WORLD TRADE  
ORGANIZATION  WT/TPR/OV/M/5 
14 February 2005 
 (05-0575) 
Trade Policy Review Body  
 
 
OVERVIEW OF DEVELOPMENTS IN THE 
INTERNATIONAL TRADING ENVIRONMENT 
 
Minutes of the Meeting of 16 December 2004  
  
1. The Chairperson
, Ambassador H.E. Mrs. Puangrat Asavapsit (Thailand), welcomed Members 
of the Trade Policy Review Body and the Director-G eneral to the Annual Overview of Developments 
in the International Trading Environment, mandate d under the Uruguay Round Agreement.  She noted 
that this was an occasion for Members to give  their views on current issues in the trading 
environment.  The Review had been assisted by the Report by the Director-General, issued as 
document WT/TPR/OV/10.  It was a comprehensiv e look at the state of the multilateral system, 
giving particular attention to several key areas, such as agriculture, mark et access, textiles and 
clothing, and regional trade agreements.  She inv ited the Director-General to present his report. 
2. The Director-General  noted that since the preparation of  the Overview the prospects for the 
global economy had dimmed slightly.  Downward revisions for global economic growth had been 
necessary, due mainly to higher oil prices and financ ial imbalances in the world economy.  The latter 
were a cause for some concern as they might carry  the seeds of protectionist action.  The WTO had 
much to contribute by way of improving the global economic prospects.  Success in advancing the negotiations would serve to bolster confidence in  the multilateral trading system and could help 
improve the outlook for the world economy.  While all Members should benefit from this, it was most necessary for developing countries.  The DDA held the opportunity for all Members to strengthen 
their economies and to help improve the interna tional trade environment.  Success in the DDA should 
result in large welfare gains, much of which would accrue to developing countries and help to 
alleviate poverty.  Thus, progress on the DDA before the Hong Kong Ministerial Conference was crucial. 
3. The Overview highlighted several key areas that were of great interest to all Members.  The 
agriculture sector received a disproportionate amount  of special treatment in  the form of protection 
and subsidies, with major repercussions on the market s for agricultural products throughout the world.  
In the area of market access, notwithstanding the major achievements in past rounds, serious 
impediments to trade and thus competition remain ed.  Tariff peaks and tariff escalation were of 
particular concern to developing countries, since th ey tended to be concentrated in agriculture, food 
products, textiles and clothing, and other manufactures in which developing countries had 
comparative advantage.  On the other hand, in many developing countries high tariffs increased the 
cost of doing business and thereby raised the prices of exports. 
4. The expiry of the Agreement on Textiles and Clothing on 31 December 2004 marked the end 
to more than 40 years of discriminatory quota restrictions.  The abolition of these restrictions would bring considerable gains for the global economy, but  there was understandable anxiety on the part of 
some countries about the associated short-term adjustme nt costs.  It was important to stress, however, 
that the restructuring of domestic industry was, in any event, a necessary part of the process of 
domestic reform as well as trade liberalization.   
5. The use of contingency measures, particularly anti-dumping actions, was also a key area of 
interest to Members, prompting them to place the matter on the DDA.  It was good news that the use WT/TPR/OV/M/5 
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of these measures had declined in the recent past.  Nevertheless, their use remained significant and the 
situation should be monitored closely.  
6. In services, market-access conditions were of ma jor interest to Members.  The services sector 
accounted for a large and growing share of global GDP;  services had also been among the fastest growing segments of world trade.  Progressive liber alization of trade in services was a core objective 
of the ongoing services negotiations.  The gains from liberalizing trade in services were expected to 
be substantially greater than tho se from liberalizing trade in goods. 
7. The proliferation of regional trade agreemen ts (RTAs), which already had fundamentally 
changed the world trade landscape,  was a significant challenge to the multilateral trading system.  
