Info Service on WTO and Trade Issues (Aug12/01)
3 August 2012
Third World Network
NAMA Chair submits his final report
Published in SUNS #7415 dated 20 July 2012
19 Jul (Kanaga Raja) -- There has been "little enthusiasm"
among Members to follow a reform agenda, Ambassador Luzius Wasescha
of Switzerland, the outgoing Chair of the Negotiating Group on Market
Access for Non-agricultural Products (NAMA), has said in his last
report to the Group on 18 July.
He said that this is either because people believe markets will solve
issues or because the forces opposed to any change are too strong
for supporting reform policies of governments.
This is especially true for predictable market opening through bound
tariff reductions, he said. Since he became Chair of the Negotiating
Group (in October 2008), he added, tariffs have not been discussed
in detail in the group.
"Over the last three years, the Negotiating Group has been mainly
spending its time furthering its understanding of the various non-tariff
barrier (NTB) proposals and conducting a text-based negotiation on
some of them," he further said.
According to trade officials, Ambassador Wasescha told Members that
several attempts have been made to break the stalemate in the tariff
negotiations but to no avail.
In spite of his very best efforts to prod Members into thinking of
new negotiating approaches, it was clear that for some Members the
draft modalities in the present shape are not a suitable basis to
According to trade officials, the Chair offered some ideas on how
the new chairman of the Group (still to be appointed) could move the
negotiation forward and asked Members to keep an open mind and try
to bridge the "big gap" among them.
In tariff negotiations, an area that has been dormant in the negotiation
for most of his chairmanship, the Chair said that Members could combine
the three main elements, adjusting the "level of ambition"
in tariff reductions, with the flexibility and the implementation
period. This would provide a "safety valve" so Members could
be more receptive to bound tariff reductions.
According to trade officials, he said that the Safeguard Agreement
or the Special Safeguard Mechanism used for the agriculture negotiations
in the Uruguay Round also provides a "safety valve". He
added that a pragmatic approach might be to shift to a traditional
request/offer negotiation limited in duration.
On Non-Tariff Barriers (NTBs), the Chair said there was plenty of
"low-lying fruit" that could be harvested if Members reflected
on the advantages, not only on the risks.
He said these areas were the Horizontal Mechanism for solving NTB
disputes, textile labelling, transparency in technical regulations
and standards, re-manufactured goods and the idea to further promote
the use of international standards. In some situations, he said, the
draft modalities for the NAMA negotiations show great flexibility.
According to trade officials, the Chair insisted that "traditional
mechanics" used in the GATT trade negotiations only work if governments
are committed to an economic reform process. "While this mood
existed until 2006, this avenue appears to be blocked at this stage",
In his final report (TN/MA/23 of 18 July), the NAMA Chair addressed
the issue of tariffs, saying that "we are facing a logjam"
in the tariff negotiations. "Several attempts have been made
by Members to break the stalemate but to no avail."
The Chair noted that at MC8 (eighth Ministerial Conference held last
December), Ministers recognised "that Members need to more fully
explore different negotiating approaches while respecting the principles
of transparency and inclusiveness."
In this context, they committed "to advance negotiations, where
progress can be achieved, including focusing on the elements of the
Doha Declaration that allow Members to reach provisional or definitive
agreements based on consensus earlier than the full conclusion of
the single undertaking." They also stressed that they would "intensify
their efforts to look into ways that may allow Members to overcome
the most critical and fundamental stalemates in the areas where multilateral
convergence has proven to be especially challenging."
Finally, said the Chair, they maintained that in their negotiations,
they would "continue their work based on the progress already
"In spite of my very best efforts to prod Members into thinking
of new negotiating approaches including by putting forward my own
ideas such as scheduling offers without waiting for any formal adoption
of modalities, it is clear to me that for some Members the draft modalities
in their present shape are not a suitable basis to move forward on.
At the same time, it is equally clear that it is not possible for
other Members at this stage to discard a text which they have spent
ten years negotiating and which reflect their interests. So, how do
we move forward?," the Chair said.
