Digest Content
- Katherine C. Tai sworn in as USTR Ambassador
- U.S. Disrupts WTO Dispute Meeting Over Venezuela Sanctions Fight
- WTO members consider EU-Singapore, Peru-Australia trade agreements
- European Green Deal: Commission presents actions to boost organic production
- WTO members hold March cluster of fisheries subsidies meetings
- United States appeals panel report regarding US duties on Korean products
- Six countries remain subject to potential action while broader international tax negotiations continue
Katherine C. Tai sworn in as USTR Ambassador
18 March 2021 – Vice President Kamala Harris administered the oath of office to Katherine C. Tai and swore her in as the 19th United States Trade Representative. Ambassador Tai is the first Asian American, and first woman of color confirmed to serve in the role. Tai previously served at USTR from 2007-2014, most recently as Chief Counsel for China Trade Enforcement.
U.S. Disrupts WTO Dispute Meeting Over Venezuela Sanctions Fight
The World Trade Organization suspended a meeting of its dispute settlement body after the U.S. rejected Venezuela’s request for a probe into Trump-era sanctions against President Nicolas Maduro’s government.
The highly unusual move, relayed by an official inside a closed meeting on Friday, risks grinding the WTO’s dispute settlement process to a halt and marks another example of how the Biden administration is continuing Donald Trump’s hardball tactics at the Geneva-based trade body.
The U.S. “exercised its rights as a WTO member to object to this illegitimate panel request because representatives of the Maduro regime do not speak on behalf of the Venezuelan people,” according to a statement issued by the U.S. Mission in Geneva. “The U.S. will reject any effort by Maduro to misuse the WTO to attack U.S. sanctions aimed at restoring human rights and democracy to Venezuela.”
The meeting ended prematurely after Venezuela refused Washington’s demand that the WTO remove Venezuela’s dispute request from the meeting agenda. The impasse means that the WTO can’t hold any regular dispute settlement meetings unless and until the U.S. or Venezuela back down.
The impasse will provide an early test for the WTO’s new Director-General, Ngozi Okonjo-Iweala, who as a candidate touted her ability to bridge the deep levels of mistrust among WTO members.
2018 Sanctions
The trade dispute centers on a series of regulations and executive orders Trump issued in 2018 that prohibited access to U.S. financial markets by the government of Venezuela and transactions related to the purchase of Venezuelan debt.
Venezuela’s complaint alleged that the U.S. sought to “isolate Venezuela economically” and violated its rights under the General Agreement on Tariffs and Trade and the General Agreement on Trade in Services.
The Trump administration previously opposed Venezuela’s request for WTO dispute inquiry in 2019 and blocked WTO members from adopting the agenda of a WTO dispute-settlement meeting — something that had not happened since 1999.
Though President Joe Biden has placed greater emphasis on multilateral cooperation than his predecessor, the move reflects his administration’s willingness to maintain certain Trump-era strategies that critics say risk undermining the international trading system.
WTO members consider EU-Singapore, Peru-Australia trade agreements
WTO members considered the Free Trade Agreement between the European Union and Singapore and the Free Trade Agreement between Peru and Australia at the 22 March meeting of the Committee on Regional Trade Agreements (RTAs). The Committee was also informed of the considerable increase in the number of notifications of RTAs following the departure of the United Kingdom from the European Union.
The EU-Singapore Free Trade Agreement entered into force on 21 November 2019. Under the Agreement, the EU will eliminate duties on more than 99% of tariff lines for imports from Singapore by 2025 while Singapore’s imports from the EU became fully duty free upon the Agreement’s entry into force. Moreover, both parties to the Agreement agreed to improve market access for trade in services and investment compared to their commitments under the WTO General Agreement on Trade in Services (GATS).
Singapore at the meeting said the high-standard Agreement helped cushion the impact of the COVID-19 crisis on bilateral trade. EU-Singapore bilateral trade in goods amounted to 90 billion Singaporean dollars in 2020, or close to 10% of Singapore’s total trade in goods that year. The EU said the Agreement is a stepping stone towards more engagement between the two economies. The EU also noted that the Agreement provides additional market access for postal services, telecommunications, maritime transport and computer services, noting that Singapore is the EU’s 5th largest trade partner in services and 6th highest recipient of EU direct investment.
Members also considered the Peru-Australia Free Trade Agreement, which entered into force on 11 February 2020. Tariff elimination under the Agreement will be completed in 2023 by Australia and 2029 by Peru. Australia and Peru will maintain duties on respectively 12 and 48 tariff lines after full implementation. Trade in services are also liberalized under the Agreement and there are provisions on sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), competition, environment and labour.
Peru said that implementing the comprehensive and modern Agreement will contribute to a significant increase in bilateral trade and contribute to economic recovery in the aftermath of the COVID-19 pandemic. The Agreement helps facilitate value chains between the Americas and Asia and establishes legal certainty and more options for traders and consumers. Australia said the Agreement is fully consistent with WTO principles and rules and provides substantial liberalization across all sectors, delivering outcomes more ambitious than in WTO agreements. Australia highlighted benefits for goods like merino wool, base metals, mineral fuels, paper and pharmaceuticals, and for services like professional services, financial services, telecommunications, health services and tourism under the Agreement.
European Green Deal: Commission presents actions to boost organic production
25 March 2021, the Commission presented an Action Plan for the development of organic production. Its overall aim is to boost the production and consumption of organic products, to reach 25% of agricultural land under organic farming by 2030, as well as to increase organic aquaculture significantly.
