CANCÚN WTO MINISTERIAL 2003: BRIEFING NOTES
MARKET ACCESS, NON-AGRICULTURAL PRODUCTS Still sorting out ‘modalities’
Negotiators have missed the 31 May 2003 deadline for “modalities” setting out how tariffs should be reduced and how other market access issues should be handled. But a lot of ground has been covered and the Cancún Ministerial Conference will assess progress in the negotiations.
> Director-General’s letter to journalists
> The Doha Development Agenda
> Market access, non-agricultural products
> Intellectual property (TRIPS)
> Trade and investment
> Trade and competition policy
> Transparency in government procurement
> Trade facilitation
> Rules: anti-dumping, subsidies
> Rules: regional agreements
> Dispute settlement
> Trade and environment
> Electronic commerce
> Small economies
> Trade, debt and finance
> Trade and technology transfer
> Technical cooperation
> Least-developed countries
> Special and differential treatment
> Members and accession
> Some facts and figures
> Jargon buster
The Doha mandate
At the Doha Ministerial Conference in November 2001, ministers agreed to start negotiations to further liberalize trade in non-agricultural goods. To this end, the Negotiating Group on Market Access was created at the first meeting of the Trade Negotiations Committee, in early 2002.
The ministers agreed to launch tariff-cutting negotiations on all non-agricultural products. The aim is “to 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”. The product coverage shall be comprehensive and without a priori exclusions.
These negotiations shall take fully into account the special needs and interests of developing and least-developed countries, and recognize that these countries do not need to match or reciprocate in full tariff-reduction commitments by other participants.
At the start, participants had to reach agreement on how (“modalities”) to conduct the tariff-cutting exercise. (In the Tokyo Round, the participants used an agreed mathematical formula to cut tariffs across the board; in the Uruguay Round, participants negotiated tariff cuts using a variety of methods). The agreed procedures would include studies and capacity-building measures that would help least-developed countries participate effectively in the negotiations.
While average customs duties are now at their lowest levels after eight GATT Rounds, certain tariffs continue to restrict trade, especially on exports of developing countries — for instance “tariff peaks”, which are relatively high tariffs, usually on “sensitive” products, amidst generally low tariff levels.
Another example is “tariff escalation”, in which higher import duties are applied on semi-processed products than on raw materials, and higher still on finished products. This practice protects domestic processing industries and discourages the development of processing activity in the countries where raw materials originate. The negotiations are to end by 1 January 2005 and the Fifth Ministerial Conference in Cancún, September 2003, will take stock of progress.
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Since then ...
By June 2003, the negotiating group had met 17 times, 10 of those formally. Members have submitted more than 40 papers as a contribution to the debate. These proposals deal with the “modalities” for the negotiations, covering tariff reductions, how to deal with non-tariff barriers, how to give developing countries special and differential treatment, and the possible effects of the reduction in tariffs on the development policies of some countries and on their fiscal revenues, etc. The “modalities” include the criteria to be used to define environmental goods, since the Doha Declaration includes a mandate to negotiate the reduction of tariffs in this particular sector of goods, a subject transferred from the Trade and Environment Committee to this negotiating group.
At a three-day meeting in late May, the negotiating group’s chairperson introduced an initial “Draft Elements of Modalities” (official WTO document TN/MA/W/35).
The chairperson stressed that the draft was a set of basic elements that would need to be adjusted, completed, refined, or further expanded. There was a detailed discussion on the main elements — the formula for tariff reductions, approach for specific sectors, and special and differential treatment.
The formula On the formula, there was consensus on the need for one formula applicable to all, but delegations debated whether the formula proposed in the paper would be able to meet all of their needs.
Sectors The draft contained a proposal for completely eliminating tariffs in the following seven sectors: electronics and electrical goods; fish and fish products; footwear; leather goods; motor vehicle parts and components; stones, gems and precious metals; and textiles and clothing. These sectors are considered important for the exports of developing and least-developed countries.
In the discussion of the sectoral proposals, some members said they should be able to choose whether to eliminate the tariffs — this should not be compulsory. Some questioned why the seven sectors were chosen, and some wanted some of the sectors deleted or other sectors added.
Special and differential treatment for developing countries There was a lot of discussion on these provisions and their relationship with the formula. Most of the points raised were about flexibility for developing countries — allowing them longer implementation periods for tariff reductions; and allowing them to keep 5% of tariff lines “unbound” (i.e. not legally committed in the WTO), provided that these do not exceed 5% of imports. Least-developed country participants would not be required to undertake reduction commitments. But as part of their contribution to this round of negotiations, they are expected to substantially increase the number of products whose maximum tariff rates are legally bound in the WTO.
New members The negotiating group noted that countries that have recently joined the WTO should be given special treatment because, as part of their membership agreement, they made extensive commitments to open their markets, with tariff reductions still gradually taking place.
Non-tariff barriers Members have concentrated their work so far on notifying the measures their exporters face. Once the negotiating group has finished the notification and clarification, it will discuss “modalities” to deal with these non-tariff barriers.
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Ministers are expected to assess progress in the negotiations, which are scheduled to be completed by 1 January 2005.