TWN Info Service on WTO and Trade Issues (Mar08/05)
5 March 2008
Third World Network

Trade: Concerns about "horizontal process" emerge at NAMA meeting

Published in SUNS #6427 dated 4 March 2008

By Martin Khor, Geneva, 3 Mar 2008

Some delegations at the WTO have raised concerns that the negotiations on non-agricultural market access (NAMA) have not progressed enough to warrant a move to a "horizontal process" which is apparently scheduled to take place in the week of 17 March.

The comments were made Monday (3 March) at an open-ended meeting on NAMA, when two countries (Venezuela and China) commented that the process of NAMA negotiations could not be completed by 17 March to enable the horizontal process to start.

The "horizontal process" refers to negotiations in a selective small group of WTO members that will discuss the modalities of both agriculture and NAMA together, with "trade offs" to be expected in hard bargaining sessions. This process is expected to involve senior officials from capitals and later Ministers. It is not known which countries are selected, or by which criteria and process.

The Chair of the NAMA group, Ambassador Don Stephenson of Canada, indicated that he will produce a new revised text on NAMA modalities before 17 March, but seemed to agree that with this deadline there is little time left to complete the work.

"I did not mean I want to abolish the negotiating group," he responded to members' comments at the meeting. "But if are targeting an agreement (i. e. the whole Doha Round) by the end of the year, we are seriously out of time."

He also announced that there would be more Room E meetings this week, with non tariff barriers to be discussed on Monday afternoon and Tuesday morning, and the issue of LDCs on Tuesday afternoon.

At the start of the meeting the Chair reported on what had happened at the small-group "Room E" meetings held on Monday to Wednesday last week. (See SUNS #6424 dated 28 February for a report of these meetings). He also gave his views on the future process.

A highlight of last week's meeting was an oral presentation by Stephenson on his new ideas on eight options for flexibilities for developing countries that are subject to the tariff-reduction formula. He followed this up by sending a paper detailing the 8 options to delegations the following day.

The Chair's new proposals have thrown the NAMA negotiations into further confusion, with many countries at the Room E meeting last Wednesday saying that the options outlined were technically complex and difficult to understand, and that by the Chair putting this forward at this late stage, he had further complicated the negotiations and made them harder to complete.

Some members (notably China) had called for simulations to be done by the WTO Secretariat on the various options in terms of their implications on the country concerned.

If the Secretariat were to run such simulations for countries that made such a request, it would take a long time to do and for the results to be studied, commented a trade official outside the meeting. There simply would not be enough time to do this or to have the results as inputs into the negotiations, if the "horizontal process" is to start in mid-March.

At today's meeting, the Chair referred to the Room E meetings of last week and said he could not close any item and everything remains open, indicating that there had been little or no progress in bridging the differences.

He said that if there are changes in position which merit a revised text, he may produce such a text no later than 17 March, in tandem with the agriculture revised text.

He said he did not have a lot to be added to his text and he regretted that there was no sense of urgency in the group. He added that a deal is possible in NAMA and his central fear was that "we don't find it". He wanted everyone, not just the big countries, to show leadership.

Venezuelan Ambassador, Oscar Carvallo, referred to the new options which the Chair had put forward, and remarked that what the Chair said was contradictory because he implied that the process is reaching the end, but at the same time he had offered new options that requires significant time to discuss.

Venezuela expressed concern about preparations for a "horizontal process" involving high ranking officials in two weeks' time without the Group being prepared for it.

Carvallo said it was up to the Negotiating Group or the Trade Negotiations Committee (TNC) to decide when the moment is ripe for the horizontal process. He did not see enough elements to engage in this new process at present.

Venezuela said it was worried that a horizontal process is being prepared to be held in two weeks, and asked with what substance was it being prepared, and who was deciding on the process. It did not see how we can go to the horizontal process now.

China said the task of the NAMA negotiating group is far from being completed, and in its view the group's work cannot be over by 17 March.

