TWN Info Service on WTO and Trade Issues (Jan11/06)
27 January 2011
Third World Network

Change in spirit detected in talks, says NAMA Chair
Published in SUNS #7072 dated 24 January 2011

Geneva, 21 Jan (Kanaga Raja) -- The WTO Negotiating Group on Market Access for Non-Agricultural Products (NAMA) held its latest NAMA week from 17 to 20 January, at the end of which the Chair of the group said that he has detected a "change of spirit" in the negotiations, with Members starting to engage and express themselves in "very concise and concrete terms".

The Chair, Ambassador Luzius Wasescha of Switzerland, made this observation at a media briefing following the end of the week of negotiations.

The Chair told journalists that Members have also addressed issues (in proposals from proponents) that have never been discussed up to now. "This is not the end of the final phase, but the beginning of what might evolve into a final phase." (See below).

According to trade officials, the NAMA week was again devoted entirely to the issue of Non-Tariff Barriers (NTBs).

Most of the activity was focussed on "Friends of the Chair" meetings (of about 10 to 12 delegations in attendance) that took up three main topics -- transparency disciplines in the use of technical specifications and standards; the Horizontal Mechanism for resolving disputes involving NTBs; and trade in re-manufactured goods, including a proposal for a work programme on this issue.

New papers were also submitted on the issues of textile labelling, sectoral tariff elimination for raw materials and on liberalization of tariffs in the chemical industry, said trade officials.

According to trade officials, the role of the "Friends of the Chair" meetings is to discuss the text paragraph by paragraph for eventual submission to the "Room D" process (a more limited number of delegations than the open-ended sessions) and then on to the full membership.

Apart from two open-ended transparency sessions - one at the beginning and the other at the end of the week of negotiations - the NAMA week also included a "Room D" meeting with around 55 delegations in attendance.

According to trade officials, one of the more difficult issues discussed was that of transparency in the application of Non-Tariff Measures. This relates to what standards should apply when dealing with NTBs and whether the disciplines that go beyond the present Agreement on Technical Barriers to Trade (TBT-plus) should be applied horizontally to all the sectors under discussion or only confined to the different sectors (autos, electronics, chemicals or textiles).

Also discussed was the issue of the capacity constraints being faced by developing countries.

The discussions on the Horizontal Mechanism (TN/MA/W/106/Rev. 1) focussed on the wording of the text of the mechanism proposed by several countries including the African Group, Canada, European Union, LDC Group, NAMA-11, the Group of Developing Countries, New Zealand, Norway, Pakistan and Switzerland, as well as amendments suggested by several others, in particular, the US, Korea, Japan, Saudi Arabia and the "middle group".

According to trade officials, among issues discussed were possible conflicts with the Dispute Settlement Mechanism, the request for information from one Member to another, the nature of the information to be supplied, the problem of confidentiality, timetables, and the procedures for solving problems originated by NTBs, including the use of a "facilitator".

The Chair said that he expects a clean text on this issue after the meetings in February.

On the issue of re-manufactured goods (proposal by Japan, Switzerland and the United States), trade officials drew attention to a communication submitted by India (JOB/MA/78), in which amongst others, India voiced grave concerns on various aspects of the proposal.

[The document tabled by Japan, Switzerland and the United States contains a draft Ministerial Decision on Trade in Re-manufactured Goods. The latest revision of the draft decision - TN/MA/W/18/Add. 16/Rev. 4, 9 July 2010 - proposes amongst others the establishment of a Working Group on Trade in Re-manufactured Goods under the auspices of the Council for Trade in Goods. It further outlines a work programme in an attached annex to the draft decision.]

In its communication, which proposes a work programme on trade in re-manufactured goods, India said that in line with its earlier position paper (JOB/MA/44), it "remains gravely concerned on various aspects of the revised text which inter alia include the creation of an upfront definition, onerous commitments on market access and review of NTBs and the creation of a Working Group on Trade in Re-manufactured Goods with a view to raise and discuss specific trade concerns on re-manufactured goods."

