Developing country group asks for policy space in NAMA talks

A group of ten developing countries at the NAMA (Non-Agricultural Market Access) negotiations has called for policy space for their national industrial development priorities.

The group is coordinated by India and comprises Argentina, Brazil, Egypt, Indonesia, Namibia, the Philippines, South Africa, Tunisia and Venezuela.

In introducing the group, and speaking on their behalf at the first informal NAMA session this year, on Thursday, the Indian Ambassador to the WTO, Mr.
Ujal Singh Bhatia declared: "The main objective of the group is to reclaim and emphasise the developmental content of the Round."

The group has been working together from just before the Hong Kong Ministerial Conference last December and have already submitted their collective positions on various aspects of the NAMA negotiations - notably, on the issue of special and differential treatment for developing countries and also "less than full reciprocity" in making industrial tariff reduction commitments.

The developed country members, in particular the EU, have insisted on linking these two issues. They have argued that if developing countries want a less draconian cut in their tariffs, they would have to give up recourse to any special and differential treatment.

The developed countries, especially the EU, are also attempting to link the NAMA and agriculture negotiations. They contend that dramatic cuts in developing countries' industrial tariffs are necessary in exchange for the purportedly greater market access in the area of agricultural products.

On this point, the Indian Ambassador stated explicitly that "developing countries cannot be expected to pay for the much needed reforms in the Agriculture sectors of developed countries."

Referring to paragraph 24 of the Hong Kong Ministerial Declaration, Bhatia added that the group supports the "ministers' injunction... to strike a balance in commitment levels of members in Agriculture and NAMA."

"Ambition in NAMA cannot be viewed in isolation," he explained. "It has to be proportionate and commensurate with the contributions of Members in other areas of market access negotiations, notably agriculture."

Moreover, "the enormous burdens of adjustment that developing countries would have to bear in their industrial sectors bear no resemblance to the relatively insignificant adjustments that developed countries need to make in this sector," Amb. Bhatia argued on behalf of the Group.

Therefore, "developing countries cannot be called upon to bear the entire onus of any market opening in this round. Such disproportionate demands made of developing countries," he said, "can only lead to an imbalanced outcome, which would strike at the very roots of the development dimensions of this Round."

The Indian envoy made clear that the group is not shying away from making tariff commitments. "Developing countries such as ours are willing to reduce their tariffs," he said. However, this must be done proportionately, "on the basis of less than full reciprocity so that their concessions are commensurate with their level of industrial development."

He also pointed out to members that despite the liberalization and reform taking place in their industrial sectors, a significant part of developing countries' industrial production and employment remain in sensitive sectors and that "further liberalization of these sensitive sectors would have to be preceded by carefully managed adjustment policies."

It is for these reasons, said Amb. Bhatia, that the group argued that "paragraph 8 (of the NAMA framework) is an essential element of the flexibilities required by the developing countries to manage their adjustment processes."

Hence, "we welcome" the decision of Ministers in paragraph 15 of the Hong Kong Declaration to "reaffirm the importance of special and differential treatment and less than full reciprocity in reduction commitments, including paragraph 8 of the NAMA Framework, as integral parts of the modalities."

Bhatia however did not indicate whether the group shared a common perspective on the details of the formula that is required for making tariff reduction, such as the structure of the formula and the issue of coefficients. Nor did he indicate whether the current "flexibilities" contained in paragraph 8 of Annex B of the July Framework are sufficient for the Group.

At the informal morning NAMA session, Bhatia speaking on behalf of the Group, also explicitly recognized that "not all developing countries stand to gain" from the trade talks.

"The Least Developed Countries (LDCs) and other small, weak and vulnerable economies would not have the supply capacity to compete for the new export opportunities... and others will face significant adjustment costs from preference erosion."

To address these concerns, he told members, the group "pledge to work with these countries" to establish ways of providing flexibilities for these members, "without creating a sub-category of WTO members," The group would also work with the LDC group to "operationalise the commitments made in Hong Kong by Ministers, to provide duty-free, quota-free treatment to all LDCs for all products."

During the morning NAMA meeting, several members, such as Japan, Norway, the US and Singapore presented their recently circulated proposals on sectorals.

In the afternoon, the Chair of the NAMA negotiating group, Ambassador Stefan Johannesson of Iceland held further consultations at more technical level on the formula and the issue of flexibilities. He assured members that all issues pertinent to all members should be worked on simultaneously and nothing should be left out.