The Action Plan is designed to provide the already fast growing organic sector the right tools to achieve the 25% target. It puts forward 23 actions structured around 3 axes – boosting consumption, increasing production, and further improving the sustainability of the sector – to ensure a balanced growth of the sector.
The Commission encourages Member States to develop national organic action plans to increase their national share of organic farming. The national organic action plans will complement the national Common agricultural policy strategic plans.
Growing consumption of organic products will be crucial to encourage farmers to convert to organic farming and thus increase their profitability and resilience. To this end, the Action Plan puts forward several concrete actions aimed at boosting demand, maintaining consumer trust and bringing organic food closer to citizens. Actions also aim, for example, at preventing fraud, increasing consumers’ trust and improving traceability of organicproducts.
Presently, about 8.5% of EU’s agricultural area is farmed organically, and the trends show that with the present growth rate, the EU will reach 15-18% by 2030. This Action Plan provides the toolkit to make an extra push and reach 25%.
To raise awareness on organic production, the Commission will organise an annual EU ‘Organic day’ as well as awards in the organic food chain, to recognise excellence at all steps of the organic food chain. The Commission will also encourage the development of organic tourism networks through ‘biodistricts’. ‘Biodistricts’ are areas where farmers, citizens, tourist operators, associations and public authorities work together towards the sustainable management of local resources, based on organic principles and practices.
The Action Plan also notes that organic aquaculture production remains a relatively new sector but has a significant potential for growth.
Finally, it also aims to further improve organic farming’s performance in terms of sustainability. To achieve this, actions will focus on improving animal welfare, ensuring the availability of organic seeds, reducing the sector’s carbon footprint, and minimising the use of plastics, water and energy.
WTO members hold March cluster of fisheries subsidies meetings
In the week-long cluster of meetings of the Negotiating Group on Rules held from 15 to 19 March 2021, WTO members discussed the scope of new fisheries subsidies disciplines and provisions on subsidies contributing to overfishing and overcapacity. Members also discussed suggestions on enhancing the transparency of fisheries subsidy programmes.
WTO members considered proposals on whether and how to address subsidies to artisanal or low-income fishing in the subsidies disciplines, including based on geographical area and/or certain characteristics. They also discussed options for reflecting sustainability in the draft disciplines on subsidies that contribute to overcapacity and overfishing as well as the kinds of information that members should notify relating to the operation of the fisheries subsidies disciplines.
The chair said he would reflect on the recent discussions and on how to structure the next steps in the negotiations, given the target to conclude negotiations as soon as possible this year. The next cluster of fisheries subsidies meetings will be held during the week of 12 April 2021.
Background
Under the mandate from the WTO’s 11th Ministerial Conference and the UN Sustainable Development Goal Target 14.6, negotiators have been given the task of securing agreement on disciplines to eliminate subsidies for illegal, unreported and unregulated fishing and to prohibit certain forms of fisheries subsidies that contribute to overcapacity and overfishing, with special and differential treatment being an integral part of the negotiations.
United States appeals panel report regarding US duties on Korean products
The United States notified the Dispute Settlement Body (DSB) on 19 March of its decision to appeal the panel report in the case brought by Korea in “United States — Anti-Dumping and Countervailing Duties on Certain Products and the Use of Facts Available” (DS539). The panel report was circulated to WTO members on 21 January.
Given the ongoing lack of agreement among WTO Members regarding the filling of Appellate Body vacancies, there is no Appellate Body Division available at the current time to deal with the appeal.
The situation recalls the matter of appointments in the Appellate Body that is seriously affecting the overall WTO dispute settlement system against the best interest of members.
Some members more than once expressed their position on the importance of resolving the impasse over the appointment of new members as soon as possible and re-establishing a functioning Appellate Body. Many of the delegations described a two-tier dispute settlement system, with a panel and appeals stage, as a core part of the multilateral trading system.
The United States Trade Representative (USTR) today announced the next steps in its Section 301 investigations of Digital Service Taxes (DSTs) adopted or under consideration by ten U.S. trading partners. In January, USTR found that the DSTs adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom were subject to action under Section 301 because they discriminated against U.S. digital companies, were inconsistent with principles of international taxation, and burdened U.S. companies.
The remaining four jurisdictions – Brazil, the Czech Republic, the European Union, and Indonesia – have not adopted or not implemented the DSTs under consideration when the investigations were initiated. Accordingly, USTR is terminating these four investigations without further proceedings. If any of these jurisdictions proceeds to adopt or implement a DST, USTR may initiate new investigations.
Background
On June 2, 2020, USTR initiated investigations into DSTs adopted or under consideration in ten jurisdictions: Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom. Following comprehensive investigations, including consultations with the countries subject to investigation and consideration of public comments, in January 2021 USTR issued reports on DSTs adopted by Austria, India, Italy, Spain, Turkey and the United Kingdom.
The reports detail unreasonable, discriminatory, and burdensome attributes of each of these countries’ DSTs. In addition, USTR issued a status update in the investigations of the DSTs under consideration by Brazil, the Czech Republic, the European Union, and Indonesia. The update discusses the status of each jurisdiction’s consideration of a possible DST, and notes U.S. concerns that DSTs may be adopted in the future. The status updates are available here: https://ustr.gov/sites/default/files/files/Press/Releases/StatusUpdate301InvestigationsBEUIndCR.pdf