Bridges Weekly Trade News Digest • Volume 10 • Number 18 • 24th May 2006
NAMA: Members To Turn To Core Issues Even Though Minor Ones Remain Unresolved
Another week of intense negotiations on non-agricultural market access (NAMA) has yielded little concrete progress, Chair Ambassador Don Stephenson (Canada) reported to Members on 19 May.
Despite the absence of agreement on the various minor issues that trade negotiators have been discussing in recent weeks, Stephenson asked them to expand their focus to include the ‘core modalities’ that will determine how much countries will have to cut industrial tariffs, how many products developing countries will be able to shield from the tariff reduction formula, and the treatment of tariff lines not currently subject to binding caps. The chair insisted that an agreement by the middle of June remained "doable."
According to the schedule for six weeks of continuous NAMA negotiations that Stephenson set out at the end of April, Members were supposed to agree on a range of relatively minor issues before turning to the more contentious ones in time to reach an agreement on modalities by 16 June.
They have been unsuccessful so far. Recent consultations have proved inconclusive on issues such as the precise exceptions to standard tariff treatment to accord least-developed countries (LDCs), small and vulnerable economies (SVEs), and countries that have bound fewer than 35 percent of their tariff lines. Nor have they been able to agree, for instance, on whether developed country Members will have to indicate how they will fulfil their obligation to provide duty- and quota-free access to LDC exports when scheduling their product-specific liberalisation concessions, or at some later stage.
Stephenson has nevertheless asked Members to turn their attention to the three core issues, and will hold meetings on them from next week. He acknowledged that the eventual level of ambition in NAMA was inevitably linked to that in the also-deadlocked agriculture talks, but suggested that these discussions could be delayed no further.
One delegate said that turning to the ambition-defining core issues may actually stimulate progress. Discussing exceptions in isolation from the overall package is difficult, the negotiator explained, suggesting that the flexible tariff treatment to grant to, say, SVEs, would be hard to determine without any idea about what flexibilities will be available to all developing countries. Putting exceptions on the backburner and focusing on ambition, therefore, might help.
In any event, Members are deeply divided on the core modalities. The US and the EU have called for developing countries to use a ’simple Swiss’ tariff reduction formula associated with a coefficient of 15. This would slash all of their industrial tariffs to below 15 percent, with higher tariffs reduced more sharply. It would also require cuts to tariffs already bound below that level. While Brazil and India remain formally committed to a formula that would link each Member’s future tariffs to its current average tariff level (see BRIDGES Weekly, 20 April 2005), they have informally suggested that they could accept a 30 percent cap for developing country tariffs. A coefficient of 15 would cut a 10 percent tariff to 6 percent; a coefficient of 30 would lower it to 7.5 percent.
The US and the EU have proposed an absolute tariff ceiling of 10 percent for developed countries. Brazil and India have argued that a coefficient of 15 would force developing countries to make far greater adjustments than a coefficient of 10 would require of industrialised countries.
Furthermore, several developing countries insist that they should be allowed to designate no fewer than 10 percent of products for tariff cuts that are half those required by the overall formula, or to exclude 5 percent from reduction commitments altogether, under the provisions of Paragraph 8 of the NAMA mandate set out in Annex B of the July 2004 Framework (WT/L/579). However, most developed countries and some developing ones believe that Members should have to give up access to these flexibilities in return for a higher formula coefficient (and thus future tariff ceiling).
Sources report that Stephenson denied rumours that he was planning to table a ‘chair’s text,’ i.e., a draft set of potential compromise modalities, by emphasising that it was simply impossible at this juncture. Members would need to narrow the differences between their positions to give him enough material to develop a text to put forward under his own responsibility, he indicated. Stephenson told delegates that while a final decision on numbers might have to be left to ministers, they should set the stage for such a decision by resolving enough of the underlying issues to make a fairly detailed text possible.
Some delegates had been hoping for a measure of guidance on ways out of their current impasse from the 23-24 May meetings of senior trade officials from several influential WTO Member countries on the sidelines of the Organisation for Economic Cooperation and Development (OECD) summit in Paris. However, little of substance emerged from those discussions.
The chair is expected to continue his consultations this week, with very small gatherings bringing together the strongest supporters of some proposals and their most vocal opponents, in addition to meetings open to all delegations. Stephenson will also hold so-called ‘confessionals’ with individual delegations during which he will ask precise questions about their ‘bottom lines’ in the negotiations. Discussions on the core issues — the formula, flexibilities for developing countries, and unbound tariffs — will start from 29 May.
ICTSD reporting.