This week the European Parliament (EP) published the amendments made to the European proposal already approved for the Trade Facilitation Agreement (TFA), which is being ratified within the World Trade Organization (WTO). With the European Parliament step completed, the proposal goes to the European Council for approval by Member States. Only after that, the European Union will be ready for the WTO’s Tenth Ministerial Conference (MC10) in Nairobi in December 2015 and will conclude the Doha Round.
The rapporteur of the proposal is the MEP Pablo Zalba Bidegain (Group of the European People’s Party – Christian Democrats) Vice-Chair of the Committee on Economic and Monetary Affairs (ECON), Co-Chair of the EP Delegation to the WTO and member of the Delegation to the Euro-Latin American Parliamentary Assembly (DLAT).
The Trade Facilitation Agreement is a package of measures that covers issues including advanced rulings, transparency, goods in transit, specific issues responding to the concerns of small and medium-sized enterprises (SMEs) and simplifying customs formalities. The agreement was negotiated in Bali (Indonesia) in December 2013 in a multilateral context but it wasn’t until December 2014 that it became part of the WTO law. To enter into force, two-thirds of the 161 WTO members will have to ratify the Agreement. Both the EU and the United States have committed to make it happen.
EUBrasil: What are the advances of the project that you wrote?
Zalba Bidegain: The Trade Facilitation Agreement is a very important achievement for the WTO. We are dealing with an agreement that if is to be defined with one word, that would be innovative. Innovative in the way it addresses trade facilitation, supporting greater transparency and proposing a special and differential treatment for non-developed and developing countries. The Agreement constitutes a tool to boost trade among WTO member countries, to fight border corruption and to encourage small and medium enterprises through a reduction in bureaucratic costs and a better access to information.
EUBrasil: WTO members are already working for countries to ratify this agreement before the end of the year. So far, how many countries have ratified the TFA?
Zalba Bidegain: To date, 18 members (Hong Kong, Singapore, United States, Mauritius, Malaysia, Japan, Australia, Botswana, Trinidad and Tobago, Korea, Nicaragua, Niger, Taipei, Switzerland, China, Liechenstein, Lao People’s Democratic Republic and Belize) ratified the Protocol which incorporates the Trade Facilitation Agreement in Annex 1st of the WTO Agreement. It is a process that takes time because each member country has to ratify the Protocol internally, and, in cases such as the EU, it is necessary to get a clear and joint position among all 28 member states. I believe that we will reach and surpass the two-thirds needed given that many countries pledged to ratify the Protocol.
EUBrasil: The Trade Facilitation Agreement reduces the transaction costs of foreign trade, but some say it is much more symbolic than effective, and also add it is a way to divert attention from the central issues of the Doha Round and its possible failure. What is your opinion on these considerations?
Zalba Bidegain: There is no doubt the new approach that the Agreement is taking is symbolic, however it is not symbolic solely for its effectiveness. The agreement plans a differential treatment for underdeveloped and developing countries, allowing them to implement the provisions of the Agreement in a more flexible way according to their technical resources. To achieve implementation speed, developed countries will provide technical assistance to countries in need.
This approach leads to more developing countries being “encouraged” to ratify the Trade Facilitation Agreement and thus enjoying greater efficiency. The Doha Round began in 2011 with a focus on developing countries. If the Trade Facilitation Agreement achieves broad implementation, I believe we can qualify it as progress rather than a failure.
EUBrasil: Considering that the central theme of the Doha Round is agriculture, what can we expect from Nairobi for the global liberalization round not to be considered a failure?
Zalba Bidegain: We are facing a complex dilemma. On the one hand, in a globalized world, it is desirable to move forward on the multilateral level in order to involve as many countries as possible, but at the same time, it is increasingly difficult to get agreements between such diverse cultures and economies. I believe that the WTO is functioning well. The results to be obtained during the Nairobi Conference will depend largely on the willingness to work and reach a compromise that countries can embrace in December.
There is a consensus to proceed first with the Trade Facilitation Agreement in order to implement the rest of the package of measures adopted in Bali. We are talking about very sensitive issues, such as the subject of food reserves. Now we have to focus our efforts on achieving third party ratification of the Agreement by of the WTO members in order to know how far they can get in the negotiations on agriculture.
EUBrasil: How does the European Parliament see the three pillars of trade: elimination of export subsidies, market access and reduction of domestic subsidies?
Zalba Bidegain: The European Parliament supports the liberalization of world trade, as it has demonstrated in successive free trade agreements that the EU signed with other countries and regions. I have no doubt that regional mega agreements – such as TTIP or TPP- cannot be seen as damaging to multilateral agreements, but quite the opposite. Regional agreements have always existed, considering it was only recently that multilateralism has become less effective. We are trying to alleviate this shortage with the agreements as the TFA.
In this sense, I believe that the advances that we can get in agreements such as the TTIP, will serve as a testing ground to know what formulas may work better multilaterally – both for the elimination of subsidies, market access and reduction of domestic subsidies as well as in new areas.
EUBrasil: Nowadays is there any difference between the position of the Council, the European Parliament and the Commission with regard to what will be discussed in Nairobi?
Zalba Bidegain: As a major trading bloc, we have to show responsibility and do everything possible so that the Ministerial Conference in Nairobi is a success. The three are working together to be able to reach the goals.