THE WORLD TRADE ORGANISATION WTO:

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• THE WORLD TRADE ORGANISATION (WTO)
• Opportunities and Challenges
• Workshop for the Electronics Industry
• 9 April 2002

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WHAT IS THE WTO?

• 144 governments as members as of 2002
• set of legally binding agreements (
  Uruguay Round)
• an intergovernmental institution to monitor
  implementation and procedures to settle disputes

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PRINCIPLES OF THE MULTILATERAL TRADING
SYSTEM

• Most Favoured Nation Principle
• National Treatment
• Binding of tariffs and commitments
• Transparency

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WTO Agreements

• Single Undertaking of UR agreements
• Agreement Establishing the WTO
• General Agreement on Tariffs and Trade 1994
• Agreement on Agriculture
• Agreement on Application of Sanitary and
  Phytosanitary Measures
• Agreement on Textiles and Clothing
• Agreement on Technical Barriers to Trade
• Agreement on Trade-Related Investment Measures
  (TRIMS)

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• Agreement on Anti-Dumping
• Agreement on Customs Valuation
• Agreement on Pre-shipment Inspection
• Agreement on Rules of Origin
• Agreement on Import Licensing Procedures
• Agreement on Subsidies and Countervailing
  Measures
• Agreement on Safeguards
• Agreement on Trade in Services
• Agreement on Trade-Related Aspects of
  Intellectual Property Rights, Including Trade in
  Counterfeit Goods (TRIPS)
• Dispute Settlement Understanding

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WHY THE WTO IS IMPORTANT

• Increased market access- tariff concessions
• Importance of trade to Malaysia
• - exports in 2001 RM334.4 billion
• - imports in 2001 RM280.7 billion
• multilateral institution with multilateral trade
  rules to govern international trade with recourse
  to dispute settlement (Import Licensing, Customs
  Valuation, TBT, SPS DSM) .
• ensures a predictable and stable environmental
  for conduct of trade under conditions of fair and
  equitable competition.

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BENEFITS ARISING FROM THE URUGUAY ROUND RELEVANT
TO BUSINESS

• Binding of concessions and tariff reduction
  commitments
• -provide greater security and predictability of
  market access. Malaysia has offered bindings and
  tariff reductions on 5900 industrial products and
  1297 agricultural products.

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• Tariff bindings commitments
• developed countries( from 70 to 99)
• developing countries( range 21-73)
• sectoral cuts of 40 (textiles,fish
  products,footwear,transport equipment)
• 60 cuts (wood,furniture,metals,non-electric
  machinery)
• duty free access doubled (20 to 44)
• agriculture tariff cuts (24 to 36)

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Trading Rules With Rights and Obligations

• Enhances transparency and predictability
• compliance minimises unilateralism
• disciplines (eg. anti-dumping, subsidies, customs
  valuation,rules of origin)
• redressal of unfair trade practices via dispute
  settlement mechanism
• implementation and policy constraints (eg.
  TRIMS,subsidies, TRIPS)

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DEVELOPMENT CONSIDERATIONS

• Flexibility in terms of longer time-frame for
  implementation of obligations (differentiated
  responsibilities and reciprocity)
• assistance to infant industries
• temporary tariff protection
• exclusion list for sensitive products
• principle of progressive liberalisation
• safeguards measures
• technical assistance/cooperation

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Trade in services

• Binding commitments on market access to foreign
  service providers as reflected in the individual
  country schedules
• limitations and conditions , exclusion list
• Malaysias offer in 64 service activities (20 in
  financial and 44 in non financial sub-sectors)

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Information Technology Agreement

• Plurilateral not multilateral
• WTO Members, states or separate customs
  territories acceding
• Sector specific tariff rules

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ITA

• 57 Participants (including 15 Member States of
  the European Union)
• Albania Hong Kong,China Malaysia Separate
  Customs
• Australia Iceland Mauritius Territory of
  Taiwan Bulgaria India Moldova Penghu,
  Kinman,
• Canada Indonesia New Zealand and Matsu
• Costa Rica Israel Norway Slovenia
• Croatia Japan Oman Switzerland
• Cyprus Jordan Panama Thailand
• Czech Rep. Korea Philippines Turkey El
  Salvador Kyrgyz Rep. Poland United States
• Estonia Latvia Romania EC Lithuania Singap
  ore
• Georgia Macao, China Slovak Rep.
• Accounting for approximately 93 of world trade
  in information technology products

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Product Coverage

• Computers
• Telecommunications
• Semiconductors
• Semiconductor manufacturing equipment
• Software
• Scientific Instruments
• But not consumer electronics

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Key Aspects of Ministerial DeclarationSingapore
1996

• Bind and eliminate customs duties and other
  duties and charges on covered products
• Zero tariffs
• Covering 90 of trade

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• No exceptions -- all products at zero
• Flexibility for implementation
• -- basic staging to 2000 -- extended
  staging to 2005 (in case of Malaysia)

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• Committee of Participants on the Expansion of
  Trade in Information Technology Products
• Established 1997
• Open to all participants
• Other WTO Member and acceding countries as
  observers

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ITA 2?

