TWN Info Service on WTO Issues (Dec03/1)

2 December 2003

Third World Network

Dear friends and colleagues,


ON 27 November, a “green room” informal consultation meeting was held on non-agriculture market access (NAMA), convened by the General Council chairman, and involving 30-40 delegations.

According to some delegates, the meeting saw continued polarisation of views, mainly along North-South lines, and especially on the two issues of what formula (if any) to apply to tariff reductions, and on the proposal for tariff elimination in selected sectors.

Below is a report by Goh Chien Yen of Third World Network on the NAMA consultations.

It was published in the South-North Development Monitor (SUNS) of 1 December 2003.

With best wishes

Martin Khor

Third World Network





An informl consultation meeting on  Non-Agriculture Market Access (NAMA) held on Thursday 27 November saw a sharp polarization of views between the developed and developing countries - with positions as far apart as before and at Cancun, and some hardening too.

At the end of the consultations it was clear, trade diplomats said, that the disagreements were on two of the most contentious issues on the framework for modalities for NAMA negotiations: the issue of a formula approach to tariff reductions, and the proposal for tariff elimination on a sectoral basis.

The developed countries, which have shown a ‘low level’ of ambition on agriculture and are against any limitations on their ability to subsidize by shifting existing domestic support to the ‘green box’ and without any caps, demanded in NAMA a very high level of ambition and, in terms of both tariff cuts and sectoral tariff elimination, demanding drastic tariff cuts and market access from the developing countries.

A range of developing countries that spoke, more or less turned down these demands.

According to trade diplomats present, the Chairman of the General Council, Ambassador Carlos Perez del Castillo of Uruguay, began the meeting by informing those present of the several small-group consultations that were held by him on Wednesday.

According to the GC chairman, these discussions were focussed on the level of flexibility and specificity that could be brought to the Derbez text (the revised draft ministerial text put forward by the Chairman of the Cancun Ministerial Conference on 13 September) as it relates to NAMA.

The discussions, Perez del Castillo reportedly told the meeting,  had related more specifically on how and in which direction paragraph 3 (on a formula approach) and paragraph 6 (on a sectoral approach) of the Derbez text could be modified.

In the meeting on Thursday, the major developed countries, in particular the US and EC, stated strongly that they wanted a non-linear formula with a single coefficient to be applied by both developing and developed country members undertaking tariff cuts. They expressed their expectation of a high level of ambition by all members.

Japan, in a reference to paragraph 10 of the Derbez text, also argued that the balance between benefits of existing countries and that of newly acceded countries should be examined. In this regard, newly acceded countries should also undertake more liberalisation in this area.

However, many developing countries conveyed  their opposition to, and unhappiness with the approach of the developed countries for a non-linear formula with a single coefficient to be applied by all.  Several made clear that they could not accept the application of a non-linear formula in making tariff reductions.

On the sectoral approach, which is aimed at eliminating tariffs in selected sectors, the US said that this approach must be made mandatory for all members, including the least developed countries (LDCs). According to the US, this is because some of the products of the LDCs were competitive enough and hence should not be exempted from tariff reductions. Japan supported the US, reiterating the same arguments.

Several developing countries made clear that this was unacceptable and insisted that the sectoral approach should remain supplementary and voluntary. Other developing countries such as Venezuela, India and Indonesia, in this respect also argued that this paragraph (i.e. para 6 in the Derbez text) is unnecessary and should therefore be eliminated, “in view of the widespread misgivings of developing countries on this issue.”

Mauritius, on behalf of the African Group, raised concerns with paragraphs 3 and 6 of the Derbez text. Mauritius said that the sectoral approach should be voluntary and that the paragraph can be eliminated, if necessary. Mauritius also articulated the group’s reservation with the non-linear formula.

In response to the US proposal that LDCs should also eliminate their tariffs in these sectors, Bangladesh, speaking on behalf of the LDCs, pointed out that this was a sharp departure from the Derbez text.  Paragraph 8 of that text said  that “least-developed country participants shall not be required to apply the formula nor participate in the sectorial approach.” Bangladesh insisted that the existing position in the Derbez text should remain, and that the LDCs should not be asked to participate in making tariff reduction commitments envisaged in paragraphs 3 and 6.

India, which has been one of the principal targets of the US and EC, said that given the very wide range of views expressed on the ‘framework’ at the meeting, it was apparent that there has not been any major change in the approaches adopted by Members from the pre-Cancun phase.

