WTO objectives of Confederation of Swedish Enterprise

WTO |  The EU should support WTO efforts to create an open global trade environment ruled by multilateral agreements in all areas. Our objective is to remove all tariffs and other barriers to international trade, writes Hans Ekdahl.

Strengthening free trade. Confederation of Swedish Enterprise consistently supports free trade. Free trade and competition are essential components in a fully functioning market economy. Protective tariffs hinder market access for exporters in all countries, and they make components and services more onerous for domestic companies, so that they become less competitive.

The EU should support WTO efforts to create an open global trade environment ruled by multilateral agreements in all areas. Our objective is to remove all tariffs and other barriers to international trade. Zero duties should be the long-term objective of the EU and the WTO.

Sweden is represented in the WTO by the EU Commission, which manages the comon external trade policy of the 25 European Union member states.

The new round of WTO negotiations, the doha Development Agenda (DDA) which was launched in Doha in 2001, was suspended indefinitely in July 2006. This was mainly due to irreconcilable differences on tariff cuts for agricultura limports to industrialised countires and for imports of industrial goods to emerging countries such as Brazil and India.

Main WTO objectives of Confederation of Swedish Enterprise:

• A general reduction of tariffs for manufactured goods in all countries to maximum 10 percent, with tariff peaks at maximum 15 percent, and an elimination of all “nuisance tariffs” of less than 3 percent.
• Liberalisation of trade in services in more sectors and more countries through the simplification, harmonisation and mutual recognition of national regulations.
• More free trade in primary and processed agricultural products through the elimination of all export subsidies and a substantial elimination of domestic support and import protection. The trade-distorting agricultural policies of the EU and other industrial countries should be fundamentally reformed.
• Simplified trade and customs procedures which will lower transaction costs and delays both for exporters and importers, and especially for small and medium-sized companies.
• The WTO needs stronger mechanisms to remove non-tariff barriers in a systematic manner through simplified and harmonised national legislation and mutual recognition. A requirement should be introduced always to use the least trade-restrictive form of regulation to achieve a regulatory objective. An NTB mechanism of national contact points for consultation and mediation should be set up to solve NTB implementation problems.
• Free trade enables a more efficient use of scarce resources, so that more can be produced with a lower overall environmental impact. Environmental regulation should take full advantage of market mechanisms and encourage international trade. Tariff preferences for environmental goods must not lead to more complicated customs classification.
• The WTO dispute settlement mechanisms should be strengthened and revised, so that member states will more often resort to mediation (or as a second-best solution compensatory market opening) instead of retaliation in the form of punitive duties, which hurt unrelated companies as well as the general economic development in all countries involved.
• Anti-dumping and anti-subsidy legislation should not impede free competition and necessary structural adjustment. All member states should apply WTO anti-dumping legislation with moderation and in a uniform manner.
• Intellectual property rights concerning i.a. patents and trademarks should be fully respected in international trade in accordance with the WIPO treaties and the TRIPS agreement.
• Free trade is in itself conducive to economic development. Therefore developing countries should be given improved market access, and should themselves dismantle their own protective barriers, starting with the more developed countries. They should also receive technical assistance to participate effectively in WTO negotiations, to implement existing commitments and to simplify trade procedures.
• It is important that all WTO member states honour existing commitments concerning market access, the elimination of trade barriers and simplified import procedures.
• Multilateral rules for investment protection, competition and transparency in public procurement would promote international trade and investment, and speed up economic development all over the world. These issues should be brought up on the WTO agenda as soon as possible.

Consequences of the suspension of the Doha Round

The suspension of the Doha round in July 2006 is a great disappointment. Over the long term it will hurt the world economy and business in various ways. The world economy will lose an important impulse for renewed growth, and business will be hurt in various ways:

• If the Doha round finally breaks down, we will miss out on lower tariffs and better market access for industrial goods in important emerging markets such as Brazil and India.
• The negotiations on improved market access for service exports between industrial countries, which had now taken off, risk getting bogged down.
• We miss an opportunity to reform EU agriculture and to cut farm subsidies in the U.S.
• We miss an opportunity to get a worldwide agreement on trade facilitation, which would save billions for companies.
• Several offers for improved market access for poor developing countries, which were on the table, will now be withdrawn.
• We also risk sliding into more protectionism, more special bilateral deals and more red tape in world trade. This will have particularly negative consequences for companies which buy components and supply equipment through complex supply chains, where a large number of countries around the world are involved. Bilateral trade agreements with special preferential rules of origin, and diverging tariff levels, will lead to more paperwork and increased uncertainty for companies.

Hopefully, the EU will now try to salvage as much as possible from the Doha Delopment Agenda. This will be more important for the EU economy than new bilateral deals with individual trading partner in various parts of the world.

WTO negotiations should be pursued particularly in the following areas:

• The negotiations on trade in services were started separately from the Doha round. It should be possible to uncouple these negotiations from the round and to continue the plurilateral negotiations, which have already been engaged, between all interested countries. There are billions to be gained for the world economy and for efficient service providers through increased competition opportunities in areas such as banking, insurance, transportation, media, accountancy and hundreds of other service.
• Trade facilitation is one area where there has been a lot of progress, and where there is a broad consensus among all parties to pursue the negotiations in view of the great savings to be made all over the world through more efficient customs procedures.
• The elimination of technical and other non-tariff barriers have so far been overshadowed by the tariff negotiations. However great gains can be made through more efficient WTO action in this area to promote standardisation and to remove red tape in product testing and certification, in the same way as we have done in the EU Internal Market.