TWN Info Service on WTO and Trade Issues (June 07/14)

17 June 2007

North's NAMA proposal is 'an absolute no', say NAMA 11 Ministers

Ministers of South Africa and Argentina, representing the NAMA 11 group of developing countries, met with trade unions and NGOs on 12 June after the Ministerial meeting of the NAMA 11.  They also gave a press briefing.

Mr. Mandisi Mpahlwa, Trade Minister of South Africa, which coordinates the NAMA 1`1, said:  "There will be no progress in the Doha Round negotiations if the developed countries continue to insist on their proposal in NAMA that developed and developing countries have coefficients of 10 and 15."

They would have the impact of causing de-industrialisation in developing countries. He remarked that they are therefore "an absolute no" and that "there is no way to make progress on the Doha Round with this."

Alfredo Chiaradia, the Secretary of Trade of Argentina, said there was an unfair imbalance between what the developed countries are agreeing to do themselves in agriculture and what they are demanding from developing countries in industrial products.

And within the NAMA negotiations, the rich countries are asking developing countries to cut their tariffs by 70%, but what they propose for themselves results in a cut of only 28%, said Chiaradia, adding: "They want the developing countries to cut by 70% when we need to have industries, and they only agree to cut 28% themselves. This is not fair."

The report below was published in the SUNS on 13 June.

With best wishes
Martin Khor
TWN 

North's NAMA proposal is 'an absolute no', say NAMA 11 Ministers

By Martin Khor (TWN), Geneva, 12 June 2007

There will be no progress in the Doha Round negotiations if the developed countries continue to insist on their proposal in non-agricultural market access (NAMA) that developed and developing countries have coefficients of 10 and 15 respectively in the tariff reduction formula.

This was stated by Mr. Mandisi Mpahlwa, Trade Minister of South Africa, which coordinates the NAMA 11 group of developing countries, after a Ministerial meeting of the group on Monday.

Briefing the media, Mpahlwa said that the proposed coefficients would have the impact of causing de-industrialisation in developing countries. He remarked that they are therefore "an absolute no" and that "there is no way to make progress on the Doha Round with this."

Alfredo Chiaradia, the Secretary of Trade of Argentina, another leading member of the NAMA 11, said there was an unfair imbalance between what the developed countries are agreeing to do themselves in agriculture and what they are demanding from developing countries in industrial products.

And within the NAMA negotiations, the rich countries are asking developing countries to cut their tariffs by 70%, but what they propose for themselves results in a cut of only 28%, said Chiaradia, adding: "They want the developing countries to cut by 70% when we need to have industries, and they only agree to cut 28% themselves. This is not fair."

The South African Minister and the Argentinian Secretary of Trade were speaking to the media after the conclusion of the NAMA 11 Ministerial meeting held Monday afternoon, following earlier meetings of other developing country groupings, the G20 and G33, that operate in the agriculture negotiations.

Other NAMA-11 Ministers present at the meeting were Celso Amorim of Brazil, Kamal Nath of India and Mari Pangestu of Indonesia.

The NAMA-11 comprises Argentina, Venezuela, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa and Tunisia.

The South African Minister also remarked that what was asked of developing countries in NAMA is not proportionate with regard to what is being offered in agriculture. Mpahlwa stressed the importance of the NAMA negotiations adhering to "double proportionality" - proportionality between developed and developing countries within NAMA, and proportionality between agriculture and NAMA in the Doha package.

He said that the NAMA 11's position that there be a sufficient gap between the coefficients for developed and developing countries was based on simulations done by the NAMA 11 which show the impact on developing countries of different coefficients. (The NAMA 11 position is that there must be a difference of at least 25 points between the coefficients.)

He also said that the flexibilities for developing countries, in paragraph 8 of the NAMA framework in the July 2004 package, are up for discussion.

The Argentinian Secretary of Trade commented that the use of the Swiss formula in NAMA is a problem as it makes the negotiations difficult to grasp. Chiaradia said that there is already a fundamental difficulty in the overall negotiations in trying to achieve a fair balance in the Round. Since the agreement is a "single undertaking", there has to be some way to calibrate what a country gives and what it gets.

The problem is compounded in the goods negotiations, as we are dealing in agriculture and NAMA with different negotiating tools - the Swiss formula with coefficients in NAMA and the tiered formula with bands in agriculture, said Chiaradia. "This makes it hard to measure the contributions made by different members," he said.

