General Council – Communication from India

(98-4619)
Original:English

The following statement made by India at the informal intersessional General Council meeting on 26-27 October is being distributed at the request of that delegation.

• The Secretariat communication regarding this meeting very rightly mentions that the focus of discussion at this inter-sessional meeting will be “Issues and proposals related to paragraph 9(a)(i) of the Ministerial Declaration”, in other words, the issues, including those brought forward by Members, relating to implementation of existing agreements and decisions. In this context, I would like to recall that in paragraph 8 of the Geneva Ministerial Declaration, it was specifically recognised that the problems encountered in implementation and the consequent impact on trade and development prospects of Members is an important element in the evaluation of implementation.
• You have been kind enough to ask us to introduce our paper on “Concerns regarding Implementation of Provisions relating to Differential and More Favourable Treatment of Developing and Least Developed Countries in various WTO Agreements”. With your permission, I would like to divide our statement today, into three parts:
• Introduce our paper on Special and Differential Treatment;
• Briefly refer to other implementational issues and concerns; and
• Explain what we envisage as our work programme under para 9(a)(i) of the Geneva Ministerial Declaration.
• At the outset, I would like to state that it has not been possible for us to submit all the papers which we wanted to submit for this process in this first meeting itself. We have submitted one paper for this meeting and it is our expectation that in the course of the next few weeks, as we continue this process, we will submit further papers.
SECTION A

India has submitted a paper highlighting its concerns regarding the implementation of provisions relating to differential and more favourable treatment of developing and least developed countries in various WTO Agreements. I must clarify that this paper is not exhaustive and does not cover all the WTO Agreements from the perspective of special and differential treatment. This paper has been circulated only this morning and we are aware that delegations would not have had time to study it in detail. We therefore welcome this opportunity to introduce our paper. We are also grateful to Egypt for developing very comprehensively a number of aspects of interest to developing countries in their paper and we share most of the concerns raised by them.

SECTION B
• We have highlighted some of our concerns regarding the implementation of provisions relating to special and differential provisions with respect to some WTO Agreements. There are, however, a number of Agreements the problems of implementation of whose provisions we have not elaborated upon. We would like to clearly state that it is our intention to submit further papers during the ongoing process relating to the review of the Implementation of the existing Agreements and decisions. I would, therefore, in the second part of our presentation, only briefly touch upon some of the concerns that we have in the remaining areas.
A. Agreement on Agriculture
• Agriculture as a sector is perhaps one of the most important sectors not just for India but for a large number of developing countries with predominantly agrarian economies. We have certain major concerns regarding the implementation of the provisions of the Agreement on Agriculture. Market access for products from developing countries continues to be affected mainly because of two reasons. The first is the lack of specific disciplines with regard to the implementation of tariff rate quotas which stifle market access opportunities. The second is that the trade distorting measures, of which exports subsidies is perhaps the most prominent example, continue to prevent products from developing countries competing on an even keel. This problem has been compounded both because of the excessive budgetary resources being allocated in this regard, and because of the circumvention of existing rules by some developed countries leading to further distortion in the market. We therefore support the complete abolition of export subsidies except as a special and differential provision for developing countries.
• We would also like to briefly touch upon issues relating to food security and domestic support. It is our view that while non-trade concerns such as food security have been mentioned in the preamble to the Agreement very little has been done in this regard. It would be too simplistic to assume that agricultural liberalisation sought to be ushered in by the Agreement would by itself, be able to overcome the problems of food security for developing countries with sizeable rural population. It is, therefore, extremely important to provide a certain degree of flexibility to developing countries for the adoption of such domestic policies whose intention is to provide continued employment to the large segment of population dependent on this sector and to improve the general levels of production both with the aim of improving the overall availability of food grains and for enhancing the income levels of the rural poor. In brief, we have to find ways to ensure that the Agreement on Agriculture whose main objective is to remove distortions in international trade does not adversely affect the food security of countries like India.
B. Agreement on Textiles and Clothing

Our concerns relating to the implementation of the Agreement on Textiles and Clothing are too well known to need any reiteration here. I would only like to say that we have not derived the expected benefits from this Agreement. I am sure we will have an opportunity to discuss implementation of this Agreement in detail during this session.

