Category Archives: WTO

Colombia’s port-of-entry restrictions on textile imports

Here’s an unusual non-tariff barrier from a 2006 WTO complaint brought by Panama (mentioned in Eaton, Jinkins, Tybout, Xu):

Second, Panama considers that, through three specific resolutions, Colombia has established a requirement that all goods falling under Chapters 50 to 64 of Colombia’s Customs Tariff (textile and footwear products) that originate in, and/or are imported from, Panama or China shall enter into Colombia only through specified ports of entry. This restriction on the ports of entry applies only to relevant goods coming from Panama or China and not to goods imported directly from third countries or customs territories. Panama claims that the restriction on the ports of entry appears to be inconsistent with Colombia’s obligations under Articles I:1, V:6, XI:1 and XIII:1 of the GATT 1994.

Third, Panama considers that, through a specific resolution, Colombia has established a requirement that commercial invoices of goods coming from the Free Zone of Colon shall include, in addition to the regular requirements, the name of the buyer in Colombia, his address and his Tax Identification Number (“NIT”). This requirement applies only to goods coming from the Free Zone of Colon and not to goods originating in third countries or customs territories. Panama claims that this requirement appears to be inconsistent with Colombia’s obligations under Articles I:1, V:6, XI:1 and XIII:1 of the GATT 1994.

While Panama and Colomiba reached a mutual agreement to solve these issues in December 2006, a closely related July 2007 complaint revisited exports from the Free Zone of Colon, which again faced port-of-entry restrictions:

In relation to restrictions on ports of entry, Panama’s request for consultations is directed at a resolution of June 2007 which provides that all goods classifiable in Chapters 50-64 of the Customs Tariff coming from the Free Zone of Colon in Panama shall be entered and imported exclusively through the jurisdictions of the Special Customs Administration of Bogota and the Barranquilla Customs Office. This requirement does not apply to goods arriving directly from third countries. The regulation provides that with respect to these goods, the authorization of the customs transit procedure will not be appropriate. Furthermore, the import declaration applicable to these imports shall be presented prior to their arrival in the national customs territory but not more than 15 days in advance. If an importer does not comply with these requirements, it is subject to special procedures under Colombia’s Customs Code, including the detention of goods.

Panama considers that these restrictions are inconsistent with Colombia’s obligations pursuant to Articles XI:1, XIII:1, V:2, V:6 and I:1 of the GATT 1994.

Colombia lost this WTO case and conformed to the DSB’s ruling in 2010.

Trade at VoxEU

Some recent VoxEU columns:

  • In Belgian firm-level data, a smaller percentage of services-producing firms export than goods-producing firms. Exporting entry and exit rates are higher in services than goods.
  • Richard Baldwin says that vertical specialization requires global trade governance sufficiently distinct from existing WTO practices that it requires a new organization.
  • An optimistic take on the Trans-Pacific Partnership and proposed EU-US trade deal.

What the WTO’s “Made in the World” isn’t

The WTO’s “Made in the World” initiative is a data exercise aimed at measuring and analyzing value-added trade flows.

Michele Nash-Hoff, a US manufacturing advocate, misrepresents this statistical exercise as a massive policy change. Her Huffington Post piece is curious because it accurately describes the statistical project and the shortcomings of measuring trade flows in gross terms while simultaneously quoting people out of context to invent the idea that rules of origin may soon be eliminated. (HT: Alex Raileanu)

How would you like to go shopping and find that everywhere you went, the label said “Made in the World” instead of “Made in China,” “Made in India,” “Made in USA” etc.?…

In 2011, Andreas Maurer, chief of the WTO’s International Trade Statistics Section, said “… in the past two or three years there has been huge momentum to get the necessary information” that would be used to rationalize elimination of country of origin labeling.

The World Trade Organization and the European Union moved one step closer to eliminating “country of origin” labeling. On April 16, 2012, the European Commission and WTO held a conference to mark the launch of the World Input-Output Database (WIOD). This new database allows trade analysts to have a better view of the global value chains created by world trade…

Director-General Pascal Lamy has said that “improved measurement and knowledge of actual trade flows will help better understand the interdependencies of today’s national economies, supporting the design of better policies and better trade regulation worldwide.”…

This Initiative could have dire consequences for America’s manufacturers and consumers. For manufacturers, it could eliminate one of the options allowed by the WTO — filing a charge for product “dumping” against another country to have countervailing duties applied against that country. For consumers, “Made in the World” labels wouldn’t allow you to protect your family from the tainted, harmful, and even life threatening products coming from China.

I’m interested in these data initiatives and I have never ever seen such a policy implication suggested. It’s clearly absurd.

