TWN Info Service on WTO and Trade Issues (Nov07/03)
1 November 2007
is a report on an informal paper prepared by
The following article is reproduced here with the permission of the South North Development Monitor (SUNS). Any reproduction or re-circulation requires permission of the SUNS (email@example.com).
Geneva, 16 Oct (Kanaga Raja) -- Developed countries should offer a tariff reduction of at least 50% with respect to non-agricultural products, which can be achieved through a Swiss coefficient of 5, whereas developing countries should use a coefficient of 28.5 or 30, according to an Indian discussion paper on the modality for formula and flexibilities.
(The NAMA Chair's draft negotiating text calls for a coefficient of between 8 and 9 for developed countries and 19 and 23 for developing countries.)
The discussion paper said that the Hong Kong Ministerial mandate requires that the reduction commitments of members should follow the hierarchy of developed countries making the greatest tariff reductions; the developing countries applying the formula come next; and finally, the Small and Vulnerable Economies (SVEs) offer lesser tariff reductions than the other developing countries.
Given the SVE proposal that they will be offering a tariff reduction of up to [40%] on the average for the highest band, the developed countries should therefore offer a reduction of at least [50%], said the Indian paper.
Given the developed country tariff average of 5.9%, this can be achieved through a Swiss coefficient of 5.
(A footnote in the paper said that this has been demanded by several developed countries as well as developing country members.)
The discussion paper said that the developing countries applying the formula then should offer a reduction between [40% and 50%] on the average. Given the developing country average bound rate of 28.5%, a coefficient of 28.5 or 30 would result in developing countries concerned offering a tariff reduction of about 50%.
Regarding flexibilities for developing countries, said the paper, the present proposal of 10/5% exceptions can be built further and converted into a graduating scale whereby on one end of the scale would be the Mexican proposal of a higher coefficient for no flexibilities and on the other side of the scale would be higher flexibilities for lower coefficients.
The paper provided examples of this concept: Coefficient 33, no flexibility; coefficient 30, 10/5% tariff lines; coefficient 27, 13/6.5% tariff lines; and coefficient 24, 15/7.5% tariff lines.
The Indian paper said that regarding the trade limitation, the MFN trade covered by the tariff lines would also correspondingly increase. Since the tariff commitments do not affect the preferential trade, the trade coverage shall not be taken into consideration for calculating the trade coverage.