Comparison of Obligations in U. S Comparison of Obligations in U.S.-Vietnam Bilateral Trade Agreement with WTO Accession Requirements Demetrios J. Marantis Chief Legal Advisor, U.S.-Vietnam Trade Council demetrios.marantis@usvtc.org www.usvtc.org Seminar on Vietnam’s Accession to the WTO Hanoi Hilton Opera 6 August 2003

Overview: From the BTA to the WTO

Overview: From the BTA to the WTO BTA: Bilateral MFN Agreement/Lays Foundation for WTO Types of Trade Agreements Pre-WTO: MFN Trade Agreement (e.g., BTA) WTO: WTO Accession Post WTO: WTO Plus FTAs (e.g., U.S.-Singapore FTA) Historical Context Necessary for U.S. to apply MFN tariffs to Vietnam Other countries have also gone through MFN agreements with U.S. (e.g., Russia, Cambodia) Big Step to WTO BTA based on WTO principles Through BTA, Vietnam has already committed to do many of the things that will be required of it for WTO accession.

Overview: From the BTA to the WTO Some BTA obligations incorporate WTO Agreements in full. Ch. I, Art. 3(4): incorporates WTO Customs Valuation Agmt. Ch. IV, Art. 11: incorporates substantive provisions of WTO TRIMs Agmt Chapter VI, Art. 8: incorporates WTO Import Licensing Agreement WTO Accession will require Vietnam to apply such agreements to all WTO Members. Some BTA obligations incorporate partial WTO obligations. Chapter I: incorporates fundamental principles of SPS, TBT, and others Chapter II: incorporates most of TRIPS Agreement Chapter III: incorporates most of GATS Chapter VI: based on WTO transparency principles WTO Accession will require Vietnam to assume full agreements, where relevant (i.e.., SPS, TBT, TRIPS, GATS), and apply to all Members.

Overview: From the BTA to the WTO Some BTA commitments will form basis of negotiations with Members. Ch. I, Annex E: tariff commitments Ch. III, Annex G: services commitments WTO Members will expect Vietnam to “multlateralize” these commitments pursuant to WTO MFN obligations. Some BTA obligations have no WTO equivalents. Ch. II: certain provisions provide more than the TRIPs Ch. IV: investment provisions (other than TRIMs) Ch. V: business facilitation Ch. VI: certain transparency provisions provide more than WTO Most (but not all) of these provisions will not play role in WTO accession negotiations.

Overview: From the BTA to the WTO Key Questions for WTO Accession Where is WTO Accession “BTA Plus”? Which BTA Commitments Do WTO Provisions Require Vietnam to “Multilateralize”? What Benefits Does the WTO Provide that the BTA Does Not? How Does BTA Implementation Facilitate WTO Accession by 2005?

Where is WTO Accession “BTA Plus”?

Where is WTO Accession “BTA Plus”? SUBJECT BTA WTO Tariff Bindings Annex E binds roughly 4% of Vietnam’s tariff schedule. WTO acceding governments bind 100% of tariff schedule. Tariff Rates - (Simple Av.) Agriculture 23.6% (represents 3.3% of overall tariff schedule) 10.4%-17.5% (range from last 7 accessions) Non-Ag 22.86% (represents .76% of overall tariff schedule) 4.8%-8.9%

Where is WTO Accession “BTA Plus”? (Cont.) SUBJECT BTA WTO SPS Article 2(6)(A) provides general SPS rules (e.g., must be based on science). WTO SPS Agreement requires additional and more detailed obligations (e.g., enquiry point). TBT Article 2(6)(B) provides general TBT rules (e.g., no more trade restr. than nec.). WTO TBT Agreement requires additional and more detailed obligations (e.g., enquiry point). Agriculture Other than tariffs, no provisions on agriculture. WTO Ag. Agreement requires commitments on domestic supports and export subsidies.

Where is WTO Accession “BTA Plus”? (Cont.) SUBJECT BTA WTO Rules of Origin No provisions on rules of origin. WTO Rules of Origin Agreement establishes disciplines on ROO (e.g., must be non-distortive). Trade Remedies Limited disciplines on SG. No disciplines on AD or CVD. WTO Agreements on SG, AD, and SCM discipline trade remedy actions. IPR/TRIPS Chapter II of BTA incorporates most, but not all, of TRIPS. Additional provisions include MFN and geographic indications.

Where is WTO Accession “BTA Plus”? (Cont.) SUBJECT BTA WTO GATS Chapter III incorporates most, but not all, of the GATS. Additional provisions include establishment of Enquiry Point and the GATS Air Transport Annex. TRIMs Eliminate WTO-inconsistent TRIMs by 2006. For accession in 2005, Members may expect accelerated phase out schedule.

