The NAMA Formula vs. Sectorals

Geneva - The European Union and members of the NAMA-11 coalition - including South Africa, India, Brazil and Egypt - yesterday differed with the United States over the pace and timing of sectoral tariff elimination talks in the Doha Development Agenda nonagricultural market access architecture, WTD has learned (WTD, 3/29/07).

The issue was discussed at a NAMA Caucus luncheon meeting.

"For the first time there was a cool-headed discussion on sectorals," commented one trade envoy, who added that sharp differences exist among members on the pace and timing of the sectoral talks between proponents - including the United States, Japan, Norway, Switzerland, New Zealand and Singapore - and members that want to focus first on the tariff-cutting formula.

NAMA negotiations chair Don Stephenson kicked off the third meeting of the Caucus by seeking views from envoys on how sectoral talks can be elevated in the overall NAMA negotiations. He noted that sectorals were not a mandatory element in the negotiations, but some members say sectoral tariff elimination talks must be accorded a "higher level of ambition," according to trade diplomats.

India said members cannot elevate a voluntary instrument like sectoral tariff elimination into the core equation of the formula, according to one NAMA-11 envoy. India argued that the architecture for sectorals cannot have "universal" status.

Supplements to the Formula

The stance enunciated by India Ambassador Ujal Singh Bhatia was backed by South African trade envoy Faizel Ismail, who said sectorals are only a "supplement" to the formula. He said developing countries are prepared to discuss sectorals as long as they remain "voluntary" as per the 2004 Hong Kong Ministerial Declaration. Resolution of the coefficients in the Swiss formula has to be decided before moving on sectorals. There cannot be any link, he stated.

Even though sectorals, indeed, are voluntary, according to New Zealand envoy Crawford Falconer, members will eventually have to draw the link between the two elements.

Singapore described the sectorals as "topping off" whatever market access is achieved through the formula.
US ambassador Peter Allgeier made a forceful pitch as to why the sectoral talks need to be elevated. He said private sector global supply chains demand a harmonization of tariffs. He added that Special and Differential Treatment can be afforded for developing countries in the process. Developing countries could bring down 80 percent of their generally high chemical tariffs to zero, for instance, while given a longer implementation for the other 20 percent.

The United States is pushing for zero-for-zero deals in electronics, chemicals, pharmaceuticals and medical devices.

Japan - which is seeking sectorals in electricals and electronics, automobiles and auto parts, Norway - which wants sectorals in fish and fish products, and Switzerland - which is demanding sectorals in pharmaceuticals, all supported the US position.

While Brussels is not opposed to sectors, EU envoy Eckart Guth said agreement on the formula is a higher priority. Once coefficients that give ambitious results in the formula are decided, then Brussels would seek sectorals in textiles and footwear.