Between January and August 2004 alone, 21 new RTAs  had been notified to the WTO, increasing the 
total number of notified agreements in force to over 200.  With around 30 agreements awaiting entry 
into force and another 60 in the negotiations/propo sal stage, there could be close to 300 such 
agreements by 2005.  When fully in line with WTO provisions, RTAs could complement multilateral 
efforts to liberalize world trade and deepen econom ic relationships among pa rtners.  However, by 
discriminating against third countries and creati ng a complex network of trade regimes, these 
agreements also posed a systemic risk to the global trading system.   Multilateral liberalization in line 
with the DDA would help to neutralize the potentia lly adverse diversionary effects of RTAs on 
international trade and investment. 
8. Historically, unilateral liberalization, usually  linked to a broader programme of domestic 
reform, had accounted for most of the reductions in  border protection.  Members need not await the 
outcome of the DDA.  Indeed, with the prolifera tion of RTAs, unilateral trade reform was more 
important than ever because low barriers to trad e minimized the risks of trade and investment 
diversion.   
9. In concluding, the Director-General noted th at success in the DDA would be an arduous and 
challenging process both for Members and the Secretariat.  The Secretariat's support included technical assistance and training for officials of  developing countries.  The WTO had a programme 
for this that closely reflected the prio rities that Members established in Doha. 
10. The first discussant
 (H.E. Mr. Eirik Glenne, Norway) re ferred to Annex 3 to the Marrakesh 
Agreement as the legal basis for this meeting.   The Report presented a good overview of recent 
developments in the international trading environm ent.  The world's trade patterns were undergoing 
great changes, which was due partly to strictly trad e-based developments and pa rtly to other factors.  
This raised a number of questions on the subject of this discussion.  The view that trade was not an 
end in itself, but a tool for achieving other policy go als, was well established in the WTO.  However, 
while trade liberalization was a win-win undertaking for all participants, the necessary reallocation of 
resources was a difficult process.  A discussion of this process could provide a possibility for Members to better grasp the interplay and the various costs involved.   
11. The rise in oil prices and strong exchange rate fl uctuations were two recent developments that 
had had an impact on trade flows.  The question was whether and how Members should look into the 
nexus between these developments and trade flows.  The increasing number of preferential trade agreements represented a new trend.  There was a long list of arguments on their advantages and 
drawbacks, and the question arose as to whether Me mbers should not set aside some time to discuss 
such trade-related trends. 
12. The Secretariat's Report provided ample inform ation on the most important trade-related 
developments in the past year and was a useful re ference paper for the major trade policy instruments 
of WTO Members.  It also gave Members the possi bility to learn more about the way in which the 
individual trade policy instruments actually worked.   WT/TPR/OV/M/5 
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13. The second discussant  (Prof. Richard Baldwin, Graduate Institute of International Studies, 
Geneva) noted that the Secretariat had provided a concise and comprehensive overview of the current 
state of the multilateral trading system.  However, th e Report could have been more analytical.  As a 
truly worldwide body, the WTO could present a unique perspective, including an even-handed 
analysis of future developments. 
14. Trade policy issues were becoming more complex;  as tariff barriers came down, other 
barriers were becoming more important many of which were not yet fully understood.  Many 
examples illustrated the importance of an unbiase d analysis, which could save time and reduce 
unnecessary conflict.  The first was the area of trad e facilitation, which was a classic example of the 
role of important and complex barriers.  There ha d been many studies by various organizations, but 
each had its own particular perspective and biases.  The second example was the role of rules of origin 
in the emerging network of regional trade agreements.  This especially was a problem where production was being fragmented be tween many countries.  Rules of origin had very complex 
economics, and the WTO Secretariat was uniquely placed  to carry out an analysis of this issue.  
15. The representative of Chile
 commended the quality of the Report, the format of this 
discussion, and the two interventions from the discus sants.  However, the timing of the meeting could 
have been better.  He suggested that Members considered opening this discussion to the press or 
transmitting it by webcam for future meetings.  He  added that it would be useful to present the 
Director-General's Report together with the Worl d Trade Report or even to fully merge the two 
publications. 
