Defending trade interests

The defence of their trade interests through the WTO requires developing countries to undertake both

• the defence of their acquired rights under the rules and members' commitments
• the formulation and implementation of development strategies within the framework of the multilateral obligations.

Defence of acquired rights

Among the areas where trade rights can be exercised are:

The application of the Anti-Dumping Agreement to limit contingent protection against developing country exports

The application of Subsidies and Countervailing Measures Agreement to limit contingent protection against developing country exports

The implementation of the Agreement on Safeguards, particularly the phase out of 'voluntary' export restraints and the use of the quota modulation provision of Article 5:2

The integration of textile and clothing product categories into GATT 1994 and the use of the transitional safeguard mechanism

The allocation of agricultural tariff quotas, both "minimum" and "current" access

The application of technical standards and sanitary/phytosanitary regulations, particularly those related to environmental protection

Anti-dumping, countervailing and safeguard measures

When an importing countries applies anti-dumping or countervailing duties to the exports of developing countries, any problems must be dealt with -- at least initially -- in the context of the importing country's legislation. Defending against these actions requires the presentation of technical and legal argumentation to the competent authorities in the importing country, and strict compliance with procedures within specific and usually short time limits.

Safeguard action must include consultations with the government of the exporting countries affected.

The WTO has created Committees to oversee actions taken under each of these contingent protection provisions. The Committees ensure that developing country members are kept informed of actions affecting their exports and their rights under the Agreements are respected.

Carrying the matter to WTO Committees and eventually to the dispute settlement mechanism - if grounds exist - also requires technical preparation. The WTO Secretariat provides technical assistance related to the work of all of the WTO Committees to developing country members.

Anti-dumping

In the past, a small number of developed countries has been very active in taking anti-dumping measures and developing countries and centrally-planned economies have frequently been the targets of measures, out of proportion to their shares of global trade.

More recently, developing countries have been increasingly active in taking anti-dumping actions. Developing countries are also starting to take anti-dumping actions against other developing countries. A number of countries, now negotiating accession to the WTO, including China and transition economies, have indicated that they will introduce anti-dumping legislation. Russia has already done so.

Those developing countries increasingly taking advantage of anti-dumping measures are also largely those most active in the WTO generally and include Argentina, Brazil, Chile, Colombia, India, Indonesia, Korea, Malaysia, Mexico, Peru, the Philippines, Singapore, Thailand and Venezuela.

Antidumping actions, 1997

	Initiations	Provisional Measures	Definitive duties	Price Undertakings	Measures in force on 31 Dec 1997
Argentina	15	11	10	1	31
Australia	42	17	1	0	45
Brazil	11	0	2	0	23
Canada	14	7	7	0	91
EC	41	33	23	9	137
India	13	16	6	0	24
Japan	0	0	0	0	2
Korea	15	5	6	7	20
Malaysia	8	7	2	0	4
Mexico	6	6	7	0	81
New Zealand	5	0	0	0	26
Peru	2	1	3	0	6
South Africa	23	17	18	0	43
Thailand	2	2	1	0	2
Turkey	4	0	0	0	35
US	16	16	19	4	302
Venezuela	4	0	2	0	5
TOTAL*	240	153	116	21	880

Source: WTO Annual Report 1998
*Eleven other countries recorded single antidumping actions in 1997.

It was not surprising, therefore, that a number of developing countries took an active part in the negotiations on the Agreement on the Implementation of Article VI of GATT 1994 (Anti-Dumping measures) in the Uruguay Round. The final agreement is a compromise between tightened procedures for investigating and applying an anti-dumping measure and measures to minimize circumvention. The members of the Committee on Anti-dumping keep a careful watch on actions taken under the agreement.

The benefits that exporters are expected to enjoy from the Agreement are principally the clarification of rules related to:

• constructed value and determination of profit for constructed value (Articles 2.2 and 2.3 of the Agreement)
• the determination of sales below cost and start-up costs (Article 2.2.1)
• price comparison (Article 2.4), price averaging and price undertakings (Article 8)
• de minimis clauses (especially Article 5.8)
• reviews and sunset provisions.

In the case of developing country exporters, the possibility of a 'constructive remedy' - that is, an undertaking - must be considered before an anti-dumping measure is applied.

At the outset of an anti-dumping investigation, the authorities of the importing country must notify the government of the exporting country (Annex 1 of the Agreement). Governments may take a series of measures to assist enterprises to exercise trade rights in this field including assistance in the compilation of information including detailed statistical material and the preparation of argumentation.

Experience shows (Finger, 1991) that decisions in anti-dumping actions often turn on the existence or threat of material injury caused by the imports, rather than on the issue of whether dumping was actually taking place. The rules on de minimis levels of imports and on reviews of outstanding duties provide defences for exporters in the assessment of injury.

Subsidies and Countervailing duties

The Agreement on Subsidies and Countervailing Measures reflects a negotiated balance between more rigorous disciplines on subsidies and reforms of countervailing duty procedures and remedies. The Agreement restricts the resort to countervailing duties through:

• the introduction of an internationally agreed definition of subsidy
• the creation of a category of subsidies which are exempt from the application of countervailing duties
• a de minimis rule relating to the amount of subsidization
• a minimum threshold under which developing countries are exempt from countervailing duties.

