NAMA Negotiations. Edwini Kessie Council and Trade Negotiations Committee Division

Transcription

1 NAMA Negotiations Edwini Kessie Council and Trade Negotiations Committee Division

2 The Mandate Paragraph 16 of the Doha Ministerial Declaration (WT/MIN(01)/DEC/1): - Reduce or as appropriate eliminate tariffs - Including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation - As well as non-tariff barriers -In particular on products of export interest to developing countries - Product coverage shall be comprehensive and without a priori exclusions

3 The Mandate (cont d) - The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants - Including through less than full reciprocity in reduction commitments - In accordance with the relevant provisions of Article XXVIII bis of GATT 1994 and the provisions cited in paragraph 50 of the Declaration

4 NAMA products NAMA products refer to all goods except those covered by the Agreement on Agriculture In practice, they cover manufacturing or industrial products, fuels, mining products, fish and fish products as well as forestry products.

5 Why is NAMA so important? In the period between , NAMA products accounted for more than 90% of total world merchandise exports

6 Global export of goods and services:2005 Services 19.2% Total US$ billion Goods: US$ bn Services: US$ 2415bn Goods 80.8% Source: WTO International Trade Report 2006

7 Share of NAMA products in world merchandise trade Agricultural products 9% NAMA products 91%

8 Uruguay Round results on NAMA products? Significant improvements in market access for NAMA products in developed-country markets, as tariff averages reduced from 6.3% to 3.8% Security and predictability of market access: Developed countries: 99% binding coverage Countries-in-transition: 98% binding coverage Developing countries: 73% binding coverage

9 Tariff Bindings A tariff binding is a ceiling level or the maximum tariff that may be applied by a Member. Normally, such rates cannot be increased or withdrawn, except when compensation is provided to countries with an interest in trade of that affected product

10 Applied tariffs? Applied tariffs are the tariffs which are effectively collected by customs at the border. They can be lower than the bound rates Difference between bound and applied rates is usually referred to as "water" or binding overhang.

11 Why NAMA negotiations? Despite significant improvements in market access for NAMA products that previous GATT rounds and the Uruguay Round produced, tariffs continue to be an important source of distortions and impose significant costs on trade Prevalence of tariff peaks, high tariffs and tariff escalation, especially on products of export interest to developing countries

12 Diversity in WTO Members Tariffs Differences: (TN/MA/S/4/Rev.1) between countries Overall tariff average Tariff Structure (Peaks) within countries Tariff escalation International peak tariffs (tariffs in excess of 15% and national peak tariffs (tariffs which exceed 3 times the national average

13 Binding coverage: Overview of current situation Binding N um ber of LDCs coverage (% ) M em bers 100% 74 * 9 95 < 100% < 95% < 35% 16 8 < 5% 13 9 Total EC-25 members counted individually Note: Agriculture already 100% binding

14 Bound vs. Applied rates Average of non-agricultural tariff lines AVG Final Bound AVG MFN Applied AVG (%) Canada EC-15 Japan USA China, PR Hong Kong (*) Indonesia Korea Malaysia (*) Philippines Singapore Thailand Argentina Brazil Chile India Mexico Source: WTO Secretariat based on CTS for the bound rates and IDB and UNCTAD for the MFN applied rates. (*) Binding coverage could be overestimated due to partial bindings. See TN/MA/S/14. South Africa

15 Bound vs. Applied rates Average of non-agricultural tariff lines AVG Final Bound AVG MFN Applied Swaziland Gambia Lesotho Malawi Mozambique Sierra Leone Tanzania Uganda Zambia Ghana Kenya Mauritius Nigeria Zimbabwe Botswana Egypt Namibia South Africa AVG (%) Source: WTO Secretariat based on CTS for the bound rates and IDB and UNCTAD for the MFN applied rates.

