTO Members' progress in eliminating older measures remains elusive as the share of restrictions which have been rolled back remains stable at less than a quarter of the total recorded.

 

During the period under review, 182 new trade-restrictive measures were put in place – an average of just over 15 new measures per month. This confirms a return to the trend after the recent peak seen in 2015. The reduction in the monthly figure of new trade-restrictive measures should be placed in this broader context.

Overall, the stockpile of trade-restrictions recorded by this exercise has continued to increase at roughly the same pace as identified in recent reports. Of the 2,978 restrictions (including trade remedies) recorded by the monitoring exercise since October 2008, only 740 have been removed. In other words, the total number of restrictive measures still in place currently stands at 2,238 – up by almost 17% compared to the last annual overview. The addition of new restrictive measures, combined with a slow removal rate, remains a concern with 75% of all restrictive measures implemented since 2008 still in place. The longer‑term trend in the number of trade‑restrictive measures is an area where continued vigilance is needed.

 

WTO Members continued to adopt measures, both temporary and permanent in nature, aimed at facilitating trade. Members implemented 216 new trade-facilitating measures during the period under review – an average of 18 measures per month, slightly above the average 2009-2015 trend.  These measures include a number of import-liberalizing measures implemented in the context of the ITA Expansion Agreement with very broad trade coverage implications. The numerical counting of the trade measures does not provide a complete picture of the extent of these measures nor their impact, but Secretariat estimates indicate that the ITA expansion measures which were implemented by certain Members during the review period cover around US$416 billion. WTO Members have implemented more trade-facilitating than trade-restrictive measures over the review period, confirming the positive trend identified since October 2014.

In the area of trade remedies^[3], the decelerating trend observed in the previous reports was reversed, with the monthly average of new trade-remedy investigations recorded for this exercise being the highest since 2009. Moreover, the monthly average of trade‑remedy terminations recorded during the review period is the lowest since the beginning of the monitoring exercise.

 

The trends in the implementation of new trade measures by WTO Members have to be considered against the uncertain global economic outlook. World trade and output grew more slowly than expected in the first half of this year, prompting the WTO to revise downward its trade forecast for 2016 and 2017. The Organization now expects world merchandise trade volume growth of 1.7% in 2016, down from an earlier estimate of 2.8%, accompanied by world GDP growth of 2.2% at market exchange rates.  If the forecast for 2016 is confirmed, this would mark the slowest pace of trade and output growth since the financial crisis of 2009 and the first time in 15 years that the ratio of world trade growth to world GDP growth has fallen below 1:1. For the first time, a range of estimates has been provided for the coming year reflecting possible changes in the relationship between trade and output.  World trade growth in 2017 is now expected to be between 1.8% and 3.1%, down from 3.6% previously.

 

Exports and imports of developing economies fell sharply in the first quarter of 2016 before staging a partial recovery in the second quarter, as concerns about slowing economic growth in China eased and as commodity prices began to rise from recent lows. Meanwhile, exports and imports of developed economies stalled as economic activity slowed in North America. For the year-to-date, world trade has been essentially flat, with the average of exports and imports in Q1 and Q2 declining by 0.3% compared to the same period last year.  Europe had the fastest import growth of any region in the first half (up 3% year-on-year) while South America had the weakest (down 11.8%).

 

Even with the downward revision, risks to the forecast remain mostly on the downside. These include financial volatility stemming from changes in monetary policy in developed countries, the possibility that growing anti-trade rhetoric will increasingly be reflected in trade policy and the uncertainty about future trading arrangements in Europe following the Brexit referendum. In July, the WTO launched the World Trade Outlook Indicator (WTOI), which is designed to provide “real time” information on trends in global trade and serve as an early-warning for global trade downturns. With a current reading of 100.9 for the month of August, the WTOI has risen above trend, signaling accelerating trade growth in November-December.  This is the first update of the WTOI since July, when the indicator stood at 99.0. The current WTOI reading is broadly consistent with the latest WTO trade forecast issued on 27 September, which foresaw world merchandise trade volume growth of 1.7% for 2016.  The forecast noted flat trade growth in the first half of the year. The WTOI reading captures this.

 

Other observations of this report covered a range of subjects. WTO Members continued to show their commitment to notifying Sanitary and Phytosanitary (SPS) measures. Developing Members accounted for six out of every ten of these notifications. In the area of Technical Barriers to Trade (TBT), notifications by WTO Members significantly increased during the review period - the majority being submitted by developed Members. An increase in the number of notifications does not, however, automatically imply greater use of measures taken for protectionist purposes. During the review period, the online alert system ePing became publicly available allowing users to receive daily or weekly email alerts about SPS and TBT notifications covering products and markets of interest to them.

 

A decrease in the number of new general economic support measures was recorded for WTO Members during the review period. The main beneficiaries of such support included large-scale, multi‑sector financial aid covering various sectors such as agriculture, forestry, construction, medical and pharmaceutical. Some programmes provided specific support to SMEs and export‑related activities or enterprises.

In the area of trade in services, important developments were observed for several sectors such as air transport, construction, distribution, finance, postal, maritime transport and telecommunications, as well as in the supply of services through the movement of natural persons. Albeit with exceptions, the trend has been towards further liberalization and the strengthening and clarification of relevant regulatory requirements.

This report draws attention to the changing technological landscape and to the increasing significance of intellectual property (IP) in economic development. Several WTO Members adopted new national and regional policies related to IP and the digital economy.

Several other important trade-related developments also took place during 2016. These include new initiatives in the area of Regional Trade Agreements (RTAs) and developments in the Trade Facilitation Agreement (TFA), in Government Procurement and Electronic Commerce, the implementation of the ITA Expansion Agreement and the new biennium Aid for Trade programme.

This monitoring report has outlined the challenges faced by the international economy in 2016 and which continue to weigh on international trade flows. Despite some positive developments, it is clear that the financial crisis has had a long tail. The findings of this report underscore the importance of WTO Members working together to resist protectionist pressures. The WTO will continue to provide a predictable, transparent and inclusive framework to assist Members in this endeavour.

The repercussions of the uncertainty in the world economy have recently been amplified by a growing anti-trade rhetoric. WTO Members need to work together to ensure that the benefits of trade are spread more widely and are better understood. A failure to make the case for inclusive trade could pave the way for increased protectionism in the future.       

 

1  INTRODUCTION

1.1.  This report is submitted to the Trade Policy Review Body (TPRB) pursuant to Paragraph G of the Trade Policy Review Mechanism mandate in Annex 3 to the WTO Agreement. This provides for an annual report by the Director-General to assist the TPRB in undertaking its annual overview of developments in the international trading environment that are having an impact on the multilateral trading system. It builds on the Director-General's report to the TPRB on trade-related developments circulated to Members on 4 July 2016.^[4]

1.2.  This report covers the period from 16 October 2015 to 15 October 2016, unless otherwise indicated. Measures implemented outside the reviewed period are not included in the Annexes. The report is intended to be purely factual and is issued under the sole responsibility of the Director‑General. It has no legal effect on the rights and obligations of Members, nor does it have any legal implication with respect to the conformity of any measure noted in the report with any WTO Agreement or any provision thereof. Specifically, this report does in no way question the explicit right of Members to resort to trade-remedy measures and is without prejudice to Members' negotiating positions.

1.3.  At the WTO Ministerial Conference in December 2011, Ministers recognized the regular work undertaken by the TPRB through the monitoring exercise of trade and trade-related measures, took note of the work initially done in the context of the global financial and economic crisis and directed it to be continued and strengthened. Ministers invited the Director-General to continue presenting his trade‑monitoring reports on a regular basis, and asked the TPRB to consider these monitoring reports in addition to its meeting to undertake the Annual Overview of Developments in the International Trading Environment. Ministers committed to duly comply with the existing transparency obligations and reporting requirements needed for the preparation of these monitoring reports, and to continue to support and cooperate with the WTO Secretariat in a constructive fashion.^[5]

1.4.  Section 2 of the report provides an overview of recent economic and trade trends. Section 3 presents an account of a number of trade and trade-related policy developments during the review period. Policy developments in trade in services and trade in IP are included in Sections 4 and 5, respectively. Section 6 provides an account of transparency of trade policies across a wide range of WTO bodies. The report's annexes list specific trade policy measures of individual Members implemented during the period under review in five categories: trade-facilitating measures (Annex 1), trade-remedy actions (Annex 2), other trade and trade-related measures (Annex 3), general economic support measures (Annex 4) and services measures (Annex 5). The country‑specific measures listed in the five annexes are new measures implemented by Members and Observers during the period under review and recorded by the report.^[6] The compilation of all measures that have been recorded in Annexes 1-3 by the trade‑monitoring reports since October 2008 is available in the Trade Monitoring Database.^[7]

1.5.  Specific developments related to SPS measures and TBT are covered separately in Section 3.

1.6.  Information on the measures included in this report has been collected from inputs submitted by Members and Observers, as well as from other official and public sources.^[8] Replies to the Director-General's initial request for information on measures taken during the period under review were received from 84 Members^[9] (Box 1.1), which represents 51% of the membership. This is the first time that participation in the preparation of these reports rises above more than half of the WTO membership. Four Observers also replied to the request for information. The WTO Secretariat has drawn on these replies, as well as on a variety of other sources, to prepare this report. Participation in the verification process was uneven, and in several instances the Secretariat received only partial responses and often after the indicated deadline.^[10] Where it has not been possible to confirm the information, this is noted in the Annexes.

1.7.  The OECD has contributed two topical boxes for this report both of which address issues related to global value chains. The first box takes a closer look at the jobs that GVCs sustain domestically and globally. The second box focuses on the role of foreign value added in enhancing export performance.

Box 1.1 Participation in the preparation of this report

Argentina Australia Azerbaijan* Bosnia and Herzegovina* Botswana Brazil Canada Chile China Colombia Costa Rica Côte d'Ivoire Dominican Republic Ecuador Egypt El Salvador European Union Hong Kong, China India Indonesia Iraq*

Jamaica Japan Kazakhstan Korea, Republic of Kuwait, State of Macao, China Madagascar Malaysia Mali Mauritius Mexico Moldova, Republic of Mongolia Montenegro New Zealand Norway Pakistan Panama Paraguay Peru Philippines

Qatar Russian Federation Saudi Arabia, Kingdom of Senegal Serbia* Seychelles Singapore South Africa Switzerland Separate Customs Territory of Taiwan,   Penghu, Kinmen and Matsu   (Chinese Taipei) Thailand Trinidad and Tobago Tunisia Turkey Ukraine United States of America Uruguay Zambia

^{* Observer}

WTO Members and Observers Participating in the WTO Monitoring Exercise

 

 

Source:   WTO Secretariat.

 

2  RECENT ECONOMIC AND TRADE DEVELOPMENTS

2.1  Overview

2.1.  World trade growth stagnated in the first half of 2016, with a sharper than expected decline in merchandise trade volume in the first quarter (-1.1% quarter-on-quarter, as measured by the average of seasonally-adjusted exports and imports), followed by a smaller than anticipated rebound in the second quarter (+0.3%). Year-on-year, merchandise trade growth was essentially flat compared to the same period in 2015.

2.2.  The weakness of trade in Q1 and Q2 was driven by falling imports in Asia, South America and Other Regions (comprising Africa, the Middle East and the Commonwealth of Independent States (CIS)), but also by weak demand in North America, which recorded the strongest import growth of any region in 2014 and 2015, but which has slowed since then.  European imports made the largest contribution to global demand for traded goods in the first half of 2016, increasing by 3% year-on-year. Meanwhile, imports remained deeply depressed in South America, down 11.8% in the first half of 2016 compared to 2015.  Slowing global import demand translated into stagnant exports in developed and developing economies alike.

2.3.  The slow pace of trade expansion in the first half of this year prompted the WTO to revise downward its trade projections for the whole of 2016, as well as for 2017.  According to the latest forecast update of 27 September 2016, world merchandise trade volume should grow 1.7% in 2016, well below the previous estimate of 2.8%. The forecast for 2017 has also been revised downward, with trade expected to grow between 1.8% and 3.1%, down from 3.6% previously. If the current year’s forecast is realized, 2016 would mark the slowest pace of trade growth since the financial crisis.

2.4.  The trade forecast is premised on consensus estimates of world real GDP growth of 2.2% at market exchange rates in 2016 and 2.5% in 2017. These figures underline the lower responsiveness of trade growth to GDP growth that has been observed in recent years.  Over the long term, world merchandise trade volume has typically grown around 1.5 times faster than world real GDP at market exchange rates, although in the 1990s trade grew about twice as fast as output. However, since 2012 the ratio of trade growth to GDP growth has fallen to roughly 1:1.  If the latest WTO forecasts for trade and output in 2016 are realized, the ratio of trade growth to GDP growth will fall to 0.8, its lowest level in 15 years. The shifting ratio of trade growth to GDP growth and an increase of the number of systematically important traders have made it more difficult to forecast future trade growth. It is for this reason that the WTO is now providing a range of estimates for trade in 2017 rather than a single point estimate. 

2.5.  Despite the slowing pace of trade volume growth in 2016, trade growth in value (i.e. current U.S. dollar) terms is at least stabilizing, partly as a result of exchange rate and commodity price movements.  Year-on-year growth in the U.S. dollar value of world merchandise exports was ‑3.8% in 2016Q2, compared to -13.5% in 2015Q2.  Meanwhile, year-on-year growth in world commercial services trade has risen to -1.6% in 2016Q2 from -7.4% in 2015Q2. 

2.2  Economic Developments

2.6.  Slower trade growth has been accompanied by weaker actual and forecast GDP growth for the world and for major traders. There is no single explanation for the slower pace of economic growth, rather a series of idiosyncratic shocks (e.g. a political crisis in Brazil, forest fires in Canada, financial market volatility in China, etc.) on top of an already low baseline growth rate.

2.7.  Some important, but difficult-to-quantify, downside risks have materialized, most notably the outcome of the Brexit referendum in the United Kingdom. The main short-run impact of the referendum result was a sharp drop in the exchange rate of the UK pound against currencies of trading partners, including the U.S. dollar and the euro. Economic impacts over the longer term remain to be seen.

2.8.  During the review period, economic activity was weaker than predicted by earlier GDP forecasts, particularly in North America.  The consensus forecast for world real GDP growth at market exchange rates in 2016 was 2.4% in April, whereas today it stands at 2.2%, the lowest rate since the financial crisis. 

2.9.  In the United States, seasonally-adjusted GDP grew at an annualized rate of 0.8% quarter-on-quarter in 2016Q1 and 1.4% 2016Q2, down from 2.6% in 2015Q2. Growth in the euro area was fairly robust in the first quarter of 2016 at 2.1%, but this slowed to 1.2% in the second quarter.   In contrast, the pace of expansion in the United Kingdom accelerated to 2.7% in the second quarter from 1.7% in the first, leaving Europe-wide growth only slightly below earlier forecasts.  Japan’s GDP growth was stronger in the first quarter (2.1%) than in the second quarter (0.7%).  Meanwhile, China’s economy expanded at a relatively slow pace in Q1 (1.2% non-annualized, or around 4.9% annualized) before rebounding in Q2 (1.8% non-annualized, equivalent to annual growth of around 7.4%).  These trends left overall Asian GDP roughly in line with expectations. Growth was worse than expected in resource exporting countries and regions.

2.10.  Unemployment has changed little in developed countries since the last report.  The jobless rate currently stands at 5% in the United States, 8.6% in the European Union and 3.1% in Japan.  Meanwhile, forward looking economic indicators including Composite Leading Indicators (CLIs) from the OECD point to stabilizing growth momentum in both developed and developing economies. 2016 remains on track to be the fifth consecutive year with world trade volume growth below 3% and with global trade growth slightly lower than world GDP growth.

2.11.  Fluctuations in exchange rates since 2014 have strongly influenced nominal trade statistics, most of which are measured in current U.S. dollars. These developments are illustrated by Chart 2.12.1, which shows indices of nominal effective exchange rates for selected economies from the Bank for International Settlements (BIS) through August 2016. Since January of this year, the U.S. dollar has fallen 3.5% in value on average against the currencies of its trading partners.  The UK pound has also depreciated by 12% over the same period.  The value of the pound fell sharply in July after the Brexit referendum, but the currency's slide actually started in November 2015. The average value of the euro in terms of other currencies has changed little since the start of 2016, up 0.7%. Meanwhile, Japan’s yen has appreciated by more than 14% over the same period.  The nominal effective exchange rate of China’s RMB rose by 8% since the start of the year, but it is still down around 10% since January 2015.  Brazil’s real has also strengthened substantially over the course of 2016, rising nearly 25% in value since January.

Chart 2.1 Nominal effective exchange rate indices for selected economies, January 2014 - August 2016^a

(index, January 2014 = 100)

a             Nominal effective exchange rate indices against a broad basket of currencies.

Source:   Bank for International Settlements (BIS).

2.12.  Prices for oil and other primary commodities in U.S. dollar terms have risen since January but remain well below their levels of a few years ago. These trends are illustrated in Chart 2.2 which shows International Monetary Fund (IMF) commodity price indices. In August, fuel prices were up 41% for the year to date, although they were still down 55% compared to January 2014.  An inverse relationship tends to hold between the level of the U.S. dollar and the price of oil, with changes in the value of the dollar mirrored by changes in the opposite direction in oil prices. The partial recovery of oil prices should boost export revenues in exporting countries, but resilient production suggests that the rebound will be fairly modest.

Chart 2.2 Prices of primary commodities, January 2014 - August 2016

(index, January 2014 = 100)

Source:   IMF Primary Commodity Prices.

2.3  Merchandise Trade

2.13.  Chart 2.3 shows year-on-year growth in the dollar value of merchandise trade (red line), as well as relative contributions to nominal trade growth from developed and developing economies (stacked bars). Developments on the export and import sides are similar, with year-on-year growth recovering through Q2 and with developing economies weighing more heavily on growth than developed countries.  Trade continues to recover in nominal terms despite continued slower real trade growth. Under current circumstances with large exchange rate and commodity price fluctuations, nominal trade statistics should be interpreted with caution.

2.14.  Trade statistics in volume terms often provide a more accurate picture of trade developments since they are adjusted to account for shifts in commodity prices and exchange rates. Chart 2.4 shows seasonally-adjusted quarterly merchandise trade volume indices for selected economies through 2016Q2 based on data jointly prepared by the WTO and UNCTAD. The data show that imports and exports of Developing Asia (which includes China) slumped in Q1 but rebounded partially in Q2.  Meanwhile, the United States and other developed economies registered modest declines in import demand in Q2.  European Union imports from the rest of the world have been fairly strong for the year to date, with growth particularly robust in Q1.  Finally, the slide in Brazil’s imports appears to have been arrested in the second quarter while the country's exports also plateaued in Q2. 

2.15.  Chart 2.5 shows monthly merchandise trade developments of selected economies in current U.S. dollar terms.  These statistics are more timely than the WTO's quarterly trade volume indices, but since they are subject to distortion from commodity prices and exchange rates they should be interpreted with caution. Export and import values appear to be recovering gradually for most major economies.

Chart 2.3 Contributions to year-on-year growth in world merchandise exports and imports, 2012Q1 - 2016Q2

(% change in US$ values)

 

a             Includes significant re-exports. Also includes the CIS.

Note:       Due to scarce data availability, Africa and Middle East are under-represented in world totals.

Source:   WTO Secretariat estimates, based on data compiled from IMF International Financial Statistics, Eurostat Comext Database, Global Trade Atlas and national statistics.

 

Chart 2.4 Volume of exports and imports of selected economies, 2012Q1 - 2016Q2

(seasonally adjusted volume indices, 2012Q1 = 100)

 

Note:       Data for the United States, Japan and the European Union were obtained from national statistical sources while figures for Brazil and Developing Asia are seasonally adjusted Secretariat estimates. Official seasonally-adjusted quarterly trade volume statistics are not available for China.

Source:   WTO and UNCTAD Secretariats.

 

Chart 2.5 Merchandise exports and imports of selected economies, January 2012 - September 2016

(US$ billion)

 

 

 

Source:   IMF International Financial Statistics, Global Trade Information Services, Global Trade Atlas database, national statistics.

2.4  Trade in Commercial Services

2.16.  Chart 2.6 shows year-on-year growth in the dollar value of commercial services trade for selected economies through 2016Q2. These data are also subject to distortion from exchange rate fluctuations, but the volatility of services trade is generally inferior to that of merchandise trade. Exports were down slightly (-2% year-on-year) and imports were up moderately (+3% year-on-year) in the United States in Q2, although the pace of expansion has remained more or less steady over the last year. Meanwhile, the dollar value of the European Union's exports of commercial services to the rest of the world was down slightly (-1%) in Q2 while the value of extra-EU imports was up (+3%).

2.17.  Growth of commercial services exports and imports in other major economies has turned increasingly positive, or at least less negative.  China's imports of commercial services were down around 5% year-on-year in the fourth quarter of 2015 before rebounding in the first half of 2016 (up 15% in Q1 and 11% in Q2).  Despite a degree of improvement in the second quarter of 2016, services imports of Brazil and the Russian Federation remain deeply depressed.

Chart 2.6 Commercial services exports and imports of selected economies, 2015Q2 - 2016Q2

(year-on-year percentage change in current US$ values)

Source: WTO and UNCTAD Secretariats.

2.5  Trade Forecast and Economic Outlook

2.18.  Table 2.1 below summarizes the WTO’s most recent trade forecast, which was updated on 27 September 2016.  According to these estimates, world merchandise trade volume as measured by the average of exports and imports will grow more slowly than world GDP at market exchange rates in 2016, 1.7% compared to 2.2%. Exports of developed countries are expected to outpace those of developing economies, with growth of 2.1% compared to 1.2%. Meanwhile, imports of developing economies are expected to see sluggish growth of 0.4% compared to 2.6% for developed countries.

2.19.  A range of estimates has been provided for 2017 to reflect the increasingly uncertain relationship between trade growth and income growth.  World trade growth could be as high as 3.1% next year if it regains some dynamism.  However, it could also be as low as 1.8% if the ratio of trade growth to GDP growth continues to weaken.

2.20.  A number of reasons have been advanced to explain the decline in the ratio of trade growth to GDP growth in recent years, including the changes in the import content of demand, an absence of trade liberalization, emerging protectionism and the maturation of GVCs. All have likely played a role, but whatever the cause, the recent run of weak trade growth relative to GDP suggests the need for a better understanding of changing global economic relationships. 

Table 2.1 Merchandise trade volume and real GDP, 2012-2017

(annual  % change)

	2012	2013	2014	2015	2016a	2017a
Volume of world merchandise trade	2.2	2.4	2.8	2.7	1.7	1.8 - 3.1
Exports
Developed economies	1.1	1.7	2.4	2.8	2.1	1.7 - 2.9
Developing economies	3.8	3.8	3.1	3.2	1.2	1.9 - 3.4
North America	4.5	2.8	4.1	0.8	0.7	1.6 - 2.9
South and Central America	0.9	1.2	-1.8	1.3	4.4	3.1 - 5.5
Europe	0.8	1.7	2.0	3.7	2.8	1.8 - 3.1
Asia	2.7	5.0	4.8	3.1	0.3	1.8 - 3.2
Other Regionsb	3.9	0.6	-0.1	3.9	2.5	1.5 - 2.6
Imports
Developed economies	-0.1	-0.2	3.5	4.6	2.6	1.7 - 2.9
Developing economies	4.8	5.6	2.9	1.1	0.4	1.8 - 3.1
North America	3.2	1.2	4.7	6.5	1.9	1.9 - 3.1
South and Central America	0.7	3.6	-2.2	-5.8	-8.3	2.2 - 3.7
Europe	-1.8	-0.3	3.2	4.3	3.7	1.8 - 3.1
Asia	3.7	4.8	3.3	1.8	1.6	2.0 - 3.3
Other Regionsb	9.9	3.5	-0.5	-6.0	-2.8	0.6 - 1.0
Real GDP at market exchange rates (2005)	2.3	2.2	2.5	2.4	2.2	2.5
Developed economies	1.1	1.0	1.7	1.9	1.5	1.7
Developing economies	4.7	4.5	4.2	3.4	3.4	4.1
North America	2.3	1.5	2.4	2.3	1.6	2.3
South and Central America	2.9	3.4	1.0	-1.0	-1.6	1.4
Europe	-0.2	0.5	1.5	1.9	1.7	1.5
Asia	4.4	4.3	4.0	4.0	3.9	3.9
Other Regionsb	3.9	2.6	2.6	0.9	1.4	2.6

a             Figures for 2016 and 2017 are projections.

b             Other Regions comprise Africa, CIS and Middle East.

Source:   WTO Secretariat for trade, consensus estimates for GDP.

2.21.  Box 2.1 introduces the new WTOI release in July 2016 for the first time.

Box 2.1 The WTO World Trade Outlook Indicator

In 2016 the WTO launched a new World Trade Outlook Indicator (WTOI), which is designed to provide “real time” information on the current trajectory of world trade and clues about its direction in the near future. The WTOI combines 6 component indices of trade-related data into an overall index that signals trade conditions 3‑4 months ahead of quarterly trade volume data. As such, the WTOI should contribute to better monitoring of global trade developments in the future.   The component indices are either leading with respect to world trade or coincide with trade data but are available earlier. They include:   - export orders reported by manufacturers in purchasing managers indices; - international air freight in freight tonne kilometres (FTKs) from the International Air Transport     Association  (IATA); - container throughput of major ports, in twenty-foot equivalent (TEU) units; - automobile sales and/or production in selected economies; - customs data on electronic components trade in physical units; and - customs data on agricultural raw materials trade in physical units.     The main contribution of the WTOI is to identify turning points and to gauge momentum in global trade. Although is not a forecast per se, it complements trade statistics and forecasts from the WTO and other organizations. The headline figure denotes performance relative to recent trends. For example, a reading of 100 suggests trade growth in line with recent trends, while readings greater or less than 100 indicate above or below trend growth.    The first WTOI was released in July with data through April and had a below-trend score of 99.0 suggesting weak trade growth in Q2 and into Q3. This turned out to be the case. The first update of the WTOI, issued in November with data through August, had the indicator rising slightly above trend to 100.9, signalling a modest acceleration of trade into Q4. This is broadly consistent with the WTO's most recent forecast of 1.7% merchandise trade volume growth for 2016, which would require somewhat stronger growth in the second half of the year after a stagnant first half.  The WTO will continuously evaluate the indicator going forward and make adjustment from time to time as necessary to enhance its performance.  Future releases are expected to be on a quarterly basis, with timing depending on data availability. The next update is anticipated in February 2017.

Source:   WTO Secretariat.

3  TRADE AND TRADE-RELATED POLICY ISSUES

3.1.  The following Sections provide a more in-depth analysis of selected trade and trade-related policy developments, including several areas in which significant developments took place during the review period.

3.1  Overview

3.2.  The trade measures compiled for this report are presented in three categories: (i) measures that clearly facilitate trade (Annex 1); (ii) trade‑remedy measures (Annex 2); and (iii) other trade and trade-related measures (Annex 3).^[11] The total number of measures in these three categories recorded over the period mid-October 2015 to mid‑October 2016 was 745. This figure includes 216 trade‑facilitating measures, 347 trade‑remedy measures and 182 other trade and trade‑related measures.

3.3.  During the twelve-month period covered by this report, 216 trade‑facilitating measures (Table 3.1) were recorded. This figure corresponds to 18 trade‑facilitating measures applied per month, and remains above the average for the 2009-2015 period. Around 60% of these trade‑facilitating measures consist of measures that provide for tariff reductions, sometimes applied on a temporary basis, and another 16% of these measures provide facilitation of customs procedures. Measures implemented in the context of the ITA Expansion Agreement are also included in these numbers (Box 3.1). The trade‑facilitating measures recorded by this monitoring report^[12] are valued at US$248.9 billion (1.51% of world merchandise imports) compared to US$170.3 billion (0.91%) reported in the last annual overview.^[13]

Table 3.1 Measures facilitating trade (Annex 1)

Type of measure	Mid-October 2011 to mid-October 2012	Mid-October 2012 to mid-November 2013	Mid-November 2013 to mid‑October 2014	Mid-October 2014 to mid‑October 2015	Mid-October 2015 to mid‑October 2016
Import	136	101	168	192	173
- Tariff	120	82	145	160	128
- Customs procedures	13	15	18	24	35
- Tax	2	3	1	4	5
- Quantitative restrictions	1	1	4	4	3
- Other	0	0	0	0	2
Export	18	6	9	26	40
- Duties	7	3	4	13	6
- Quantitative restrictions	11	3	3	1	4
- Other	0	0	2	12	30
Other	8	0	0	4	3
Total	162	107	177	222	216
Average per month	13.5	8.2	16.1	18.5	18.0

Source:   WTO Secretariat.

3.4.  The principal product sectors (HS Chapters) benefiting from the trade-facilitating measures were: optical, measuring, precision and medical instruments, machinery and mechanical appliances, electrical machinery and parts thereof, and mineral fuels and oils.^[14]

Box 3.1 Trade coverage of the ITA Expansion Agreement

The review period covered by this report saw the first instances of implementation of the ITA Expansion Agreement. According to very preliminary Secretariat estimates the trade coverage of the import-facilitating measures in the context of the ITA Expansion Agreement and recorded in this report amounted to over US$416 billion or around 2.5% of the value of total world merchandise imports.a These measures were implemented by Canada, China, the European Union, Iceland, Israel, Malaysia, Mauritius, Montenegro, New Zealand, Norway, Chinese Taipei, Thailand and the United States and are reflected in Annex 1. Given the very significant trade coverage value of these measures, they have not been included in the figures evaluating the trade coverage of the trade facilitating measures in Section 3.1 as it would distort the value of any comparison with previous reports. For more details on the ITA Expansion Agreement see Section 3.9.

a             Calculated at HS six-digit level and using 2015 import figures. Singapore and Hong Kong, China are not included in this figure as their tariffs on these products are already zero.

Source:   WTO Secretariat.

3.5.  Trade‑remedy measures taken between mid-October 2015 and mid-October 2016 are listed in Annex 2.^[15] As a share of all trade and trade-related measures recorded for the review period, trade remedies make up 47%, up from 43% in the previous annual report. Out of the 347 trade remedy measures recorded (Table 3.2), 257, or almost three-quarters, were anti-dumping actions. In line with the trend identified in recent monitoring reports, more initiations were recorded than terminations. The monthly average of trade remedy initiations of investigations for this exercise equals the highest recorded since 2009, whereas the monthly average of trade remedy terminations is the lowest since the beginning of the monitoring exercise (Chart 3.1).  Moreover, the gap between trade remedy initiations and terminations is the highest recorded since 2009.

Chart 3.1 Initiations and terminations of trade remedies

(average per month)

Note:       Values are rounded.

Source:   WTO Secretariat.

Table 3.2 Trade remedy measures (Annex 2)

Type of measure	Mid-October 2012 to mid-November 2013		Mid-November 2013 to mid-October 2014		Mid-October 2014 to mid-October 2015		Mid-October 2015 to mid-October 2016
	Initiations	Terminations	Initiations	Terminations	Initiations	Terminations	Initiations	Terminations
Trade remedy
Anti-dumping	156	112	134	133	130	111	160	97
Countervailing	24	9	21	15	21	14	27	16
Safeguard	37	17	16	18	14	7	35	12
Total	217	138	171	166	165	132	222	125
Average per month	16.7	10.6	15.5	15.1	13.8	11.0	18.5	10.4

Source:   WTO Secretariat.