One option might be the use of safety valves, said Ambassador Wasescha,
adding that a safety valve allows Members to be more receptive to
bound tariff reductions or - put another way - to an increase in the
level of ambition because they have the possibility of respite in
difficult times. It affords a degree of comfort to Members that in
case difficulties arise because of such tariff concessions, they have
access to the requisite breathing space, especially accompanying the
"A tool which serves this dual purpose might go some way in breaking
the logjam we are facing in the NAMA tariff negotiations. Clearly
such a mechanism cannot be invoked in an indiscriminate fashion; neither
can its conditions of use be too strict. So, devising such a tool
as well as the conditions of its use will be a challenge. Members
could look at existing safety valves such as the Safeguard Agreement
or the special safeguard mechanism which was used in the Uruguay Round
agricultural negotiations for some guidance."
The other tool that Members might wish to consider is the time-frame
for tariff cuts. Rather than having a blanket time-frame which is
what is currently provided for in the draft modalities text, retaining
the possibility to extend or shorten the time-frame of cuts on individual
items might assist in reaching the necessary balance between ambition
"If Members are ready to look beyond the modalities, then at
this stage a pragmatic approach might be to shift to a traditional
request/offer negotiation limited in duration, for example, six months,
and which may or may not be subject to any objectives or benchmarks.
My inclination would be to go with the latter (i. e. no objectives),
because Members might take another 5 years to decide on such objectives.
Such a process might pave the way for some kind of a result, albeit
On Non-Tariff Barriers (NTBs), the NAMA Chair said that since January
2009, the Negotiating Group has done substantive amount of work on
NTBs, more precisely NTB proposals which he has labelled Wagon 1 proposals.
"A question and answer phase followed by a text-based negotiation
has got the Negotiating Group to three draft working texts which I
would stress have a fair number of square brackets."
With respect to the Horizontal Mechanism under the Wagon 1 NTB proposals,
Ambassador Wasescha said that while a substantive amount of work took
place in the small-group in the lead up to April 2011, which is reflected
in the working document attached to his 2011 report, not much has
been done on the Horizontal Mechanism (HM) since then.
"It will be recalled that this proposal has broad support, at
the same time opposition to it is quite stiff. If one considers that
it is a pure additional tool to prevent NTBs one might wonder whether
this opposition is proportionate. I encourage the opponents to reflect
whether they could not adopt a more constructive attitude in the light
of the conclusions of MC8. This remark also applies to other Members
in other areas of the NAMA negotiations."
According to the NAMA Chair's report, the main issues of concern to
the opponents appear to be the:
(1) linkage of the HM with the DSU (Dispute Settlement Understanding);
a paragraph has been proposed by a delegation on the DSU link, or
more appropriately the absence of such a link, which needs to be discussed
further. What remains is to find adequate wording.
(2) dilution of the role of Committees; there is a fear that the HM
will diminish the role of the Committee as a forum for raising and
addressing specific trade concerns. The current paragraph 3, which
was a compromise, is not sufficient for those Members who believe
that Members must take an issue first to the relevant Committee before
bringing it before the HM. The balance has to be found between the
present role of the Committee and the informality and the rapidity
of the HM.
(3) scope of the mechanism; at issue is whether measures regulated
by the Agreement on Sanitary and Phytosanitary Measures ("SPS
Agreement") and whether agricultural goods would be covered by
"I believe that with the exception of the third issue (which
in my view requires political guidance to be resolved), the other
two issues as well as the subject of special and differential treatment,
the review versus the sunset clause and timeframes among others can
be addressed through further technical discussions, which could lead
to an early outcome," the Chair suggested.
On textile labelling, the Chair said that the proposal on this issue
is where he believes the most progress was made. "In terms of
specifics, we advanced on the question of scope insofar as there was
an understanding reached among the Members of the small group that
intermediate products would be covered by the Understanding. Subsequently,
the discussion revolved around the differentiated treatment to which
these products would be subject."
