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TWN Info Service on WTO and Trade Issues (Mar06/14)

23 March 2006
 

DEVELOPING COUNTRIES CRITICISE NORTH'S NAMA APPROACH AS ANTI-DEVELOPMENT

A group of developing countries, known as the NAMA-11, sharply criticised on Monday 20 March the demands of the developed countries for drastic reductions of their industrial tariffs by developing countries, and said the demands "threaten to create an anti-development outcome" in the Doha talks.

The critcism came as the WTO resumed its NAMA negotiations. . The NAMA-11 comprise Argentina, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa, Tunisia, and Venezuela.

Mr Faisel Ismail of South Africa described the recent proposals of the developed countries in NAMA as "totally disproportionate".

Developing countries are being called upon to reduce the tariffs from their applied rates with limited space to manage the adjustments in their sensitive labour intensive sectors.

In contrast, the developed countries are "closing off the possibility of any significant new market opening" in agriculture through "additional flexibility for the bulk of their sensitive products," the NAMA-11 argued.

"Developing countries are [therefore] being called upon to bear the burden of any new market opening in this round." "This threatens to create an imbalanced and anti-developmental outcome in the Doha Round."

Below is a report of the NAMA-11 presentation to WTO.


With best wishes
Martin Khor
TWN

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Developing countries criticise North for anti-development NAMA demands

By Goh Chien Yen (TWN),  Geneva 20 March 2006

A group of developing countries, known as the NAMA-11, sharply criticised on Monday 20 March the demands of the developed countries for drastic reductions of their industrial tariffs by developing countries, and said the demands "threaten to create an anti-development outcome" in the Doha talks.

They sharply criticized the demands of the developed countries on the developing countries to make dramatic reductions to their industrial tariffs, as the WTO resumed its NAMA negotiations Monday morning.

The NAMA-11 comprise Argentina, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa, Tunisia, and Venezuela.

Speaking on behalf of the NAMA-11, Mr Faisel Ismail, head of the South African delegation, described the recent proposals of the developed countries to cut developing countries' tariffs in NAMA as "totally disproportionate". The "painful structural adjustment for many developing country economies" in the industrial sectors will be far more burdensome compared to the "relatively insignificant adjustment" that the developed countries will make, Ismail said.

To make matters worse, the South African declared, "developing countries are being called upon to reduce the tariffs from their applied rates with limited space to manage the adjustments in their sensitive labour intensive sectors".

In contrast, the developed countries are "closing off the possibility of any significant new market opening" in agriculture through "additional flexibility for the bulk of their sensitive products," the NAMA-11 argued.

"Developing countries are [therefore] being called upon to bear the burden of any new market opening in this round." "This threatens to create an imbalanced and anti-developmental outcome in the Doha Round."

In order to ensure that the outcome in the NAMA negotiations is "fair, balanced" and in accordance with the Doha mandate, the NAMA-11 group of developing countries argued in their submission this morning that several elements should be adhered to:

* In reducing tariffs, the need for policy space to advance the industrial development of developing countries should be respected.

* The principles of less than full reciprocity and special and differential treatment should be respected.

* Tariffs are to be reduced from bound rates, as have been the practice in the WTO and agreed in the July 2004 Framework Agreement.

* The flexibilities needed by developing countries to manage their adjustment process must be fully provided for in the modalities.

On this basis, the NAMA-11 demonstrated in their submission, that even with a "lower" coefficient of 10 for the developed countries and a "higher" coefficient of 40 for developing counties, the developed countries will cut their bound tariffs by 25.77% while the developing countries will be making a 41.57% reduction to their bound tariffs.

The NAMA-11 therefore argued that "the coefficients for developed and developing countries should be substantially differentiated to deliver on the principle of less than full reciprocity." The group pointed out that "less than full reciprocity" according to the mandate means that "developing countries should undertake lesser percentage reductions in their tariffs as compared to that by the developed countries."

The group in their submission made clear that they are only "willing to reduce their tariffs proportionately on the basis of less than full reciprocity in reduction commitments so that their concessions are commensurate with their level of industrial development."

The group also criticized attempts by some developed countries to "change the basis of the NAMA negotiations from bound to applied rates."

First and foremost, the NAMA 11 pointed out, WTO members have already agreed in the July Framework agreement that the basis of tariff reductions "shall be bound rates after full implementation of current concessions."

Furthermore, the proposal to use applied rates by the developed countries is "purely self-serving", the NAMA-11 said. In the industrialized countries, "there is no difference between their bound and applied tariff rates" since they did not effect "any significant unilateral MFN tariff reduction after the implementation of their Uruguay Round commitments," the NAMA-11 pointed out.

Besides, the "rules in NAMA should not be applied in a selective manner and need to be consistent with that being applied in agriculture."

In agriculture, the negotiations on reducing farm tariffs are based on bound rates. In addition, the "developed countries have insisted on using the bound levels as a basis for their domestic support reductions", the NAMA-11 pointed out.

The NAMA-11 also argued that space between bound and applied levels needs to be maintained "so as to retain the policy space required for industrial development."

They reminded the developed members that "tariffs have been used as an industrial policy and industrial development tool by [themselves] in the past." And that the "developed countries should not now kick the ladder behind them, thus denying developing countries a legitimate policy tool."

Hence, the proposal to use applied rates by the developed countries for making tariff commitments is "not acceptable" for the NAMA-11.

On the issue of flexibilities, the NAMA-11 in their submission reminded members of the fact that a "significant part of their production and employment remain in sensitive sectors" and that the current flexibilities may have to be expanded to accommodate this reality.

The group therefore made clear that they "retain the right to adjust these numbers (the number of tariff lines that are not subjected to the formula) upwards to enable some of our economies to manage the adjustment of sensitive sectors and prevent the social disruption caused by job losses and closure of enterprises that would result from further liberalization."

In addition, the NAMA-11 group "emphasised that paragraph 8 is a stand-alone provision in the agreed NAMA framework " "Any move to link it, or use it as a trade-off with the tariff reduction formula will create unnecessary difficulties in the negotiations," the group said. "The two issues are separate and should be treated as such."

This is made clear, according to the NAMA-11, in paragraph 14 of the Hong Kong Ministerial Declaration which "reaffirm the importance of special and differential treatment and less than full reciprocity in reduction commitments, including paragraph 8 of the NAMA framework, as integral parts of the modalities."

Finally, in their submission, the NAMA-11 group also recognized that "not all developing countries stand to make significant gains from the Doha Development round in the short term" in particular the Least Developed Countries and the small, weak and vulnerable economies.

The NAMA-11 therefore pledged to address the problems of preference erosion and the concerns of small, weak and vulnerable economies. The group also reaffirmed its "commitment to working with the LDC group to operationalise the commitments made in Hong Kong, to provide duty-free, quota-free treatment to all LDCs for all products."

The NAMA-11 statement was the last item on the agenda.

None of the developed countries responded.

The Chair of the Negotiating Group on NAMA, Ambassador Don Stephenson of Canada, informed members that he will be having consultations with different members over the next two days on the issues of the formula, treatment of unbound tariff lines and the flexibilities. He will hold an information sharing session open to all members on his consultations on Wednesday, 22 March at 5.00pm.

 


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