The State of Play in NAMA
1
Basic framework for negotiating tariff concessions
Modalities
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Postmodalities
Defining the rules of the game
GATT Article XXVIII bis
Tariff reduction: which option?
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Request/Offer?
Sectoral?
Formula? If so, which one?
New bindings: how many? at what level?
Implementation period
S&D / Flexibility provisions
Members prepare and submit offers
Multilateral verification
Final Schedules of concessions
2
Previous Rounds
Round
GATT ~ Dillon
Developed
Developing
request / offer
request/offer
Kennedy Round
Linear cut formula (50% cut),
with exceptions.
request/offer
Tokyo Round
“Swiss formula” w/ coef. of 14
and 16 was used, with
exceptions
request/offer
(1947 ~ 1961)
(1964-1967)
(1973-1979)
Uruguay Round
(1986-1994)
Targeted simple average
reduction (33.3% AVG), plus
some sectoral agreements (zero
for zero and harmonization)
request/offer
ceiling bindings
3
GATT/WTO – 60 years of tariff reductions
(Estimated MFN tariff reduction of industrial countries for industrial products (excl. petroleum))
Implem.
Period
Round Covered
Weighted
tariff
reduction
Weights based on
MFN imports
(year)
1948
Geneva (1947)
-26
1939
1959
Annecy (1949)
-3
1947
1952
Torquay (1959-51)
-4
1949
1956-58
Geneva (1955-56)
-3
1954
1962-64
Dillon Round (1961-62)
-4
1960
1968-72
Kennedy Round (1964-67)
-38
1964
1980-87
Tokyo Round (1973-79)
-33
1977 (or 1976)
1995-99
Uruguay Round (1986-94)
-38
1988 (or 1989)
Source: WTO World Trade Report 2007, Table 5, p. 207
Note: Tariff reductions for the first five rounds refer to the United States only. The calculation of
average rates of reductions are weighted by MFN import values.
4
DDA (NAMA): Sequence of main events
2001 -> Doha Ministerial Declaration (Paragraph 16)
July 2002 -> Work program is adopted
(deadline for modalities = 31 May 2003)
May 2003 -> Chairman’s Draft Elements for Modalities
(TN/MA/W/35 i.e. “Girard Text”)
September 2003 -> Cancun Ministerial fails to adopt a
“framework” on NAMA (JOB(03)152/Rev.2)
July 2004 -> “July Package” adopts the NAMA Framework with
initial elements (Annex B of WT/L/579)
December 2005 -> Hong Kong Ministerial clarified add. elements
2007 First draft modalities (JOB(07)/126)
2008 Third revision of draft modalities (TN/MA/W/103/Rev.2)
July Mini-ministerial (JOB(08)/96)
Fourth revision of draft modalities (TN/MA/W/103/Rev.3)
5
The formula
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Ministers had previously agreed:
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A Swiss formula
Reduce or as appropriate eliminate tariffs, including the reduction
or elimination of tariff peaks, high tariffs and tariff escalation, in
particular on products of interest to developing countries
Special & Differential Treatment, including through less than full
reciprocity in reduction commitments
Fourth revision (TN/MA/W/103/Rev.3) said:
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Simple Swiss formula with four coefficients
Coefficient for developed countries: 8
Coefficient for developing countries: “sliding scale” with 3 options:
“X” = 20, “Y” = 22, “Z” = 25 depending on flexibilities chosen
6
Formula
5. The following formula shall apply on a line-by-line basis:
{a or (x or y or z)} x t0
t1 =_____________________________
{a or (x or y or z)} + t0
where,
t1 = Final bound rate of duty
t0 = Base rate of duty
a = 8 = Coefficient for developed Members
x = 20, y = 22, z = 25 to be determined as provided in
paragraph 7 =Coefficients for developing Members.
7
The mark-up for unbound tariffs
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Ministers have agreed:
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A non-linear mark-up to establish the base rate for
commencing tariff reductions
i.e. 2001 MFN applied rate + mark-up = base rate
Then apply Swiss formula on that base rate
Fourth revision said:
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A mark-up of 25 percentage points
8
Setting the base rate
Bound rates
Unbound rates
2001 MFN applied
Mark-up
(+25 pts)
Base rates
Formula
New Bound rates
9
Formula flexibilities (Paragraph 7)
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Ministers had previously agreed :
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Fourth revision said:
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Developing countries shall have longer time to implement reductions
Half-formula cuts for [10] % of tariff lines, with an import value cap of [10] %, or
No-cuts for [5] % tariff lines, with an import value cap of [5] %
Implementation period of 5 years (6 equal cuts) for developed countries and 10 years
(11 equal cuts) for developing countries
“Sliding scale”: Set of 3 options for an increased number of tariff lines for flexibilities in
exchange of a lower coefficient:
 Swiss-20 = 14% lines with half-cut and 16% import cap; or
6.5% lines with no-cut and 7.5% import cap
 Swiss-22 = 10% lines with half-cut and 10% import cap; or
5% lines with no-cut and 5% import cap
 Swiss-25 = no flexibilities
“Anti-concentration”: Formula needs to be applied on a minimum of 20% of lines or 9%
of value in each HS Chapter
Specific situations:
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Mercosur, Oman, South Africa (SACU), [Argentina?], [Venezuela?]
