NAMA NEGOTIATIONS IN WTO

1. Rajan Sudesh Ratna Professor Centre for WTO Studies Department of Commerce Indian Institute of Foreign Trade rsratna@nic.in NAMA NEGOTIATIONS IN WTO

2. DOHA MANDATE • Para 16 of the Doha Ministerial Declaration (DMD): • reduce or eliminate tariffs (including tariff peaks, high tariffs, and tariff escalation) as well as non-tariff barriers • negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity (LTFR) in reduction commitments

3. Framework Agreement • Annex B: • a formula approach is key to reducing tariffs, and reducing or eliminating tariff peaks, high tariffs, and tariff escalation • Negotiating Group should continue its work on a non-linear formula applied on a line-by-line basis which shall take fully into account • special needs and interests of developing and LDCs, including through less than full reciprocity in reduction commitments

4. Hong Kong Ministerial Declaration • Para 13: • Reaffirm commitments in para 16 of the DMD. • Reaffirm all elements of Framework Agreement • Para 14 & 15: • Adopt a Swiss formula • Reaffirm the importance of special and differential treatment and less than full reciprocity in reduction commitments • Para 24: • Comparably high level of ambition in market access for Agriculture and NAMA to be achieved • in a balanced and proportionate manner consistent with the principle of special and differential treatment

5. MAIN ELEMENTS IN NAMA • FORMULA • TREATMENT OF UNBOUND LINES • FLEXIBILITIES • SECTORALS • OTHER ISSUES

6. India’sPosition • The coefficients of the formula should be such that the mandate of less than full reciprocity (LTFR) in reduction commitments between developed and developing countries is met i.e. developed countries take larger % cuts from their bound rates than developing countries.

9. FORMULA • HONGKONG MINISTERIAL (HKMD) • Adopt a Swiss Formula with coefficients to • Reduce or eliminate tariffs especially on products of export interest for developing countries • Take account of special needs of developing countries (including LTFR) • Chairman’s Modalities (17th July, 2007) • Swiss 19-23 for developing countries • Swiss 8-9 for developed countries • Chairman’s Modalities (May 2008) • 7-9 for developed and 19-26 (three options) for developing countries. • Chairman’s Modalities (July 2007) • No change in May text.

10. FORMULA (cont) Simple Swiss Formula: Tf=(A x Tb) / (A + Tb) Tf = Final Bound Tariff, A = Swiss coefficient Tb = Current Bound Tariff • From the above formula – higher the tariffs larger will be the cuts. Secondly lower is the value of “A” greater will be the cuts. • Therefore a lower coefficient is prescribed for developed countries. • Developed – 6 equal cuts in 5 years, Developing – 11 equal cuts in 10 years.

11. TREATMENT OF UNBOUND • HONGKONG MINISTERIAL • Adopt a non-linear mark-up approach to establish base rates for commencing tariff reductions • Proposals • Fair mark up (NAMA 11) • 5% markup (Canada, Hongkong, New Zealand, Norway) • 30% markup (Pakistan) • July 2008 modality (para 6 b – agreed) • 25% markup on the applied rate • Base year – Applied MFN tariffs on 14th November 2001

12. FLEXIBILITIES: PROPOSAL • If coefficient is : 19-21 • Atleast 50% of formula cuts in [12-14]% NAMA lines with imports not more than [12-19]% of total NAMA imports. • Keep unbound and/or not applying formula cuts to [6-7]% NAMA lines provided the imports not more than [6-9]% of total NAMA imports. • If coefficient is : 21 – 23 • Atleast 50% of formula cuts in 10% lines with imports not more than 10% of total NAMA imports. • Keep unbound and/or not applying formula cuts to 5% NAMA lines provided imports are not more than 5% of total NAMA imports. • If coefficient is : 23 – 26 • No flexibility • Cannot exclude entire HS Chapter. A minimum number of either % of national tariff lines or a % of value of imports has been proposed. The percentage is to be decided.

13. SECTORALS • Current Proposals: • Autos & related parts, Bicycles & related parts • Chemicals, Electronics/ electrical • Fish & fish products, Forest products • Gems & Jewellery, Hand Tools • Health Care, Raw Materials, Sports Equipment • Textiles & Clothing, • India’s opposes sectoral intiatives as they • Create an inverted duty structure • Affect vulnerable industries • Distort the tiered tariff structure • Have revenue implications • Entail larger reductions by developing countries than developed countries

14. NON TARIFF BARRIERS • The horizontal proposals on: • Ministerial Decision on Procedures for the Facilitation of Solutions to Non-Tariff Barriers; and • Ministerial Decision on Trade in Remanufactured Goods. • The vertical proposals on: • Negotiating Proposal on Non-Tariff Barriers in the Chemical Products and Substances Sector; • Understanding on the Interpretation of the Agreement on Technical Barriers to Trade as Applied to Trade in Electronics; • Agreement on Non-Tariff Barriers Pertaining to the Electrical Safety and Electromagnetic Compatibility (EMC) of Electronic Goods; • Understanding on the Interpretation of the Agreement on Technical Barriers to Trade with Respect to the Labelling of Textiles, Clothing, Footwear, and Travel Goods; and • Agreement on Non-Tariff Barriers pertaining to Standards, Technical Regulations and Conformity Assessment Procedures for Automotive Products.

15. SCENARIO Mr. Pascal Lamy, Director General, reported “that the main blockage is on the Agriculture legs [domestic support and market access] of the triangle of issues” that were being sought to be addressed, and that “it remained clear that the gaps remain too wide”. The main reason of the deadlock is lack of consensus in Agriculture. The most crucial country is USA.

16. WHERE IS THE BALANCE?

17. THANK YOU