He highlighted, amongst others, that country of origin in paragraph
2 is still a problem for some Members. In spite of language which
was proposed to address some of the concerns, more discussion and
work would be required on this subject. Paragraph 4 of the working
text was also an area of concern and Members in the small group were
trying to find a way forward. Language which was proposed by one delegation
seemed to have gone some way towards accommodating those concerns
but more debate is required. Other paragraphs which would need to
be reverted to are paragraphs 6.1, 6.2 and 6.5.
The Chair said that the Group made significant progress in the area
of transparency, adding that in his view, this work is important because
the trade effects of technical regulations and standards are particularly
difficult to predict or assess.
While clearly the TBT (Technical Barriers to Trade) Agreement already
contains detailed disciplines in the area of transparency that have
been further elaborated by the Committee, "progress needs to
be made and we started some of this work in the NAMA context, and
indeed we got quite far."
"In particular, I would draw attention to the work which was
started by delegations to find ways to improve the availability of
information on the regulatory lifecycle of measures. We considered,
among other things, the benefits of early notification of regulatory
work (referred to by some as "Regulatory Agenda"), the importance
of providing access to the full texts of notified draft documents,
including translated versions - even if only unofficial; we also looked
at the other end of the cycle, i. e., the benefits of communicating
and making available the final, adopted versions of regulations; the
feasibility of the Secretariat setting up a repository of this information
was also discussed."
Some Members also stressed the importance of increasing transparency
in the setting of (voluntary) standards - as, in some cases, these
are precursors to technical regulations (mandatory).
"I could only encourage continued technical work in this area,
building on the progress already made - both in the NAMA context as
well as in the context of regular work. Here again an early outcome
might be within reach."
As to re-manufactured goods, the Chair said that this was a relatively
unexplored area at the start of the discussions in early 2009.
"I believe that through workshops and other means the proponents
of this proposal have tried and succeeded in enhancing the understanding
of the membership of this industry. In this connection, for some Members
further educational activities should be the substantive content of
any outcome on re-manufactured goods."
For the proponents, this is not sufficient and a "soft"
commitment which would see the enhancement of market access on such
products would be a necessary outcome.
The Chair believed that further acquainting Members with this industry
through workshops would be useful. As well, beginning a preliminary
discussion on the definition of such products might stimulate further
thinking on what is possible in this area. Here, a parallel member-driven
activity is desirable.
As to the issue of international standards, Ambassador Wasescha's
report said that Members are positive about the need to further promote
the use of relevant international standards. On this there is general
"Indeed, in my view, appropriate standard-setting procedures
and a sound scientific basis will significantly contribute to making
international standards ‘globally' relevant - and the use of such
standards then becomes a form of technology transfer, as recognized
by the TBT Agreement itself."
Of course, it remains essential to ensure opportunities for meaningful
participation by all Members in the standard-setting process, including
- and in particular - developing country Members. Nevertheless, even
where participation is assured, and even when the process is "right"
- achieving "global" relevance (of international standards)
remains a challenge.
On the specifics, the Chair noted that Members do not always agree
on the "relevance" of a particular standard or standardizing
body, and said that this creates uncertainty - and uncertainty is
never good for trade.
Hence, in moving forward, ways and means of improving the relevance
of international standards to the WTO membership needs to be stressed.
The idea of strengthening the TBT Committee's principles on the development
of international standards to better facilitate cooperation between
standardizing bodies and the TBT Committee has been generally well
"One place to start may be in exploring to what extent these
principles have been used, what lessons can be drawn from this experience,
and what further role the WTO can take upon itself to contribute to
the promotion and use of standards that are relevant to the membership
as a whole. As standards are not only tools that impact on rule making
but also products with a market value, it might be a challenge to
devise a long term strategy with standard setting bodies. Such a common
strategy, however, would facilitate a cooperative approach among Members
and would help to prevent fragmentation of the global market."
Turning to the Wagon 2 NTB proposals, Ambassador Wasescha explained
that he had labelled a number of proposals "Wagon 2" proposals
as the intention had been to discuss them after addressing the proposals
he had labelled "Wagon 1".
