APPENDICES TO THE MINUTES OF EVIDENCE
APPENDIX 1
Memorandum from the Confederation of British
Industry
CBI OBJECTIVES FOR THE 1999 WTO MINISTERIAL
MEETING
I BACKGROUND
1. The Confederation of British Industry
(CBI) supports the World Trade Organisation (WTO) in its mission
to ensure that international trade is fair and as free from restrictions
as possible. We believe that, through this process of liberalisation,
opportunities are offered to all countries to benefit from greater
economic growth, to increase living standards and work towards
sustainable development. Companies now operate in a world characterised
by rapid change which raises new challenges. For example, innovations
in the fields of both information technology and telecommunications
technologies and improvements in transportation are accelerating
the globalisation and integration of markets for goods, services
and capital; and economic disruption causes uncertainty for companies
as markets risk closure under protectionist pressures.
2. Therefore, we see it as necessary to:
— improve the predictability of the
environment in which companies operate
— ensure that public opinion fully
understands and supports open, liberalised markets and further
liberalisation of trade and investment.
3. The third meeting of the WTO at Ministerial
level will take place in Seattle from 30 November—3 December
1999 and will provide an opportunity both to review progress since
the WTO's establishment in 1995 and also to continue to move forward
the WTO's agenda.
4. The CBI believes that the Seattle meeting
should make a formal decision to launch a new Round of trade negotiations,
and take decisions in a number of other areas.
II OBJECTIVES
FOR SEATTLE
5. The CBI sees the following as prime objectives
for the 1999 Ministerial meeting:
(a) The overriding objective should be for
the Ministers of WTO Members to agree to launch a new comprehensive
Round of multilateral trade negotiations to reinforce the legislative
authority of the WTO, and to deter lapses into protectionism.
This should include not only services and agriculture, which are
already scheduled for new negotiations in 2000, but also industrial
tariff reductions and provisions governing the treatment of direct
investment (see paragraphs 20-24 below).
(b) The agreement by WTO Ministers in Geneva
in 1998 on duty-free treatment of electronic commerce should be
made permanent. Electronic commerce will be one of the largest
contributors to the increase in world trade and actions to encourage
it should be a priority.
(c) Agreement to increase and bind duty-free
access to more developed markets for industrial products from
the least developed countries, to enhance their chance to participate
in global growth.
(d) Progress the accession to the WTO of
new Members, especially but not exclusively, China which should
include undertaking to participate fully in the new Round in addition
to liberalisation in the context of entry negotiations. There
are currently 135 Members of the WTO, some thirty applicants and
a number of observers. The CBI supports accession to the WTO by
the maximum number of countries able to meet the appropriate conditions
for membership.
(e) Clarification by Ministers of the relationship
between WTO rules and multilateral environmental agreements.
(f) Additional funding by the WTO and/or
its Members for the development of expertise in the implementation
and negotiation of trade policy rules in smaller and less developed
countries.
6. A comprehensive Round is necessary to
provide a basis for mutual benefit between the Members of the
WTO and it should be time-limited and concluded by a single undertaking.
7. The CBI wish to see full and faithful
implementation of all WTO agreements. We also attach importance
to respect for the agreed schedules for implementation and review
of agreements reached in the Uruguay Round.
8. The conduct of the new Round, which should
aim to be of limited duration, should nevertheless allow for "early
harvesting" on issues which do not disrupt the overall balance,
or the continuation of negotiations on issues which prove to require
longer. Where such cases are identified their treatment needs
to be agreed by all parties and must not serve as an "excuse"
for failure to agree on those issues which can be agreed in the
time-limited negotiation.
9. The effectiveness of the WTO's dispute
settlement mechanism has recently been brought under the spotlight.
The CBI believes that there is scope for clarification and improvement
of its provisions because, to be efficient, the multilateral trading
system needs to have a strong, reliable, consistent and effective
mechanism to settle international trade disputes.
10. In the increasingly globalised world
in which companies operate, the need for increased co-operation
between the WTO and other multilateral bodies (e.g. World Bank,
IMF, UNCTAD, UNEP and ILO) is becoming evident. Such co-operation
is necessary to ensure that developing countries can benefit fully
from further trade liberalisation by developing capacity to implement
WTO rules and participate in negotiations.
