WTO rules

THE World Trade Organisation which has members comprising developed, developing, small and large countries is the world trade body governing multilateral trade.

In the past, the large developing countries virtually controlled the decision making in the WTO and smaller and developing countries had no choice but to fall in line with such rules whether or not they had an adverse impact on the small developing countries.

One of the main reasons for such a situation was that most of the developing countries did not have the financial and human resources to man their units in Geneva with sufficient numbers to cover all WTO activities. Nor did they have sufficient legal expertise in trade related subjects in their countries to study and advise their governments.

Such a situation resulted in smaller countries not being fully aware of all their obligations in addition to not being aware of the remedies at their disposal through the WTO if any members failed to follow the rules whereby the smaller countries could have adverse effects.

The situation today in the WTO is different. The developing countries have become a voice to reckon with and some of the larger developing countries which today have sufficient financial and human resources to study the WTO rules in depth are challenging the larger developed countries in the WTO and winning such cases.

The smaller countries are also grouping themselves together with likeminded countries to provide unified voices on matters of concern to them. Unlike in the past when trade remedy measures were not used by the smaller countries against larger countries which were considered heavy weights in international trade, smaller countries have now realised that there are various remedies available to them in case of injury to their domestic markets, etc.

At a meeting of the rules negotiations committee, helping small, poor countries make use of WTO trade remedy measures was discussed in depth when a group of African, Caribbean and Pacific countries (ACP) called for the creation of a ‘facility’ to assist developing countries in developing the institutions and expertise they need to protect domestic industries from dumped or subsidised imports.

The proposal stated that the rules providing for the application of trade remedy measures, being technically complex and financially burdensome, deprive the capacity constrained developing countries, mainly the least developed and small and vulnerable countries, of the benefit of applying such measures.

ACP countries have proposed that the proposed trade remedies facility be housed in the WTO Secretariat with functions such as promoting coherence among trade remedy related technical assistance provided by the WTO, UN, etc., to developing countries, help countries prepare laws and institutional frameworks required for applying trade remedies and train personnel to conduct anti dumping or countervailing duty investigations.

The proposal, which noted that several developing countries “at higher stages of development” had become successful users of anti dumping and countervailing measures, called for greater South-South cooperation on trade remedies so that officials could learn from such experiences.

Setting up an information database on trade remedy measures within the WTO Secretariat’s Institute for Training and Technical Cooperation has also been suggested. This database would provide information on past dispute rulings clarifying aspects of WTO law related to trade measures. If this proposal is accepted, Sri Lanka stands to benefit as this facility could help her, particularly in training personnel in available trade remedy measures.

In the recent past, with growing awareness of trade related matters in Sri Lanka and various training programmes organised by the WTO in collaboration with the Department of Commerce, a new category of trade law experts have been developing in Sri Lanka.

If their skills are further polished by such a proposed unit, Sri Lanka need not look beyond her shores for expertise if and when trade remedy measures have to be resorted to, particularly with regard to dumping of cheap goods. In the absence of local legislation on subsidies and countervailing duties, such a facility offered by the WTO would be useful.

The same meeting also saw Sri Lanka being an active co-sponsor of a proposal regarding export subsidies. When a developing country crosses the threshold of $ 1,000 (Constant 1990 $ 1000 in three consecutive years) per capita GNP, the WTO rules on subsidy prohibit the use of export subsidies with an exception being given to LDCs and a few developing countries including Sri Lanka.

The proposal, which has Sri Lanka as a cosponsor, argues that these countries which are now exempt from the rule should be allowed the same facility given to the developing countries which didn’t qualify for the exemption, which were allowed an eight-year phase-out period for export subsidies and that the period should begin from the year in which they graduate out of the $ 1,000 limit. The importance of this proposal is that Sri Lanka has passed the $ 1,000 threshold and continuation of this exemption is helpful to her economic development.

As the proposal will raise objections from some countries, it will take some time to know its outcome.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)