WTO MARKET ACCESS GROUP DELIBERATES NEGOTIATING APPROACH

WTO Members used a 9 - 11 July meeting of the WTO Negotiating Group on Non-agricultural Market Access (NAMA) to advance further reactions to the NAMA Chair's draft paper outlining how the market access negotiations might be structured. Chair Pierre-Louis Girard had submitted his 'Draft Elements of Modalities' (TN/MA/W/35, available at http://docsonline.wto.org) on 16 May in advance of an end-May deadline for countries to agree on modalities for reductions in tariff and non- tariff barriers on non-agricultural goods, a deadline that passed without agreement (see BRIDGES Weekly, 28 May 2003). While most countries view the document as a good start, agreement on modalities continues to elude negotiators.

It is primarily gaps in positions between developed and developing countries that are dogging the discussions. Developing countries, in particular the African group, say that Girard's draft modalities paper goes too far, too fast and doesn't address their concerns in the sense that they need protection for their industries and the ability to maintain fiscal revenue from tariffs.

Many developed countries say the formula -- which inter alia calls for across-the-board tariff cuts, gradual elimination of tariffs in certain sectors and a formula to slash higher tariffs by larger margins -- does not address effectively the mandate to reduce high tariffs and will not produce effective market access.

The meeting saw some concrete proposals submitted by smaller states, including Fiji and Papua New Guinea. These countries reminded the group of ensuring appropriate special and differential treatment for small, vulnerable economies, as well as on the need to preserve existing margins of preference -- i.e. through market access schemes between developed and developing countries -- for products exported by poorer states. In its proposal (TN/MA/W/39), Papua New Guinea said that developing countries should be able to allocate up to 10 products as 'sensitive', where tariffs on these products would be exempted from reduction under the formula.
However, the US said exemptions should not be allowed to govern the tariff reduction talks, but that they should be seen as a "small window" to address market access sensitivities. The US delegation supported the idea of giving credit to countries that have conducted autonomous liberalisation, for instance through structural adjustment programmes, and also extending the benefits envisaged for least- developed countries (LDCs) to other Members with special needs. "It doesn't mean a new category of Members but a recognition of their needs," the US said. On this point, South Africa proposed a new categorisation of WTO Members that would reflect the capabilities and particular circumstances of smaller economies for the application of a formula for tariff reductions.

On the question of a sectoral approach (i.e. the seven sectors proposed by the chair for a complete elimination of tariffs), positions are far apart. Developing countries would like a voluntary approach to participating in these sectoral tariff reductions, while developed countries prefer it to be mandatory. Some countries would like more sectors added, while other want some deleted. Korea, Japan and Taiwan insisted they had serious problems with including the sectors of fish and fisheries and leather. Most Members said they wanted to address the sectoral approach only once the overall tariff reduction formula had been approved.

On non-tariff barriers (NTBs), the Chair said he would extend until October the period for notifications. There has been relatively little discussion thus far on NTBs, although the US has been pushing for a 'vertical' non-tariff barrier modality, an approach it elaborated at the 9-11 July meeting with its submission to the NAMA (TN/MA/W/18/Add.3). A vertical NTB modality, according to the US, would bundle together a number of NTB issues relevant to a single industry and address them in the context of that industry. The US has suggested automotive products and textiles and apparel as possible priority areas for vertical NTB agreements, noting that there are other highly- globalised industries that might also be appropriate for the vertical approach.

Sources say it is unlikely that Members will reach an agreement on modalities before the WTO's Cancun Ministerial in September. However, Girard, speaking at the Trade Negotiations Committee on 14-15 July (see related article, this issue), said he intended to "develop some options" for various elements of his draft modalities, which could be first treated in an informal way at the next meeting of the NAMA on 13- 15 August. Following the August meeting, he said he might then put forward a revision of the draft elements of modalities for further consideration, though he declined to say when the revised draft might be circulated.

ICTSD reporting; "Supachai Intends to Issue First Draft Of Cancun Ministerial Declaration by July 18," WTO REPORTER, 15 July, 2003; "WTO Members Fail to Bridge Gap on Nonfarm Trade Talks in Geneva," KYODO NEWS, 12 July 2003.