Trade officials from 40 countries participated in the latest round of steel subsidy talks. The officials negotiated a text on what subsidies were prohibited or allowable, but Joseph Spetrini - the Acting Assistant Secretary of Import Administration at the Department of Commerce and Chairman of the Subsidies "Disciplines" Group - cautioned that the text still contained several "brackets" and was by no means final, although it was smoother and more whole than the last draft agreement penned in April (see box to the right for draft language). One problem is that the group fell short of US goals when countries failed to reach agreement on the definition of subsidies that would be prohibited under an international agreement aimed at curbing distortions in the steel sector. Countries balked at accepting the subsidy definitions provided in Articles I and II of the World Trade Organization's Agreement on Subsidies and Countervailing Measures without changes. Countries did reach a much firmer agreement on using WTO definitions as a starting point for a steel agreement. They have agreed that a steel agreement would establish a blanket prohibition for subsidies except for a certain number of exemptions. Possible exemptions discussed were subsidies related to the closure of steel plants and environmental improvements. To date, discussions on what type of subsidies would be permitted under a steel pact have proved to be very contentious. Spetrini said that delegates at the Paris meeting - hosted by the Organization for Economic Cooperation and Development (OECD) - had focused on the basic framework of the agreement, leaving the implementation of any final agreement for later discussion. China's absence at the last three meetings has been a cause of concern among many trade delegates. Spetrini said that he will offer to brief Chinese government on the status of the OECD talks in an effort to get China more actively involved in the negotiations. Further, he said that the OECD Secretariat would be sending a letter to the Chinese Vice-Minister of Commerce to encourage the Chinese government to increase its level of involvement in the talks. Additionally, Spetrini said that China would be invited to a number of informal meetings. Spetrini also said the petition by several developing countries, including Argentina, Brazil, and India, for special and differential (S&D) treatment under the subsidy accord was a non-starter for the US. With respect to the future work of the disciplines group, Spetrini said that the goal is to have an agreement on prohibited and permitted subsidies finalized following a July 16 - 18 meeting of the disciplines group, at which time the text could be publicly endorsed by a high-level meeting of deputy trade ministers. He also said that countries agreed to put off discussion on other implementation related issues such as dispute settlement and special and differential treatment for developing countries. A number of options existed as to how to deal with special treatment for developing countries, including not having any such provisions in a final agreement. Another issue left for future discussion is whether countries will have the ability to countervail subsidies that are permitted under an agreement, as sought by the US. But this position has met stiff resistance from other OECD participants, such as the European Union. The disciplines group will next formally meet in mid-June with countries holding a series of informal bilateral and multilateral discussions in the coming weeks. Draft Language for Agreement The OECD proposal is likely to contain six primary concepts, including: Scope - Most participants have agreed that the final agreement should be restricted to subsidies, and that the definition of "subsidy" should be the one proposed in the World Trade Organization Agreement on Subsidies and Countervailing Measures. This definition would include all industry-specific subsidies granted by governments at any level. Product Coverage - The proposal includes pipe and tube, and participants will consider including a provision requiring the OECD Committee on Steel to collect information on and monitor subsidies benefiting certain fabricated articles, including wire products. Prohibition of Subsidies - In addition to prohibiting subsidies granted to benefit the manufacture of steel products, some associated activities (i.e., research and development, processing, distribution and sales) might also be covered. Exceptions - Exceptions to the prohibition on subsidies would be limited to subsidies to help finance the cost of any of the following related to permanent plant closures: dismantling and destroying facilities; addressing the environmental requirements associated with closing a plant; and addressing the needs of workers made redundant by permanent closures, including those related to retraining. Differential Treatment - The draft proposal includes differential treatment for five years for developing countries and economies in transition. Notification - Participants would have to provide notification of any permitted subsidy in advance of its introduction to enable other countries to raise questions or concerns. If pre-notification is not possible, a notification must be made within one month of the introduction of a program.
 American Wire Producers Association |