3.6.  Out of the total number of trade-remedy measures, 222 were initiations of new trade‑remedy investigations valued at US$89.6 billion (0.55% of world merchandise imports), and 125 measures were terminations of either investigations or existing duties valued at US$18.2 billion (0.11%).^[16]

3.7.  The number of other trade and trade-related measures recorded during the review period (Annex 3) was 182, i.e. broadly comparable to the 178 recorded for last year's report. The monthly average of other trade and trade-related measures remains below the monthly average of trade-facilitating measures (Table 3.1) - a consistent trend over the past couple of years. Out of the 182 measures listed in Annex 3, 133 measures were applied to imports. As has been the case in the past, the most prevalent import measure remains tariff increases, accounting for almost 61% of import measures in Annex 3 (Table 3.3) - a slight decrease compared to the previous annual overview.

3.8.  In addition to imports, 34 measures affecting exports and 15 measures mainly relating to domestic-content requirements were recorded. Compared to the previous report, export measures increased slightly.

Table 3.3 Other trade and trade-related measures (Annex 3)

Type of measure	Mid-October 2011 to mid‑October 2012	Mid-October 2012 to mid‑November  2013	Mid-November 2013 to mid‑October 2014	Mid-October 2014 to mid‑October 2015	Mid-October 2015 to mid‑October 2016
Import	118	153	119	136	133
- Tariff	54	106	74	88	81
-Customs procedures	38	25	26	20	26
- Tax	6	6	7	11	11
- Quantitative restrictions	20	15	11	11	11
- Other	0	1	1	6	4
Export	32	27	36	31	34
- Duties	8	4	12	13	7
- Quantitative restrictions	24	11	12	5	12
- Other	0	12	12	13	15
Other	14	10	13	11	15
Total	164	190	168	178	182
Average per month	13.7	14.6	15.3	14.8	15.2

Source:   WTO Secretariat.

3.9.  Other trade and trade-related measures recorded over the review period cover a wide range of products. The main product sectors (HS Chapters) targeted were: iron and steel, machinery and mechanical appliances, articles of iron and steel, and electrical machinery and parts thereof, accounting for US$101.2 billion (0.62% of world merchandise imports).^[17]

3.10.  In the previous annual overview, the product sectors most heavily affected were: mineral fuels and oils, iron and steel, vegetable fats and oils, electrical machinery and equipment, machinery and mechanical appliances, and vehicles and parts thereof, accounting for US$228.3 billion (1.23% of world merchandise imports).

3.11.  The total number of what can be considered as trade‑restrictive measures introduced by WTO Members since October 2008, and captured by the periodic monitoring reports is 2,978.^[18] According to information recorded for this exercise, as of mid‑October 2016, 740, or around one quarter of these measures had been removed leaving the stockpile of measures still in place at 2,238 – an increase of 17% since October 2015. Chart 3.2 compares the stockpile of restrictive measures at mid-October 2010 with that of mid‑October 2016.

Chart 3.2 Stockpile of trade-restrictive measures

 

Note:       Totals include measures listed in Annex 3 and trade remedy actions.

Source:   WTO Secretariat.

3.12.  Overall, the stockpile of trade-restrictions recorded by this exercise has continued to increase by roughly the same rate as identified in recent reports. Similarly, tangible evidence of WTO Members eliminating older measures remains elusive as the share of restrictions which have been rolled back remains stable at around a quarter of the total recorded. The addition of new restrictive measures, combined with a slow removal rate, remains a persistent concern with 75% of all restrictions measures implemented since 2008 still in place.

3.2  Trade-Remedy Trends

3.13.  The analysis in this Section of the report provides an assessment of trends in trade-remedy actions during the periods July 2013 – June 2014 ("first period"), July 2014 – June 2015 ("second period") and July 2015 – June 2016 ("current period").^[19] Concerning anti-dumping, the current period indicates an increase in the number of new investigations initiated compared with the second period, but no change compared with the first period.^[20] The trend in safeguard investigations showed a similar pattern. The number of countervailing investigations initiated showed little change across the three periods. The total numbers of initiations of safeguards and countervailing investigations remained considerably lower than for anti‑dumping.

Anti-Dumping Measures

3.14.  Global anti-dumping initiations decreased by 12% in the second period, from 266 in the first period to 238, before increasing again to 267 in the current period (Table 3.4). The Table also provides more information on which Members initiated anti-dumping investigations.

Table 3.4 Initiations of anti-dumping investigations

Reporting Member	July 2013 – June 2014	July 2014 – June 2015	July 2015 – June 2016
Argentina	11	6	8
Australia	26	14	18
Bahrain, Kingdom of;  Kuwait, State of; Oman; Qatar; Saudi Arabia, Kingdom of; United Arab Emiratesa	0	0	1
Brazil	66	18	15
Canada	10	12	4
Chile	0	1	1
China	7	6	10
Colombia	6	7	1
Costa Rica	0	0	2
Dominican Republic	2	0	1
Egypt	2	10	4
European Union	4	15	13
Guatemala	1	0	0
India	25	37	66
Indonesia	14	16	2
Israel	0	0	1
Japan	1	2	0
Korea, Republic of	9	3	3
Malaysia	7	13	3
Mexico	5	17	5
Morocco	1	2	4
Pakistan	6	3	21
Peru	1	1	0
Russian Federation, Kazakhstanb	4	5	0
South Africac	6	1	0
Chinese Taipei	1	0	8
Thailand	0	1	13
Trinidad and Tobago	0	1	0
Turkey	4	22	8
Ukraine	2	3	2
United States	45	21	51
Uruguay	0	1	0
Viet Nam	0	0	2
Total	266	238	267

a             Notified individually by these Members, but investigations are initiated by the Cooperation Council for the Arab States of the Gulf on behalf of all of its members collectively.

b             Notified individually by these Members, but investigations are initiated by the Eurasian Economic Union on behalf of all of its members collectively. 

c             Notified by South Africa, but investigations are initiated by the Southern African Customs Union on behalf of all of its members collectively.

Note:       Counted on the basis of exporting countries or customs territories affected.

Source:   WTO Secretariat.

3.15.  Chart 3.3 shows that the number of anti-dumping investigations initiated increased from 2011 until it peaked in 2013 with 287 measures. The number of investigations has declined since then, to 236 and 230 initiations in 2014 and 2015 respectively. The initial figure covering the first six months of 2016 may indicate an acceleration of anti-dumping initiations for the full year.  

3.16.  While anti-dumping investigations do not necessarily lead to the imposition of measures, a rise in the number of investigations is an early indicator suggesting a likely rise in the number of measures imposed. Over the three periods covered in this Section, a total of 507 anti-dumping measures were imposed (as shown in Table 3.5). However, as it can take up to 18 months for an anti-dumping investigation to be concluded, these measures may not necessarily be the result of initiations in the same period.

 

Chart 3.3 Total anti-dumping investigation initiations^a

 

a             Data for 2016 relate to the January to June period.

Source:   WTO Secretariat.

Table 3.5 Number of Anti-Dumping Measures Imposed

	July 2013 - June 2014	July 2014 - June 2015	July 2015 - June 2016
Measures imposed	158	198	151

Source:   WTO Secretariat.

3.17.  Chart 3.4 shows that there was little change in terms of the breakdown of products affected by anti-dumping investigations initiated during the three periods examined. Metal products were subject to the most initiations in each period, accounting for 34% of all initiations in the first period, 37% in the second period and 47% in the current period. In each period, at least 85 initiations targeted metals, of which 90% focused on steel products (goods classified under HS Chapters 72 and 73). Over the three periods combined, the United States (83), Australia (36) and Canada (23) accounted for more than half of the 306 initiations on metals. An increase in the number of initiations against metal products was seen in the current period with 39 investigations initiated by the United States, 15 by India, 13 by Thailand and 11 by Australia. Initiations against metals across the three periods targeted mostly products from China (81, of which 69 involved steel products), the Republic of Korea (36, of which 34 involved steel) and Chinese Taipei (19, of which 18 involved steel). In many instances, investigations were launched on the same product from several sources. For instance, three steel products were the focus of 45 investigations.  

3.18.  Chemical products accounted for the second‑largest share of initiations over the three reporting periods, with an 18% share of initiations in the first period, a 24% share in the second and a 14% share in the current period. These initiations targeted mostly chemical products from China (41), the United States (11) and the Republic of Korea (11). Similarly to the metals sector, investigations into chemicals frequently targeted the same product from different sources – 19 products accounted for 77 of the investigations in this area.

3.19.  Plastics and rubber ranked third over the three periods examined, accounting for 19% of all initiations in the first period, 16% in the second, but dropping to 7% in the current period. China was the main target of investigations in this sector (20), followed by India (9), the Republic of Korea (6) and Thailand (6).

3.20.  In terms of countries or customs territories affected by new anti-dumping investigations, 50 exporting Members were affected during the first period, 42 during the second and 42 in the current period. China remained, by far, the Member most affected by anti-dumping initiations – investigations into Chinese products accounted for 28% of all investigations during these periods. The second-most affected Member during the three reporting periods – the Republic of Korea – accounted for 8% of the total initiations, followed by India and Chinese Taipei, at 5% each.

Chart 3.4 Anti-dumping initiations by product

 

 

Source:   WTO Secretariat.

Countervailing Measures

3.21.  Table 3.6 shows that global initiations of countervailing duty investigations have remained relatively constant over the three periods examined. The main users of countervailing measures were the United States, Canada and the European Union. Over the three periods examined, 90% of countervailing investigations were conducted concurrently with an anti‑dumping investigation. 

Table 3.6 Initiations of countervailing duty investigations

Reporting Member	July 2013 – June 2014	July 2014 – June 2015	July 2015 – June 2016
Australia	2	0	5
Brazil	0	1	0
Canada	3	11	2
China	1	0	1
Egypt	1	5	0
European Union	5	2	2
India	1	0	1
Mexico	1	0	0
Pakistan	0	0	1
Peru	0	1	0
Russian Federationa	0	1	0
Turkey	0	1	0
Ukraine	0	1	0
United States	24	17	24
Total	38	40	36

a            Notified individually by these Members, but investigations are initiated by the Eurasian Economic Union on behalf of all of its members collectively. 

Note:       Counted on the basis of exporting countries or customs territories affected.

Source:   WTO Secretariat.

 

3.22.  Chart 3.5, reflecting annual figures, shows an upward trend in countervailing initiations since 2010, notwithstanding some fluctuation in 2012. In fact, the number of initiations recorded in 2014 (45) exceeds the previous peak of 41 initiations observed in 1999.^[21]

Chart 3.5 Countervailing investigation initiations^a

a             Data for 2016 relate to the January to June period.

Source:   WTO Secretariat.

3.23.  As with anti-dumping, countervailing investigations do not necessarily lead to the imposition of measures. However, a rise in the number of investigations initiated may be an early indicator of a likely rise in the number of measures imposed.  Over the three periods, a total of 43 countervailing measures were imposed (as shown in Table 3.7).  However, as it can take up to 18 months for an investigation to be concluded once initiated, these measures may not necessarily be the result of initiations in the same period.

Table 3.7 Number of Countervail Measures Imposed

	July 2013 - June 2014	July 2014 - June 2015	July 2015 - June 2016
Measures imposed	11	15	17

Source:   WTO Secretariat.

3.24.  Concerning the types of products affected by countervailing investigations, Chart 3.6 shows that metals accounted for most of the initiations reported over the three reporting periods. For the three periods combined, 64 of the 114 total initiations recorded covered metals, all but four on steel. During the current period, eleven of the 23 steel-related initiations in the current period targeted products from China.  Plastics were the second most-targeted sector with 15 initiations, followed closely by chemicals with 12.

3.25.  In terms of countries or customs territories affected by new countervailing investigations, 12 exporting Members were affected during the first, 18 during the second and 10 during the current period. Similarly to anti-dumping, China was the most affected Member throughout the periods reviewed, accounting for 38% of all investigations. India, the second-most affected Member during the three reporting periods, accounted for 14% of all initiations, followed by Turkey, which accounted for 9%.

 

Chart 3.6 Countervailing duty initiations by product

 

 

 

Source:   WTO Secretariat.

Sunset Reviews

3.26.  This Section attempts to examine the effect which the global financial crisis may have had on anti-dumping  and countervailing actions, by analysing the extent to which measures imposed following the financial crisis have been extended or have expired (or otherwise terminated) - possibly suggesting that the financial crisis could have been a factor that contributed to the imposition of the measure. This Section, therefore, examines measures imposed as a result of investigations initiated in 2008, before the financial crisis, as well as 2009 and 2010, when the full effects of the financial crisis were being felt.^[22] 

3.27.  The relevant WTO Agreements stipulate that anti-dumping and countervailing measures can remain in force only for as long as necessary to counteract injury caused by dumped or subsidised imports. In addition, they must expire no later than five years after their imposition unless it is determined, through a review, that removal of a measure would likely lead to a continuation or recurrence of dumping or subsidisation and injury. In such a case, the measure can be extended for up to a further five years. This review process is often referred to as a sunset review. Investigating authorities generally invite applications for a sunset review before a measure expires, and in the absence of a review, they allow the measure to lapse. 

3.28.  As of 30 June 2016, measures imposed as a result of investigations initiated in 2008-2010 are in various stages of their lifecycle. Some measures are still within the initial five-year imposition period, some are under review^[23], some have been extended and some have expired. 

3.29.  Chart 3.7 shows the status of anti-dumping and countervailing measures resulting from investigations initiated in 2008, 2009 and 2010 by WTO Members.

Chart 3.7 Status of measures resulting from AD and CVD investigations initiated in 2008, 2009 and 2010

Note:       As at 30 June 2016.

Source:   WTO Secretariat.

3.30.  All of the 167 measures resulting from investigations initiated in 2008 by WTO Members have now been subject to expiry action (either a sunset review or termination), along with 163 of the 164 measures for 2009. However, the majority of measures resulting from investigations initiated in 2010 (61 out of 111) have not yet been subject to any expiry action.

Table 3.8 Proportion of expiring measures subject to sunset review

Expiring measures	Investigation initiated in
	2008	2009	2010a
Not reviewed	39%	28%	24%
Reviewed	61%	72%	76%

a             Only 50 measures resulting from investigations initiated in 2010 have so far expired or been subject to review.

Note:       Based on the year the investigation was initiated.

Source:   WTO Secretariat.

3.31.  Table 3.8 shows the proportion of measures that were due to expire for which a sunset review has been conducted; noting that measures not reviewed will automatically expire. For measures resulting from investigations initiated in 2009 ("the 2009 measures"), 72% were reviewed, higher than the 61% found for 2008 ("the 2008 measures"), although there is insufficient information at this time to determine whether this difference is significant. It is still too early to draw conclusions in relation to the measures based on investigations initiated in 2010.

3.32.  As at 30 June 2016, 101 sunset reviews had been completed for measures resulting from investigations initiated in 2008, 62 for 2009 and 15 for 2010, as shown in Table 3.9. Available information shows that the expiry of the measure would lead to a continuation or recurrence of dumping/subsidisation and injury and extended the measures for 88% of the 2008 measures and 87% of the 2009 measures - no significant change after the financial crisis began.

Table 3.9 Results from completed reviews (based on the year the investigation was initiated)

	Investigation initiated in
	2008	2009	2010
Number of completed reviews	101	62	15
Measure extended	88%	87%	80%
Expiry of measure	12%	13%	20%

Source:   WTO Secretariat.

3.33.  Based on the data currently available, there is no discernible change in extension versus expiry of measures coinciding with the financial crisis. As further time passes and additional data become available, other trends may reveal themselves.

Safeguards

3.34.  Unlike anti-dumping and countervailing measures, safeguard measures are intended to be a temporary emergency measure in response to a surge in imports of particular goods and are imposed on products from all sources.^[24] Thus, safeguards are subject to different rules/durations than anti‑dumping and countervailing measures and are, therefore, not directly comparable to these other types of trade remedies.

3.35.  Initiations of safeguard investigations have risen by more than 50% between the period July 2014-June 2015 and July 2015-June 2016. The largest driving force was the sharp increase in investigations in the steel sector.

Table 3.10 Initiations of safeguard investigations

(number of new investigations)

Reporting Member	July 2013- June 2014	July 2014-June 2015	July 2015-June 2016
Chile	0	0	4
Colombia	4	0	0
Costa Rica	1	0	0
Ecuador	0	1	0
Egypt	0	3	1
India	6	1	3
Indonesia	3	0	1
Jordan	0	1	0
Kyrgyz Rep.	1	0	0
Malaysia	0	1	3
Morocco	1	1	0
Philippines	2	0	0
Thailand	1	0	0
Saudi Arabia, Kingdom of	0	0	1
South Africa	0	0	1
Chinese Taipei	1	0	0
Thailand	0	0	1
Tunisia	0	2	1
Turkey	1	3	0
Ukraine	0	0	1
Viet Nam	0	0	2
Zambia	0	0	1
Total	21	13	20

Source:   WTO Secretariat.

3.36.  Table 3.10 shows the breakdown of the Members that have initiated these investigations. Total initiations by calendar year since 2008 can be seen in Chart 3.8.

Chart 3.8 Safeguard investigation initiations^a

 

a             Data for 2016 relate to the January to June period as reported by Members.

Source:   WTO Secretariat.

3.37.  Chart 3.9 shows the product covered by these investigations. Although safeguard investigations normally cover a diverse range of sectors, the latest period saw a high concentration in the steel sector, with "metal" covering 75% of all the investigations initiated.  Tables 3.11 and 3.12 show the imposition of safeguard measures by calendar year and for the period under review.

Table 3.11 Imposition of safeguard measures by calendar year

Year	Number	Year	Number	Year	Number
2000	7	2006	7	2012	6
2001	8	2007	5	2013	8
2002	13	2008	6	2014	12
2003	15	2009	10	2015	12
2004	6	2010	4	2016a	5
2005	6	2011	11

a             Data for 2016 relate to the January to September period as reported by Members.

Source:   WTO Secretariat.

Table 3.12 Imposition of safeguard measures for the period under review

	July 2013 - June 2014	July 2014 - June 2015	July 2015 - June 2016
Measures imposed	12	16	8

Source:   WTO Secretariat.

3.38.  Recent discussions in the Committee on Safeguards appear to be showing a growing concern among WTO Members regarding the use of safeguard measures, particularly in the steel sector.

Chart 3.9 Safeguard initiations by product

 

 

 

 

Source:   WTO Secretariat.

3.3  Sanitary and phytosanitary measures (SPS)^[25]

3.39.  Under the SPS Agreement, WTO Members are obliged to provide an advance notice of intention to introduce new or modified SPS measures^[26], or to notify immediately when emergency measures are imposed. The main objective of complying with the SPS notification obligations is to inform other Members about new or changed regulations that may significantly affect trade. Therefore, an increased number of notifications does not automatically imply greater use of protectionist measures, but rather enhanced transparency regarding food safety, animal and plant health measures, many or most of which presumably are legitimate health-protection measures.

3.40.  In the period from October 2015 through September 2016^[27], 1,395 SPS notifications (regular and emergency, including addenda) were submitted^[28] to the WTO, resulting in a decrease of 21% in total notified measures compared to the previous period (1 October 2014 to 30 September 2015). Notifications from developing-country Members accounted for 63% of the total number. In the previous year, the total number of notifications and the proportion of measures notified by developing-country Members were higher: from October 2014 through September 2015, a total of 1,758 notifications (regular and emergency, including addenda) were submitted, of which 69% were notified by developing-country Members.

3.41.  From October 2015 through September 2016, WTO Members submitted 1,308 regular SPS notifications (including addenda), 61% of which were submitted by developing-country Members. Compared with the previous period (2014-15), there was an 18% decrease in the total number of regular notifications and a 26% decrease in regular notifications by developing-country Members.

3.42.  The number of notifications of emergency measures (including addenda) decreased even more sharply compared with the previous period (Chart 3.10). Compared to the previous period (2014-25), there was a 46% decrease in the total number of emergency notifications (including addenda). Similarly, the number of emergency notifications made by developing countries decreased by 44% compared to the previous period, but proportionally stayed roughly the same, constituting 87% of all emergency and addenda notifications (compared with 84% in the previous period). These high percentage figures are consistent with the general trend of the majority of emergency measures being notified by developing-country Members. This might stem from the fact that they do not have as extensive SPS regulatory systems as developed-country Members do, and consequently, when facing emergency challenges, they are more likely to have to introduce new regulations or change existing ones.

Chart 3.10 Number of SPS notifications

Source:   WTO Secretariat.

3.43.  Many Members are following the recommendation to notify SPS measures even when these are based on a relevant international standard, as this substantially increases transparency regarding SPS measures. Of the 984 regular notifications (excluding addenda) submitted from October 2015 through September 2016, 449 (about 46% of the total) indicated that at least one international standard, guideline or recommendation was applicable to the notified measure (Chart 3.11). Of these, about 80% indicated that the proposed measure was in conformity with the existing international standard.

Chart 3.11 Regular SPS notifications and international standards (excluding addenda)

 

 

Note:      Codex Alimentarius (Codex), World Organisation for Animal Health (OIE) and International Plant Protection Convention (IPPC).

Source:   WTO Secretariat.

3.44.  International standards often provide useful guidance regarding measures to address disease outbreaks and other emergency situations. Indeed, about 96% (64 in total) of the 67 emergency notifications (excluding addenda) submitted from October 2015 through September 2016 indicated that an international standard, guideline or recommendation was applicable to the notified measure (Chart 3.12). Of these, all but one indicated that the measure was in conformity with the existing international standard.

Chart 3.12 Emergency SPS notifications and international standards (excluding addenda)

 

Note:      Codex, OIE and IPPC.

Source:   WTO Secretariat.

3.45.  Of the 984 regular notifications (excluding addenda) submitted in the review period, the majority were related to food safety and plant protection.^[29] The remaining notifications related to animal health, the protection of humans from animal diseases or plant pests, the protection of the Member's territory from other damage from pests. Most of the regular notifications identified more than one objective per measure.

3.46.  Of the 67 emergency measures (excluding addenda) notified in the same period, the majority related to animal health, followed by measures related to food safety, the protection of humans from animal diseases or plant pests, and the protection of the Member's territory from other damage from pests. Similarly, the majority of emergency notifications during this period identified more than one objective per measure.

3.47.  While there is no formal provision for "counter notification", concerns regarding the failure to notify an SPS measure, or regarding a notified measure, can be raised as a specific trade concern (STC) at any of the three regular meetings of the SPS Committee each year. In the Committee meetings of October 2015, March 2016 and June-July 2016, 15 new STCs were raised. Of these new STCs, five related to animal health, four to food safety, three to plant health and three were related to other concerns (Table 3.13).

3.48.  The margins of the SPS Committee meetings provide important opportunities for delegations, which often include experts from capital, to discuss and resolve STCs bilaterally. Two STCs included on the proposed agenda were withdrawn following bilateral consultations. These STCs were respectively Indonesia's concerns regarding exports of Indonesian mangoes to the Republic of Korea (March 2016), and Brazil's concern regarding Mexico's non-recognition of regional conditions, including disease-free areas (June-July 2016). Furthermore, during the period under review, four STCs were reported as resolved under the specific agenda item. Since 1995, 37% of all STCs raised at the Committee have been reported as resolved.^[30]

Table 3.13 SPS new STCs raised in October 2015, March 2016 or June‑July 2016

 

STC	Document title	Members maintaining the measure	Members raising the concern	Members supporting the concern	Date raised	Primary objective
397	India's amendment to its import policy conditions for apples; Restriction to Nhava Sheva port	India	Chile, New Zealand	United States, European Union	14/10/2015	Other concerns
398	Viet Nam's restrictions on fruit due to fruit flies	Viet Nam	Chile		14/10/2015	Plant health
399	Viet Nam's restrictions on plant products	Viet Nam	Chile		14/10/2015	Plant health
400	Undue delays in the start of Australia's risk analysis for avocados	Australia	Chile		14/10/2015	Plant health
401	Undue delays in Viet Nam's approval process for dairy and meat products	Viet Nam	Chile		14/10/2015	Animal health
402	Undue delays in Australia's approval process for chicken meat	Australia	Chile		14/10/2015	Animal Health
403	India's amended standards for food additives	India	European Union	Chile, United States	14/10/2015	Food safety
404	Revised veterinary health certificates for the import of cattle, sheep and goats from Botswana, Lesotho, Namibia and Swaziland	South Africa	Namibia	Botswana, Swaziland	16/03/2016	Animal health
405	Import restrictions due to Schmallenberg virus	China	European Union		16/03/2016	Animal health
406	Import restrictions due to Highly Pathogenic Avian Influenza	China	European Union		16/03/2016	Animal health
407	Restrictions on exports of pork from the State of Santa Catarina	European Union	Brazil		16/03/2016	Food safety
408	Restrictions on exports of beef and poultry	Nigeria	Brazil		16/03/2016	Food safety
409	Russian Federation import measures	Russian Federation	Ukraine		30/06/2016	Other concerns
410	Costa Rica's regulation on registration, use and control of pesticides and related substances	Costa Rica	Israel		30/06/2016	Other concerns
411	Russian Federation import restrictions on certain animal products from Germany	Russian Federation	European Union		30/06/2016	Food safety

Source:   WTO Secretariat.

3.49.  29 previously raised STCs were discussed at the October 2015, March 2016 and/or June‑July 2016 SPS Committee meetings (almost half of which – 13 STCs – were discussed in all three meetings).^[31] Of these previously raised STCs, four addressed persistent problems that have been discussed seven times or more. In particular, two have been discussed on 20 or more occasions (Table 3.14). In addition one STC raised for the first time in October 2015 was discussed again in March 2016^[32], and two STCs raised for the first time in March 2016 were discussed again in the June-July 2016 meeting.^[33]

Table 3.14 Previously-raised SPS STCs discussed in October 2015, March 2016 and/or June-July 2016

Note:       The STCs marked with an asterisk (*) beside their number in this table are STCs that were raised in all three SPS Committee meetings.

Source:   WTO Secretariat.

3.50.  Analysing the October 2015, March 2016 and June-July 2016 SPS Committee meetings, 33% of all STCs raised for the first time concerned animal health, 27% concerned measures covering food safety, 20%  covered plant health and 20% related to other types of concerns.^[34] Regarding previously raised STCs in the reviewed period, 34% concerned measures covering food safety, 28% concerned animal health, 21% covered plant health and 17% related to other types of concerns.^[35] Of the total raised or discussed STCs in the reviewed period, 29% concerned measures covering animal health, 29% covered food safety, 22% concerned plant health and 20% of total STCs related to other types of concerns.

Box 3.2 Enhancing Monitoring and Transparency in SPS and TBT

Accessing relevant information on SPS or TBT product requirements in export markets can be a huge challenge, especially for SMEs. The WTO helps tackling this potential trade barrier through the combination of transparency requirements included in the SPS and TBT agreements and two online tools that make information easily accessible, the SPS and TBT Information Management Systems (SPS/TBT IMSs). WTO Members are required to notify proposed SPS and TBT measures if they may affect international trade. Each year the WTO receives more than 3500 notifications. Publicly available online tools help stakeholders find notifications of relevance to their trade: the SPS/ TBT IMSs (www.spsims.wto.org and www.tbtims.wto.org) and the new ePing (www.epingalert.com). The SPS/TBT IMSs are search-platforms that help among others find SPS or TBT notifications by using parameters such as products, notifying Member and objective. ePing is an online alert system allowing users to receive daily or weekly email alerts about SPS and TBT notifications covering products and markets of interest to them. ePing helps stakeholders track, discuss and adapt to new regulatory conditions, avoiding trade disruption by addressing potential frictions at an early stage.

3.4  Technical Barriers to Trade (TBT)^[36]

3.51.  Under the TBT Agreement, WTO Members are required to notify their intention to introduce new or modified TBT measures, or to notify adopted emergency measures immediately upon their adoption. The main objective of complying with the TBT notification obligations is to inform other Members about new or changed regulations that may significantly affect trade.^[37] Therefore, an increased number of notifications does not necessarily imply greater use of protectionist or unnecessarily trade­-restrictive measures. Rather, TBT notification obligations are meant to promote enhanced transparency regarding measures taken to address legitimate policy objectives, e.g. the protection of human, animal or plant life or health or the environment.

Notifications – new regulations with possible trade impact

3.52.  From 1 October 2015 to 30 September 2016 (the "review period"), WTO Members submitted 1,775 new notifications of TBT measures^[38]. This represents a 30% increase in the number of new regulations notified by Members compared to the previous 12-month period.^[39] Developing country Members (including CIS and LDC Members) notified 79% of new regulations during the current review period, i.e. no measureable change in this share as compared to the previous period.

3.53.  The ten Members which notified the most new regulations during the review period were: the United States (172), Israel (111), the European Union (91), Uganda (71), the Republic of Korea (67), Egypt (60); Gulf Cooperation Council Standardization Organization Members (GSO)^[40] (60); China (53); Chile (50); Kenya (48) and Brazil (48). Most Members notified more new regulations in the current period as compared to the previous period. Of the top ten notifying Members, those with the greatest increase in notification activity in the current as compared to previous review period were: Israel (825% increase), Kenya (85% increase), and Egypt (67% increase). Conversely, the largest decreases in notification activity were seen by China (35% decrease), Uganda (20% decrease), and the Republic of Korea (14% decrease). One important development during the review period was the 60 regionally harmonized Gulf Cooperation Council draft technical regulations notified by GSO Members in joint notifications (on behalf of all seven Members) to provide a common deadline for comments on these measures and facilitate the handling of comments received.

3.54.  Of the 1,775 new notifications received during the review period the main indicated objectives^[41] were: protection of human health or safety (71%), prevention of deceptive practices and consumer protection (30%), quality requirements (16%) and protection of the environment (13%).^[42]

3.55.  In terms of follow‑up notifications^[43] a total of 605 were submitted during the review period, unchanged from the previous year. However, as a share of new follow-up notifications submitted, there was a relative 10% decrease from the previous to current review period.^[44] These types of notifications are important because they help to increase transparency across the regulatory lifecycle.^[45]

STCs – Regulations discussed at the TBT Committee Meetings

3.56.  Any Member may raise STCs with respect to TBT measures proposed or adopted by other Members.^[46] These STCs are frequently discussed in the regular meetings of the TBT Committee, with more than 50 STCs discussed per meeting in recent years (Chart 3.13).

Chart 3.13 STCs discussed per committee meeting, March 2006- June 2016

 

Note:      This chart counts the number of STCs on the agenda of the TBT Committee per meeting. The same STC can be raised at all three meetings in a year and, in this chart, it is counted under all three meetings.

Source:   WTO Secretariat.

3.57.  Depending on the extent of the trade-restrictiveness and importance of the issue to the Members raising the STC, the same measure may come up at one or more meetings of the TBT Committee. For example, a STC may be discussed at only one meeting (as a new STC), and subsequently a resolution to the trade concern may be found. Alternatively, an STC may be discussed at subsequent meetings (previously raised STC), usually reserved for long‑standing and more serious concerns.

3.58.  A total of 38 new STCs were raised during the three Committee meetings that fell within the reviewed period: 17 new STCs were raised at the 4-5 November 2015 meeting, 11 new STCs at the 9-10 March 2016 meeting and 10 new STCs at the 15-16 June 2016 meeting. This number is consistent with the number of new STCs during the previous 12-month period (37)^[47], as illustrated by Chart 3.14

Chart 3.14 STCs raised with respect to Members' TBT measures

Note:       This chart counts the number of TBT measures discussed as STCs per year. The data for 2016 include the STCs raised at the March and June 2016 Committee meetings. Previously raised concerns are counted only once even if they are raised in subsequent meetings in the same year.

Source:   WTO Secretariat.

