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The real battlefield
By
Jayanthi Iyengar
NEW DELHI - The United States
may be fighting a conventional war in Iraq, but recent
developments have shown that ultimately, in this era of
globalization, it will be trade rather than missiles
that will determine dominance.
That the
importance of trade has not been forgotten even in the
midst of this war is clear from an opening salvo fired
by the Japanese Ministry of Economy, Trade and Industry
(METI) on March 31. A METI subcommittee headed by
Professor Mitsuo Matsushita of Seikei University
released the key points of its 2003 report on the World
Trade Organization (WTO) Consistency of Trade Policies
by Major Trading Partners. The full report will not be
available in English before the end of the month, but
the key points highlight four major US failings:
Imposition of safeguard measures on imports of 14
steel products.
A sunset provision in the anti-dumping agreement
that set high standards for revocation of anti-dumping
measures.
Provisions in the Anti-Dumping Act of 1916 that
violate WTO provisions.
Anti-dumping measures imposed by the US on certain
hot rolled steel products from Japan.
The
summary makes the point that though the United States is
the most active user of WTO dispute-settlement
mechanisms, "it continues to maintain Article 301 and
similar measures that allow for unilateral action". It
further notes that the US government has a tendency to
use Article 301 in conjunction with WTO
dispute-settlement procedures to leverage negotiations.
"This is a trend that will require continued monitoring
on Japan's part," it states.
Japan's report does
not end with the United States. It also has a list of
complaints about the European Union, China and other
Asian trading partners. As far as the EU is concerned,
Japan's gripe revolves around provisional safeguard
measures imposed on the import of 15 steel products,
including flat and long products. The provisional
safeguard was imposed for six months ending September
28, 2002. However, on September 29, EU imposed a
three-year-long definitive safeguard duty against seven
steel products, including non-alloy hot rolled steel and
cold rolled steel sheets. The report makes the point
that the EU is one of the world's main producers and
consumers of steel and its implementation of the
safeguard measures on the heels of the US measures will
have "considerable" influence on world trade in steel.
"The result of the EU and US measures has been to give
new momentum to protectionism in the trade of steel
around the world," it states.
In China's case,
Japan's economic "attack" is wider. The four main points
of disputes include:
Provisional safeguard measures imposed on the import
of steel products (covering 48 customs categories)
followed by definitive safeguard measures on import of
steel products (27 customs categories).
Failure to fulfill tariff concessions on certain
photographic and cinematographic products.
Failure to implement import quotas for automobiles
and major auto parts.
Infringement of intellectual property rights (IPR),
including counterfeiting and piracy.
The summary
notes that while China has joined the WTO, it still has
many issues left to tackle in fulfilling its obligations
to the world trade body. These include the enhancement
and amendment of a vast body of domestic law, the
establishment of a transparent and uniform
administration and training of human resources.
The report states that the accession protocol
permits China to maintain an import quota system until
the end of 2004, expanding the value of the quota at the
rate of 15 percent per annum from an initial US$6
billion. The import quota for 2002 had been set at $7.94
billion according to this formula, but the actual
imports were only $3.12 billion between April and
December, "raising concerns that the quotas have not
been implemented as promised".
On infringement
of IPR, METI's criticism is more scathing. It points out
that counterfeits and piracy have been serious problems
in China. The Chinese authorities have taken steps to
deal with the problem, but little improvement has been
seen. The situation will require appropriate and
effective administration of laws and enforcement by the
judicial and administrative branches of government, not
just improvements in laws themselves. "We look for
drastic improvement in the enforcement of the existing
protection."
Further, Taiwan and South Korea
come in for criticism for lax IPR protection, while
India, Indonesia and Thailand have been held responsible
for spreading the "abuse and misuse of anti-dumping
measures".
Interestingly, within hours of METI
releasing its report, the US government retaliated,
setting aside for the moment its concerns over the
"shock and awe" in Iraq. In a joint statement issued on
the very same day as METI's report, US Trade
Representative (USTR) Robert Zoellick and Agriculture
Secretary Ann Veneman blasted Japan. They said it was
one of the few WTO member countries identified as
"blocking progress on agriculture to preserve high
protective tariffs on a few products".
The US
officials also said their government was "disappointed
but not surprised" that WTO agricultural trade
negotiations had missed the crucial March 31 deadline
for agreeing on modalities, specific details and time
frames for eliminating export subsidies.
A day
later, the USTR released its annual report on foreign
trade barriers. "Bringing down barriers to trade
promotes growth and prosperity for the United States and
the world," Zoellick said while releasing the report.
"The [George W] Bush Administration is committed to
identifying unfair barriers to US exports and to working
aggressively with our trading partners to eliminate the
barriers."
The USTR report describes unfair
trade barriers encountered in Africa, Brazil, Canada,
China, the EU, India, Japan, South Korea, Mexico, Russia
and Ukraine. Covering practices by 56 trade partners,
the report precedes by a month a statutory deadline for
identifying those countries' practices best suited for
action under Special 301 provision of the US trade law
against inadequate intellectual property protection. In
2002, for instance, the US imposed retaliatory tariffs
under Special 301 on imports from Ukraine.
The
report states that the USTR views as "unfair" the
non-tariff barriers on agriculture imposed by the EU,
Russia, China, Mexico, Australia, Japan, Taiwan and
Venezuela. Barriers in Russia contributed to a $500
million drop in US poultry exports, it states. An EU
moratorium on licensing biotechnology products since
1998 has led to lost of export opportunities worth $200
million a year, it elaborates.
A dramatic
increase in trade barriers to agriculture has been
reported for Mexico as compared with the previous year,
it claims. It reiterates that the US would not
renegotiate market access issues in the North American
Free Trade Agreement (NAFTA) settled years ago.
It further claims high levels of copyright and
patent piracy in Europe, Asia and Latin America. It pegs
US losses from copyright piracy at $777 million from
Brazil alone. If also reiterates the Japanese position
on China and states, "The lack of effective IPR
enforcement remains a major challenge in China. If
significant improvements are to be achieved on this
front, China will have to devote considerable resources
and political will to this problem."
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