26. Memorandum submitted by the Confederation
of British Industry (CBI)
BACKGROUND
1. The 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 on-going 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.
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. To this end British business welcomes
the launch of the new round of trade negotiations: the Doha Development
Agenda (DDA). We believe the DDA provides a substantial opportunity
for the 144 WTO members to liberalise their trade and investment
systems. The momentum established in Doha needs to be maintained
and governments will need to act with resolve to ensure that the
ambitious deadline for the single-undertaking of 1 January 2005
is met.
OBJECTIVES AT
DOHA
4. The CBI had a number of objectives for
the Ministerial meeting itself. These were all met to some extent.
— Launch a new comprehensive round:
CBI called for the round to be time limited, concluded by a single-undertaking
and to include the built-in agenda, industrial tariff reductions,
and provisions governing the treatment of direct investment.
— Duty-free treatment of electronic
commerce: the CBI will continue to call for this to be made permanent.
— Duty-free access for LDCs to developed
markets: the CBI called for bound commitments by a maximum number
of developed countries.
— Accession of new WTO members: the
Ministerial confirmed the accession of China and Chinese Taipei.
— Relationship between WTO rules and
multilateral environmental agreements: negotiations were agreed.
— Capacity building and technical assistance:
a new fund was established and working groups to examine trade,
debt and finance as well as small states and technology transfer
were established.
— Consideration of implementation issues:
the Ministerial agreed a Declaration on this issue and consideration
of others.
— Effectiveness of the dispute settlement
mechanism: Ministers are to consider this issue by May 2003 outside
of the single-undertaking.
— Interaction with other international
organisations: co-operation was agreed in a number of areas with
sharing of expertise.
CBI PRIORITIES IN
THE DOHA
DEVELOPMENT AGENDA
5. The CBI gives the highest priority to
the following negotiating areas whilst noting that a satisfactory
outcome to all WTO members for all agenda items will be necessary
to conclude the negotiations with a single-undertaking. Progress
on resolving "sensitive" or "round-stalling"
issues, notably agriculture, implementation and TRIPS/public health,
is also particularly vital.
Market Access/Tariffs
6. 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.
7. 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.
8. 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
9. 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.
10. We also support the unilateral dismantling
of all tariffs for imports from the least developed countries
by all WTO members.
11. CBI members are currently being consulted
on their preferred method for reducing tariffs but it seems likely
that a general tariff reduction formula which would be weighted
towards reduction of the high tariffs is preferred. We do not
support a strategy solely based on the sector-by-sector or zero
for zero approach. However if an international consensus amongst
the industrial sector concerned can be achieved then this achievement
should not be excluded. The issue of "nuisance" or marginal
tariffs is also being investigated and it seems likely that only
where consensus can be found should these tariffs be removed.
12. 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.
13. The CBI is 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.
14. 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.
Investment
15. 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.
16. 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
17. 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 when
WTO Ministers meet in Cancun. 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.
18. Points emanating from the review of
the Trade Related Investment Measures Agreement (TRIMS) 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 linked to and absorbed
into such a comprehensive investment agreement to ensure consistency
of treatment.
19. The investment agreement we envisage
should 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.
Services
20. The launch of the DDA and the agreement
on dates for the request and offer process have enabled the negotiations
on services (GATS 2000) to progress with greater certainty. It
is also clear as the DDA negotiations proceed that substantial
progress is possible in these negotiations, however, it has to
be noted that the service negotiations are part of the single-undertaking
and are "hostage-bound" by the rest of the DDA.
CBI Position—Services
21. British business supports increased
liberalisation of services cognisant of the fact that services
now account for the majority of annual flows of foreign direct
investment and, as such, are essential in improving the economies
of both developed and developing countries. The services sector
is becoming increasingly important in developing countries as
well indicating that it is not just developed economies that would
benefit from liberalisation.
22. More specifically we want to see: 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.
Service negotiations should also include consideration of the
inclusion of postal and express delivery services. We would like
to see progress in three particular areas: movement of personnel;
domestic regulation; and e-commerce.
23. 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).
Trade Facilitation
24. 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
25. The CBI regrets that Ministers postponed
commencement of negotiations on trade facilitation until the Cancun
Ministerial.
26. We would like to see the following issues
included in the negotiations: 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. Furthermore, noting that it is often in developing
countries that trade procedures prove to be substantive obstacles
for business, the WTO would benefit from collaboration with other
international organisation operating in the field of capacity
building, for example UNCTAD, World Bank and IMF.
27. It also seeks to minimise burdensome
administrative procedures in international trade and payments
by utilising IT, electronic documentation and circumventing electronic
smuggling. The IMF 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.
OTHER KEY
AREAS FOR
THE CBI
Agriculture
28. The CBI supports substantial reform
of the EU's Common Agricultural Policy during its Mid-Term review.
Without the commitment of the EU, US and other countries with
highly subsidised or protected agricultural systems, the WTO's
commitment to negotiations on agriculture will not proceed. Progress
in the key areas of market access, export subsidies and domestic
support will be vital for the stock-take to take place in Cancun.
It seems likely that commitment to other areas of the WTO negotiations
are contingent upon progress in the agricultural sphere.
Trade and Environment
29. 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.
30. The commitment at Doha to launch negotiations
on this issue is welcome. 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 (eg 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.
31. On eco-labelling, we support the WTO's
CTE and TBT Committee giving consideration to the interface between
uptake of eco-labelling and WTO rules. We believe that 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.
Government Procurement
32. Transparency in procurement is vital.
The CBI wants to see the establishment of a truly multilateral
agreement on government procurement based on national treatment
and most favoured nation principles. The existing plurilateral
agreement needs to be extended to a greater number of countries
and sectors and in doing so extended to create a globally uniform
body or rules and regulations for public procurement.
33. The agreement by WTO members to negotiate
on transparency in government procurement, by explicit consensus,
after Cancun is welcome. The contents of such a negotiation should
embody the principles of a fair and transparent procurement system
which should be framed in such a manner to attract developing
country members of the WTO to participate.
CBI
January 2003
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