16. He wondered whether the informati on contained in the section on non- ad valorem  tariff rates 
also covered the impact of tariff rate quotas, and not ed that specific duties, covered in paragraph 24 of 
the Report, were generally more de trimental to developing countries.  It was very useful that the 
Report had revealed the gap between bound and applie d rates, which showed the vast scope for the 
current negotiations.  On agriculture, he noted that most subsidies went to richer farmers and asked 
whether the Members' various objectives could not be  net with less discriminatory means.  Regarding 
anti-dumping measures, the number of measures in place was only a limited indicator of their impact 
on trade flows, unless the numbers were trade-we ighted.  Furthermore, the simple initiation of 
anti-dumping investigations could have a negative impact on trade, and the impact on the exporting 
country should also be taken into account.  He noted that the number of safeguard measures was 
increasing, which could have a wider impact than anti-dumping measures. 
17. Referring to the Report's section on business pr ocess outsourcing, he believed that "off-
shoring" would be a preferable expression, as outsourcing could also apply to the domestic market.  It 
should also be highlighted that off-shoring had been  beneficial to some industrial countries such as 
Ireland. On RTAs, he stated that a trade-weighted  view would have been preferable to a simple 
account of the number of agreements in place.  Mo reover, it would have been interesting to see how 
investment and services were covered in such ag reements.  Future reports should provide more 
analysis of the role of rules of origin and why RT As were steadily increasing.  He disagreed with the 
Report's statement that there had been no progress on the CRTA's mandate on consistency 
assessment, and noted that a consistency check s hould be left to the Dispute Settlement Body.  
Referring to the increasing numbers of disputes befo re the WTO, he wondered whether this was due 
to a deterioration of trade policies, an increased volume of international trade, less tolerance against 
breaches, or better dispute settlement.  Better and more timely compliance with dispute settlement 
rulings was needed. 
18. The representative of the United States  recalled the progress that been achieved in the 
negotiations in 2004.  The DDA was the single mo st effective lever available to Members in 
collectively sustaining global economic growth and development, and the United States continued to 
be ambitious and aggressive in its approach to the DDA.  He underlined the role of the United States 
as an engine of global growth, as highlighted by th e Secretariat's Report, and believed that too much WT/TPR/OV/M/5 
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importance was given to its so-calle d twin deficits.  The Report also  recognized China as an important 
force in the world trading system, and the United States looked forward to China's leadership in 
achieving ambitious results in the DDA.  The global economy was facing a number of risks, including excessive reliance on export-led growth in a number of countries and negative oil market 
developments. 
19. The United States supported an ambitious and bala nced agriculture package covering all three 
pillars.  However, Members should not lose sight of the importance of reducing barriers to agricultural 
trade among developing countries.  Ambitious agricultura l reform in all three pillars with meaningful 
commitments by developing countries could create additional incentives for th e trade and investment 
needed to sustain forward economic momentum.  The July framework provided ample scope to 
address sensitivities and to facilitate adjustment.  In the services sector, the rapidly growing number of 
commitments made by developing countries was en couraging, but was not an accurate measure for 
the degree of openness. While the Report provided a detailed assessment for Mode 4 supply, other 
modes of supply would have benefite d from a similarly detailed coverage. 
20. The multilateral system remained at the heart of  the United States' trade policy.  However, 
RTAs consistent with WTO disciplines could effec tively and positively complement the goals of the 
multilateral system.  The United States appreciated the difficulties the Secretariat must have had in compiling the statistics on trade remedies and noted that the information on new measures imposed might be a more meaningful measure of activity than initiations.  Regarding dispute settlement, the 
rising number of disputes were a sign that the WTO system was credible, effective, and clearly enabling countries to resolve their trade policy differences.  The end of quantitative restrictions under 
the Agreement on Textiles and Clothing as of 2005 ma rked a milestone, showing how Members could 
make and fulfil ambitious commitments despite obvious sensitivities. 