3.59.  The six Members whose measures attracted new STCs during the review period were: China (7), the European Union (5), India (4), the Russian Federation (4), Colombia (2) and the United Arab Emirates (2) (Table 3.15). For the previous 12-month review period, China, the European Union and the Russian Federation topped this list (5 each), with Ecuador (4), and Brazil, France, Indonesia, Mexico and Chinese Taipei (2 each) making up the remainder of the  top five.

3.60.  In terms of Members raising most new STCs, the European Union (17), the United States (15), Canada (9), Indonesia and the Republic of Korea (5 each) were most active during the review period. The most active Members in the previous period were: United States (12), European Union (11), Canada (9), Indonesia (6), and Australia and Mexico (5 each).

3.61.  As seen in Table 3.15, new STCs discussed in the review period regulated a wide range of products, including cosmetics and personal hygiene products, ICT products, agricultural and food products and tyres and toys.

Table 3.15 New TBT STCs raised in the period 1 October 2015-30 September 2016

New STCs with respect to measures maintained by Members
Bolivia, Plurinational  State of: concerning Food Labelling and Advertising Law (ID501) (raised by Canada, European Union, Guatemala and United States)
Brazil: concerning Toy Certification; Ordinance No. 89, No. 310 and draft administrative rule No. 321(ID 478) (raised by Canada, United States and European Union)
China: concerning Interim Measures for Quality Management of Commercial Coal (ID477) (G/TBT/N/CHN/1057) (raised by Australia and Canada)
China: concerning Insurance Regulatory Commission (CIRC) Information and Communication Technology Regulation (ID 489) (raised by Canada, Japan, United States and European Union)
China:  concerning Guidance for Notification and Registration for New Chemicals (ID 146) (raised by the Kingdom of Saudi Arabia, Kingdom of and European Union)
China: concerning Formula Registration Regulation for Infant and Follow-up Formula, G/TBT/N/CHN/1165 (ID 493) (raised by Japan; Korea, Republic of and European Union)
China: concerning Draft Standardization Law (ID 507) (raised by Republic of Korea)
China: concerning Chinese Standards of Exhaust Emissions (ID 508) (China 6, BEIJING VI) (raised by Republic of Korea)
China: concerning National Standards on Limits of Volatile Organic Compounds for furniture, (ID 509) (G/TBT/N/CHN/1094; G/TBT/N/CHN/1095; G/TBT/N/CHN/1096) (raised by European Union)
Colombia: concerning Testing Requirements to be met by Toys and their Components and Accessories (ID 479) (raised by Canada and United States)
Colombia: concerning Draft Resolution of the Ministry of Health and Social Welfare and the Ministry of the Environment and Sustainable Development "adopting the Technical Regulation establishing the maximum levels of phosphorus and the biodegradability of surfactants in detergents and soaps, and introducing other provisions" G/TBT/N/COL/214; G/TBT/N/COL/214/Add.1 (ID 506) (raised by Mexico)
Egypt: concerning Manufacturer Registration System (ID505) (Decree 43/2016 and Decree 992/2015) G/TBT/N/EGY/114 and G/TBT/N/EGY/115 (raised by Australia, Canada, Chile, China,  European Union, South Africa, Norway, Turkey, Ukraine and United States)
European Union: concerning a proposal for a Directive of the European Parliament and of the Council on the Cloning of Animals of the bovine, porcine, ovine, caprine and equine species kept and reproduced for farming purposes (197) and Proposal for a Council Directive on the placing on the market of food from animal clones (198) (G/TBT/N/EU/197 and G/TBT/N/EU/198) (ID 492) (raised by Brazil and United States)
European Union: concerning Restriction on Polycyclic Aromatic Hydrocarbons (PAHs) in Tyres as specified in Annex XVII of REACH (ID 33) (raised by Indonesia)
European Union: concerning the withdrawal of equivalence for processed organic products (ID 483) (raised by India)
European Union: concerning Quality Schemes for Agricultural Products and Foodstuffs, (G/TBT/N/EU/139; G/TBT/N/EU/139/Add.1) (ID 512) (raised by United States and Uruguay) and
European Union: concerning Directive 2014/40/EU on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC (ID 513) (raised by Indonesia and Guatemala).
France: concerning Amendment 367 on Biodiversity Law (ID 499) (raised by Brazil and Indonesia)
Hungary: concerning Proposal for Government Decree on the amendment of Government Decree 39/2013 (of 14 February 2013) on the Manufacture, Placement on the Market and Control of Tobacco Products, Combined Warnings and the Detailed Rules for the Application of the Health-Protection Fine, (ID 498) G/TBT/N/HUN/31(raised by Australia, Canada, Cuba, Dominican Republic, European Union, Guatemala, Indonesia, New Zealand, Nigeria, Norway and Uruguay)
India: concerning Secondary cells and batteries containing alkaline or other non-acid Electrolytes (ID 482)  (G/TBT/N/IND/47/Add.1)(raised by Republic of Korea and United States)
India: concerning The Stainless Steel Products (Quality Control) Order, 2015 (ID 486) (raised by European Union)
India: concerning Amendments in the import policy conditions applicable to apples (ID 487) (raised by Australia, Chile, New Zealand, United States and European Union)
India: concerning Draft Food Safety and Standards (Alcoholic Beverages Standards) Regulations, 2015, G/TBT/N/IND/51 (ID 494) (raised by Australia, Canada, Chile, Guatemala, Japan, European Union, United States and New Zealand)
Indonesia: concerning Halal Product Assurance Law No. 33 of 2014 (ID 502) (raised by Brazil, European Union and United States)
Kenya: concerning East African East African Community (EAC) alcoholic beverage standards (ID510) (raised by Chile, European Union, South Africa and United States)
Korea, Republic of: concerning Standards and Specifications for Wood Products (ID 491) (G/TBT/N/KOR/599) (raised by Canada and United States)
Russian Federation: concerning Implementation plan related to excise tax on palm oil and soda products (ID 500) (raised by Indonesia)
Russian Federation: concerning Rules of cement certification (ID 497) (raised by Mexico and European Union)
Russian Federation: concerning Measure affecting the import of Ukrainian wallpaper (ID 476) (raised by Ukraine)
Russian Federation: concerning Measures affecting import of Ukrainian products (ID 504) (raised by Ukraine)
Kingdom of Bahrain, State of Kuwait, Kingdom of Saudi Arabia, Qatar: concerning Motor Vehicles General Requirements "No. GSO 42:2003" (ID 336) (raised by European Union)
Kingdom of Saudi Arabia: concerning Draft for update of the Technical Regulation No. SASO 2857:2014 "Vehicle Tires Rolling Resistance and Wet Grip Requirements" (ID 488) (raised by European Union)
Singapore: concerning Plain Packaging for Tobacco Products (ID 484) (raised by Australia, Canada, Dominican Republic, Guatemala, Indonesia, New Zealand and Norway)
South Africa: concerning an Amendment to Regulations Relating to Health Messages on Container Labels of Alcoholic Beverages, G/TBT/N/ZAF/48/Rev.1 (ID 495) (raised by Canada, Guatemala and European Union)
Chinese Taipei concerning Draft of the Organic Agriculture Act G/TBT/N/TPKM/225; G/TBT/N/TPKM/225/Add. 1 and Add. 2 (ID 511) (raised by European Union)
Thailand: concerning Milk Code – Draft Act on Controlling to the Marketing Promotion on Food for Infant and Young Children and Other Related Products BE, G/TBT/N/THA/471 (ID 503) (raised by United States)
United Arab Emirates: concerning the Energy efficiency labelling for electrical appliances (ID 481) (raised by Republic of Korea)
United Arab Emirates: concerning the Control scheme to restrict the use of hazardous materials in electronic and electrical devices (ID 496) (raised by European Union)

Source:   WTO Secretariat.

3.62.  In addition, 58 previously raised STCs were discussed during the current review period, as compared to 54 in the previous review period. Overall, the new and previously-raised STCs discussed during review period, were in keeping with the trend of a greater number of STCs being discussed per meeting as well as per year. Chart 3.15 shows the total number of STCs discussed per Committee meeting per year since 2005.

Chart 3.15 STCs discussed per TBT Committee meeting, 2005-30 September 2016

 

Note:       This chart counts the number of STCs on the agenda of the TBT Committee per meeting. The same STC can be raised at all three meetings in a year and, in this chart, is counted under all three meetings. Data for 2016 include the STCs raised at the March and June 2016 Committee meetings.

Source:   WTO Secretariat.

3.63.  This upward trend shows that the Committee has spent more time discussing STCs than any other item on the agenda. An average of around 20 STCs were discussed per meeting in 2006 whereas in 2015 that figure was 54. As illustrated by Chart 3.16, there is a marked correlation between the number of new notifications and new STCs raised each year. Since 1995, an average of around 68% of STCs discussed in TBT Committee meetings relate to notified measures. Similarly, and also since 1995, Members have raised 511 new STCs, in the TBT Committee, with an upward trend in STCs observed since 2005.^[48]

Chart 3.16 Number of TBT notifications and new STCs^a

 

a             Up to 30 September 2016.

Source:   WTO Secretariat.

3.5  Trade Concerns Raised in Other WTO Bodies^[49]

3.64.  During the period covered by this report a number of other trade concerns were raised by Members in formal meetings of various WTO bodies. With a view to increasing transparency, this Section aims to provide a brief and factual overview of such concerns raised between mid‑October 2015 and mid-October 2016.^[50] As this Section does not seek to reproduce the full substantive description of the trade concerns described by Members, a specific reference is made to the relevant formal meeting where a particular issue was raised. For the full account and context of the concerns, Members are invited to consult the records of the respective WTO bodies. The list of concerns and issues mentioned in this Section is not exhaustive.

3.65.  At the meeting of Council for Trade in Goods (CTG) on 10 November 2015^[51], new concerns were raised on (i) China's measures relating to trade in seafood, including quarantine and testing procedures, import licences for salmon and lack of indication about the list of Norwegian companies authorized to export seafood to China (raised by Norway); (ii) India's port closures for apple imports (raised by Chile, China, European Union, New Zealand and United States)^[52]; and (iii) Brazil's industrial nitrocellulose import ban/non automatic import licences, also raised at the Import Licensing Committee (raised by European Union).

3.66.  Trade concerns were also again raised on: (i) Nigeria's restrictive measures intended to preserve foreign exchange reserves which affected imports of sea products as well as agricultural products, plastics, aircraft and aircraft parts, and metal and metal products; (ii) Nigeria's local content requirements in the oil and gas industry (raised by Chile, European Union, Iceland, Norway, Malaysia, Switzerland, Thailand, United States and Uruguay); (iii) Indonesia's import and export restricting policies and practices (raised by Australia, Brazil, Canada, Chinese Taipei, European Union, Japan, New Zealand, Norway, Switzerland and United States); (iv) Pakistan's Regulatory Order No. 1125 on domestic sales taxes imposing a sales tax of 17% on imported goods, while similar domestically produced goods are taxed at 5%^[53] (raised by Canada, European Union, Japan, Switzerland and United States); (v) Ecuador's import restricting measures on automobiles adopted since 2012 and extended to end December 2015 (raised by Canada; Japan; Korea, Rep. of; Mexico and United States); (vi) Ecuador's balance of payment (BOP) measures, also raised at the Committee on Balance-of-Payments Restrictions (raised by Chile, Colombia, European Union, Japan, Panama, Peru, Switzerland and United States); and (vii) Ukraine's customs valuation issues based on Resolution 724 providing indicative prices for customs valuation purposes (raised by Iceland, Norway and Switzerland).

3.67.  At the 15 April 2016 meeting of the CTG^[54] new trade concerns were raised on (i) the Russian Federation's Presidential Decree No. 1 and Government Resolution No. 1 of January 2016, banning all international transit of cargo by road and rail from Ukraine to Kazakhstan through the territory of the Russian Federation (raised by Australia; Canada; European Union; Jamaica; Japan; Korea, Rep. of; Turkey; Ukraine and United States)^[55]; (ii) the United States' seafood import monitoring programme to prevent the Illegal, Unreported and Unregulated (IUU) fishing^[56] (raised by Norway and Russian Federation); and (iii) India's trade restrictions, including minimum import prices for steel products, the increase in customs duties for tariffs for 96 tariff lines, the safeguard measures applied to the steel sector and the conformity assessment procedures for ICT products (raised by Australia; Canada; Chile; China; European Union; Korea, Rep. of; New Zealand and United States). Trade concerns were raised on six additional issues that had already been brought to the CTG attention on previous occasions on (i) Indonesia's import and export restrictions; (ii) China's measures applied to seafood; (iii) Nigeria's import restricting measures; (iv) Ecuador's BOP measures; (v) Ukraine's customs valuation legislation; and (vi) Pakistan's discriminatory taxes.

3.68.  At the 14 July 2016 meeting of the CTG^[57], new trade concerns were raised on (i) the European Union's anti-dumping investigation on imports of cold rolled flat steel products already raised at the Committee on Anti-Dumping Practices (raised by China and Russian Federation); (ii) Sri Lanka's dairy tariffs on skimmed milk and milk powder in excess of the bound rate also raised at the Committee on Agriculture (raised by New Zealand); (iii)  Canada's wine related policies and measures adopted by some provincial authorities also raised at the Committee on Agriculture (raised by Australia, Chile, European Union, Mexico, New Zealand and United States); and (iv) China's simplified tax system on personal effects and increased rate of import taxes on personal effects (raised by Japan). Seven additional trade concerns were raised at the 14 July meeting that had already been discussed at the April 2016 meeting and also in previous CTG meetings. These concerns were: (i) Nigeria's import restricting measures; (ii) China's measures applied to seafood; (iii) Indonesia's import and export restrictions; (iv) Ecuador's BOP measures; (v) Ukraine's determination of the transaction value; (vi) India's import restricting measures; and (vii) the U.S. measures applied to imports of fish and seafood products.

3.69.  At the meeting of the Committee on Market Access (CMA) on 19 April 2016^[58] new concerns were raised on (i) India's increased import duties on certain telecommunication equipment (raised by European Union, Japan and United States); (ii) the Kingdom of Saudi Arabia's increased import duties on cigarettes and its potential implications on the Gulf Cooperation Council common external tariff (raised by Switzerland); (iii) the Russian Federation's export ban on raw hides and skins (raised by European Union); and (vi) the United States' restrictions on trade in sturgeon, which include an import ban on five species for environmental reasons and labelling requirements for certain hybrid species (raised by European Union). At the same meeting trade concerns were raised again on the Kingdom of Bahrain's apparent violation of bound duties on cigarettes (raised by Switzerland).

3.70.  At the 12 October 2016 meeting of the CMA^[59] trade concerns were raised again on (i) India's increased import duties on certain telecommunication equipment (raised by European Union; Japan; Korea, Rep. of; and United States); (ii) the Russian Federation's export ban on raw hides and skins (raised by European Union) and (iii) United States' trade restrictions of sturgeon and sturgeon products (raised by European Union). At the same meeting new concerns were raised on (i) Argentina's newly adopted law in the auto-part sector, also raised at the Trade‑Related Investment Measures Committee (raised by Canada, European Union, Mexico, Japan, Chinese Taipei, and Turkey); (ii) Croatia, through the European Union, about new regulations concerning certain oil and biodiesel products (raised by Russian Federation); (iii) India's minimum import prices on iron and steel products in breach with the bound duties (raised by Japan); (iv) Republic of Korea's ongoing Schedule modification concerning rice products  (raised by Thailand); and (v) Oman's increased customs duties on tobacco products (raised by European Union, Switzerland and United States).

3.71.  At the meeting of the Committee of Participants on the Expansion of Trade in Information Technology Products^[60] on 18 April 2016, trade concerns were raised regarding India's Customs Notification No. 11/2014 on the increased 10% import duties on certain telecommunication equipment with concessions that are bound at duty-free levels (raised by European Union; Japan; Korea, Rep. of; and United States).

3.72.  In the Committee on Agriculture^[61] a number of questions and concerns were raised with respect to Members' individual notifications and on implementation-related issues under Article 18.6. During the period concerned, a total of 283 questions were discussed on individual notifications (163 questions), Article 18.6 issues (108 questions on 57 implementation-related issues) and on overdue notifications (12 questions). Additional details regarding these questions and concerns can be found in Section 3.6 of this report.

3.73.  At the meeting of the Committee on Customs Valuation on 25 April 2016^[62] trade concerns were raised on (i) the alleged use by Armenia of reference prices (raised by United States); (ii) Indonesia's lack of notifications on Pre-Shipment Inspection measures (raised by United States); and (iii) Ukraine's creation of a database of pre-determined commodities which would act as benchmark values, contained in Resolution No. 724 (raised by European Union, Norway, Switzerland and United States).

3.74.  A number of concerns were repeated at the meeting of the Committee on Import Licensing^[63]  on (i) Indonesia's import licensing regime for cell phones, handheld computers and tablets (raised by United States); (ii)  Brazil's regulatory requirements for imports of nitrocellulose (raised by European Union); (iii) India's import licensing requirements on boric acid (raised by United States); (iv) Bangladesh's import licensing procedures and in particular with respect to the importation of medicines (raised by United States); (v) Mexico's steel import licensing programme (raised by Canada and United States); and (vi) Viet Nam's importation of distilled spirits (raised by United States). New trade concerns were raised on (i) Malaysia's import licensing regime on passenger and commercial vehicles, rice, round cabbage, unroasted green beans, logs and wood, as well as its halal certificate administration (raised by European Union); and (ii) Morocco's import licensing requirements on the importation of certain arms and gear wheels (raised by European Union).

3.75.  At the meetings of the Committee on Subsidies and Countervailing Measures^[64] on 25 October 2015 and 26-27 April 2016, concerns were raised on countervailing duty actions as per Table 3.16

Table 3.16 Concerns raised at the Committee on Subsidies and Countervailing Measures

Measure implemented by	Member(s) raising the concern
Canada
Provisional measure on certain hot-rolled steel plate	Russian Federation
China
Investigation on distillers dried grains with or without solubles (DDGS)	United States
European Union
Investigation on aquaculture products	Turkey
Measures on ductile cast iron tubes and pipes	India
India
Investigation on castings for wind operated electricity generators	China
Peru
Investigation on  biodiesel	Argentina
Russian Federation
Investigation on ferrosilicon manganese	Ukraine
Ukraine
Investigation on light motor vehicles	Russian Federation
United States
Measures on iron and steel products	Turkey
Investigation on  certain cold-rolled steel flat products	Russian Federation
Investigation on new pneumatic off-the-road tires	India
Investigation on hot-rolled and cold-rolled steel products	Brazil
Investigation on sugar	Mexico

Source:   WTO Secretariat.

3.76.  At the same meetings concerns were raised on subsidies as per Table 3.17.

Table 3.17 Concerns raised at the Committee on Subsidies and Countervailing Measures

Measure implemented by	Member(s) raising the concern
Canada
Government support for the Canadian Aircraft Industry	United States
China
Non-notification of alleged subsidies	United States
Non-notification of alleged subsidies in the fisheries sector	United States
Requests for information on certain alleged subsidy programmes	United States
India
Non-notification of alleged subsidies	United States
Export subsidies in the textile and apparel sector	United States
Japan
Government support for the development of regional aircraft	Brazil

Source:   WTO Secretariat.

3.77.  Additional concerns were raised on: (i) elimination of export subsidies by the Members that received extensions under Article 27.4 of the SCM Agreement; (ii) low and declining level of compliance with the notification and transparency obligations in the SCM Agreement; (iii) requests for information pursuant to Article 25.8 and 25.9 (proposal from the United States); and (iv) enhancing fisheries subsidies transparency (United States).

3.78.  At the meetings of the Trade-Related Investment Measures (TRIMs) Committee on 13 June and 17 October 2016^[65] new or continuing concerns were raised on (i) China's provisions on insurance system informatization (raised by United States); (ii) Indonesia's local content requirements for 4G LTE mobile devices (raised by Canada, European Union, Japan, Chinese Taipei, United States); (iii) Indonesia's local content provisions in the energy sector of mining, oil and gas (raised by Canada, European Union, Japan, United States); (iv) Indonesia's newly adopted industry law and trade law (raised by European Union, Japan, United States); (v) Indonesia's minimum local product requirement for modern retail sector (raised by European Union, Japan, United States); (vi) Indonesia's measures addressing local content in investment in the telecommunications sector (raised by Japan, United States); (vii) measures implementing the Russian Federation's import substitution policy (raised by European Union, United States) and (viii) Argentina's Act 27,263 on the development and strengthening of the auto-part (raised by Mexico).

3.79.  At the meetings of the Committee on Anti-Dumping Practices^[66] on 28 October 2015 and 27 April 2016, concerns were raised as per Table 3.18.

Table 3.18 Concerns raised on anti-dumping practices

Measure implemented by	Member(s) raising the concern
Australia
Sunset review on ammonium nitrate	Russian Federation
Brazil
Investigation on PET sheet	Peru
Canada
Duties imposed on oil country tubular goods	Korea, Rep. of
Provisional duties imposed on certain hot-rolled carbon steel plates a and high- strength low-alloy steel plate	Russian Federation
China
Investigation on unbleached sack paper	European Union and Japan
Investigation on optical fibre preforms	United States
Investigation on acrylic fibres	Turkey
Investigation on grain-oriented electrical steel	European Union and Japan
Investigation on polyacrylonitrile fibre	Japan
Dominican Republic
Investigation on steel reinforcing bar	Turkey
Egypt
Investigation on wet wipes	Turkey
European Union
Measure on ammonium nitrate	Russian Federation
Investigation on cold-rolled steel products	China and Russian Federation
Measure on aluminium foils	Russian Federation
India
Procedures to complete the sunset review on cold-rolled stainless steel	United States
Investigation on cold-rolled flat steel products, hot-rolled flat products of alloy or non-alloy steel in coils and not in coils	Japan
Investigation on seamless pipes	China
Indonesia
Sunset review on of hot‑rolled plate	Ukraine
Investigation on wheat flour	Turkey
Sunset review on cold-rolled steel sheet	Japan
Investigation on ammonium nitrate	Australia
Israel
Investigation on float glass	Turkey
Japan
Investigation on potassium hydroxide	Korea, Rep. of
Malaysia
Provisional measures on pre-printed or printed colour coated coils	Viet Nam
Morocco
Investigations on hot-rolled steel sheets and refrigerators	Turkey
Pakistan
Investigation on cold-rolled coils and sheets	Ukraine
Investigations on hydrogen peroxide	Turkey
Russian Federation and Kazakhstan
Investigations on bars and rods, ferrosilicon manganese and seamless pipes and tubes	Ukraine
Thailand
Investigation on hot-rolled non ally steel in coils and not in coils	Turkey
Turkey
Investigation on hot-rolled coil	European Union
Investigation and preliminary measure imposed on safety glass	Israel
Investigation on biaxially oriented polypropylene films	Egypt
Investigation on cotton	United States
Investigation on hot-rolled coil	Japan
Termination on 20 April 2016 of investigation on hot‑rolled coil sheet	Russian Federation
Ukraine
Investigation on certain nitrogen fertilizers	Russian Federation

Source:   WTO Secretariat.

3.80.        Other additional issues and concerns were raised on: (i) recent European Union investigations, including the use of the analogue country methodology (raised by China); (ii) China's upcoming expiration of Accession Protocol Section 15 (a); (iii) Colombia's and United States country-wide duty practice on Chinese products (raised by China); (iv) the recent rapid increase in anti‑dumping measures, especially in the steel sector (raised by Japan, China); (v) the length of the United States anti-dumping measures (raised by Japan); (vi) European Union approaches in anti‑dumping investigations, especially with respect to the metal and steel sector (raised by Russian Federation), (vii) United States' practice for determining the scope of the product under consideration (raised by Russian Federation) and; (viii) India's procedures, transparency and due process in anti-dumping investigations (raised by Chinese Taipei and United States).

3.81.  At the meetings of the Committee on Safeguards^[67], on 26 October 2015 and 25 April 2016, concerns were raised on specific safeguard actions as per Table 3.19.

Table 3.19 Concerns raised at the Committee on Safeguards

Measure implemented by	Member(s) raising the concern
Chile
Investigation on steel wire	Brazil, China, European Union, Mexico and Chinese Taipei
Investigation on steel nails	Brazil, China, European Union, Mexico and Chinese Taipei
Investigation on steel mesh	Brazil, China, European Union, Mexico and Chinese Taipei
Investigation on steel wire rod	United States
Egypt
Investigation on white sugar	European Union
Investigation on PET	European Union
Investigation on automotive batteries	European Union
India
Investigation on hot-rolled flat products of non-alloy and other alloy steel	China; European Union; Japan; Korea, Rep. of; Russian Federation; Chinese Taipei; Turkey; Ukraine, and Unites States
Investigation on hot-rolled flat sheets and plates	Brazil, European Union, Japan, Turkey and Ukraine
Indonesia
Investigation on bars and rods	European Union, Japan and Chinese Taipei
Investigation on coated paper and paper board	Japan
Jordan
Investigation on writing and printing paper	European Union and United States
Malaysia
Investigation on hot-rolled coils	Japan
Morocco
Investigation on cold-rolled sheets and plated or coated sheets	United States
Investigation on paper in rolls and paper in reams	European Union
Investigation on wire rods and reinforcing bars	European Union, Turkey and the United States
Philippines
Investigation on steel angle bars	United States
South Africa
Investigation on certain flat-rolled products of iron, non-alloy steel or other alloy steel	Brazil; European Union; Japan;  Korea, Rep. of; Turkey and the United Sates
Thailand
Investigation on hot-rolled steel flat products	India and Turkey
Tunisia
Investigation on ceramic tiles	European Union and Turkey
Investigation on glass bottles	European Union
Investigation on MDF fibre boards	European Union
Turkey
Investigation on porcelain and ceramic tableware, kitchenware	European Union
Investigation on cellular portable telephone	China; European Union; Korea, Rep. of; United States and Viet Nam
Investigation on wallpaper and similar wallcoverings	European Union
Ukraine
Investigation on flexible porous plates, blocks and sheets of polyurethane foams	European Union
Viet Nam
Investigation on monosodium glutamate	Thailand
Investigation on semi-finished and certain finished products of alloy and non-alloy steel	China, European Union and Japan

Source:   WTO Secretariat.

3.82.  Other issues and concerns were discussed: (i) the United States potential safeguard action on aluminium (Russian Federation); and (ii) increasing number of safeguard actions taken around the world (Australia; Brazil; Canada; European Union; Israel; Japan; Korea, Rep. of; Malaysia; Mexico; New Zealand; Norway; Pakistan; Chinese Taipei and the United States).

3.83.  At the meeting of the Working Party on State Trading Enterprises^[68] on 12 October 2015 concerns were raised regarding (i) the operation of Canada's provincial and territorial liquor control authorities, differential tax treatment, variable mark‑ups and selective criteria for the liberalization of alcohol sales; (ii) the activities of two Indian enterprises, the Tamil Nadu State Marketing Corporation Limited and the Food Corporation of India; (iii) the functioning of Zespri Group Limited, a state trading enterprise for kiwi fruit exports maintained by New Zealand; and (iv) a counter-notification relating to the non-notification by China of its state trading enterprises^[69]; (v) the non-notification by the Russian Federation of its state trading enterprises, including the non-notification of enterprises considered by some delegations to be state trading enterprises, including Gazprom and the Russian United Grain Company and (vi) the overall poor level of compliance among Members with the notification obligations of Article XVII of GATT 1994 regarding state trading enterprises.

3.84.  At the Working Party meeting of 9 June 2016^[70] new or continuing concerns were raised on (i)  China's notification of its state trading enterprises (raised by Australia, European Union and United States); (ii) Tunisia's Direction de la Pharmacie et du Médicament (raised by European Union); (iii) Canada's provincial and territorial liquor control boards (raised by European Union); (iv) India's Food Corporation on India and Tamil Nadu Marketing Corporation Ltd. (raised by European Union); (v) the possible changes to New Zealand's Kiwifruit Export Regulations of 1999 (raised by Chile and European Union); (vi) the lack of notifications by the Russian Federation in general and the non-notification of the Russian United Grain Company (raised by European Union and United States); (vi) the non‑notification by the European Union of Alko Inc. of Finland (raised by Russian Federation); and (vii) the failure of the United Arab Emirates to submit a notification (raised by United States).                  

3.85.  At the meetings of the Committee on Balance-of-Payments (BOPs) Restrictions consultations were held with Ecuador^[71] and concerns were repeated by a number of Members on the introduction of an import surcharge for BOP purposes, although some Members expressed support for the measures.

3.86.  At the meetings of the Council for Trade in Services (CTS)^[72] on 18 March and 17 June 2016, concerns were raised about regulatory measures that impede Mode 4 access to the United States, Canada and the United Kingdom (raised by India). At those same meetings, and again at the CTS meeting held on 10 October 2016, concerns were repeated about certain measures related to Ukraine's reforms of its Unified Gas Transportation System (raised by Russian Federation).  These concerns were first mentioned in November 2014, and have been restated at all subsequent regular meetings of the Council for Trade in Services.^[73]  

3.87.  In the Committee on Trade and Development (CTD), LDCs raised concerns with regard to the implementation of the duty-free and quota-free (DFQF) market access decision for LDCs. A proposal was submitted by Benin, on behalf of the LDC Group, on the draft terms of reference for a Secretariat study on DFQF implementation.^[74] In the CTD's Dedicated Session on Small Economies, trade concerns were expressed on how small and vulnerable economies could better integrate into global value chains in goods and services trade.^[75]  

3.88.  At the meeting of the Committee on Trade and Environment (CTE) on 6 October 2015, discussions continued on the effect of environmental measures on market access, including in relation to measures aimed at fighting IUU fishing. In this context, several delegations^[76] underscored the environmental and socio-economic impacts of IUU fishing, while urging Members to take the interests of developing country exporters into consideration in their measures to combat IUU fishing. At the 30 June 2016 CTE meeting^[77] discussions continued on the effect of environmental measures on market access. In this context, some delegations expressed the concern that such measures, including certain certification schemes and other technical requirements could have a negative impact on developing countries, in particular for SMEs.

3.89.  The above Section shows that WTO Members continue to use a wide range of WTO bodies to raise trade concerns. A larger number of trade concerns on measures implemented by WTO Members were raised during the review period compared to the same period last year, in particular in the Council for Trade in Goods, the Committee on Market Access, the Committee on Anti‑Dumping Practices, the Committee on Safeguards and the Committee on Subsidies and Countervailing Measures. Several measures were raised in more than one WTO body during the review period, perhaps suggesting that the trade concerns raised involve increasingly complex and cross-cutting issues. This may also provide an indication that WTO Members are soliciting multiple platforms within the WTO committee structure to address various aspects of such trade concerns. From a systemic point of view this is significant because of the increased transparency which it brings, but also because it demonstrates that Members are actively utilizing the WTO Committees to constructively engage trading partners on potential areas of trade friction.

3.6  Policy Developments in Agriculture

3.90.  The Committee on Agriculture (CoA) provides a forum for Members to discuss matters related to agriculture trade and to consult on matters relating to the Members' implementation of commitments under the Agreement on Agriculture (AoA), including rules-based commitments. The review work by the CoA is based on notifications Members make on their commitments. There is also a provision in Article 18.6 that allows Members to raise any matter relevant to the implementation of the commitments under the AoA.

3.91.  In the framework of the CoA meetings in March, June and September 2016, Members posed a total of 283 questions, including both questions on individual notifications and under Article 18.6, with a large number of these questions directed at issues related to domestic support notifications or implementation of domestic support commitments.

