Differences remain after week of NAMA talks

The Negotiating Group on Market Access for Non- Agricultural Products (NAMA) at a week-long meeting (ending Friday, 3 March), discussed sectoral initiatives, flexibilities for developing countries and paragraph 24 of the Hong Kong Declaration that calls for a comparably high level of ambition in market access for agriculture and NAMA.

At the meeting, sharp divisions emerged between the developed and developing countries on the flexibilities to be accorded to developing countries under paragraph 8 of Annex B of the July 2004 framework, as well as on the meaning and operationalization of paragraph 24 of the Hong Kong Ministerial Declaration. (See SUNS #5978 dated 3 March 2006.)

The NAMA-11 group of developing countries reiterated their position that the 'flexibilities' found in paragraph 8 are 'stand-alone provisions'. They made clear that these provisions are an integral part of the special and differential treatment mandate and could not be traded off with other issues in the NAMA negotiations. The developed countries on the other hand supported the idea of an integrated approach towards the issue of flexibilities.

Several developed countries also disagreed with the NAMA-11 group's position a Raja*) -- The Negotiating Group on Market Access for Non- Agricultural Products (NAMA) at a week-long meeting (ending Friday, 3 March), discussed sectoral initiatives, flexibilities for developing countries and paragraph 24 of the Hong Kong Declaration that calls for a comparably high level of ambition in market access for agriculture and NAMA.

At the meeting, sharp divisions emerged between the developed and developing countries on the flexibilities to be accorded to developing countries under paragraph 8 of Annex B of the July 2004 framework, as well as on the meaning and operationalization of paragraph 24 of the Hong Kong Ministerial Declaration. (See SUNS #5978 dated 3 March 2006.)

The NAMA-11 group of developing countries reiterated their position that the 'flexibilities' found in paragraph 8 are 'stand-alone provisions'. They made clear that these provisions are an integral part of the special and differential treatment mandate and could not be traded off with other issues in the NAMA negotiations. The developed countries on the other hand supported the idea of an integrated approach towards the issue of flexibilities.

Several developed countries also disagreed with the NAMA-11 group's position on paragraph 24 of the Hong Kong Ministerial Declaration.

On 27 February, when the week-long meeting began, the Negotiating Group formally confirmed the appointment of Ambassador Donald Stephenson of Canada as its new Chairman.

The Chair made a short introductory speech in which he said that to bring the Doha Development Agenda "to a reality" in 2006 is a significant challenge but "one that can be achieved".

He also said that he understood that his three responsibilities as a negotiating chair are: to be neutral and unbiased with respect to the substance of the negotiations; to ensure transparency and inclusion in the negotiations; and to facilitate negotiations among members.

He added: "My role is to facilitate discussions, but not to take decisions for you. You are negotiating with each other, not with the chair".

Reminding members of how soon is the 30 April deadline for achieving full modalities in NAMA, and for that matter, how soon the end of 2006 is, the Chair said that "It is time to make progress on all fronts as quickly as possible".

At the meeting, Japan submitted two new papers: the first entitled "Text-based contribution for negotiations on enhanced disciplines on export restrictive measures"; and the second on electronics and electrical products.

On export restrictive measures and the difficulties encountered in stable importation due to export restrictions applied by some members, Japan said that this was a systemic issue since the WTO agreements appear to lack sufficient disciplines for transparency on export restrictive measures.

Japan said that through informal meetings, members have examined the desired disciplines on this issue, and the essence of the desired disciplines can be summarised as: Publication of rules and relevant information on export restrictions; Notification of list of products subject to export restrictions to a Committee; and publication of relevant statistics upon request.

In this context, Japan said that it tabled a draft text "for the sake of facilitating discussion". The proposal, according to Japan, is not intended to strain any legitimate export restriction that complies with the WTO Agreements, or to introduce new substantive rules. It is a proposal from the viewpoint of procedural transparency.

The draft text proposed by Japan is based on the existing Agreement on Import Licensing Procedures, and basically asks for the same procedures that are now applied to import licensing to be applied to export licensing.

The Japanese proposal however did not garner much support. Only the EC gave its clear support to the proposal, saying, "we fully share and support the goals; it's true that there is more attention given to the import of goods than to the export of goods. We are less ambitious than Japan but share its concerns."

The US said "let's keep an open mind". While it did not have a position on the issue, the US said that there is need for transparency and this is what will guide its position in the future. Switzerland only said that "it's worth looking at this issue".

