WTO

After more than seven years of negotiations in the so-called Uruguay Round, the States Parties of the existing GATT (General Agreement on Trade and Tariffs) agreed on founding the World Trade Organisation (WTO) with headquarters in Geneva. The WTO began its work on 1 January 1995 and forms the legal and institutional foundation of the multilateral system of trade.

GATT, which had governed international trade rules since 1948, was integrated under the roof of WTO. While GATT provisions only applied to the commodities trade, however, WTO rules have a wider scope of application: In addition to cross-border commodities trade, the WTO also regulates services, commercial aspects of intellectual property, and public procurements. The rules on public procurement are contained in a plurilateral agreement only binding on some of the WTO member states (also on Liechtenstein).

Liechtenstein signed the founding agreement in Marrakech in 1994 and joined the WTO on 1 September 1995.

Liechtenstein participation in the work of the WTO is undertaken by staff members of the Permanent Mission in Geneva. Not least because of the limited human resources, the Liechtenstein delegation mainly deals with areas of special and direct importance for Liechtenstein, and for which Liechtenstein has its own negotiation authority. These mainly include services and investments, intellectual property, and public procurement. In addition, Liechtenstein follows the developments in the WTO General Council and the negotiating committees. Liechtenstein has no external trade authority in the previous core area of the WTO/GATT, namely trade in industrial goods and agricultural products. These sectors are negotiated by Switzerland and are applicable to Liechtenstein according to the Customs Treaty.

New world trade liberalisation round ("Doha round")

A new WTO world trade liberalisation round was launched in Doha/Qatar in November 2001. Since then the ongoing negotiations have proven to be the main activity of the Permanent Mission in regard to its work with the WTO. The priority task of the World Trade Organization (WTO) is the gradual liberalisation of world trade. Therefore, the contents of the ongoing negotiation round is the further liberalisation of trade with industrial goods, agricultural products and services as well as the further development of the WTO rules network. In general terms, all the aims and contents of the negotiations are of interest for Liechtenstein. As a small state, Liechtenstein is not only dependent on access to the world markets but also on reliable rules and enforceable laws in the world trade, e.g. a well-functioning dispute settlement mechanism.

The negotiations in Geneva turned out to be quite difficult. The stumbling block along the path to further progress in the overall negotiations were the discussion on agriculture. Even though an important step was reached in the end of July 2004, the aims for the Ministerial Meeting in Hong Kong in December 2005 had to be lowered. The final document from Hong Kong had foreseen to fix the modalities (a relatively strictly formulated frame containing concrete numbers and formula) until the end of April 2006 and to stick to the aim of concluding the negotiations until the end of 2006. Neither of the aims could be reached and for some time the negotiations in Geneva were even suspended. In autumn 2007 the negotiations were taken up again in Geneva with the hope to conclude the Doha round as soon as possible.

Finally, the breakthrough came only at the 9th WTO Ministerial Conference in Bali on 3-7 December 2013. Ministers adopted the so called „Bali Package“, which contains selected issues of the broader Doha Round negotiations. The Bali Package consists of an agreement on trade facilitation and decisions on issues regarding agriculture and development. The trade facilitation agreement has direct and positive impact on the strongly export-oriented Liechtenstein economy. It  simplifies customs procedures by reducing costs and improving their speed and efficiency. 

Due to the Customs Union Treaty with Switzerland the Agreement is also applicable to Liechtenstein. However, as Liechtenstein is a member state of the WTO, Liechtenstein has also ratified the Agreement. The instrument of ratification was handed over to the WTO Director General by Ambassador Peter Matt on 18 September 2015. The Trade Facilitation Agreement entered into force on 22 February 2017.

10th WTO Ministerial Conference in Nairobi on 15-19 December 2015

Since the breakthrough in the „Doha negotiation round“ at the Ministerial Conference in Bali in December 2013 negotiations in Geneva were continued intensely in view of a possible conclusion of the so-called „Doha round“ at the Ministerial Meeting in Nairobi in December 2015.

