TWN Info Service on WTO and Trade Issues (June08/21)
28 June 2008
Third World Network

Trade: Some movement on Mercosur request saves NAMA talks
Published in SUNS #6503 dated 25 June 2008

Geneva, 24 Jun (Martin Khor) -- Informal talks among 12 countries (dubbed the G12) on non agricultural market access (NAMA) organized by the United States continued on Sunday and Monday, with some progress on discussion of the request by Mercosur countries to have an extra flexibility for members of customs unions in relation to applying tariff cuts under the Swiss formula.

The discussions have been on the methodology in calculating the number or percent of tariff lines affected by the extra flexibility that have been insisted on by Brazil, Argentina and other members of Mercosur.

The United States, European Union and other developed members of WTO have been against the Mercosur proposal to allow developing countries that are in a customs union to exclude trade within the customs union when calculating the value of trade that can be excluded from the full formula cut.

In the draft NAMA text, a developing country affected by the Swiss formula can allocate [10] per cent of its NAMA tariff lines to be subjected to half of the full tariff cuts dictated by the formula, but this must be restricted to 10% of the total value of the country's NAMA imports. As an alternative, the country can exclude [5] per cent of its NAMA tariff lines from any cut, but this also has to be restricted to 5% of the total value of imports.

By excluding intra-customs union trade from the calculation of the total value of trade, the Mercosur countries would be able to get flexible treatment for additional tariff lines.

The strong opposition from major developed countries to the Mercosur proposal almost led to the collapse of the G12 talks, with Brazil's chief negotiator, Roberto Azevedo, saying last Friday that if there was no progress on Sunday at the G12 meeting, there would have to be a "stocktaking" of the whole negotiations.

Journalists to whom he was speaking took him to mean that Brazil would have to consider whether it was worthwhile continuing with the entire negotiations. Azevedo and the US Ambassador Peter Allgeier reportedly had a heated exchange on the Mercosur issue.

Brazil's Foreign Minister Celso Amorim has said that his country placed its trade relations with Mercosur on the highest priority, and the Doha negotiations would not be allowed to damage that relationship. The acceptance of additional flexibility for Mercosur countries in NAMA is seen as a condition for Brazil and also Argentina (which is even more concerned about the direction of the NAMA negotiations) continuing with the Doha talks.

Simulations undertaken by the WTO Secretariat based on data on the external trade of Brazil and other Mercosur countries were discussed at the G12 meeting on Sunday. Methodologies to assess the trade data and new options for approaching the flexibility issue were also discussed, according to sketchy reports of the Sunday and Monday meetings.

Ambassador Don Stephenson of Canada, Chair of the NAMA negotiations, told journalists Tuesday that there had been some progress at the G12 talks. For the time being, the G12 would take a pause, and he would now hold some consultations and meetings later this week.