3.92.  In total, 13 Members raised 108 questions on 57 implementation-related issues (Article 18.6) in the March, June and September 2016 CoA meetings. As can be seen in Chart 3.17, the average number of questions raised under Article 18.6 per meeting has been increasing since 2011 reaching an all-time high in 2016 with an average of 36 questions per meeting with a total of 108 questions this year so far. These numbers include questions that were repeated from one meeting to the next because responses were not provided in the relevant time-frames.

Chart 3.17 Average number of questions raised under Article 18.6 per meeting (1995‑2016^a)

a             Data for 2016 relating to the CoA's March, June and September meetings.

Source:   WTO Secretariat.

3.93.  Out of the 57 implementation‑related issues raised in the CoA during the review period, 45 issues were discussed for the first time, whereas the remaining issues had been discussed one or more times in previous years under matters raised under Article 18.6. Table 3.20 indicates the specific issues relating to implementation commitments that were discussed for the first time in the CoA during the March, June and September 2016 meetings. The complete questions, and answers, can be accessed through the Agriculture Information Management System (AG IMS) by using the ID numbers provided in the table.^[78]

3.94.  During the reported period, Canada's wine sale policy and its new milk ingredient class as well as the European Union's agriculture policy garnered considerable scrutiny from the membership. Close to half of the new issues raised in the March, September and June 2016 CoA meetings related to domestic support policies. Measures benefiting producers of cotton, dairy, rice, sugar, soybeans and the ornamental horticulture industry were questioned. Members also requested clarification on insurance schemes allegedly implemented by Australia and India. Similarly, questions were raised regarding agricultural policies of a general scope (e.g. China's agriculture policy, Turkey's domestic support policy and U.S. farm support programmes). Market access was another area of interest to Members where they raised questions on measures that restricted, or had the potential to restrict, the trade of agricultural products (e.g. Australia's Biosecurity Act, France's Amendment No. 367 to the proposed law on biodiversity, Peru's price band system, Tanzania's restrictions on sugar imports and the Russian Federation's trade measures affecting Ukrainian transit of agricultural products to Kazakhstan). There were eight questions raised to seek clarification in the area of export subsidies (e.g. European Union's export subsidies, Pakistan's export subsidies for sugar exports, Turkey's fruit and vegetable export subsidies and Zambia's public stocks and exports of maize). In the area of export restrictions and prohibitions, Members requested Argentina to provide additional information regarding its commodity and grain export policies.

Table 3.20 Article 18.6 new issues

Question Summary	Question raised by	Products	Number of questions	CoA Meetings	ID number
Canada's new milk ingredient class	Australia, India, New Zealand, United States	Dairy, milk, milk powders, butter, cheese, other	8	79, 80, 81	81001, 81009, 81049, 81054, 81055, 81056, 80003, 80005, 80006, 80025, 79035
Canada's wine sale policy	Australia, European Union, New Zealand, United States	Alcoholic	8	79, 80, 81	81003, 81011, 81024, 81046, 81097, 80008, 80009, 80094, 80095, 79003
European Union's agriculture policies	Australia, India, New Zealand	Dairy, milk, milk powders, butter, cheese, other, bovine, swine,	5	80, 81	81005, 81058, 81060, 81061, 80010
India's new crop insurance scheme	Canada, European Union		3	79, 80	80068, 79024, 79051
Japan's MARUKIN Stabilization Programme	European Union	Swine	2	79	79025, 79052
Moldova's poultry tariffs	United States	Poultry	2	80, 81	81014, 80028
Russian Federation's measures affecting Ukrainian transit of agricultural products to Kazakhstan	Ukraine		2	79, 80	80065, 79084
Thailand's export of rice from government stocks	European Union	Rice	2	80, 81	81031, 80045
Turkey's fruit and vegetable export subsidies	European Union	Fruit and vegetables, fresh vegetables, processed vegetables, roots and tubers, fruit, nuts, processed fruit or nuts, fruit and vegetable beverages	2	79, 80	80056, 79031
Turkey's rice support	European Union	Rice	2	79, 80	80052, 79029
Turkey's support scheme to certain agricultural sectors	European Union	Fruit	2	79, 80	80049, 79026
U.S. New Cotton Ginning Cost Share programme	Brazil, India	Cotton	2	80, 81	81069, 80096
U.S. soybean programmes	Brazil	Fresh vegetables, seeds	2	79, 81	81098, 79095
Argentina's commodity and grain export policy	European Union	Coarse grains	1	80	80031
Argentina's support for dairy producers	European Union	Dairy, milk, milk powders, butter, cheese, other	1	80	80032
Argentina's tax policies	Ukraine		1	80	80059
Australia's Biosecurity Act of 2015	India		1	81	81045
Australia's Farm Insurance Advice Scheme	India		1	79	79085
Brazil's soft loans to sugar cane growers for cane planting	European Union	Sugar, cane or beet sugar, other	1	80	80033
Canada's Growing Forward policy framework	India		1	81	81047
Canada's STE notification on dairy products	New Zealand, United States of America	Dairy, milk, milk powders, butter, cheese, other	1	81	81010, 81096
Canada's support for the ornamental horticulture industry	India		1	81	81048
China's Agriculture Policy	Canada	Cereals, wheat, corn, rice, malt, coarse grains	1	79	79030
China's decision to end corn floor price	European Union	Corn	1	80	80036
China's environmental programmes	Australia		1	81	81050
China's regional assistance programmes	Australia		1	81	81053
European Union's export subsidies	Japan		1	80	80013
France's amendment No. 367 to the proposed law on biodiversity	Indonesia		1	79	79066
Japan's Act on price adjustment of sugar and starch	European Union	Sugar, cane or beet sugar, other	1	80	80042
Malaysia's Table ES:2 notification	European Union	Eggs	1	81	81027
Pakistan's export subsidy for sugar exports	European Union	Sugar, cane or beet sugar, other	1	81	81028
Pakistan's increase on import duties on milk powder including whey	European Union	Milk powders	1	81	81030
Peru's price band system	Brazil		1	79	79094
Statement by the European Union on consultations under Article 5.7	European Union	Butter	1	79	79034
Tanzania’s restriction on sugar imports	Thailand	Sugar, cane or beet sugar, Other	1	81	81021
Thailand's rice policies	United States	Rice	1	79	79005
Turkey's domestic support policies	Canada		1	81	81064
Turkey's subsidies aimed at incentivising the use of domestic dairy	New Zealand	Dairy, milk, milk powders, butter, cheese, Other	1	81	81065
U.S. Farm Support Programmes	India		1	79	79086
U.S. Global Food Security Act	India		1	81	81067
U.S. increase in sugar TRQ	India	Sugar, Cane or beet sugar, Other	1	81	81068
U.S. Price Loss Coverage and Agriculture Risk Coverage programmes	India		1	81	81070
U.S. purchase of cheese stock	Australia	Cheese	1	81	81066
Viet Nam's increase of excise duties for wine and spirits	European Union	Alcoholic	1	81	81032
Zambia's public stocks and exports of maize	European Union	Corn	1	81	81033

Source:   WTO Secretariat.

3.95.  Other measures that were discussed related to follow-up questions on persistent areas of concern. A number of these issues have been raised in the CoA more than 21 times with as many as 31 questions (e.g. Costa Rica's compliance with AMS commitments). In the September 2016 CoA meeting, Costa Rica noted, in  response to the U.S. reiterated concern regarding its continued lack of compliance with its AMS commitments, that it had submitted its domestic support notification for 2015 where it showed domestic support values well below its AMS commitments. Brazil faced for the sixteenth time requests for data on domestic and international shipments of particular products made as part of two of its domestic support programmes. Similarly, India's sugar export subsidies and Turkey's destination of wheat flour sales were the subject of questioning in the CoA for the twelfth and ninth time, respectively. Other issues subject to considerable scrutiny were Canada's tariff-rate quota for cheese, Turkey's domestic support and export subsidies, and India's importation of apples (Table 3.21).

Table 3.21 Questions previously raised under Article 18.6

Question Summary	Question raised by	Products	Number of questions	Number  of CoA meetings in which the issue was discussed	CoA meetings	ID number
Costa Rica's compliance with AMS commitments	Canada, European Union, United States	Rice	31	21	61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81	81012, 80026, 79004, 78005, 77002, 77070, 76052, 75031, 75059, 74023, 73002, 73037, 72005, 72050, 71030, 70008, 69028, 69029, 68008, 68022, 67006, 67007, 66003, 66004, 65002, 65003, 64002, 64003, 63008, 62007, 61004
India's sugar export subsidies	Australia, Brazil, Colombia, European Union, Thailand,	Sugar, cane or beet sugar, other	21	12	50, 51, 52, 73, 74, 75, 76, 77, 78, 79, 80,  81	81025, 81062, 80011, 80037, 79023, 79047, 78016, 78017, 77035, 77044, 76016, 76025, 76050, 75028, 74007, 74055, 73036, 73055, 73067, 73068, 52005, 51001, 50003
Brazil's domestic support programmes	United States	Wheat, corn, rice, malt, coarse grains, cotton	16	16	65, 66, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81	81008, 80024, 79001, 78002, 77066, 76039, 75023, 74021, 73026, 72051, 71028, 70007, 69027, 68007, 66002, 65011
Turkey's destination of wheat flour sale	United States	Wheat	11	10	71, 72, 73, 75, 76, 77, 78, 79, 80, 81	81015, 80029, 79033, 78008, 77071, 75001, 75037, 73042, 72057, 71034
Turkey's domestic support and export subsidies	Japan, European Union, New Zealand	Fruit	9	7	73, 74, 75, 77, 78, 79, 80	80012, 80017, 80048, 79027, 78044, 77047, 75069, 74020, 73056
India's importation of apples	Chile, European Union, New Zealand, United States	Fruit	7	4	78, 79, 80, 81	81006, 80014, 79067, 78084, 78085, 78086, 78088
Canada's compositional standard for cheese	Australia, New Zealand	Dairy, milk, milk powders, butter, cheese, other	6	6	48, 49, 50, 51, 80, 81	81002, 80004, 51003, 50001, 49002, 48010
Canada's tariff-rate quota for cheese	New Zealand, Norway, Switzerland, United States	Cheese	6	5	75, 76, 77, 80, 81	81004, 81051, 81052, 80001, 80002, 80007, 77037, 77001, 76023, 75026
Sri Lanka's increase in milk powder tariffs	Australia, New Zealand	Dairy, milk, milk powders, butter, cheese, other	5	3	78, 80, 81	81007, 81063, 80016, 78001, 78022
India's export assistance programmes	United States	Meat, bovine, swine, sheep and goat, poultry, horses, other, milk, sugar, cane or beet sugar, other	4	4	78, 79, 80, 81	81013, 80027, 79002, 78007
China's maize subsidies	European Union	Corn	3	3	77, 78, 79	79022, 78015, 77043
European Union's dairy policies	Australia, New Zealand	Dairy, milk, milk powders, butter, cheese, other	2	2	78, 79	79032, 78078

Source:   WTO Secretariat.

3.7  General Economic Support^[79]

3.96.  According to information provided to the Secretariat or obtained through other sources, 112 new general economic support measures were put in place by WTO Members during the review period. This corresponds to a monthly average of nine measures, a slight decrease compared to the monthly average of 11 new measures recorded in the previous annual report at the end of 2015.^[80] Out of the 112 new measures, 25 were not confirmed by the Members concerned.

3.97.  Annex 4 covers various economic support measures targeting specific sectors and industries, or multiple sectors. The main beneficiaries of economic support measures recorded during the review period included large-scale, multi-sector financial aid covering various sectors such as agriculture, forestry, construction, medical/pharmaceutical. Several programmes provided support to agriculture and food, and in particular the dairy sector, followed by aid schemes or measures supporting energy, transport and infrastructure programmes. A number of programmes provided specific support to SMEs and to export-related activities or enterprises. Others included import-related support, domestic content programmes and consumer credit measures. A number of programmes recorded during the review period were of a temporary nature and some included the reduction of subsidies.

3.98.  Gathering and verifying information on general economic support measures continues to represent a significant challenge. The number of WTO Members that provided information on new general economic support measures implemented during the review period remained low and the lack of active participation by WTO Members in providing relevant information on such support remains a concern. For the verification exercise, the WTO Secretariat reverted to a large number of WTO Members for their confirmation of such measures, including many obtained from other official sources. Several WTO Members requested that some of the measures relating to support programmes in their economies not be included in this monitoring report.

3.99.  Thus, it is important to emphasise that Annex 4 of this report seeks to cover all general economic support measures which may have potentially important trade-related effects. However, it is imperative to recognize that it is far from straightforward to unambiguously determine whether some measures are in fact impacting trade flows. This is an important difference between the current situation and the immediate aftermath of the onset of the financial crisis in 2008 where several subsidy programmes included features which had real potential to curb international trade. 

General Economic Support Measures since 2008

3.100.  The following Section takes a closer look at the trends that have characterized the general economic support measures captured by the monitoring reports since October 2008.

3.101.  A total of 849 general economic support measures have been recorded by the WTO Secretariat since the beginning of the monitoring exercise. A quarter of these measures were introduced in direct response to the financial crisis. As of November 2009, the implementation of new general economic support measures decelerated substantially (Chart 3.18). In the period under review, the monthly average of nine new measures resulted in a slight decrease compared to the monthly average quoted in the last annual report, but still remained the third-highest since the beginning of the monitoring exercise.

Chart 3.18 General economic support measures

(average per month)

 

Note:       Values are rounded.

Source:   WTO Secretariat.

3.102.  According to information recorded by the WTO Secretariat, large-scale, multi-sector or economy-wide stimulus packages constitute the bulk of general economic support measures introduced by WTO Members since October 2008. These types of measures were extensively used during the first three years of the monitoring exercise. Multi-sector measures have been traditionally very broad and can cover, simultaneously and under one programme, a diverse range of sectors from agriculture and forestry to medical and shipbuilding. Separately, the banking and financial sectors received a very significant share of the general economic support in 2008-2009. These subsidies were all but eliminated in the following years.

3.103.  The agriculture and food sectors have been the second largest recipient of general economic support measures. A variety of objectives are covered by these measures, including long-term improvements in productivity, incentive packages through tax breaks and preferential credit lines.

Chart 3.19 Sectors covered by economic support measures, October 2008 – mid‑October 2016

(% share of total number of measures)

Source:   WTO Secretariat.

3.104.  WTO Members have provided regular support to the automotive sector since the beginning of the monitoring exercise.  SMEs have also been the beneficiaries of economic support measures, with aid schemes, credit guarantee programmes, incentive packages and improved access to investment and capital, representing the more prevalent assistance provided. Other sectors which have received general economic support include the energy and the transport sectors. The remaining areas of support cover, amongst others, manufacturing (other than SMEs), infrastructure, construction, export credits, telecommunications and investment.

3.105.  Typically, general economic support measures have been temporary in character. This is especially the case for those general economic support measures that were introduced in response to the financial crisis. Based on the available information, the general economic support measures that have been reduced or eliminated, aside from the financial and credit sectors, are mostly found in the energy, food and agriculture sectors. A noteworthy example is the reduction in 2015-2016 by several countries of various fuel price support schemes, likely in response to the fall in the price of oil.

3.106.  There is little doubt that the universe of general economic support measures provided by WTO Members is much greater than what this exercise has been able to record. Similarly, it has been clear from the very beginning of the monitoring exercise that the number of such measures recorded is very much a function of the transparency which surrounds the granting of subsidies in individual Members. Transparency is a prerequisite for providing a balanced account of the overall number of general economic support measures introduced and it remains that some Members have featured more frequently in Annex 4 because of such transparency, despite the fact that many other Members have applied similar measures.

3.107.  General economic support measures will likely remain attractive to governments, particularly for strategic sectors, despite the often significant financial cost of such programmes. Subsidy programmes do not per se impact on trade. However, because of their potential to be trade distorting, guidance from WTO Members on how the trade monitoring report might better capture such trade effects would be welcome.

3.8  Overview of Trade Policy Reviews

3.108.  Between mid-October 2015 and mid-October 2016, 26 Trade Policy Reviews (TPRs) were undertaken. The TPRs provided the WTO membership with a better understanding of trade and economic developments in each of the Members reviewed and constitute a fora for constructive and insightful discussions among participants.^[81]

Table 3.22 Trade Policy Reviews from mid-October 2015 to mid-October 2016 - summary tariff indicators

	Simple applied average (%)			Duty freea	Non- ad valorema
	Total	WTO agriculture	WTO non-agriculture
SACU (2015)	8.3	9.9	8.0	55.7	3.8
Jordan (2015)	10.2	16.8	9.1	52.4	0.1
Thailand (2015)	13.4	34.7	10.1	17.6	7.8
Haiti (FY2014/15)	4.9	8.6	4.4	44.2	0.0
Georgia (2015)	2.0	6.7	0.8	79.6	4.5
Morocco (2015)	12.5	30.0	9.5	0.1	0.2
Fiji (2015)	11.2	12.5	11.0	4.3	4.5
Turkey (2015)	12.8	49.0	5.5	23.5	1.7
Maldives (2015)b	6.0	22.5	2.4	67.0	3.9
Saudi Arabia, Kingdom of (2015)	5.2	5.9	5.1	11.0	1.5
Ukraine (2015)	4.9	9.6	3.6	37.9	1.0
Malawi (FY2015/16)	12.7	18.8	11.6	31.7	0.0
Honduras (2015)	5.9	10.7	5.1	48.1	0.1
Albania (2015)	4.2	8.7	3.0	48.6	0.0
United Arab Emirates (2015)	4.7	5.5	4.5	11.2	0.3
Zambia (2016)	12.9	18.9	11.9	29.9	2.2
Tunisia (2016)	14.1	32.1	9.6	46.6	0.0
China (2015)	9.5	13.8	8.6	9.7	0.5
Singapore (2016)	0.0c	0.0c	0.0	99.9	0.1
El Salvador (2015)	6.3	12.5	5.2	47.8	0.0
Russian Federation (2016)	8.3	14.6	6.5	16.0	14.8
Korea, Rep. of (2016)	14.1	60.0	6.6	15.9	0.8

a            % of total tariff lines.

b            As of end-October.

c            ITA For six tariff lines a specific rate is applied.

Note:       Calculations are based on national tariff line levels; including AVEs as available, in case of unavailability the ad valorem part of alternate and compound rates is included; excluding in-quota rates. Figures in brackets refer to the year of the tariff schedule applied.

Source:  WTO calculations, based on data received by the authorities.

Southern African Customs Union (Botswana, Lesotho, Namibia, South Africa and Swaziland): 4 and 6 November 2015

3.109.  Members praised the SACU States for their commitment to the multilateral trading system and their active participation in the WTO. Botswana was particularly applauded by Members for having ratified the Amendment of the TRIPS Agreement on Public Health, as well as the TFA, and for its timely notification of its Category A commitments. Lesotho^[82], Namibia, South Africa and Swaziland were encouraged to follow suit. Members noted that SACU's common trade regime had remained broadly unchanged since 2009. The areas so far harmonized were mostly customs-related, including tariffs, other border taxes and trade remedies. The SACU States were urged to pursue their trade liberalization reforms, to address the high level of inequalities within and between their economies and to improve the implementation of their multilateral commitments on goods and services. The five countries were also encouraged to ensure that their RTAs were consistent with WTO provisions, to comply with their notification obligations - particularly in the areas of SPS, TBT and import licensing - and to improve their business environments. South Africa was encouraged to expedite its technical evaluation process on imported electro-technical products so as to limit administrative delays. 

3.110.  Some delegations raised concerns regarding declining Government revenue in some SACU countries, particularly those for which the Common Revenue Pool was very important. The complexity of the SACU Common External Tariff (CET) and its high rates on selected products was also a source of concern for delegations. Members enquired about the WTO compliance of the SACU CET non-ad valorem rates, while SACU States have individually bound their tariffs at ad valorem rates only. Delegations expressed interest in current regional initiatives in the SACU non-harmonized areas, the implementation and benefits accrued from SACU states' RTAs, especially in the framework of SADC and the EPA with the European Union, the implementation of the 2002 SACU Agreement, including the operationalization of SACU institutions, SACU's plan to review its revenue sharing mechanism, and the relatively large number of anti-dumping measures taken by SACU during the review period. In the area of mining, information was sought on the mining policies implemented by each of the countries - in particular, the administration of mining permits, assessment of their environmental dimensions and foreign participation. Members sought clarification on the consistency with the WTO SPS Agreement of some import requirements imposed by South Africa on animal products and about the administration of tariff quotas on a list of agricultural products.

Jordan: 17 and 19 November 2015

3.111.  Delegations praised Jordan's commitment to the WTO and the multilateral trading system, acknowledging in particular Jordan's constructive role in the DDA negotiations, i.e. its leadership role as former coordinator of the Arab Group and as current coordinator of the Asian Group of Developing Countries. They welcomed the notification of Jordan's Category A commitments under the TFA and the adoption of measures such as the Golden List, single window, single point of contact to license investment activities in Jordan and the implementation of ASYCUDA World. Many saluted the negotiations Jordan had undertaken towards accession to the GPA and encouraged Jordan to ratify the TFA. Delegations further commended Jordan for the resilience of its economy despite adverse circumstances relating, inter alia, to the global economic crisis, regional conflict, influx of refugees, decline in tourism, fall in remittances receipts and disruption of gas flows. They applauded the Government for its macroeconomic policies and its planning for future growth as set out in the Jordan 2025 National Vision and Strategy, which would help to stimulate economic growth and social inclusiveness, including gender equality. Several delegations additionally took positive note of the recent enactments of the Investment Law, Customs Law, Income Tax Law, Competition Law, Public Private Partnership Law and the simplification of public procurement rules that would improve the competiveness and transparency of the economy and trade environment. Members supported Jordan's request for a three-year extension in order to phase out an export subsidy programme that is currently under discussion in the CTG.

3.112.  Notwithstanding the positive trends recorded in these areas, Members urged Jordan to further remove restrictions on foreign investment, promote protection and enforcement of IP rights and reduce tariff and non-tariff measures. While Jordan's performance in the agriculture sector was praised, Members underscored the insufficient water supply and encouraged the Government to develop a more sustainable agriculture strategy. Participants also sought additional information on land ownership restrictions, minimum capital requirements, equity ownership restrictions, restrictions on foreign investment in certain service sectors, such as wholesale and retail trade, safeguard measures on A4 writing and printing paper, the import processing fee, some SPS measures and the acceptance of test certificates for certain goods from the country of export.

Thailand: 24 and 26 November 2015

3.113.  Members commended Thailand's commitment to the multilateral trading system and its active participation in the DDA negotiations, including in the expansion of the ITA. Its recent ratification of the TFA, observer status to the Committee on GPA and the granting of Duty Free Quota Free treatment to LDCs, as well as the intention to accept the Protocol of Amendment to the TRIPS Agreement by MC10, were widely appreciated. Members took positive note of Thailand's trade facilitation initiatives, including the signature of the Revised Kyoto Convention. Several Members raised Thailand's increased involvement in RTAs and expressed the hope that these schemes would contribute to further enhancing trade under the multilateral trading system. Members congratulated Thailand for its macro-economic policy mix that served to ensure the resilience of its outward-oriented economy and to maintain financial stability despite continued endogenous and exogenous challenges relating to, inter alia, lower domestic spending, an ageing population, rising labour costs, limited production capacity in high technology and political issues. Several delegations commended Thailand's unilateral lowering of tariffs on certain products.

3.114.  Notwithstanding these positive trends, Members also pointed towards areas where Thailand could improve its trade policies and practices. They made recommendations for Thailand to avoid the "middle income trap" and promote growth. These involved, inter alia, considering options for reducing state involvement in the economy, removing existing FDI restrictions, developing transport infrastructure, focusing on a digital economy, moving manufacturing capacity up the value chain and pursuing structural reforms in areas such as taxation, competition policy, state-owned enterprises and transparency. Some Members urged Thailand to make amendments to improve its complex tariff structure. Others pressed for Thailand to improve the enforcement of its competition legislation and address issues relating to price controls. Some delegations welcomed action to strengthen Thailand's IP rights regime, but expressed concern about its enforcement. They encouraged the Government to address and prioritize longstanding challenges including the patent applications backlog. A few delegations encouraged Thailand to review and simplify its allegedly discretionary excise taxes on alcoholic beverages and automobiles. A few Members encouraged Thailand to review some of its SPS and TBT measures, to make greater use of international standards and recognize disease- and pest-free areas. They noted that TBT and SPS measures on, for example, ceramic tiles, ractopamine maximum residue limits, beef and poultry requirements, food inspection fees and alcoholic beverage labelling, as well as import licensing requirements for automotive tyres, remained more restrictive than necessary. Some delegations also urged Thailand to move towards a more liberal trade regime for agricultural products as, despite its global competitiveness, Thailand's agriculture remained protected with particularly high tariffs, TRQs, special safeguards, significant domestic support spending and other behind the border barriers. In the area of services, Thailand was encouraged to promote sustainable growth by furthering multilateral liberalization in banking, insurance, telecommunications, real estate and professional services. Thailand's intensified recourse to safeguard measures was noted by several Members. Some delegations also encouraged Thailand to improve its WTO notification record.

Haiti: 2 and 4 December 2015

3.115.  Delegations congratulated Haiti on its success in maintaining macroeconomic stability and welcomed the country's objective to achieve the status of an emerging economy by 2030. They praised Haiti's efforts to improve the business climate, taking particular note of the "Haiti is open for business" campaign. Members also observed that overall tariff protection remained relatively low although some tariffs had been increased since the last review. Concerns were expressed about the impact of natural disasters, such as the devastating earthquake in 2010, droughts and hurricanes, on economic growth. In this context, Members recalled various bilateral initiatives that had been taken over the past years to assist the people of Haiti. They also took note of structural obstacles which prevented achieving more dynamic growth, including a weak infrastructure, electricity shortages, limited access to credit and a downturn in external funding.

3.116.  Members encouraged the Government to improve the country's business environment by modernizing business-related legislation i.e. the Commercial Code, reinforcing governance and ensuring long-term food security. To promote economic stability and growth, Haiti was also encouraged to diversify its exports with respect to destination markets as well as products, to engage in the necessary reforms to enhance competitiveness, to ratify the TFA and to adopt WTO customs valuation rules. Areas of particular concern to Members were Haiti's import licensing procedures and various fees and charges applied on imports that resulted in higher import costs. Enquires were made about Haiti's plans to align its tariff lines with the CARICOM common external tariff and to join CARICOM's single market. Similarly, several delegations requested further clarification on clearance times at customs, discriminatory taxation of imported and domestic products, high port fees, energy subsidies, legislation in the mining sector, fishing rights, WTO notifications, the delay in implementation of certain trade-related legislation, in particular IP rights and plans to formalize trade with the Dominican Republic.

Georgia: 19 and 21 January 2016

3.117.  Georgia's trade openness and its commitment to the multilateral system were highlighted during the Review. Members commended Georgia for the ratification of the TFA, which would strengthen Georgia's role as a trade transit corridor in the region, and its notification of Category A, B and C commitments. Members noted Georgia's observer status to the GPA and its current efforts towards joining this Agreement. Members also welcomed the announcement that Georgia was considering becoming party to the expanded ITA, which would constitute a significant step forward for attracting further investment. Georgia's efforts to integrate into the world economy, as evidenced by the progressive liberalization of its trade regime and its active participation in numerous multilateral, regional and bilateral trade agreements, were applauded. Members noted that Georgia's economy had performed well in recent years, as it continued to meet the challenges posed by the slowing economies of its main trading partners and the depreciation of their currencies. Georgia's resilience was demonstrated by a relatively healthy GDP growth rate, a good and improving international ranking in terms of ease of doing business and prudent macroeconomic policies. In this context, Members commended Georgia for its open, transparent and predictable trade and investment regimes. They underscored that Georgia's customs procedures had been simplified and that the Georgian MFN tariff rate of 2% was one of the lowest in the world, with almost 80% of imports were duty free. Georgia had also undertaken reform initiatives aimed at streamlining, liberalizing and simplifying trade regulations and their implementation, as part of the commitment of the Georgian government towards aligning its legislative and regulatory framework to that of the European Union. Some Members expressed the view that WTO-consistent implementation of the commitments in the Association Agreement with the European Union, including provisions of the Deep and Comprehensive Free Trade Agreement, would serve to improve Georgia's trade and investment environment.

3.118.  While there were many positive trade and economic developments during the review period, Members in their statements and written questions had concerns that reduced exports and remittances have led to increasing external vulnerability, and that further structural reforms were required in order to strengthen Georgia's resilience to shocks, attract additional foreign direct investment, diversify its industrial production, improve productivity and increase exports. In the area of tourism Members highlighted that, while the tourism sector had performed well in recent years, there was further potential for growth. On SPS, Members were interested in discussing how Georgia would bring its regulatory system on food safety into compliance with the SPS Agreement. Georgia was encouraged to advance the regulatory framework and infrastructure for animal health control and to improve efficiency, hygiene and quality standards in agro-processing. Enquires to Georgia from Members included the issue of auctions for spectrum allocation in telecommunications, aspects of the new Tax Code affecting investors in Georgia, and technical issues regarding the launch of an e-visa portal for tourists wishing to visit Georgia.

Morocco: 2 and 4 February 2016

3.119.  Members praised Morocco's strong support of the WTO and congratulated Morocco for its social and economic development since 2009, high investment to GDP ratio and the contribution of foreign direct investment to economic growth in recent years. It was noted that Morocco currently ranks among the world’s leading exporters of, inter alia, automotive products, tourism services and horticultural products. Recent economic and structural reforms to improve its business environment were raised. In the area of trade facilitation, Morocco had introduced the PortNet electronic platform and improved the computer system for Customs administration. In the services sector, liberalization of several transport services had spurred massive infrastructure investment and diversification of the economy through the development of other sectors. Relating to agriculture, Morocco was commended for the adoption of a consistent long term policy under the Plan Maroc Vert. Other recent legislative and institutional reforms concerned standards and technical regulations, the establishment of the new Food Products Health Agency and electronic access to Government procurement. Members also noted Morocco's numerous trade agreements with over 50 countries and its negotiations on a Deep and Comprehensive Free Trade Agreement with the European Union.

3.120.  At the same time, delegations raised a number of issues. On tariffs, several inquired about Morocco's high and variable tariffs and the Government's plan to reduce the applied rates of its 792 tariff lines that still exceed their bound levels. The new draft law on foreign trade was source of some concern, as delegations enquired about its impact on the openness of the domestic market. Information was additionally sought about Morocco’s industrial acceleration plan and its potential effect on employment. Prospects regarding Morocco's investment policy reform and Morocco’s new renewable energy policy were of interest to some delegations as was market access for foreign suppliers. In the mining sector, participants asked about facilitation of foreign investment, and noted that the phosphate industry remained largely organized around a State-trading monopoly. In the area of IP, Members expressed interest in Morocco's protection against counterfeiting and against piracy of audio-visual materials, new laws on trademarks and geographical indications, planned changes to the functioning of the Copyright Office and consistency of the national compulsory patent licensing system with the TRIPS Agreement. On SPS, Members sought more information on SPS regulations, samples collection by the Food Products Health Agency and the recent export restrictions on the food product agar agar. Delegations also expressed concern about the increased use of trade-remedy measures. Other questions raised concerned the functioning of the Competition Council, national preferences provisions in public purchases and under the New Public-Private Partnership Law, new labelling requirements and customs valuation procedures, market access conditions for foreign shipping companies and foreign banks, the Government’s new strategy on postal services, pending notifications on, inter alia, state aid and state-trading enterprises and the sustainability and transparency of Morocco’s fishing policy. Participants encouraged Morocco to eliminate various other duties and charges levied on imports as well as capital and exchange controls. Several delegations encouraged Morocco to finalize its ratification of the TFA. Some sought clarification of Morocco's subsidy programmes, tax exemptions and insurance schemes. Several Members encouraged the Government to pursue further reforms aimed at extending the liberal regime of the offshore export sector to companies producing for the local market as this dismantle the duality of the VAT system thereby ensuring full compliance with the national treatment principle.

