Chair of WTO NAMA Negotiations Says Window of Opportunity for Deal Closing

GENEVA -- The chairman of the World Trade Organization's negotiating group on non-agricultural market access (NAMA) warned March 7 that the window of opportunity was rapidly closing for a deal in the sector which would allow the Doha Round to be completed by the end of 2006.

Speaking to reporters, Don Stephenson, the Canadian ambassador chairing the NAMA talks, said that while he was encouraged by the renewed sense of engagement in the negotiations, many outstanding issues remain to be resolved.

Among those issues are the details of the formula for reducing tariffs on industrial goods, the flexibilities to be given to developing countries, and the treatment of "unbound" tariffs, i.e. tariff lines currently exempt from WTO commitments. These three issues will be the focus of the next "NAMA week" of negotiations due to take place the week of March 20.

Stephenson also admitted that WTO members are divided over what they expect to achieve by the end of April, when "modalities" for the sector are due to be finalized.

The Canadian chairman said that while there was no "explicit consensus" on what a modalities deal would cover, a "strong view" exists" that the deal must include an agreement on the formula for reducing industrial tariffs, the figures for determining the actual cuts, and an agreement on how many tariff lines developing countries will be allowed to exempt from the formula cuts.
In contrast, no consensus exists on whether issues such as preference erosion, special treatment for small economies, and special treatment for recently acceded members of the WTO (such as China) must be included as part of the April deal, the chairman said, suggesting a push by some WTO members to push off an agreement on those issues until sometime after April.

Deal in April 'Doable.'

Stephenson stressed that he, like WTO members in general, believe a deal on modalities in April was "doable" and that the Doha Round can be completed in 2006, as mandated by WTO members at the organization's Hong Kong ministerial last December.

However, "it's a very small window in terms of achieving the objectives set out in Hong Kong," Stephenson added. "The amount of work before us is still challenging, and the number of weeks that we have to make progress on key issues is extremely small."

"It is now extremely important that members multiply their consultation processes and that the do that at a bilateral and plurilateral level, as well as in the negotiating group itself," he added.

As the chairman spoke, senior officials from the United States, the European Union, Japan, Brazil, India, and a half-dozen other countries met for talks in Geneva on the NAMA negotiations.

Review of Simulation Results

Officials said the March 7 meeting reviewed the results of simulations circulated by the United States March 3 outlining the potential impact of proposed cuts on the tariff lines of participating countries. The simulations were based on the use of coefficients in the reduction formula ranging between 2-15 for developed countries and 15-40 for developing countries.

While one official said a "good exchange of views" took place at the March 7 meeting, another official speaking on condition of anonymity said no progress was made and that worrisome signs emerged of a hardening of positions between developed and developing countries.

The official said India insisted that the principle of less than full reciprocity in reduction commitments must be an integral part of the modalities deal, as agreed in the August 2004 framework deal for advancing the Doha negotiations, and that this implied greater reduction commitments by developed countries--even though the bound tariff rates of developed countries, and India in particular, are far higher on average than those of developed countries.

Indian officials suggested that if it accepted a reduction coefficient of 20 in the formula--resulting in cuts in bound tariffs of more than 50 percent--developed countries should accept a coefficient around 1, which would essentially reduce tariffs in these countries close to zero. "It was clearly not a useful discussion," said a developed country official.

According to WTO figures, developing country bound tariffs on industrial products average 29 percent, compared with 9 percent among the Quad Group (the United States, European Union, Japan, and Canada). Actual applied rates range from 5.4-6.9 percent among the Quad countries, whereas applied rates among developing countries tend to be much higher (32 percent in India and 14 percent in Brazil).

The NAMA talks will be one item for discussion at a key meeting of trade ministers from the United States, the EU, Japan, Brazil, India, and Australia in London March 10-11.