Bridges Weekly Trade News Digest • Volume 6 • Number 29 • 6th August 2002

Differing Viewpoints Over Modalities Characterise WTO Market Access Talks

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At the first of four remaining meetings for 2002 of the WTO Negotiating Group on Market Access, Members addressed different approaches to how market access talks on industrial goods could be structured, including ways to tackle tariffs, non-tariff barriers, developing country concerns and environmental goods. The EC, Japan, New Zealand, S. Korea and the US all submitted proposals for discussion.

Background

On 18 July, Members agreed to submit proposals on modalities for market access negotiations by the end of 2002, and to agree on "a possible outline on modalities by the end of March 2003, with a view to reaching agreement on modalities by 31 May 2003" (see BRIDGES Weekly, 24 July).

The Doha mandate commits Members to "reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of interest to developing countries…The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments." At the beginning of March 2002, Members also decided that negotiations on environmental goods would take place in the Market Access Group, to be monitored by the special session of the Committee on Trade and Environment (CTE).

How to negotiate?

A variety of options for structuring market access talks emerged in the proposals and ensuing discussions at the 2 August meeting. In its submission (TN/MA/W/6, available online at http://docsonline.wto.org), South Korea said it would "prefer pursuing a formula approach, with limited use of the request-offer approach, when necessary." Formula- based modalities, said Korea, would bring about the greatest comprehensive tariff reduction for all Members. A formula approach, or linear tariff cuts of equal magnitude, is usually expressed in a percentage cut across whole classes of products. A request-offer approach usually proceeds on the basis of bilateral requests and offers, with results extending to all other WTO Members on a most- favoured nation basis.

Korea’s position was supported by Japan (TN/MA/W/5), whose paper said that a formula approach would be an effective means to reach agreement in a short timeframe [such as the 1 January 2005 deadline for the Doha round]. However, it qualified this by noting the importance of reducing tariffs to a certain targeted level corresponding to countries’ level of development, saying that in the case of developing countries, the degree of development and competitiveness of each Member should be carefully analysed.

China, India and Kenya told the Negotiating Group that they preferred a request-offer approach. Kenya said that many developing countries were not in a position to open their markets in a linear manner due to their weak industrial base, noting that it feared the possibility of de- industrialisation as well as lost revenues for the day-to-day functioning of the government if it were to significantly reduce import tariffs on industrial goods.

The EC’s submission (TN/MA/W/1) showed some flexibility, and noted that while there are different ways to reducing tariffs, "the modality to be chosen has to bring about the greatest possible reductions across the board for Members." According to the EC, the most important goal of the negotiations should be to bridge the gap between applied and bound tariffs.

Reductions in tariff peaks and escalation called for

A number of Members agreed that the issue of tariff peaks and tariff escalation should be a priority. India, China, and Kenya indicated that there was a need for special and differential treatment for developing countries in this area, as high tariffs on value-added goods impacts most on poorer countries with weak industrial bases. The EC and Japan targeted the reduction of tariff peaks, though they appeared less sanguine about reductions in tariff escalation.

Environment

In addition to a proposal on tariff and trade data needs assessment, the US submitted its 3 July paper on the need to provide greater market access for environmental goods (TN/MA/W/3), reviewed in BRIDGES Weekly, 17 July 2002). Inter alia, the submission argued for greater coordination between the WTO’s Committee on Trade and Environment and the Market Access Group in order to obtain substantial market access for environmental goods. This was echoed in Korea’s paper, which pointed out the need for "reinforced cooperation with the CTE as well as among Members" to negotiate on market access for environmental goods. Malaysia pointed out that negotiations on environmental goods did not imply agreeing to environmental standards for various industrial products.

Non-tariff barriers

In its submission, New Zealand (TN/MA/W/4) said that the Negotiating Group should focus on identifying non-tariff barriers, as these posed a serious threat to further liberalisation of trade in industrial goods, identifying a number of non-tariff barriers present in WTO Members’ trading regimes. Korea also said it wanted different categories of non- tariff measures to be "clearly defined and listed up, while ways to identify individual non-trade barriers belonging to such categories should be agreed on at the outset of the negotiations."

ICTSD reporting; "WTO Members Discuss Market Access For Industrial Products, Tariff Treatment," WTO REPORTER, 5 August 2002.