Fiji: 23 and 25 February 2016

3.121.  Members commended Fiji for becoming the first country to ratify the UN climate treaty agreed in Paris in December 2015 and for its strong commitment to the multilateral trading system. Specifically, they noted that Fiji had opened a Permanent Mission in Geneva in June 2014 to more actively participate in the WTO. Fiji was encouraged to submit its outstanding WTO notifications, in particular its Category A commitments under the TFA and to ratify this Agreement. Members saluted the initiative of Fiji to effectively implement its first ever Trade Policy Framework for 2015-25 and National Export Strategy aimed at promoting sustainable growth by encouraging exports, competitiveness, value adding and export diversification in six priority areas: agro‑business, forestry, marine products, mineral water, information and communication technologies, and audiovisual services. Members welcomed the entry into force of Fiji’s new Constitution in September 2013 and the measures taken to bring its legislative framework in line with international best practices in areas such as competition, government procurement, foreign investment, SPS measures, standards, agriculture and shipping. They noted the steps taken by Fiji to boost FDI inflows and improve its business environment, notably by eliminating the minimum investment required for foreign investors. Members also took note of Fiji’s engagement in regional trade agreements. Fiji was praised for its good economic performance, declining overall poverty levels and sound macroeconomic policies that underpinned one of the best GDP growth cycles since its independence. It was, nonetheless, cautioned that progress in rural areas was lagging and that as a small economy it remained highly dependent on exports of certain commodities and vulnerable to external shocks. High transportation costs and the frequency of natural disasters were also constraining factors in its economic outlook. Therefore, delegations encouraged Fiji to persevere with the implementation of structural reforms, especially in the areas of physical infrastructure and human resources development, to strengthen its resilience to shocks, reduce bottlenecks in the economy, foster productivity, improve the investment climate, diversify its exports and raise potential GDP growth. Several Members underlined their commitment to continue providing trade-related assistance to Fiji and help in overcoming the effects of cyclone Winston.

3.122.  While recognizing Fiji’s various economic and trade policy reforms adopted over the last few years, some Members voiced concerns with respect to the difference that exists between the overall bound average of 40.2% and Fiji’s applied MFN tariff of 11.2% in 2015 and the fact that only half of all tariff lines are bound. They urged Fiji to make improvements in this area and render its trade regime more transparent and predictable. Fiji was also urged to eliminate remaining foreign exchange restrictions, and to continue streamlining procedures for doing business. Questions were raised about the application of different excise duty rates on domestic and imported goods, the requirements for obtaining quarantine import permits for animal products and of other SPS measures, the rationale for the use of price controls and the enforcement of IPRs, in particular copyrights. Regarding sectoral policies, Members sought clarification about the restructuring of the sugar industry and the situation of land tenure, the sustainable management of fisheries, the use of local content requirements in cigarette manufacturing, the restructuring of the Fiji Electricity Authority and the granting of domestic subsidies to fossil fuels. On services, some Members expressed concerns about recent increases in airport and port fees and charges and their impact on Fiji’s international competitiveness. Further clarification was also sought on licensing requirements for telecommunication operators and on the direction of Fiji’s new development plan for the tourism sector.

Turkey: 15 and 17 March 2016

3.123.  Members welcomed Turkey’s commitment to the multilateral trading system and to trade liberalization. The prominent role it played in a number of economic fora, including its recent G20 presidency was particularly commendable. Turkey's dedication to the system was demonstrated by its participation in the Doha negotiations, and in TiSA, Environmental Goods Agreement, and the expanded ITA. LDCs and other vulnerable economies particularly appreciated Turkey’s development assistance and implementation of duty-free-quota-free for LDCs and other preferential arrangements. Several delegates noted that Turkey was an important bridge between developed and developing countries. Turkey's position as the 17^th largest economy in the world, a leading trading partner for many WTO Members and as the 7^th biggest agricultural producer in the world all testified to its importance in the world economy and the WTO. Members welcomed Turkey's ratification of the TFA and recent initiatives in facilitating trade at the border, including the single window application, the Authorized Economic Operator (AEO) programme, and the “one‑stop-shop” pilot project. Turkey’s “Vision 2023” was noted as an important policy initiative in which Turkey was working towards a number of ambitious goals regarding the economy and trade to mark the 100th anniversary of the Turkish Republic. These included increasing GDP to over US$2 trillion, becoming one of the top ten countries in terms of nominal GDP, achieving an export volume of US$500 billion and shifting production to higher valued added goods. Turkey was commended for its trade and GDP growth during the period despite structural vulnerabilities and the geo-political instability in the region. The services sector continued to be an important sector in terms of economic growth, employment and trade accounting for over half the economy and 23% of gross exports in 2014. Turkey had continued to liberalize the sector by including services in new and revised FTA agreements and by participating in the TiSA negotiations. Travel and tourism were highlighted as important service sectors for trade and the growth of the tourism sector, including health tourism, was particularly impressive. In their interventions, nevertheless, delegations also cautioned that GDP growth had fluctuated in recent years, reflecting changes to capital inflows and contraction in agricultural output. Delegations also underscored that, though trade had intensified during the review period as exports and imports grew to the equivalent of 60% of GDP in 2014, it remained below its potential for many of its trading partners, especially FTA partners and neighboring countries. This was partly due to the recent turmoil in the region. Turkey was encouraged to continue addressing its significant current account deficit.

3.124.  Among the specific issues raised, Members noted Turkey's mixed record of compliance with WTO notification obligations, in particular on agriculture. Turkey was urged to address all pending notifications. Tariffs were another area of significant interest by Members and with a low level of tariff bindings (50%), and a relatively large gap between applied and bound rates Turkey was encouraged to bind more tariffs. Some Members noted that applied rates exceeded the bound rates on 47 tariff lines, that tariff rates were particularly high on many goods and the use of non-ad valorem tariffs on some products were also a burden to exporters. Law No. 474 on the customs tariff schedule had created an unpredictable situation for traders as it allowed the Government to increase tariff levels to provide adequate protection to domestic industries. On investment, it was recognized that FDI was an important contributor to Turkey’s economic development and while it maintained a relatively open investment regime for most sectors, the continuation of restrictions in a number of important sectors prompted Members to enquire about further liberalization initiatives. While acknowledging the importance of agriculture to Turkey's economy and trade, several delegations also noted the high number of restrictive measures in the sector, including high tariffs and high domestic support levels. Several delegations encouraged reforms in the sector and called for an increase in transparency. On SPS, questions were raised regarding barriers to trade in certain subsectors, including live animals and adherence to international standards. Several delegations enquired about the role of marketing boards, in particular the Turkish Grain Board and its operations. Members called upon Turkey to join to the GPA. With respect to IP, several requests were made for improvements in Turkey’s IPR system in terms of the data exclusivity period, granting of compulsory licences, enforcement and protection of undisclosed information. Members noted with some concern the frequent use of trade remedies.

Maldives: 21 and 23 March 2016

3.125.  Members praised the commitment of the Maldives to the multilateral trading system and commended it for its foreign investment regime which was very liberal, except for the fisheries and retail sectors. Members took positive note of the Maldives' robust and sustained economic growth, especially in light of various exogenous and endogenous challenges. These challenges were especially related to global climate change, worldwide economic trends such as fluctuations in energy prices and the country's small size, topography, limited natural resources, political transition, heavy reliance on tourism and fisheries, dependence on import, and loss of preferential treatment and assistance following its upgrade from LDC status to upper-middle income country. Members acknowledged Maldives' efforts in undertaking various structural reforms, which had resulted in the introduction of more broad-based taxes to reduce reliance on import duties as the main source of revenue and also in the enactment of legislation which would allow special economic zones to provide greater fiscal incentives for traders and investors.

3.126.  Members encouraged Maldives to press ahead with reforms which could help strengthen the rule of law, improve its economic resilience, diversify its export markets and sectors, attract more business and investment and enhance the efficiency and competitiveness of its economy. Several Members reiterated their call for Maldives to fully comply with WTO notification requirements. Some encouraged Maldives to join the ITA and the GPA and others suggested that Maldives participate in the EGA.  Several Members commended Maldives for its unilateral tariff liberalization, but at the same time expressed concern about the increase in certain import duties and the persistent application of MFN tariffs in excess of bound rates. Members welcomed the introduction of a fast import clearance channel and legislation implementing the WTO Agreement on Customs Valuation. Some urged the authorities to do more, by promptly ratifying the TFA, acceding to the Revised Kyoto Convention and improving import licensing procedures. Some Members also welcomed Maldives' action to strengthen its IP rights regime, and encouraged it to accept the Protocol of Amendment to the TRIPS Agreement.

Saudi Arabia, Kingdom of: 4 and 6 April 2016

3.127.  Delegations noted that the Kingdom of Saudi Arabia continue to play an increasingly active role in regular committees, in negotiations as well as in dispute settlement as a third party, demonstrating its confidence in, and commitment to, the multilateral trading system. For several years, before and after the last review, high oil prices had allowed the economy and Government revenues to grow strongly and public debt to fall. Since 2014, however, the sharp decline in oil prices has reversed this trend. The fiscal deficit stood at 15% of GDP in 2015.

3.128.  Several delegations noted that economic diversification was a prominent challenge facing the Kingdom of Saudi Arabia. This was a matter of priority in the Kingdom of Saudi Arabia’s 9th and 10th Development Plans and while some progress could be detected the oil industry still dominated the economy and related export earnings and still made up the bulk of Government revenue. Several Members encouraged the Kingdom of Saudi Arabia to step up its diversification efforts, not only to mitigate the immediate impact of lowering oil prices, but also to prepare for a less oil-dependent future. Some argued that one way to promote diversification was to improve the trade and investment environment. In this connection, a number of delegations noted that the Kingdom of Saudi Arabia had a relatively simple trading regime with low tariffs on most products. They welcomed in particular the simplified import/export procedures and the notification of Category A commitments under the TFA, and noted with satisfaction that the ratification of the Agreement was at an advanced stage. Some delegations called on the Kingdom of Saudi Arabia to accede to the GPA and the expanded ITA and took note that relevant legislation was being reviewed, and that an impact assessment on joining the GPA was under way. Several Members emphasized the importance of a strong system for the registration and protection of IP rights and noted the progress made by the Kingdom of Saudi Arabia in this regard to bring current laws into line with the TRIPS Agreement. A number of delegations raised concerns about development and application of SPS measures, technical requirements and standards. On investment, Members acknowledged that the Kingdom of Saudi Arabia had a generally open regime with more sectors open to foreign investment since the last review. It was noted, nevertheless, that various restrictions still existed, including the complex licensing regime, minimum Saudi investment requirements and requirements to employ Saudi nationals. Some delegations also expressed an interest in receiving further clarification regarding the privatization programme for state-owned enterprises.

Ukraine: 19 and 21 April 2016

3.129.  Many Members acknowledged that Ukraine’s accession to the WTO in 2008 provided the foundations for an open, liberal, predictable, and transparent trade regime. In particular, Ukraine was commended for its low, fully bound tariffs and for its extensive commitments under the GATS. Some Members also complimented Ukraine for its active participation in the WTO and its acceptance of new obligations under the WTO framework, as seen in its recent ratifications of the TFA, the Protocol Amending the TRIPS Agreement, and the GPA. Members also observed that Ukraine had complemented its WTO commitments with free trade agreements that it had negotiated with key trading partners. Many Members saw this as a potential catalyst for Ukraine to strengthen its protection of IP rights, align its TBT and SPS standards and adopt simplified, non-discriminatory and more transparent administrative practices. Many Members acknowledged Ukraine’s achievements in improving its legal and administrative framework affecting business, and its willingness to make further improvements. Some also encouraged Ukraine to continue its fight against corruption and build a fully independent and efficient legal system.

3.130.  At the same time, several Members were of the view that Ukraine could be more transparent as regards its agricultural support measures, the progress of its privatization and ongoing economic reforms and the operation of its state trading enterprises. Members noted that the predictability of Ukraine’s trade regime, while generally stable, had at times been undermined by certain actions such as its attempt to renegotiate a multitude of tariff concessions, the imposition of temporary import surcharges and the resort to temporary restrictions on exports and imports. Other areas of concern raised by Members included TBT and SPS measures, IP protection and Ukraine’s use of contingency measures. While the adoption of new Tax Codes and Customs Codes were important reform outcomes, it was also noted that legislation was not applied uniformly across all customs offices and that documentation requirements could still be cumbersome and excessive despite the move towards streamlined electronic procedures. Customs valuation and delays in VAT reimbursement were topics of widespread concern. Several delegations noted, however, that it had taken steps to address these issues. Separately, some Members enquired about the rationale for measures such as a ten‑year export ban on timber, local content requirements and price controls on alcoholic beverages.

Malawi: 27 and 29 April 2016

3.131.  Members acknowledged Malawi’s active participation in the DDA negotiations and welcomed the recent establishment of a Malawi WTO Mission in Geneva. Malawi was also commended for its economic performance and for progress made with respect to the diversification of exports and ensuring food security. Delegations congratulated Malawi on its efforts to establish a National Trade Facilitation Committee and its recent notification of Category A commitments under the TFA and encouraged it to promptly ratify the Agreement.

3.132.  Members also noted, however, that Malawi as one of the poorest countries in the world faced several important challenges. The challenges posed by its landlocked situation were exacerbated by inadequate transport infrastructure as well as insufficient and unreliable power and water supplies. Similarly, the economy remained highly dependent on a few agricultural commodities, which made it vulnerable to external shocks such as severe weather conditions. Members therefore urged Malawi to focus on addressing these infrastructural deficiencies and to step up its diversification efforts while striving to enhance productivity. Some pointed out that continued support from development partners would be important to success in this regard. Members also proposed additional steps to increase investor and donor confidence, including putting in place effective fiscal controls and anti-corruption strategies, improving transparency and accountability and further streamlining regulatory and investment procedures. Delegations expressed the hope of Malawi adhering more closely to WTO notification requirements. While Malawi’s trade facilitation efforts were acknowledged, several delegations saw scope for simplification of its import procedures relating to standards and technical regulations. Further, noting that Malawi’s IP regime had not been substantially updated during the period under review, Members encouraged the authorities to accept the Protocol amending the TRIPS Agreement and to ensure its effective implementation. Some suggested that technical assistance might allow Malawi to participate more actively in the WTO. Others sought details about the Government’s priorities regarding, inter alia, Malawi’s involvement in bilateral and regional trade liberalization initiatives, competition policy, SPS and TBT regimes.

Honduras: 2 and 4 May 2016

3.133.  Members welcomed Honduras' commitment to the multilateral trading system and congratulated its active participation in the WTO. Several delegations also referred to Honduras' network of preferential trade agreements and urged it to ensure that these agreements complement multilateral efforts. As Honduras became more closely integrated into the global economy, Members encouraged it to diversify its production and export base, including by taking further advantage of unilateral trade preferences and of those negotiated through the preferential trade arrangements. Members acknowledged Honduras' ongoing economic, trade and institutional reform efforts, including trade and investment liberalization and noted that it had shown prudence in the conduct of monetary and fiscal policies. Noting that Honduras had a relatively open trade regime, Members commended it for not using anti-dumping and countervailing measures, for its low applied average MFN tariff and for having bound its full tariff schedule. On investment, several delegations welcomed Honduras' reforms, in particular through the 2011 Investment Promotion and Protection Law which introduced new guarantees and investment incentives, including fiscal incentives, and aimed at promoting private sector cooperation in the execution, development, and management of major infrastructure and services projects. A number of Members noted with interest a new legislation in 2013 which allowed the establishment of Employment and Economic Development Zones (ZEDE) with their own internal policies and regulations, including fiscal and monetary policies. Members praised Honduras' efforts to modernize and streamline customs procedures through the implementation of a Single Window and the submission of customs declarations for exports in electronic format and for engaging in a trade facilitation initiative at the regional level. Honduras' efforts to enhance transparency in government procurement were acknowledged as was continued efforts to improve compliance with IP rights both at the border and within the country.

3.134.  At the same time, Members raised a number of pending issues, including compliance with notification requirements, in particular with regard to import licensing, safeguard measures, SPS, and preferential trade agreements. Several delegations drew attention to the applied tariff rates for a few products that remained above bound rates and the price-band system applicable to certain agricultural products. Honduras was urged to ratify the TFA.^[83] To promote faster growth, several Members advised Honduras to redress the fiscal imbalance, improve regulatory transparency and persevere in its efforts to restructure the economy. In this regard, Members took note of the 2013 introduction of a tax reform and other measures to improve governance and increase transparency. A number of other issues generated interest, including Honduras' application of other trade measures such as TBT and SPS measures which were usually in line with international standards, the safeguard measure imposed on certain iron and steel products and a new import licensing regime for onions. Members sought more information on the Customs Union with Guatemala and clarification on the protection of GIs and on Honduras' accession to the International Conventions for the Protection of New Varieties of Plants (UPOV).

Albania: 11 and 13 May 2016

3.135.  Members expressed appreciation for Albania’s commitment to the multilateral trading system and congratulated it on having deposited its instruments of acceptance for the TFA. Several delegations acknowledged Albania's participation in the expanded ITA and enquired about its plans, if any, to join the GPA. Members noted that Albania had obtained in June 2014 the status of candidate country for accession to the European Union, which provided strong incentives for Albania to harmonize its legislation with that of the European Union in various areas based on the 2009 Stabilization and Association Agreement. A number of delegations commended Albania for its continued economic growth and its institutional and economic reforms, including the reduction of trade barriers, privatization of state-owned enterprises and fiscal consolidation. On investment, Albania received recognition for the establishment of three new relevant bodies, i.e. the National Committee for Trade Policy Coordination and Facilitation, the National Economic Council and the Investment Council. Several Members looked forward to learning more about these entities. They also welcomed Albania’s reduction of tariffs while maintaining a simple tariff structure, adoption of a new Customs Code and amendments to its government procurement legislation. They commended Albania for not having taken any anti-dumping, countervailing, or safeguard measures since its accession to the WTO in 2000. Some delegations mentioned Albania’s efforts to fight corruption and streamline administrative procedures. 

3.136.  Confronted with high unemployment and non-performing loans, Albania was urged by several delegations to undertake further structural reforms, diversify its economy, strengthen the judicial system and improve the transparency and predictability of the investment regime. Some Members asked about Albania’s plan to formalize economic activities. Members also raised concerns about the time required for customs clearance, a number of applied MFN tariff rates exceeding the bound rates, the use of SPS measures and food standards and the application process for work visas. Members were additionally interested in learning more about Albania’s revised customs procedures, reforms in its IP regime, including the new copyright law, the law on state aid, agricultural policies, including domestic support, and its intentions to liberalize certain economic sectors such as energy and health.

United Arab Emirates (UAE): 1 and 3 June 2016

3.137.  Delegations appreciated UAE's active participation in the WTO and the steps it had taken to bring its notifications up-to-date. They were pleased to note that UAE had deposited its instrument of acceptance for the TFA on 18 April 2016. Members encouraged the UAE to increase its involvement in the WTO's plurilateral agreements by becoming an observer, and in due course, a party to the GPA, joining the expanded ITA and entering into negotiations on environmental goods. Members welcomed several aspects of trade policy in the UAE, including the binding of all tariff lines and the application of the GCC common external tariff which sets nearly all applied tariffs at either zero or 5%. They took note of the diversification of the economy that had helped the UAE weather the 2008 financial crises and the fall in oil prices since 2014. Although the hydrocarbon sector and related industries were still important, recent growth had been driven by non-oil sectors, particularly construction, retail and wholesale trade, tourism and manufacturing. The development strategy set out in Vision 2021, focusing on innovation and the transformation to a knowledge-based economy, was welcomed as further contributing to sustainable growth and reduced reliance on oil and gas. The importance of free zones and specialized economic zones was noted by some delegations as was the absence of investment restrictions in these areas. The zones had greatly helped the development of the economy, including the successful development of widespread air and maritime links.

3.138.  Several delegations expressed concerns related to import procedures and requirements, border inspection procedures and clearance systems, SPS and TBT requirements and consularization of import documents. Others referred to requirements in the context of investment outside the free zones, such as majority Emirati ownership requirements which apply to all commercial activities, including trading and agency licences, the continued prevalence of state involvement in the economy, including state-owned enterprises and the enforcement of IP rights, particularly on counterfeit goods. Members urged the UAE to further liberalize its investment regime and expressed hope that new legislation would be promulgated to relax ownership restrictions for investments and further promote competition in the economy.

Zambia: 21 and 23 June 2016

3.139.  Members commended Zambia for its commitment to the multilateral trading system. They were pleased to note that Zambia had ratified the TFA and notified its categories A, B and C commitments. Several delegations enquired about the establishment of a National Committee for implementation of the Agreement and raised concerns about specific trade facilitation measures, including border procedures and taxation issues. Some delegations were also interested in transparency issues related to Zambia's public procurement framework and enquired whether the country was considering becoming party or an observer to the GPA. They encouraged Zambia to fully meet the WTO notification requirements and other commitments such as those in relation to customs procedures, standards and other technical regulations, SPS measures and protection of IP rights. Some highlighted the relevance of assistance programmes, including training, in this context. Some delegations cautioned that Zambia's membership of overlapping trade agreements, including the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) involved conflicting obligations. On the back of buoyant global demand for copper, several delegations congratulated Zambia on its graduation from the low-income to the lower-middle-income category in the World Bank analytical classification in 2014.

3.140.  A number of Members, however, also noted that structural weaknesses, including supply-side constraints, significant State intervention and high costs of doing business still impeded full exploitation of Zambia's potential and dampened its economic diversification efforts. Members raised questions about specific actions undertaken by the Zambian authorities to address these constraints and to diversify the economy and encouraged the Government to further improve its business environment to attract investment for such diversification. Some indicated readiness to assist Zambia in exploring its growth potential in sectors such as agriculture and services and recalled that, as an LDC, Zambia was eligible for the Everything-But-Arms (EBA) initiative of the European Union and has duty-free and quota-free access to the U.S. market under AGOA. Zambia was encouraged to better utilize these preferential trade schemes for the benefit of its economy. Several Members proposed that Zambia assess the impact of its export taxes on the promotion of local value addition and encouraged it to improve its tariff binding commitments by enlarging their coverage and reducing the gap between bound and applied rates. Several Members expressed interest in private sector participation in Zambia's trade policy formulation, including tariff setting and revision, and sought information about the effectiveness of the newly promulgated Public-Private Partnership Act in boosting related projects. Some Members enquired about Zambia's priorities regarding, inter alia, effective protection of IP rights, business licensing, and plan to develop its agriculture and promote rural development.

Tunisia: 13-15 July 2016

3.141.  Members congratulated Tunisia for maintaining positive economic growth and macroeconomic stability throughout the last decade. They welcomed the strategic reforms in political and social areas that were carried out in the country following the revolution in 2010 and the adoption of a new Constitution in 2014. They also encouraged Tunisia to move forward in liberalizing its trade and investment regimes, including reforms to streamline regulatory practices in the area of off-shore and on-shore taxation and recent foreign exchange liberalization measures. Members welcomed new trade policy initiatives in Tunisia, in particular the Investment Code and the implementation of a new competition law. Several delegations welcomed the drastic reduction of its average MFN tariff rate from 45% to 14%, and encouraged Tunisia to narrow the gap between applied and bound tariff rates. Tunisian plans for the simplification of compulsory technical control of imported products were considered important. Some Members expressed interest in several IP issues, including the prospect of suspending import clearance for infringing goods, building a national registry of geographical indications and the strategy to combat counterfeiting and piracy. They applauded Tunisia's commitment to the multilateral system and encouraged it to further improve its notifications. Some also encourage Tunisia to ratify the TFA as a matter of priority. 

3.142.  However, Members also requested clarification on a variety of issues. In terms of tariffs and taxes, enquiries were made regarding the 10% income tax instalment on imports, import duty and VAT exemption and suspension schemes as well as fiscal privileges applied to manage imports, in particular of motor vehicles. On IP, members enquired about the compulsory licensing scheme for medical products and the responsibilities and activities of the Tunisian copyrights organization. Some delegations raised issues relating to the non-automatic import licensing procedures, pre-importation surveillance measures and the purpose of export prohibitions, licences and control.

China: 20 and 22 July 2016

 

3.143.  Members noted that although China's real GDP growth had slowed down since 2013, it had remained at a relatively healthy level of 6.5% to 7% a year. The Chinese economy was undergoing a structural shift where economic growth would rely more on the services sector and on knowledge-based industries. Members welcomed China's effort in pursuing structural reforms to allow a market-oriented approach to investment and resource allocation and, noted China's initiatives in establishing more Pilot Free Trade Zones and streamlining customs procedures. Some delegations, however, sought further information on specific measures. China was encouraged to continue improving its protection of IP rights and to continue its move towards a more open, predictable and transparent foreign direct investment regime. Members congratulated China for opening its market to products from LDCs and for its leading role in South-South cooperation. In the area of multilateral trade, Members welcomed China's participation in the negotiations on ITA expansion, the EGA and the TFA. Delegations also welcomed China's latest offer for its accession to the GPA and encouraged it to make further efforts to conclude negotiations. On transparency, several Members acknowledged China's progress in fulfilling its notification obligations with the recent notification of several sub-central level government subsidies and other updates. Some delegations encouraged China to publish all trade-related laws, measures and regulations in a WTO official language. As the biggest merchandise trader in the world, the top trading partner for over 120 countries and regions and one of the largest recipients of FDI, several Members called upon China to assume its increasing responsibility as a major player in the multilateral trading system.

3.144.  At the same time, Members expressed concerns and raised questions on various issues. Regarding China's reforms, some delegations noted a limited coverage of the reforms and a slow-down undermining the market forces in various sectors. Barriers to foreign investment still persisted in areas considered of strategic importance or related to national security. Members also expressed concerns regarding the prohibition of foreign investment in film production, restrictions in distribution and exhibition, circulation of foreign audio-visual contents, standards for banking and insurance, market access in telecommunication and financial services. Enquires were issued about China's application of distortive measures, including support and subsidy policies, the use of export restrictions, import tariffs and tariff quota administration. Furthermore, some delegations raised a number of issues, including on the global overcapacity on steel and in the use of some technical requirements, including TBT and SPS measures.

Singapore:  26 and 28 July 2016

3.145.  Members congratulated Singapore for its strong economic fundamentals and its successful development model, as well as its openness to trade and investment. Members welcomed Singapore's ongoing efforts in restructuring the economy from labor–intensive activities towards innovation-led growth and higher productivity, as a response to the slow-down of economic growth and an ageing population. They also praised Singapore's active role in the WTO and its support for the multilateral trading system as well as its compliance with transparency and notification requirements. Members commended Singapore's prompt ratification of the TFA, its participation in the expanded ITA and in the negotiations on the EGA. Singapore's provision of technical assistance to other Members was recognized by several delegations as was its efforts in promoting a broad-based fossil fuel subsidy reform.

3.146.  At the same time, Members encouraged Singapore to increase the binding coverage and reduce the gap between bound and applied rates, in order to enhance predictability. They also urged Singapore to liberalize its remaining restrictions on investment and trade in services. Delegations also expressed concerns and sought clarification on several areas and existing policies, such as the role played in the economy by the state, the import licensing mechanism, the array of fiscal privileges, the rice stockpile scheme and vehicle quota regime. Several delegations noted Singapore's involvement in regional trade agreements and its institutional framework, in particular the work of the Non-Tariff Measures Unit and the Committee on the Future Economy. Enquiries were raised on Singapore's regulatory adjustments in the area of IP, i.e. introduction of a positive patent grant system, modification of copyright legislation and new legislation on the protection of geographical indication. Other issues were raised relating to certain SPS and TBT measures and the difficulties of foreign participation in the government procurement market. 

El Salvador:  14 and 16 September 2016

 

3.147.  Members congratulated El Salvador on having managed to achieve positive growth rates during the review period in spite of the negative effects of the 2008 financial crisis and its significant progress in poverty reduction and improvement of social indicators. Several delegations commended El Salvador for the continued liberalization of its trade and investment regimes and noted its efforts to deepen economic integration with Central American countries and to search for closer economic ties with other trading partners. They praised El Salvador's TFA ratification, the modernization and streamlining of its customs procedures, as well as its open trade regime with a relatively low applied average MFN tariff. They also recognized El Salvador's reforms in the areas of investment, IP, quality control, trade facilitation, export promotion and the free zone legislation to remove export subsidies and local content requirements. Members also welcomed improvements to the protection of trademarks and geographic indications as well as, the provision of greater legal certainty for investment. Some delegations sought more information regarding the implementation of these measures.

3.148.  At the same time Members raised concerns regarding the large number of El Salvador's tariff lines still subject to import permit or approval procedures and urged it to streamline these import requirements. Some highlighted the importance of services and enquired about the limitations of market access in some services sectors such as, insurance, telecommunications, transport and tourism. Several Members commended the country for establishing a Salvadorian Quality System and called on the authorities to notify any mutual recognition agreement on technical regulations and conformity assessment procedures. Delegations encouraged El Salvador to take actions to reduce the fiscal deficit and external debt, diversify the economic structure and to further improve its investment climate so as to boost productivity and promote sustainable growth.

Russian Federation: 28 and 30 September 2016

3.149.  In its first Trade Policy Review since its accession to the WTO in 2012, the Russian Federation was praised for the considerable progress made in liberalizing its trade regime. Members welcomed its ratification of the TFA, tariff reductions, simplification of customs procedures, participation in the ITA agreement and improvements to its IP legislation. Although notification on state-trading enterprises and some others were still outstanding, delegations acknowledged that Russian Federation was one of only four developed Members that had updated its notifications on domestic support and export subsidies. Members also expressed interest in learning more about the implementation of trade policies at the regional level because of the expanding roles of the Eurasian Economic Union and Eurasian Economic Commission. Members took note of the Russian Federation's challenging economic environment with a slow and modest recovery, mainly due to the fall in oil prices, sanctions imposed by some countries and counter measures taken by the Russian Federation. Although structural reforms were ongoing to diversify the economy and reduce reliance on hydrocarbons, some Members encouraged the Russian Federation to take advantage of the country's high level of education, excellence in technology and the wide range of available resources.

3.150.  At the same time, several Members raised concerns over the Russian Federation's import substitution policy. Some expressed doubts about its compliance with the basic WTO principles and noted its potential to undermine trade liberalization efforts and discourage competition. Members voiced concerns over local content requirements applied in government procurement and by state-owned enterprises. Several delegations noted that these companies represented half of the country's GDP and dominated key economic sectors such as banking, transport and energy and urged the Russian Federation to restart the stalled privatization programme and join the GPA. Concerns were also raised about the Russian Federation's use of SPS and TBT measures not based on international standards, restrictions on import to the Russian Federation and on the transit of goods through the territory of the Russian Federation. Other issues raised included fossil fuel subsidies, fisheries subsidies, use of contingency measures, efforts in fighting corruption, use of non-ad valorem tariff and various incentives conditional on strict localization requirements.