21. The representative of Japan
 recalled the steadfast recovery of the world economy in 2004, 
with an estimated growth rate of 5%.  This, toge ther with the July package should be a source of 
optimism for long-term growth.  However, some risk  factors, such as the recent surge in oil prices, 
still remained.  In order to achie ve a successful conclusion of the current round, all Members should 
share the responsibilities of redoubling efforts in every area of the DDA.  The broadening and 
deepening of RTAs had been one of the most important trends in recent years.  RTAs should complement the multilateral trade system.  With a vi ew to ensuring transpar ency in RTAs, Members 
should intensify their discussion in the CRTA and rules negotiations.   
22. With regard to the integration of developing countries in the world economy, Japan believed 
that the liberalization of trade in services would have a positive impact on developing countries' 
growth and hoped that many developing countries would undertake more commitments in Mode 3.  
The expansion of South-South trade was another fa ctor in the successful integration of developing 
countries.  In 2004, Japan expande d the coverage of duty-free and quota-free treatment for imports 
from LDCs, including all tex tile and clothing products. 
23. With regard to agriculture, th e representative noted that his government was preparing a new 
Basic Plan for Food, Agriculture and Rural Areas.  Japan hoped that every Member's agricultural 
reforms would be further accelerated.  Turning to  dispute settlement, he noted that the WTO's 
mechanism for the settlement of disputes was one of the major achievements of the multilateral rules-
based system.  Japan strongly supported the settle ment of trade disputes based upon the rules and 
therefore believed that all Members should do their utmost to maintain the integrity of this 
mechanism.  He expressed his hope for a succe ssful Hong Kong Ministerial Conference in 2005. 
24. The representative of Canada
 referred to his country's r ecent market access initiative for 
LDCs, which unfortunately was not mentioned in the Report.  This initiative extended duty-free and 
quota-free access to imports from LDCs, with the exception of certain over-quota, supply-managed 
agricultural products, which included dairy and poultry pr oducts and eggs.  It was one of the most far-WT/TPR/OV/M/5 
Page 5 
 
 
reaching LDC preference schemes of any developed count ry, partly because of its realistic and liberal 
rules of origin, which allowed for cumulation from a ll developing countries.  This initiative had had a 
notable effect.  In 2003 Canada's total imports  from LDCs rose by 77% over their 2002 level.   
25. The representative noted the Report failed to mention the progress made by a number of 
Members in the implementation of the WTO Deci sion on TRIPS and Public Health.  Canada was 
among the first countries to take steps to implement the Decision;  its new regime for compulsory 
licensing of patented pharmaceutical products should come into effect in early 2005. 
26. The representative of Malaysia  noted that a successful conclusion of the DDA would bring 
greater opportunities to economies around the world, especially to developing countries.  He referred to the particular contribution of the United States and China to the growth in world trade and was 
hopeful that China would continue to assume an impo rtant role in the development of world trade and 
the multilateral trading system.  For developing countries, the international trade area remained 
fraught with challenges.  Tariff peaks and escalation continued to limit market access of many products of export interest to de veloping countries.  Agriculture was a very important sector for 
Malaysia as for other developing countries.  Howe ver, exports of agricultu ral products were faced 
with unfair competition in terms of export subsidie s, domestic support, and high tariffs.  Malaysia 
looked forward to these distortions being addressed in the DDA negotiations.   
27. The multilateral trading system was incr easingly facing challenges from free-trade 
agreements, many of them bilateral.   Malaysia was a latecomer in the field of FTAs, but it hoped that 
the potential negative effects of this method of trade liberalization would be outweighed by the 
benefits. 