Most of the other countries that spoke expressed reservations, with countries such as Venezuela, Brazil and Argentina saying that the proposal went or could go beyond the mandate of the negotiations. Others such as India, China, Thailand, Brazil and Korea took the view that the new disciplines would mean additional burdens for developing countries.

China asked what are the legitimate or illegitimate export restrictions. In the absence of rules, all restrictions are legitimate, China said.

Argentina said export restrictions are legitimate tools. They are a way to generate fiscal revenues as well as serving as a tool for the development of industrial policy. India shared this view. Malaysia said that if disciplines are developed in this field, the export of technology- and knowledge-based products should also be addressed.

Japan organized a meeting on Tuesday to address these concerns.

The meeting then turned into an information session on sectoral initiatives (total elimination of tariffs in certain sectors or drastic reduction with cuts going deeper than formula cuts).

Discussions have been ongoing in ten areas as part of the sectoral tariff elimination, with varying degrees of progress:

On 'auto/auto-parts' (Group coordinated by Japan): Members interested in tariff elimination in the auto/auto-parts sector have engaged in informal discussions since September 2005. Beyond the possible benefits of tariff elimination, such key elements as product coverage, critical mass and special and differential treatment have been discussed.

On 'bicycles and related parts' (Group coordinated by Chinese Taipei): Discussions among interested Members up to now have focused mainly on product coverage and special and differential treatment (S&D). Some Members have expressed an interest in adding to the product coverage by including other accessories related to bicycles, such as padlocks, bells, gloves and helmets. All the elements, including product coverage, the level of critical mass, final target rates and the S&D options, remain open for discussion.

On 'chemicals' (Group coordinated by the United States): To date, 25 Members (15 of which are developing countries) have participated in chemical sector discussions. On behalf of interested Members, the United States along with Canada, Chinese Taipei, Japan, Norway, Singapore and Switzerland tabled a proposal on chemical sector liberalization (TN/MA/W/58). Participants continue to discuss product coverage, based on the existing chemical harmonization initiative and the principle of comprehensive product coverage, including a full range of chemical products along the processing chain (HS chapters 28-39). Discussion among interested Members have also focused on incorporating flexibility for developing countries, encouraging participation of additional key traders and target tariff end rates.

On 'electronics/electrical products (Group coordinated by Japan): Members have held informal discussions on tariff elimination in this sector since February last year. The concept of key elements, i. e., product coverage, benefits of tariff elimination, critical mass and S&D is shown in the document circulated in July 2005 (TN/MA/W/59). Members are now discussing a "second generation" proposal which contains detailed tariff elimination modality.

On 'fish and fish products' (Group coordinated by Norway): The discussion in the several meetings held so far have focused both on non-tariff barriers and tariffs, with the latter being the most advanced. The group has discussed tariff reductions/elimination, critical mass, addressing sensitivities through possible forms of S&D for developing countries, as well as how to attract other interested Members.

On 'forest products' (Group coordinated by Canada): Members interested in a sectoral agreement on tariff liberalization for forest products have agreed to seek expansion of product coverage in the existing agreement on pulp andpaper products (HS Chapters 47, 48, 49) and also to significantly increase participation in the agreement. Specifically, participants want to include HS Chapter 44 (wood products) and some participants have identified products in HS Chapter 94 (certain furniture items and pre-fabricated buildings).

On 'gems and jewellery products' (Group coordinated by Thailand): Members participating in talks in this sector have agreed that product coverage should cover, but not be limited to, the whole of HS Chapter 71. Certain sensitive products from developing countries will be considered in the context of S&D provisions.

On 'raw materials' (Group coordinated by United Arab Emirates): Several bilateral and open informal meetings have taken place to discuss the proposal and a preliminary list of tariff lines has been circulated. The UAE has circulated a questionnaire in order to assess whether meaningful participation can be achieved and to ascertain Member's thoughts regarding product coverage, including product sensitivities and offensive and defensive interests.

On 'sports equipment' (Group coordinated by Chinese Taipei): Discussions so far have focussed mainly on product coverage and S&D treatment. Some Members have expressed an interest in expanding the product coverage in this sector to include other related items such as "safety headgear" and "sailboats"; some have indicated that they have certain sensitive products and are seeking the appropriate treatment to address their concerns. All elements, including product coverage, the level of critical mass, final target rates and S&D remain open for discussion.