He added that the NAMA negotiations are supposed to be guided by the principle of less than full reciprocity (LTFR), but the Swiss formula made it hard to measure the percentage cuts of different countries (and thus difficult to see if the principle is being followed).

"When we speak of coefficients in NAMA, it's something that cannot be grasped. When I say coefficient 10 or 15 or 25, it doesn't mean anything until you find out what impact these have on your tariffs," he said.

Referring to the developed countries' proposal of coefficients 10 and 15, Chiaradia said that the rich countries are in fact saying that developing countries should cut their average tariff by 70% but they cut their own average tariff by only 28%. "They want developing countries to cut by 70% when we need tariffs to have an industry, but they themselves want to cut by only 28%. This is not fair."

He added that what the developed countries agree to do in agriculture and what they demand of developing countries in industry is also unfair, and this was exposed by the NAMA 11 paper submitted to the WTO on 8 June.

The Secretary of Trade remarked that the developed countries' response to the NAMA 11 proposal was that "this is not the way to go" and they asked how could the NAMA 11 propose an "outlandish" coefficient of 35. He said that in fact a coefficient of 35 implied a substantial cut of 50% in the tariff of a majority of developing countries.

A journalist commented that the chair of the NAMA negotiations and diplomats of developed countries had told him that paragraph 24 (of the Hong Kong Declaration) was only a "political statement" and had no other negotiating meaning, and asked for comments on this.

Chiaradia said that the WTO negotiations have to fully respect paragraph 24, which is on the need for balance between the ambition level in NAMA and agriculture.

This paragraph shows that some members such as the EU and Japan are very defensive in agriculture and very offensive in NAMA, he said, adding: "When you demand something, you must offer something. If there is no linkage, they can do what they want, such as asking for coefficients 10 and 15. But you have to think before you demand, because you have to offer something. Paragraph 24 puts a restraint on the demand."

South Africa's Deputy Trade Minister Rob Davies said that China could have taken a more "mercantilist" approach in NAMA by placing demands on other developing countries, but it had instead taken a broader perspective and shown more understanding for the needs of developing countries.

Davies said that the EU and the US should take a similar approach. In agriculture, there was a "take-it-or-leave-it" attitude by the major developed countries last year but it was more like a give-and-take situation now. The same spirit of give-and-take is not there in NAMA. It's a take-it-or-leave-it attitude, a "pack up your bags if you do not accept our views" approach, said Davies. "If this is the negotiating methodology, you are putting the Round at risk."

Earlier, the NAMA 11 meeting adopted a "NAMA 11 Ministerial Communique" of 11 June 2007. The Communique emphasized the objective of achieving "a fair, balanced and development oriented result in accordance with the mandate."

The Ministers said that the NAMA 11 is committed to work with the Members in "the search for pragmatic and creative solutions" to achieve a successful conclusion of modalities in the NAMA negotiations, in concert with the negotiations in Agriculture.

"A successful outcome will only be obtainable if the outcomes within NAMA and between NAMA and agriculture are balanced, as established in the Doha mandate and paragraph 24 of the Hong Kong Declaration," said the Ministers.

"An outcome that seeks to lower the contribution of developed countries in Agriculture, with no effective cuts in domestic support and resulting in no new trade flows, and also insists on developing countries making disproportionate and imbalanced contributions in NAMA, will be unfair and inconsistent with the mandate.

"We recall that the mandate emphasises the need for developed countries to provide enhanced market access to developing countries, and we therefore state that it is inappropriate for developed countries to place extreme demands on developing countries.

"Developing countries cannot be expected to pay for the Round by accepting a Swiss coefficient of 15, whilst developed countries make minimal reductions to their own industrial tariffs. This is totally imbalanced and disproportionate and bears no correlation with the offers of developed countries in agriculture.

"We stress that a difference of at least 25 points between the coefficients of developing and developed countries takes into account the principle of "less than full reciprocity in reduction commitments", that requires developed countries to do more than developing countries, that is to make a deeper cut in their tariffs and a greater effort.

"We recall that the NAMA 11 has called for the numbers in the brackets of paragraph 8 to be increased for developing countries so as to accommodate their development needs.

"We recognise that increasing binding coverage is an important objective; the fact that most developing countries will significantly increase their binding coverage will be an important result for this Round. The mark-up for unbound tariff lines must be considered in the context of the inherent sensitivity of these products and should be at least 30 points.

"A successful outcome of the negotiations is only possible if the Round delivers on its development objectives. This means correcting past imbalances in the multilateral trading system and, for the first time, tipping the balance in favour of developing countries." +