"There has been yet no discussion of the former as focus has
been on the latter. I would note that the proposal on Forestry Products
was withdrawn by the sponsor. This was the only progress here."
The Chair noted that a certain number of delegations have tried to
push their proposals by winning support from other Members and attempted
to push them in Wagon 1 without success at this stage.
"So in general on NTBs, since the beginning of 2012, while some
Members have shown willingness to continue technical work, a view
has been expressed that such work cannot take place in isolation from
the tariff negotiation. This has put us in a difficult situation given
that tariff negotiations remain blocked. As a result, we have been
at a standstill for much of 2012."
In his personal considerations and conclusions, Ambassador Wasescha
said that the traditional mechanics on which the success of GATT tariff
negotiations is built does not work in the Doha Round. After accepting
a package of tariff reductions, Members used to implement these cuts,
which led to some structural adjustments. These adjustments allowed
Members to commit themselves to further cuts in the next negotiation.
This well experienced mechanism only works if governments are committed
to an economic reform process.
"While this mood still existed until 2006, this avenue appears
to be blocked at this stage. The active participation of developed
countries in tariff negotiations since 1947 has allowed medium tariff
rates to be brought down to levels where NAMA tariffs can no longer
be considered as barriers to trade. Tariff peaks remain however. Their
elimination remains an objective of the negotiations."
To establish an adequate balance of commitments for those developing
countries which are economically in a situation to do so is another
objective. This should be achieved without creating specific groupings.
According to the Chair, Members do group themselves in categories
according to their trade interests. In addition to the UN recognized
group of LDCs, the group of SVEs (Small and Vulnerable Economies)
and others have emerged in the Doha Round.
"The draft modalities for the NAMA negotiations show a great
flexibility for all these situations. The hesitation to engage in
the binding of autonomous tariff liberalization creates a perception
that these Members are refraining from engaging. The system acknowledges
the difference between bound and applied tariffs. This is the systemic
understanding of a policy space. I doubt that this concept has to
be further expanded."
Another imbalance has arisen from the fact that newly acceded Members
have had to cut their tariffs and bind them in a more extensive way
than founding Members of the GATT and/or the WTO. To correct this
imbalance should be another objective, even if it may conflict with
the recognized approach of less than full reciprocity.
If Members wish to engage on the present basis, they may wish to review:
the dimension of the cuts (coefficients); the flexibilities; and the
According to the Chair, one technical aspect which is open since the
conclusion of the Uruguay Round (UR) is the treatment of Initial Negotiating
Rights. This subject is not relevant for large exporters, but it might
be crucial for many smaller and medium-sized exporters, allowing for
a negotiating right in situations where concessions are withdrawn.
One could imagine a simplification by taking the outcome of the UR
as a starting point and building upon it. Such technical work could
be addressed immediately.
"The global market through global value chains demonstrates every
day in a more significant way that market access issues may need new
approaches, when the origin and the value of a product become global.
WTO should become a bridge builder between the global markets and
national trade policies. The Uruguay Round has allowed the establishment
of parallelism between goods, services and intellectual property rights.
The next logical step would be to extend this parallelism to investment
and competition policy. A further step would then be to integrate
all these areas in a broader more coherent multilateral system,"
Ambassador Wasescha concluded.
[Trade observers noted that at the Hong Kong Ministerial Conference
in 2005, at the insistence of Argentina, a parallelism in progress
was decided as between NAMA and Agriculture. In the latter, there
is a treaty commitment to proceed towards further reforms of the agriculture
sector to eliminate subsidies.
[The very same countries pushing for a "reform agenda" in
NAMA (including forcing developing countries to reduce from applied
tariff levels and bind them, for "real market access") have
not only been blocking the Marrakesh treaty commitments, but also
engaging in backsliding by shifting their subsidies through box shifting,
and in some sectors increasing them. Those backsliding on agriculture
reform include Ambassador Wasescha's own country, as also the US,
Europe, Japan etc, trade observers said.] +