Which BTA Commitments Do WTO Provisions Require Vietnam to “Multilateralize”?

Which BTA Commitments Do WTO Provisions Require Vietnam to “Multilateralize”? Why? Tariff Levels: Annex E binds tariffs on 261 products Yes MFN: GATT Article I Quantitative Restrictions: Annex B1/B2 provides phase out period for QRs Trading Rights: Ch. I, Art. 2(7)/Annex D sets timetable to liberalize trading rights

Which BTA Commitments Do WTO Provisions Require Vietnam to “Multilateralize”? (Cont.) Why? IPR: TRIPS Plus obligations (e.g., longer trademark protection). TRIPS+ obligations: Most (NB: will have to apply full TRIPS to all Members) MFN: TRIPS Article 4 MFN may not apply to BTA Ch. II, Art. 5 (TRIPS Plus obligation on encrypted signals). Services: Annex G lists Vietnam’s specific market access and national treatment commitments for a wide range of services. Yes MFN: GATS Article II Annex G comparable to commitments of recently acceded Members.

Which BTA Commitments Do WTO Provisions Require Vietnam to “Multilateralize”? (Cont.) Why? Investment: Ch. IV provides extensive provisions on investment. Only TRIMs Other than TRIMs, WTO contains no investment provisions. MFN obligation does not apply to investment. Business Facilitation: Ch. V establishes commitments to facilitate business. No WTO contains no analogous provisions. Transparency: Ch. VI contains WTO Plus provisions (e.g., notice and comment) WTO+: No WTO: Yes WTO contains no analogous provisions with MFN requirements.

What Benefits Does WTO Accession Provide That the BTA Does Not?

What Benefits Does WTO Accession Provide That the BTA Does Not? SUBJECT BTA WTO BENEFIT Textiles Ch. I, Art. 1(4) exempts textile quotas from MFN requirement, thereby permitting a party to establish non-MFN textile quotas. WTO Textiles Agreement phases out all textile quotas by 2005. After 2005, GATT rules (e.g., MFN, no quotas) apply to textile sector. Consultations and Dispute Settlement BTA has consultation provision but no means of resolving disputes arising out of alleged violations. WTO has dispute settlement procedures that allow Members to challenge allegedly WTO inconsistent actions of other Members.

What Benefits Does WTO Accession Provide That the BTA Does Not. (Cont SUBJECT BTA WTO BENEFIT Trade Remedies – Safeguards (SG) Ch. I, Art. 6 allows for SG action if market disruption but provides no rules for investigations or recourse to challenge. WTO SG Agreement provides protection: stricter standards, rules for investigations, and recourse to challenge actions. Trade Remedies – Antidumping (AD) and Countervailing Duty (CVD) Ch. I, Art. 6(4) allows party to apply AD/ CVD law but provides no standards, rules on investigations, or recourse to challenge. WTO AD and SCM Agreements provide protection: legal standards, rules for investigations, recourse to challenge actions.

How Does BTA Implementation Facilitate WTO Accession by 2005?

How Does BTA Implementation Facilitate WTO Accession by 2005? SUBJECT BTA TIMETABLE WTO 2005 Customs Valuation Ch. I, Art. 3(4): adopt WTO Customs Valuation Agreement (CVA) by Dec. 2003. Implementation enables Vietnam to meet CVA requirements by 2005. State Trading Ch. I, Art. 8 provides substantially similar obligations to GATT Art. XVII. Implementation enables Vietnam to meet key GATT requirement by 2005. IPR/TRIPS Phased implementation of BTA Chapter II (most TRIPS rules) ends in June 2004. Implementation enables Vietnam to meet most TRIPS requirements by 2005.

How Does BTA Implementation Facilitate WTO Accession by 2005? (Cont.) SUBJECT BTA TIMETABLE WTO 2005 GATS, GATS Annexes and Telecom Reference Paper Ch. III and Annex F incorporate most GATS obligations, 3 GATS Annexes and Telecom Reference Paper into the BTA. Implementation enables Vietnam to meet key services requirements by 2005. TRIMs Vietnam must eliminate trade balance and forex TRIMs by 12/01 and all other TRIMs by earlier of 12/06 or WTO accession. Implementation furthers Vietnam’s ability to meet TRIMs obligations by 2005.

Conclusion

Conclusion: The BTA and Post-2005 BTA reflects WTO Agreements as the are today. Today: So many BTA obligations stem from/similar to WTO Accession requirements. Tomorrow: WTO in process of evolution. Accessions get harder each time. Easier to accede in 1995 than now. Doha obligations could add new accession requirements. Countries negotiating post-2005 could face harder time. BTA sets stage for 2005 Accession. WTO accession requirements are what they are. BTA, which incorporates and phases-in many of these requirements, helps accomplish 2005 goal.

August 2003