8 June, 2005

A small degree of convergence started to become evident in several Members' negotiating positions during the first two days of a week of talks on non-agricultural market-access (NAMA) at the WTO, according to Geneva-based sources. A recent joint statement on the WTO NAMA negotiations by Asia-Pacific Economic Cooperation (APEC) countries (see related story, this issue) featured prominently during the discussions, with many delegations welcoming it as a useful boost to the faltering talks.

The 6-10 June session of the Negotiating Group on NAMA is divided among plenary sessions, smaller so-called 'Room D' meetings to which delegations may send a maximum of three representatives, and various small informal consultations with Chair Ambassador Stefan Johannesson of Iceland, in addition to bilateral and plurilateral meetings.

APEC countries collectively endorse Swiss formula

At a 2-3 June summit in Jeju, Korea, ministers from the 21 APEC member countries -- Pacific Rim states including China, Indonesia, Japan, Thailand, and the US -- endorsed the goal of a 'Swiss' formula for calculating NAMA tariff reductions in the Doha Round negotiations. Such an approach would see higher tariffs cut more steeply than low ones, and would 'harmonise' tariffs by bringing them sharply closer to a particular level. They also called for binding caps to be established for all tariff lines, with currently unbound tariffs to be subject to the reduction formula. The statement also encouraged a critical mass approach to developing sectoral liberalisation initiatives 'on a voluntary basis.' The ministers instructed their representatives in Geneva to pursue these aims in order to achieve 'substantial progress' by the end-July target date for 'first approximations' of an eventual accord to be adopted at the December WTO Ministerial Conference in Hong Kong.

The US has long espoused a similar approach, accompanied by differentiated coefficients -- and hence weaker reduction commitments -- as the only form of more favourable treatment accorded to developing countries (see BRIDGES Weekly, 16 March 2005, 16/story5.htm).

The recent statement was significant because it was signed by representatives from countries such as Malaysia, Thailand and Peru, which had not explicitly advocated using the Swiss formula in the past. Also notable was its assertion that the outcome on NAMA would be 'commensurate with agriculture.'

Senior trade officials from the US and Australia had welcomed the agreement, with Australian Trade Minister Mark Vaile saying that it would 'inject new momentum' into the talks at the WTO. Their sentiments were echoed by US manufacturers, who said that only a Swiss formula approach would reduce developing countries' generally higher levels of tariffs on industrial goods.

Four of the five proposals for cutting tariffs are based on the Swiss formula. The fifth, a formula put forward jointly by Argentina, Brazil, and India (the ABI proposal; TN/MA/W/54, available online at, would also cut higher tariffs more substantially that lower ones, but since it links tariff reduction to a country's average tariff level, would have countries with high overall tariffs make cuts less steep than those required by the other proposed formulae (see BRIDGES Weekly, 20 April 2005,

In response to the APEC declaration, Brazilian Foreign Minister Celso Amorim, a major critic of the Swiss formula approach, told the Financial Times that he was prepared to negotiate, but only in return for more concessions from rich countries on agricultural trade. Dissent was also voiced within APEC itself: Philippines Trade Secretary Juan Santos expressed disagreement with the aims of both binding unbound tariff lines and making them subject to the tariff reduction formula. 'The very act of binding tariffs is already a concession,' he told the Manila Times, 'it would therefore be unfair that the Philippines and other developing countries, having just newly bound their tariffs, should immediately be asked to concede an actual reduction.'

Geneva discussions 'move beyond concept to substance'

Negotiators described the first two days' work of the NAMA week as 'intense'and 'productive.' A brief plenary session was followed by a day and a half of smaller 'Room D' discussions on the tariff reduction formula and the treatment of unbound tariff lines.

The US, Japan, and the sponsors of the ABI proposal made presentations on what the different proposed formulae would deliver in terms of tariff reduction and market access. Sources report that the presentations indicated that the Swiss-formula approaches were demonstrably more effective at lowering tariff peaks. Some delegations expressed the concern that the ABI proposal only benefited countries with high tariff averages such as India.

Both APEC and non-APEC countries welcomed the APEC statement, with particular reference to the tariff reduction formula, the binding of all tariff lines, and the link to the agriculture negotiations. A Geneva-based trade diplomat said that the APEC declaration was very important because it contained information about the hitherto unknown specific views of governments such as the Philippines, Thailand, and Malaysia, particularly with respect to the treatment of their many unbound tariffs.

The delegation from one Asian APEC member state reportedly expressed the view that it now felt more positive about the Swiss formula coupled with special and differential treatment provisions than the ABI's proposed approach.

The APEC declaration leaves Brazil and India as the two largest countries that oppose a Swiss formula-based approach for the tariff reduction formula.In addition to Argentina, they are said to have the support of Jamaica and some Caribbean and North African Members.

One developed country source pointed to the APEC statement -- which had several developing countries committing to both a Swiss formula approach and binding all of their tariff lines -- as an example of 'some convergence' among Members' positions, saying that 'many countries are looking at solutions other than [those in the] ABI proposal on unbound tariffs. We are not [at convergence] yet, but are making progress towards having fewer options on the table.'

The remainder of the NAMA week will see more informal consultations with the Chair, bilateral and plurilateral meetings, and a 'Room D' session on non-tariff barriers.

ICTSD reporting; 'APEC breakthrough in nonfarm trade expected to spur WTO,'KYODO NEWS, 3 June 2005; 'US manufacturers cheer 'breakthrough' for WTO talks,' REUTERS, 3 June 2005; ; 'Manila shuns APEC lobby for reduction in global tariffs,' THE MANILA TIMES, 6 June 2005; 'APEC Trade Ministers Boost WTO Talks,' WTO REPORTER, 6 June 2005; 'Ministerial Statement on Doha Development Agenda Negotiations,' APEC PRESS RELEASE, 3 June 2005; 'Meeting of APEC Ministers Responsible for Trade: Statement of the Chair,' APEC PRESS RELEASE, 3 June 2005; 'APEC agrees formula for cuts in tariffs,' FINANCIAL TIMES, 3 June 2005.

Carin Smaller
Project Officer, Trade Information Project Institute for Agriculture and Trade Policy,
Geneva Office
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Geneva 1205
ph: +41 22 789 0734
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