Malaysia said that the negotiations on NAMA must continue, and the NAMA negotiating group has to be alive even beyond the horizontal process.

Stephenson responded to these comments by saying that this process will never be over, and he did not mean he wanted to abolish the negotiating group, but if we set a target to have an agreement (of the whole Round) by the end of the year, then we are seriously out of time. His idea is to review the text "this side of Easter".

Venezuela responded to this, stating that its main worry is that a particular setting would be established in the horizontal process, in which only a few members make the decisions and trade among themselves. The Ambassador said that it is for the negotiating group and the TNC (and not a small number of countries) to decide on the content and to see if there should be a horizontal process.

Stephenson also reported on the substance of last week's Room E discussions.

On "Paragraph 6" countries (12 countries that have less than 35% of bound tariffs, referred in the Chair's text in para 8) a new proposal is expected by Kenya for a tiered approach, with the countries categorized in three groups, each with a different level of final tariff bindings. (In the Chair's latest draft the options are between 70 to 90 per cent of tariff bindings).

On Recently Acceded Members (RAMs), (dealt with in paragraph 18, 19 and 20 of the Chair's text), no consensus was reached on the request by China for an increased coefficient (1.5 times higher than for developing countries in general) for the four RAMs that are subject to the formula (Oman, Croatia, China and Chinese Taipei).

The Chair said at today's meeting that there was what he called a clear "no" from some Members that indicated that what was in the July 2007 text was the maximum they could accept. The chair said there was not much he could take from the discussion for a revision of his modalities text.

[At the Room E meeting, according to trade officials, the major developed countries strongly objected to providing extra flexibilities for RAMs, with the EU saying it was "shocked" that the Chair was proposing an extended implementation period. The US and EU also opposed China's request that its proposal of an increased coefficient (i. e. 1.5 of the general coefficient for developing countries) be put as an option (in square brackets) in a revised text.]

On SVEs, the solution has been made difficult because there seemed to be divergent views on the percentage cut in tariffs in the three proposed tiers even among the SVE proponents, according to a trade official.

A proposal by Bolivia for special treatment (leaving their current bound tariffs as they are, without need for reduction) because of its special economic circumstances, was widely supported. At today's meeting, the Chair asked Bolivia to put its Bolivia its proposal on treatment in writing.

The main development in the Room E meetings was the proposal by the Chair containing 8 options, most of them linking the flexibilities for developing countries with the coefficient in the tariff-reduction formula that they are to adopt.

At the Room E meeting, the Chair gave a lengthy description of his idea of a "sliding scale" by which the movement upwards or downwards in the flexibilities for developing countries (paragraph 8 in his text) would be linked to a corresponding movement downwards or upwards in the coefficient of the formula.

This sliding scale was one of 8 options that he verbally presented, which he called "flexible flexibilities". The set of options are complicated, and Stephenson himself said some of the options were "mathematically challenging."

According to a trade official, there was little reaction technically to the Chair's proposed options at the Room E or the open-ended meetings, because the members wanted time to examine the options, and some said they wanted simulations to be done to analyze the implications of the various options on their tariffs.

At Room E last Wednesday, there was skepticism shown by several countries and even rejection by some, according to the official. A common concern expressed by many members was that the Chair's new options would now complicate or delay the negotiations even further at this very late stage.

At today's open-ended meeting, Stephenson said, with regard to his new ideas, that "some instinctively like or did not like some ideas or felt them to be too complicated". But he said that people are brainstorming on his ideas adding that what is now required is "real engagement and discussion among yourselves to further articulate these ideas".

Only Switzerland and Chinese Taipei reacted at today's meeting to the Chair's options. Switzerland liked some of the ideas and did not accept others. It objected to one of the options which it said went against the "Swiss formula" that had already been agreed to. Chinese Taipei said that some of the ideas would prolong the discussions. +