WORLD TRADE  
ORGANIZATION  TN/RL/24 
22 March 2010 
 (10-1508) 
Negotiating Group on Rules  
  
 
NEGOTIATING GROUP ON RULES 
 
Report by the Chairman, Ambassador Guillermo Valles Galmés, to the 
 
Trade Negotiations Committee for the purpose  
of the TNC stocktaking exercise  
 
22 March 2010 
  1. When I last submitted a written report to this Committee, I indicated my intention to circulate 
new draft comprehensive texts, a step which I took two days later (TN/RL/W/236).  As foreshadowed 
in that report, the new texts were bottom-up docum ents, which did not purport to offer any magic 
solutions on critical issues where there was little sign  of convergence.  Rather, my intention was to 
provide ample opportunity for further discussions thr ough an intensive programme of meetings.  As I 
cautioned when I circulated the documents, whet her the Group made progress at those meetings 
would depend primarily on the collective commitm ent and flexibility of delegations.  As the 
discussions have now been held, it is an opportune mo ment for me to provide this Committee with an 
account of what we have been doing and where the Rules negotiations now stand.   
Anti-dumping/horizontal subsidies
 
2. On anti-dumping and horizontal subsidies, my  December 2008 texts contained extensive 
proposed changes in the form of un-bracketed  text, reflecting substantial progress towards 
convergence on numerous technical issues.  They did not however propose a new balance on the 
major political issues regarding AD and horizontal subs idies that sharply divide the Group.  Rather, 
the texts identified in brackets certain major AD and subsidy issues where I saw no convergence and 
where I considered that I had no basis or mandate to propose compromise solutions.   
3. In the anti-dumping area, I identified eleven issues as lacking the convergence necessary to 
justify maintaining proposed texts.  They are:  ze roing, causation of injury, material retardation, the 
exclusion of related producers, produc t under consideration, informati on requests to affiliated parties, 
public interest & lesser duty, anti-circumvention, sunset reviews, third country dumping and special & 
differential treatment/technical assistance.  By cont rast, I maintained or revised specific drafting on 
dozens of other issues, including cost allocations, ex change rates.  Model matching, applications, pre-
initiation notification of exporting governments, back -to-back investigations, the identification of 
exporters and domestic producers, non-confidential files, new shipper reviews, duty assessment 
proceedings, interim reviews, verifications, and the review of Members' anti-dumping policy and 
practice, to name just as few.   
4. In the subsidies area, both the number of brackets and the amount of un-bracketed text is less 
than in the area of anti-dumping.  In part, this re flects that I did not in these draft texts attempt to 
make changes in the countervail area paralleling chan ges on anti-dumping.  However, it also reflects 
the far lower number of proposals, and relatively lesser appetite for major changes on horizontal 
subsidies as opposed to anti-dumping.  That said, there are four major bracketed issues in my 
draft ASCM text, regarding certain financing by  loss-making institutions, export competitiveness, TN/RL/24 
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  export credits – market benchmarks and export cr edits – successor undertakings.  These are important 
and challenging issues.  In addition, the un-bracketed  text related to regulated pricing is no less 
controversial and of comparable importance.  And significant issues, such as pass-through and 
subsidy allocation, are also addr essed through un-bracketed text.   
5. We have worked intensively over the past fifteen  months on the basis of these texts.  We held 
intensive clusters in February, May, June, Septem ber, October and December  2009, and continued our 
efforts in January and March of this year.  The wo rk has been slow but we have now completed our 
discussion of all un-bracketed language in the two te xts, have discussed all the bracketed issues, and 
have reverted to all the unaddressed issues raised  by participants.  We have also begun to discuss 
AD/CVD transposition, including in relation to differences between provisions of the existing AD and 
ASCM Agreements, and whether and to what extent un-bracketed language in the draft 
AD Agreement would be appropriate for inclusion in the SCM Agreement.   
6. In terms of where we go next, I think a few things are clear.  First, while we have made 
progress on technical issues, we are no nearer consen sus on the big political issues than we were in 
December 2008, and we are not likely to see the type of engagement that could lead participants to 
negotiate compromises on these issues  until the overall direction of the Round becomes clearer.  Thus, 
any effort to identify agreed "landing zones" at this stage is unlikely to achieve any success beyond 
our results at Hong Kong.  Second, I have seen no indi cations that participants are prepared for me to 
propose a new comprehensive balance at this stage of the negotiations;  it is clear that participants for 
now want to stick with a bottom-up approach.   
7. It is clear that much remains to be done on anti-dumping and horizontal subsidies, and in 
particular that the proper balance and trade-offs  among remaining big political issues remains to be 
struck.  That said, we should not forget how far we have come since 2001.  We moved from 141 general submissions in our first phase, through th e identification of scores of detailed elaborated 
text-based proposals, to detailed Chair texts propos ing numerous un-bracketed changes to the current 
rules.  While there is of course no consensus on these  changes, and some remain highly controversial, 
there is a high degree of convergence on many of them.   
8. Equally important, we have clearly identified s lightly more than a dozen key issues within 
which we know the trade-offs necessary to complete  our work must be found, and we have already 
explored in detail possible options for addressing these i ssues.  Further, participants continue to take 
proposed language from my first draft texts as a poin t of reference on many of these issues.  Thus, if 
we can complete technical work in such areas as tr ansposition, I am convinced that we will be well-
positioned to tackle the outstanding political issues when the time is ripe.  In this way, we can ensure 
that Rules makes its contribution, as part of the singl e undertaking, to the successful conclusion of this 
Round.   
Fisheries subsidies
 
