TWN Info Service on WTO and Trade Issues (May05/5)

10 May 2005

Report 2 on WTO Symposium

An interesting forum during the WTO's Public Symposium (held in Geneva on 20-22 April) was jointly organised by NGOs and trade unions on "NAMA Is Key!" At the session, a broad range of NGOs and trade union representatives criticised the framework on NAMA (non agriculture market access) and the proposals tabled at the negotiations.

Below is a TWN report on the forum.

With best wishes
Martin Khor


NGOs and trade unions criticise NAMA framework during WTO Symposium

By Goh Chien Yen, TWN, Geneva

A coalition of civil society organizations (CSOs) has called for a halt to the WTO negotiations on non-agriculture market access (NAMA), for an assessment to be conducted on the current proposals, and for a rethinking of what should be in the eventual framework.

The call was made by some leading development and environment groups as well as global and national trade unions and organizations of fisher-folk during the WTO public symposium on "WTO after 10 years: Global problems and multilateral solutions" taking place here on 20-22 April.

At a session on "NAMA is key: a debate on civil society concerns about the NAMA negotiations" organized by 11 organisations, speakers pointed to the negative impacts that the present NAMA framework would have on local industries and industrial development prospects in developing countries, on employment and poverty, and on the environment.

The NGO speakers also engaged in a lively debate with representatives of industry and WTO diplomats. The 11 co-sponsors of the session were Greenpeace, Friends of the Earth International, ICFTU, the Third World Network, PSI, International Metalworkers Federation, Seatini, ActionAid, CIEL, IATP and IFG.

The session chairman, Daniel Mittler of Greenpeace, said many CSOs from diverse backgrounds (development, environment, human rights, trade unions, fisher-folk, etc) had been examining the NAMA negotiations and were united in their concerns on the process and the content of the negotiations. They were holding the session to share these concerns with other CSOs and the policy makers.

Martin Khor of the Third World Network said that liberalization of industrial imports could have both positive and negative effects, depending on how a country formulated its trade and development policies. The developed countries and successful developing countries had taken care to protect and nurture their local industries during their development stage, including through tariffs and subsidies.

He cited data showing that developed countries such as the US and European countries had industrial tariffs during their development phase that were far higher than the present average tariffs of developing or even least developed countries. He said that many developing countries had suffered the collapse of local industries and loss of industrial jobs when applied tariffs were drastically reduced under loan conditionalities.

He added that until now, the GATT and WTO practice allowed for considerable flexibility for developing countries on what tariffs to bind and at which rates, and on the pace of import liberalization. During the Uruguay Round, countries were not subjected to a formula to reduce tariffs; there was a target for developing countries to reduce industrial tariffs by 30% on average and thus they had flexibility to choose the rates for specific tariff lines.

However, the NAMA framework arising from the July 2004 package would, if implemented, remove or reduce the existing flexibilities and subject developing countries to drastic tariff reductions across the board. Countries would have to bind all their tariffs (already a major commitment on their part) but not at rates they choose as the unbound applied tariffs would be multiplied by two and then subjected to a formula cut, which would mean binding them at low levels.

As for the formula, many developing countries would be required to reduce their tariffs by more in percentage terms and in terms of percentage points if a non-linear formula is used. This would contradict the principles of "less than full reciprocity" adopted in the Doha Declaration, the meaning of which is that developing countries should not be required to undertake commitments inconsistent with their individual development, financial and trade needs.

Khor added that while LDCs were exempted from the formula, it can be expected that they would also be affected by steep tariff cuts when they graduate from being LDCs; and the flexibilities given to other countries were too few and too little in quantity to be able to offset the damage that could be done to industrial development prospects by the huge tariff cuts implied by the NAMA framework.

Carla Coletti of the International Metalworkers Union expressed serious concerns about the employment repercussions of the NAMA proposals, which she said had been only marginally examined. She asked for a proper employment impact assessment to be carried out as part of the negotiations and asked that decisions not be taken until the proposals could be shown to not negatively affect employment.