16 Tariff escalation: textiles and clothing Tariff (%) 5 0 Raw material Semi-manufactured Finished product

17 Higher tariffs in which sectors? Textiles and clothing Leather, rubber, footwear and travel goods Transport equipment Fish and fish products

18 Issues on tariffs Very disperse binding coverage across the membership Very diverse tariff commitments Residual protection in developed country markets Absolute high protection in developing country markets (high bindings and/or unbound items)

19 Global export of goods by region 2005 Asia 27.0% North America 15.0% South and Central America 3.0% Africa 3.0% CIS 3.0% Middle East 5.0% Europe 44.0% Total US$ bn Source: WTO International Trade Report 2006

20 Intra-Regional Trade, 2004 Extra-regional Intra-regional 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% North America South and Central America Europe CIS Africa Middle East Asia Source: WTO International Trade Statistics 2005

21 FTAs and Customs Unions Proliferation of FTAs and Custom Unions in the last decade Greater proportion of world trade being conducted under bilateral/regional trade agreements Lesser barriers: significant proportion of products entering markets duty free

22 Tariff Reduction Formulae In early GATT rounds, tariffs were cut on a selective product-by-product basis through requests and offers Subsequently, contracting parties decided to use formulas to cut tariffs across-the-board. During the Kennedy Round, for example, the linear cut formula was utilized, while during the Tokyo Round the Swiss formula was used by developed countries, but with several exceptions In the Uruguay Round, developing and developedcountry participants used a combination of methods to reach a reduction average target comparable to that of the Tokyo Round (1/3 cut).

23 Why a formula approach in the DDA negotiations? Following intensive discussions, participants recognized the advantages of a formula approach. Formula approach is more transparent. Every Member will know by how much others will reduce their tariffs; Much more efficient (simpler than request/offer approach) Equitable (tariff reduction depends on rules rather then "bargaining power") Predictability (easier to anticipate the results of the negotiations)

24 Advantages of a Swiss or Swiss-type formula? Firstly, such a formula will cut higher tariffs more than the lower tariffs, thus meeting the Doha NAMA mandate to reduce or eliminate tariff peaks, high tariffs, and tariff escalation. In fact the coefficient in the formula sets a cap on the tariff. For example, a coefficient of 20 means that no tariff will be above 20. Secondly, the post-uruguay Round tariff profiles of WTO Members are very diverse, but due to the harmonizing effect of the Swiss or Swiss-type Formula such differences will be diminished.

25 t1 = Simple Swiss Formula A Simple Swiss Formula with two coefficients, one for developing and the other for developed Members: (a or b) t0 (a or b) + t0 where, t1= Final bound tariff t0= Base rate a = Coefficient for developed Members b = Coefficient for developing Members subject to the formula.

26 Swiss-type formula (ABI) t 1 = B B t t a a + where, t1=is the final rate, to be bound in ad valorem terms t0=is the base rate ta =is the average of the base rates B =is a coefficient, its value(s) to be determined by the participants t t 0 0

27 Differences between the two options Effect Simple Swiss Formula ABI formula Number of coefficients Harmonize tariffs within a Member s schedule? Harmonize tariffs across Members schedules? Two Yes Yes One for each Member applying the formula Yes No

28 Sectoral Negotiations During the later Rounds, sectoral approaches were also initiated or the so-called zero for zero, which aimed at the elimination of tariffs in particular sectors In some of the sectoral approaches, there were proposals for the harmonization of tariffs, whereby all participants would agree to bring down their duty rates to the same level. Sufficiently broad-based participation.

29 Apparel Examples of sectorals being proposed Autos and Parts Footwear Forest products Gems and jewellery Bicycles Chemicals Electronics/electrical equipment Fish Pharmaceuticals and medical equipment Raw materials Sporting goods

30 Trade liberalisation of fish and fish products (Job06/132; 1 May 2006) Proponents: Canada, Hong Kong (China), Iceland, New Zealand, Norway, Oman, Panama, Singapore and Thailand Liberalisation of this sector which is subject to high tariffs, tariff peaks and tariff escalation would bring about considerable benefits for developing countries In 2003, value of exports of fish and fish products exceeded the combined total net value of exports of coffee, cocoa, bananas, rubber, sugar, tea &rice. About 40% of fish and fish products traded internationally, with developed countries importing around 80% 95% of employment in the fish sector located in developing countries

