Bridges Weekly Trade News Digest • Volume 10 • Number 11 • 29th March 2006

Turkey Makes Controversial Bid To Shield Textiles From Full NAMA Tariff Cuts

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A Turkish proposal to effectively carve textiles and clothing out of the general tariff reduction formula for industrial goods in the Doha Round has provoked angry opposition from several major textile exporters such as China and Pakistan, and surprise from WTO Director-General Pascal Lamy.

During the recent week of non-agricultural market access (NAMA) negotiations (see related story, this issue), Turkey hosted a meeting on 23 March where it called for tariff ‘harmonisation’ in the textiles and clothing sector. Based on the precedent that Turkey cited in an informal paper on the issue — a Uruguay Round-era agreement on ‘harmonising’ chemical tariffs — this would require Members participating in the initiative to establish a common range of tariffs for certain types of textiles and clothing. Turkey specifies that "all competitive producers" would have to be part of the initiative for it to benefit "all developing countries." The paper also identifies the types of textiles and clothing that Turkey would want to see covered by such a carveout.

The Turkish approach would produce effects very different from those that would result from applying the mathematical formula for tariff reduction to individual tariff lines. Turkey contends that it would allow some kinds of textiles to be shielded from the full force of the NAMA tariff cutting formula, while allowing others to be cut by more than the formula demands. The other sectoral initiatives in the NAMA negotiations are seeking uniformly deeper cuts to tariffs, or their elimination altogether.

At the meeting, several Members criticised the proposal, arguing that it went against the liberalisation objectives in the Doha Round NAMA mandate. China accused Turkey of trying to resurrect quotas in textile and clothing trade after their expiry at the start of 2005; Pakistan, too, slammed the proposal for seeking to go back on the hard-won integration of textiles into the WTO system (see BRIDGES Weekly, 26 January 2006). Hong Kong pointed out that the ‘Swiss’ structure of the overall tariff reduction formula would already have a strongly harmonising effect on tariffs. The EU expressed support for a different kind of sectoral initiative on textiles — for tariffs to go as close to zero as possible.

During the week, Jordan, Mauritius, Sri Lanka, and Tunisia expressed support for Turkey, which claims the support of several more Members for its approach. In its paper, Turkey said that textiles and clothing merited special treatment "since the economies of developing countries are highly dependent on those sectors," noting that in many developing and least-developed countries, they account for close to 80 percent of exports and 50 percent of employment. Several countries that benefit from preferential access to rich country textiles markets feel that sharp tariff cuts could erode the value of their preferences, and leave them unable to compete on the global market.

Textiles manufacturers from several WTO Member countries, including the US, have long been lobbying for shallow tariff cuts of the sort envisioned by Turkey. Nevertheless, the US has yet to make up its mind on the Turkish initiative. US Trade Representative Rob Portman did not rule out support for the proposal on 28 March, referring to it as "constructive."

Lamy, for his part, told journalists on 28 March that partially exempting textiles and clothing from tariff cuts would "be very strange," and said that "a large part of the Members" shared his view. "This would be a new animal — a NAMA-minus — in a negotiation where we have always structured the thing so that there may be NAMA-plus," he said.

ICTSD reporting; "WTO chief Lamy calls Turkey textile plan "strange," REUTERS, 28 March 2006; "USTR Calls Turkish Textile Proposal ‘Constructive,’ ‘Helpful’ to WTO Talks," WTO REPORTER, 29 March 2006.