Comments on: Obama’s visit to Indonesia and Australia and the TPP

By: Bernard K. Gordon

Bernard K. Gordon — Thu, 03 Jun 2010 10:28:09 +0000

Prof. Brett Williams has pointed correctly to an error of emphasis at the very end of my essay on the ‘Obama visit to Indonesia and Australia and the TPP.’ I’m pleased he agrees with my main point that (as he wrote) the ‘TPP is not going to be a solution to the problem of the clutter of discriminatory preferences.’ But he is also correct that Doha completion would not ‘render moot’ most of them. It may ameliorate their effects but they will not be rendered moot. As another colleague, like Prof. Williams also a trade lawyer, has written to me, ‘the world will still suffer from many discriminatory preferential regional trading blocs, including this TPP, even after the Doha Round is completed.’ I was too expansive, and I thank Prof. Williams for his correction.

By: Emmanuel

Emmanuel — Wed, 02 Jun 2010 18:50:44 +0000

Interesting article. Two points, though:

1. Mahathir’s proposal was not the “East Asian Community” but rather the “East Asia Economic Caucus” or EAEC. He famously described it as a “caucus without Caucasians” [!]

2. Regarding ASEAN, you downplay the Philippines’ importance in relation to Indonesia. The Philippines was designated by Obama as the United States’ chief coordinator with ASEAN during outgoing President Gloria Macapagal-Arroyo’s visit to the White House in July 2009.

By: Brett Williams

Brett Williams — Tue, 01 Jun 2010 09:20:31 +0000

Professor Gordon writes:
“All the more so when, if the WTO’s Doha Round were completed, its ‘most favoured nation’ clause would render moot most of the preferential trade agreements now cluttering world trade …”

Unless I have misunderstood, my view is that this statement is wrong.

The MFN provisions in the GATT and the GATS apply if the Doha round is never completed and they apply if the Doha Round is completed.
However, all of the preferential liberalization extended under GATT Article XXIVB, GATS Article V or the Enabling clause is not required to be extended to other WTO members under the MFN clauses.

The liberalization in the Doha Round will not reduce MFN barriers to a point at which the discriminatory margins of preference are trivial. Many of the products and services liberalized under PTAs will not even be the subject of liberalization on an MFN basis in the Doha Round – if the existing exclusions in the NAMA and agricultural draft texts apply, and if the current timid approach to scheduling GATS commitments continues to the end of the Round. Therefore, even if the Doha Round is completed, there will still be many many preferential trade agreements cluttering world trade.

I agree with Professor Gordon that the TPP is not going to be a solution to the problem of the clutter of discriminatory preferences – but even if the Doha Round is completed on a basis in line with the draft texts, then the world will still be in need of a solution to the problem of the clutter of discriminatory preferences.

Brett Williams
University of Sydney Faculty of Law