Implementing a WTO Agreement on Trade Facilitation: What Makes Sense?
| Author | J. Michael Finger . John S. Wilson |
| Profession | Consultant to the World Bank. Lead Economist, Development Research Group, World Bank |
| Pages | WPS3971 |
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J. Michael Finger and John S. Wilson J. Michael Finger is a consultant to the World Bank. John S. Wilson is Lead Economist, Development Research Group, World Bank.
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In initiating the current round of multilateral negotiations, WTO Members committed themselves to pay particular attention to issues raised by developing countries - signaled by referring to the negotiations at the "Doha Development Agenda" rather than the "Doha Round." The commitment reflected two widespread perceptions of the Uruguay Round outcome:
* it was unbalanced, more favorable to the interests of developed Members than to developing Members,
* it created an "implementation problem" more severe than any created by previous GATT agreements. (The nature of these will be taken up in detail below.)
WTO Members, in the Declaration that initiated the new round,3 responded to these perceptions in two ways. They renewed their commitment to treat developing countries generously, i.e., to special and differential treatment for developing countries,4 and they promised to give special attention to implementation-related issues and concerns.
Indeed, implementation is the first item in the Doha Declaration Work Program. In the documents that outlined the new negotiations WTO Ministers devoted more space to implementation than to agriculture, services and non-agricultural market access, combined.5
The purpose of this paper is to explore how the implementation issue has evolved. In this exploration we pay particular attention to trade facilitation.6 It is the only "new area" in the agenda and the only place the negotiations have taken up the challenge to tailor obligations to particular conditions and of tying the legal obligation to implement WTO rules to a concrete commitment to provide assistance. Moreover, trade facilitation involves activities such as transport, communications and public service efficiency that are economy-wide in scope. Thus the trade facilitation discussion does take up the issue of how regulating their trade dimension can guide construction of institutions basic to the domestic economy.
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Our approach is a practical one. We review what has been accomplished through WTO negotiations and through other means. e.g., bilateral and multilateral development agencies, we pull together lessons from these experiences. We will look in detail at progress that has been made through a number of instruments that exist in the international community. We look into the details of progress on trade facilitation in order to learn more about how the contributions of the different organizations fit together. This part of our work was in part sparked by a Japanese contribution to the WTO7 discussion that brought forward the idea that institutions have comparative advantages, their different structures and capacities should be taken into account in determining which of the international community's different instruments are best suited to different parts of the development challenge.8
As to our findings, contrary to the pervading view that the Doha negotiations have achieved little, we find that on trade facilitation much progress has been made, particularly through development banks and bilateral development agencies. Active private sector participation has been an important input. Many agencies have been involved; we find that their roles have been consistent with their comparative advantages.
As to how the international community can best support continued progress, we conclude in favor of a cautious approach to the imposition of new WTO obligations in the area of trade facilitation. On the whole, this is the approach the WTO has taken, e.g., by limiting its negotiations on trade facilitation to several specific provisions of the GATT. The WTO can continue to function as a catalyst for reform; it is perhaps uniquely place to relate the trade facilitation agenda to the overall trade agenda.
On design and construction of the relevant infrastructures and capacities, the development institutions, including bilateral agencies, should continue to lead. We find little evidence to support the need for a comprehensive new "platform" to channel trade-related aid. We will suggest, however, that an innovative approach to using the well established, but under utilized Trade Policy Review Mechanism (TPRM) be considered to increase transparency on where new aid is going over time and to expand understanding of where and how country-based progress has been achieved.
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This part of the paper looks at the "implementation problem," or in WTO language, "implementation-related issues and concerns." Do the "implementation-related issues and concerns" in the Doha Declaration address the "implementation problem" as it emerged from the coming into force of the Uruguay Round Agreements? What progress has been made to address the implementation-related issues and concerns and the implementation problem?
The Uruguay Round "grand bargain,"9 was that developing countries would take on obligations in new areas such as intellectual property and services in exchange for developed countries' making significant market access concessions on products of export interest to developing countries - particularly textiles/clothing and agricultural products.
As Sylvia Ostry (2002) has explained, when the Uruguay Round Agreements were accepted their implications of were poorly understood, certainly not quantified. As to what developing Members received, the newly tariffied schedules of protection of agriculture proved to be hardly less restrictive than the hodgepodge of non-tariff measures they replaced. The commitment to remove quantitative restrictions on imports of textiles and clothing would take place mostly at the end of the 10-year phase-in period, not at the beginning. Moreover and less often noted, the economics of TRIPS (the agreement on trade-related aspects of intellectual property) dominates the economics of the Uruguay Round Agreements. For the United States and other intellectual property providers, the value of the claims TRIPS generates is several times larger than the gain to them from all the merchandise trade liberalization agreed, including the liberalization of their own restrictions. For countries that mostly use intellectual property established elsewhere, the TRIPS-generated obligation to pay is several times larger than the gains they will enjoy from the Uruguay Round package of merchandise import liberalization.10 Thus there emerged a concern that the basic GATT/WTO ethic of reciprocity or balance had been violated - developing Members had given more than they got.
The Uruguay Round brought into the GATT/WTO system challenges that the original GATT had not taken on. While the politics of agreeing to tariff reductions is difficult, to implement such an agreement provides no particular challenge. New tariff schedules are printed and distributed to customs houses.
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The Uruguay Round however pushed past regulations aimed specifically at international trade into areas of behind-the-border institutions and regulations such as technical and sanitary standards, the protection of international property. While these matters are "trade-related" - they do affect international trade - they more basically provide the institutional structure of the domestic economy. Moreover, agreements in these areas took a form different from that of traditional agreements to reduce or eliminate barriers. They require that countries' regulations be harmonized to a common standard; e.g., every WTO Member must apply the same standard for defining and protecting intellectual property, must vigorously apply that standard to foreign-owned property. Implementation of the obligations undertaken in these agreements requires institution-building - not just removing restrictions. This institution-building would demand significant...
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