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Formula flexibilities (Paragraph 7)
(a)Coefficient x in the formula and either:
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(i) less than formula cuts for up to 14 percent of nonagricultural national tariff lines provided that the cuts are no less
than half the formula cuts and that these tariff lines do not exceed
16 percent of the total value of a Member's non-agricultural
imports;
or
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(ii) keeping, as an exception, tariff lines unbound, or not
applying formula cuts for up to 6.5 percent of non-agricultural
national tariff lines provided they do not exceed 7.5 percent of the
total value of a Member's non-agricultural imports[1].
[1]
It is understood that the options in sub-paragraph 7(a)(ii) (keeping tariff lines unbound or not
applying formula cuts) may be combined but cannot together exceed the applicable percent of
tariff lines and total value of a Member’s non-agricultural imports.
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Formula flexibilities (Paragraph 7)
(b)
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(i)
Coefficient y in the formula and either:
less than formula cuts for up to 10 percent of nonagricultural national tariff lines provided that the cuts are no
less than half the formula cuts and that these tariff lines do
not exceed 10 percent of the total value of a Member's nonagricultural imports;
or
(ii) keeping, as an exception, tariff lines unbound, or not
applying formula cuts for up to 5 percent of non-agricultural
national tariff lines provided they do not exceed 5 percent of
the total value of a Member's non-agricultural imports[1].
[1]
It is understood that the options in sub-paragraph 7(b)(ii) (keeping tariff lines
unbound or not applying formula cuts) may be combined but cannot together exceed
the applicable percent of tariff lines and total value of a Member’s non-agricultural
imports.
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Formula flexibilities (Paragraph 7)
(c) Coefficient z in the formula without recourse to flexibilities.
(d)The flexibilities provided under paragraph 7 shall not be used to
exclude entire HS Chapters. In order to ensure tariff reduction in
every Chapter, without substantially limiting the flexibilities
provided to developing Members, this provision shall be
understood to mean that full formula tariff reductions shall apply
to a minimum of either 20 percent of national tariff lines or 9
percent of the value of imports of the Member in each HS Chapter.
(e) As an exception, Botswana, Lesotho, Namibia, South Africa and
Swaziland shall include a common list of flexibilities in their
schedules and shall have recourse to [.........].[1]
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[1] The attention of Members is called to the loss of tariff revenue by
Lesotho, Botswana, Namibia and Swaziland resulting from these tariff
reductions, and in particular the LDC status of Lesotho. This loss of
revenue may warrant a priority for targeted Aid-for-Trade assistance.
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Formula flexibilities (Paragraph 7)
(f) As an exception, Argentina, Brazil, Paraguay and Uruguay
shall include a common list of flexibilities in their schedules
and each shall calculate the percentage for the value of trade
limitation in paragraph 7 using the total value of Brazil’s
non-agricultural imports.
(g) As an exception, Oman shall not be required to reduce any
bound tariff below 5 per cent after applying modalities under
paragraph 7(b)(i). Flexibilities shall be used exclusively to
cover tariff lines currently bound at 5 or 5.5 per cent. Oman
shall implement its tariff reductions in accordance with
paragraph 6(f).
[(h) Argentina]
[(i) Venezuela].
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Formula flexibilities (Paragraph 7)
Further work required:
(2)
Consultations with Argentina, South Africa and
Venezuela will have to be pursued next week. I would
observe that the discussions on South Africa are rather
advanced.
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Members with low binding coverage
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Ministers had previously agreed:
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Special flexibilities for countries with less than 35% binding
coverage
Fourth revision said:
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12 developing countries qualify
A “tiered approach” based on existing binding coverage for
non-agricultural products:
Band
Current binding
coverage
Share of lines to
bind
At an average of
8(a)(ii)
Higher than 15%
80%
30%
8(a)(i)
At or below 15%
75%
30%
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Small, Vulnerable Economies (SVEs)
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Ministers had previously agreed:
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Special consideration shall be given to SVEs
Fourth revision said:
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Band
Eligibility is less than 0.1% of world NAMA trade
SVEs would not apply the formula, but rather reduce to a target
average - 4 bands according to AVG of bound:
If AVG of bound:
Reduce to a new AVG of:
13(a)(i)
At or above 50%
30%
13(a)(ii)
+30 – 50%
27%
13(a)(iii)
+20 – 30%
18%
13(a)(iv)
-20%
Min. line-by-line reduction of 5% on 95% of
lines, or equivalent
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Special cases: Bolivia, Fiji, Gabon
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Recently Acceded Members (RAMs)
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Ministers had previously agreed :
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Special provisions for tariff reductions shall be provided in view of
heavy accession commitments
Fourth revision said:
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List of 11 Members (Low Income Economies in Transition; Very
Recently Acceded Members) that shall make no tariff reductions
RAMs with less than 0.1% of world NAMA trade shall have access to
SVE treatment
RAMs applying the formula shall have 3 years extended
implementation period
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Least Developed Country Issues
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Ministers had previously agreed:
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LDCs not required to cut tariffs, but expected to increase binding coverage
DFQF market access on 97% of tariff lines by the start of the implementation
period; remaining 3% within no specified time (“Annex F”)
Rules of origin should be made simpler, transparent and trade facilitating
Fourth revision said:
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Transparency on products that will be covered by DFQF on a date to be
determined “prior to the date of the Special Session of the Ministerial
Conference to be held to take decisions regarding the adoption and
implementation of the results of the negotiations in all areas of the DDA”
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Developed Members shall ... “provide meaningfully enhanced market access for
all LDCs.”