On 'healthcare (pharmaceuticals and medical devices)' (Group coordinated by the US): This is the latest sectoral proposal, made jointly by the US, Singapore and Switzerland. It was launched at the NAMA group meeting on 27 February under the title "Open access to enhanced healthcare". It calls for a "substantial reduction or elimination of import tariffs and specific non-tariff barriers" for a group of products as comprehensive as possible, building on the Uruguay Round pharmaceutical agreement. It includes medicines and innovative medical technology products.

In order to receive input from Members, the Chair sent a number of questions on different subjects of the negotiation to guide the small-group discussions and the open-ended consultations.

On Wednesday, there was a meeting to analyse the flexibilities that the mandate (Paragraph 8 of Annex B of the July 2004 framework) provides for developing country participants. These flexibilities are: longer periods of implementation; applying less than formula cuts to a number of tariff lines; and keeping some tariff lines unbound.

Divergent positions emerged during the discussions on how to make use of these flexibilities, with some countries saying that they are ready to trade them in exchange for other concessions but others insisting that the provisions in the paragraphs containing these flexibilities are not a concession, should not be used as trade-offs, and are a strong part of the package not subject to conditions.

China said they represent a fundamental principle in the negotiations and the figures in square brackets represent the minimum acceptable to them. (10% of tariff lines for the application of less than formula cuts or 5% of tariff lines not required to be subject to the formula).

On Wednesday evening and Thursday morning, there was another meeting to discuss paragraph 24 of the Hong Kong Ministerial Declaration. This paragraph establishes a link between NAMA and Agriculture and calls for a "comparably high level of ambition in market access for Agriculture and NAMA. This ambition is to be achieved in a balanced and proportionate manner consistent with the principle of special and differential treatment".(See SUNS #5978 dated 3 March 2006.)

South Africa, on behalf of the NAMA-11 group of developing countries (actually comprising ten members - Argentina, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa, Tunisia and Venezuela), opened the discussion.

South Africa said that paragraph 24 "should be celebrated as a moment of inspiration by Ministers in Hong Kong." It added that the strategic goal for these negotiations must be for industrial countries to reduce the protection they grant to their inefficient sectors that frustrate the growth potential of the developing countries.

"They (the Ministers) have instructed us to ensure that there is a comparable high level of ambition in market access in both agriculture and NAMA. Real opportunities should be created for developing countries," said the NAMA-11.

Several developed countries however tried to downplay the significance of paragraph 24 and the linkage it made between NAMA and agriculture.

Canada said that there was nothing new in this paragraph, and that it just reiterated the Doha development objectives. Norway and Switzerland took a similar view. The EC said that "it is not constructive to refer only to the offer we made in agriculture. We also made one in NAMA and there is complete disregard for our offer... We don't see anything, nothing in NAMA."

Other countries aggressive in NAMA but defensive in agriculture such as Korea, Chinese Taipei and Japan, which are members of the G10 group in agriculture, also argued that agriculture and NAMA are different and it is difficult to establish a numerical link through paragraph 24.

These countries together with some others tried to make the argument that it is more a political concept and that every country will have to evaluate how to make the linkage, rather than having the paragraph operationalized within the NAMA negotiations.

Reminding members why there is a need for paragraph 24, Uruguay said that "we have to avoid the double standards we've seen in other rounds. The double standards of being liberal when we talk about manufactured products but protectionist in agriculture. The double standards of talking about multi-functionality in agriculture but ignoring the economic and social costs of adjustment in the industrial sector."

Argentina stressed that paragraph 24, which was deliberately adopted by Ministers at the Hong Kong Ministerial conference, is a fundamental tool for a balanced result in the round. Adding to this, Venezuela urged members not to try to diminish the importance of this paragraph.

The next NAMA week of negotiations is scheduled for the week of 20 March.

However, according to the Chair's "roadmap for agreeing to modalities by 30 April 2006" (prepared on his own responsibility), he will be holding consultations starting from 4 March till 21 April.

The topics for consultation over the next two weeks from 4-19 March include "paragraph 6 flexibilities", paragraph 8 flexibilities, least developed countries, flexibilities for small and vulnerable economies, non-reciprocal preferences, newly acceded countries and credit for autonomous liberalisation.

He will also be conducting consultations on the horizontal and vertical approaches to the non tariff barrier issue over the coming two weeks.

(* With inputs from Goh Chien Yen.)