6 Accession of the Russian Federation
and Samoa to the WTO
| (a)
(33338)
16748/11
COM(11) 720
|
Draft Council Decision on the position to be adopted by the European Union within the relevant instances of the World Trade Organisation on the accession of the Russian Federation to the World Trade Organisation
|
| (b)
(33354)
16809/11
COM(11) 721
|
Draft Council Decision on the signing, on behalf of the European Union, and provisional application of, the Agreement in the form of an exchange of letters between the European Union and the Government of the Russian federation regarding the preservation of commitments on trade in services contained in the current EU-Russia Partnership and Cooperation Agreement
|
| (c)
(33355)
16812/11
COM(11) 724
|
Draft Council Decision on the conclusion, on behalf of the European Union, of the Agreement in the form of an exchange of letters between the European Union and the Government of the Russian federation regarding the preservation of commitments on trade in services contained in the current EU-Russia Partnership and Cooperation Agreement
|
| (d)
(33342)
16785/11
COM(11) 732
|
Draft Council Decision on the position to be adopted by the European Union within the relevant instances of the World Trade Organisation on the accession of Samoa to the World Trade Organisation
|
| Legal base | Articles 91, 100(2) and 207(4), in conjunction with Article 218(9) TFEU; QMV
|
| Document originated | (a)-(c) 10 November 2011
(d) 11 November 2011
|
| Deposited in Parliament | (a) 14 November 2011
(b)-(d) 15 November 2011
|
| Department | Business, Innovation and Skills
|
| Basis of consideration | EMs of 6 December 2011
|
| Previous Committee Report | None
|
| To be discussed in Council | 14 December 2011
|
| Committee's assessment | Legally and politically important
|
| Committee's decision | Not cleared
|
Background
6.1 The process of World Trade Organisation (WTO)
accession consists of two strands. First, individual WTO members
agree bilateral market access arrangements with the acceding country
regarding market access for industrial goods, agricultural trade,
and services, the outcomes of these individual negotiations then
being amalgamated into the Schedules of Commitments and the best
offers granted to all WTO members on the "Most-Favoured Nation"
(MFN) principle. Secondly, there are discussions on the compatibility
or otherwise of the trade policy regime of the acceding member
with the multilateral agreements and obligations which constitute
WTO membership. This process — which the Commission negotiates
on behalf of the EU Member States — effectively sets out
the terms and conditions of the acceding party's membership, and,
once these have been agreed, a vote must be taken in the General
Council of the WTO on allowing the new member to join.
The current documents
DOCUMENT (A)
6.2 Document (a) is a draft Council Decision establishing
an EU position on the accession of the Russian Federation, which
applied to become a member in June 1993, and seeks to confirm
the approval which the Commission proposes to give on behalf of
the EU at the eighth WTO Ministerial Conference being held 15
to 17 December 2011. The Russian Federation's national assembly
is expected to ratify the deal in June 2012, with WTO membership
following 30 days after the instrument of ratification is deposited
(expected to be September 2012 at the latest), at which point
it becomes subject to WTO disciplines and has the right to participate
formally in WTO committees and negotiations and be subject to
the WTO's Dispute Settlement Mechanism (DSM).
6.3 As part of the accession, Russia concluded 57
agreements on market access for goods, and, on average, the final
legally binding tariff ceiling for the Russian Federation will
be 7.8%, compared with a 2011 average of 10%. The average tariff
ceiling for agricultural products fall from 13.2% to 10.8 %; that
for manufactured goods from 9.5% to 7.3%: tariffs for information
technology products (currently 5.4%) will be bound at zero, in
addition to which exports of such products to Russia will benefit
from simplified registration and licensing conditions for goods
with encryption technologies, harmonised standards and other regulatory
reforms. The final bound rates will be implemented on the date
of accession for more than a third of tariff lines, with another
quarter to be put in place three years later: and the longest
implementation period is eight years for poultry, followed by
seven years for motor cars, helicopters and civil aircraft.
6.4 Important gains are also expected due to reforms
in a wide range of areas, from the alignment to WTO standards
as far as non-tariff measures are concerned to the elimination
or reduction of trade-distorting measures, such as export duties
and discriminatory pricing practices. All agricultural products
will benefit from major regulatory reforms in the area of sanitary
and phyto-sanitary requirements applied in Russia, and Russia
has also agreed to gradually cap its domestic support subsidies
to $4.4 billion by 2018, and to bind its export subsidies at zero
level.