Taking up this theme, Tanya van Meelis of the Congress of South African Trade Unions (COSATU) said that it was wrong to approach the NAMA negotiations with the goal of binding and reducing tariffs as much as possible. The main problems in South Africa are high unemployment of up to 40%, high poverty and inequality. Trade policy had to contribute to industrial development policy with the goals of reducing poverty, unemployment and inequality.

The test of NAMA therefore is not the extent of bindings or tariff cuts but the extent to which the policies reduce poverty and unemployment. The priority was to generate jobs in labour-intensive sectors and trade policy should ensure that local industries that supply jobs are protected and supported.

She cited data to show that in recent years, South Africa was losing more jobs due to imports, especially in labour-intensive sectors, than it was gaining from exports. She expressed concerns that the NAMA framework and proposals would seriously worsen the trade trends and thus worsen unemployment and poverty.

Among the implications of NAMA is that a line-by-line formula cut would result in South Africa losing its preferences and hinder the growth of labour-intensive exports, and damage industrial strategy of climbing the value chain. Imports would accelerate and further threaten certain sectors such as textiles and clothing where 1000 to 2000 jobs were being lost monthly. It would be a disaster for South Africa and its attempt to advance the economy.

There would also be negative regional effects, as many countries in Southern Africa were looking to the South African market for growth. She said that an effect of NAMA is that if South Africa lost its own domestic market to imports, the region would lose its market in South Africa. The region would then be trapped in having to find jobs in the mineral sector, and this would be a "kiss of death" for industrialization for the country and region.

"Leave us with the tools to develop our own industrial policy," she said. "Push NAMA in the present way and you take away our chance."

Ronnie Hall of Friends of the Earth International said the NAMA negotiations would seriously affect the environment in several ways. In the sectoral approach for tariff elimination, some natural resource based sectors were selected, and accelerated liberalization would deplete the resources rapidly.

She expressed grave concerns that countries had submitted many proposals on the removal of non-tariff barriers. These proposals touched in many cases on measures that countries have for genuine social and environmental purposes. An FOE study had found 72 challenges to environmental and social measures. These challenges and the removal of such measures would extend the reach of the WTO to domestic policy space of countries much more than now.

Among the measures that were challenged were those that regulate foreign investment, that promote fuel efficiency in motor vehicles (which are needed to combat climate change), restrictions on export of natural resource based products such as forest and mineral sectors, and restrictions on chemicals and other toxic materials on safety grounds. A main concern is that the NAMA outcome would increase unsustainable consumption and threaten genuine measures that protect health and the environment.

Hall said that the NAMA negotiations should stop to allow an impact assessment to be carried out.

During question time, a representative of the chemical industry said that it was sympathetic to having flexibilities for LDCs and some developing countries, but opening the markets of big emerging countries such as China, India and Brazil was important. How could such differentiation be carried out?

A representative of the EC delegation to the WTO agreed that the Doha negotiations should benefit developing countries and should not destroy their nascent industries. However, there were flexibilities in the NAMA framework that protect LDCs and other developing countries. He expressed worry about the call to stop the NAMA negotiations.

Khor replied that differentiation was a complex and highly charged issue which should not be pursued, especially since this was not in the mandate of the Doha Declaration. It was not fair to take an approach that developing countries would be affected by an "ambitious" formula or tariff liberalisation method, simply to be able to open markets in big developing countries.

He added that it was also unfair to single out the three countries mentioned just because they had large populations. Each of the countries had their own problems and characteristics. For instance, India had a large population that was poor and most parts of India could be considered an LDC. China was still a developing country and had just undergone rapid liberalization because of its accession process and its tariffs were already very low. And Brazil also had large pockets of urban and rural poverty as well as a very large external debt, which required it to earn foreign exchange surplus to service the debt.

If special pressures were put on these countries, including removal of special and differential treatment, it would be unfair, and could also result in damaging effects.

He added that the flexibilities in the NAMA framework were very restricted and indeed stingy, as there would be exemption from the formula or bindings for only 5% or 10% of tariff lines valued at 5% to 10% of import value. And even this is sought to be taken away or eroded by recent proposals.

Khor said that development concerns are not taken into account in the framework or the proposals. Thus, it would be useful to review the framework in light of the concerns raised, and to see if a better framework can be drawn up, so that the result would really serve and not counter development needs.