News and Analysis • Volume 12 • Number 20 • 4th June 2008

NAMA Chair Suspends Talks Citing Utter Lack of Progress

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The chair of the deadlocked WTO talks on manufacturing tariffs on 2 June suspended meetings of the negotiating group, telling delegates that further gatherings would be pointless following a week of discussions in which they did not seriously attempt to move towards a compromise.

If anything, divisions had actually seemed to worsen, said Canadian Ambassador Don Stephenson, who mediates the Doha Round negotiations on non-agricultural market access (NAMA). He called on countries to meet amongst each other to try to develop compromises that could then be brought to the multilateral table.

The failure to bridge differences does not bode well for Members’ ongoing push to strike framework accords on agriculture and NAMA by June or July, or for the ostensibly soon-to-start ‘horizontal process’ of cross-sectoral tradeoffs intended to prepare the ground for ministers to finalise these ‘modalities’ agreements, said one official.

However, sources report that officials from some countries appear to be preparing to meet outside the WTO, to see if a way forward can be found.

The week of talks had focused on an updated template for a potential NAMA deal that Stephenson had circulated to Members on 19 May.

That draft text provided multiple potential options for dealing with the central issues in the negotiations, notably the ‘coefficients’ for the formula that will determine countries’ future tariff levels and ‘flexibilities’ for developing nations alone to shield some products from the full force of duty cuts. It also included possibilities for according some specific countries and customs unions special treatment (see BRIDGES Weekly, 21 May 2008, http://www.ictsd.org/weekly/08-05-21/story2.htm).

The text drew complaints from both ends of the spectrum in the talks. The US and the EU claimed that it would not expand access to developing country markets, while the NAMA-11 group (which includes Argentina, Brazil, India, and South Africa) countered that developing nations were still being asked to cut their manufacturing tariffs by a deeper margin than the industrialised world.

Stephenson reminded the negotiating group that a week earlier, many Members believed that “there were too many unresolved issues” for the text to go to ministers, a view that he shared (see BRIDGES Weekly, 28 May 2008, http://www.ictsd.org/weekly/08-05-28/story2.htm). But during subsequent discussions among the entire Membership as well as smaller groups, he said that instead of narrowing gaps, “you have actually made it worse. You have re-opened issues, you have maintained extreme positions… in a couple of instances taken even more extreme positions, and introduced new proposals.”

Audibly exasperated - a recording of his concluding remarks is available on the WTO website - the chair said that despite “a couple of interesting discussions… you certainly achieved nothing - nothing inside the negotiating group, and nothing outside it.”

“It remains as it was last Tuesday, a text in search of a negotiation,” he said.

Explaining his decision to stop convening meetings, Stephenson said that the week’s discussions had demonstrated that it was “useless to continue in this manner, that is to say, relatively large meetings in which there is not much more engagement than prepared statements.”

Instead, he said “it’s time for the Members and their senior officials to take responsibility for the negotiations in NAMA… to work to bridge their positions.” He added that he would schedule “no further meetings until Members signal to me that they have achieved some convergence on the issues, and they would like an opportunity to bring that convergence to the wider Membership.” He stressed that he would remain available to support countries in such endeavours.

Main issues ducked, differences repeated

Sources said that in meetings held on various issues in the NAMA talks last week, countries largely repeated well-known positions. The most contentious figures - those that will determine countries’ future tariff levels and the extent of developing country flexibilities - were not even discussed.

Members of Mercosur, a trade bloc comprising Argentina, Brazil, Paraguay, and Uruguay, explained how they would be affected by their controversial proposal to exclude intra-customs union trade from import value limitations on the flexibilities. Other countries continued to oppose this, fearing that this would leave them more room to shield products from tariff reduction.

The developing countries that currently have binding caps on fewer than 35 percent of their tariff lines, including Nigeria, Cameroon, Sri Lanka, and Mauritius, asked to be allowed to bind the majority of their tariff lines at an average of 32.6 percent instead of the 28.5 percent provided for in Stephenson’s recent paper.

Small and vulnerable economies, another group of developing countries that is slated to receive gentler tariff treatment than the 30-odd states that will use the standard tariff reduction formula, asked for their future tariff levels to correspond to the highest figures provided for in the text. The US, with some support from other industrialised countries, pushed for figures towards the lower end of the ranges set out by Stephenson.

Preference erosion was another subject of disagreement during the recent talks. The draft text contains options for the US and the EU to receive an extended implementation period of seven to nine years for tariff cuts on several products, mostly types of clothing such as t-shirts, in order to soften the blow of liberalisation for countries - generally among the world’s poorest - that have benefited from preferential access to the two giant markets. Some of these goods, especially the textiles, are among those that the US and the EU protect most heavily, backed by influential lobbies. Sources say that the NAMA-11 group called for ensuring that developing countries’ own access to the EU and the US markets - often preferential, albeit under relatively less generous schemes - would not be affected. Alternatively, developing countries could be allowed grace periods for some products of their own choosing.

Officials to meet outside WTO?

Some delegates agree with Stephenson on the inefficacy of the current process. “At the level of the negotiating group, we can’t do anything,” one told Bridges.

Another trade diplomat said that there is “a realisation that there needs to be other ways to do this,” since the chair-led discussions are not yielding progress. Several countries are starting to feel that “we’re not going to do anything in these ‘Room D’ (small group) configurations.”

This official attributed some of the acrimonious tone of recent weeks to the fact that countries were unsure about how they stood to be affected by the various new proposals in the text. Negotiators need to know what they are agreeing to in order to assess whether it might be deemed acceptable back home, the delegate explained.

Delegates and possibly capital-based senior officials from some countries are reportedly planning to meet outside the WTO to discuss the NAMA negotiations. These talks might involve countries such as the US, the EU, Brazil, China, Mexico, India, Canada, and South Africa, among others, sources suggest.

Details about the timing of such talks - or indeed if they will take place at all - remain unclear. However, senior trade officials from several countries are expected to arrive at WTO headquarters in Geneva starting 9 June.

Even before that, ministers from the world’s major trading nations will have an opportunity to discuss the Doha Round negotiations in Paris this week, at the Organisation for Economic Co-operation and Development’s annual summit. The rich countries’ club has invited ministers from Brazil, China, India, Indonesia, and South Africa to take part in its yearly gathering, which is set to focus on trade, climate change, and the global economy.

ICTSD reporting.