Some negotiators at the WTO are wondering whether any common ground exists for Members to strike a Doha Round agreement on cutting industrial tariffs, following more discussions that served to underline differences rather than point the way to compromise.

The principal fault line in the negotiations remains unaltered: the US and the EU say that developing countries such as Argentina, Brazil, India, and South Africa are not offering to cut their industrial tariffs deeply enough to generate meaningful new trade flows. The developing countries dismiss these suggestions, and argue that the farm reforms tabled by Washington and Brussels - and indeed the depth of manufacturing tariff cuts they are willing to undertake themselves - hardly merit a sweetened offer (see BRIDGES Weekly, 17 October 2007).

Non-agricultural market access (NAMA) Chair Ambassador Don Stephenson had been expected to issue a new potential draft deal in mid-November. However, he told Members on 29 October that he would push back issuing the new negotiating text till later in the month, because a linked draft in the agriculture talks had also been delayed.

Stephenson has asked Members to narrow their differences. The absence of clear signs from delegations about where consensus might lie on issues that are still divisive means that the chair may have to guess what an acceptable compromise might look like. Negotiators acknowledge that this is a difficult task. "I don't see what the chair will do," said one (see BRIDGES Weekly, 24 October 2007).

With the circular deadlock on the tariff reduction formula - which will determine future tariff levels for industrialised nations and 30 or so of the relatively larger developing economies - delegations opened the week by looking at special treatment for other groups of Members. Even there, however, sources said that mutual compromise was in short supply.

LDCs voice priorities

Least-developed countries (LDCs) are not required to cut tariffs as part of the Doha Round negotiations. In December 2005, Members agreed that developed countries, along with developing countries that feel able to do so, should provide duty- and quota-free access to LDC exports, for at least 97 percent of tariff lines. Some of the world's poorest countries say that the 3 percent exception - included primarily to accommodate some Members' concerns about opening up trade in textiles and some agricultural products - was enough to cover the handful of goods that they are able to produce competitively.

The LDC Group has called for Stephenson's revised text to strongly urge developed countries to phase out restrictions on the remaining 3 percent. LDCs believe that they have softened their position somewhat, one official said. Instead of demanding a time-bound mandatory road map for phasing out the 3 percent, they now are asking for exhortations and some sort of process to monitor Members' actions in this regard.

For products that are not covered by countries' 3 percent exemptions, the LDC Group is seeking simplified rules of origin, so that more goods qualify for duty- and quota-free export. Sources report that several developed countries, including Australia, New Zealand, the EU, and the US, said that their rules of origin were already simple and transparent, and complained that the LDCs' demands went beyond what Members had agreed to. The LDC group is believed to be considering a process under which other countries would be required to respond to how they were addressing LDCs' rules of origin-related concerns, which vary from one target market to another.

Several - but not all - LDCs currently enjoy preferential access to major markets. Their margin of preference stands to be eroded by multilateral liberalisation. The group thus asked for some additional products to be added to the list attached to Stephenson's July text for products liable to be affected by preference erosion; these products may receive extra-long phase-in times for tariff cuts. The LDC group also asked for the revised NAMA text to specifically refer to their need for technical assistance and capacity building to overcome technical obstacles to exports, such as regulations and standards.

Clash over 'Paragraph 6' countries

Developing countries with binding caps on fewer than 35 percent of their manufacturing tariff lines - are not required to apply the tariff reduction formula, as per 'Paragraph 6' of the NAMA mandate in the WTO Members' July 2004 framework agreement.

Instead, Stephenson's July text would have them bind some 90 percent of their tariff lines at an average level of 28.5 percent (which corresponds to the current average for developing country bound tariffs).

In practice, this affects only 12 developing countries, including Kenya, Cameroon, Ghana, Nigeria, Mauritius, and Sri Lanka. They argued on 5 November that binding 90 percent of their tariff lines would be too onerous a commitment. Kenya noted that it only had binding caps on 1.5 percent of its lines, and that no member of the group had bound more than 22 percent. They asked for a requirement between 70 and 80 percent.

Several potential options were discussed, involving different figures for the percentage of tariff lines bound. A compromise suggested by Mexico and Costa Rica, under which the 'Paragraph 6' countries would bind 90 percent of tariff lines, but at a higher average of 30 percent, was dismissed by many countries, including the US.

On 7 November, discussions on treatment for small and vulnerable economies as well as for recently acceded Members (RAMs), also failed to yield any progress. One source said that China in particular was emphatic that it would block a Doha Round deal that did not meet its expectations, although it was not whether it meant a higher tariff ceiling for RAMs than for other developing countries, or the ability to shelter more products from liberalisation.

Talks are now set to turn once again to the tariff reduction formula and related flexibilities for developing countries to shelter some products from liberalisation. Stephenson's revised text is expected later this month.

ICTSD reporting.