R 110825Z JUN 09 ZDK
FM USMISSION GENEVA
TO SECSTATE WASHDC 8605
INFO WORLD TRADE ORGANIZATION COLLECTIVE
DEPT OF AGRICULTURE WASHINGTON DC
USDOC WASHDC
USEU BRUSSELS

UNCLAS GENEVA 000459 
 
 
EEB/TPP/MTAA FOR CRAFT 
PASS USTR FOR ROHDE, MORROW 
USDA/FAS/ITP, MTND 
USDOC FOR ITA 
USEU FOR DMULLANEY 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO USTR
SUBJECT:  WTO METING TO MONITOR ACTION IN RESPONSE TO THE GLOBAL 
ECONOMIC SITUATION 
 
¶1.  Summary - On April 14 the WTO held a meeting of the WTO's Trade 
Policy Review Body (TPRB) for the purposes of monitoring actions 
taken by WTO Members and observers in response to the global 
economic situation.  The meeting was relatively low key and 
non-contentious.  Members refrained from finger pointing, though 
China complained that the Secretariat's report for the meeting went 
too easy on the United States on one issue.  In introducing the 
written report to the meeting, DG Lamy noted that the economic 
situation has deteriorated since the WTO's last meeting on the issue 
in February.  He reported that the pressure for protectionist 
measures was increasing and while there was no widespread resort to 
protectionism, he saw some slippage and danger of an incremental 
buildup.  Delegations that spoke were generally of one mind in 
welcoming the DG's report, stressing the importance of avoiding 
protectionism and in declaring their support for concluding the DDA 
negotiations to strengthen the WTO as a bulwark against 
protectionism.  Many speakers welcomed the G20's pledge on avoiding 
protectionism and a number of Members mentioned that they were 
working on their own "standstill" commitment.  Several Members 
expressed concern that the number of trade remedy actions was 
increasing while others attempted to introduce this issue of 
compliance with WTO dispute settlement rulings as germane to the 
monitoring process.   Some Members also suggested that the financial 
crisis highlighted the need for serious work in the WTO on subsidies 
for services industries.  DG Lamy announced that the Secretariat's 
next monitoring report will be issued in mid-June and the next 
meeting of the TPRB in this monitoring mode will take place at the 
end of June.  End Summary 
 
¶2.  Members were generally happier with the Secretariat's report for 
this meeting than the one that was prepared for the TPRB meeting on 
this same subject in February.  This stemmed largely from the fact 
that the Secretariat invited input from Members and gave each Member 
that was mentioned in the report and opportunity to comment on 
anything that was said about them.  However, there were grumblings 
from a few Members.  China complained that the Secretariat had gone 
easy on the United States in mentioning a Congressional ban 
affecting poultry imports from China - by contrast he stated that 
the report's characterization of the Chinese ban on Irish pork had 
not received commensurate kid glove treatment. Their complaint was 
about language in the listing saying that the action was taken for 
health reasons - a view they contest.  .  Mexico was also unhappy 
with a reference to the temporary suspension of tariff privileges 
for the United States that had been put in place because of the 
trucking issue, noting that these measures had been necessitated by 
U.S. failure to meet its NAFTA commitments.  Ecuador complained that 
the Secretariat had not taken its advice to include non-compliance 
with dispute settlement rulings (e.g., bananas) in its report.  Cuba 
seconded them.  Russia said that  20 percent (6 individual items) of 
the listings in the Secretariat report dealing with them were 
incorrect. 
 
¶3.  Most statements by delegations were limited to the general 
points in the summary above but a few interventions stood out. 
India said that the G20 recognized that the pledge to avoid 
protectionism could fall on deaf ears, and therefore included new 
language calling for rollback of transgressions.  India noted that 
doomsday predictions of a return to Smoot/Hawley had proven to be 
misplaced.  The India rep said it was wrong to think that the 
current situation was the result of some bad decisions by U.S. 
banks.  There are structural issues that need to be addressed.  No 
country can expect that its debts will perpetually be financed by 
others.  A new equilibrium will also require changes regarding 
currencies.  He said that we need to pay particular attention to 
trade distorting subsidies since they put developing countries at a 
serious disadvantage and can be hard to reverse.  He expressed 
particular concern about countercyclical agriculture subsidies since 
they forestall adjustment and leveled a similar criticism of 
subsidies to the automotive and steel industries.  He called for 
more serious attention to the issue of subsidies for services 
industries.  The Indian rep said he was intrigued by the WTO's 
estimate that a successful DDA would be worth $150 billion to the 
global economy, citing various estimates by others that had ranged 
from $40 billion to $400 billion.  He recalled that a former U.S. 
Ambassador to India had said that the role of economic forecasters 
was to make astrologers look reputable.  He expressed interest in 
seeing details on the WTO's forecast, including an indication of who 
the beneficiaries would be.  The U.S. rep joined him in expressing 
interest in further details. 
 
