Bridges Weekly Trade News Digest • Volume 8 • Number 42 • 8th December 2004

Developed, Developing Countries Disagree On Industrial Market Access Approach

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Developing country Members continue to disagree with a US-led group of developed countries on how to go about reducing import tariffs on industrial and consumer goods. The first two days of the 6-8 December meeting of the WTO Negotiating Group on Non-agricultural Market Access (NAMA) saw discussions on the July Package’s mandate; the third day’s talks focused largely on non-tariff barriers.

Sources said that the "totally multilateral" informal sessions on 6-7 December allowed several delegations to express their views on the framework for establishing NAMA negotiating modalities set out in Annex B of the July Package. They hoped that the open discussions would help Members identify common ground on which to move forward.

Members divided on sectoral, formula-based approaches

In spite of the participatory nature of the discussions, Members remain broadly divided on whether to first focus on developing a tariff-reduction formula that would apply across the board, or to first pursue a ’sectoral’ initiative that would sharply reduce or eliminate import tariffs on certain products.

Proponents of the sectoral approach — including the US and Canada — argued that such a strategy had been successful in the past, pointing to agreements on toys and raw materials such as paper products and steel. Sectoral agreements for various products already exist among a number of primarily developed country WTO Members. Informal discussions organised in November by the US, Canada, and Hong Kong suggested that a sectoral initiative could encompass products of export interest to developing countries, such as chemicals, machinery, leather goods, and gems.

Developing countries remained generally unconvinced of the merits of the sectoral approach, arguing that Members should devote their energies to developing a tariff-reduction formula. China did not find the existing sectoral agreements to be as successful as the US-led countries were arguing; along with India, it argued that a sectoral initiative might not even be necessary if an agreed formula cuts tariffs substantially enough. Brazil demanded that participation in a sectoral initiative be voluntary. Several developing country Members fear that a sectoral approach could leave them facing high tariffs in areas of importance to them, since it is not clear how sectors would be chosen. They also believe that they may not have the research capacity necessary to evaluate the effects of liberalising certain sectors.

The informal discussions explored many gaps in the discussions. Supporters of sectoral liberalisation talked about a ‘critical mass’-based approach that would see tariffs on a product eliminated when a sufficiently high percentage of countries trading in it agree to participate in the initiative. They argued that this would address Brazil’s desire to keep participation voluntary. Some countries asked the WTO Secretariat to prepare some studies on the sectoral approach, looking at whether such initiatives have ever been successful in the past.

Non-tariff barriers discussed on 8 December

The 8 December session was occupied by discussions on non-tariff barriers (NTBs). The Secretariat has prepared a document classifying NTBs notified by Members on the basis of the WTO Agreements to which they pertain. Members discussed whether each NTB should be dealt with within the relevant body (e.g., the Committee on Sanitary and Phytosanitary Measures or the Committee on Technical Barriers for Trade) or whether NTBs should be discussed as a whole by the NAMA group. Kenya and the EC support the latter approach. The US suggested that the Chair could hold consultations on NTBs with smaller groups of Members. New Zealand said that Members are obliged to ensure that NTBs are legitimate under WTO law.

Given the absence of consensus on how to change the process for dealing with NTBs, the Chair decided that work will simply continue as it has been proceeding.

The Negotiating Group on NAMA is scheduled to meet next at the end of January 2005.

ICTSD reporting; "US-Backed Sectoral Initiative Continues to Face Opposition at WTO NAMA Talks," WTO REPORTER, 8 December 2004.