Korea, Republic of: 11 and 13 October 2016

 

3.151.  Members appreciated the Republic of Korea for its economic fundamentals and its increasing important role in international trade. Remarkable resilience of the Korean economy was acknowledged as it recovered from the 2008 financial crisis and managed to grow. Members noted the three-year Plan for Economic Innovation and the Creative Economic initiative, the Republic of Korea's key strategies to maintain growth, although at a slower speed. They also praised the Republic of Korea for remaining fully committed to the multilateral trading system during its rapid expansion of joining various preferential agreements. Many Members commended its constructive participation in various WTO trade negotiations, its ratification of TFA, the technical assistance it provided to other Members and its contribution to the DDA Global Trust Funds. Members also recognized the Republic of Korea's involvement in plurilateral initiatives, such as its participation in the revised GPA and in the ongoing negotiations on the EGA. They also encouraged the Republic of Korea to swiftly implement the expanded ITA. In the energy sector, even though the state-owned enterprises (SOEs) still play the main role and the prices were often regulated, Members praised the Republic of Korea's decision to end support for coal production by eliminating fossil fuel subsidies by 2020.

3.152.  Notwithstanding the Republic of Korea's efforts to attract foreign investment and to implement reforms, some further improvements were suggested regarding registration, notification, licensing and approval requirements for foreign investment. Members noticed that inward foreign direct investment to the Republic of Korea remained much lower than the outflow and encouraged it to further reduce its various limitation and restrictions to enhance effective enforcement of the legislation on IP rights so as to attract more inward investment. Members expressed concerns over the productivity gaps between manufacturing and services sectors. Although trade in services was considered as key driver for future development, Korean services continued to be under-developed and its major services activities were lack of competition.  Thus some Members encouraged the Republic of Korea to implement productivity-enhancing reforms and to open up its market, in particular for activities with restrictions on foreign ownership. Similarly, a productivity gap was identified between large business conglomerates and SMEs. Some Members highlighted the need for the Republic of Korea to provide adequate support to its SMEs so they could take advantage of new business opportunities resulting from bilateral and regional trade agreements. Concerns were also raised on the Republic of Korea's tariff regime. Many Members required the Republic of Korea to simplify its customs tariff structure, reduce the rates and phase out the less predictable flexible tariffs. Furthermore, they demanded more timely action from the country in the notification of export subsidies and domestic support in agriculture as well as, in the certification and modification of its schedule of tariff commitments. Some Members noticed the substantial rise in anti-dumping initiations and encouraged the Republic of Korea to restrain such trend.  Concerns was expressed over continued discrepancies between the SPS legislation, multilateral provisions and international standards and several Members encouraged the Republic of Korea to continue harmonizing its industrial standards with international ones. Other issues included the highly protective trade measures of agricultural sector, the Republic of Korea's support on fisheries, the supply of green energy, the overcapacity in the shipbuilding market, the Republic of Korea's incentives available to other manufacturing activities. Members encouraged the Republic of Korea to liberalize and reform its agricultural sector, to make constructive contribution in the negotiations in fisheries subsides and to restructure its shipbuilding industry.

3.9  Other Selected Trade Policy Issues

3.153.  The following Section provides a brief overview of selected developments on trade policy issues in the WTO context. In addition, the Section includes two topical boxes by the OECD.

Regional Trade Agreements

3.154.  During the period 15 October 2015 to 15 October 2016, WTO Members notified nine RTAs to the WTO (19 notifications) as compared to 11 RTAs (24 notifications) during the previous period (15 October 2014 - 15 October 2015). As of 15 October 2016, the total number of RTAs notified to the WTO and to the GATT before it, amounted to 268 (135 covering goods and services, 132 goods only and one services only). The WTO Secretariat has also identified and verified, through the respective parties, 83 RTAs that are in force, but not yet notified to the WTO.^[84]

3.155.  Judging from overall notifications, RTA activity is strongest in Europe (21% of RTAs in force), with successive European Union enlargements and agreements with countries in Eastern Europe and around the Mediterranean basin as well as RTAs notified by the European Free Trade Area (EFTA); this is followed by East Asia (17%) and South America region (11%) (Chart 3.21).^[85] These regions also continue to be active in RTA negotiations.

Chart 3.20 Number of physical RTAs that have entered into force since 2006

Note:       As of 15 October 2016.

Source:   WTO Secretariat.

Chart 3.21 RTAs in force by region

Source:   WTO Secretariat.

3.156.  In addition to their existing RTAs, most WTO Members are actively negotiating new RTAs. While most negotiations are bilateral, a few have elicited recent interest because they are between a number of Members. One of these, the Trans-Pacific Partnership (TPP) Agreement, was signed on 4 February 2016 and is currently going through ratification by its 12 members. According to the text of the TPP Agreement, it will enter into force 60 days after internal ratification procedures are complete in all 12 parties. If these are not completed within two years, the Agreement will enter into force 60 days following the end of the two years provided at least six of the 12 signatories, and who account for 85% of the combined GDP of the original signatories, has ratified the Agreement. Others, such as the Regional Closer Economic Partnership (RCEP) Agreement between 10 ASEAN members and six others in the Asia-Pacific, the Trans-Atlantic Trade and Investment Partnership (TTIP) Agreement across the Atlantic and the Tripartite Agreement on the African Continent, are still being negotiated.

3.157.  The primary objective of RTAs has been to further reduce barriers to trade between the parties, by both removing tariffs and other restrictions at the border. However, as tariffs come down generally, RTAs are increasingly concentrating on reducing non-tariff measures which are not necessarily only imposed at the border. Accordingly, RTAs have become more complex and their texts more detailed over the years. In addition to traditional market access issues in goods and services, and related rules such as those for origin and trade remedies, more recent RTAs tackle other regulations and procedures  such as standards, SPS measures, trade facilitation, IP rights, investment, competition and electronic commerce. Of all RTAs notified to the WTO since 2000 (Chart 3.22), 58.9%% have provisions in services, and 56.7% in investment, while 48.2% have provisions in IP rights and 32.1% in environment and 22.8% in labour.

Chart 3.22 Provisions included in RTAs notified since 2000 to October 2016

Source: WTO Secretariat.

3.158.  While a larger number of provisions are being included in RTAs, not all of them go much beyond the WTO texts where these exist. Recent research by the WTO Secretariat based on all RTAs notified to the WTO finds a mixed picture. For some provisions, notably market access in goods, RTAs have been successful in eliminating tariffs between the parties. However, for a number of WTO Members, MFN applied tariffs are already quite low so the impact of the additional liberalization may not be that significant. Moreover, in some cases RTAs are not able to remove or even reduce tariffs on sensitive products, which therefore remain protected both in MFN and preferential trade. For other provisions, for instance anti-dumping measures, most RTAs do not seem to go beyond affirming the parties' RTA rights. For provisions such as standards, and safeguards, while some procedural changes have been introduced by RTAs, by and large they do not make substantive changes vis-a-vis existing WTO rules.

3.159.  In contrast, RTAs are clearly creating new rules with respect to provisions for which there are as yet no WTO rules, e.g. competition, electronic commerce, environment and labour. Nevertheless, even for some of these provisions, it is interesting to see that a number of countries tend to follow the same approach in their RTAs. For others, for instance competition, environment or labour policies, legislative changes resulting from RTA commitments are, for practical purposes, best applied in a non-discriminatory manner even though they were negotiated through an RTA. Thus, while it may be true that RTAs establish new rules and standards, these new rules and standards are not as diverse as we might expect. In addition, their application is sometimes non‑discriminatory.

Trade Facilitation

3.160.  Members intensified their preparations for the Trade Facilitation Agreement (TFA) to enter into force. Advancements were achieved on several fronts, especially with respect to the amendment protocol (WT/L/940)^[86], which has to be accepted by two‑thirds of all WTO Members for the TFA to take effect.  As of 10 October 2016, the WTO has received 94 valid instruments – an increase of 45 additional instruments since the last report. This amounts to 85% of the overall number required for the Trade Facilitation Agreement to enter into force. 

3.161.  Delegations also continued to notify the commitments they will immediately implement upon the TFA's entry into force (frequently referred to as "category A commitments"). The Preparatory Committee received 15 additional notifications since mid-October of 2015, coming not only from developing countries, but also from LDCs. This brought the overall number of submitted category A notifications to 87 as of 10 October 2016. Members further started to indicate which provisions of the TFA they consider to require additional time ("category B commitments") or time and the acquisition of implementation capacity ("category C commitments"). A first related notification was presented in February 2016^[87] by Georgia and was followed by four additional submissions during the months that followed, by Mauritius, Malawi, the Solomon Islands and Zambia.^[88]

3.162.  Work continued with respect to technical assistance and capacity-building initiatives. In 2014 the Director-General launched a WTO Trade Facilitation Facility (the Facility) to assist developing and LDC Members in implementing the TFA that became operational on 27 November 2014. The Facility works closely with individual Members to ensure they are receiving the information and support needed. It also provides information on assistance programmes and, where needed, it can conduct match-making between donors and recipients. The Facility supports Members' efforts to implement the Agreement by acting as a repository for training materials, case studies and best practices on implementation of the measures. It provides training programmes and support materials to assist Members to fully understand their obligations.   This year the Facility assisted Members to prepare their category ABC notifications and build the capacity of the national trade facilitation committees by conducting national and sub-regional workshops.  It also offered an advanced course for chairs of national trade facilitation committees, with the cooperation of partner organizations.  Two courses were conducted in English in 2016 with courses in French and Spanish planned for early 2017.  The Facility also assisted Members to find support for implementation of the Agreement in a variety of ways.^[89]

ITA Expansion

3.163.  A new agreement to expand the product coverage of the 1996 Information Technology Agreement (ITA) was announced at the 10th Ministerial Conference in Nairobi on 16 December 2015. The ITA Expansion Declaration was signed by 24 Participants, which represent 53 WTO Members, including both developed and developing members, and account for approximately 90% of world trade in these products.  The new deal eliminates customs duties on an additional list of 201 products, including new generation semi‑conductors, semi-conductor manufacturing equipment, optical lenses, GPS navigation equipment, and medical equipment such as magnetic resonance imaging products and ultra-sonic scanning apparatus. Secretariat estimates of the annual trade in these products are around US$1.3 trillion per year and accounts for approximately 10% of global trade in goods.

3.164.  Under the ITA Expansion, import tariffs and other duties and charges on most of the 201 IT products are set for elimination either starting on 1 July 2016, and/or progressively over three years (by 1 July 2019).  For a limited number of sensitive products, tariffs will be phased out over five or seven years for the most exceptional cases (Box 3.1). As of October 2016, most Participants were on track with the implementation of the first tariff cut, subject to the completion of domestic procedural requirements.^[90] As required by paragraph 6 of the Declaration, 17 Participants have also initiated the 1980 Procedures for Modification and Rectification of Schedules in order to include the new ITA Expansion concessions into their WTO Schedules and extend them to all WTO Members on an MFN basis. The ITA Expansion Declaration also provides for further work on non-tariff barriers in the IT sector, and for keeping the list of products covered under review to determine whether further expansion may be needed to reflect future technological developments.

Aid for Trade

3.165.  The new biennium Aid for Trade Work Programme, themed "Promoting Connectivity", was issued on 16 February 2016. The 2016-17 Aid for Trade Programme draws on the results of the 2015 Global Review, which recognised the burden of high trade costs on developing countries, particularly LDCs, in connecting to the global trading system. The work programme builds on the 2015 Nairobi Ministerial Declaration that emphasised the importance of continuing support to developing countries and LDCs in building supply side capacity and trade-related infrastructure, paying specific attention to LDC priorities. The centre-piece of the work programme is the 6^th Global Review scheduled for 11-13 July 2017.

3.166.  A key activity underpinning the work programme is the Aid for Trade monitoring and evaluation (M&E) exercise, carried out in partnership with the OECD. The current M&E programme was launched on 27 July 2016, via a joint communication from WTO Director-General, Roberto Azevêdo and OECD Secretary-General, Angel Gurría. The 2016 monitoring and evaluation exercise focuses on: how and why Aid for Trade priorities have changed since 2015; the status of implementation of the WTO TFA; e-commerce and digital connectivity; and infrastructure enhancement and the improvement of related services markets through support of investment climate reforms. The evaluation exercise also includes a call for case studies, which spotlights on-the-ground initiatives to promote connectivity. As part of the joint monitoring and evaluation work, the OECD keeps track of Aid for Trade flows. OECD figures highlight that overall disbursements in Aid for Trade reached the highest recorded amount in 2014 at US$42.4billion. However, total commitments fell by US$1 billion to US$54.4Billion between 2013 and 2014. Specifically, LDC Aid for Trade commitments in 2014 fell from US$18.5 billion in 2013 to US$14.4billion. Disbursements also slowed, albeit more gradually with a drop of US$0.4 billion to US$10.5 billion in 2014.  Total disbursements of Aid for Trade since 2005 stand at more than US$308 billion in official development aid, and a further US$208 billion in other official flows.

Trade Financing

3.167.  Since the issuance of the Director-General's proposals on Trade Finance and SMEs in May 2016^[91], the Asian Development Bank (ADB), with support from several institutions (including the WTO), has released its 2016 Trade Finance Gap Survey. The estimated global trade finance gap was US$1.6 trillion in 2015, an increase of US$200 billion over the previous year, despite the fall in trade in 2015. Although around US$700 billion of the gap is estimated to be in the Asia region, Africa, the CIS, Europe and Latin America are also affected. Globally, surveys show that while multinational corporations face trade finance rejection rates of around 10%, around 56% of the trade finance requests by SMEs are rejected by banks. Part of the trade finance gap reflects a knowledge gap, notably in developing countries. Several international intergovernmental institutions as well as private entities are engaged in complementary efforts to narrow this gap through increased trade finance training and the objective of training 1,000 trade financiers per year is considered achievable.

3.168.  In the area of trade finance, as indeed across the whole spectrum of cross-border financial activities, questions about regulations largely have focused on the cost of compliance to non-prudential regulation, so-called "know-your-customers" (KYC) requirements and related regulations on anti-money laundering (AML). The causality between the cost of compliance and "de-risking" by global banks has been difficult to establish, but it has been subject of several reports and studies over the past couple of years. With respect to trade finance facilitation schemes, discussions have continued among partner institutions about increasing existing programmes or promoting new ones. However, such efforts have faced a number of challenges, including the fact that trade declined in value (albeit not in volume) in 2015 and in early 2016 and that the amount of trade to be financed in low-income countries – in particular in the commodity area - also fell.

Government Procurement

3.169.  The WTO Agreement on Government Procurement (GPA) continues to gain importance as an instrument for promoting trade and good governance in government procurement markets. The updated and modernized version of the Agreement that was adopted by the Parties in 2012 is now in force for all but one of the Agreement's Parties. The Agreement covers the procurement of goods, services and construction services, subject to relevant thresholds and other exclusions, and contains important disciplines on transparency and the prevention of corruption in addition to market access.

3.170.  Following the deposit by Ukraine and the Republic of Moldova of their instruments of accession during the review period, the Agreement came into force for these two Members on 18 May 2016 and 14 July 2016, respectively. This brings the total number of WTO Members covered by the Agreement to 47. The number of WTO Members participating in the GPA Committee as observers is now 29, with Kazakhstan being granted observer status on 19 October 2016. Increasingly, WTO Members are joining the GPA for reasons relating to the promotion of good governance and economic reform in addition to market access advantages for their national suppliers. Further additions to the Agreement's membership are expected in the short to medium term. Negotiations on Australia's and the Kyrgyz Republic's accessions may be concluded in the first half of 2017. Negotiations on Tajikistan's accession are also progressing well. Discussions continue on China's accession to the Agreement. As well, the Russian Federation has applied for accession as a Party to the Agreement and its first market access offer is expected to be circulated by the end of 2016. Four other WTO Members — Albania, Georgia, Jordan and Oman have applied to join the GPA. Another six WTO Members have provisions regarding accession to the Agreement in their respective Protocols of Accession to the WTO: Afghanistan, Kazakhstan, Mongolia, the Kingdom of Saudi Arabia, Seychelles and the former Yugoslav Republic of Macedonia.

3.171.  With regard to ongoing work in the Committee, the GPA Parties have now initiated discussions on a number of specific work programmes. These address, inter alia: (i) promoting access to government procurement markets by SMEs; (ii) ensuring sustainability in public procurement activities; (iii) improving the statistics that Parties submit pursuant to relevant provisions of the GPA; and (iv) identifying and (potentially) reducing the number of exceptions and exclusions to coverage that are included in the Parties' market access schedules.  The purpose of these work programmes is to enhance transparency and, where relevant, contribute to the future evolution of the Agreement.^[92] Also during the review period, the GPA Committee adopted a decision on Arbitration Procedures regarding Parties' modification of their coverage schedules.  The purpose of the new Procedures is to expedite, where appropriate, adjustments to the Parties' market access schedules in light of developments such as the elimination of government control over listed procuring entities. Throughout the review period, the Committee has monitored the implementation of the new "e-GPA system", an interactive, automated web portal created by the Secretariat to enhance the accessibility and usability of the market access and other information provided by Parties pursuant to the Agreement.

Electronic Commerce

3.172.  Consideration of e-commerce has gained renewed momentum in the WTO, particularly since the Nairobi Ministerial in December 2015.  Delegations have tabled a number of submissions. Workshops have been held in various formats, including by Members and as a part of WTO technical assistance. Members have also requested that more events allowing for expert views on various e-commerce topics be organized.  In addition, an exchange of information on e-commerce, including on initiatives to help SMEs participate more fully, was agreed under the Council on Trade in Services.  Moreover, the WTO's Aid for Trade initiative will include issues on connectivity and e‑commerce readiness in its 2016/2017 mandate.  Bearing these developments in mind, some of the emerging features of e-commerce trade and related measures are briefly highlighted below, along with some existing sources of further information. 

3.173.  E-commerce in all its forms, whether ordering on line or delivery on line, continues to grow unabated.  By the end of 2015, business to consumer retail (B2C) e-commerce both domestic and cross border was estimated at about US$1.7 trillion.^[93] By 2019, retail e-commerce is expected to reach US$3.6 trillion, or nearly 13% of total global retail sales.^[94]  Patterns are shifting as well. As of 2014, the value of B2C e-commerce in Asia-Pacific outstripped that of North America, and even exceeded the combined total of North America and Western Europe. Annual growth of on-line B2C sales in Africa and the Middle East, although from a lower base, exceeds that of every region except Asia Pacific.^[95] Rough estimates are that business to business (B2B) e-commerce, hard to measure, may be worth about ten times that of B2C e-commerce.^[96]    

3.174.  As e-commerce grows, and permeates business activities at all levels of global value chains, governments are struggling to adapt their legal and regulatory frameworks to deal with – and face the challenges raised by – on-line economic activities. Members have identified a number of relevant policy areas in recent submissions to the E-commerce Work Program. These range from e-signatures and authentication, encryption and source codes, standards and interoperability, conformity assessment, privacy of personal data, consumer protection and cybersecurity to network neutrality and competitive conditions, choice of technology and transfer thereof, IP protection, customs and customs procedures and data regulations.

3.175.  It is important to note, however, that measures adopted by governments in the context of these different policy areas mentioned can help or hinder the potential for growth of e-commerce. Some updates are necessary to provide legal predictability and inspire consumer confidence. Laws recognizing e-signatures or providing on-line consumer protection are among these. However, other measures can pose obstacles, unintended or not, to the efficient conduct of business and trade online. Burdensome customs procedures and various types of data flow regulations, if poorly designed or overreaching their objectives, are often cast as examples of this.^[97]  Where measures result in significant added costs of supplying goods and services online, these costs will ultimately be passed on to business clients and ordinary consumers, thus reducing the anticipated benefits of internet-enabled trade accruing to consumers, on-line businesses and traditional industries, as well.^[98] The challenge for governments, in devising new and adapted laws and regulations for to e‑commerce, is to strike a balance between obtaining the benefits for economic growth and development, and protecting legitimate, yet competing, policy concerns. 

3.176.  UNCTAD reports that the share of countries having enacted relevant e-commerce enabling laws is typically highest for e-transactions and lowest for the protection of online consumers, but that patterns vary. In Central America, for example, UNCTAD reports that seven out of eight countries have consumer protection legislation in place, but more than half of them lack laws related to data protection. Illustrating that an increase in related measures is a recent phenomenon, with regard to disciplines on data transfers, the European Centre for International Political Economy (ECIPE) reports that the number of various types of controls on data began rising in the 1990s, showing a significant upward trajectory since the early to mid-2000s. Of the 65 countries ECIPE has reviewed, few, if any, had local storage or local data processing requirements up until the 1990s, but as of 2016 a total of 84 such measures were in place.

3.177.  Currently, some agencies or organizations are seeking to incorporate information on laws and regulations affecting e-commerce and digital trade into new or existing databases. Many of the issues examined in the monitoring reports since 2009 could potentially impact Members' ability to engage in electronic commerce, even where e-commerce may not be specifically cited in the measures concerned. For example, government measures concerning net neutrality, privacy protection and investment measures relating to, among other things, e-commerce portals have been covered. The WTO's ITIP database, developed in collaboration with the WB, includes information on regulations and policies relating to trade in cross-border services which may impact e-commerce.^[99] The Secretariat is also in the process of adding information on measures relevant to cross-border data flows.

3.178.  Two other recent initiatives are specifically dedicated to cataloguing cyber measures.  This includes the Global Cyberlaw Tracker compiled by UNCTAD and the Digital Trade Estimates (DTE) Project of ECIPE. The UNCTAD Global Cyberlaw Tracker maps cyberlaws in the 194 UNCTAD member states.^[100] It tracks the state of e-commerce legislation in the fields of e-transactions, consumer protection, data protection/privacy and cybercrime. The database indicates whether or not a given country has adopted legislation, or has a draft law pending adoption. In instances where information about a country's legislation is not readily available, "no data" is indicated.  Data was collected through UNCTAD research as well as contributions by its partners, including the Commonwealth Secretariat, the Council of Europe, the International Telecommunication Union, the United Nations Commission on International Trade Law, the United Nations Economic and Social Commission for West Africa, the United Nations Office on Drugs and Crime and the World Bank. UNCTAD's focus in mapping the global legal e-commerce landscape has been on primary legislation, rather than implementing regulations. In addition, over the past few years, UNCTAD has conducted individual studies on e-commerce and related cyber laws in Latin America, and ECOWAS, ASEAN, East Africa and Central America and the Caribbean.^[101]

3.179.  ECIPE has launched the DTE project with the objective of shedding light on the types of measures that are affecting digital trade.^[102] The database currently covers 65 economies. In addition, the DTE includes an index which attempts to quantify the cost of all these measures on digital trade. The DTE database is a comprehensive database entirely dedicated to digital trade policy. It covers measures in 13 policy areas, which have been grouped within four broad clusters, i.e. fiscal restrictions, establishment restrictions, restrictions on data and trading restrictions. In association with the database, ECIPE is also producing an index and a report. The index is based on the information in the database. It relies on an analysis of the trade-restrictiveness of digital trade policies and assigns a score to the countries, from zero (most open) to 1 (least open). The index provides an overview of the digital environment of the countries as well as their ranking in each of the areas covered. The report, to be issued annually, summarises the findings of the DTE project and includes detailed information on the methodology used to classify the measures and calculate the index. 

Dispute Settlement

3.180.  The high level of dispute settlement activity witnessed in previous years has intensified in 2016. Twenty new dispute settlement reports, awards and decisions were circulated between 9 October 2015 and 9 October 2016. Seven of these were reports by panels (including a report by one compliance panel established under Article 21.5 of the DSU). The Appellate Body circulated eight reports (including two reports under Article 21.5 of the DSU). In addition, there were three awards issued by arbitrators under Article 21.3(c) of the DSU and two Article 22.6 decisions. As of the end of the review period, an additional five final panel reports issued to parties are currently being translated before they are circulated. Similar to previous years, the subject-matter of WTO dispute settlement covered many agreements, including the GATT 1994, the SCM Agreement, the Anti-Dumping Agreement, the TBT Agreement, the SPS Agreement, the GATS and the TRIPS Agreement. Several ongoing disputes involve complex factual and legal issues. Nearly all of the dispute settlement proceedings over the review period involved at least one developing country Member, either as the complainant or the respondent.

3.181.  While the high level of dispute settlement activity shows that the Membership has great confidence in the system, it has resulted in a number of panels not being able to proceed immediately after composition as not enough lawyers were immediately available to staff them. An increase in the number of staff in the Rules and Legal Affairs Divisions, as well as collaboration between the two divisions, made it possible to assign lawyers, by April 2016, to assist all of the panels that were awaiting staff as of October 2015 in accordance with the Director-General's announcement to WTO Members. Nevertheless, the continuing establishment and composition of panels over the past year has led to new delays with panels not always in a position to proceed with their work immediately after composition. As of the end of the review period, there were 28 ongoing panel and compliance panel proceedings and three panels at the composition stage. Based on the number of cases currently at the panel stage, it is expected that the workload of the Appellate Body will increase further and will remain very high in coming years. The panel report in the compliance proceedings in the EC and Certain Member States – Large Civil Aircraft dispute was circulated to WTO Members on 22 September 2016 and appealed in October. Further large appeals are expected in 2017, including an appeal in United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (Article 21.5), in which the panel report is expected to be circulated in early 2017. Overall, more than 25 panel reports could be circulated between October 2016 and October 2017 and on average two-thirds of all panel reports are appealed.

OECD contribution

3.182.  The following two topical boxes (Boxes 3.3 and 3.4) by the OECD look at the jobs that trade and GVCs sustain domestically and globally, and the benefits from GVCs in enhancing export performance.

 

Box 3.3 Trade, GVCs and Jobs

The income generated within value chains is a well understood part of the GVC story; a less researched part is the jobs that GVCs sustain domestically and globally. In 2011, over 590 million workers (in the 61 countries covered in the OECD-WTO TiVA database) were engaged in producing exports. Nearly 111 million of these worked in firms producing the intermediates used by other countries in their exports. These jobs, selling inputs into GVCs, are known as forward GVC jobs.   Although these employment figures represent a relatively small share of global employment, they are growing fast: since 1995, export jobs grew more than twice as fast as total jobs - and forward GVC jobs grew over six times faster.1   Asia is a key employment hub…   The countries of North and Southeast Asia2, supplied, in 2011, 52% of forward GVC jobs globally. China was the largest global supplier, providing 31.5% of all forward GVC jobs, with the ASEAN region providing nearly 17% of such jobs (more than India, despite a smaller combined population).   In Asia, as in other regions, the jobs associated with exports and forward GVC participation are growing fast (Table 1). In Viet Nam, for example, over five million people (10% of the working population) were engaged in producing exports of intermediate goods and services in 2011, a 330% rise from 1995.   Table 1. Jobs linked to trade in Asia   2011 Changes 1995-2011 Country Total employment Employment in exports Forward GVC jobs Total employment Employment in exports Forward GVC jobs Brunei Darussalam 188,000 37,442 9,047 47% 72% 156% Singapore 2,826,000 1,509,607 378,667 66% 60% 156% Cambodia 8,235,000 2,615,104 463,168 81% 105% 46% Malaysia 12,012,000 5,528,904 1,287,411 51% 60% 91% Philippines 37,534,000 8,361,848 2,238,441 47% 47% 150% Thailand 38,842,000 16,502,280 3,677,286 24% 75% 148% Viet Nam 52,108,000 23,246,610 5,348,009 39% 203% 336% Indonesia 108,725,000 19,089,300 5,519,080 31% 18% 97% Hong Kong, China 3,582,000 1,404,839 296,768 20% 42% 97% Chinese Taipei 10,910,000 4,604,291 1,237,168 18% 40% 133% Republic of Korea 24,010,000 7,532,696 1,815,572 16% 46% 113% Japan 62,398,000 8,163,711 2,336,723 -3% 47% 114% China 761,493,000 172,083,900 35,206,020 15% 57% 129% Note:          All values are estimates derived from a model that combines the information in the TiVA ICIO with ILO data on employment by sector. Source:      Lopez-Gonzalez (2016). _______________            [1] These values do not distinguish between jobs created and jobs destroyed. Assessing the net impact of GVCs on jobs is a complicated empirical exercise which requires digging deeper into the type of jobs that are affected as well as the interaction between domestic and foreign jobs as substitutes and the role of technological progress. (See Lopez-Gonzalez, J. (2016), “Using Foreign Factors to Enhance Domestic Export Performance: A Focus on Southeast Asia”, OECD Trade Policy Papers, No. 191, OECD Publishing, Paris. http://dx.doi.org/10.1787/5jlpq82v1jxw-en).            2 Asia includes Brunei Darussalam; Singapore; Cambodia; Malaysia; Philippines; Thailand; Viet Nam; Indonesia; Hong-Kong, China; Chinese Taipei; Rep. of Korea; Japan and China.

 

…and also supports jobs abroad   In 2011, ASEAN exports used foreign inputs produced by over 14 million workers located in other countries. China accounted for more than 4.5 million of these workers; ASEAN countries for 4 million and India for 2.5 million. ASEAN exports also supported 600,000 jobs in the European Union, 400,000 in Japan, 370,000 in North America and Mexico, 140,000 in Korea, Rep. of and 100,000 in Australia and New Zealand. Rising job interdependencies, through GVCs, means that there are increasingly shared interests in the success of other countries’ exports. More ASEAN exports now mean more European, Japanese and American export jobs.3   These jobs might also be more productive. Evidence suggests that domestic workers engaged in forward GVC jobs have, on average, a higher productivity than workers employed in the production of gross exports.   International productivity differences drive GVC interactions   Countries with higher output per worker tend to source from regions with lower output per worker (and vice versa). This means that the share that foreign workers represented in the production of exports differs markedly from how value added is shared across borders. For example, only 4.7% of the workers that China relies on to produce exports are located in other countries (that is, are engaged in producing the intermediates it uses). By contrast, 32% of the value added in Chinese exports is foreign.   This high domestic labour content of exports is characteristic of labour abundant economies such as China and ASEAN (where 84% of the workers engaged in producing exports are employed domestically). The domestic job content of exports in economies like the United States or Germany is closer to 60%, but the value added per worked is almost 10 times that of China, reflecting their relative endowment of high-skilled labour.   How can policy support export and forward GVC jobs?   Increased employment in export industries is strongly determined by the growing use of foreign value added (in agriculture, manufacturing and service sectors). Industries which source more from foreign providers expand their economic activity and demand more workers; as such foreign sourcing is complementary to employment creation in exports and GVCs.   An open trade and investment policy can help to increase the number of workers that are engaged in producing exports and in producing the intermediates sold into GVCs. While there are still some broad differences between developed and emerging countries in terms of the relative importance of skills and wages in participating in GVCs, policies aimed at increasing the skills of the labour force will help deliver better GVC outcomes. Knowledge and skills are becoming an increasingly important and perhaps more sustainable source of comparative advantage in current and future GVCs.   _______________            3 This analysis captures only the employment in exports and not overall employment. The impact of imports on employment is discussed in Autor et al. (2013a, 2013b, 2013c and 2016) and Acemoglou et al., (2014). When assessing the net employment effects, these findings need to be taken into account (see Lopez-Gonzalez, 2016 for a discussion).   Bibliography   Acemoglu, D., D. Autor, D. Dorn, G. Hanson and B. Price (2014), "Import Competition and the Great U.S. Employment Sag of the 2000s," NBER Working Papers 20395, National Bureau of Economic Research, Inc. Autor, D., D. Dorn and G. Hanson (2016), "The China Shock: Learning from Labor Market Adjustments to Large Changes in Trade". NBER Working Papers 21906, National Bureau of Economic Research. Autor, D., D. Dorn and G. Hanson (2013a), "The geography of Trade and Technology Shocks in the United States." American Economic Review, American Economic Association, vol. 103(3), pages 220-25, May. Autor, D., D. Dorn and G. Hanson (2013b), "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-68, October. Autor, D., D. Dorn, G. Hanson and J. Song (2013c), "Trade Adjustment: Worker Level Evidence" NBER Working Papers 19226, National Bureau of Economic Research, Inc. Lopez-Gonzalez, J. (2016), “Using Foreign Factors to Enhance Domestic Export Performance: A Focus on Southeast Asia”, OECD Trade Policy Papers, No. 191, OECD Publishing, Paris. http://dx.doi.org/10.1787/5jlpq82v1jxw-en

Source:   OECD.

