Bridges Weekly Trade News Digest • Volume 8 • Number 13 • 8th April 2004

Industrial Market Access Hinges On Agriculture Outcome

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The WTO Negotiating Group on Non-Agricultural Market Access (NAMA) met from 29-31 March, with delegates agreeing to seek to draft a negotiating framework by the end of July this year. The meeting, which failed to make any substantive progress, consisted of formal plenary sessions to start and wrap up the talks on 29 and 31 March respectively as well as of a number of informal open-ended negotiations. Trade sources indicated that progress on key agricultural issues was a precondition for talks on NAMA to move, and until such progress was seen, movement on NAMA would be slow or nonexistent. Any agreement on NAMA would have to reflect the level of ambition agreed in agriculture. The NAMA meeting, which was the first official negotiating session on the topic since the Cancun ministerial, followed a week of agriculture negotiations that had failed to show any concrete forward movement (see BRIDGES Weekly, 31 March 2004).

During the meeting, Stefan Johannesson, Ambassador of Iceland, succeeded Pierre-Louis Girard (Switzerland) as chair of the NAMA group. At the brief final plenary session, he said that in his view, Members had shown they were in "active listening mode," but he had seen "no great movement" nor any "great convergence" in positions.

Gap between ambitious, less ambitious countries remains wide

The informal negotiations focused on the overall objectives of the NAMA negotiations; possible formulas for tariff reduction on industrial goods; the sectoral elimination of tariffs on products of export interest to developing countries; and on the specific concerns of developing countries.

The talks did little to bridge the gap between countries that want to see an ambitious outcome on NAMA, such as the US, the EC, Japan, Canada, Australia, New Zealand, Chile, Costa Rica, Singapore, Hong Kong, Norway, and Switzerland, and those that take a more cautious stance. A number of developing countries coalesced around a principle of "less than full reciprocity in reduction commitments" for developing countries. This group, including Argentina, Brazil, China, Colombia, India, Indonesia, Malaysia, the Philippines and Venezuela, and characterised as a "mini G-20," partially overlapped with the G-20 coalition that had emerged in agriculture talks as a counterweight to the US and EC in the lead-up to Cancun. On NAMA, the group wanted to make sure that talks moved in parallel with agriculture talks, an area of greater strategic interest to the Members. Developing countries generally maintain much higher tariffs on industrial goods than do developed countries.

Members react to US proposal on "blended formula"

During the informal sessions, Members had the chance to react to a proposal by US Trade Representative Robert Zoellick circulated in a letter in January this year (see http://www.ictsd.org/ministerial/cancun/docs/Zoellick-letter.pdf). The proposal, which was part of a wider attempt on the part of the US to jumpstart the Doha round talks, suggested an overall ambitious formula for cutting industrial tariffs, while allowing developing countries some flexibility under a "blended formula" for tariff cuts. The US previously preferred using the so-called "Swiss formula," under which countries make the steepest cuts to their highest tariffs, across the board. Under the "blended formula," developing countries would be allowed to make smaller tariffs cuts for sensitive products. Both formulas are also under discussion in the agriculture talks. US officials explained the rationale behind the blended formula during the meeting, but the initiative did not prompt much discussion or support.

Another proposal from Zoellick’s January letter involved zero-tariff initiatives in sectors where there was "critical mass" to support such an approach. On this proposal, some countries felt that discussing sectoral tariff elimination was premature, and preferred to progress only after the group had agreed on an overall formula for tariff elimination.

The next meetings of the NAMA group are scheduled for 10-12 May and 9-11June. In July, the group is expected to agree on a framework including concepts and formulas for tariff reductions, allowing future talks to progress to detailed numbers and percentages.

ICTSD reporting; "WTO ends nonfarm trade talks with little progress," KYODO NEWS, 1 April 2004; "WTO Members End Disappointing Talks On Access to Non-Agricultural Markets," WTO REPORTER, 1 April 2004; "’Mini G-20′ Emerges to Challenge U.S.-EUPush for Cuts in Tariffs on Industrial Goods," WTO REPORTER, 29 March 2004.