III CBI PRIORITIES
FOR A
NEW ROUND
11. The CBI has given close attention to
the possible components of a new comprehensive Round and has identified
the following priorities.
(i) Market Access/Tariffs
12. Successive GATT Rounds have already
led to a substantial reduction in tariffs, particularly in the
developed countries. The import tariffs of the European Union
are generally already amongst the lowest in the world and, in
practice, EU customs duties only fully apply vis-a"-vis OECD
countries (EEA countries excluded), with developing countries
enjoying duty-free access or very low tariff levels in the framework
of preferential trade agreements. However, it needs to be stated
that for certain sectors the maintenance of even a marginal tariff
is still of great importance, especially in the bulk commodity
area.
13. On the other hand, EU exporters continue
to face high tariffs in other parts of the world, especially the
major growth areas of emerging markets. In numerous sectors third
counties still apply relatively high tariffs, with the possibility
of increasing these within the limits of an even higher bound
rate, thereby seriously damaging trade predictability and reliability.
14. Non-tariff barriers including technical
barriers to trade also constitute obstacles to accessing the global
market place where countries restrict trade by specifying standards
and testing procedures which may prove overly costly as well as
unduly restrictive. The current WTO Technical Barriers to Trade
(TBT) Agreement contains a Code of Practice designed to encourage
national standards bodies to adopt international standards wherever
possible and to work towards non-discrimination and harmonisation.
CBI Position—Market Access/Tariffs
15. The CBI attaches great importance to
improving access for goods to the markets of third countries through:
— bound reduction of high tariffs and
in particular tariff peaks with a view to securing greater tariff
harmonisation between countries
— binding of unbound tariffs at commercially
acceptable levels
— improved geographical coverage of
zero-duty sectoral agreements and sectoral tariff harmonisation
agreements.
16. It is important that in a new Round
all tariff reductions, either general or sectoral, become part
of a single undertaking (i.e. part of a wider agreement accepted
by all parties).
17. To obtain real market access, any tariff
liberalisation process should also be accompanied by substantial
progress to improve market access by elimination of existing barriers
and prevention of the imposition of any new non-tariff measures.
18. The CBI are keen to see full, faithful
and internationally consistent implementation of the TBT Agreement
and negotiation for the removal of the barriers which remain.
However, to be fully effective the TBT Agreement should be amended
to keep pace with changes in how standards are developed, specifically
to allow for democratically developed, internationally accepted
sector schemes.
19. A report on progress from the WTO's
TBT Committee is due in Seattle. National standards bodies should
be encouraged to sign up to the Code of Practice whilst recognising
that technical assistance may be necessary to help developing
countries adhere to the Code. Mutual Recognition Agreements also
provide a useful mechanism for reducing barriers to trade in particular
sectors.
(ii) Investment
20. All countries seek investment in their
economies, desirous of the transfers of technology, skills and
standards, creation of employment and opportunities for industrial
development that it brings. Increasingly, access to markets involves
investment in some form, but there are no global rules to complement
those for trade in goods and services: market realities are, as
a result, only partially reflected by existing WTO provisions.
Investors seek markets which are stable, transparent and predictable
to give them the confidence to take risks inherent in investing
their capital.
21. Virtually all governments are involved
in or contemplate regional trade agreements, which increasingly
tend to cover investment as well as trade. They have also entered
into bilateral investment treaties with other WTO Members, recognising
that increasing numbers of countries find themselves not only
hosts to inward investment, but also the source of foreign direct
investment (FDI). These developments increase the risk of conflicting
requirements being placed on companies, placing unnecessary costs
on business and/or diverting scarce government resources. Removal,
or at least the reduction, of these inhibitions to investment
flows, improving levels of investment protection and transparency
of national investment regimes would all add value to the existing
situation, especially for small companies and countries; and provide
a basis for future liberalisation.
CBI Position—Investment
22. The CBI attaches high priority to the
establishment of a global regime for FDI, which is non-discriminatory,
transparent, stable and liberal and we therefore advocate the
commencement of WTO negotiations for an investment agreement.