It argued that the framework on NAMA, which the members were currently working on, should not constrain future negotiations. The NAMA negotiations should ultimately be seen in the overall context of negotiations that would successfully conclude only if there is a balance of gains and losses for each member.

If at the framework stage, a particular direction is to be given and a particular specificity is to be achieved, then there would have to be more specificity in other areas such as certain modes of delivery in services, in agriculture, on implementation issues and on special and differential treatment questions.

India raised its concern that there had been a mention of ‘harmonization’ which was not a part of the Doha mandate.  It  underscored the “paramount importance” of special and differential treatment and less than full reciprocity  for developing countries, contained in paragraphs 16 and 50 of the Doha Declaration. In this regard, “any framework that is agreed to must acknowledge and reflect the centrality of these elements”, India emphasized.

On paragraph 7 (on special and differential treatment) of the Derbez text, India pointed out that “the flexibilities provided for developing countries do not give options to members to choose from, but restricts and further constrains their policy space.”  Thus, for providing meaningful flexibility and policy manoeuverability, a judicious blend of both the alternatives put forward in para 7 was required.

India said that at this stage of the negotiations, all the formulae put on the table by members in the negotiating process should remain available for discussion in the next stage of negotiations. Paragraph 3 should not exclude any formula already on the table and it must be clearly and unambiguously worded.

India added that the current formulation of para 6 was not clear. Read with para 8, it caused a great deal of concern as the intention to have a mandatory sectoral initiative becomes quite clear.  India felt that para 6 should be eliminated completely in view of the widespread misgivings of developing countries on this issue.

It said that para 11 of the text subsumed the sectoral approach, adding that the sectoral approach cannot be considered as anything apart from being a supplementary and voluntary one.  (Para 11 of the Derbez text deals with the possibilities of supplementary modalities).

On non-tariff barriers,  India pointed out that a negligible amount of work has been undertaken in this area and they were treated in the Derbez text as if these issues were on a separate track. India reminded that “identification and removal of non-tariff barriers is an integral part of the negotiations.”  More focussed attention was required so that the modalities for tariff and non-tariff barriers could be finalised together.

India concluded that it was essential to provide real options to meet the divergent needs of developing countries if the negotiations are to move forward. High levels of ambition are being mentioned when it comes to NAMA, but realism steps in a big way when it comes to negotiations in other areas like agriculture.

India said that ambition could not be unidirectional, aimed solely at forced tariff reductions, completely oblivious to the developmental imperatives in developing countries. At the end of the day, “we have to be very ambitious when it comes to addressing developmental issues which are at the heart of the Doha Development Agenda.”

Argentina and Brazil, in their separate interventions, compared the lack of progress and the lowering of ambitions by the developed countries in agriculture and the progress and the high level of ambition sought in NAMA. The level of ambition in agriculture was low, but that on NAMA was high.

They established a clear linkage between progress in agriculture and that on NAMA.

Any tariff reduction formula must fully reflect the Doha mandate for ‘less than full reciprocity’ requirement for developing countries.

Both countries also came out against any mandatory sectoral approaches.

A number of developing countries also questioned and challenged the proposals on the formula for tariff-reduction and binding on the unbound tariffs in their schedules.

The text now suggests doubling the applied tariff, and then subjecting it to the tariff reduction formula for binding. Some of the developing countries asked why the applied tariff should be only doubled and not tripled or quadrupled or whatever.

Kenya insisted that any formula must reflect fully the requirement for “less than full reciprocity” from developing countries, and should reflect the level of development of the country.

The Philippines disagreed with the same coefficient approach for developing and developed countries. It also insisted on S&D treatment for developing countries, and opposed compulsory participation in sectoral tariff elimination.

There were thus clear divergences of views, especially between developed and developing countries at the meeting.  However, despite this, the Chairman of the General Council saw the meeting as encouraging. According to the Chair, the active participation of the members would help him to develop positions to move the process forward.

Australia and Canada however were less sanguine and raised their concerns about the 15 December senior officials meeting. They were not hopeful that significant outcomes for the negotiating process could be reached by then. They suggested that the elements of the modalities for NAMA could be explored over the course of the following year.

Some trade diplomats said that on the basis of the consultations held so far - on agriculture, on cotton, NAMA, and Singapore issues -  it was difficult to see any convergence. This, they said, raised the question of what could be feasible and possible at this stage. Some doubted whether on this basis senior officials could be asked to come for the 15 December meeting, and perhaps the target date may need to be extended.