Draft Canc?n Ministerial Text - Revision/Market Access for Non-Agricultural Products

MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS

1. STATUS OF WORK

Discussions in the Negotiating Group on Market Access (NG) have been constructive and all Members have positively contributed to the texts submitted by the Chair by exposing and explaining their different points of view. As a result, the text which has been included in Amb. Perez de Castillo's text as Annex B reflects the work by the NG. In fact, apart from a few minor details, it is the text that Amb. Girard, Chair of the NG, had finally proposed to Members as draft for the Ministerial Declaration.

Even though negotiations on non-agricultural products started after Doha, the level of detail contained in Annex B is comparable to that contained in Annex A devoted to agriculture and for which negotiations did start much earlier. In this respect, Annex B can be seen as the tangible demonstration of the significance that all Members attach to market access for non-agricultural goods under the Doha Development Agenda.

2. ANNEX B

Further to the invitations addressed by other WTO Members, the EU and US stepped up their co-operation on both agricultural and non-agricultural issues. For the latter they presented a joint text (co-sponsored by Canada), which received support from both developed and developing Members. Strongly supported by Japan and welcomed by all other DCs, the paper was crucial in the establishment of Perez de Castillo's text. Although Annex B is an improvement on the first proposals that had been made by the Chair of the NG, the EU still feels that the text presents two types of imbalance that should be redressed in Cancun.

The first imbalance is of a general nature and concerns the ambition that is contained in the agricultural framework under Annex A as against the one that Annex B contains for non-agricultural products. Even if the veritable level of ambition depends on the figures that will finally be agreed, the level of ambition in Annex B should be much higher to match that of Annex A.

The second imbalance is specific and concerns the different elements in the Annex B. Whilst the text in paragraph 7 relating to special and differential treatment is very detailed and even contains figures in brackets, the texts under paragraph 3 and 6 are less precise and present no specific figures at all. The EU, alongside with other Members,considers that such imbalance should be eliminated by describing the formula with a finer degree of accuracy (i.e. ' a simple, single Swiss formula applied on a line-by-line basis'). The EU supports such a single Swiss formula integrated by a system of credits to accommodate objective differences in the economic situation of WTO members and offering flexibility for developing countries, always bearing in mind the priorities that the EU has in market access for non-agricultural products.

As regards paragraph 6 devoted to sectors, it is clear that sectoral initiatives will need to be mandatory if we want sectors of value to all Members, but in particular to DCs, to be on the table. In general sectors of interest to some Members tend to be sensitive sectors for others. Therefore, unless sectoral initiatives are mandatory for all Members, there will be little if no incentive for any Member to put its sensitive sectors on the table. More fundamentally, such imbalance risks undermining the EU's objective of sustainable development through improvements in South-South trade. Access to developing countries markets is increasingly important for developing country exporters. In a situation where protection in some developing countries is significantly higher than in other developing or developed countries at a comparable level of development, the imbalance between paragraph 7 on the one hand and paragraphs 3 and 6 on the other risks to worsen distortions much to the detriment of the most vulnerable developing and least developed Members.

Although sectoral initiatives have been interpreted by the Chair as a way to fulfil that part of the mandate that refers to elimination of duties, the EU considers that they should not exclude harmonisation which can be an equally important goal and which could be of greater interest to DCs. For the EU, moreover, it is important that such initiatives be accompanied by determined action against non-tariff barriers affecting the sectors chosen. This is the reason why the EU maintains that tariff cuts for textiles, clothing and footwear are linked to the elimination of export taxes affecting inputs for these sectors.

3. EU'S OVERALL APPROACH TO MARKET ACCESS

It should be stressed that the EU's approach to market access negotiations under the Doha Development Agenda is characterised by three main objectives:

1. Achievement of genuine liberalisation (traditional GATT objective) with reciprocity in some sectors;
2. Support to sustainable development (the new DDA developmental dimension);
3. Maintenance of the single undertaking (no backsliding or two-tier Membership).

The EU attaches great importance to the achievement of effective market access in conjunction with an improved rules-based system where all Members will be equally empowered within the WTO institutional set-up. In other words, special and differential treatment should allow DCs to participate fully in the system rather than be interpreted as an opt out from the system.

The benefits that all Members will reap in market access negotiations need to be seen in conjunction with the benefits that will accrue to Members from the outcome of negotiations on other issues such as trade facilitation, competition, investment and transparency in government procurement.

4 September, 2003

JOB(03)/150/Rev.1 24 August 2003

Preparations for the Fifth Session of the Ministerial Conference
Draft Canc