28. The representative of Thailand
 highlighted the Report's finding that agriculture remained the 
most protected and distorted sector.  In this context, it would be useful if futu re reports could illustrate 
the impact of different policy instruments on agri cultural trade.  More careful design and better 
targeting of agricultural policies would enable governments to pursue their multiple objectives in a 
more cost-effective manner with minimal disruption to international agricultural markets.  With 
regard to tariffs, the Report revealed that tariff p eaks of the Quad countries were often concealed by 
non-ad valorem  tariffs, showing that the tariff structure of  developed countries was not as simple as it 
looked.  In that regard, it would be useful to extend the study to developed countries that relied 
heavily on specific duties.  With regard to devel oping countries, the representative noted that using 
only four countries as a case study would not reflect the full picture. 
29. The expiry of quantitative restrictions under the Agreement on Textiles and Clothing was an 
important milestone in the development of interna tional trade relations.  Consumers of these products 
and developing country producers shoul d stand to gain from this liberalization.  Nevertheless, the 
removal of the quotas might lead to considerable mark et disruption.  Thailand agreed that appropriate 
means and assistance should be available to help de veloping countries adjust efficiently to the new 
environment.   
30. With regard to services, the representative noted  that the level of ma rket opening in Mode 4 
remained extremely low and called upon Members to take steps to upgrade their specific 
commitments regarding this Mode.  The movement of short-term contractual service providers would 
not necessarily result in a brain drain, but rather en courage brain circulation.  She noted the upward 
trend in the number of disputes going to the appeal  level.  Thus, it was desirable to increase the 
number of Appellate Body members in order to respond to a demand fo r expedited recourse to dispute 
settlement.  There was a need to clarify and improve the DSU, and Members should redouble their 
efforts to finalize the DSU negotiations in a timely manner. 
31. The representative of the Republic of Korea  endorsed the view that a change of rules was 
necessary for improving the dispute settlement mechan ism.  For three to fo ur decades, Korea had WT/TPR/OV/M/5 
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achieved relatively rapid economic growth through th e promotion of exports and imports.  Following 
the financial crisis, Korea had put great emphasis on  the strengthening of its financial sector and the 
liberalization of its investment regime.  Both measu res had contributed to sustained economic growth.  
32. A new experience for Korea was the negotiation of free-trade agreements.  The entry into 
force of its first agreement, with Chile, had led to an impressive growth of bilateral trade despite the 
limited coverage of the agreement.  This agreemen t had been followed by bilateral negotiations with 
Singapore and Japan, as well as on an Asian free-trade area.  While Korea had started late in negotiating free trade agreements, it had suddenly beco me very active so as not to be left behind.  
Korea hoped that the conclusion of free-trade agreements would contribute to the overall 
liberalization and expansion of trade.  In that c ontext, the representative noted that APEC leaders had 
recently endorsed guidelines for achieving high-standa rd agreements, which could provide a useful 
input to the current negotiations.   
33. Rapid structural adjustment had taken place in Korea's agriculture sector, as demonstrated by 
the strong fall of the share of farmers in the work force.  Korea was committed to the reform of its 
agriculture sector, but the negotiations should take  account of the need for a smooth implementation 
of the reform programme. 
34. The representative of Kenya
 noted that the issues of non-tariff barriers and the WTO Decision 
on TRIPS and Public Health deserved larger coverage in the Report.  With regard to the Overview's 
section on applied tariffs, he noted that financial in stitutions, such as the IMF, could assist developing 
countries in addressing the problem of revenue loss that might occur during the liberalization process.  As the countries affected by this problem were al ready highly indebted, the representative wondered 
whether incurring additional debts to implement WTO commitments would be the right solution.  
This issue, as well as the role of tariffs as instrument of development, deserved more analysis.  
35. Regarding the gap between applied and bound ra tes in developing countries, some Members 
had been obliged by the World Bank or the IMF to go  beyond their commitments.  Preferences were a 
prominent form of special and differential treatme nt and a good instrument of industrialization, 
despite the rather negative picture painted by the Re port.  One reason for the less than full utilization 
of certain preference schemes was that some c ountries had options between different schemes and 
usually looked for the least restrictive programme.  The impression that preference-receiving countries were delaying trade liberalization was incorr ect.  Rather, Members should strive to integrate 
preferences into the GATT rules. 