Finally, this aim was not achieved. Nonetheless, the 10^th WTO Ministerial Conference has been successful. An agreement could be reached among Ministers. They adopted a common declaration. The Ministers adopted in Nairobi the new extended Information Technology Agreement (ITA) which is a plurilateral agreement; a package of measures regarding export competition in the agricultural field as well as a liberalisation package for the least-developed countries (LDCs). Furthermore, the Ministers welcomed the conclusion of negotiations on the accession of Liberia and Afghanistan at the 10th Ministerial Conference.

Plurilateral Information Technology Agreement (ITA)

On the 2nd day of the Ministerial Conference a first success could be celebrated after the final adoption of the new Information Technology Agreement (ITA).

Negotiations on a framework agreement regarding a new plurilateral agreement on the liberalisation of the cross-border trade related to goods in the field of information technology were concluded already on 18 July 2015. In the meantime, the participating States reviewed their concession lists and agreed on the timeframe regarding the implementation for eliminating duties on each product.

Negotiations on the expanded Information Technology Agreement (ITA) were conducted by the EU and its 28 member states, Albania, Australia, China, Costa Rica, Guatemala, Hong Kong, Iceland, Israel, Japan, Canada, Korea, Columbia, Malaysia, Mauritius, Montenegro, New Zealand, Norway, Philippines, Singapore, Switzerland, Taiwan, Thailand as well as the United States of America (USA). It is a plurilateral Agreement which means that not every WTO member state participates but the agreement is open to all WTO member states. Every single WTO member state - also those which have not participated in the negotiations – will benefit from the concessions in the ITA.

The new ITA expands an existing agreement on information technology from 1996. 80 out of 161 WTO member states have joined this agreement. It now comprises a total of 200 IT products, especially computer, computer games, memory chips, products of medical technology and GPS-systems. The new Agreement takes into account the technological development since 1996. The WTO estimates the total trade volume which is concerned by the elimination of duties up to 1.3 billion US dollars. This means also a lack of income from duties worldwide of up to 17 billion US dollars. It is the most important agreement regarding elimination of duties since the first ITA was concluded in 1996. The agreement is also of importance to the Liechtenstein industry, mainly in the field of precision instruments, medical technology and laser technology. Finally, also consumers benefit from lower prices in the field of entertainment electronics.

The agreement concerns customs union matter and therefore, it is also applicable to Liechtenstein. This is also the reason why Liechtenstein did not participate directly in the negotiations on the ITA. Furthermore, since it is a plurilateral agreement, a signing of the ITA and the ratification by Liechtenstein was not foreseen.

Export subsidies („export competition“)

In the context of a package of measures to strengthen the export competition in the field of agriculture, Ministers agreed on a timeframe for the elimination of export subsidies. The measures foresee an immediate elimination of export subsidies for the industrialised countries whereas developing countries have to do the same by 2018. There is a transitional period for industrialised countries until 2020 regarding the elimination of export subsidies on processed agricultural products, as long as they do not export to LDC-WTO-member states. During this transitional period (up to 2020) export subsidies are allowed as before, i.e. no gradual elimination of export subsidies is foreseen.

Switzerland has a system of export subsidies which is known under the name “chocolate law”. Via export subsidies Switzerland reduces the price of milk and crop basic products which are further processed in agricultural products and which are foreseen for export. Liechtenstein companies can also benefit from this system via the customs union with Switzerland.

Package for the LDC member states of WTO

The Ministerial Conference reached agreement on a package for the least developed countries (LDC) of WTO. Ministers agreed on preferential rules of origin in favour of LDCs. Also the extension of the LDC Services Waiver until 2030 was agreed upon. The latter was an important request of the LDCs since it took 4 years from the decision on the waiver in Bali in 2011 to its implementation. The WTO Council for trade in services shall review the LDC Services Waiver on a regular basis.

The LDC Services Waiver foresees an exception from the Most Favourite Nations Principle (MFN) regarding the granting of preferential treatment for the least developed countries of WTO in the field of trade in services. Liechtenstein notified the relevant preferential conditions to the WTO Council for trade in services on 1 December 2015.

11th Ministerial Conference in Buenos Aires (Argentina) on 10-13 December 2017

Ministers wrapped up the 11th Ministerial Conference of the World Trade Organization on 13 December 2017. Ministers could not agree on a common Ministerial declaration but took a number of decisions in different fields and committed themselves to a reliable multilateral trading system.

