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TWN Info Service on Trade and WTO Issues (Dec08/06)
5 December 2008
Third World Network

Trade: Argentina submits proposal on NAMA
Published in SUNS #6601 dated 1 December 2008

Geneva, 28 Nov (Kanaga Raja) -- Argentina, in a communication to WTO members dated 25 November, has set out a basis on which it would be able to move ahead on a set of modalities in non-agricultural market access (NAMA) involving a Swiss formula coefficient of 35 and flexibilities of 16% of NAMA lines, with a 50% cut and no trade value limitation.

Argentina said that this contribution was on the assumption that sufficient progress is made in the agriculture negotiations.

In its communication (TN/MA/W/109), Argentina said that this is a significant contribution and its best effort in the present international circumstances and the current negotiating context.

Alternatively, said the Argentinian paper, in the case of a coefficient of less than 35 but greater than 25, the flexibilities required by Argentina would be: 16% of lines subject to a 50% cut; and 8% of lines not subject to cuts.

Argentina said that it is fully committed to the Doha Round negotiations, and endorsed the objective that the final agreement should be consistent with the development mandate and remedy the imbalances in the multilateral trading system resulting from asymmetry in the treatment of agricultural products vis-a-vis non-agricultural products.

Specifically, and in order to prevent a further deepening of the disparity of treatment between Agriculture and NAMA, Argentina considers it essential that the outcome of the Round, whatever it may be, should be in keeping with the provisions of paragraph 24 of the Hong Kong Ministerial Declaration in ensuring a comparably high level of ambition in market access for Agriculture and NAMA.

In this connection, said the paper, "neither the draft NAMA modalities of July
2008 nor the Director-General's proposal included in his 'package' of 25 July 2008 are consistent with the principle of less-than-full reciprocity in reduction commitments, nor do they comply with paragraph 24 of the Hong Kong Ministerial Declaration."

"This is compounded by undue demands to limit flexibilities, impose 'anti-concentration' rules, and require mandatory participation by certain developing countries in sectoral agreements. All of this runs counter to the principle of special and differential treatment in favour of the developing countries," said the paper.

In Argentina's view, current circumstances demand that the outcome of the negotiations, whatever it may be, should contribute to trade liberalization whilst allowing the developing countries to maintain moderate tariff levels and preserve the space they need to implement their policies aimed at expanding and diversifying the production base, increasing employment, and guaranteeing social stability and progress.

"This is the only way for developing country markets to continue making a dynamic contribution to the rise in global demand, in a context of financial crisis with its clear symptoms of international economic recession."

According to the paper, the manufacturing industry, which accounts for approximately 17% of Argentine GDP, was one of the main engines of Argentina's economic recovery following the crisis suffered by the country in 2001 and 2002.

From then on, the number of jobs in the industrial sector rose by 8% per year, from 773,036 in 2002 to 1,130,858 in 2007. As a result of economic recovery, the value of industrial goods imports underwent a continuous increase from $7,683 million in 2002 to $38,971 million in 2007, representing an annual growth rate of 38%.

Argentina said that the deficit in the industrial goods trade balance went from $86 million in 2002 to $21,648 million in 2007, a figure that cannot continue to rise at the same pace without jeopardizing the country's further growth and social stability.

According to Argentina, the key element which explains its positive contribution to global demand is economic growth, not an excessive reduction in tariffs. Argentina currently has moderate industrial tariffs, which fosters the major increase in trade flow mentioned above.

The relative importance of tariffs as an industrial policy instrument is linked to acceptance and implementation of multilateral disciplines restricting the use of other tools such as subsidies, quantitative restrictions, regulations governing foreign investment, and directed lending schemes.

Many of these other tools are, however, used in agricultural production and trade in the developed countries, thus limiting Argentina's ability to benefit from the high competitiveness it enjoys in this area, the paper noted.

Indeed, said Argentina, the major economic powers will maintain a high level of protection for products of commercial significance to Argentina, even after implementing the undertakings negotiated in the Doha Round.

This is because of the differences in cuts pertaining to sensitive products, a situation that is further aggravated by the persistence of strongly managed trade, given the diversity of protection instruments, including tariff quotas. The reduction provided in the negotiations in respect of these quotas does not, for the time being, narrow the gap between in-quota and out-of-quota tariffs.

As far as the industrial sector in the developed countries is concerned, the granting of high subsidies to the automotive and other industrial and services sectors is currently under review in order to address the global financial crisis.

The implementation of such measures would considerably alter competitive conditions for countries, such as Argentina, which do not or cannot grant subsidies.

"It is therefore all the more important that tariff reduction in NAMA by the developing countries should be consistent with the proposals set out in this document, including the possibility of exempting from tariff reduction sectors benefiting from subsidies in the developed countries."

In view of the above, said the paper, and assuming that sufficient progress is made in the Agriculture negotiations, Argentina confirmed that it will be able to move ahead on a set of modalities involving a Swiss formula coefficient of 35 and flexibilities for 16% of NAMA lines, with a 50% cut and no trade value limitation.

This is a significant contribution and Argentina's best effort in the present international circumstances and the current negotiating context.

Alternatively, in the case of a coefficient of less than 35 but greater than 25, the flexibilities required by Argentina would be the following: 16% of lines subject to a 50% cut; and 8% of lines not subject to cuts. +

 


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