The appropriate forum for developing country members to maintain close surveillance of countervailing measures against their exports is the WTO Committee on Subsidies and Countervailing Duties.

Safeguards

The Agreement on Safeguards specifically prohibits voluntary export restraints (VERs) and other "grey area" measures, which are to be phased out over a period of four years (that is, generally by the end of 1998).

The Agreement permits quantitative restrictions for safeguard purposes and even certain departures from MFN treatment under the "quota modulation" clause (Article 9(b)). The challenge facing WTO member countries is to ensure that the disciplines of the Agreement are strictly enforced so that discriminatory measures are kept within the narrow bounds permitted in the Agreement.

In countervailing cases, it is the government taking the action that must defend its practices before the Committee established under the Agreement. In safeguard actions, however, neither the pricing policies of firms nor the policies of the exporting countries are in question. The exporter's interests may be defended by challenging the evidence of serious injury presented to the 'competent authorities' in the importing country: clause 3 of the Agreement requires that there should be such an opportunity.

Members taking or maintaining a safeguard measure must seek to ensure that the overall balance of concessions made to the affected exporting members is not disturbed by a safeguard restriction (clause 16 of the Agreement). A second line of defence, therefore, is the pursuit of consultations on this requirement under clause 27 of the Agreement.

Members beginning the investigation of injury under the provisions of the Agreement, or continuing a safeguard action, must notify their action to the Committee on Safeguards. Consequently, developing country members have an opportunity to learn of any safeguard action affecting their interests and may use the Committee procedures to ensure that their rights under the Agreement are fully respected.

Textiles

The phasing out of' the MFA in the Agreement on Textiles and Clothing was one of the major achievements of the developing countries in the Uruguay Round. However, the transitional safeguard mechanism permits the use of quantitative restrictions on individual countries' exports of products which have not yet been integrated into GATT 1 994.

A number of cases have already arisen and have been brought before the Textiles Monitoring Body (TMB), and -- in several instances -- even to the dispute settlement mechanism.

Agriculture

The Agreement on Agriculture converts border non-tariff barriers into bound tariff rates and reduces all agricultural tariffs. However, the considerable flexibility provided within the parameters of the Agreements could permit policies that could still penalize agricultural exporters, including those in developing countries.

Developing countries need to monitor developments closely to ensure that the MFN principle is respected in the allocation of minimum access tariff quotas and that their exporting firms are able to participate in the related licensing procedures effectively and successfully.

Developing countries with a trade interest in agricultural commodities need to follow closely the allocation of the domestic and export subsidies within the overall limits.

At the Singapore Ministerial Conference in December 1996, agricultural issues were included in the “process of analysis and exchange of information” which was initiated “to allow Members to better understand the issues involved and identify their interests before undertaking the agreed negotiations and reviews” (Singapore Declaration).

This process is underway, for agriculture, through informal discussions in the WTO’s Committee on Agriculture. Issues covered include

• the application of tariff quotas,
• differences between quota administration mechanisms employed by individual countries,
• divergent interpretations of the Agriculture Agreement's provisions on this subject.
• domestic support and export subsidies (both widely regarded as principal issues for future negotiations),
• the “blue box” payments made by governments under production-limiting programmes,
• the special safeguard mechanism introduced by Article 5 of the Agreement on Agriculture,
• the role of state-trading enterprises (seen variously as distorting agricultural trade or, on the contrary, as stabilizing supplies and prices), and
• special and differential treatment for developing countries.

In his report to the March 1998 meeting of the Committee on Agriculture, the chairman of the committee notified his intention to consult members on how to focus further work on special and differential treatment for developing countries in relation to market access, food security, domestic support, export subsidies, notification requirements and technical assistance.

Standards and SPS

The Agreements on Technical Barriers to Trade (TBT) and Sanitary and Phyto-sanitary Measures (SPS) will reduce the risk of standards and regulations becoming protectionist devices. However, the proliferation of environmental protection measures and growing consumer sensitivity to food safety has created a danger that protectionist interests could use such regulations to discriminate against foreign suppliers.

Both the TBT and SPS agreements require that measures conform to not only the basic principles of MFN and national-treatment but also to principles of minimum effective restriction and the use where possible of internationally agreed technical criteria. The SPS agreement requires that restrictions be supported by sufficient scientific evidence. There are detailed requirements in each agreement for the notification of measures and, in the case of the TBT agreement, for the creation of national enquiry points to provide information to importers on regulations.

Developing country members seeking to defend their rights and interests in the use of technical and SPS restrictions should be actively involved in the work of the Committees established to oversee the agreements. The Committees are a source of information on measures and the appropriate vehicle for initial pursuit of concerns or complaints. The SPS Committee also has a mandate to actively foster cooperation in the creation and oversight of appropriate procedures and regulations for SPS protection.

In both cases, additional technical or scientific assessments will be needed to challenge a restriction that otherwise conforms to the principles of non-discrimination. Both agreements provide for technical assistance on developing country members.