TWN Info Service on WTO and Trade Issues (Apr06/14)

21 April 2006

NAMA Differences resurface in Chair's report ands meeting

Below please find a report on the start of the week's NAMA negotiations that took place on 19 April

With best wishes
Martin Khor


Key differences re-surface in NAMA report and meeting

Geneva, 19 April 2006:  By  Goh Chien Yen (TWN)

In this final week of negotiations on non-agricultural market access (NAMA) before the end-April deadline for modalities, WTO members remain polarized over the key issues of the formula for making tariff cuts and flexibilities from the formula for developing country members.

Updating members on his recent consultations, the Chair of the NAMA negotiating group, Ambassador Don Stephenson of Canada, in a 18-page report circulated at the start of the meeting on Tuesday, said that "there was no progress on either the architecture of the Formula or the level of ambition."

According to his report, members could not agree on the value of the coefficients to be used in the formula for the developed and developing countries. "In the view of some Members the distance between the two coefficients had to be in sight of each other, and sufficiently low to ensure real market access," he said.

A delegation had proposed "a range of 5 to 15 for developed countries and 10 to 20 for developing countries." However, other members have pointed out that "developing countries had to do less than developed members, as provided for in less than full reciprocity in reduction commitments."

During Tuesday's consultations, several developing country members such as Argentina, Venezuela and the Philippines pointed out that there is no convergence on the issue of the coefficients because the demands of the developed countries had failed to respect the principle of less than full reciprocity. India added that adherence to this principle means lower percentage reductions for developing countries.

Under the current proposals made by the developed country members, developing countries will have to undertake far more significant percentage cuts to their industrial tariffs compared to the developed countries.

Responding to the developing countries, the US said that while they supported the principle of less than full reciprocity in tariff reduction commitments, there was no consensus that it should be understood only in terms of percentage reduction.

On the issue of flexibilities for developing countries, which was also discussed on Tuesday, members remain divided on the number of tariff lines that would be wholly or partially exempted from the tariff-reduction formula.

This division was also described in the Chair's report, which reported that some members "made a reference to the numbers in paragraph 8 [in Annex B on NAMA of the August 2004 Framework] as being the bare minimum, and wished to see an enhancement of them. Of course, others indicated that in their view, paragraph 8 numbers were already too generous, and would reduce the benefits accruing to them."

However, the Chair did observe some common understanding among all members on some of the technical issues in relation to the paragraph 8 flexibilities, which was reflected at yesterday's meeting.

According to the Chair's report: (i) "no less than half formula cuts" meant 50% of the formula cut or more at the discretion of individual delegations; ( ii) the imports referred to were NAMA imports; (iii) the reference to tariff lines was to tariff lines at the national level and; (iv) the phrase "not entire HS chapter" would be interpreted in a legalistic way (this means that a exclusion of a single tariff line would constitute not an entire HS chapter).

Finally, on the issue of treatment of unbound tariffs which was one of the three topics discussed on Tuesday, members were still unable to agree on a value to mark up the unbound tariff lines by.

According to the Chair's report, some members are looking for a higher mark up than the range of 5 to 30.

The Chair in his report then proposed the text "constant non-linear mark up of [ ... ]" for the potential end-April modalities.

Some members had concerns over the use of the word "constant", but according to one senior trade diplomat, this was accepted during Tuesday's meeting with the understanding that this does not preclude the possibility of having more than one number for the purposes of the mark up.

However, a trade analyst has pointed out that the inclusion of the word "constant" would in fact go one step beyond the current architecture for treatment of unbound tariffs, as members would be locked into the percentage-points increase approach.

Consultations over the other issues such as the paragraph 6 countries, the Least Developed Countries, the Small and Vulnerable Economies, non-tariff barriers and preference erosion will also be held during the week (see separate article).

The Chair has indicated in his written report that he will also be seeking guidance from members on the issue of process during this week. "Where there was some convergence or text presented by members", he said, he "would be in a position to put forward language for consideration."

However, where the issues remained unresolved, he had two options: "to simply report the nature of the discussion or to attempt to articulate options for Ministers."

He also informed members that he will not be putting out reference papers in NAMA as has been done in the case of agriculture.