International provisions on investment, demonstrating commitment
to multilateral disciplines cannot of themselves produce investment
flows, but should aim to make positive investment decisions both
easier and more likely: companies accept the obligation to comply
with international law and the law in countries where they are
to become corporate citizens, while governments, especially in
developing countries, seek support to prevent their lowering of
national standards or provision of costly incentives to attract
investment. A multilateral investment agreement should not encroach
on governments' right to regulate, nor on areas of policy such
as labour or environmental standards which should be, and are
being, tackled on their own merits in appropriate fora.
23. The Trade Related Investment Measures
(TRIMS) Agreement is scheduled for review in the year 2000. Points
emanating from its review combined with provisions of the WTO
Subsidies Agreement relating to investment incentives and of the
General Agreement on Trade in Services (GATS) relating to commercial
presence should be absorbed into such a comprehensive investment
agreement to ensure consistency of treatment.
24. We are aware that free access to markets
for investment is not a realistic short term objective for the
WTO. The investment agreement envisaged should nevertheless introduce
the first welcome steps in the direction and include provisions
on: a definition of investment; right of entry/establishment;
national treatment; transparency/binding; transfer or repatriation
of funds; non-interference in the management and operation of
investment projects; incentives and disincentives/no lowering
of standards; expropriation and compensation; dispute settlement;
and future review/revision.
(iii) Services
25. New negotiations on services (GATS 2000)
will be launched in Seattle regardless of the scope of the comprehensive
Round. Part of GATS 2000 will consist of further scheduling of
commitments by WTO Members in specific service sectors, but a
new comprehensive Round will also be a chance to improve the GATS
as a whole and to review the place of services in the WTO structure.
Services account for 60%/$210 billion of the annual flows of foreign
direct investment and as such are essential for improving the
economies of both developed and developing countries.
CBI Position—Services
26. Business supports increased liberalisation
of services; the GATS negotiation should be included in a new
comprehensive Round concluded by a single undertaking. More specifically
we want to see, inter alia: the widest possible standstill commitments
obtained, so that measures in force are not changed for the worse,
with grandfathering of instruments and other established principles
where necessary; a reduction in the number of exceptions and discriminations
by negotiating away barriers to services trade, professional services
and investment; and an improvement in the methods and techniques
of scheduling, to achieve greater liberalisation in cross-border
supply, consumption abroad, commercial presence and natural persons.
If, as the CBI hopes, an agreement on investment is concluded
in the new Round, investment aspects of the GATS must be consistent
with it and preferably transferred to it. Service negotiations
should also include consideration of the inclusion of postal and
express delivery services.
27. Those countries which have yet to ratify
and implement the WTO Agreement on Financial Services, December
1997 should be encouraged to do so as should full implementation
of the WTO Agreement on Basic Telecommunications (especially in
the context of electronic commerce).
(iv) Agriculture
28. The WTO is committed to further negotiations
on agriculture to begin next year and a Europe positively disposed
to reform is vital if progress is to be made. In this context,
the EU currently faces the challenges of: enlargement of the European
Union; free-trade areas under discussion between the EU and third
countries/regions; improving competitiveness in the single market;
the resumption of WTO negotiations; capturing an increased share
of growing world markets; and an expected surplus of agricultural
products and the consequent budgetary problems which the Commission
expects around the year 2005. These challenges are exerting pressure
on the reformation of the Common Agricultural Policy (CAP).
CBI Position—Agriculture
29. There are significant opportunities
for increasing the openness of markets and removing barriers to
trade in the agricultural sphere and WTO negotiations on agriculture
have the potential to influence how the other components of a
new Round proceed. The CBI believes that the EU should engage
constructively in WTO agricultural negotiations to ensure a truly
global, substantial and balanced agreement whilst continuing to
streamline the CAP.
(v) Trade Facilitation
30. Trade facilitation has the capacity
to greatly improve the operations of companies both large and
small engaged in international trade. For these benefits to be
realised, co-operation at the multilateral level is required in
order to develop harmonised solutions necessary for traders to
most effectively carry out international transactions.
