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TWN Info Service on WTO and Trade Issues (Mar07/06)

20 March 2007

 

No agreement on NAMA tariff cuts at WTO

A week of NAMA negotiations (26 Feb to 2 March) ended with no discussions on the key issue of tariff cuts.The real talks on NAMA are being held elsewhere and negotiations at the WTO will only commence after the impasse in the agriculture negotiations is unlocked.

The Chair of the NAMA talks said that there is no agreement on the NAMA formula to be used for making industrial tariff cuts.

"There is no consensus that can be ascribed to the NAMA negotiations on the coefficients," he replied when asked whether countries were converging around the coefficients of 10 and 15 for the tariff cut formula, as have been suggested in some news reports.

He added that the values of 10 and 15 for developed and developing countries respectively to be applied in the formula "is the proposal being publicized by the EU and some other members, but there is no consensus" on them. 
 
Below is a report of the NAMA talks which was published in SUNS of 5 March.
 
With best wishes
Martin Khor
TWN
 
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No agreement on NAMA tariff cuts at WTO
By Goh Chien Yen (TWN), 2 March 2007
 
 
Another week (26 Feb to 2 March) of negotiations at the WTO on market access for non-agricultural products (NAMA) ended with no discussions on the key issue of tariff cuts.  According to trade diplomats, the real talks on NAMA are being held elsewhere and negotiations at the WTO will only commence after the impasse in the agriculture negotiations is unlocked. WTO members would have to balance the level of ambition in NAMA vis-a-vis agriculture and services.

The Chair of the NAMA Negotiating Group, Ambassador Don Stephenson of Canada, told journalists at a media briefing on 2 March that there is no agreement among members on the NAMA formula to be used for making industrial tariff cuts.

"There is no consensus that can be ascribed to the NAMA negotiations on the coefficients," he replied when asked whether countries were converging around the coefficients of 10 and 15 for the tariff cut formula, as have been suggested in some news reports.

He added that the values of 10 and 15 for developed and developing countries respectively to be applied in the formula "is the proposal being publicized by the EU and some other members, but there is no consensus" on them.

According to some US media reports, in the 'NAMA caucus' talks among a small group of key countries held by the Chair last Friday, there was sharp disagreement over the 10 and 15 coefficients proposed by the EC.

A coefficient of 10 for developed countries would result in their making a cut of between 23% to 25% to their tariffs, while the coefficient of 15 for developing countries would lead to a cut of more than 60% to 70%, depending on their individual tariff profiles.

This is contrary to the mandated principle of "less than full reciprocity."

Even some developed countries were reported to have raised objections against a coefficient of 10 for the developed countries.

Despite the lack of progress on the tariff cut formulae, the Chair said that he is encouraged by the discussions this week, as members were more engaged than they had been at the previous meeting in January.

"We had a limited agenda, but a great deal of engagement," he said.

The limited agenda this week (on which there was 'a great deal of engagement') centred on non-tariff barriers (NTBs) and the treatment of recently acceded members (see SUNS #6200). Several countries have also been meeting among themselves on the various sectoral initiatives, where the tariffs of the participating members to these sectors will be eliminated.

On the NTB discussions that took place on Tuesday, the export taxes (TN/MA/W/11/Add. 6) and export restrictions (TN/MA/W/15/Add. 4) proposals of the EC and Japan respectively drew significant opposition from other members.

The refined EC proposal seeks to restrict members' usage of taxes on goods that are intended for export. The EC tried to calm concerns by saying that export taxes can be imposed to deal with issues such as financial crisis, short supply of the product and protection of the environment and of infant industries.

Nonetheless, there was a chorus of opposition from numerous members including Argentina, Malaysia, Brazil, India, Venezuela and South Africa. They pointed out that export taxes is not part of the mandate of the negotiations, and to introduce it at this stage would affect the balance of the negotiations.

The US response to the proposal was tepid, pointing out that its domestic industries have a lot of concern. They are still studying the proposal and have not taken a decision yet.

The Japanese proposal on export restrictions usage also attracted emphatic disapproval from several delegations. While it claimed that it is only about transparency rather than imposing new rules on the members, several countries including Venezuela, India, Malaysia and others, rejected the proposal.

Korea and the US, on the other hand, were more sympathetic on the assumption that it is only a matter of transparency.

There was more consensus among members around the issue of establishing a new procedure in the WTO to deal with NTBs, referred to as the "horizontal mechanism" by its proponents.

There are two concrete proposals, one from a grouping of developing countries in the NAMA negotiations known as the NAMA-11 Group [its ten members include Argentina, Brazil, Egypt, India, Indonesia, Philippines, South Africa, Namibia, Tunisia and Venezuela (TN/MA/W/68/add. 1)], and another by the European Communities (TN/MA/W/11/add. 8).

The EC justified its proposal arguing that there is a gap in the current procedures to deal with NTBs. Members are faced with the extreme "nuclear option" of the DSB on the one end and the "talkative club" of the regular WTO bodies on the other, the EC said. "We need something in between."

The EC said its proposal for a mechanism (in between the DSB and the regular WTO bodies) will not be a new legal body and that members' rights and obligations will not be prejudiced by this mechanism.

The NAMA-11 said that NTBs are the important "other half" of the negotiation. The Group considers that its proposed mechanism is not an alternative to the Dispute Settlement Mechanism or an addition to it, rather it is merely a "process" for resolving NTBs.

According to trade officials, Japan said that it sees this mechanism as a meditation effort. Norway celebrated that the EC has taken a step back from giving its proposed mechanism a kind of legal framework.


On the other hand, Chile and Costa Rica were more apprehensive expressing doubts as to its implementation. The US was also non-committal saying that it had a lot of questions on both proposals - on the workability, structure and cost of such a body.

The Chair observed "a lot of support", conditional on answers to some questions on the workings of such a mechanism. Several other proposals on NTB were also discussed on Tuesday.

To move things forward, a "soft" deadline of 23 March was set by the Chair for members to submit legal drafts for the vertical and horizontal NTB proposals, in order for them to be considered at the next NAMA week of negotiations to start on 26 March. +

 


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