¶4.  Brazil expressed concern that efforts to resist protectionism 
are slipping and, as in the past, laid the blame at the feet of the 
developed countries.  The Brazilian rep expressed concern that 
subsidies for cotton and dairy were already increasing and said that 
the continuation of cotton subsidies in the face of adverse dispute 
settlement ruling raised questions about the credibility of the 
system.  He recognized that stimulus measures are needed, but argued 
that best practice was subsidies aimed at consumption.  He further 
noted that measures aimed at "buy national", while possibly 
consistent with WTO rules, are unhelpful and send all the wrong 
signals at this time. 
 
¶5.  The EU rep noted that the EU has refrained from raising tariffs 
and continued to meet its commitments.  Its dairy subsidies are 
within WTO rules and are of limited scope and duration.  He insisted 
that trade remedy measures are legitimate, noting that while the 
EC's use of them has not increased much, the same cannot be said for 
some of the emerging economies. 
 
¶6.  The U.S. rep said that our current assessment is that the system 
is working pretty well to ward off protectionism.  However, the 
system is being sorely tested and continuing vigilance is important. 
 In this regard, he noted the importance of the WTO's standing 
committees and called for Members to provide renewed energy to this 
day- to-day work. 
 
¶7.  The Australian rep expressed concern with statements suggesting 
that protectionism was not a great threat.  He noted that 
unemployment was still on the rise and that protectionist pressure 
will increase.  He also noted that claims that trade distortive 
measures (e.g., EC dairy subsidies) are WTO consistent miss the 
point. 
 
¶8.  Hong Kong China welcomed the G20's commitment on protectionism 
and said that it was working with several other countries on their 
own "standstill" commitment.  Switzerland, Turkey, Chile, Singapore 
and New Zealand mentioned in their statements that they support this 
effort. 
 
¶9.  Ecuador made a strong plea for understanding of trade measures 
it has implemented for balance of payments reasons.  The Ecuadoran 
rep noted that its options are limited since Ecuador  uses the 
dollar as its currency and therefore cannot have a monetary policy 
and that Ecuador has  lost 2 million people to emigration. 
 
¶10.  In one of the more remarkable interventions of the day, the 
Indonesian rep called on other Members to follow its example of 
restraint, notwithstanding the lengthy list of new Indonesian trade 
restrictions in the Secretariat's report. 
 
¶11. Another point made by several Members, in particular Turkey, 
Singapore, Colombia, and New Zealand, was the interdependent nature 
of the global economy made it difficult to adopt certain forms of 
protectionism, i.e., high tariffs on inputs.  Instead, these Members 
viewed creeping incremental protectionism (e.g., non-tariff 
barriers) as measures to monitor and prevent. 
 
¶12.  Brazil, India, and Hong Kong China also noted with skepticism 
those measures that are designed to help a domestic industry and are 
to be temporary in nature.  They posit that these measures are more 
likely to become permanent, and that domestic support for certain 
industries (autos, chemicals, steel, textiles, footwear) only delays 
the need to vastly overhaul and restructure and relocate these 
industries.  Hong Kong China pointed to the Multi-Fiber Arrangement 
as an example of a short-term solution to a particular issue that 
has taken over thirty years to take apart. 
 
¶13.  In his closing statement, DG Lamy said the purpose of this 
process was becoming clearer - monitoring creates transparency, 
transparency promotes public scrutiny, and public scrutiny creates 
pressure which helps discourage protectionism.  He urged Members not 
to fall into the trap of arguing over the definition of 
protectionism.  On services subsidies, he noted that it was already 
within the negotiating mandate so it is up to Members to reignite 
work on it.  He took on board the various suggestions for 
improvements to the Secretariat's monitoring reports but did not 
respond on the specifics.  On the $150 billion figure, he said it 
was a simple calculation based on duties foregone assuming trade 
flows remain the same.  He said it would be a reduction from the 
$250 billion in duties that are currently collected now and compares 
to the $500 billion in duties that would be collected if Members 
applied tariffs at their legal limits under WTO commitments.    He 
offered to arrange a further briefing for any Members that were 
interested. 
 
¶14. The next report from the DG will be issued in mid-June with a 
follow-up meeting toward the end of June. 
 
 
SHARK