31 Trade liberalisation of fish and fish products (Job06/132; 1 May 2006) Product coverage should be broad Participation: nonmandatory: critical mass- 90% of trade Treatment: elimination or harmonization NTBs to be addressed HS Code HS0509 HS HS 03 HS HS Ex HS 1603 HS 1604 HS 1605 HS 2301 HS Description Sponge Fish unfit for human consumption Fish and fish products Fish oils Fish oils Juices and extracts of meat and fish Prepared or preserved fish Prepared or preserved crustaceans and molluscs Fish meal

32 Non-tariff barriers No official definition but, in general terms, refer to any measure other than a tariff which protects a domestic industry. Many non-tariff measures are based on a legitimate goal (such as the protection of human health) and can be introduced in a WTO-consistent manner. Agreements such as the SPS and TBT allow governments to pursue legitimate goals. However, measures should unnecessarily restrict trade or be used as a disguised protection on trade

33 How are NTBs being addressed? The Group has been identifying, categorizing and examining various NTBs Sectoral basis Bilateral/regional efforts to address NTBs Results may be limited given existing agreements such as SPS and TBT Trade Facilitation

34 Chairman s Draft Modalities (Job (07) /126; 17 July 2007

35 Formula Adoption of a simple Swiss Formula with two coefficients 8-9 for developed countries; and for developing countries Product coverage to be comprehensive without a priori exclusions Reductions or elimination on the basis of bound rates

36 Formula For unbound rates, a constant non-linear mark up of 20% to the MFN applied rate in the base year (14 November 2001) Conversion of non ad-valorem duties into ad valorem equivalents Reference period for import data: Reductions for developed-country and developing-country Members in 5 and 9 equal instalments, respectively

37 Flexibilities for developing countries subject to formula Applying less than formula cuts for up to 10% of tariff lines; OR Keeping 5% of tariff lines unbound provided they do not exceed 5% of the total value of a member s imports Not to be used to exclude entire HS chapters Alternatively, where flexibility not used, developing-country Member can apply a coefficient of b + 3 in the formula

38 Flexibilities for developing countries with low binding coverage As an exception, participants with a binding coverage of non-agricultural tariff lines of less than 35 percent would be exempt from making tariff reductions through the formula. Instead, they are expected to bind 90 percent of non-agricultural tariff lines at an average level that does not exceed the overall average of bound tariffs for all developing countries after full implementation of current concessions which is at 28.5%. (Developing Members concerned are: Cameroon; Congo, Côte d'ivoire; Cuba; Ghana; Kenya; Macao, China; Mauritius; Nigeria; Sri Lanka; Suriname; and Zimbabwe.)

39 Flexibilities for LDCs LDCs exempted from applying the formula for tariff reduction and the sectoral approach. However, as part of contribution to this Round of negotiations, LDCs expected to substantially increase the level of tariff binding commitments. Individual LDCs to determine the extent and level of tariff binding commitments in accordance with their individual development objectives. Duty-free, quota-free access for LDCs transparency ( Hong Kong Declaration)

40 Flexibilities for LDCs Accordingly, by the time Members submit their comprehensive draft schedules of concessions, developed-country Members shall, and developingcountry Members declaring themselves in a position to do so should: - inform the WTO of the products that are currently covered under duty free and quota free market access for LDCs; - notify the internal procedures by which they will implement the Decision; and - provide an indication of the possible time frame within which they intend to fully implement the Decision as agreed.

41 Flexibility for Small Vulnerable Economies Search for benchmarks of vulnerability abandoned. Single eligibility criterion based on value of NAMA trade from : 0.1% Two options: a formula tariff reduction with expanded flexibilities or a target average tariff reduction as proposed by SVEs Chair s recommendation: tariff average approach, in 3 tiers based on average bound tariffs, and including a minimum line-by-line tariff reduction