9. I'd like now to turn our attention to fisheries subsidies .  At present, there are of course no 
sector-specific disciplines on fisheries subsidies in  the WTO, and in my first draft text of 
November 2007 I had therefore included a new annex to the SCM Agreement that proposed additional 
disciplines on fisheries subsidies, based upon the pr ohibition of certain subsidies that I considered 
most likely to give rise to overcapacity or over-fish ing, a set of general ex ceptions, provisions on 
special and differential treatment, general disciplines addressing certain fisheries adverse effects, fisheries management conditionalities, and provisions  on notifications and surveillance, transition and 
dispute settlement.    TN/RL/24 
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  10. I crafted this annex with a view to mee ting the mandate from Hong Kong to "strengthen 
disciplines on subsidies in the fisheri es sector, including through the prohibition  of certain forms of 
fisheries subsidies that contribute to overcapacity and over-fishing", and to include in the disciplines 
provisions on "transparency and enforceability", as well as "appropriate and effective special and 
differential treatment for developing and least-devel oped Members [which] should be an integral part 
of the ... negotiations, taking into account the importa nce of this sector to development priorities, 
poverty reduction, and livelihood a nd food security concerns".  In my view, the key points of the 
Hong Kong Declaration were that the focus was ov ercapacity and over-fishing, that the disciplines 
should include a prohibition on certain forms of subs idies that contributed to such overcapacity and 
over-fishing, that the rules needed  to be enforceable, and that effective special and differential 
treatment needed to be an integral part of our work.   
11. As you know, my draft text on fisheries subsidi es proved at least as cont roversial as my draft 
texts on AD and horizontal subsidies.  In spite  of much discussion, no narrowing of positions 
emerged.  Thus, when I issued my new texts in December 2008, I was not in a position to issue a revised comprehensive text on fisheries, nor, given that  the fisheries text was a wholly new text rather 
than adjustments to an existing framework, was I able  to revert on controversia l issues to an existing 
agreement.  Accordingly, I decided to circulate a roadmap, detailing specific focused questions on all 
aspects of the proposed disciplines.  The purpose of  the roadmap was to provide a basis for a well-
structured point-by-point discussion on the wide range of complex issues facing the Group.   
12. We dedicated 2009 to considering each and every one of the questions raised in that roadmap, 
in respect of the prohibition;  the general exce ptions;  special and differential treatment;  
general disciplines / actionability;  fisheries ma nagement;  transparency;  dispute settlement;  
implementation;  and transition rules.  In this re view, in particular, we analyzed the balance and 
relationship among the various structural elements in  possible new disciplines: the relationship of the 
breadth of a prohibition to the breadth of general and S&D exceptions, with a view to ensuring an effective but not overly broad discipline;  the relati onship of fisheries management to the possibility to 
access certain types of subsidies;  and the rela tionship between using flexibilities and providing 
transparency in respect of their use.  We  have completed the process in December.   
13. Where do we go next?  A number of participants  have tabled new proposals that would offer 
new approaches, and even fundamentally different  alternative architectures, for disciplines on 
fisheries subsidies.  We began considering these proposals in December 2009, and continued the work 
in January.  We have alr eady considered a proposal that would sh ift the focus of the disciplines from a 
prohibition to an amber box that would discipline subs idies based upon their fisheries adverse effects.  
We have also considered a proposal to expand special and differential treatment for small and 
vulnerable economies.  And at our next meeting, in May, we will take up a proposal to radically 
reshape the regime of special and differential treatme nt proposed in my first draft text.  I would be 
surprised if other Members with competing visions of fisheries subsidies disciplines did not come 