Box 3.4 Benefits of GVCs: Using foreign value added to enhance export performance

The debate on where countries locate in the value chain is often predicated on the idea that countries should seek a higher share of the value added of the products they produce.  In fact, in terms of the domestic benefits from GVCs, it is not the share of value added that matters but rather the amount, or total value that the economic activities within the value chain generate.  Re-thinking upgrading   A country or firm's position in the value chain will largely depend on its comparative advantage and the mix of skills and resource endowments it brings to international production. For some countries or firms, this might initially involve specialising in labour intensive segments while for others it may involve specialising in high-tech elements.           A hypothetical “smiley curve” plots, for a particular product, the stages of GVC participation against their possible value added contribution (Figure 1). At the extremities, pre- and post-production activities such as R&D and marketing tend to command a higher share of the value of a particular finished product, while manufacturing or assembly activities tend to be located at the bottom of the curve (lower value added share). However, this “smiley curve” does not give the whole story on economic benefit of participating in value chains.  It does not take into consideration that firms increasingly specialise in tasks along the value chain and therefore operate across a range of products. Hence while the firm that assembles the iPhone will retain a small share of the value of phone, that firm can specialise in assembly and can grow by assembling the smartphones of other companies.  The firm can thereby reap value over a range of products and generate a much larger overall amount of domestic value added. The Smiley Curve: share of value added along the value chain Source:      Adapted from OECD (2015) based on Shih (1996) and Gereffi (2005). Ultimately, the benefits of engaging in GVCs do not depend on the position held in the value chain, but on the extent to which countries can leverage their participation to become more efficient and maximise the income and benefits from the activities they undertake now and in the future. This can be measured through changes in the domestic value added that the activity generates. In a world of GVCs, access to cheaper and more sophisticated imported inputs is key to growing domestic value added. Assembly requires sourcing from various countries in the same way that developing the high-end specs of a smartphone requires locating elements of its production in the most cost-effective location. So in fact growth in domestic value can rely on an increasing share of foreign value added in production. Policy-makers should therefore focus on the value that the firms are generating and not the share that is being performed domestically. In ASEAN, for example, the domestic value added share of exports fell from 71% to 67% between 1995 and 2011 but the volume of domestic value added in exports increased nearly fourfold (Figure 2). ASEAN increased the volume of its economic activity by relying on more foreign value added; that is, it is the total return that is important, not the share in any given production activity. In other words, a country may only be receiving $1 of value added per item, but if it is producing 500 of those items it makes a greater overall return than if it receives $2 per item on a product of which it can only sell 100 units competitively.

 

 

Figure 2. Lower share, but much higher volume, ASEAN exports in 2011 Source:   Own calculations using OECD-WTO TiVA database. Developing domestic value added is inextricably tied to foreign value added. Recent empirical analysis shows that the use of foreign value added is one of the most important determinants of positive changes in domestic value added in exports across all types of activities (agriculture, manufacturing and services) and levels of development (for developed and emerging economies). Foreign value added is therefore a complement to, rather than a substitute for, domestic value added in exports. In a world of GVCs, more than ever, export competitiveness requires import openness.

Source:   OECD.

4  POLICY DEVELOPMENTS IN TRADE IN SERVICES

4.1.  The period under review was eventful in the area of trade in services, with new measures being introduced by 41 Members in such diverse sectors as air transport, construction, distribution, finance, postal, maritime transport and telecommunications, as well as in the supply of services through the movement of natural persons. Albeit with exceptions, the trend has been towards further liberalization and the strengthening and clarification of relevant regulatory requirements. Annex 5 contains more in-depth descriptions of these services measures.

Measures affecting various service sectors

 

4.2.  The general FDI regimes of Australia; Kingdom of Bahrain; China; India; Indonesia and Ukraine were significantly changed, in most cases improving access conditions in various service sectors. In the case of Australia, recent legislative changes are part of a broad reform package commenced in 2015 with the stated aim of strengthening the foreign investment framework and applying greater scrutiny to some foreign investments. While not removing the need for Foreign Investment Review Board (FIRB) clearance of acquisitions of 'substantial interest' in Australian entities, some aspects of the regime have been improved, such as the increase of the threshold for mandatory notifications (with a preference granted to some bilateral trading partners). China, in successive regulations, expanded the legal forms available and eliminated minimum capital requirements for foreign suppliers in a number of sectors^[103], and reformed its system for the admission of foreign investment enterprises (FIEs) in all sectors of the economy (shifting from the substantial review and approval system to a "filing for the record" system). In the same vein, Ukraine abolished state registration of foreign investment in all sectors of the economy.

4.3.  Changes in their respective FDI catalogues have resulted in significant liberalization in India and Indonesia. In a recent circular, India consolidated the liberalization measures introduced over the last year, notably in the air transport, retail distribution and telecommunications sectors. The new aviation policy, part of a long-anticipated reform, allows 100% foreign ownership of scheduled and non-scheduled air transport operators, under given conditions, 100% foreign ownership of new airports and up to 74% foreign ownership (and beyond, subject to government approval) of existing airports. Full foreign ownership is also allowed for providers of ground handling services, maintenance and repair services, flying training institutes and technical training institutions. The new Indonesian FDI catalogue allows increased levels of foreign participation – ranging from 49% to 100% – in many services sectors where foreign investment had previously been prohibited, limited or not expressly permitted. The sectors benefiting from this liberalization notably include audiovisual services, business services, health care support services, fixed and mobile telecommunication services, internet services, distribution and warehousing, and various transport services. In some sectors where foreign investment has been capped at 67%, the measure foresees preferences for ASEAN investors, who are allowed to invest up to 70%.^[104] The new catalogue, however, reserved some business sectors – certain construction services and retail trading via mail or internet order – for investment by, or in partnership with, domestic SMEs. The Kingdom of Bahrain also allowed 100% foreign ownership in various sectors, such as administrative services, health and social work, information and communications, and real estate activities.

4.4.  Contrary to this trend, Namibia has recently reserved certain business activities, in particular local small businesses, such as hairdressing, street vending, retail, take-away businesses and beauty salons, for nationals only.

Distribution services

 

4.5.  In the period under review, new measures affecting the supply of distribution services were introduced by China, Colombia, India, Myanmar, the Kingdom of Saudi Arabia, Singapore and Viet Nam.

4.6.  India allowed 100% foreign ownership of business-to-business e-commerce under the automatic route (i.e. without prior authorization), and authorized established single-brand retailers to undertake retail trading through e-commerce. The Kingdom of Saudi Arabia liberalized the retail and wholesale distribution sectors, increasing the ceiling for foreign investment from 75% to 100%.

4.7.  Colombia made it mandatory for foreign companies seeking to engage in multi-level marketing and distribution of goods and services in the country to establish as branches. However, natural persons, including foreign ones, are not allowed to be representatives of multi-level marketing companies or to directly carry out those activities in Colombia.  Viet Nam introduced stricter requirements for the establishment of representative offices and branches by foreign traders. A foreign trader is prohibited from forming more than one foreign representative office and branch with a similar name in a province or a city, and, when applying to open branches in Viet Nam, foreign traders must have had an operating activity in Viet Nam for at least five years from the date of establishment or registration. China modified the taxation of cross-border business-to-consumer retail sales, while Singapore introduced new regulations on the sale and distribution of tobacco products. Finally, Myanmar allowed foreign investors to trade in construction materials, provided they form joint ventures with local firms. In addition, subject to conditions, Myanmar allowed the import and wholesale distribution of products by distributors or agents, as well as the import and wholesale distribution of products manufactured by the investor, its parent company or an affiliated company.

Financial services

 

4.8.  Important liberalization initiatives have taken place in China, India and the Philippines. In February 2016, China broadened the scope of foreign investors qualified to invest in the Chinese interbank bond market (CIBM), and removed quotas. The new measure permits most types of foreign institutional investors (e.g. commercial banks, insurance companies, securities firms, fund management companies and other asset management institutions, pension funds, charity funds, endowment funds and other mid- or long-term institution investors recognized by the PBOC) to invest in the CIBM. In June this year, China also issued new regulations allowing foreign payment card companies to operate in the country. Under the new regime, overseas institutions that only provide bank card clearing services in foreign currencies for cross-border transactions are not required to establish any bank card clearing institution within the territory of China, while overseas bank card clearing institutions wishing to engage in RMB-denominated bank card clearing business must apply for a licence to establish a bank card clearing institution within the territory of China.

4.9.  India authorized full foreign ownership of "white label ATM operations" by non-bank entities without prior authorization, reviewed the guidelines on ownership of private sector banks (which envisaged diversified shareholding in private sector banks by a single entity/corporate entity/group of related entities), allowed full foreign ownership of 18 types of non-banking finance companies (including suppliers of portfolio management, securities trading and underwriting, and financial consultancy services) and raised the foreign shareholding cap in stock exchanges to 15%.

4.10.  In February 2016, the Philippines announced the gradual lifting of the ban on new banking licences. The plan envisages the removal of all restrictions on the grant of new bank licences in 2018. In addition, a recent law allows 100% foreign ownership of adjustment companies (up from 40%), lending companies (up from 69%) and financing companies and investment houses (up from 60%).

4.11.  New restrictions on the supply of reinsurance services were introduced by Indonesia. Indonesian insurers are now required to cede all risks within motor, health, personal accident, credit, life and suretyship business lines (so-called "simple risks") to domestic Indonesian reinsurance companies. For other insurance business (so-called "non-simple risks"), a minimum of 25% of risks must be placed with domestic reinsurers and up to 75% may be placed with off-shore reinsurers. However, exceptions to the 100% local cession requirement for "simple risks" can be granted.

4.12.  Other developments worth noting include the simplification of licensing requirements for the establishment and operation of foreign banks and insurance companies in Thailand, as well as new regulatory frameworks for cross-border clearing and settlement of securities in Australia and Switzerland.

 

Maritime transport services

 

4.13.  In June 2015, China allowed sino-foreign joint ventures to establish in free trade zones to supply international transport business between Chinese ports (without limitation on share-holding) and international transport agency services (with foreign equity limited to 51%). In addition, wholly foreign-owned enterprises established in free trade zones are now allowed to supply cargo handling, container station and depot services auxiliary to international maritime transport, and international ship management services.

4.14.  In October 2015, Indonesia introduced a new regulation on freight forwarding services. The new regulation contains more detailed provisions on, inter alia, licensing, scope of business, foreign investment, liability, and sanctions, and raises minimum capital requirements. Foreign shareholding in freight forwarding companies remains limited to 49%, as per the relevant regulation issued in 2014. Further, the new regulation continues to limit the operational scope of a foreign invested freight forwarding company to a number of airports and seaports. New legislation passed by the Congress of the Philippines in June 2015 allows foreign vessels to transport and co-load foreign cargoes for domestic transshipment.

4.15.  Finally, South Africa amended its Merchant Shipping Act, 1951, so as to give effect to the Maritime Labor Convention 2006 and the Work in Fishing Convention 2007 and to provide for matters connected therewith.

Communication services

 

4.16.  Several Members introduced changes to different aspects of their telecommunication, information technology and media regulatory frameworks, mostly with a view to promoting and consolidating convergence, facilitating access, fostering competition, setting up regulatory bodies, and addressing specific regulatory issues. While many of these measures relate to domestic regulatory regimes, they have implications for suppliers operating cross-border or through a commercial presence.

4.17.  Some of the most important measures affecting market access in this sector include the amendment by Argentina of its media and telecommunications regimes, allowing cable TV owners to hold a single nationwide licence, with no regional limits, but restricting telecom companies from participating in the TV or cable business unless they do so by associating with cooperatives. The amendments still maintain existing restrictions on satellite TV providers on entering the radio, broadcast TV and pay-TV markets, or run telecommunications services.

4.18.  China simplified the approval procedures applicable to audio-visual and media services, and established pre-approval requirements for publishing mobile games. However, new regulation on online publication services, enacted in February 2016, prohibits the engagement of Sino-foreign joint ventures, Sino-foreign cooperative ventures and wholly foreign owned suppliers in network publishing services.

4.19.  Another restrictive piece of legislation was introduced by Tanzania. This involved an amendment to its Electronic and Postal Communications Act, making it mandatory for network facilities, network services and application services licensees to have a minimum local shareholding of 25% of its authorized share capital throughout the life of the licence, obtained through public offer in the stock exchange market.  Existing licensees of network facilities, network services or application services will be required to offer shares to the public and list the shares within six months from 1 July 2016, and new licence holders are to list, within two years from the date of granting of the licence. Content service licensees must have a minimum of 51% local shareholding throughout the life of the licence. New Measures for the Supervision and Administration of Universal Postal Services, released by the Chinese Ministry of Transport and effective since 1 December 2015, defines the scope of universal postal services, and grants China Post the exclusive right to handle letters.  Foreign investors and overseas postal operators are not allowed to provide postal services within the territory of China.

4.20.  New regulations relating to privacy and the transfer of data have been introduced by the European Union and the Russian Federation. In May 2016, the European Union issued the General Data Protection Regulation, which will be applicable as of 25 May 2018. The regulation applies to data processing of personal data of data subjects who are in the Union in the context of activities of an establishment of a company in the Union, and to processing of personal data by a company not established in the European Union where the processing relates to (i) offering goods or services to such data subjects in the European Union, or (ii) profiling or tracking their behaviour as far as this behaviour takes place within the European Union. The Regulation dedicates a chapter to transfers of personal data to third countries or international organizations. Separately, in July 2016, the European Union approved a new EU-U.S. privacy shield, which is expected to facilitate the transfer of personal data in the European Union to the United States. For its part, the Russian Federation introduced new data retention obligations applicable to communications service providers and internet-based data distributors.

Services supplied through the movement of natural persons

4.21.  During the period under review, several Members implemented, or modified the implementation of, quota systems for work permits issued to foreigners, and modified salary requirements or visa fees for foreigners. Most of these measures also amend relevant procedures.

4.22.  Box 4.1 below offers a closer look at the strengthening of the services-investment nexus.

Box 4.1 Globalisation, digitisation and the strengthening 'services-investment' nexus

1.        Deepening 'trade-investment-services' nexus Trade and investment have always been interlinked – since both contribute to the efficient allocation of economic resources (capital, labour and knowledge), both domestically and internationally.  However, the relationship between trade and investment is rapidly evolving as a result of technological developments, economic liberalization and new ways of organizing production and distribution. Since the mid-1990s, three related developments in the global  economy are blurring the lines between goods and services, shifting the sources of value creation, and reinforcing the complementarity and interdependence between trade (including notably services trade) and investment:   i.      The spread and continuing evolution of GVCs A key driver of the growing interconnection and interdependence of trade and investment is the globalization of production and distribution of goods and services organized around GVCs.  Today, some 70% of global trade is in intermediate goods and services; and 80% of world trade takes place within international production networks of multinational enterprises. Trade and investment have become two sides of the same strategy for producing, distributing, marketing, selling and delivering goods and services across multiple foreign markets. In this new business model, foreign direct investment (FDI) and trade are not "substitutes" anymore. Rather, more investment gives rise to more trade and, vice-versa more trade gives rise to more investment flows. i.       ii.        The growing importance of services in both global trade and investment _The share of services in global GDP has risen steadily during the past four decades, reaching 68% in 2014 (+10% since 1995).1 Services also make an increasingly important contribution to world trade. In 2011, services accounted for almost half of world exports on a value-added basis (_figure 1).2  _Concurrently, global FDI is also shifting towards services. _In 2014, services accounted for almost two‑thirds (64%) of global FDI stock – followed by manufacturing (27%) and the primary sector (7%) (figure 2).3 This shift results from the worldwide expansion of services in economies more generally, the liberalization and privatization of key services industries4 as well as the rising 'trans-nationalization' of services and services companies. Services industries increasingly produce in regional and global networks.5 Interestingly, the share of services in FDI stock is nearly the same in developed and developing economies – albeit with significant regional differences within the latter group (figure 3). _Services – such as transport, information and communication technology, logistics, supply chain management and financial services – made the rise of GVCs possible in the first place. They act as the "glue" allowing geographically dispersed firms and service suppliers to deliver just-in-time output at required specifications, in a tightly coordinated manner. As a result, GVCs tend to raise concomitantly the share of services in both trade and investment (positive "feedback link"). i.        iii.       The rise of the "digital economy" The rise of the digital economy is further transforming the 'trade-investment-services' nexus, in yet unforeseen ways. Modern services can now be unbundled and splintered into value chains, and electronically transported internationally through satellite and telecom networks.6 The offshoring of services (i.e. the cross-border outsourcing of information technology, business and/or knowledge processing) has already generated changes in the direction, as well as in the sectoral and geographic distribution of global services and FDI flows. Finally, the line between goods and services is blurring, with value creation and innovation increasingly coming from the services embodied in the manufacturing and distribution of goods.7 ______________      1 World Bank, World Development Indicators (last updated 01/11/2016).           2 Latest available estimate. The share of services in world exports in value-added terms accounts for the value of services embodied in exported goods. _     3 UNCTAD, World Investment Report 2016.  In comparison, the services' share in global FDI amounted to 25% in 1970 and to less than 50% in 1990. _     4 Such as financial, telecommunications, energy-related, environmental, and postal and courier services. _     5 See for instance Lanz, R. and Maurer, A. (2015), Services and Global Value Chains – Some Evidence on Servicification of Manufacturing and Services Networks, WTO Working Paper ERSD-2015-03. _     6 Ghani, E., Grover, A., Kharas, H. (2011), Can services be the next growth escalator?, Vox, 12 December 2011. _     7 For example, energy systems shift from a centrally, supply-side approach to a demand-oriented model as digital services and technologies create a novel nexus between production, transportation, distribution and consumption. As a result, energy increasingly "becomes a service".

 

_Figure 1: World gross exports (2011), value-added inputs to exports (2011) and global inward FDI stock (2014), by sector                (%) Source: − Share of services in world exports (BoP) and value-added inputs to exports: WTO and OECD-       WTO TiVA Database; − Global inward FDI stock: UNCTAD, World Investment Report 2016. _Figure 2: Global inward FDI stock, by sector, 2014 (Trillions of dollars and %) Source: UNCTAD, World Investment Report 2016, FDI/MNE database (www.unctad.org/fdistatistics). _Figure 3: Global inward FDI stock, sectoral distribution by grouping and region, 2014                (%) Source: UNCTAD, World Investment Report 2016, FDI/MNE database (www.unctad.org/fdistatistics).

2.        In services, trade is investment and investment is trade Nowhere is the inter-relationship, and overlap, between trade and investment more 'tangible' than in services. As reflected in the General Agreement on Trade in Services (GATS), in many instances trade in services is (and implies) investment; and, conversely, investing for the purpose of supplying a service is considered as trade. Recognizing that supplying services to a foreign market often involves establishing a commercial presence (i.e. an investment) in that market, the GATS has defined "mode 3" as the supply of a service "by a service supplier of one [WTO] Member through commercial presence in the territory of another [WTO] Member".8,9 Thus, under the GATS, foreign investment is identified as a form of trade subject to the disciplines of the Agreement. When WTO Members undertake commitments on market access under mode 3 in the GATS, they commit to open a given service sector to foreign investment and, consequently, to allow at least some foreign participation in that sector. Mode 3 is the commercially most significant means of supplying services, representing some 55 to 60% of all trade covered by the GATS. Accordingly, when it comes to services, barriers to trade and to investment are closely intertwined – as evidenced also in Annex 5 to this report on 'Measures Affecting Trade in Services'. Many of the (cross-sectoral as well as sector-specific) measures cited therein are investment measures.  They include restrictions on foreign ownership or on the legal form (e.g. only joint-ventures are allowed); non-automatic approval requirements for foreign investors; investment screening measures; nationality requirements for board members and/or managers; commercial presence and/or performance requirements; etc. 3.        Policy consequences – the need for greater trade-investment policy coherence Trade and investment are increasingly interdependent and intertwined − driven by the spread of global supply chains, the expansion of services trade, and the rise of digital commerce. With services and investment flows being increasingly interdependent, restrictive measures in one area may constitute obstacles across the other area as well. As their production and distribution networks become more integrated and global, multinational enterprises are pressing for international trade and investment rules that are more integrated and global, too. Similarly, it becomes crucial for governments to ensure consistency across their trade and investment obligations/commitments in order to minimize the risk of legal tension regarding their implementation. In that context, it is worth noting that at the bilateral, regional and 'mega-regional' level, new-generation agreements (in fact regional trade and investment agreements (RTIAs)) are redefining the trade-investment policy interface by addressing trade and investment measures in a more integrated manner – including across goods and services. As a result, such agreements often include a range of related disciplines to facilitate both trade and investment, with chapters notably on the temporary movement of business people, domestic regulation10, competition or regulatory transparency that apply to both trade (and notably trade in services) and investment.  _______________ 8 In the GATS, the concept of "commercial presence" is defined very broadly, covering any type of business and professional establishment. 9 The GATS applies to measures "affecting trade in services" which, in turn, is defined to consist of four types of transactions or modes of supply. Apart from the conventional concept of cross-border product flows (mode 1), these are supplies to consumers and/or their property that stay within another WTO Member’s territory (mode 2), as well as supplies provided via foreign commercial presence (mode 3) and the presence of foreign natural persons (mode 4) within a WTO Member’s own jurisdiction. 10 The domestic regulation obligations often apply both to cross-border supply of services and to services supplied by a covered investment, i.e. mode 3 (and thus to investment in service sectors).

Source:   WTO Secretariat.

5  POLICY DEVELOPMENTS IN TRADE AND INTELLECTUAL PROPERTY

5.1.  The linkage between intellectual property (IP) and trade strengthened during the review period, as evidenced by continued growth in the share in global trade of IP-intensive goods and services, and of trade in IP rights (IPRs) as such. This trend was supported by technological innovation, new business models including e-commerce, and the wider dissemination of information and telecommunications technology. These developments were also apparent in the pattern of recent notifications of national legislative measures submitted to the TRIPS Council and the measures reviewed in national trade policy reviews. These reviews illustrated how the adoption of national and regional policies related to IP and the digital economy responded to the changing technological landscape and the increasing significance of IP in economic development.

Box 5.1 Recent IP policy initiatives – three examples

Creative India – Innovative India In May 2016, the Indian Government released its National Intellectual Property Policy. The objective of the Policy is to catalyse the potential of IP for economic growth and development while protecting the public interest. The Policy recognizes the need to raise awareness of the importance of IP rights as a marketable financial asset and economic tool.[105] Digital Single Market – European Union The Digital Single Market Strategy aims to revamp regulations to improve access to digital goods and services, enhance the business environment to match the pace of technology and ensure that digitalization serves as a driver for growth. It is estimated that the EU Digital Single Market is worth €415 billion per year.[106] On 14 September 2016, the European Commission proposed modernizing copyright rules with a view to increase cultural diversity and content available online.[107] This proposal aims to update the regulatory framework and take into account technological developments to foster access to copyrighted works in the European Union market. Intellectual Property Financial Policy – Republic of Korea The Intellectual Property Financial Policy, implemented by the Korean Intellectual Property Office, provides for the utilization of IP assets (e.g. patents) as collateral when SMEs are raising funds. The Policy has allowed Korean SMEs to access the financial market and obtain the necessary resources to invest and operate by utilizing their high-value intangible property.

Source:   WTO Secretariat.

5.2.  The link between balanced IP systems, public policy goals and international trade was illustrated by the entry into force, on 30 September 2016, of the WIPO Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled (Marrakesh VIP Treaty).^[108]  In providing for exceptions and limitations to copyright works to enhance access to formats for visually impaired persons, it facilitates the exchange of these works across borders to serve those beneficiaries. Currently, the VIP Treaty has 25 Contracting Parties.

5.3.  The expected entry into force of the Protocol Amending the TRIPS Agreement will make this public health flexibility an integral and permanent part of the TRIPS Agreement. Almost two-thirds of WTO Members have already deposited their respective instruments of acceptance. The entry into force of the TRIPS Amendment will consolidate this avenue for exports of generic medicines, which will benefit Members which rely on imported medicines. Members annually review the implementation of the Paragraph 6 System in the framework of the TRIPS Council and have discussed its implementation at the national level during trade policy reviews.

5.4.  The network of bilateral and RTAs that contain IP provisions continues to expand. As of October 2016, the WTO RTA Database contained 148 RTAs that incorporate IP-related provisions on, inter alia: enforcement measures applied at the border or covering the online environment, examination and administration of industrial property rights, the scope of rights accorded to IP holders, and the substantive standards defining the eligibility for protection of certain forms of IP subject matter. Some RTAs also cover exhaustion of IPRs and provide for competition policy measures that may have implications for the IP system. An increasing number of RTAs, or their "side-letters", contain provisions related to e-commerce and IP. Amongst the e-commerce provisions, those on online copyright protection tend to be more detailed.

5.5.  Intangible exchanges in IP are an integral part of GVCs. Collaborative work between international organizations and their members continues to further develop the collection of data on cross-border exchanges of IP, as part of the research and analysis of GVCs^[109] and of digital trade.^[110] One of the data sources available to the WTO Secretariat is the trade in financial services statistics on the import and export of charges for the use of IP.^[111] Table 5.1 shows the exports of charges for the use of IP, by region, for the years 2014 and 2015, as well as the percentage share change in 2010-2015, 2014 and 2015. While the participation of the major exporters - North America and Europe - has slightly decreased, the participation of other regions - Central and South America, the CIS, the Middle East and Asia - has grown. This illustrates the diversifying trend in international trade in IP, with the increasing engagement in global trade of emerging economies and some developing countries as producers and exporters of IP.

Table 5.1 Exports of charges for the use of IP by region

	Value US$ billions			Share %			Annual % change
	2014	2015		2010	2015		2010-15	2014	2015
Exports
World	305	295		100.0	100.0		4	4	-3
North America	135	131		45.6	44.0		3	0	-3
South and Central America	1	1		0.3	0.4		14	-2	19
Europe	119	113		39.5	38.0		3	5	-5
European Union (28)	101	98		30.7	33.0		6	12	-3
Commonwealth of Independent States (CIS)	1	1		0.2	0.3		10	-10	2
Africa	0	0		0.1	0.1		-1	2	-9
Middle East	1	1		0.2	0.3		15	8	-12
Asia	50	50		14.1	17.0		8	15	0

Source: 2016 WTO Statistical Review.

TRIPS Council

5.6.  In October 2015, following a request by the LDC Group^[112], the TRIPS Council agreed to extend the transition period for the pharmaceutical sector for LDCs until 2033, ensuring maximum flexibility for LDCs in line with the Sustainable Development Goals.^[113] This is particularly relevant in practice both for those LDCs which remain highly reliant on imported medicines, and for local and regional programmes to build production capacity for medicines that would help service LDC needs. Members also undertook the Annual Review of the Paragraph 6 System, recognizing the importance of the System and agreeing to extend the deadline for accepting the TRIPS Amendment until end-2017.  A study of Members' implementation of the System by exporters concluded that around 80% of the world's pharmaceutical export capacity is now covered by the System^[114], thus greatly increasing the potential scope of its use by those countries in need of imports of affordable medicines, notably LDCs.   

5.7.  The TRIPS Council debate has continued on the question of whether non-violation and situation complaints should be available under the TRIPS Agreement, following the decision to extend the current moratorium on such disputes.^[115] Discussions covered the need to engage in factual analysis and work towards a permanent solution.

5.8.  Transparency obligations in the TRIPS Agreement have always been an important part of the work of the TRIPS Council. During the review period, Members notified legislative developments regarding copyrights and related rights, trademarks, geographical indications, patents, industrial designs and, enforcement measures. For example, during the review of its national legislation, Fiji noted that IP has had a growing influence on its trade relations, and that trademarks and patents have become a source of economic and technological development. This resulted in the establishment of the Fiji Intellectual Property Office, under the Office of the Attorney General.^[116]

5.9.  Japan notified the amendment to its "Unfair Competition Prevention Act".^[117]  This amendment strengthened the combat against trade-secret infringements, and expanded the scope of penalties for infringements to cover acquisition of trade secrets under management of Japanese companies which are stored in servers overseas. Chinese Taipei notified operational directions governing the mutual cooperation between its Intellectual Property Office (TIPO) and the Japan Patent Office (JPO) in the field of deposit of biological materials. The main objective of this legislation is to facilitate the process for applicants in both jurisdictions, and to implement the Mutual Cooperation Agreement in the Field of Deposit of Microorganisms for the Purposes of Patent Procedure, between TIPO and JPO.^[118] Mexico notified the "Support System for Patent Applications Management for the Central American Countries and the Dominican Republic"^[119], which is a service provided by the Mexican Industrial Property Institute (IMPI) to help various national industrial property offices in Latin America, the Caribbean and English-speaking Africa to carry out the patentability examinations for which they are responsible. Open exchanges and availability of information on TRIPS-related legislative developments ensure smooth access to the protection of IPRs and due process.

5.10.  At the June 2016 TRIPS Council meeting, discussions on the Work Programme on Electronic Commerce were resumed, at the request of Canada^[120], which shared its experience on the suppression of online sales of counterfeit products. Members have recently notified provisions that are applicable in the digital environment, for example, concerning online copyright and trademark protection.^[121] Additionally, during the reporting period, Members continued sharing experiences on different aspects of IP and innovation. These included SMEs and start-up enterprises in the area of new and mobile technologies, illustrating the role that IP played in bringing innovation to the market, and education on IP as an essential factor for countries to fully exploit their potential for innovation. Other experiences included how to use the IP regime to foster green technologies and innovation to tackle climate change and the transfer of environmentally friendly technologies.

TRIPS-related Discussions in Trade Policy Reviews

5.11.  Trade Policy Reviews during the review period included discussions of a wide spectrum of IP issues with bearing on trade policy, including on exhaustion of IPRs, copyright registration and management organizations, use of copyright statutory licences, protection of well-known trademarks, geographical indications, expedite screening and examination of green technology patents, patentability criteria, test data protection, anti-competitive practices, enforcement measures online and, at the border, adjudication procedures, and, judicial review of administrative decisions. National policies and strategies aimed at fostering innovation and IP as a tool for economic growth were also discussed.

5.12.  In the first trade policy review of the Russian Federation, Members noted the significant reforms undertaken by the Russian Federation in the area of IP, inter alia concerning the amendments to the Civil Code in 2014, the establishment of the Intellectual Property Rights Court in July 2013, and the "Strategy for Innovative Development 2020". Members enquired about implementation of international exhaustion, administrative and enforcement framework, the inclusion of royalty payments in customs valuation methodologies, protection of databases, State accreditation for collective copyright management, protection of well-known trademarks in the Eurasian Economic Union, trademark invalidation, the geographical indications regime, the Eurasian Economic Union patent regime and fees, compulsory licences, protection of test data and undisclosed information, enforcement, online anti‑piracy measures, and preliminary injunctions and judicial procedures.

