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TWN Info Service on WTO and Trade Issues (June06/04)

8 June 2006
 

Lack of progress in NAMA talks in week ending 19 May


There has been no progress made in the NAMA negotiations in the week ending Friday 19 May. The talks were on the so-called "exception" issues. The non-progress was reported by Ambassador Don Stephenson of Canada, Chair of the NAMA Negotiating Group. He was speaking at a NAMA meeting on 19 May.

"Exception issues" refer to the treatment of WTO members that have obtained or are seeking exemptions from having to apply the standard formula for reducing NAMA tariffs.

As explained in the NAMA chair's progress report to the Trade Negotiations Committee (26 April 2006), the first priority in the present NAMA talks is to deal with the "exception" issues, so as to "clear the way" for the issue of ambition (i. e. the rate of tariff cuts) to be resolved later.

However, after three weeks of negotiations on these "exception" issues, members have yet to reach agreement on the treatment of the paragraph 6 countries (i. e. those that have bound less than 35% of their tariffs), the small and vulnerable economies (SVEs) and the demands of the least developed countries (LDCs).

Below is a report of the NAMA talks on the week ending 19 May.


With best wishes
Martin Khor
TWN

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Chairperson reports lack of progress in NAMA talks in week ending 19 May

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

There has been no progress made in the negotiations this week on non-agriculture market access (NAMA) in the WTO on the so-called "exception" issues, according to Ambassador Don Stephenson of Canada, Chair of the NAMA Negotiating Group.

He was speaking at a NAMA informal plenary meeting on Friday 19 May. "Exception issues" refer to the treatment of WTO members that have obtained or are seeking exemptions from having to apply the standard formula for reducing NAMA tariffs.

As explained in the NAMA chair's progress report to the Trade Negotiations Committee (26 April 2006), the first priority in the present NAMA talks is to deal with the "exception" issues, so as to "clear the way" for the issue of ambition (i. e. the rate of tariff cuts) to be resolved later.

However, after three weeks of negotiations on these "exception" issues, members have yet to reach agreement on the treatment of the paragraph 6 countries (i. e. those that have bound less than 35% of their tariffs), the small and vulnerable economies (SVEs) and the demands of the least developed countries (LDCs).

Some members are opposed to the para 6 countries' proposal of increasing their level of tariff binding to 95% coverage, at an average overall rate of no more than

50%. An alternative proposal of the Para 6 countries, to bind up to 70% of their tariffs, at the average rate of 28.5%, has also encountered opposition from several other members.

The SVEs also faced an uphill battle with their proposal of being exempted from having to apply the formula. Instead, they have offered to cut their tariffs according to a "tiered approach", in which tariffs within a certain band are to be cut by a certain percentage, on a average basis (i. e. not on a line-by-line basis of every product having to have its tariff cut by the same rate).

Several members have challenged the SVEs on the criteria they have proposed in determining which developing country is a SVE. They argued that the criteria is too lax and must incorporate a measure for vulnerability in the selection of a SVE.

New Zealand proposed that the Secretariat do a tariff simulation on SVEs to enable members to judge whether they are indeed vulnerable. This was supported by the US and Japan. Japan added that while SVEs should be given special treatment, there is a "hierarchy" for this kind of treatment, which starts with the LDCs on the most generous level.

Costa Rica said during the informal meeting on 17 May that it was unacceptable for SVEs to ask for special treatment on top of other requests (for example, on the need to address preference erosion) and without giving concrete proof that they are indeed "vulnerable". Peru, Jordan and Ecuador supported Costa Rica's position.

Another area of contention that has emerged over the last few days of negotiations is over the proposal to eliminate tariffs of "environmental goods" by 2008. This proposal was made jointly by Canada, EC, New Zealand, Norway, Singapore, Switzerland and the US.

The US, which introduced the proposal, said that removing tariffs on goods that protect the environment would benefit all members and would be in keeping with the Doha mandate for NAMA. The co-sponsors stressed the "win-win-win" outcome from this proposal. The EC said that this proposal is not a sectoral one, implying that this treatment of environmental goods would apply to all (whereas participation in sectoral initiatives could be voluntary).

The NAMA 11 Group, led by South Africa, and other developing countries strongly criticized the proposal. They said that the paper prejudges the results of negotiations in the Committee on Trade and Environment Special Session and that it asks developing countries to provide market access on the same level as developed countries.

Ecuador said that of the 500 environmental goods targeted for tariff treatment, only 1 to 2% are produced by developing countries.

Consequently, the Chair said at Friday's meeting that it is not possible for him to prepare a text, given where members stood on the various aspects of the NAMA negotiations.

To move the process forward, the Chair informed members that he will be using a combination of approaches in the coming weeks of negotiations.

He told members that he will be conducting bilateral meetings on various issues starting from next week. This will be followed by small group consultations of various formats, combined with open-ended meetings with all members.

He also informed members that he will be organizing "confessionals" over the next 3 weeks on a parallel track. These confessionals would be held on a one-to-one basis with the Chair.

He informed members that starting from the week of 29 May, he will begin to deal with the core issues of formula, flexibilities and treatment of unbound tariffs. However, he observed that tackling these issues head on will not be helpful. A more constructive approach would be to use simulations under different coefficients as some members have done.

He told members that he has instructed the WTO secretariat to produce simulations for all members. The parameters of the simulation would be the same as those used by countries that have already done so. According to the Chair, this data would be available by the end of the month.

The chair also suggested that one way to position for a successful Ministerial meeting, if one is held, is to agree on architecture, structure and approach before that, without dealing explicitly with the level of ambition. This could be done by leaving brackets around some numbers or leaving these brackets blank, and this will simplify issues for the ministers to decide.

He hoped that the modalities could be provided by mid-June, remarking that this is "doable".

At the meeting, Cuba also presented its formal communication (TN/MA/W/71) demanding that the US "immediately and unconditionally remove all current regulations that establish, maintain and reinforce the economic, commercial and financial blockade" against it. It states that "the blockade against Cuba is an act of economic warfare" which finds no justification under international law in times of peace."

This was supported by Venezuela which commented that this blockade of more than 40 years is completely unjustified.

 


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