36. Regional trade agreements had a vital role in  integrating developing countries into the 
multilateral trading system.  The entry into force of COMESA, for example, had shown that regional 
integration arrangements were boosting trade.  Th us, it was important to see how to use regional 
trading arrangements as building blocks for the multilateral trading system. 
37. The representative of Turkey
 was pleased to observe that the world economy was recovering 
from a slower pace of growth.  However, the various downside risks should urge Members to 
complete the DDA negotiations on time.  He noted that the high level of tariff protection also present 
in developing countries was not only an impediment to North-South trade, but also to trade between 
developing countries.  Members should fulfil the D oha mandate by agreeing on significant tariff 
reductions and addressing tariff escalation.   
38. Significant liberalization in agriculture was cr ucial for the global economic development.  
The removal of the remaining quantitative restricti ons on textiles and clothing was likely to cause 
disruptions, including a possible surge in imports that  was likely to lead to temporary restrictions.  
Like many developing countries, Turkey had serious  concerns about the future of its textile and 
clothing sector and hoped to find a reasonable solu tion.  With regard to RTAs, Turkey sincerely 
believed that although RTAs could contribute to gr eater liberalization, their increasing number had WT/TPR/OV/M/5 
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the potential to pose a serious risk to the multilatera l system.  Thus, Members should give priority to 
multilateral negotiations. 
39. The representative of Jamaica  noted that the sustainability and breadth of the current 
economic recovery was an issue of primary interest to  his delegation.  With regard to sustainability, 
he referred to the downside risks mentioned in the Report, which were widely recognized.  A point of 
concern was that two countries, the United States and China, had accounted for almost half of the 
increase in world trade and growth in the past year.  Jamaica welcomed rapid growth of trade in many 
developing countries, and looked forward to a broade ning of the current recovery to encompass all 
regions and groups of developing countries.  The Ju ly package should have a salutary effect on global 
economic trends.   
40. Annex 1 to the Overview showed that Jamaica ha d a very liberal applied tariff schedule, with 
60.5 per cent of all tariff lines being duty free.  While there were differenc es between applied and 
bound rates, this did not necessarily mean that Ja maica's trade regime was unpredictable.  Rather, 
unpredictability could arise from the use of trade defence measures.  The representative noted that 
preferences were part of the WTO's existing structure of rules and that many countries that benefited 
from preferences contended that they were beneficial.  It was not surprising that countries not 
benefiting from the GSP tended to adopt more liberal trade policies, as competitiveness was probably 
higher among those developing countries that had graduated from the GSP a nd overcome supply-side 
constraints. 
41. Likewise, the views expressed on RTAs in the Report were too negative.  Jamaica believed 
that regional and multilateral liberalization could go  hand in hand and even reinforce each other.  
Thus, Members should focus on ensuring that the tw o approaches were complementary.  Furthermore, 
the representative noted that the role of exchange rate movements should have been dealt with more 
in depth.  The World Trade Report and the Annual Overview could be usefully integrated, which 
might be to the benefit of both. 
42. The representative of China  noted that the year 2004 had witnessed various ups and downs in 
the multilateral trade system.  The WTO had generally  shown its strength and relevance in a rapidly 
changing global economic environment.  China was pleased with the good performance of the world economy, but the difficulties and problems faced  by developing country Members should not be 
neglected.  Thus, it was important to ensure that  the ongoing recovery continued and became more 
stable, robust, and balanced in the coming years.  The existing downside risks should be tackled by 
Members through structural domestic reforms.  The developed countries and in ternational institutions 
had a major role to play in helping devel oping members to overcome developing countries' 
difficulties. 
43. Tariffs on agricultural products were much highe r than those on non-agricultural products, 
especially in the major developed Members.  Trad e- and production- distorting support to agriculture 
also remained extremely high.  Thus, it was necessary to push forward the negotiations in agriculture.  