forward with additional proposals.  Clearly, participan ts expect to have an opportunity to present their 
visions, and no new text from me could be envisioned  before they are provided.  In any event, my 
sense is that in this area, as in the others, pa rticipants are not yet ready to abandon a bottom-up 
approach to our work.   
14. That said, I would like to recall the urgency of these negotiations, which has been emphasized 
at some point during our meetings by virtually all delegations, from every region and at all levels of 
development.  The objective reality that forms the bac kdrop of our work is that the dire state of global 
fish stocks has only continued to worsen sinc e the WTO first took up the question of fisheries 
subsidies in the late 1990s.  The latest figures from the FAO are dramatic – 80 per cent of world fish 
stocks are fully or over-exploited, as are most of th e stocks of the top ten species.  In spite of much 
international work on the issue, fishing capacity continues to far exceed available stocks.  And the 
enormous level of subsidies continues unabate d, with the negative c onsequences not only of TN/RL/24 
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  contributing to the depletion of fish stocks but also of encouraging fishing well beyond economically 
rational levels, costing society as a whole billions of dollars annually in lost potential profits, in 
addition to the direct costs of the subsidies.  The clock thus is ticking ever more loudly as the decline 
in fish stocks and the economically irrational fishi ng activities put at increasing risk the livelihoods of 
vast numbers of people around the globe.   
15. So, our challenge is to achieve results that cr eate new disciplines that effectively address the 
contribution of subsidies to that overcapacity and ov er-fishing, before it is too late.  And here, we 
must be very careful when we think about our ambition level.  In particular, given the unique 
characteristics of the fisheries sector, if we lower our sights too low, we will end up with a result that 
is contrary
 to our mandate.  In other words, while certai n trade-offs are imaginable in the context of 
fisheries subsidies disciplines, the principle of establishing a discipline that is effective in controlling 
subsidies that contribute to overcapacity or over-fish ing, by definition, limits the number and scope of 
such potential trade-offs.  It is for this reason that the questions in my roadmap sought, among other 
things, to concentrate the minds of delegations on th e need to reconcile their legitimate concerns over 
the impact on them of new disciplines with a result that conforms to, rather than undermines, our 
mandate in regard to overcapacity and over-fishing.   This remains our central challenge in these 
negotiations.   
Regional Trade Agreements  
16. At the meeting of this Committee in December  2008, I indicated that the review of the 
provisionally adopted Transparency Mechanism on Regional Trade Agreements could not be 
completed because there was still no consensus among Members on the timing of the review.  The 
Transparency Mechanism, which was negotiated in  the Negotiating Group, is being implemented by 
the Committee on Regional Trade Agreements  (CRTA) and the Committee on Trade and 
Development (CTD).  The CRTA has now cons idered 70 RTAs (counting goods and services 
notifications separately), while the CTD has so fa r considered three agreements and a fourth is 
scheduled for consideration this summer.   
17. It is my sense that delegations continue to believe that while experience is being built up, 
especially in the CRTA and that the Mechanism is functioning well, consensus on conducting the 
review at present remains elusive.  Nevertheless, I do think that discussions on the functioning of the 
Transparency Mechanism should take  place and I intend to continue consulting delegations informally 
to determine the timing of such a review.   
18. On systemic issues relating to RTAs, my impr ession is that while no one is disputing the 
fundamental importance of the issues, the Group cannot  advance and conclude its work in this area 
without text-based proposals by Members.  I hope to see such text-based proposals from delegations 
soon so that the systemic work of the Group can resume.   
19. This concludes my Report.  Thank you Mr. Chairman.   
 
 
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