TWN Info Service on WTO and Trade Issues (Jul15/27)
30 July 2015
Third World Network
 
Members "quite far from convergence" on NAMA, says Chair
Published in SUNS #8070 dated 27 July 2015
 
Geneva, 24 Jul (Kanaga Raja*) -- The Chair of the Negotiating Group on Market Access for Non-Agricultural Products (NAMA) has reported that members are "quite far from convergence" and are "not in negotiating mode".
 
The Chair, Ambassador Remigi Winzap of Switzerland, gave this assessment Thursday at an informal open-ended meeting of the negotiating group, convened to take stock of the latest situation in the NAMA negotiations.
 
Meanwhile, at an informal meeting on the services negotiations, members have started to focus on the potential next steps for an outcome on services at the upcoming Nairobi Ministerial Conference (see below).
 
According to trade officials, the NAMA Chair said that no new concrete proposals have been made and members had just reaffirmed their previously known positions.
 
His conclusion was that members were not in a negotiating mode nor in a mood to compromise.
 
The Chair was of the view that the negotiating group should not be spending more time in meetings like this.
 
While members were afraid to put things on the table (in reference to new proposals), they did not like the Chair to do it either, said Ambassador Winzap.
 
The Chair considers that the main challenge in the NAMA negotiations is the fundamental and contradictory position of members on the Rev. 3 draft modalities text, which has the "Swiss formula" of tariff reductions at its core.
 
Some members want to stick to this document, while others consider that it has elements that should be saved. Some others insist that it is not acceptable as a basis for negotiations.
 
Some continue to defend the Swiss formula, while others consider it to be unacceptable because of the "severe" tariff cuts that it would produce.
 
According to the Chair, at least in the last few months, a consensus has emerged in the sense that the Least Developed Countries and Small Vulnerable Economies should not be asked to do more than what was envisaged in Rev. 3, and that the principles of Less Than Full Reciprocity in reduction commitments and Special and Differential treatment are concepts generally accepted by the membership.
 
According to trade officials, many developing countries underlined the difficulty in taking decisions on NAMA while there was a disappointing situation in the agriculture negotiations and what many viewed as "a lowering in the level of ambition in the Agriculture talks".
 
These included Venezuela, on behalf of the Bolivarian Alliance for the Peoples of Our America (ALBA, comprising Bolivia, Cuba, Nicaragua and Venezuela), South Africa, Barbados, Indonesia, Argentina, Uruguay, Brazil, Pakistan, Paraguay and India.
 
These countries also referred to the "lack of clear signals" in Agriculture that prevent NAMA negotiations from moving forward.
 
According to trade officials, developing countries also insisted on a strong link between the Agriculture and NAMA negotiations, in particular in respect of the level of ambition.
 
India said we need to know the impact of possible alternative ideas. It did not want any more simulations, as everyone knows the effect of the situation on technical grounds. The problem is political, not technical, India said.
 
Lesotho, on behalf of the African Group, said that special and differential treatment (S&D) is fundamental and members need to stick to the mandate.
 
According to information provided by some delegations, the major developing countries challenged the developed countries to explain why they should adopt an average formula framework derived from the results of the 2008 revised draft modalities for market access for industrial goods.
 
Many developing countries severely opposed the average formula framework based on the Swiss approach. They said this is not sustainable when the level of ambition is being lowered in agriculture by adopting simple percentage cuts, but push for adopting an average framework in NAMA market access, based on the Swiss harmonizing framework.
 
South Africa called for adoption of the Uruguay Round approach in which the developed countries undertake higher percentage cut than the developing countries to overcome the difficulties posed by the Swiss formula.
 
Members largely reiterated their previous position either in support of the new average formula framework based on the results derived from the Swiss formula or adhering to the 2008 revised draft modalities with flexibilities to so address tariff peaks and tariff escalation.
 
Ahead of the meeting, the chair had sought to know from the so-called formula-applying industrialized and developing countries whether they have an understanding to move away from line-by-line cuts and under what conditions they can depart from such cuts. In case members could agree to depart from the application of a Swiss formula for tariff cuts, "should there be a link or not to Rev. 3 [the 2008 revised draft modalities] in determining the level of cuts," the chair asked.
 
Except Argentina, which provided a concrete request-and-offer approach, there are no proposals in writing from any member until now.
 
