TWN Info Service on WTO and Trade Issues (April 07/04)

16 April 2007

NAMA week focuses on Non-Tariff Barriers

Please see below a report of the negotiations on NAMA in the week 26-30 March at the WTO.
The NAMA talks focused on non tariff barriers.
With best wishes
Martin Khor
NAMA week focuses on Non-Tariff Barriers
Published in SUNS #6224 dated 3 April 2007
By Kanaga Raja, Geneva, 2 April 2007

A week-long meeting (26-30 March) of the WTO Negotiating Group on Market Access for Non-Agricultural Products (NAMA) was almost exclusively devoted to discussions on text-based proposals on how to deal with Non-Tariff Barriers (NTBs).

According to trade officials, there was no discussion as yet, at least in the open sessions, on the ''core modalities'' (tariff-reduction formula, coefficients in the formula, and flexibilities for developing countries) as Members continue to wait for the results in the agriculture negotiations before making commitments in NAMA.

The Chair of the NAMA Group, Ambassador Don Stephenson of Canada, launched the NAMA week by providing an assessment of the current state of play in the negotiations.

According to trade officials, to the question "where are we and where are we going", the Chair said that he was confused.

He said that he was not aware of progress in the Doha Development Agenda negotiations, which are now focused on agriculture but where the progress is slow. He further said that he was not clear on the situation in general.

Convergence among the key players is the necessary precondition to progress, but at the same time, the only possible breakthrough in NAMA is consensus at the level of the whole Negotiating Group on full modalities, said Stephenson.

Nevertheless, Stephenson said that "if the train leaves the station, it can gather considerable speed very quickly" and that's why he recommended the continuance of work on the difficult technical issues at hand: Non-Tariff Barriers (NTBs) and the sectoral component (elimination or harmonization of tariffs in key sectors).

The Chair also informed the Group that Saudi Arabia had joined the negotiating proposal by the Recently Acceded Members (TN/MA/W/83). (See SUNS #6200 dated 28 February 2007.)

The RAMs are calling for measures that go beyond the ones that will be given to developing countries: An implementation period of 5 years longer than the implementation period for developing countries; a grace period of 5 years; and a coefficient 1.5 times higher than the one for developing countries.

They are also calling for less than formula cuts applied to 15% of tariff lines or the possibility of choosing exemption from formula cuts for up to 10% of tariff lines.

According to trade officials, most of the discussions during the week was focused on NTBs.

To "facilitate and focus" the discussions on NTBs, the Secretariat was asked by the Chair to produce a compilation of text-based proposals on NTBs.

There are a total of nine text-based proposals: On labelling of textiles, apparel, footwear and travel goods (proposed by the US); on trade in re-manufactured goods (the US); on export licensing procedures (Japan); on trade related to electronics (the EC); on trade in textiles, clothing and footwear (the EC); on export taxes (the EC); on procedures for facilitating the resolution of NTBs (the EC); on procedures for resolution of NTBs (the NAMA-11); and on NTBs affecting forestry products (New Zealand).

According to trade officials, most of the progress made was on the EC and NAMA-11 group proposals for a horizontal mechanism to resolve disputes concerning NTBs.

Despite the presentation of texts in a draft agreement form and its compilation in one document, the Chair said that he was not moving to text-based negotiations but only to text-based discussions.

The text-based proposal by the US on labelling of textiles, apparel, footwear and travel goods calls for an agreement by which Members shall not require information on permanent labels or marking beyond country of origin, fibre content, care instructions, and information necessary for consumer safety, with respect to textile and apparel goods, and country of origin with respect to footwear and travel goods.

According to trade officials, Argentina, Cuba and China said that it was too early for a text-based discussion. Other Members such as Indonesia, Egypt, the Philippines and Thailand said that they needed clarification, in particular, on the need to provide information for consumer safety. Brazil expressed some doubts about the general thrust of the paper.

The proposal by the US on trade in re-manufactured goods calls for each Member's trade regime to evolve in a manner that enhances market access opportunities for re-manufactured goods, and that the Council for Trade in Goods should review progress in this field including progress in eliminating non-tariff barriers on such goods.

The US explained that the proposal does not call for a binding agreement, only for a declaration of intentions. The idea would be further examined after the conclusion of the Doha Round.

According to trade officials, many Members expressed some doubts about this idea. Among the comments made were that "the concept lacks clear definition", "it might conflict with local legislation" and "don't see the need for new disciplines".

The US elaborated that the difference between new goods and re-manufactured goods is that the first uses new or virgin goods, while the other utilizes used goods. But the end product has the same regulations or technical specifications.

On the proposal on export licensing procedures, Japan proposes to apply more or less the same provisions now applying for import licensing procedures to export licensing procedures for a more transparent and less restrictive trade regime concerning exports of certain goods.