CBI Position—Trade Facilitation
31. The CBI would welcome negotiations on
trade facilitation being launched as part of the new Round. As
part of these negotiations we would like to see: co-operation
between operators and customs; "one-stop clearance"
procedures; transparent arrangements; the use of accurate and
reliable statistics; and simplification, harmonisation and computerisation
of customs procedures. We also attach high priority to the full
and effective implementation of WTO agreements, such as Customs
Valuation, as important building blocks towards a framework of
appropriate commitments in the WTO. The CBI supports WTO and World
Customs Organisation (WCO) co-operation on these issues.
32. It also seeks to minimise burdensome
administrative procedures in international trade and payments
by utilising IT, electronic documentation and circumventing electronic
smuggling. The IMF, of which 141 countries are members, requires
under its Article VIII the elimination of restrictions on the
making of payments and transfers for international transactions.
The CBI supports, and is seeking within the EU, concrete proposals
on all such measures aimed at trade facilitation.
(vi) Trade and Environment
33. The WTO's Committee on Trade and Environment
(CTE) has made a valuable contribution in examining the interaction
of multilateral trade agreements and multilateral environmental
agreements (MEAs) which may contain trade measures and also the
role of eco-labelling. Trade and environment policies are, or
need to be made, mutually supportive but it is not the task of
the WTO to set international environmental standards - other international
fora have the capacity to formulate international environmental
agreements which can enshrine standards. It is the WTO's role
to ensure that any such measures are compatible with WTO rules.
Trade measures designed to protect the environment should not
contravene the fundamental WTO aims of most favoured nation treatment
and non-discrimination. Their goal should be the protection of
the environment and not the protection of domestic industries.
This is an area which needs urgent attention since, allegedly,
the Basle Convention and Montreal Protocol both allow trade measures
which contravene WTO's basic principles.
CBI Position—Trade and Environment
34. The CBI believes that the WTO should
accommodate trade measures contained in MEAs, which address global
environmental problems, by adopting an Understanding laying down
a number of trade policy considerations and other suggestions
which MEA negotiators should take into account (e.g. proof that
the measure is necessary to achieve the agreement's environmental
goal, including least-trade restrictiveness and proportionality,
or, that the MEA seeks to solve a global problem, etc.) and then
lay down the assumption that such widely agreed trade measures
are presumed to be compatible with GATT Article XX (exceptions).
Such an Understanding would have the advantage that WTO Members
would not lose their right to initiate a dispute-settlement procedure
against an MEA trade measure, the complainant however would have
to prove that the trade measure was not compatible with GATT Article
XX. The CBI believe that this is an area which could be resolved
by Ministers in Seattle.
35. On eco-labelling WTO Members should
establish that the TBT Agreement is applicable to national rules
on eco-labelling. This would lead to notification of such rules
to the WTO, and therefore to greater transparency and scrutiny.
Clarification is also needed as to the extent to which private
eco-labelling rules should be covered by the Agreement. The CBI
also believes that the WTO should consider drafting clear and
workable rules for border tax adjustment of environmental taxes
which distinguish between product and process.
(vii) Government Procurement
36. The WTO's Working Group on Transparency
in Government Procurement, which was given its mandate in Singapore,
gave a progress report in November last year and hopes to reach
an agreement by Seattle. Meanwhile, the WTO Government Procurement
Agreement is the subject of a review to be completed by the end
of 1999.
CBI Position—Government Procurement
37. Transparency in procurement is vital.
The CBI is very keen to see the Working Group reach an agreement
on transparency by Seattle or shortly afterwards and to build
on this adding market access conditions incrementally. The CBI
wants to see the establishment of a truly multilateral agreement
on government procurement. The WTO Government Procurement Agreement
needs to be updated and we welcome its review.
IV OTHER ISSUES
OF CURRENT
WTO CONCERN
(i) Commercial Defence
38. WTO provisions on anti-dumping, export
subsidies and safeguards are essential in underpinning the multilateral
liberal trade regime. The CBI is against any attempt to weaken
these provisions as part of a comprehensive negotiation.
(ii) Trade and Competition
39. The CBI is committed to companies' ability
to compete with each other in individual foreign markets on a
level playing-field, taking full advantage of the expansion of
international trade. The WTO's Working Group on the Relationship
between Trade and Competition reported last year and the CBI supports
its continuing educational role. We could support a set of principles
within the WTO designed to shape national competition laws to
prevent market foreclosure (improve market access) and to encourage
developing countries, in particular, to draw up transparent and
non-discriminatory competition rules. The terms on which co-operation
arrangements between national competition authorities are devised
in matters such as the exchange of information on companies are
crucial; one must be safeguards for business confidentiality and
against the misuse of information.
