Report 2 on WTO Symposium: NGOs and trade unions criticise NAMA framework during WTO symposium

9 May, 2005

By Goh Chien Yen, TWN, Geneva

A coalition of civil society organizations (CSOs) has called for a halt to the WTO negotiations on non-agriculture market access (NAMA), for an assessment to be conducted on the current proposals, and for a rethinking of what should be in the eventual framework.

The call was made by some leading development and environment groups as well asglobal and national trade unions and organizations of fisher-folk during the WTOpublic symposium on 'WTO after 10 years: Global problems and multilateralsolutions' taking place here on 20-22 April.

At a session on 'NAMA is key: a debate on civil society concerns about the NAMAnegotiations' organized by 11 organisations, speakers pointed to the negative impactsthat the present NAMA framework would have on local industries and industrialdevelopment prospects in developing countries, on employment and poverty, and onthe environment.

The NGO speakers also engaged in a lively debate with representatives of industryand WTO diplomats. The 11 co-sponsors of the session were Greenpeace, Friendsof the Earth International, ICFTU, the Third World Network, PSI, InternationalMetalworkers Federation, Seatini, ActionAid, CIEL, IATP and IFG.

The session chairman, Daniel Mittler of Greenpeace, said many CSOs from diversebackgrounds (development, environment, human rights, trade unions, fisher-folk, etc)had been examining the NAMA negotiations and were united in their concerns on theprocess and the content of the negotiations. They were holding the session to sharethese concerns with other CSOs and the policy makers.

Martin Khor of the Third World Network said that liberalization of industrial importscould have both positive and negative effects, depending on how a country formulatedits trade and development policies. The developed countries and successfuldeveloping countries had taken care to protect and nurture their local industries duringtheir development stage, including through tariffs and subsidies.

He cited data showing that developed countries such as the US and Europeancountries had industrial tariffs during their development phase that were far higherthan the present average tariffs of developing or even least developed countries. Hesaid that many developing countries had suffered the collapse of local industries andloss of industrial jobs when applied tariffs were drastically reduced under loanconditionalities.

He added that until now, the GATT and WTO practice allowed for considerableflexibility for developing countries on what tariffs to bind and at which rates, and onthe pace of import liberalization. During the Uruguay Round, countries were notsubjected to a formula to reduce tariffs; there was a target for developing countriesto reduce industrial tariffs by 30% on average and thus they had flexibility to choosethe rates for specific tariff lines.

However, the NAMA framework arising from the July 2004 package would, ifimplemented, remove or reduce the existing flexibilities and subject developingcountries to drastic tariff reductions across the board. Countries would have to bindall their tariffs (already a major commitment on their part) but not at rates they chooseas the unbound applied tariffs would be multiplied by two and then subjected to aformula cut, which would mean binding them at low levels.

As for the formula, many developing countries would be required to reduce theirtariffs by more in percentage terms and in terms of percentage points if a non-linearformula is used. This would contradict the principles of 'less than full reciprocity'adopted in the Doha Declaration, the meaning of which is that developing countriesshould not be required to undertake commitments inconsistent with their individualdevelopment, financial and trade needs.

Khor added that while LDCs were exempted from the formula, it can be expected thatthey would also be affected by steep tariff cuts when they graduate from being LDCs;and the flexibilities given to other countries were too few and too little in quantity tobe able to offset the damage that could be done to industrial development prospectsby the huge tariff cuts implied by the NAMA framework.

Carla Coletti of the International Metalworkers Union expressed serious concernsabout the employment repercussions of the NAMA proposals, which she said hadbeen only marginally examined. She asked for a proper employment impactassessment to be carried out as part of the negotiations and asked that decisions notbe taken until the proposals could be shown to not negatively affect employment.

Taking up this theme, Tanya van Meelis of the Congress of South African TradeUnions (COSATU) said that it was wrong to approach the NAMA negotiations withthe goal of binding and reducing tariffs as much as possible. The main problems inSouth Africa are high unemployment of up to 40%, high poverty and inequality. Trade policy had to contribute to industrial development policy with the goals ofreducing poverty, unemployment and inequality.