Japan said that it is not a proposal to ban or further restrict the use of export restrictions. It is a proposal to enhance transparency.

According to trade officials, many countries rejected this idea. China said that it had "serious difficulties" and that this fell outside the mandate of this negotiation that talks about market access, "not access to products".

Similar views were expressed by amongst others Venezuela, Kenya, Malaysia and Cuba. India wanted more clarifications. The US said that it is a modest but useful proposal, while the EC and Korea supported Japan.

The proposal by the EC on trade related to electronics calls for measures to tackle the problem of divergent, duplicative and burdensome national standards, technical regulations and other procedures.

Some Members such as China and Argentina expressed concern that the WTO is not the right place for an issue like this which involves the harmonization of standards. Others said that the proposal for "one standard, one only test" was too ambitious.

The text by the EC on trade in textiles, clothing and footwear contains proposals to avoid similar effects concerning the labelling of textiles, clothing and footwear.

According to trade officials, some Members said that this is a matter for the Committee on Technical Barriers to Trade.

The proposal by the EC on export taxes calls for an agreement to abolish export taxes that go beyond the taxes applied to goods destined for internal sale on the grounds that they distort international trade, produce tariff escalation and serve as an indirect subsidization of the product. They also limit the availability of certain goods for manufacturing.

The EC explained that it does not seek to challenge the use of legitimate taxes in instances foreseen by the GATT Agreements, such as in cases of stopping illegal logging or in a financial crisis.

According to trade officials, the EC proposal however drew strong opposition from many developing-country Members such as Kenya, Argentina, Venezuela, India, Malaysia, Vietnam, Brazil, Cuba and Bangladesh. They all said that this goes outside the mandate of the negotiation.

The US said that it supports efforts to eliminate the distorting effects of export taxes and that it is an idea "worth exploring". Japan was "supportive".

Aware of the strong opposition to its proposal, the EC said that this proposal might fall into the realm of "exoteric academics" but added that it would draw the appropriate conclusions in other negotiating areas.

There were two proposals with respect to procedures for the resolution of NTBs. The one by the EC proposes "the establishment of a horizontal mechanism, in the form of a procedure for problem-solving in the area of NTBs, with short time-lines, as well as with the involvement of a facilitator that can assist countries in reaching mutually agreed solutions".

The NAMA-11 proposal meanwhile talks about the need for a new, standing, flexible and expedient mechanism that is 'solution based' rather than 'rights based' and that would offer creative and pragmatic results to conflicts regarding NTBs.

According to trade officials, the idea seems to be accepted now by the whole membership.

There was a lot of discussion on this, with Members asking a lot of questions on the scope of the proposals, the mandatory or voluntary nature of them, the financial implications, the timetable for the different stages of the resolution, the Secretariat involvement, and the selection of a mediator.

Thailand made calculations based on the experience of the EC among its Members and concluded that to put this idea into practice would exert a heavy burden on WTO resources with probably 36 cases per day in search for facilitators and a budget.

The EC however said that these figures are exaggerated since its own experience includes many aspects of the European Union policy and cannot be compared to this mechanism.

The proposal by New Zealand on NTBs affecting forestry products points out the differences in, and proliferation of, domestic standards and technical regulations in the building industry, and calls for Members to adopt the standards set by the technical committees of ISO (the International Standardisation Organization). It also calls for the ISO to work closely with the WTO.

At the end of the discussion, the Chair invited the proponents of the different proposals to provide new drafts by 30 April.

In his "caucus" meetings (taking place outside the WTO with the participation of ambassadors), the subject of "sectorals" was discussed.

[According to trade diplomats, at a NAMA Caucus luncheon meeting, where sectoral tariff elimination was discussed, there were differences on the pace and timing of the sectoral talks - between proponents (US, Japan, Norway, New Zealand, Switzerland, Singapore and others) and the EU and NAMA-11 coalition.

[While the proponents want sectoral talks with a 'higher level of ambition', India and others said that sectoral talks (for tariff elimination) were only voluntary, and could only be a 'supplement' to the tariff cutting formula. An accord on such a formula and the 'coefficients' had to be reached, before moving on sectorals. India, South Africa and other NAMA-11 coalition members also rejected any links being established between sectorals and tariff-cut formula negotiations.]

Stephenson said that the Negotiating Group might be able to focus on the architecture of the sectoral initiative soon, but discussing other aspects like participation and critical mass would not be feasible until later.

He also said that he wants to push this issue along, and added that "in the not too distant future, we'll have to talk (again) about the core issues", whatever happens in other negotiating bodies.

The next NAMA session takes place during the week of 7 May. The agenda for that week will include NTBs, further multilateral verification of ad valorem equivalents, the "architecture" for the sectoral initiative and small-group consultations in different aspects of the negotiations. +