[In JOB/MA/44 dated 7 September 2010, India sought to ascertain clarifications from the co-sponsors and presented its viewpoint on the proposed Ministerial Decision on Trade in Re-manufactured Goods outlined in document TN/MA/W/18/Add. 16/Rev. 4 dated 9 July 2010. See SUNS #7005 dated 27 September 2010.]

In its present communication, India noted that similar concerns were also expressed by a number of other delegations during the discussions in both the small-group and open-ended negotiating group meetings.

Based on extensive consultations with stakeholders, India believed that the subject of trade in re-manufactured goods requires extensive groundwork before one can look at the specific contours of any commitments, whether it be soft or hard or on a best endeavour basis.

"Without this understanding, there is a fear specifically among many developing Members that the current text of the proponents could be used as a conduit for dumping of sub-standard products into their markets," said India.

"We are therefore of the view that Members must look at only a work programme without prejudgement of its final outcome. Any decision can be taken only at the end of this work programme and India remains wary of any early harvest of elements of the work programme," it added.

India proposed a work programme that includes a series of workshops, both general and thematic, intended to delve into and clarify the varied nuances of re-manufacturing.

In the general workshop, India proposes addressing: (a) Policy Objectives; (b) Definition of re-manufacturing sector-wise -- (i) A special definition would need to be carved out for specific sectors where re-manufacturing could have separate connotations from that for other sectors; (ii) Definition should include concepts such as "reasonable manufacturing activity", "durability" and "minimum value addition".

Thematic workshops proposed by India include an industry workshop, whereby it would address amongst others the issue of differentiation between re-manufactured goods and related terms like: (i) Refurbished goods; (ii) Recycled goods; (iii) Re-used goods; (iv) Repaired goods; (v) Reconditioned goods; (vi) Recovered goods; (vii) Second hand goods; (viii) Replaced goods; (ix) Serviced goods; (x) Overhauled goods; (xi) Recharged goods; (xii) Rebuilt goods; (xiii) Remade goods; (xiv) Renovated goods; and (xv) Any other term.

Other issues proposed to be taken up by the industry workshop include concept of "durability" "remaining useful life" and "performance warranty" of a product; current practises by both original equipment manufacturers (OEMs) and non OEMs including independent re-manufacturers and component manufacturers on treatment of re-manufactured goods and their parts as well warranty compliance, including contemporary approach to re-manufacturing; organised market in re-manufactured goods, customer perception, and their practices; unorganised market in re-manufactured goods and their practices; and life cycle analysis of re-manufactured goods.

Also to be included in the industry workshop are issues such as incentive schemes and subsidies offered by various countries to their industries to promote sustainable development, including the 3 R's (reduce, reuse and recycle) and also to gain an understanding of how the "end-of-life" regulations of various countries encourage re-manufacturing activity and make it economically attractive; product's acceptable level of durability along with conforming to the original specifications, including mechanical integrity of re-manufactured products through metal fatigue and other checks; product's safety features, utility in varied climatic conditions, serviceability & spares, and the cost of continuing use of old technology and its impact on energy use; extent of working, including properties of salvaged and new material; handling of hazardous products like asbestos, lead etc and conformity with international conventions such as the Basel convention; and creation of HS (Harmonized Commodity Description and Coding System) codes for re-manufactured products.

Other thematic workshops proposed by India include a development workshop, an environment workshop, a regulatory workshop, an institutional workshop, and information and outreach workshop and consultations.

Issues proposed for the development workshop include the effect of re-manufacturing on domestic manufacturing, setting up of new units and transfer of technology to developing countries; employment potential of re-manufacturing and its effect on the employment in the manufacturing sector; consumer welfare of re-manufacturing; and special and differential treatment for developing countries.

India's communication was supported by many developing countries, said trade officials.

The proponents on the other hand insisted that they want a strong commitment by Members on this subject, which they claimed, will not mean onerous new obligations.

