Trade Agreements

The global trade-negotiating process has accelerated over the years and with the failure of the WTO to come to any agreements at Cancun this process will only quicken. A growing network of bilateral and regional free trade accords have gained in their importance since the collapse of the global trade talks in Cancun, Mexico. For example, Singapore had already signed bilateral pacts with the United States, Japan, Australia and New Zealand. Now Singapore, Chile and New Zealand have completed the first round of negotiations for a three-way free trade agreement called the Pacific Three Free Trade Agreement.

In the Middle East, the Arab Gulf Cooperation Council (AGCC) expects to sign a free trade agreement with the European Union before the end of 2004, after a new round of negotiations in Riyadh in November. Also, the three NAFTA countries (Mexico, the U.S. and Canada) have proposed a trade agreement (designated MEFTA) to commence in 2008 to five Middle East countries (Kuwait, United Arab Emirates, Qata, Oman an Saudi Arabia).

China has been engaging in regional trade talks with Mercosur and cooperation with ASEAN has intensified. China and the ASEAN countries formally launched the ASEAN-China Free Trade Area (ACFT) in November, 2002. The next ASEAN+3 (China, Republic of Korea and Japan) summit will be Oct, 2003. The Shanghai Cooperation Organization (SCO) was formed in 1996 to improve relations between countries that border China. SCO (China, Kazakhstan, Russia, Tajikistan and Uzbekistan) has discussed becoming a free trade area.

Working towards a Free Trade Area of the Americas (FTAA), the U.S. has made an offer to Caricom, the 14 nations in the Caribbean basin. Negotiations for CAFTA (U.S. – Central American Free Trade Agreement) were launched in January 2003 and include Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Panama and the Dominican Republic were given the same offer as Central American countries. The U.S. offer to Andean countries was made to Bolivia, Colombia, Ecuador, Peru and Venezuela and the offer to Mercosur was made to Argentina, Brazil, Paraguay and Uruguay. Canada, Chile and Mexico are existing FTA partners with the United States.

Sources: BRIDGES Weekly Trade News Digest, U.S. Trade Representative, WTO, various news services

WTO Peace Clause Set to Expire

The General Agreement on Tariffs and Trade (GATT) was created in 1948 as part of the postwar reconstruction. After the 1986-1994 Uruguay Round of negotiations GATT was replaced with the World Trade Organization, effective January 1, 1995.

The Uruguay Round included a specific Agreement on Agriculture (AoA). The AoA set out commitments which countries had to apply over a sixyear implementation period (1995-2000), but which was to remain in force until a successor agreement was made. The AoA included Article 13, commonly called the “peace clause”.

Article 13 protects countries using subsidies which comply with the agreement from being challenged under other WTO agreements. Without this “peace clause”, countries would have greater freedom to take action against each other’s subsidies, under the Subsidies and Countervailing Measures Agreement and related provisions.

Article 13 expires at the end of 2003 and is a significant factor in negotiations towards a new AoA. Some countries want it extended to ensure that they will not be challenged so long as they comply with their commitments on export subsidies and domestic support under the Agriculture Agreement. Others want it to lapse in order to see agriculture brought under general WTO disciplines.

The peace clause only applies if the level of domestic support for a commodity remains at or below 1992 levels. At Brazil’s request, the WTO has already agreed to establish a dispute panel to rule on whether U.S. government subsidies for American upland cotton growers violate U.S. WTO commitments. Brazil claims the U.S. violated the peace clause by substantially increasing subsidies for U.S. cotton growers since 1992. If the peace clause expires, some fear a large volume of disputes may be filed with the WTO.

Source: WTO, BRIDGES Weekly News Digest, USDA/ERS, various news sources.

Japan Lifts Suspension of Poultry

Scattered outbreaks of Highly Pathogenic Avian Influenza (HPAI) in China and Europe resulted in bans on imports of poultry and poultry products earlier this year. Japan lifted the ban on Belgium, effective September 10, 2003. Japan had already lifted bans on poultry and poultry products from China (August 19), Germany (August 21) and the Netherlands (August 12).

Recently Japan placed a temporary import suspension on poultry and poultry products from Denmark on September 11after confirmation of low pathogenic avian influenza at a duck farm in Denmark.

Source: Weekly updates of news from the Japanese Ministry of Agricuture, Forestry and Fisheries.