NAMA TALKS STILL FOCUSED ON 'NON-CORE' ISSUES, AS CLOCK CONTINUES TO TICK

The Doha Round talks on liberalising trade in industrial goods continue to proceed at a snail's pace, despite a warning from the chair of the negotiating committee that time is running out for Members to reach an agreement.

Principal among the reasons for this is the persistent deadlock on farm subsidy and tariff cuts. Chair Ambassador Don Stephenson (Canada) told delegates on 1 October that many Members had informed him that they would be reluctant to discuss potential concessions on the central issue of the formula for calculating industrial tariff reduction until they saw signs that the agriculture talks were making at least some tangible progress.

Agriculture is hardly the only problem: wide gaps remain between countries' positions on non-agricultural market access. This was highlighted in July when Stephenson issued a draft text outlining terms for a potential compromise. Members including Brazil, India, Argentina, and South Africa complained that the document required developing countries to make tariff cuts that were unfairly demanding (see BRIDGES Weekly, 1 August 2007). The US and the EU initially argued the precise opposite - that the cuts for developing countries should have been deeper still - though they are now urging their trading partners to accept the paper's terms.

In recent weeks, the chair has been focusing on less controversial secondary issues in the negotiations. Intensive discussions on the formula and flexibilities for developing countries to shield some products from tariff cuts are yet to come.

Product coverage confused by seaweed, fish meal

One of the 'non-core' issues being discussed is the list of products to be covered by NAMA liberalisation. The determination of what constitutes a manufactured product is not as straightforward as it might seem. Japan, for instance, classifies edible seaweed as an industrial product, even though other Members deem it to be an agricultural product. Switzerland deems fish meal used for cattle feed to be an agricultural product, even though fish products are normally classified with manufactured goods. Both countries want to preserve these anomalies, since this would let them preserve existing levels of protection to the greatest extent possible. However, sources report that other countries were not enthusiastic about their request for a "deviation" allowing them to do so.

Stephenson reported more signs of flexibility on special treatment for non-LDC developing countries that have binding caps on fewer than 35 percent of their industrial tariff lines. These 12 so-called 'Paragraph 6' countries (named for the relevant section of the negotiating mandate), which include Nigeria, Mauritius, Sri Lanka, and Kenya, were unhappy with the draft text's requirement for them to bind 90 percent of tariff lines at an average of 28.5 percent. They argued that they should have to bind no more than 70 percent of tariff lines.

RAMs soften demands

Another set of countries arguing that they deserve to reduce tariffs more gently than others as part of the Doha Round are the recently acceded Members (RAMs). They want compensation for the extensive liberalisation they had to implement as the price for joining the WTO. These cuts left them with bound and applied tariff rates that are roughly equal, they argue, as a result of which substantial further cuts would make it difficult for some industries to survive.

Only four of the RAMs will be required to apply the tariff reduction formula. However, China is one of the four, along with Croatia, Oman, and Taiwan. China's status as a lucrative market and major exporter makes other governments particularly wary of granting the RAMs extensive flexibilities. The broader Membership gave a chilly reception to the RAMs' past demands for a coefficient (and thus future tariff ceiling) one-and-a-half times higher than that for developing countries in general, the freedom to shield more tariff lines wholly or partially from reduction, longer implementation periods, and a grace period before having to start reducing tariffs.

This week, the group softened its position, instead putting forth a 'menu approach' under which they would have to choose no more than two of the types of flexibility, e.g., a higher coefficient and the ability to subject more than 10 percent of tariff lines to only half the standard reduction, but no extended implementation or grace period. Also, the higher coefficient was simply a to-be-determined number of points greater than the figure for all developing countries, rather than a multiple of it.

Nevertheless, other Members continued to voice "strong concerns" about the flexibilites the RAMs were seeking, with some pronouncing the new informal proposal unacceptable as well.

NTB facilitation mechanism discussed

The 1 October meeting of the negotiating committee also discussed proposed legal text for a new 'facilitation' mechanism for rapidly mediating bilateral disagreements over non-tariff barriers that affect trade in goods. The proposal (TN/MA/W/88) was noteworthy for being backed by a wide range of the WTO Membership: not only does it have the support of both the EU and the NAMA-11 group - often at loggerheads on other issues - its sponsors include Canada, New Zealand, the African Group, the LDC Group, Pakistan, and Switzerland.

The proposal, first circulated in July, notes that non-tariff barriers (such as labeling requirements for clothing) can negate market access opportunities that would otherwise arise from tariff reduction. Therefore, it makes the case for creating a mechanism to facilitate the expeditious consideration of non-tariff barriers, so as to help Members find "mutually acceptable trade solutions that aid exporters and importers."

Many of the countries backing the submission had previously argued that using formal WTO dispute settlement to address disagreements on non-tariff barriers was time-consuming and expensive, and not of immediate use to exporters facing obstacles (see BRIDGES Weekly, 17 May 2006). Mediation, they said, could help surmount non-tariff barriers without having to examine the issue of whether they are illegal.

The paper sets out a multi-stage process, which the Indian ambassador explained to the gathering. The first, a question and answer phase, would allow countries to discuss the trade issues arising from a non-tariff barrier. Members receiving requests for facilitation over a particular NTB would have to respond in writing within 20 days (although the figure is in brackets, indicating that it remains to be finalised). The subsequent stages - if both parties agree - would be the appointment of a facilitator and the actual mediation of the disagreement. Crucially, the proposal provides for the procedures to be completed within 60 days of the facilitator's appointment.

The proposal's sponsors took pains to stress that using the facilitation mechanism would not in any way affect countries' ability to pursue formal dispute settlement.

Even though it questioned the necessity for a new mechanism for addressing NTBs, the US tabled a modified informal version of the facilitation proposal, calling for the initial clarification phase to last 60 days rather than 20. Sources say that the US text tried to make it easier for countries to stop the process.

New Zealand rejected the US text, arguing that it defeated the purpose of the original proposal. Pakistan and Venezuela made similar critiques.

Time running out

Stephenson said that he would continue to meet with small groups of Members, and hopes to use their input to revise his draft text. He added that delegates realistically had about a month left in which to give him input, since without an agreement on modalities in NAMA and agriculture by the end of the year, the Doha Round talks risked going into limbo. Trade diplomats widely believe that chances for finalising a deal will become even slimmer as the US election campaign heats up next year.

ICTSD reporting.