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Impasse in NAMA talks

TWN Info Service on WTO and Trade Issues (Jul 05/13)
28 July 2005
Third World Network


The WTO's General Council meeting will begin on morning of 27 July. It had been hoped that this meeting will come up with texts that articulate new agreement on some issues such as agriculture and non agriculture market access (NAMA). These new texts had been termed "first approximations" of the modalities for the negotiations on these issues.

On the eve of the General Council meeting, it has become clear that there continues to be serious disagreements on key issues concerning agriculture as well as NAMA. Thus the Council meeting will not adopt new agreed texts but is expected to only receive reports on the status of the negotiations.

Below is a report on the situation on the eve of the meeting.

with best wishes
Martin Khor

Lack of convergence continues on eve of General Council meeting

By Martin Khor (TWN), 26 July 2005

On the eve of the WTO General Council meeting (which starts on 27 July), there does not appear to be any last minute breakthroughs on the main issues of agriculture or non-agricultural market access (NAMA).

The situation may become more clear later on Tuesday afternoon when two meetings on agriculture and NAMA are convened at the informal heads-of-delegation level for the Chairs of the negotiating groups to brief members on the results of their consultations of the last several days.

"There has not been convergence on any of the key issues," said a delegate involved in the agriculture consultations. "At best, there has been a better understanding among the delegations on where each of them stands. But there is nothing on paper."

About 14 members, which include the so-called Five Interested Parties (FIPs) plus 9 others, have been meeting on agriculture since last Thursday. Among the contentious issues in market access are the structure of the tariff-reduction formula and whether or not to place a maximum limit on tariffs, with the Group of 20 proposing caps of 150% for developed countries and 100% for developing countries, with the US in support of a cap and the EU against.

Trade officials said the EU seemed reluctant to allow any "movement" in agriculture before the summer break. Some EU member states at a meeting last weekend of the European Union's Committee 133, which deals with trade issues, reportedly cautioned the EC against making concessions in agriculture, especially on market access and the capping of tariffs, unless there is progress in other areas such as NAMA.

On Tuesday morning, an informal consultation in a small group was convened by the NAMA chair, Ambassador Stefan Johannesson of Iceland, to discuss the tariff-reduction formula. Members invited included Brazil, Canada, China, the EC, Egypt, India, Jamaica, Japan, Kenya, Malaysia, Mexico, New Zealand, Norway, Pakistan and the US.

Delegations present did not indicate any change in their known positions, said a diplomat present at the meeting. There was thus no basis for the Chair to produce a "first approximation", and he can only be expected to give an update of the report on the state of the NAMA negotiations that he had produced a fortnight ago, said the diplomat.

At the meeting, there was discussion on the Pakistan proposal, that a simple Swiss formula be adopted with two coefficients, one for developed countries (i.e. their present collective average bound tariff of 6%) and one for developing countries (their collective average bound tariff of 30%). The advantage of such an approach is that it is transparent and simple to understand, said Pakistan.

Some countries, including China and Malaysia, indicated interest in exploring the Pakistan proposal further.

However, other developing countries present indicated that they could not accept the proposal. India, for instance, reportedly said that the harmonizing approach implicit in the Pakistan proposal was not provided for in the Doha mandate and that it did not fulfil the principle of less than full reciprocity, as developing countries would be obliged to cut their tariffs more.

Jamaica also found difficulty with Pakistan's proposed coefficients, as the outcome of using them would mean that developing countries like itself would have to cut their bound rates by far more than what is possible or equitable. It said that the coefficients are critical and the numbers presented did not meet the countries' needs.

There should be differentiated coefficients for different countries to respond to the countries' various interests, and to have only one coefficient for developed countries and another for developing countries was not appropriate. Other features should thus be structured in, Jamaica added.

Korea was reportedly of the view that one size does not work. It suggested that the discussion on coefficients should go on after September and the Chair in his report should just note the degree of support for the various formula approaches.

The United States reportedly indicated that the Pakistan proposal would not deliver the market access it was looking for. The key issue is to balance the coefficients with the flexibilities for developing countries, indicating that a less "ambitious" formula would be linked to less flexibilities.

It reaffirmed its proposal of a simple Swiss formula with dual coefficients, but added that all proposals have to be looked at, so that members could come up with something that can be sold politically.

The Chair reportedly told the meeting that the main problem was not so much to find the structure of the formula and the coefficients, but the relation between the formula and the degree of flexibility for developing countries.

However, this linkage between the level of ambition in the formula and coefficients on one hand, and the degree of flexibilities on the other hand, was objected to by several developing countries present. They argued that flexibilities constituted a separate issue, which was a right for developing countries separate from the question of the formula.

Kenya reportedly said it did not understand why the issues of the level of ambition in the formula and coefficients was being mixed up with the issue of flexibilities as these are two different issues.

Brazil stressed the same point, saying that flexibilities already exist and do not depend on the level of ambition. Also, simplicity in a formula should not be taken as an end in itself.

Meanwhile, consultations have also being held on special and differential treatment, with the discussion focusing on five agreement-specific proposals relating to least developed countries, with an attempt to reach agreement on some or all of them by the General Council meeting.

The deadline for reporting on a review of all the agreement-specific proposals was set for this General Council meeting. The progress has been painfully slow, and discussion has now narrowed down to only the five LDC-related proposals.

Among the most contentious of the remaining points is the proposal by LDCs that developed-country members shall provide bound duty free and quota free market access for goods originating from LDCs in a manner that ensures stability, security and predictability.

The developed countries, led by the US and EU, do not want the word "bound" in the text. They reportedly do not want to be bound in the WTO to provide such access to LDCs, preferring that the issue be dealt with on a bilateral basis.

Another contentious issue relates to the trade-related investment measures (TRIMs) agreement. The LDCs want the text to allow them to maintain existing measures (permanently) and to adopt new measures (temporarily) that deviate from their obligations under TRIMs.

Developed countries on the other hand are willing only to allow LDCs to temporarily maintain existing measures, and to request duly motivated waivers from Article 2 of TRIMs, with limited duration.

Other issues that are being discussed are LDC proposals regarding waivers of obligations under GATT 1994, and a proposed Decision of Measures in favour of LDCs.

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