40. The WTO's dispute settlement mechanism,
as currently constituted, should only be able to resolve complaints
about the general operation of a national competition enforcement
regime; it should not be able to act on individual rulings of
competition authorities.
(iii) Trade and Labour
41. UK business is strongly opposed to exploitation
of child labour and forced labour, and supports active promotion
of the respect of basic human rights. Adequate solutions need
to be found in discussions between industrialised and developing
countries to combat the non-respect of core labour standards throughout
the world. However, the CBI does not accept the rationale behind
calls for the introduction of a "social clause" into
the WTO and moves to use trade policy to achieve social policy
objectives by using trade sanctions. Such action would have serious
negative implications for the multilateral trade system and not
serve to improve social conditions.
42. The CBI believes that the International
Labour Organisation (ILO) is the right international organisation
for discussion of the impact of global labour standards; it has
the expertise, it is more universal than the WTO, and has a tripartite
constitution. Thus, we continue to support the WTO's Singapore
Ministerial communique« which recognised the ILO as the competent
body to deal with the observance of internationally recognised
labour standards.
(iv) Intellectual Property
43. The CBI attaches great importance to
full and timely implementation of the Trade Related Intellectual
Property (TRIPs) Agreement, noting the impending expiration of
the transitional period on 1 January 2000 and that the TRIPs Agreement
was one of the major achievements of the Uruguay Round. We welcome
the joint WTO/World Intellectual Property Organisation (WIPO)
programme to provide assistance to developing countries' implementation
of TRIPs Agreement.
44. Since the TRIPs Agreement has its own
built-in Agenda for review, a precondition for change must be
to take the present agreement as a baseline, and there must be
no weakening of the provisions of the present text, either on
the substance or on its implementation provisions or deadlines.
(v) Electronic Commerce
45. Recognising that global electronic commerce
is growing and creating new opportunities for trade, last year's
WTO Ministerial approved the establishment of a comprehensive
work programme to examine all trade-related issues relating to
global electronic commerce. The 1998 Ministerial also agreed to
extend the practice of not imposing customs duties on electronic
transmissions: the CBI supports making this practice permanent.
Progress on the work programme and any recommendations will be
reported in Seattle and a future work agenda decided there.
46. The applicability of existing trade
rules to the techniques of electronic commerce and making adjustments
necessary to achieve such compatibility should be the objective,
not a separate agreement risking conflicting requirements on companies
engaged in this rapidly developing form of conducting business.
(vi) Regional Trading Agreements/Free Trade
Areas
47. Since the Marrakesh Agreement creating
the World Trade Organisation, proposals for regional trade agreements
(RTAs), some including the European Union, have multiplied risking
trade discrimination and politically undermining the WTO multilateral
re«gime. However, multilateral and regional trade liberalisation
can be complementary, economically beneficial and trade-creating,
where RTAs are established in accordance with WTO rules and principles.
The establishment of RTAs should include: removing high tariffs,
non-tariff barriers and impediments to service trade/investors;
and protecting intellectual property.
48. Against such a background there is an
increasing need to review the provisions of GATT Article XXIV
to ensure that regional or other free trade agreements are compatible
with multilateral rules and regulations and are not allowed to
develop into an alternative, discriminatory approach to trade
liberalisation.
CONCLUDING REMARKS
49. The priorities identified by UK business
are largely shared by our counterparts in Europe (Union of Industrial
and Employers' Confederations of Europe—UNICE). With over
one hundred and thirty potential participants in the new Round
other countries will naturally have other priorities and concerns
which will be brought to the table in Seattle. No one country
will be able to set the agenda for the new Round and it is therefore
important to remain flexible as to the final coverage of the Round
if the CBI's main priorities are to be included.
50. Acceptance by all WTO Members of the
concept of a comprehensive negotiation governed by a single undertaking
represents the best chance of achieving our objectives while offering
benefits to all participants.
51. The CBI will continue to monitor the
developing situation and will comment further as this becomes
desirable.
July 1999
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