RIYADH, 14 November 2005 — The WTO agreements cover three broad areas: Goods, services and intellectual property.
The agreements covering the two largest areas — goods and services — begin with broad principles, followed by extra agreements and annexes dealing with specific requirements and then the schedules of tariff bindings (also known as “market access commitments”).
WTO obligations are categorized as “general” or “specific”. Obligations that are applicable to all WTO members are called general, while obligations that are country-specific (usually the result of negotiations with member countries, e.g., Saudi Arabia’s commitments under the US-Saudi bilateral agreement) are called specific obligations. We list below additional general obligations and rights:
• Members countries are required to simplify and harmonize the procedures that importers must follow to obtain licenses, and the import licensing requirements must not be unduly trade restricting. Import licensing rules, including the list of products subject to licensing, must be published and made available to all concerned.
• Antidumping levies are allowed to offset any price advantage in a situation involving “dumping”. Dumping occurs when a product is exported to another country “at less than normal value”.
• Import restrictions, including quotas, are allowed to safeguard a country’s external financial position and its balance-of-payments under specific circumstances.
• Import restrictions are allowed for developing countries if they are needed to foster economic growth, for example, to protect infant industries.
• Import restrictions are allowed if implementation of negotiated reductions in trade barriers result in an unforeseen surge in imports.
• General exceptions to the WTO agreement allow measures to be taken to safeguard public morals, health, laws and natural resources as long as they are nondiscriminatory and are not disguised restrictions on trade.
• Discriminatory import restrictions against particular countries can be imposed if imports from that particular country have increased “disproportionately”.
• Safeguard actions cannot be taken against developing countries when their share of exports is materially insignificant.
• Members must notify the WTO of all subsidy programs on an annual basis. Subsidies should be used, if possible, instead of trade barriers wherever a case for government support can be demonstrated.
• Export subsidies in manufactured goods are prohibited except for least developed countries. Export subsidies contingent on local content requirement are prohibited for all countries, except that developing countries get a 5-year exemption, and least developed countries get an 8-year exemption.
• Countervailing duties as well as dispute resolution measures can be initiated in cases of “prohibited” or “actionable” subsidies.
(Khan H. Zahid is chief economist and vice president at Riyad Bank. He is based in Riyadh.)