C. Agreement on Customs Valuation
• All of us recognise the importance of the Agreement on Customs Valuation. Our experience in implementing this Agreement has brought out certain difficulties. First, Articles 1, 8 and 17 are not adequate to deal with situations such as collusion between the importer and exporter for under-valuation of goods. To some extent, the difficulty is overcome by the decision of Ministers at Marrakesh concerning the rejection of the transaction value method in cases where there was a doubt about the truth or accuracy of the declared value of goods. We believe that it would be advantageous to incorporate this decision in the Agreement itself.
• A second implementation concern springs from the situation where an exporter files the correct export declaration to the customs authorities, but the importer unilaterally resorts to mis-declaration of value to the customs authorities in the importing country to evade due customs duty. To tackle this problem, the practice of entering into bilateral agreements for exchange of information regarding customs value as evolved. But this is not a practical solution to the problem.
• A third implementation concern relates to determination of customs value on the basis of transaction value of identical or similar goods. Where the customs value can not be determined under the provisions of Article 1, Articles 2 and 3 of the Agreement provide that if in applying these Articles more than one transaction value of identical or similar goods is found, the lowest such value shall be used to determine the customs value of the imported goods. This provision, in our view, creates a bias in favour of importers, and could lead to manipulation. This situation in our view also needs appropriate correction.
• Fourth, under Article 8 of the Agreement, commissions and brokerage, except buying commissions, have to be taken into consideration in determining the customs value. We believe that the exclusion of buying commissions from the computation of value encourages under-invoicing and the artificial splitting of value, especially when purchases are first made by buying agents and are re–invoiced to the importer.
• Fifth, under Article 8:1(b)(iv), addition of cost of services such as engineering, development, and design work, which are supplied directly or indirectly by the buyer free of charge or at reduced cost for the production of goods under import, is permitted only if the services are undertaken other than in the country of importation. This provision provides room for the splitting of the import value, by claiming that part of the services were rendered in the importing country itself. This situation also clearly needs to be addressed.
• Sixth, valuation of imports by sole agents, sole distributors, and sole concessionaires of large corporations, including transnational corporations, poses a problem as such entities are not considered as “related persons” automatically under Article 15:5 of the Agreement. If such entities sell the product at specially reduced prices, there may be no means available with customs administrations to check the veracity of such special prices.
• Seventh, the determination of customs value under the residual method in Article 7 of the Agreement, especially the exclusion clause (c) in paragraph 2, poses the problem that while the WTO Agreement on Anti-dumping takes cognisance of the domestic price, the Customs Valuation Agreement explicitly excludes such a possibility.
• We will present these thoughts in a detailed paper on implementation of the Customs Valuation Agreement soon.
D. TRIPS Agreement

We hope to submit a separate paper regarding implementation of TRIPS Agreement fairly soon. At this meeting we would like to refer to two aspects of this Agreement. The first concerns geographical indications. India attaches great importance to ensuring additional multilateral protection, available for wines and spirits in terms of Article 23 of the TRIPS Agreement, to the products of developing countries. Another concern for India is the protection of indigenous knowledge which risks being used by patent holders in developed countries without the flow of benefits from patentees to the original developers. While we are taking this opportunity to flag our concern on these aspects at this meeting, we will revert to them in greater detail in future sessions.

E. Importance of Adhering to multilateral approach in finding solutions to trade concerns

When our Ministers signed the Marrakesh Agreement in April 1994, the general expectation was that once WTO comes into force with its strong dispute settlement mechanism, Members will not have any need or justification to take recourse to unilateral action. Unfortunately, we continue to see threats of unilateral action even after coming into force of WTO. We are concerned about this. We hope to deal with this subject in greater detail in the future sessions.

