Bridges Weekly Trade News Digest • Volume 9 • Number 14 • 27th April 2005
NAMA Week: Members Discuss Argentina-Brazil-India Proposal
A recent proposal (TN/MA/W/54) from Argentina, Brazil, and India for reducing tariffs on non-agricultural goods dominated discussions during the first two days of talks in the WTO Negotiating Group on Non-Agricultural Market Access (NAMA). The US was particularly critical of the proposal, arguing that it would not guarantee increased market access for global goods trade.
The three proponents of the controversial paper kicked off the ‘NAMA week’ on 25 April by presenting it to a plenary session of the negotiating group. The submission calls for a tariff reduction formula that would link a Member’s tariff cuts to its existing average level of tariff protection — so that the higher a country’s average tariff rate, the higher its tariffs would remain even after the formula is applied on an item-by-item basis. The proposal would also link the formula to differentiated coefficients for developed and developing countries so as to ensure that the latter are permitted to make less onerous tariff reductions; it specifies that the values of these coefficients would be tied to market access commitments in "other areas" of the Doha Round talks. (For more about the proposal, see BRIDGES Weekly, 20 April 2005)
The proposal generated much discussion and questions from Members across the spectrum of developmental levels, both during the plenary meeting and the following day’s more technical ‘Room D’ discussions. The latter, named after a room in the WTO building, are attended by a maximum of three representatives from each delegation, as per NAMA Chair Ambassador Stefan Johannesson’s structure for the work of the Negotiating Group.
Several Members unhappy with formula proposed by Argentina, Brazil, India
Delegates report that the US, the EU, Costa Rica, Chile, and some other Latin American countries were not pleased with a tariff-average-based reduction formula, since they had bound their tariffs at fairly low levels. Some of them also complained that the formula would not lead to substantial liberalisation.
During the Room D meetings on 26 April, advocates of a ‘Swiss formula’ approach to tariff reduction — according to which higher duties are slashed more sharply towards a harmonised level for all tariffs — argued that the three countries’ joint proposal did little to address tariff peaks.
Some Members said that though Argentina, Brazil, and India based their tariff reduction formula on the one put forward in May 2003 by then-NAMA Chair Ambassador Pierre-Louis Girard, their proposal neglected to include the mandatory ’sectoral’ liberalisation that was an important component of his overall plan.
Members also asked several questions about the submission’s ideas for the treatment of ‘unbound’ tariff lines, i.e., items for which a tariff ceiling had not yet been established. Sources indicate that a number of developing countries, including Malaysia, the Philippines, and other members of the Association of Southeast Asian Nations (ASEAN) contended that the paper’s treatment of unbound tariffs was not equitable for developing countries that had bound all of their tariffs, or that applied low tariffs even to unbound lines. They pointed out that only about 20 developing countries, India among them, had a high enough proportion of unbound tariffs that they stood to benefit from a formula that did not require unbound tariffs to be cut on a line-by-line basis.
Trade news sources quote US negotiator Nancy Adams as slamming the proposal for being "based on already rejected ideas," warning that the US would be unable to deliver on expanded market access and reduced subsidies in agriculture in the absence of a "significant commercially meaningful result in NAMA." She described the proposal as "Girard minus, minus in terms of ambition and balance."
Some North African and Caribbean countries, on the other hand, expressed support for the proposal. China and Egypt allowed that the proposal could help serve as a basis for future discussion. However, countries benefiting from trade preference schemes expressed concerns about the potential erosion of their preferential access to rich country markets. They pointed out that a tariff average-based formula would cut EU tariffs — already at a low average level — to nearly zero, rendering much of their preferential access irrelevant.
The week of market access talks will conclude on 29 April with a formal meeting of the Negotiating Group on NAMA.
ICTSD will round up coverage of the NAMA week in the next issue of BRIDGES Weekly.
ICTSD reporting; "US Slams Argentina-Brazil-India Proposal for NAMA Tariff Formula," WTO REPORTER, 26 April 2005.