The representative expressed the hope that substan tial progress would be achieved in the negotiations 
on non-agricultural market access by the Ministerial Conference in  Hong Kong, China, so as to pave 
the way for an early and successful conclusion of the Round. 
44. China had serious concerns about the frequent abuse of anti-dumping measures by major 
developed Members, as it had long been one of the main victims of these measures.  With regard to textiles and clothing, the Report failed to reflect the importance of the termination date of the 
Agreement on Textiles and Clothing on 1 January 2005.  Likewise, the Report did not contain an 
analysis of the impact on the trading environm ent of non-tariff measures such as SPS and TBT, an 
issue of great concern to many developing countries. WT/TPR/OV/M/5 
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45. The representative of Paraguay
 pointed to the upcoming Trade Policy Review of his country 
in 2005, and hoped that this exercise would also come up with conclusions and recommendations for 
his country's trade policy.  Paraguay shared the op timistic tone of the Report, despite the downward 
risks mentioned by the Director-General in his st atement.  The WTO, as a rules-based system, was 
managing to make trade more predictable.  Howeve r, while there had been considerable growth of 
trade, there were some countries, including Paraguay,  where the figures were not that encouraging.   
46. RTAs had not been particularly beneficial for most developing countries as they tended to 
favour industrialized or larger developing countri es.  Smaller economies also derived little benefit 
from the GSP;  and they were usually the last to be consulted but the first to be affected by decisions 
adopted in WTO.  Paragraph 35 of the Doha Mini sterial Declaration pointed to the particular 
problems of small economies, and it was time for th e international community and the WTO to take 
note of these and work to remedy this situation.  The fact that Paraguay was not mentioned a single 
time in the Report showed the little importance of small economies to the international community.  
Paraguay hoped that considerable progress would be  made on the issue of small economies in 2005. 
47. The representative of India  agreed with the Director-General on the need to avoid 
protectionist responses in domestic restructuring policies;  the phase-out of the Agreement on Textiles 
and Clothing was an important example.  In I ndia, the textiles and garment industry had been 
undergoing a major transformation, including tough reforms in the system  of tariff duties.  
International trade in textiles and clothing woul d soon settle down to a new equilibrium, but it was 
important that this sector was not subjected to any ne w form of protectionism.  With regard to trade in 
services, he noted that trade liberalization brought w ith it potentially greater benefits than for trade in 
goods.  However, progress in this sector had been the most muted in the current negotiations and 
Members needed to cover ground for a balanced outcome of the DDA   
48. With regard to the Overview's tariff analysis , he disagreed with the view that developing 
countries needed to do more to bring down their ta riffs.  Rather, it was important to understand the 
impact of measures and policies in key countries on the development prospects of poor countries.  
This included trade-distorting support to agriculture  in a number of developed countries, tariff peaks 
and non-tariff barriers, and the restrictive provision s in the rules of origin of a number of GSP 
schemes.   
49. The representative of Hong Kong, China  commended the Secretariat on a well-executed 
Report, but noted a number of imbalances such as th e omission of TRIPS and non-tariff barriers.  The 
Report provided a good basis for reflection on the objectives for the Ministerial Conference in Hong 
Kong.  Given the downside risks in the current international economic environment, a successful 
conclusion of the DDA would boost international ec onomic confidence and help alleviate poverty in 
poorer countries.  Although there were consider able overall gains to be obtained through trade 
liberalization, possible unfavourable short-term ef fects in some developing countries highlighted the 
importance of coherence and cooperation with other international agencies. 
50. The representative agreed with the observati on that the impact of anti-dumping measures 
remained high, despite the drop in their number.  It  was a worrying trend that the proliferation of anti-
dumping actions seemed to have spread not only among the traditional users, but also among new 
users, particularly from developing countries.  H ong Kong, China also believed that many rules on 
anti-dumping had not taken into account that ma nufacturing processes were now conducted across 
borders, and urged Members to make the best efforts to improve and update the anti-dumping 
disciplines in the Rules negotiations. 