If the label said “Made in the World”, one couldn’t know if the product were domestic or foreign, so no trade duties of any sort could apply. Is this what we imagine WTO member countries are headed towards? Eliminating rules of origin would render every preferential trade agreement and preference scheme obsolete by implementing perfectly non-discriminatory trade. The world has never been close to such a policy regime. I’m bemused that Ms Nash-Hoff has managed to turn an exercise in data collection and analysis into a scary free-trade conspiracy.

The WTO’s Andreas Maurer posted in the comments section of the Huffington Post to set the record straight:

Your article refers to another article which stated that “… in the past two or three years there has been huge momentum to get the necessary information” that would be used to rationalize elimination of country of origin labeling. This is not true.
That article by Mr Richard McCormack referred to the WTO’s Public Forum Session in September 2011. But that Session in no way propagated the “elimination of country of origin labelling” and the introduction of a “Made in the World” label. Rather it stated that current international trade statistics do not adequately reflect where value added is created.
Understanding where value is created is very important for business and national policy makers alike, and is the object of intense academic investigation. As your article points out, a research consortium produced a public database last month. In addition, WTO and OECD are jointly working to develop statistics on trade in value added.
But this research project does not affect whatsoever the way country of origin is reported by official statistics collected through customs. There is no intention at all to have the “Made in the World” logo actually appearing on any traded product. This logo only illustrated a statistical concept. Thus the article above misrepresents the objectives of the WTO.

Quick links

My blogging has taken a back seat to my research recently. Here are some quick links that I wish I had more time to discuss:

US abandons zeroing (for now?)

I’m seeing a lot of news about the US federal government dropping its practice of zeroing in calculating antidumping duties. The WTO news item is uninformative. I don’t have time this week to follow the latest developments, so I’ll just drop links:


The US has reached deals with the European Union and Japan to drop a contentious practice in its anti-dumping calculations known as “zeroing”, ending a longstanding international trade dispute in order to prevent retaliation against American products. The agreements, signed in Geneva, will close the books on a fight that began in 2003 when the EU first filed a case against the US at the World Trade Organisation.

USTR press release:

After the WTO found that the United States had not brought its antidumping methodologies into compliance, the EU and Japan requested authorization to impose hundreds of millions of dollars of trade retaliation. Had these agreements not been reached today, substantial volumes of U.S. exports could have been closed out of markets in the EU and Japan, resulting in job loss for U.S. workers and financial loss for U.S. farms and businesses…

Under the agreements signed today, the United States will complete the process – which began in December 2010 – of ending the zeroing practices found in these disputes to be inconsistent with WTO rules. In return, the EU and Japan will drop their claims for trade retaliation.

Politics-oriented coverage from The Hill includes this detail: “the Obama administration said it will try to negotiate a future deal at the WTO to permit the practice.” Here’s Scott Lincicome on the news.

WTO: WTR 2012 discussion forum

The WTO’s World Trade Report 2012 will focus on non-tariff barriers. Of course, NTBs are nothing new, but they’re more relevant in a low-tariff world. Their relative opaqueness makes them more difficult to negotiate, discipline, and study. The WTO invites submissions of short articles for their discussion forum, though I have no idea about the scope for influencing the report (due out in July).

Pakistan grants India MFN status

Pakistan has granted MFN status to India (with a list of excepted products). This accelerates liberalization between the two countries that had made some progress with the South Asian FTA (SAFTA). India granted Pakistan MFN status back in 1995. Here’s a State Bank of Pakistan research bulletin arguing for granting India MFN. Here’s a World Bank book on The Challenges and Potential of Pakistan-India Trade, which includes this paragraph:

In fact, the evidence on informal trade indicates that Pakistan has already granted something close to de facto MFN status to India. Traders exploit market arbitrage and the poor enforcement of antismuggling measures to import banned Indian products into Pakistan, hence with the change in the trade regime there could be additional revenues for the government for items that are likely to switch from the informal trade to formal trade.

How did Pakistan not grant India MFN status while being a WTO member since its inception in 1995? While MFN status has been relegated to “least favored nation” status in many circumstances, it seems that it still means something in this part of the world.

Does the DSM need support from ongoing negotiations?

Jeff Schott worries that the WTO’s dispute settlement mechanism may be less effective if the dismal prospects for future negotiations cause dispute panels to expand their coverage:

Of course, WTO members will still be bound by existing obligations and the heralded dispute settlement system will continue to function. But past success is not a guarantee of future performance. Disputes undoubtedly will arise over “gray areas” of WTO law. Without the prospect of new negotiations to update and clarify the WTO rulebook, panelists will be tempted to bridge the gaps in their rulings. That is the danger: If the panelists attempt, or appear to be attempting, to usurp the powers of WTO members by interpreting and possibly expanding the scope of WTO obligations, it will likely trigger a political backlash against the WTO and discourage national compliance with such rulings. Members of Congress already think this is a problem with regard to the numerous WTO rulings against US antidumping practices. Over time, the frozen WTO legislative function will erode political support for compliance with the judicial function of the WTO