6.5 There are 30 bilateral agreements on market access
for services, with Russia having made specific commitments on
11 service sectors and on 116 sub-sectors. On telecommunications,
the foreign equity limitation (currently 49%) will be eliminated
after four years; foreign insurance companies will be allowed
to establish branches nine years after accession; foreign banks
will be allowed to establish subsidiaries; there will be no cap
on foreign equity in individual banking institutions, but the
overall foreign capitalisation in the Russian banking system will
be limited to 50% (not including foreign capital invested in potentially
privatised banks). On transport services, Russia has made commitments
in maritime and road transport services, including the actual
transport of freight and passengers; on distribution services,
Russia will allow 100% foreign-owned companies to engage in wholesale,
retail and franchise sectors upon accession to the WTO. For computer
services, a high growth sector, Russia is opening the sector fully,
without any restrictions, at the level of the sector as a whole.
With regard to the movement of natural persons providing services
(Mode 4), Russia take commitments for infra-corporate transferees
and business visitors (including visitors setting up a commercial
presence), without application of labour market tests or quotas,
with respective lengths of stay of three years renewable and 90
days respectively.
6.6 More generally, the Russian Federation will ensure
that all laws, regulations and other measures related to the Agreement
on Trade-Related Investment Measures will be consistent with WTO
provisions, and any inconsistent measures, including preferential
tariffs or tariff exemptions, applied in reference to the investment
programmes (including automobile investment programmes) and any
agreements under them will be eliminated by 1 July 2018. The Russian
Federation will also fully apply the provisions of the WTO Agreement
on Trade-Related aspects of Intellectual Property Rights including
provisions for enforcement, without recourse to any transitional
period, and it will continue to take action against the operation
of websites (with servers in the Russian Federation) which promote
illegal distribution of content protected by copyright or related
rights. It will investigate and prosecute companies which illegally
distribute objects of copyright or related rights on the internet,
and, by the time of accession, will apply all the rules of the
Berne Convention for the Protection of Literary and Artistic Works.
6.7 The provisions of the WTO Agreement would be
applied uniformly throughout the territory of the Russian Federation,
including regions engaging in frontier traffic, special economic
zones and other areas where special regimes for tariffs, taxes
and regulations could be established. All legislation affecting
trade in goods, services and intellectual property rights will
be published promptly, consistently with WTO requirements. The
Russian Federation will regularly update its official publications,
including websites, and make these laws readily available to WTO
members, individuals and enterprises.
DOCUMENTS (B) AND (C)
6.8 The
impending accession of the Russian Federation to the WTO has also
given rise to a number of bilateral agreements with the EU addressing
specific issues. These cover (i) a commitment[46]
by the Russian Federation to gradually reduce or eliminate certain
export duties, and not to introduce or increase such duties on
other products; (ii) the
introduction of safeguards[47]
to maintain EU exports on parts and components of motor vehicles,
pending the phasing out by 2018 of any measures which are not
compatible with the WTO Agreement on Trade-Related Investment
Measures; and (iii) rules[48]
establishing how the implementation of a commitment by the Russian
Federation to reduce its export duty on raw wood products will
be applied to the EU.
6.9 We think it sufficient
to simply to refer to these agreements in this Chapter of our
Report without making them the subject of further substantive
Reports to the House, but we are drawing specific attention to
documents (b) and (c), which relate to trade in services. At present,
a Partnership and Cooperation Agreement (PCA) between the European
Community and Russia, signed in July 1994, contains commitments
in this area, which include trade in maritime transport services
and on Mode 4. When the Russian Federation accedes to the WTO,
the commitment in the PCA will lapse in the light of the extensive
commitments undertaken by the Russian Federation, which will be
made available to the EU on a Most Favoured Nation (MFN) basis.
However, the PCA commitment regarding maritime transport and Mode
4 will not be reflected in full in Russia's WTO commitments, and
consequently the bilateral agreement which the EU and Russia have
reached — and which would be brought into effect by these
two documents — seeks to preserve these obligations.
DOCUMENT (D)
6.10 The
WTO Ministerial Conference on 15-17 December 2011 will also be
deciding on a similar application for membership lodged by Samoa
in April 1998, and this document similarly would authorise the
Commission to support this application on behalf of the EU. Accession
is important to Samoa in allowing it to benefit from WTO market
access and global trading rules, from the transparency of the
WTO trading system, and from the WTO Dispute Settlement Mechanism,
and it will also mean that foreign businesses can operate in a
more transparent and predictable environment, including better
protection for intellectual property rights. However, compared
with the accession of the Russian Federation, there is a relatively
limited UK economic
interest, with exports to Samoa between 2005 and 2010 averaging
only £0.7 million a year.
