| ‘Friends' NAMA Formula
Washington Trade Daily
Monday, March 14, 2005
Trade Reports International Group Geneva – The "Friends of Ambition" in Doha market access negotiations for industrials – the United States, Australia, Hong Kong, Norway, Singapore and Canada, among others – converged last week around a "Swiss" tariff-cutting formula as proposed last year by previous NAMA negotiations chairman Pierre-Louis Girard, WTD has learned (see related report this issue). Ahead of this week's special nonagricultural market access negotiating session – which starts today – the "Friends" met last week to discuss a common strategy, but could not settle on a single formula. "We wanted a much more ambitious framework, but the US has already set the ground by suggesting its dual-coefficient ‘Swiss' formula and the EU and Norway with their credit-based approach, a key member of the "Friends" group told WTD. The official suggested that the NAMA negotiations chairman will push for a non-linear formula – like the one discussed at the Mombasa ministerial meeting two weeks ago. Since the ministerial, several ideas have been offered which are based on the "Swiss" formula with "less-than-full reciprocity" as a central element. On Thursday, Norway circulated a paper proposing a simple, non-linear formula with two coefficients that includes a simple and transparent element of credits. It would provide members with a certain degree of flexibility on how they would fulfill the Doha mandate of tariff reduction. Norway said the two coefficients would be subject to further negotiations. Norway's Approach The Norway approach would ensure substantial reduction of peaks, high tariffs and tariff escalation by using a "Swiss" formula where the coefficient would establish a maximum level of tariffs after the formula is applied. Similarly, it would incorporate the concept of less-than-full reciprocity by using a modified "Swiss" formula with two coefficients – one for developed and one for developing countries. It would give members flexibility in deciding how to shape their contribution to the overall result through a concept of credits and rewards. Three different credits are envisioned – participation in sectoral components that reduce or eliminate tariffs on products of particular export interest to developing countries; applying the formula to all tariff lines and improving predictability through full tariff bindings. This week a group of developing countries – led by India, China, Brazil, South Africa and Argentina – is expected to present a modified "Girard" formula with three separate bands for cutting industrial tariffs in developing countries. Countries with high bound tariffs would slice their maximums, followed by a second category of high tariffs, followed by lower cuts for the lowest category of tariffs. Mexico, Chile and Colombia presented their approach at the Mombasa ministerial which calls for a high level of flexibility for developing countries ready to accept higher cuts in their tariffs, and lower flexibility for those seeking less ambitious reductions in their tariffs. In a separate joint proposal, Canada and Norway called for the total elimination of low tariffs since they are "are ineffective as a form of tariff protection and at the same time are costly and time-consuming for the business community." The two countries said elimination of low tariffs would simplify tariff structures, reduce the administrative burden on governments and industry and lower costs as applied to manufacturing inputs. Speaking for the African, Caribbean, Pacific group of countries, Benin demanded that the issue of preferences be addressed as part of the NAMA negotiations. It said preference erosion is a big problem and will increase as trade liberalization expands. It is a serious problem facing the weakest and the most vulnerable WTO members, it stated. Keeping preferences is not inconsistent with trade liberalization, Benin argued. It explained that preferences generally are limited to few products with a very few export markets. Therefore, erosion of preferences would be acute for small and vulnerable countries. The ACP group asked for calculating three relationships in addressing preferences – the share of the particular product of the importing country on the total exports of the exporting country, the share of the particular product of the exporting country in the importing country and the world market share of the exporting country for the particular product.
| 
