Bridges Weekly Trade News Digest • Volume 10 • Number 8 • 8th March 2006
NAMA Week: Members Differ On S&D Flexibilities, Link To AG
WTO Members remain divided over the extent of special and differential treatment (S&D) in the negotiations on non-agricultural market access (NAMA). During an informal meeting of about 25 delegations on 1 March, several developing countries, including China, insisted that developing countries should be allowed to slate no fewer than 10 percent of products for tariff cuts lower than those required by the overall tariff reduction formula, or to exclude 5 percent from reduction commitments altogether. The NAMA week ran from 27 February -3 March (see BRIDGES Weekly, 1 March 2006).
China insisted that these flexibilities in tariff treatment, provided for in Paragraph 8 of the NAMA mandate set out in Annex B of the July 2004 Framework (WT/L/579), are a fundamental principle in the negotiations, and that the specific figures, which were bracketed in the text to signify lack of agreement, were the lowest that it could accept. Several (primarily developed) countries, however, repeated their longstanding position that the flexibility figures would remain in brackets until the formula was finalised. They have long maintained that developing countries should give up recourse to the flexibilities in exchange for a formula coefficient that would leave them with tariff levels higher than those of developed countries after reduction.
One trade observer suggested that China, as a very efficient producer of industrial goods, would benefit from a situation in which coefficients were low but flexibilities high, since this would steeply lower tariffs elsewhere while allowing it to shield sensitive sectors from deep tariff cuts.
Members read different meanings into Para 24
In a subsequent informal gathering on 1-2 March, Members discussed what was entailed by the mandate in Paragraph 24 of the Hong Kong Declaration to "ensure that there is a comparably high level of ambition in market access for agriculture and NAMA … in a balanced and proportionate manner consistent with the principle of special and differential treatment."
The mandate is being interpreted differently by different delegations. Canada, Norway and Switzerland said that the paragraph did nothing more than simply repeat the Doha mandate for ambitious liberalisation in both agriculture and NAMA. A group of ten developing countries referred to as the ‘NAMA-11,’ on the other hand, described it as a "moment of inspiration by ministers," one that required Members "to ensure that real [export] opportunities are created for developing countries" while simultaneously taking into account their lower developmental level and capacity to adjust to liberalisation. South Africa, speaking on behalf of the group (which also includes Argentina, Egypt, Brazil, India, Indonesia, Namibia, the Philippines, Tunisia, and Venezuela), pointed to Paragraph 24’s reference to S&D and said that "the percentage reduction in the formula for developing countries should be a proportion of that provided for developed countries."
The NAMA-11, which came together in the run-up to the Hong Kong Ministerial Conference, reiterated its belief that developing countries must have recourse to the ‘Paragraph 8 flexibilities’ in addition to a formula that requires them to make tariff cuts less onerous than those required of developed countries.
Argentina suggests ways to compare ag, NAMA ambition
Although several delegations, including Taiwan, the US, Colombia, Japan and Singapore, suggested that making a numerical comparison between the agriculture and NAMA negotiations was difficult, Argentina outlined some ways to compare the level of ambition in each.
Specifically, Argentina proposed comparing the depth of tariff reduction demanded by different proposals on NAMA and agriculture. For example, the EU’s NAMA approach — a simple ‘Swiss formula’ associated with a coefficient of 10 for both developed and ‘advanced developing’ countries — would slash a 35 percent tariff to 7.78 percent, while its proposal for cutting farm tariffs would reduce an identical duty to only 19.25 percent. Argentina’s calculations indicated that the EU’s agriculture proposal was roughly equivalent to a Swiss formula with a coefficient of 42.78, and that the US and Japan were also pushing for far deeper tariff cuts on industrial goods than on farm products.
Argentina also said that the proportion of trade affected by reduction commitments, along with the percentage of tariff lines exempted, could be used to compare the level of ambition in each area of the talks. It contended that the various exemptions and market access flexibilities that the EU was seeking in its agriculture proposals would allow it to shield a far higher share of agriculture tariff lines and import value from cuts than what was available to developing countries in the NAMA negotiations. Argentina also posited the proposed future maximum tariff levels in agriculture and NAMA as another potential basis for comparison.
The EU, for its part, said that if other countries felt justified in using Paragraph 24 as a basis for not altering their negotiating positions in NAMA, then it too had an excuse for not budging from its position on agricultural market access — since no new offers had been made on NAMA.
Several countries said that a numerical link was difficult in light of the differences between the two negotiating areas, and that Paragraph 24 was more of a political concept that Members would have to interpret.
The NAMA negotiations are likely to feature high on the agenda when ministers from the ‘G-6′ countries — the US, the EU, Australia, Brazil, India and Japan — meet in London from 10-11 March. WTO Director-General Pascal Lamy has suggested that the ministers would have to discuss specific numbers for reductions to industrial and agricultural tariffs as well as farm subsidies if they are to have a chance of pushing the negotiations forward.
The Hong Kong Declaration sets out a 30 April target date for a comprehensive agreement on NAMA modalities. The next NAMA week is scheduled to kick off on 20 March, alongside a week of agriculture negotiations.
ICTSD reporting; "WTO key partners must ‘talk figures’ at forthcoming London meeting - Lamy," AFX NEWS, 8 March 2006.