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TWN Info Service on WTO Issues (July04/3)

11 July 2004

Third World Network

Chair of NAMA negotiations announces intention to use Derbez Text as basis for NAMA part of July package

On 8 July, an informal meeting was held on non-agriculture market access (NAMA) at which the Chair of the Negotiating Group on NAMA, Ambassador Johannesson of Iceland announced that he would forward the Annex B of the Derbez text on NAMA to the Chair of the General Council, Japanese Ambassador Shotaro Oshima and the Director General Dr. Supachai to form the NAMA section of the July Package, according to trade diplomats who were at the meeting.

This decision was met with disappointment by several delegations from developing countries, especially those which had spoken up against key points contained in the Derbez text’s Annex B.    Their objections to the Derbez text’s points (including a non-linear formula for tariff reduction, a sectoral approach to tariff elimination for selected sectors, and the use of existing ap[plied rates as the basis for binding tariff lines that are unbound) had been made in several submissions and presentations in previous meetings in and outside the WTO.   

 

Below is a report by Goh Chien Yen of the Third World Network on the informal meeting on NAMA held on 8 July.

 

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Annex B of Derbez text to be the basis for July Package for NAMA?

TWN Report by Goh Chien Yen, 9 July 2004

 

The Chair of the Negotiating Group on Market Access, Ambassador Johannesson of Iceland announced on 8 July during an informal meeting on non-agriculture market access (NAMA) that he will forward the Annex B of the Derbez text on NAMA to the Chair of the General Council, Japanese Ambassador Shotaro Oshima and the Director General Dr. Supachai to form the NAMA section of the July Package, according to trade diplomats.  Supachai and Oshima are drafting the first draft of the July package which is expected to be ready no later than the middle of next week

Johannesson acknowledged however during the meeting that most members are unhappy with Annex B of the Derbez text.

[The Kenyan delegation pointed out during the TNC meeting last week that the African trade ministers have highlighted explicitly the inappropriateness of the Derbez text and its annex in relation to NAMA as the “proposals contained in the Derbez text and its annex on NAMA are in contradiction of the principle of less than full reciprocity as enshrined in the Doha mandate and as such would deepen the crisis of de-industralisation and accentuate the unemployment and poverty crisis in our countries.”]

Amb. Johannesson informed members that he would therefore submit Annex B together with a covering letter that would highlight the key areas of contentions and concerns of the members.

He added that in the letter, he would specify areas where more work needs to be done now towards the July Package and the work that will be done after the end of July.

He sensed, based on his consultations, that there is an agreement on a formula to be applied on a line-by-line basis, which incorporates the notion of less than full reciprocity. Amb. Johanssen said that the formula would be worked out in the post-July phase of the negotiations.

Some developing country delegates are however puzzled as they said that they had informed him during the consultations earliar in the week that they would have difficulties in accepting a formula in making their tariff reduction commitments. 

He pointed out that members have different perceptions on paragraph 6 of Annex B of the Derbez text on the sectoral tariff elimination approach.  Under this approach sectors identified during negotiations will have their tariffs reduced to zero. According to the Chair, some members think that the current Derbez text calls for this approach to be made mandatory, while others argue that this approach is to be undertaken on a voluntary basis. He said that he would bring in the idea of “critical mass” in his letter to address the differences between the members on this matter.

On paragraph 5 of Annex B, which exempts some developing countries from an eventual core modality on tariff reduction,  the Chair noted that these members have expressed concerns that their negotiating positions are being constrained by this paragraph. According to the Chair, these members pointed out that the qualifying conditions for the application of paragraph 5 are also too narrowly drawn and that they should not be obliged to be subjected to the sectoral approach.

On the issue of the least developed countries’ (LDCs) obligations, he noted that there is an agreement to exempt the LDCs from making further tariff reduction but these countries should still make commitments in terms in increasing their levels of binding.

He recognised the need to address the issue of preference erosion.

On the issue of non-tariff barriers, the Chair said that he would not propose any changes to anything in the Derbez text except on the notification date.

He also pointed out that paragraphs 11, 12, 14 and 16 of Annex B of the Derbez text would not be changed.

According to the Chair the cover-letter to Annex B will also recognise the linkage between NAMA and agriculture and that there will be commensurate levels of specificity in agriculture and NAMA.

The Chair also said that he would recognise the idea of uniformity within the text on NAMA in his letter.

Brazil had pointed out during the TNC meeting on 30 June that:  “Members would have to do better than the Derbez text for NAMA, which is general where it should be specific, and it is specific where it should be general.  The Derbez text is general in the application of the central concept of  “less than full reciprocity in reduction commitments” and it is specific in the sectoral component - which was not even mentioned in the mandate, but received a whole paragraph, detailing and prejudging some features that should be left for the modalities phase.”

The Chair said the letter would also recognize the identification of weak and vulnerable developing countries. However, he will not include this in his submission of the text on NAMA to Dr. Supachai and Amb. Osima as this is a political concept that needs to be defined and trying to introduce it into the July package text on NAMA will risk dividing members further.

During the meeting, Kenya asked about the status of the cover letter which will accompany Annex B and the Chairman’s  basis for forwarding Annex B to Amb.Oshima and Supachai since it has not been accepted by the members.

The Chairman tried to assure members that their positions would not be prejudiced by reiterating that what he is forwarding is only a draft for further negotiations. He also pointed out that the need for his cover-letter would reflect the fact that the Derbez text is not agreed upon.

Nonetheless, the Chair concluded the meeting on an optimistic note that “we have a framework within reach.”

After the meeting, a number of delegates from developing countries expressed disappointment with the Chair’s decision to submit Annex B of the Derbez text.   They felt that this meant that their views and positions were not adequately taken into account.

 


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