6  TRANSPARENCY OF TRADE POLICIES

Notifications and Surveillance in WTO Councils and Committees

6.1.  This Section aims to provide an overview of the compliance and timeliness of Members' notifications to the WTO. Notifications are the primary instrument for ensuring transparency in the multilateral trading system; they are submitted by each Member and reviewed by the relevant bodies of the WTO. The importance attached by governments to this issue explains the very elaborate system of notifications and cross-notifications put in place under the terms of most Agreements. The Section covers the compliance record of notification requirements in the different WTO Bodies.^[122]

Agriculture

6.2.  The CoA continued its review of the implementation of Members' commitments under the Agreement. Timely and complete notifications are fundamental for effective monitoring of the implementation of commitments. Twelve distinct notification requirements are applicable in the domain of agriculture covering the following areas: market access, domestic support, export subsidies, export prohibitions or restrictions and the follow-up to the Marrakesh NFIDC Decision. The applicability of a notification requirement to a Member is largely dependent on its specific commitments under the AoA. Out of the 12 notification requirements the following five are "regular" or "annual" notification requirements: (i) imports under tariff and other quotas (MA:2), (ii) special safeguards (MA:5), (iii) domestic support (DS:1), (iv) export subsidies (ES:1) and (v) total exports (ES:2). Annual notifications are required to be submitted no later than a certain number of days following the end of the year in question, in accordance with the deadlines set out in document G/AG/2.

6.3.  For the period 1995-2014, there are a total of 1,663 outstanding regular notifications.^[123] Out of the five annual notification requirements, domestic support (Table DS:1) and export subsidy (Table ES:1) notifications have the highest number of outstanding notifications with 743  and 764 of notifications pending, respectively (Chart 6.1).^[124]

Chart.6.1 Total outstanding notifications per type of notification requirement (1995‑2014)

 

Note:       MA:2 - Imports under tariff and other quotas, MA:5 - Special safeguards, DS:1 - Domestic support, ES:1 - Export subsidies, ES:2 - Total exports. This number represents reported years and does not necessarily match the number of notifications submitted on the same period since some notifications covered more than one year.

Source:   WTO Secretariat.

6.4.  While a large number of outstanding notifications remain, there has been a concerted effort by Members to bring their notifications up-to-date, as can be seen in Chart 6.2, where notifications reporting more than one year (which might include the required year and/or any pending previous years) have been increasingly submitted by Members. From 2009-2015, the average number of years reported per notification has been close to three.

Chart 6.2 Number of regular notifications in agriculture and years reported (1995‑2016^a)

a             Until 1 September 2016.

Note:       The total number of years reported might include the required year and/or any pending previous year(s). For example, in 2009 Mexico submitted one Table MA:2 notification reporting in-quota imports for eight years (2000-2007). For the purpose of this table, this means that Mexico reported eight implementation years.

Source:   WTO Secretariat.

6.5.  From 15 October 2015 to 1 September 2016, Members submitted 167 notifications, (including addenda and corrigenda). A total of 163 questions were posed during the March, June and September 2016 CoA meetings concerning these and previously submitted notifications. As seen in Chart 6.3, during the review period the majority of questions raised related to domestic support notifications (72%). In particular, domestic support notifications by China, Israel, Brazil, Mexico, Panama, United Arab Emirates, United States and Viet Nam were the subject of a considerable number of questions.

Chart 6.3 Number of questions raised per section (mid-October 2015 – September 2016)

 

Source:   WTO Secretariat.

Quantitative Restrictions (QRs)

6.6.  The notification of quantitative restrictions to the Market Access Committee is an obligation established by the 2012 Decision on Notification Procedures for Quantitative Restrictions (G/L/59/Rev.1). The Decision requires Members to notify every two years the QRs they have in force, as well as any changes in the interim. Since the last report, two Members have submitted complete notifications for the period 2012-14; five Members have submitted complete notifications for the period 2014-16 and eight Members for the period 2016‑18. 

6.7.  The Decision on Reverse Notification of Non-Tariff Measures (G/L/60) gives Members the possibility of making reverse notifications of non-tariff measures imposed by another Member subject to certain conditions. Only one notification has been made since the adoption of the decision in 1995.

Table 6.1 Notification procedures for QRs

No.	Notification requirement	Total number of notifications received as of 17 October 2016, by biennial period
1	Quantitative restrictions in force (regular notification)	2012-2014: 28 notifications from 22 Members. 2014-2016: 30 notifications from 25 Members. 2016-2018: eight notifications from eight Members.
2	Changes to the quantitative restrictions maintained (ad hoc) or introduction of new restrictions	2012-2014: two Members notified changes to their existing QRs 2014-2016: one Member notified changes to its existing QRs 2016-2018: no Member has notified changes
3	Restrictions maintained by other Members (reverse notification)	No Member has notified.
4	Non-tariff measures, maintained by other Members (reverse notification)	No Member has notified.

Source:   WTO Secretariat.

Import Licensing

6.8.  Notification requirements in the area of import licensing procedures result from the WTO Agreement on Import Licensing Procedures and are complemented by the "Procedures for Notification and Review under the Agreement on Import Licensing Procedures" adopted by the Committee on Import Licensing in 1995 (G/LIC/3) and the "Understanding on Procedures for the Review of Notifications submitted under the Agreement on Import Licensing Procedures" adopted on 23 October 1996 (G/LIC/4). The notification requirements are described in Table 6.2.

Table 6.2 Notification procedures for import licensing

No.	Notification requirement	Established in:	Type	Notification Category
1	Submission of full texts of relevant laws and regulations and any changes thereto	Article 8.2(b) of the Agreement; G/LIC/3	One-off and ad hoc	N/1
2	Sources in which information concerning import licensing procedures are published	Article 1.4(a) of the Agreement; G/LIC/3	One-off and ad hoc	N/1
3	New import licensing procedures and changes to existing procedures	Article 5 of the Agreement	Ad hoc	N/2
4	Reply to the Questionnaire on Import Licensing Procedures	Article 7.3 of the Agreement; G/LIC/2	Annual, by 30 September each year	N/3

Source: WTO Secretariat.

6.9.  The N/1 notification requires a WTO Member to notify all relevant laws and regulations with regard to import licensing procedures as well as identify the source/publications containing such information. It contains both a one-off element (notification of existing laws and regulations and source/publications) and an ad hoc element (changes to laws and regulations thereafter). In theory, a WTO Member should have at least one N/1 submission, providing its laws and regulations on import licensing and indicating that its Government does not maintain any import licensing regime.

6.10.  The N/2 notification is an obligation for Members to notify new licensing procedures or changes being made to existing procedures. It is ad hoc in nature and only due when specific circumstances occur. The N/3 notification obliges each Member to reply to a Questionnaire describing all import licensing procedures in place by 30 September every year.

6.11.  As of 11 October 2016, 84 new notifications under the Agreement on Import Licensing have been received and circulated by the Secretariat. Of these, 24 were N/1 notifications from the following members: Tajikistan; Russian Federation; Bolivia, Plurinational State of; European Union; Macao, China; Afghanistan; Paraguay; Chinese Taipei; Seychelles; Brazil; Ecuador and Philippines.

6.12.  The Committee also reviewed 17 N/2 notifications from the following members: Indonesia; Russian Federation; Argentina; Jamaica; El Salvador; European Union; Bolivia, Plurinational State of; Hong Kong, China; Paraguay; Brazil and Malaysia. Finally, 43 N/3 notifications have been received and reviewed from the following members: European Union; Russian Federation; Korea, Rep. of; Indonesia; Switzerland; Costa Rica; Kuwait, State of; Dominican Republic; Canada; Australia; India; Malaysia; Mali; Singapore; Colombia; Uruguay; Jamaica; Seychelles; El Salvador; Cameroon; Panama; Macao, China; Kazakhstan; Mauritius; Ukraine; Honduras; Chinese Taipei; Brazil; Cuba; Hong Kong, China; Japan; Jordan; Turkey and Philippines.

Rules of Origin

6.13.  The Agreement on Rules of Origin contains two notification obligations, described in Table 6.3. Recent notifications have improved the overall compliance with notification obligations; about 70% of Members have already submitted information about their preferential or non‑preferential rules of origin (or the absence thereof).

Table 6.3 Notification procedures for rules of origin

No.	Legal source	Notification requirement	Type
1	Article 5 of the Agreement	Non-Preferential Rules of Origin: All Members must submit a notification indicating: -        if they apply non-preferential rules of origin (informing what the rules are); -        or if they do not apply any non-preferential rules of origin. Changes to the legislation must also be notified.	One-off
2	Paragraph 4 of Annex II of the Agreement	Preferential Rules of Origin: Members only notify if they adopt new preferential rules of origin or if they make changes to existing preferential rules (e.g. new FTAs or other new trade preferences).	Ad hoc

Source:   WTO Secretariat.

6.14.  To date, 47 Members have notified the Committee that they do implement some type of non‑preferential rules of origin; 56 Members have notified that they do not implement rules of origin for non-preferential purposes; whereas 35 Members have never submitted notifications to the Committee.

6.15.  A recent development in the area of rules of origin in the WTO is the Ministerial Decision on Preferential Rules of Origin for LDCs (WT/L/917/Add.1), adopted during the meeting in Nairobi. The Nairobi Decision builds on the earlier 2013 Bali Ministerial Decision on preferential rules of origin by providing more detailed directions on specific issues, such as methods for determining when a product qualifies as “made in an LDC”, and when inputs from other sources can be “cumulated” — or combined together — into the consideration of origin. The provisions also call on preference-granting Members to consider simplifying documentary and procedural requirements related to origin as well as other measures to further streamline customs procedures. Implementation of the decision is expected to meaningfully facilitate exports from LDCs to developed and developing preference-granting Members.

Customs Valuation

6.16.  Notifications in the area of customs valuation stem not only from the Agreement on Customs Valuation itself, but also from a number of Decisions that have been adopted by the Committee on Customs Valuation. There are five main notification requirements (Table 6.4).

Table 6.4 Notification procedures for customs valuation

No.	Notification requirement	Established in:	Type
1	Submission of complete texts of national legislation (laws, regulations, etc.)	Decision on the Notification and circulation of national legislation  in accordance with Article 22 of the Agreement (G/VAL/5, B.2, paragraph (i))	One-off
2	Changes in laws and regulations on customs valuation	Article 22.2 of the Agreement on Customs Valuation	Ad hoc
3	Responses to the checklist of issues	Decision on the Checklist of Issues (G/VAL/5, B.3)	One-off
4	Decision on interest charges - Date of implementation	Decision on the treatment of interest charges in the customs value of imported goods (G/VAL/5, A.3, last paragraph)	One-off
5	Decision on Carrier Media (software) - Application of paragraph 2	Decision on the valuation of carrier media bearing software for data processing equipment (G/VAL/5, A.4, paragraph 2)	Ad hoc

Source:   WTO Secretariat.

6.17.  The notification requirements in the area of customs valuation are either one-off or ad hoc, which means that different approaches are required to estimate their level of compliance. In addition, any estimate must take into account that the European Union notifies on behalf a group of Members, and that this number has changed several times since the WTO entered into force.

6.18.  Taking all these elements into account, the maximum number of one-off notifications as at 10 October 2016 cover 135 Members (counting the European Union as one). This denominator has been used to estimate the degree of compliance for the following notifications: (i) submission of the complete texts of national legislation; (ii) responses to the checklist of issues; and (iii) date of implementation of the Decision on the treatment of interest charges in the customs value of imported goods (Table 6.5).

6.19.  Because ad hoc notifications are, by definition, only due when specific circumstances occur, there is no maximum number of notifications that can be used to estimate the overall degree of compliance. This is the case of the: (i) changes in laws and regulations on customs valuation; and (ii) application of paragraph 2 of the Decision on Carrier Media (software).

Table 6.5 Compliance in customs valuation notifications

No	Notification requirement	Compliance as of 15 October 2016
1	Submission of complete texts of national legislation (laws, regulations, etc.)	The large bulk of these notifications were received before 2003 and not many notifications have been received since then.  The current compliance rate is approximately 73%, as 37 Members still need to fulfil this notification requirement.
2	Changes in laws and regulations on customs valuation	Since this is an ad hoc type of notification (i.e. a Member is only required to notify if there is a change in its national legislation), it is not possible to assess the level of compliance.  Only 37 notifications of changes to their national legislation on customs valuation have been notified by 28 Members since 1995.
3	Responses to the checklist of issues	The large bulk of these notifications were received before 2003 and progress has been very slow since then.  The current compliance level stands at approximately 49%, as 69 Members still need to fulfil this requirement.
4	Decision on interest charges - Date of implementation	The level of compliance of this notification is very low as 44 of the Members have submitted it.  This means that 90 Members still need to notify the date in which they implemented the Decision on interest charges.
5	Decision on Carrier Media (software) - Application of paragraph 2	Since this is an ad hoc notification (i.e. a Member is only required to notify if it imports of carrier media bearing data and software are valued as provided for in paragraph 2 of the Decision), it is not possible to assess the level of compliance.  To date, 41 Members have made this notification, but it is not possible to know whether there are Members applying the paragraph without having submitted the notification.

Source:   WTO Secretariat.

Preshipment Inspection

6.20.  Article 5 of the Agreement on Preshipment Inspection (PSI) provides that Members shall submit to the Secretariat copies of the laws and regulations by which they put the Agreement into force, as well as copies of any other laws and regulations relating to preshipment inspection. Changes in such laws and regulations shall also be notified immediately after their publication. Since the last report, two Members have submitted notifications relating to PSI to the Committee on Customs Valuation, which is the body responsible for administering the implementation of the PSI agreement (see Table 6.6).

Table 6.6 Compliance with PSI notifications

No	Notification requirement	Notifications received in 2016 (up to 17 October)
1	Submission of copies of laws and regulations putting the Agreement into force	No Member
2	Other laws and regulations relating to PSI	No Member
3	Changes in laws and regulations relating to PSI	No Member
4	Absence of laws and regulations on PSI	Two Members -  Vanuatu and Kazakhstan

Source:   WTO Secretariat.

Integrated Database

6.21.  The submission of tariff and import information to the Integrated Database (IDB) is a notification requirement provided in the General Council Decision of 16 July 1997.^[125] To overcome gaps in Members' notifications and delays in providing information to users the Committee on Market Access adopted in July 2009^[126] a framework to enhance the IDB notifications' compliance. The decision gave the WTO Secretariat flexibility to collect missing information from official sources and after approval from the Member concerned, to include it in the IDB. Therefore, the information included in the IDB is either directly notified to the Secretariat by Members or collected by the Secretariat.

6.22.  The IDB follows a unique pattern, as it is the only notifications' database in the WTO where Members have authorized the Secretariat to proactively collect missing information to assist them in complying with their notification requirements. Since the adoption of the IDB framework decision in 2009, the IDB completeness and timeliness have significantly improved. The IDB data collection policy could serve as an example of good‑practice for other databases, as of the establishment of a network of data providers and a set of reliable data sources.

6.23.  Charts 6.4 and 6.5 present the number of tariff and import notifications received by the IDB, and show the number of notifications directly submitted by Members or collected by the Secretariat.

6.24.  As of October 2016, the yearly average coverage of IDB notifications was 79% for tariffs and 66% for imports. The highest year coverage for tariffs was in 2010 with 97% complete coverage.  For imports, however, it was in 2006 with a data-coverage of 86%. As of the last IDB status of submissions^[127], about 27 Members (of which 19 are developing) have complete tariff data up to the year 2014 and 23 Members (of which 15 are developing) have complete imports up to 2013. These same 23 Members have complete data for both tariff and imports.

 

Chart 6.4 Completeness of IDB tariff notifications^a

(%)

 

a             Data for 2016 cover January to October.

Note:       The completeness of notifications is calculated on the number of Members' schedules and not on the number of WTO Members (i.e. European Union member States are included in the European Union schedule and Lichtenstein in Switzerland's schedule).

Source:   WTO Secretariat.

6.25.  As shown in Chart 6.4, the IDB tariff coverage has been at more than 90% since 2006 until 2013. National submissions have priority over data collected from other sources and when valid, they supersede collected data. The completeness of import data is slightly lower (Chart 6.5) mainly because very few countries make available publicly detailed import statistics, making the Secretariat's work to find reliable sources of import statistics very challenging. Nonetheless, from 2004 to 2014, more than a quarter of IDB import statistics were collected by the Secretariat, with a peak in 2011 with more than 40% of imports collected.

6.26.  The IDB notifications' timelines is illustrated in Table 6.7 where the percentage of data available within the years of the deadlines for tariffs and imports is provided since 2000. In cases where a valid submission has been received on time but was replaced or revised at a later date, the initial submission is included in the count of timely notification. The same is true for data collected within the deadline but eventually replaced either by a notification or by another framework-sourced data.^[128] Timeliness has improved across the years especially for tariffs. In 2013, 75% of tariff data were submitted and/or collected on time. On the other hand, for imports, timeliness is a bigger issue. The timely notification and/or collection from another source have yielded generally less than half of expected data, except in 2010 when 50% of data were available by the deadline. Hence, on imports, more data awareness measures need to be undertaken by the Secretariat both in terms of proactive data gathering from alternative sources as well as urging Members to make their notifications in a timely manner.  One measure that was put in place to address this issue is facilitating data notification through a dynamic, user-friendly and secure internet-based application which became operational during the second quarter of this year.

Chart 6.5 Completeness of IDB import notifications

(%)

Note:       The completeness of notifications is calculated on the number of Members' schedules and not on the number of WTO Members (i.e. European Union member States are included in the European Union schedule and Lichtenstein in Switzerland's schedule).

Source:   WTO Secretariat.

Table 6.7 Percentage of IDB data available within the year of the deadline^a

 (% of expected schedules)

	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
Tariff	26	33	42	32	31	28	24	22	26	38	53	69	62	75	51	50	41
Imports	29	34	29	27	19	17	22	21	31	27	50	45	43	38	21	22	n.a.

a             The numbers slightly differ from those reported in the past as the review of some submissions indicated that data were not suitable for inclusion in the IDB because of technical problems.

n.a.         Not applicable.

Source:   IDB, 5 October 2016.

6.27.  The notification of non-MFN regimes to the IDB, mostly the preferential tariffs resulting from FTAs and RTAs is becoming more regular. During 2015 and 2016, 69% of applied tariff notifications included at least a non-MFN tariff regime, usually a preferential tariff regime. This information is of great value and the revised status of submissions document circulated on paper during the Committee on Market Access regular meeting reflect these additional data.  The old format which includes the status of submission from 1996 for all Members and all years is now only available electronically.

Anti-Dumping

6.28.  Pursuant to Article 16.4 of the Agreement on the Implementation of Article VI of GATT 1994 ("the Anti-Dumping Agreement"), all Members are required to submit to the Committee on Anti‑Dumping Practices, on a semi-annual basis, reports of any anti-dumping actions taken within the preceding six months, using an agreed standard form. Members that have not established an authority competent to conduct anti-dumping investigations have the option to make a one-time "nil" notification, valid unless and until they establish an investigating authority, in lieu of submitting nil notifications each six months.

6.29.  Approximately 45 Members (counting the European Union as a single Member) regularly submit semi‑annual reports, either of anti-dumping actions taken, or of no actions having been taken, during the preceding six months. Forty‑seven Members have submitted one-time nil notifications. The remaining (approximately 40) Members generally fail to submit semi-annual reports in respect of anti-dumping actions.

Subsidies and Countervailing Measures

6.30.  The trends in the status of compliance with the obligation to notify subsidies to the Committee on Subsidies and Countervailing Measures under Article 25.1 during the period 1995‑2015 are shown in Table 6.8. Subsidy notifications are required every two years and the most recent notifications were due on 30 June 2015. Further notifications for this period are expected to be received. The share of Members that have notified subsidies has remained between 39% and 50% between 1995 and 2013.^[129] The share of Members that made a "nil" notification fell significantly over the same period. Excluding 1995 and 2015, the share of Members making the required notifications has not exceeded 70%, and generally has hovered around 57%. Conversely, the share of Members not making any notification registered a substantial increase since 1995, from 27% to 44%, albeit with some intervening fluctuations.

Table 6.8 Status of subsidy notifications

New and full subsidy notification	1995	1998	2001	2003	2005	2007	2009	2011	2013	2015
	% share of total
Members that notified subsidies	50	39	44	44	46	47	46	46	44	24
Members that made a "nil" notification	23	15	15	12	11	10	15	16	15	4
Sub‑total notifying Members	73	54	59	56	57	57	61	62	59	28
Members that did not make any notification	27	46	41	44	43	43	39	38	41	72

Source:   WTO Secretariat.

6.31.  Pursuant to Article 25.11 of the SCM Agreement, all Members are required to submit to the SCM Committee, on a semi-annual basis, reports of any countervailing duty actions taken within the preceding six months using an agreed standard form. Members that have not established an authority competent to conduct countervailing duty investigations have the option to make a one‑time "nil" notification, valid unless and until they establish an investigating authority, in lieu of submitting nil notifications each six months.

6.32.  Approximately 45 Members (counting the European Union as a single Member) regularly submit semi‑annual reports, either of countervailing duty actions taken, or of no actions having been taken, during the preceding six months. Thirty-four Members have submitted one-time nil notifications. The remaining (approximately 57) Members generally fail to submit semi-annual reports in respect of countervailing duty actions.

State Trading Enterprises

6.33.  Notifications related to state trading enterprises are reviewed by the Working Party on State Trading Enterprises on behalf of the CTG. In July 2012, the Council agreed to extend indefinitely the new biannual frequency of new and full notifications. Thus, all WTO Members must notify their state trading enterprises every two years, with no updating notifications in the intervening years.

6.34.  Table 6.9 presents notifications received for the years in which a new and full notification was due. The table shows a declining trend in total notifications over the period examined, which has accentuated over the past few years.  Although it is likely that additional notifications will be received for more recent periods, it remains clear that compliance with this notification requirement has been deteriorating. 

Table 6.9 Status of STE notifications^a

New and full STE notification	% share of total
	1995	1998	2001	2004	2006	2008	2010	2012	2014	2016
Members submitting notifications (including "nil" notifications)	67	54	55	50	48	49	49	42	37	28

a             As at 10 October 2016

Source:   WTO Secretariat.

Balance-of-Payments Restrictions

6.35.  Notification obligations in relation to restrictions to safeguard a country's balance of payments stem from Articles XII and XVIII of the GATT 1994 and the Understanding on Balance‑of-Payments (BOP) Provisions (described in Table 6.10).

Table 6.10 Notification procedures for BOPs restrictions

Legal source	Notification requirement	Type
GATT Article XII:4(a)   GATT Article XVIII:12(a)	Any Member applying new restrictions or raising the general level of restrictions by a substantial intensification of the measures applied under this Article shall immediately after instituting or intensifying such restrictions (or, in circumstances in which prior consultation is practicable, before doing so) consult with Members as to the nature of its balance of payments difficulties, alternative corrective measures which may be available, and the possible effect of the restrictions on the economies of other Members.	Ad hoc, followed by annual consultations   Ad hoc, followed by biennial consultations
Understanding on BOP Provisions, para. 9	A Member shall notify to the General Council the introduction of or any changes in the application of restrictive import measures taken for balance-of-payments purposes, as well as any modifications in time-schedules for the removal of such measures as announced under paragraph 1. Significant changes shall be notified to the General Council prior to or not later than 30 days after their announcement.	Ad hoc, followed by a yearly consolidated notification

Source:   WTO Secretariat.

6.36.  In 2016, the BOP Committee received notifications from two Members, Ukraine (WT/BOP/N/80) under GATT Article XII, and Ecuador (WT/BOP/N/81, WT/BOP/N/82, WT/BOP/G/24) under GATT Article XVIII.

Regional Trade Agreements

6.37.  The improvements made in the notifications of RTAs noted in last year's overview continued through 2016. The improvements are due largely to a simplification of the various notification formats and active efforts by the Chairman of the Committee on Regional Trade Agreements (CRTA) and the WTO Secretariat in monitoring RTAs and reminding Members of their notification obligations. Following an announcement by the Chairman at the CRTA meeting of 28 and 29 June 2011, the Secretariat has continued to circulate a list of agreements that have been verified by their parties as being in force, but not notified to the WTO, as a working document in advance of all CRTA meetings. The most recent of these, circulated on 22 September 2016, contained 83 such agreements.^[130] The response by Members has been positive with some 50 RTAs being notified as a result. The Secretariat continues to remind Members of their notification obligations by keeping track of dates of signature and entry into force of agreements and verifying these with Members. The notification tables included in each factual presentation prepared by the Secretariat and requests by Members to notify at each CRTA meeting have also been helpful in improving notifications. The Secretariat is aware of (but has not yet verified) some 30 other agreements that continue to be in force and are not yet notified to the WTO.

Preferential Trade Arrangements

6.38.  Under the Transparency Mechanism for Preferential Trade Arrangements (PTAs), which was established in December 2010^[131], newly notified PTAs are to be considered in dedicated sessions of the Committee on Trade and Development (CTD), on the basis of Secretariat-prepared factual presentations. Since the establishment of the Transparency Mechanism, seven PTAs have been notified to the WTO. Two of these have been considered by the CTD meeting in dedicated session, while for several others the notifying Members have yet to provide to the Secretariat the full set of data required for the preparation of the factual presentations. The CTD Chairman provides an update at each CTD meeting on the PTAs that are to be considered in dedicated sessions, and urges the notifying Members to provide the data as soon as possible.

6.39.  The Transparency Mechanism for PTAs also stipulates that an electronic database on individual PTAs is to be maintained by the Secretariat. The Database on PTAs^[132] currently contains information on 30 PTAs. Table 6.11 provides an overview of the PTAs included in the database, which is updated based on the information provided by the Members implementing PTAs. The CTD Chairman has urged Members to ensure that they are up to date with their notification and information requirements and has invited them to remain in touch with the Secretariat on this matter.

Table 6.11 Preferential Trade Arrangements of WTO Members

WTO Member	Number of PTAs	Name or description of PTA
Australia	2	Generalized System of Preferences
		South Pacific Regional Trade and Economic Cooperation Agreementa
Canada	2	Generalized System of Preferences
		Commonwealth Caribbean Countries Tariff
Chile	1	Duty-free treatment for LDCs
China	1	Duty-free treatment for LDCs
European Union	4	Generalized System of Preferences
		Trade preferences for countries of the Western Balkans
		Trade preferences for Pakistanb
		Trade preferences for the Republic of Moldovac
Iceland	1	Generalized System of Preferences
India	1	Duty-Free Tariff Preference Scheme for LDCs
Japan	1	Generalized System of Preferences
Kazakhstan	1	Generalized System of Preferences
Republic of Korea	1	Preferential Tariff for LDCs
Kyrgyz Republic	1	Duty-free treatment for LDCs
Morocco	1	Duty-free treatment for African LDCs
New Zealand	2	Generalized System of Preferences
		South Pacific Regional Trade and Economic Cooperation Agreementa
Norway	1	Generalized System of Preferences
Russian Federation	1	Generalized System of Preferences
Switzerland	1	Generalized System of Preferences
Chinese Taipei	1	Duty-free treatment for LDCs
Tajikistan	1	Duty-free treatment for LDCs
Thailand	1	Duty-free treatment for LDCs
Turkey	1	Generalized System of Preferences
United States	5	African Growth and Opportunity Act
		Andean Trade Preference Actd
		Caribbean Basin Economic Recovery Act
		Former Trust Territory of the Pacific Islands
		Generalized System of Preferences

a                         Australia and New Zealand both provide preferences under this PTA.

b                         The preferences granted under this PTA expired on 31 December 2013.

c             The preferences granted under this PTA expired on 31 December 2015.

d             The preferences granted under this PTA expired on 31 July 2013.

 

Source:   Database on Preferential Trade Arrangements.

Government Procurement

6.40.  To ensure the transparency and predictability of its Parties' procurement regimes, the Government Procurement Agreement sets out notification obligations for its Parties in five areas: (i) national implementing legislation on government procurement;    (ii) procurement thresholds in national currencies; (iii) statistics on procurement activities; (iv) modifications to schedules of commitments; and (v) media for the publication of procurement-related information.

6.41.  Numerous notifications are made during the year pursuant to each of these requirements. Some of the foregoing obligations have been simplified in the recent revision of the Agreement to facilitate the use of electronic tools in providing relevant information. This is expected to facilitate more timely compliance with reporting responsibilities over time.

Transparency of Trade-Related IP Measures

6.42.  The TRIPS Agreement requires WTO Members to notify to the Council for TRIPS their IP laws and regulations, establish and notify contact points in their administrations for the purposes of cooperation with each other aimed at the elimination of trade in infringing goods, and notify the Council in the event that they wish to avail themselves of certain possibilities provided for in the TRIPS Agreement that relate to the substantive obligations. Additionally, Members have undertaken to provide information on how they meet TRIPS obligations by responding to a Checklist of Issues on Enforcement. Developed country Members also agreed to provide certain information and make notifications which are not specifically provided for in the Agreement, including on technical cooperation and transfer of technology incentives for the benefit of LDCs.

6.43.  The bulk of notifications are laws and regulations notified pursuant to Article 63.2.^[133] Chart 6.3 below provides information on laws and regulations notified from 1995 to 15 October 2016. Notifications peaked in 1996, when developed country Members notified existing laws or amendments that implemented the TRIPS Agreement. Notifications of laws and regulations from 2000 onwards have been predominately from developing countries and recently-acceded Members. The most recent rise in notifications also corresponds to a trend of diverse approaches by Members to the revision and updating of their IP legal and policy settings so as to respond to changing economic, technological and social dimensions of IP in the national development and economic context. As the chart shows, the cumulative total of laws and regulations notified as of 15 October 2016 was 3,035 legal texts, representing a wide array of distinct national means of adapting and applying TRIPS standards according to their national priorities and wider policy frameworks.

Chart 6.6 TRIPS Notifications 1995 – 15 October 2016

 

Source: WTO Secretariat.

Enforcement Checklists

6.44.  The Checklist of Issues on Enforcement provides unique information on national measures with a significant trade policy component, especially in relation to border measures.  Since 1995, Members have deposited a total of 175 Responses to the Checklist.^[134] Chart 6.7 below shows the checklists submitted until mid-October 2016. Notifications peaked in 1997 and 200-2001, when developed-country and developing-country Members deposited their respective Checklists.

Chart 6.7 Notifications of TRIPS Enforcement Checklists 1995 -15 October 2016

Source:   WTO Secretariat.

6.45.  Few original WTO Members have notified revisions to their checklists; the latest was Switzerland, which submitted an updated version of its original Checklist.^[135] During the reporting period, Thailand and Sri Lanka submitted their Checklists.^[136] Seychelles, a recently‑acceded Member, submitted its Checklist in April 2016.^[137]

eTRIPS

6.46.  The Secretariat continues developing an information management system to enable streamlined and more efficient processing of legislative notifications and enforcement checklists, along with other types of TRIPS information, with the goal of providing an improved information service for Members to make effective use of the notified materials including for capacity building and support for policy discussions.

Services

6.47.  From mid-October 2015 to mid-October 2016, 19 notifications in total were made under GATS Article III:3 by five WTO Members (counting the EU as one). As indicated in previous reports, GATS Article III:3 requires each Member to notify to the Council for Trade in Services at least annually any regulatory changes that significantly affect trade in services covered by its specific commitments. However, compliance with this obligation has been de facto left to Members' discretion. Some of the notifications continued to be made under the caveat that "there is no common understanding among WTO Members on when a measure 'significantly affects trade in services' within the meaning of GATS Article III:3" and that "the notified measures may be relevant to trade in services without prejudice to the interpretation of the phrase 'significantly affect trade in services' in Article III:3".

6.48.  During the same reporting period, eight agreements concerning economic integration in services were notified under GATS Article V:7, which involve 11 WTO Members (counting the EU as one). These agreements were subject to examination in the Committee on Regional Trade Agreements.

6.49.  There were no notifications received under other GATS provisions during this period.