The Government's
view
6.11 These documents are dealt with
in separate Explanatory Memoranda of 6 December 2011 from the
Minister for Employment Relations, Consumer and Postal Affairs
at the Department for Business, Enterprise and Skills (Mr Edward
Davey).
6.12 He supports the accession of Samoa
to the WTO as providing a balanced but ambitious package of commitments
in line with its status as a least-developed country, and he notes
that the UK has also consistently supported the accession of the
Russian Federation on the right terms, having worked closely with
the Commission throughout the negotiations to ensure that the
UK's objectives and priorities have been taken into consideration.
He says that it is a measure of the success of the package that
these have been met to a significant extent, and that, in acceding
to the WTO, the Russian Federation will embrace a series of rules
and commitments which are the foundation of an open, transparent
and non-discriminatory global trading system, providing important
guarantees for Russia and for the 153 other members of the WTO,
and bringing Russia more firmly into the global economy, thereby
making it a more attractive place to do business. He describes
the outcome of the negotiations on services as very good, in that
they will grant UK service suppliers significant market opportunities,
whilst helping the Russian economy to modernise, thereby making
it an even more attractive market.
6.13 The Minister
has also commented on the application of the Mode 4 provisions
to the accession of both the Russian Federation and Samoa, and
to the bilateral agreement between the EU and Russia on trade
in services, which he says preserves commitments
either previously entered into by Russia and the EU in the existing
PCA, or offered bilaterally by Russia to the EU in the course
of WTO accession negotiations, which would otherwise lapse.
6.14 He says that,
whilst trade in services falls within the
EU's exclusive competence post-Lisbon, the Government's position
is that Mode 4 provisions fall within the scope of the UK's Title
V opt-in. He notes that, whilst documents (a) and (d) do not themselves
contain Mode 4 provisions, accession will enable Russia and Samoa
to avail themselves of the UK's commitments on Mode 4 under the
General Agreement on Trade in Services (GATS), and therefore represents
a widening of those commitments without changing their substance.
The UK therefore intends to exercise the opt-in in relation to
each Decision. Likewise, he considers that documents (c) and (d)
also trigger the opt-in, pointing out that the UK's Mode 4 commitments
in the GATS relate to intra-corporate transferees, business visitors
and contractual service suppliers, and are made available to other
WTO members on a Most Favoured Nation basis, with new countries
acceding to the WTO being able avail themselves of these commitments.
He notes that, in relation to Mode 4, the side agreement on trade
in services replicates some of these commitments, apparently for
presentational purposes in order to enable Russia to make more
commitments of its own on Mode 4 to the EU, but, notwithstanding
this, he says that the UK proposes to exercise the opt-in in relation
to these two Decisions.
6.15 The Minister
also notes that there is a separate question over whether the
bilateral agreement should be mixed or EU-only. He says that his
department is currently discussing this issue with the Department
for Transport, and is aiming to resolve it by 6 December, the
argument for mixed competence being based on the transport provisions
(since this remains an area of shared competence). He adds that
the two departments are investigating whether the transport provisions
of the agreement are in areas where the EU has already exercised
competence, but he observes that any claim by the UK in favour
of mixed competence would meet resistance at an EU level.
Conclusion
6.16 The draft Decisions supporting
the accession to the WTO of the Russian Federation and Samoa are
clearly to be welcomed on policy grounds, as are the provisions
of the proposed bilateral agreement between the EU and the Russian
Federation on the trade in services.
6.17 However, we note that the UK
intends to exercise its Mode 4 opt-in rights under Title V in
the absence of agreement from other Member States and the Commission,
and, consequently, of a legal base. Since Mode 4 rights can affect
national labour markets, they are politically sensitive as well
as important —
for example, the Trades Union Congress is campaigning[49]
to restrict those provisions in the EU India Free Trade Agreement
and in other similar EU agreements. Moreover, we
have exchanged differing views with the Government on the legality
of asserting opt-in rights in the absence of a Title V legal base
on several previous occasions, and our view remains that such
a base is necessary for the UK to exercise its opt-in rights.
Consequently, we do not feel able to release these documents from
scrutiny, although we recognise that, as the UK is unwilling to
hold up these WTO accessions, it will signify its political agreement
to these Decisions in the Council on 14 December, thus giving
rise to scrutiny overrides.
46 (33356) 16821/11 and (33357) 16824/11: see chapter
28 of this Report. Back
47
(33352) 16800/11 and (33353) 16803/11: see chapter 28 of this
Report. Back
48
(33348) 16758/11 and (33350) 16771/11: see chapter 28 of this
Report. Back
49
EU-India Trade Agreement (temporary migration), June 2011 (http://www.tuc.org.uk/international/tuc-19635-f0.pdf). Back
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