SECTION C
• In the concluding part of our statement, it is necessary for my delegation to spell out clearly what we envisage as our work under para 9(a)(i) of the Geneva Ministerial Declaration. In this context, it may be recalled that during the run-up to the Geneva Ministerial Conference when we were all engaged in discussions regarding the various elements which should appropriately go into the preparatory process for the Third Ministerial Conference, it was essentially developing countries who argued that they are facing unforeseen difficulties in implementing some of the agreements and that implementation issues and concerns should be discussed and solutions found during the preparatory process for the Third Ministerial Conference. You will recall that in one of the meetings convened for the purpose of discussing the draft Geneva Ministerial Declaration, some delegations asked us as to what we mean by implementational issues and concerns. What we said on that day holds good even today as far as my delegation is concerned. We had pointed out on that occasion that we have two categories of implementational issues and concerns. The first category covers those problems which we are encountering in the process of implementing some of the covered agreements. When we had accepted these agreements, we had not anticipated these problems during implementation and probably even our trading partners from developed countries could not have visualised the enormity of the problems developing countries would be facing. The second category of problems is relatable to the fact that in respect of some agreements where developing countries like India were hoping to derive some benefits, the anticipated benefits had not materialised because of the manner in which some of these agreements are being implemented by developed countries without regard for the object and purpose of these Agreements.
• We are afraid that some delegations are trying to downplay issues and concerns relating to implementation articulated by us by arguing that implementation issues could be solved through increased technical assistance. We would like to clearly say that the implementation issues and concerns which we are facing are of a serious nature and it will be unrealistic for any delegation to imagine that these problems can be solved and concerns can be met through technical assistance alone. If some of us face a major problem in implementing TRIPS or TRIMs Agreement or if our trading partners are implementing the Anti-Dumping or Subsidies Agreement or the Textiles Agreement in such a way as to impede market access, the problems cannot be solved through technical assistance. What we find is that while implementing, for example, TRIMs, we are virtually forced to give up some of our developmental aspirations and strategies. This is the reason why we have always been saying that implementation issues and concerns have to be viewed and handled in a political framework and not on the basis of enhanced technical assistance.
• Since this is the first meeting in which we are launching our work programme envisaged by Ministers in paragraph 9 of the Geneva Ministerial Declaration, we think it will be appropriate for us to appeal to our colleagues from developed countries not to make an attempt to view this process of looking into implementation issues and concerns as a mere ritual or as an opportunity to force the pace of implementation even faster than that visualised by the Agreements or as a process through which the balance of rights and obligations could be further distorted against the interests of developing countries. In this context, we would like to repeat what we had said in the first Special Session of the General Council: “There should be no expectation that the developing countries seeking solution for their legitimate concerns in the implementation area should pay a price for what was only a redressal issue”. We also pointed out that implementation issues were related to asymmetries and imbalances in the agreements for developing countries and to a review of the empty platitudes of special and differential treatment of developing countries in order to substantiate them.
• All of us have to realise that we have gained more knowledge and more insight into the working of the world trading system since our Ministers signed the Uruguay Round Agreements at Marrakesh in April 1994. At that time there were certain implied assumptions behind the commitments undertaken. We have to recognise today that the Uruguay Round Agreements have not provided the expected benefits to developing countries including least-developed countries. This is a point that our delegation has been making repeatedly in various fora. We would, in this context, also like to quote from a speech delivered recently by Mr. Joseph Stiglitz, Senior Vice-President and Chief Economist of the World Bank, in Geneva, a speech from which the distinguished Ambassador of Egypt also quoted earlier. I quote:
• “But the trade policy agenda for the developing world — or at least the agenda advocated for developing countries by the West — has in recent years suffered from its single-minded focus on liberalisation through reduction of trade barriers in those countries. To complement this argument, important as it is, we need to ask also, what responsibilities does the developed world have in the area of trade policy? . . . but let me suggest several developments that have clearly helped delay the progress towards transformative development through openness:
• First, the Uruguay Round trade agreement — for all the benefits it brought to the world’s consumers, producers and taxpayers — did too little to ensure the opening of markets to developing country exports. . . . market access is one area where the developed world is uniquely positioned to give a boost to the development transformation that I have called for.
• Second, and a related point, is that we must continue working to stem the tide of the new protectionism in the West. As you know, the last two decades have seen a rise in the use of creative new measures to block imports. Examples include nuisance anti-dumping claims, lodged under laws that often make little economic sense; countervailing duties that similarly lack objective justification.
• Third, international protection of intellectual property rights (IPRs) should strike a balance between the interests of producers and users. . . . Yes, it is important to give incentives to innovators by ensuring them a return on their investment in R&D. But we must remember that knowledge is a crucial input into production processes, whether in agriculture or high-tech industry, and that unlike physical inputs into production, knowledge can be shared ad infinitum without any additional cost. Thomas Jefferson likened the creation of knowledge to the lighting of a candle in the darkness: many other candles can draw their light from that first candle without diminishing its power or brilliance. Excessive protection of IPRs may end this virtuous cycle of knowledge transmission and regeneration in the developing world”.
• “In all these cases, we should seek to construct not just good policies, but also a sense that the process by which policies are devised is itself fair and open. . . . Worse still, . . . , even as the more developed countries preach the doctrines of openness, they engage in restrictive practices. . . . And even as the developed countries dismiss the political problems facing less-developed countries, they justify their own resort to these protectionist measures as necessary to overcome even worse protectionist sentiments within their own countries.”
• It is obvious that implementation issues and concerns require to be handled with certain amount of political sensitivity, especially in the light of the current perceptions about the multilateral trading system. We have highlighted some of our concerns and these are, by no means, exhaustive. I trust that our trading partners will consider seriously all the concerns raised by us today as well as those which will be raised in future. I also trust that it will be possible for all of us to jointly endeavour to find meaningful conclusions for these problems and concerns.