In other actions, China, Hong Kong-China and India tabled a paper that questions many aspects of the proposal for new disciplines on labels for textiles, clothing, footwear and travel goods (TN/MA/W/93/Rev. 2). They considered these to be more trade-restrictive than necessary, especially if these requirements change from one market to another.

According to trade officials, Australia and the United Arab Emirates tabled a communication (TN/MA/W/37/Add. 7) that proposes draft modalities for the sectoral tariff elimination in the raw materials sector.

In a communication, Croatia informed Members that it is co-sponsoring the chemical tariff initiative submitted by Canada, the European Union, Japan, Norway, Singapore, Switzerland, Chinese Taipei and the United States, which contains draft modalities for the liberalization of tariffs in the chemicals sector.

Trade officials said that more negotiations are needed on issues of a technical nature such as conformity assessment and international standard setting, and NTB sectoral proposals on chemicals, electronics and autos.

On the "sectoral approach", for the total or almost total liberalization of 14 sectors, trade officials said that the US briefly reported that it had bilateral meetings with other delegations on the chemical sector.

The US and Hong Kong-China asked for more engagement by delegations on the sectoral initiative. The US also asked for more time to be set aside in the next NAMA week for this crucial area of the negotiation, said trade officials.

Trade officials pointed out that Ambassador Wasescha plans to include the sectoral initiative in the agenda of the next meeting. The Chair however said that he considers it more productive at this stage to let Members negotiate among themselves.

He also said that tariff and non-tariff issues will be considered.

According to trade officials, negotiations will resume in small groups on 31 January, with the next NAMA week scheduled to start on 7 February.

At the media briefing on Thursday evening, the Chair said that he detected a change in spirit, with Members starting to engage and express themselves in very concise and concrete terms.

"This is not the end of the final phase, but the beginning of what might evolve into a final phase," he said.

Turning to the substantive issues, the Chair said that on issues relating to improving transparency provisions in the existing Technical Barriers to Trade Agreement, the one question that is still open is whether these provisions will apply across the board -- as many Members suggest -- or will they be confined, as originally proposed, to one sector such as electronics or the automotive sector.

On the issue of re-manufactured goods, the Chair said that there is a proposal from three co-sponsors (United States, Switzerland and Japan) with the support of other Members, and "quite a large group of agnostics" who would like to start with a workshop before deciding whether to do something or not on this issue.

What has appeared for the first time in the discussions this week is (the notion) that any trade in re-manufactured goods is trade in goods and therefore the provisions of the existing WTO and GATT 1994 rules apply, he said, adding amongst others that one could have more detailed information on a national regime on re-manufactured goods, for instance, through the Trade Policy Review mechanism, and that "one can even imagine a dispute settlement case on this issue because we are in the area of trade in goods."

He further said that the objective is to one day eliminate obstacles to trade in this issue. He also said that the question of the definition of a re-manufactured good is key.

On the issue of labels for textiles, clothing, footwear and travel goods, which he described as "low hanging fruit", the Chair said that China, Hong Kong-China and India had come up with a submission in which a certain number of fundamental questions were raised, such as rules of origin, and labelling of intermediate products.

On the issue of the Horizontal Mechanism in respect of resolving disputes over non-tariff barriers, the Chair said that for the first time there was engagement in a small group to clean the text on the basis of the proposal and amendments that were circulated in an earlier phase.

He hoped that in the course of the month of February, there will be a clean text to facilitate the negotiations in Room D.

He also noted that the developing and least-developed countries drew attention to the importance of technical assistance, special and differential treatment and the need to avoid burdensome procedures with regards to their interests.

The Chair said that he has decided to treat these aspects at a later stage when the substantive elements of the package emerges.

He also noted that the proponents of the sectoral initiative have held several meetings this week. As to the question of holding an open-ended session on sectorals, the Chair said that this will happen when it is ripe. It's not time yet, he added, indicating that it might have to wait until spring. +