WTO Ministerial Section • Volume 7 • Number 19 • 28th May 2003

Industrial Market Access Modalities Approval Awaits Agriculture

Do More

See also

WTO Members convened on 26-28 May for what was supposed to have been the final date for approving market access modalities for non-agricultural goods. However, as was widely expected, the Negotiating Group on Non-agricultural Market Access deadline passed without agreement on a Chair’s draft paper submitted on 16 May (see BRIDGES Weekly, 21 May 2003).

The missed deadline joins many others, including on special & differential treatment for developing countries, implementation, and notably modalities for negotiations on agriculture (see BRIDGES Weekly, 2 April 2003). Dispute settlement negotiations, which are scheduled to finish this week, also appear set to miss their deadline. Many negotiators are now of the view that progress on non-agricultural market access modalities — or formulas for achieving the objectives of the negotiations — must await movement in agriculture.

Members used the 26-28 May meeting to express their first reactions to the draft (TN/MA/W/35) by Chair Pierre-Louis Girard (Switzerland). None as yet have rejected it as a basis for negotiation, and most, according to sources, see it as a good start. Of all countries, Japan has objected most strongly to the paper, saying it would prefer the use of an average percentage cut — as opposed to the draft paper’s suggested across-the-board tariff reductions — that could allow Members to keep sensitive sectors from deep tariff cuts. The Japanese delegation also took issue with the inclusion of fish and fish products, footwear and leather goods as sectors where Members would negotiate eventual tariff elimination.

The formula suggested by the paper, inter alia, is an attempt to meet the Doha Declaration’s mandate of ‘less than full reciprocity’ for developing countries. According to the formula, the higher a country’s average tariff rate, the less it will be required to reduce its tariffs. Since developing countries on average maintain higher duties than developed countries, the formula would lead developed countries to make proportionally bigger cuts than developing countries.

Not all Members are happy with this arrangement, however. One industrialised country said that it would like to see the modalities cut more into high tariffs, adding that the modalities should not reward those who keep higher duty rates. Some developing countries, primarily those with lower average tariffs such as China and Malaysia, are not fully pleased with the draft either. Others, primarily African countries, are worried about how the modalities might affect preferential market access arrangements. Regarding the special and differential treatment aspects contained in the draft — such as longer implementation timelines, differential sectoral commitments and exemption of least-developed countries (LDCs) from making reduction commitments — many developing countries said they wanted more time to reflect and consider their responses.

Some low-income African countries that are not LDCs expressed concern that they might be required to make tariff concessions that could affect an important source of government revenue for them. One developed country Member indicated that the Quad (Canada, the EC, Japan and the US) might be able to show some flexibility in this regard in terms of finding solutions to help those countries, provided they would not put the whole special and differential treatment agenda at risk.

Environmental Goods

The Quad said that some sectors should be added to the Chair’s list of sectors of particular export interest to developing and least-developed country participants that would be scheduled for phased tariff elimination. Namely, they noted the absence of environmental goods, which the Negotiating Group is still attempting to define. Canada said that the sectoral list should also include forest products and chemicals.

The Chair said he would continue consultations through June and July, but sources said it was unlikely the modalities draft will change much from its current form.

The next official meeting of the Negotiating Group on Market Access is scheduled for 18-20 August.

ICTSD reporting.