The test of NAMA therefore is not the extent of bindings or tariff cuts but the extentto which the policies reduce poverty and unemployment. The priority was to generatejobs in labour-intensive sectors and trade policy should ensure that local industriesthat supply jobs are protected and supported.

She cited data to show that in recent years, South Africa was losing more jobs due toimports, especially in labour-intensive sectors, than it was gaining from exports. Sheexpressed concerns that the NAMA framework and proposals would seriously worsenthe trade trends and thus worsen unemployment and poverty.

Among the implications of NAMA is that a line-by-line formula cut would result inSouth Africa losing its preferences and hinder the growth of labour-intensive exports,and damage industrial strategy of climbing the value chain. Imports would accelerateand further threaten certain sectors such as textiles and clothing where 1000 to 2000jobs were being lost monthly. It would be a disaster for South Africa and its attemptto advance the economy.

There would also be negative regional effects, as many countries in Southern Africawere looking to the South African market for growth. She said that an effect ofNAMA is that if South Africa lost its own domestic market to imports, the regionwould lose its market in South Africa. The region would then be trapped in havingto find jobs in the mineral sector, and this would be a 'kiss of death' forindustrialization for the country and region.

'Leave us with the tools to develop our own industrial policy,' she said. 'PushNAMA in the present way and you take away our chance.'

Ronnie Hall of Friends of the Earth International said the NAMA negotiations wouldseriously affect the environment in several ways. In the sectoral approach for tariffelimination, some natural resource based sectors were selected, and acceleratedliberalization would deplete the resources rapidly.

She expressed grave concerns that countries had submitted many proposals on theremoval of non-tariff barriers. These proposals touched in many cases on measuresthat countries have for genuine social and environmental purposes. An FOE studyhad found 72 challenges to environmental and social measures. These challenges andthe removal of such measures would extend the reach of the WTO to domestic policyspace of countries much more than now.

Among the measures that were challenged were those that regulate foreigninvestment, that promote fuel efficiency in motor vehicles (which are needed tocombat climate change), restrictions on export of natural resource based productssuch as forest and mineral sectors, and restrictions on chemicals and other toxicmaterials on safety grounds. A main concern is that the NAMA outcome wouldincrease unsustainable consumption and threaten genuine measures that protect healthand the environment.

Hall said that the NAMA negotiations should stop to allow an impact assessment tobe carried out.

During question time, a representative of the chemical industry said that it wassympathetic to having flexibilities for LDCs and some developing countries, butopening the markets of big emerging countries such as China, India and Brazil wasimportant. How could such differentiation be carried out?

A representative of the EC delegation to the WTO agreed that the Doha negotiationsshould benefit developing countries and should not destroy their nascent industries.However, there were flexibilities in the NAMA framework that protect LDCs andother developing countries. He expressed worry about the call to stop the NAMAnegotiations.

Khor replied that differentiation was a complex and highly charged issue whichshould not be pursued, especially since this was not in the mandate of the DohaDeclaration. It was not fair to take an approach that developing countries would beaffected by an 'ambitious' formula or tariff liberalisation method, simply to be ableto open markets in big developing countries.

He added that it was also unfair to single out the three countries mentioned justbecause they had large populations. Each of the countries had their own problems andcharacteristics. For instance, India had a large population that was poor and most partsof India could be considered an LDC. China was still a developing country and hadjust undergone rapid liberalization because of its accession process and its tariffs werealready very low. And Brazil also had large pockets of urban and rural poverty as wellas a very large external debt, which required it to earn foreign exchange surplus toservice the debt.

If special pressures were put on these countries, including removal of special anddifferential treatment, it would be unfair, and could also result in damaging effects.

He added that the flexibilities in the NAMA framework were very restricted andindeed stingy, as there would be exemption from the formula or bindings for only 5%or 10% of tariff lines valued at 5% to 10% of import value. And even this is soughtto be taken away or eroded by recent proposals.

Khor said that development concerns are not taken into account in the framework orthe proposals. Thus, it would be useful to review the framework in light of theconcerns raised, and to see if a better framework can be drawn up, so that the resultwould really serve and not counter development needs.