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Monitoring mechanism in the CTD to track future steps to fully implement the
Decision. Details remain to be negotiated by the NGMA
Technical assistance and capacity building support should be provided
through EIF and Aid for Trade.
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Non-reciprocal preferences
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Ministers had previously agreed :
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Preferences will be eroded by MFN liberalization
The scope of the problem should be determined
Possible solutions to the problem should be identified
Fourth revision said:
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Two principal preference-granting markets (EC and US) granted:
 5 years extended implementation period (i.e. 10 years)
 Of which 2 years should be a “grace period” (i.e. no cut)
57 TLs for the EC; 29 TLs for the USA
Preference granting Members urged to increase their assistance
through EIF and A4T; simplify ROs
“Disproportionately affected” Members should be granted normal
implementation period, through a waiver, on a sub-set of lines:
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In the EC: Pakistan and Sri Lanka.
In the USA: Bangladesh, Cambodia, Nepal, Pakistan and Sri Lanka
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Non-reciprocal preferences
ANNEX C, Chair’s report to the TNC
Annex 2:
57 tariff lines listed correspond to the tariff structure notified by the EC to
the IDB for the year 2005, which is in the HS2002 nomenclature. The
product descriptions are indicative only.
Annex 3:
29 tariff lines correspond to the tariff structure notified by the US to the
IDB for the year 2005, which is in the HS2002 nomenclature. The product
descriptions are indicative only.
In addition:
Bangladesh adds 5 TLs to the US list
Cambodia adds 5 TLs to the US list
Nepal adds 5 TLs to the US list
Pakistan adds 5 TLs to the EC list and 5 TLs to the US list
Sri Lanka adds 5TLs to the EC list and 5 TLs to the US list
All these additional TLs mentioned above correspond to the tariff structure
notified by the EC and the US to the IDB for the year 2005, which is in the
HS2002 nomenclature. The product descriptions are indicative only.
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What is the issue?
Example: Cotton trousers in the US Market
16.6%
0%
5.4%
MFN Suppliers
(e.g. Ban., Chn., etc.)
Preferential Suppliers
(e.g. AGOA, CBI, etc.)
22
Non-Tariff Barriers (NTBs)
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Ministers had previously agreed :
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Members should make proposals to address NTBs
Fourth revision said:
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Text based negotiations should continue on proposals after
modalities are established. Seven of them “merit particular
attention”
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Aim is to finalize discussions on proposals as early as possible for
their inclusion in any final package in NAMA
Members should pay attention to any systemic or cross-cutting
issues, including those relating to the TBT Agreement, that may
arise from these proposals
Negotiations on bilateral requests should proceed in tandem.
Need to multilateralize the outcomes through inter alia
incorporating them where appropriate into Part III of the
schedules
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Sectoral negotiations
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Ministers had previously agreed :
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Fourth revision said:
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Sectorals are another key element of the negotiations
Participation should be on a non-mandatory basis
Participation in sectorals remains on a non-mandatory basis, but
there will be an annex with Members who have “agreed to
participate ... in negotiating the terms of sectoral tariff initiatives,
with a view to making them viable”
But this participation “shall not prejudge a Member's decision to
participate in that sectoral initiative”
New proposals on sectors/subsectors may be submitted
S&D to be defined sector by sector
Chair said
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(JOB(08)/133):
“a very big hurdle to jump”
“clever drafting which will do the trick and forge the consensus”
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Sectoral negotiations (cont’d)
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Key questions:
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Scope of product coverage.
Implementation period for tariff reduction or
elimination.
S & D for developing country Members,
including:
-“zero for x” tariff reductions;
-Longer implementation periods;
-Partial product coverage or participation in sub-sectors;
-Etc.
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Sectoral negotiations (cont’d)
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(1)
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Further work required:
Sectorals (paragraphs 9 to 12): Even though the included text is
accepted as a basis for further work, we are far from a consensus
among Members. The main open questions in sectorals are:
An indication by some Members that their ability to finalize NAMA
modalities depends on a commitment by those Members who
took part in the negotiations on formula and flexibilities in July to
negotiate an agreed list of sectors and to participate in the
agreements that result from those negotiations. In this context,
the language referring to a single undertaking in paragraph 9
meets resistance from the non-proponents.
How and when to define the commitment of Members to
participate in sectorals without altering the non-mandatory
character of these negotiations?
Annex 7: option 1 is the preferred option of the proponents, and
option 2 the preferred one of the non-proponents.
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Future work on NAMA
The future of the NAMA negotiations –
and the Doha Development Agenda more
generally – lies in the hands of the
Members.
.
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