51. Understanding of the impact of RTAs remained  sketchy and patchy.  Rules of origin, for 
example, merited further study.  Complex rules of origin resulted in both trade and investment 
diversion.  As there was a collective interest in addressing the systemic implications of RTAs to the WT/TPR/OV/M/5 
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multilateral trading system, Members should work  towards enhancing RTA transparency and 
addressing systemic issues in the Rules Negotiating Group. 
52. The representative of Australia  welcomed the report which provided some useful material on 
developments and trends in the international trad ing environment.  However, two of the footnotes 
contained misleading inferences about aspects of Australia’s trade policy and practices.  As 
agriculture was the most heavily distorted sector in the world trading system, it was regrettable that 
only a relatively small part of the Report was dedicat ed to this subject.  The current negotiations on 
agriculture should go deeper and further than in  the Uruguay Round.  Members should be able to 
emulate the NAMA framework and convert all non- ad valorem  tariffs and bind them in ad valorem  
terms.  The NAMA mandate also gave Members the opportunity to address the issues of tariff peaks 
and tariff escalation. 
53. With regard to development, Australia strongly endorsed the Report's view on the important 
role that the World Bank, IMF a nd other institutions could play in  managing the transition to freer 
markets.  Expanded market access through the Doha Round would not in itself enable Africa to improve its export performance.  Developing countries fi rst needed help to take greater advantage of 
the trade concessions already available.  Progress on internal governance would also help to promote 
growth.  On services, the delegate noted that th e negotiations on Mode 4 involved a number of 
complex issues that would require close cooperation between trade and labour market officials as the 
Round progressed.  Liberalization and improved commitments across the other modes of supply would also be important for the success of the services negotiations. 
54. The Report's section on RTAs demonstrated that, in the best of cases, these could be 
complementary to the multilateral trading system.  Thus, Members had a responsibility to ensure that 
the rules were sufficiently clear to be able to judge those “best cases”.  Without strong and clear 
disciplines applied to all FTAs, the integrity of the multilateral trading system could be eroded.  
Progress made since Cancun on issues such as transp arency was insufficient, and Members had to 
ensure that other important systemic issues were addressed, such as clarification of the meaning of 
“substantially all trade”.   
55. The representative of the European Communities
 noted that the Report brought together a 
number of details and data.  However, as these we re already available in other WTO publications, 
more analytical work could be included.  With re gard to developments in 2004, two very important 
points were the enlargement of the EU in May and the WTO package adopted in July.  The European 
Communities would continue to work for an am bitious outcome on all areas of the DDA and was 
looking forward to more progress being made towards the Hong Kong, China Ministerial Meeting. 
56. The representative of Columbia  emphasized that a broad understanding of special and 
differential treatment and development would go beyond a simple discussion of preferences and 
implied true market openness for export products from developing countries.  In particular, more 
openness for tropical products was a desirable outcome  of the current negotiations;  a more ambitious 
outcome was needed than in the previous Round, pa rticularly to encourage substitution of illicit crops. 
57. The representative of Ecuador , referring to the Report's section on non-reciprocal preferences, 
noted that preferences could not substitute basic pr inciples of the multilateral trading system such as 
the MFN rule.  Preferences were not only an issu e between granters and beneficiaries, but might 
discriminate against third parties, which were of ten developing countries with equal or sometimes 
greater needs than the beneficiaries.  It was importa nt also to bear in mind that conditions, defined by 
the preference-giving country, were of ten attached to the preferences.  
58. The Chairperson , on behalf of the Director-General, thanked Members and the two 
discussants for their interventions.  She noted that the use of discussants in the Overview meeting had 
been a successful innovation.  She was encouraged  by some Members' call for more and deeper WT/TPR/OV/M/5 
Page 10  
 
analysis, but stated that this year 's report was already considerably mo re advanced in that respect than 
those issued a few years earlier.  The request for more analysis would be taken seriously in the 
preparation of the next Director-General's Overview. 
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