Bridges Weekly Trade News Digest • Volume 8 • Number 39 • 17th November 2004
Differences Persist On How To Structure WTO NAMA Talks
The WTO Negotiating Group on Market Access for Non-Agricultural goods (NAMA) met from 8-11 November to continue discussions on a number of technical issues and on how to organise future work. According to several trade sources, initial disagreements began to emerge on how the work plan for the negotiations should be structured and the order in which three key elements from the July Package (WT/L/579) should be discussed: the general tariff-reduction formula; the sectoral tariff component (involving the full elimination of tariffs in selected sectors); and flexibilities for developing countries.
Developing countries greet Johannesson’s text with scepticism
The NAMA Chair, Ambassador Stefan Johannesson of Iceland, circulated a note to delegations before the meeting with some initial ideas on how the work programme could be structured, stating that "there was broad support" for focusing on the following elements in the first instance: the formula; sectorals; and flexibilities for developing countries (the so-called "tripod"). He also made reference to non-tariff barriers (NTBs) as a fourth element that could be discussed in this first phase.
About 20 developing countries, including Brazil, Thailand, Peru, Ecuador, Venezuela, Argentina, Indonesia, the Philippines, Malaysia, El Salvador, Honduras, the Dominican Republic, and India criticised the statement, saying that they would oppose the "tripod" approach and that they could not negotiate a sectoral component until the formula was agreed. According to the Indian delegation, accepting the initiative would put sectoral tariff elimination at the same level of priority as the establishment of the formula. Furthermore, developing countries reiterated their demands of having the issue of flexibilities for developing countries considered at every stage of the process.
The sectoral initiative (and the work programme proposed by Johannesson) was strongly backed by the US, the EC, Australia and New Zealand. These Members stated that the formula was no more important to the negotiations than the other elements of a future agreement, including a sectoral component.
In this regard, the US mentioned that the July Package did not set out primary modalities and urged delegations not to break the balance inherent in the text. The Australian delegation reacted with disappointment, stating that some developing countries were trying to reinterpret the July Package where both the formula and the sectoral elimination were characterised as "key", suggesting both elements as equally important.
Another issue that stirred debate regarded the participation of Members in the sectoral initiative. Developing countries argued that the July Package stated that "participation by all participants" would be important for achieving the goals set out in the Doha Declaration. The US, on the other had, had proposed the creation of a "critical mass," which would seal the deal on eliminating tariffs for a specific product when a large percentage of countries trading in that product agreed.
No agreement on methodology for tariff conversion
Delegates also discussed the conversion of non ad valorem duties into ad valorem duty equivalents during the NAMA meeting. Ad valorem duties refer to tariffs based on a fixed percentage of the value of imports, while non ad valorem duties are based on volume. The July Package calls for all non ad valorem tariffs to be converted into ad valorem equivalents and bound in ad valorem terms, so that they can be applied to the overall tariff reduction formula.
The US proposed to establish a "subgroup" within the NAMA Negotiating Group to study the technical implications of the conversion and come forward with a formula. However, this idea was opposed by the EC, which argued that this would duplicate efforts already underway in the agriculture negotiations.
The treatment of unbound tariffs in the reduction exercise was also discussed. The July Package calls for all unbound tariffs to be converted into bound tariffs. Sixty Members have more than one percent of tariff lines unbound.
Argentina, India, Singapore, Chinese Taipei and Japan submitted new notifications on non-tariff barriers. Korea made a focused submission on the NTBs faced by its electronics industry (TN/MA/W6/add4).
Reacting to the four days of meetings, one developing country delegate affirmed that NAMA is "an area that we’ve taken for granted, but which could give us more problems than agriculture". Other delegations mentioned that the disagreement was only a normal part of the evolving discussion on how to move forward with the discussions and that they did not expect it to become a great obstacle to further movement in the negotiations.
The next meeting of the Negotiating Group on Market Access is scheduled for 6 December.
ICTSD reporting; "WTO Members Hold Market Access Talks; Members Remain Split on Sectoral Initiative," WTO REPORTER, 11 November 2004.