Regarding Liechtenstein, the revised WTO Agreement on Public Procurement entered into force on 7 April 2014. The revised agreement allows to modernising and adapting the provisions of the existing agreement. It becomes more user-friendly. In addition, the provisions are adapted to new developments like the use of electronic auctions. At the same time the contracting parties have extended their mutual market access commitments. New markets will be accessible for economic actors. Furthermore, the process of accession, especially for developing countries, shall be facilitated through flexible transitional measures.

12th WTO Ministerial Conference in Geneva

The 12th WTO Ministerial Conference took place in Geneva from 12 to 17 June 2022 (due to the Covid19-pandemics the Ministerial Conference had to be postponed twice before).

The WTO Ministers adopted the following decisions and declarations (“Geneva Package”):

• Outcome document, including the intention to present concrete decisions regarding the WTO reform at the next Ministerial Conference;
• Package on WTO response to emergencies, comprising a Ministerial Declaration on the Emergency Response to Food Insecurtiy and a Ministerial Decision on Wold Food Programme (WFP) Food Purchases Exemptions from Export Prohitions or Restrictions;
• Ministerial declaration on the WTO Response to the COVID-19 Pandemic and Preparedness for Future Pandemics;
• Ministerial decision on the Agreement on Trade-related Aspects of Intellectual Property Rights;
• Decision on the E-commerce Moratorium and Work Programme (extension of the moratorium on customs duties on electronic transmissions until March 2024 at the latest);
• Agreement on Fisheries Subsidies (prohibition of harmful forms of fisheries subsidies that contribute to overfished stocks).

In addition, Ministers adopted two decisions – on the Work Programme on Small Economies and on the TRIPS non-violation and situation complaints – and a Sanitary and Phytosanitary Declaration for the Twelfth WTO Ministerial Conference: Responding to Modern SPS Challenges. No consensus could be reached for a Work Programme regarding the negotiations in the area of agriculture.

13th WTO Ministerial Conference in Abu Dhabi (26.2.-1.3.2024)

The 13th WTO Ministerial Conference in Abu Dhabi came to an end on March 1. The Liechtenstein delegation was led by Minister Dominique Hasler. The Comoros and East Timor were welcomed as new members at the 13th WTO Ministerial Conference following the conclusion of a lengthy admission procedure. This brings the number of WTO members to 166. One of the WTO's objectives is to improve the integration of least developed countries (LDCs) into world trade. To this end, further measures were adopted in Abu Dhabi. For example, the 13th Ministerial Conference decided that for a transitional period, less stringent trade rules will continue to apply to those LDCs that move up from this country category due to their economic development than to the other developing countries. This is to ensure that the welcome promotion does not lead to an abrupt change in the rules and thus to negative effects on the economic development of these countries.

Simplification of procedural rules important for Liechtenstein

Together with numerous other WTO members, Liechtenstein participated in efforts to simplify and standardize the global procedural rules for the authorization of services. This can also save small and medium-sized enterprises time-consuming and resource-intensive authorization procedures in cross-border trade in services. In addition, Liechtenstein supports an initiative that advocates greater involvement of the WTO in harmful subsidies for fossil fuels. The aim is to accelerate the abolition of such subsidies worldwide through greater transparency and the exchange of relevant experience.

The moratorium on customs duties on electronic transmissions, which is important for the economy, was extended again at the Ministerial Conference. Negotiations on the important reform of the mechanism for settling trade disputes are to be accelerated and concluded by the end of the year.
 

WTO Trade Policy Review: Review of the trade policies of Switzerland and Liechtenstein in the WTO

The 6th Trade Policy Review of Switzerland and Liechtenstein took place in Geneva on 18/20 May 2022. Link 

Importance of the WTO for the Liechtenstein economy

The WTO Agreement creates, of course, no economic integration comparable to the level of the EEA. Nevertheless, WTO offers the Liechtenstein economy and its exports - which go in an important share to countries outside Europe - an indispensable and reliable legal basis. In addition, the dispute settlement system of WTO is also of high importance for the protection of the Liechtenstein interests in the international trade.