Although there has been considerable discussion on the so-called average formula framework in the closed-door meetings convened by WTO Director-General Roberto Azevedo as well as meetings of select trade envoys convened by Canada, nobody appears to have given the average formula framework in writing.
 
The chair urged members to table their proposals so as to advance the negotiations instead of restating their known positions, said a participant familiar with the meeting.
 
The European Union made a strong case for an average formula framework, saying that it would be beneficial for developing countries. The EU said it is not asking for a line-by-line cut as part of the average formula framework based on the results derived from the Swiss formula. Members will have the flexibility to decide the tariffs on which they are willing to cut because of the average formula framework, the EU said.
 
Further, the average formula cuts will not bring down tariffs to the current applied rates, the EU argued. It insisted that results from the Swiss formula must become the basis for the average cuts as there is no time for starting from scratch.
 
The US said it is ready to explore alternative options but is not prepared to agree to a proposal that would involve "removing its blood while others remove only water," according to a participant present at the meeting.
 
South Africa made a dispassionate case against the Swiss formula which went against the less-than-full-reciprocity requirement of the Hong Kong Ministerial Declaration of 2005. South Africa criticized the average formula cuts based on the results derived from the Swiss formula in the 2008 revised draft modalities.
 
Instead, members could settle for a Uruguay Round approach involving a higher percentage cut for industrial tariffs in the industrialized countries and lower cut for the developing countries, South Africa argued.
 
China said it is willing to discuss new approaches but its preferred option is the 2008 revised draft benchmarks. China also said any new approach must address tariff peaks and tariff escalation.
 
India asked the proponents of the average formula framework for clarity on various elements such as depth of cuts, the manner in which reduction commitments are determined, the extent of binding coverage, modalities for unbound lines, treatment of non-ad valorem duties, and degrees of flexibilities.
 
SERVICES TALKS
 
At an informal meeting of the Special Session of the Council for Trade in Services also held on Thursday, according to trade officials, most members were doubtful that a work programme on services could be finalized by 31 July, the deadline set at the 27 November 2014 General Council meeting.
 
The ACP Group said that it is working on a collective paper highlighting further the Group's position on what the work programme should entail in services.
 
According to trade officials, some delegations including Korea, Saudi Arabia and Mexico said that missing the July deadline would not mean the end of the world.
 
They were hopeful of a services outcome at the Nairobi Ministerial Conference in December, which would focus on domestic regulation and market access, while anchoring a strong development dimension with flexibilities for developing countries.
 
According to trade officials, several members including Australia, Canada, Chile, China, Chinese Taipei, the European Union, Hong Kong-China, Iceland, Japan, Korea, Mexico, New Zealand, Norway, Pakistan, the Philippines (on behalf of the "Friends of Emergency Safeguard Measures" group, comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Viet Nam), Singapore, Switzerland, Turkey and the US said that this objective would only be reached if intensified negotiations resume immediately after summer.
 
Several members noted that the services negotiations are more advanced than the agriculture and NAMA negotiations on account of the work that members had already undertaken in this area.
 
According to trade officials, the ALBA (Bolivarian Alliance for the Peoples of Our America) nations, Argentina, Brazil, India and South Africa were of the view that the level of ambition cannot be raised any further until the "landing zones" in agriculture and NAMA are clear.
 
South Africa reiterated its reservations on the market access negotiations, saying that its 2006 offer remains the final offer on the table. It said that it is looking to find "acceptable" ways to discuss market access in the broader context of the DDA.
 
According to trade officials, India said that it is unfortunate that there is no work programme on services. It is a natural outcome given the lack of progress in agriculture and NAMA. A work programme would have been ideal, it added.
 
According to India, members will now have to think about how best to advance the negotiations in September, keeping the other core areas in mind. It reiterated its call for Annex C (of Hong Kong Ministerial Declaration) to be used, and that flexibilities in market access have to be ensured.
 
According to trade officials, Uganda, on behalf of the Least Developed Countries (LDC), reminded members of the agreed deadline of 31 July on notifying how members who are in a position to do so intend to provide preferential treatment to LDC services and service suppliers.
 
So far, the Council for Trade in Services has received notifications from Canada, Australia, Norway, Korea and China.
 
The Chair of the Special Session, Ambassador Gabriel Duque of Colombia, is expected to make a report on progress on the services component of the post-Bali work programme to the Trade Negotiations Committee (TNC) on 31 July.
 
(* With inputs from D. Ravi Kanth.) +