Bridges Weekly Trade News Digest • Volume 9 • Number 10 • 23rd March 2005
Members Continue To Differ Over NAMA Formula
During WTO talks on non-agricultural market access (NAMA) last week, Brazil and India argued that US and EU proposals for reducing tariffs on industrial goods would disproportionately affect developing countries. The ‘NAMA week’ concluded on 18 March with a meeting of the Negotiating Group on Market Access.
The week saw several informal bilateral and plurilateral meetings, as well as so-called ‘Room D’ technical discussions on 16 March (for coverage of the first half of the NAMA week, see BRIDGES Weekly, 16 March 2005).
Room D talks focus on formula
The bulk of the Room D talks focused on four recent communications on the tariff-reduction formula. The submissions, all of which were based on a ‘Swiss’ harmonising formula which would require sharp reductions in higher tariffs, came from Norway (TN/MA/W/7/Add.1), the EU, the US, and jointly from Chile, Colombia, and Mexico (TN/MA/W/50).
Paragraph 8 of Annex B of the July Package (WT/L/579) specifically states that "developing country participants shall have longer implementation periods for tariff reductions," and that "in addition, they shall be given" the flexibility to apply cuts less onerous than those required by the formula to a certain number of tariff lines, as well as to keep a small number of tariff lines unbound. The July Package also exempts least-developed countries and countries with fewer than 35 percent of their tariffs bound (these tend to be among the poorest) from the application of the formula.
Each of the four submissions discussed puts forward suggestions for providing developing countries with a certain level of special and differential treatment (S&D). For instance, the EU, like Norway, has proposed giving countries ‘credit’ in the form of smaller tariff reduction requirements in return for forgoing the use of other Paragraph 8 flexibilities, such as leaving some tariffs unbound or excluding certain products from tariff reduction. The US has proposed a ‘dual coefficient’ system that would allow developing countries to make shallower tariff cuts, also upon condition that they forego other Paragraph 8 flexibilities.
Brazil, India unhappy with US, EU papers; will forward own proposals
Trade sources report that Brazil slammed the US and EU proposals for requiring "more than full reciprocity" from poor countries. Developing countries including Brazil, China, India, Indonesia, Malaysia and the Philippines objected to the demands for what they saw to be an overly onerous Swiss formula approach, arguing that it failed to take into account developing countries’ interests, and that it violated the principle of "less than full reciprocity" for developing countries specifically cited in both the Doha Declaration and the July Package’s mandate on NAMA. Since developing countries tend to have higher industrial tariffs than their industrialised counterparts, a Swiss formula approach would require them to make proportionally bigger tariff reductions, in both percentage and actual terms. One developing country trade negotiator said that it appeared as though the developed countries’ objective was to completely abolish developing-country tariffs, and they were proceeding accordingly.
Not all developing countries, however, were wary of deep tariff cuts. Notable among these were Chile, Colombia, and Mexico.
Some developing countries also denounced the US and EU proposals for their "either-or" approach — the insistence that Members choose between Paragraph 8 flexibilities or a more favourable version of the tariff-reduction formula. A trade delegate said that in his view, the mandate called for "less than full reciprocity" to be a built-in feature of both the tariff-reduction formula and flexibilities in the formula’s application.
A handful of developed-country negotiators reported a sense of frustration that Brazil and India were yet to put forward their own proposals on NAMA. Sources indicate that Brazil and India are preparing to do so — though it is not yet clear whether they will do it jointly or separately — in time for the April NAMA meeting.
Preference erosion divides developing countries
Submissions on preference erosion from the group of African WTO Members (TN/MA/W/49) and the African, Caribbean, and Pacific (ACP) countries (TN/MA/W/53) met with an unfavourable reaction, primarily from other developing country Members. These countries criticised these submissions for proposing to reduce the extent of trade liberalisation in areas in which they also had export interests. Brazil said that the EU and the US should provide the solution to the problems associated with preference erosion. It argued that developing countries should not have to pay for problems they had not created.
The Room D talks did not make much headway on the issue of how to deal with Members’ unbound tariffs. Nor was there progress on how Members might go about converting specific tariffs (such as tariffs that charge a fixed amount per unit of imports, e.g., USD 10 per tonne of wheat imported) into ‘ad valorem’ tariffs based on the value of the good being imported. Discussions on non-tariff barriers also took place during the NAMA week, but no notable progress was reported.
The 18 March meeting served largely to wrap up the week’s talks. Chair Johannesson said that there was no conclusion on the form that the tariff-reduction formula would take, and encouraged Members to come forward with new proposals in time for the 25-29 April meeting.
ICTSD reporting; "Developed Countries Advocate Steep Cuts in NAMA Tariffs," THIRD WORLD NETWORK, 16 March 2005.