• Expedited review of the product coverage
  commenced in 1997
• Work continued during 1998 and1999.
• Matter addressed at each meeting
• No agreement to add new products

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Outcome of WTO Doha Ministerial Conference

• The 4th WTO Ministerial Conference
• Doha, Qatar from 9 14 November 2001
• The WTO Ministers adopted
• Ministerial Declaration
• Decision on Implementation Issues and Concerns
• Declaration on TRIPs and Public Health

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• Establishes future work programme
• Negotiations on
• Agriculture
• Services
• Industrial tariff
• TRIPS
• Environment
• WTO rules
• Dispute settlement

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• Clarification on elements for multilateral
  framework or rules on
• Investment
• Competition policy
• Government procurement
• Trade facilitation
• Environment

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• Other actions
• to be pursued by relevant WTO bodies including
  reviews of relevant WTO provisions
• Formation of Trade Negotiating Committee
• first meeting on 28 January 2002)
• oversee and conduct of negotiations
• completion no later than 1 January 2005

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Implementation Related Issues and Concerns

• Provides
• Resolution to some of the implementation problems
  of existing agreements
• Guidance to WTO bodies to deal with other
  outstanding issues

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LABOUR

• Not featured in the WTO work programme
• Reaffirms that International Labour Organisation
  (ILO) is the competent body to deal with labour
  standards

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Industrial Tariff Negotiations

• negotiations by modalities to be agreed to reduce
  or eliminate where appropriate
• tariff and Non-Trade Barriers
• Product coverage comprehensive and without a
  priori exclusions
• S D treatment for developing countries to
  include less than full reciprocity
• Appropriate studies and capacity building
  measures for LDCs
• Will provide improved possibilities for trade of
  IT and related goods and consumer electronics

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Investment, Competition, Transparency in
Government Procurement, Trade Facilitation

• Decision
• Negotiations on a multilateral framework to
  commence after 5th MC if there is explicit
  consensus on modalities for negotiations
• WTO Working Group to clarify elements,
  definition, scope, principles for possible
  inclusion in a multilateral framework of rules

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Malaysias Follow up

• Working group to be established to
• examine elements listed in declaration
• identify other elements of importance to Malaysia
  for incorporation into possible rules
• To establish the form of the multilateral
  framework that best suits Malaysias needs
• To participate in WTO working group discussions

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Challenges

• The commencement of new round of negotiations on
  agriculture, services, non agricultural tariffs,
  environment, and rules.
• The establishment of WTO Trade Negotiations
  Committee
• Increased market access
• Competition more intense
• Push for rules setting in new areas

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• To be fully engaged in the negotiation process to
  ensure that multilateral rules take into account
  our concerns and caters to the developmental
  needs of Malaysia
• Current consultative mechanism that include the
  private sector, academicians, NGOs will continue
  to be consulted to formulate national positions

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• New issues Preparatory process is important
  without pre empting that, there will be
  consensus on modalities for negotiations. Working
  Groups already established
• Continue to apprise the private sector of
  developments in the WTO through seminars and
  special briefing sessions

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Future Work

• Business associations, industry groups and
  professional bodies to assess and identify
  potential Impact of Doha decision on their
  existing markets, expected competition or
  potential market openings
• To re-look, restrategise, shifting of mindset to
  capitalize on opportunities that can be made
  available even on new issues
• Participation in rule setting important to ensure
  interests taken into account

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Need to monitor developments

• Increasingly protectionist measures by developed
  countries has affected market access and offset
  the benefits of tariff reduction
• Agencies responsible for implementation of
  specific agreements such as TBT , SPS , AOA,
  TRIPS to monitor implementation of all related
  agreements by other governments or bodies which
  contravene the agreements and may have
  implications on our trade

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• Obtain feedback from industries on problems
  encountered in international trade
• Understanding our rights and obligations under
  the agreements and fulfilling our commitments
• Follow the discussions at the international level
  to ensure that future rules negotiated take into
  account our needs and reflect needs of the
  industry

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Issues in the Electronic and Electrical Sector

• Increasingly stringent measures in foreign
  markets, add to cost and affect competitiveness
• Difficulties of challenging measures taken to
  protect the environment eg. European Union
  Directives on waste disposal and use of hazardous
  substances in E E equipment
• WTO Agreement on Technical Barriers to Trade
  recognises right to protect human, animal or
  plant life or environment,
• covers product related processing and production
  methods
• Increasing use of standards to cater for consumer
  concerns, eg Belgian law on socially responsible
  production
• Need to ensure conformance with international
  standards
• Recognition for conformity assessment procedures
  

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• Thank
• You

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