42 Flexibility for Small Vulnerable Economies Where the SVE has bound 50% or more of its tariff lines, its overall tariff average shall not exceed 22%. Fiji special consideration on account of its low level of binding coverage and the fact that SVEs will be expected to bind 100% of their tariff lines Where the SVE has bound between 30% and 49% of its tariff lines, its overall tariff average shall not exceed 18% Where the SVE has bound less than 30% of its tariff lines, its overall tariff average shall not exceed 14% SVEs to make a minimum tariff reduction of 10% for 95 per cent of their tariff lines

43 Flexibility for Small Vulnerable Economies All tariff lines to be bound on 1 January following the entry into force of the DDA results at initial bound rates For bound tariff lines, existing bindings will be used. For unbound tariff lines, SVE to determine the level of the initial binding of those tariff lines Overall binding target average to be made effective at the end of the implementation period through 9 equal rate reductions. First reduction to be made 1 year after the implementation of the DDA results All duties to be bound on an ad-valorem basis

44 Flexibility for Recently Acceded Members Potential list of RAMs: Ecuador, Bulgaria, Mongolia, Panama, Kyrgyz Republic, Jordan, Georgia, Albania, Oman, Croatia, Moldova, China, Chinese Taipei, Armenia, Former Yugoslav Republic of Macedonia, Saudi Arabia, Vietnam and Tonga RAMs have to apply the formula, with the exception of Armenia, Former Yugoslav Republic of Macedonia, Saudi Arabia, Vietnam and Tonga A grace period of 2 years which shall apply on a lineby-line basis and which shall begin as of the date of full implementation of the accession commitment on that tariff line

45 Flexibility for Recently Acceded Members An extended implementation period of 2 equal rate reductions to implement commitments (i.e. in addition to the 5 or 9 equal instalments foreseen) First reduction to be implemented on 1 January of the year following the entry into force of the DDA results, with the exception of those tariff lines covered above In respect of those tariff lines, the first reduction shall be implemented on 1 January of the year following completion of the grace period In both cases, each successive reduction to be made effective on 1 January of each of the following years

46 Sectorals Key element in fulfilling the Doha mandate Participation on anon-mandatory basis Discussions to date have focussed on defining critical mass, scope of product coverage, implementation period and SDT for developing countries Members participating in sectorals to intensify their work

47 Non-reciprocal preferences Assessment of the scope of the preference erosion problem greatly assisted by a Secretariat analysis of the key products, key countries and key markets concerned. element in fulfilling the Doha mandate Suggested possible solutions: - Aid-for-Trade to address the underlying challenges faced by beneficiary countries diversification of exports and strengthening competitiveness; - Possible longer implementation periods; - Correction coefficient opposed by several Members, who argue that trade measures are not apposite for addressing the problem

48 Non-reciprocal preferences Recognition that MFN liberalization will erode preferences Reduction of tariff on eligible products to be implemented in 7 equal rate reductions instead of 5 equal rate reductions by preference-giving countries First reduction to be implemented on 1 January of the year following the entry into force of DDA results

49 Others Supplementary modalities: Request and offer approach Low Duties: elimination encouraged NTBs: Members encouraged to merge proposals to facilitate text-based negotiations; resolution of bilateral requests; intensification of work Capacity-building measures Non-agricultural environmental goods

50 NAMA and Agriculture The Hong Kong Ministerial Declaration, Annex B, Paragraph 24: We recognize that it is important to advance the development objectives of this Round through enhanced market access for developing countries in both Agriculture and NAMA. To that end, we instruct our negotiators to ensure that there is a comparably high level of ambition in market access for Agriculture and NAMA. This ambition is to be achieved in a balanced and proportionate manner consistent with the principle of special and differential treatment.

51 Some Reference Documents Chairman s Draft NAMA Modalities, Job(07)/ July 2007 Chairman s report, TN/MA/W/80 (July 2006) HK Declaration, WT/MIN(05)/DEC (Dec. 2005) July Framework, WT/L/579 (August 2004) List of Documents, TN/MA/S/16/Rev.5 (July 2006) Tariff reduction simulations, JOB(06)/210 (June 2006) Ad Valorem equivalents, JOB(05)/166/Rev.1 (Sept. 2005) Paragraph 16 of Doha Ministerial Declaration, WT/MIN(01)/DEC 1(Nov 2001