Hot off the WTO: NAMA, AoA draft modalities out now

After a long silence in the WTO headquarters, the draft text of the modalities for Non-agricultural Market Access (NAMA) and Agreement on Agriculture (AoA) are out. Here are the two in .pdf file format:

Draft Modalities for Agriculture
Draft NAMA Modalities

UPDATE: FairTrade Senior Researcher Errol Ramos has an initial observations and reactions to the draft NAMA modalities.

Based on his summary, the salient features of the new NAMA draft are:

For bound tariffs, the Swiss formula is adopted with 2 coefficients (1 for developed and one for developing). Specifically: (1) Between 8-9 for developed; and (2) Between 19-23 for developing.

For unbound tariffs, a 20 percent mark-up will be adopted.

The flexibilities under the para 8 of the NAMA Framework are:

(1) For bound tariffs, 10 percent of the NAMA lines will have lesser cuts. (2) For unbound tariffs, 5 percent of the NAMA lines will be kept unbound.

The new NAMA draft also speaks of having no consensus or little development at all on the:

1. Definition of what full reciprocity is,
2. Sectoral initiatives
3. Other issues like non-tariff barriers, conversion to ad valorem equivalents
4. NAMA environmental goods.
5. Balance of ambition between NAMA and AoA.

His reactions to the draft NAMA text, after the jump:

The new draft is unacceptable from the point of view of the developing countries, specifically the Philippines for five major reasons:

(1) The coefficients used (with only a difference of 12 percent on the average between the developed and the developing) are not fair and equitable. With these coefficients, the reduction in the tariffs of developed countries is just around 40 percent while that of the developing countries is at 60 percent. And the average tariff reduction in percentage points is also revealing – the tariff cut for developing countries is 4 times more than the cuts for the developed. Clearly, this is against the principle of less than full reciprocity and an SDT in reverse, in favor of the developed countries. For the Philippines, it will be a tariff reduction (reduction in policy space) of 54 percent and a new ceiling bound rate of 11.6 percent from the existing 23.4 percent.

(2) The mark-up of 20 for the unbound tariffs is also unacceptable. A mark-up of 20 percent will have a binding rate only of less than 20 percent. Considering that our unbound tariffs can legally be at 100 percent, we are looking at a policy space reduction of more than 80 percent!

(3) The para 8 flexibilities are the same as the July Framework modalities but now its unbracketed. Meaning, somehow there is convergence on these numbers. Again, this is unacceptable. WE wish to reiterate to our trade negotiators this: you are mandated to carry out the Philippine NAMA stakeholders’ position (PCCI, FPI, AA, Philexport, FTA) to fight for at least 10 percent of the tariff lines to remain unbound. We believe that the developing countries, specifically the Philippines should have the flexibility to use tariff protection for its development needs. Also based from the calculations of Tariff Commission, even a coefficient of 35 and a mark-up of 30, it can be readily shown that the tariff cuts are so drastic that additional flexibilities are still needed to comply with the DDA principle of less than full reciprocity in the reduction commitments. On the other hand, FTA’s stand is that para 8 flexibilities is a stand alone provision but why is it, in the current NAMA negotiations, it is very obvious the flexibilities is being tied or linked with the ambition in tariff reduction formula? This should not be.

(4) On the balance on the level of ambition of market access for agriculture and NAMA. Observations: There are still huge imbalances between the two, among them are: There is huge domestic support on agriculture by the developed countries but very strict implementation of countervailing measures on NAMA products. In AoA, there is a possibility to exempt products under the SP or SSM according to a set of indicators but the flexibilities under the NAMA is explicitly limited to its trade value. In agriculture there is a tiered formula on the tariff reduction but the Swiss formula, due to its nature, is much more drastic.

(5) The issues of NTBs and tariff escalations remain unresolved. If this is the case, then market access into the developed countries will remain elusive and the developing will remain as producers of raw materials and will have greater difficulty moving into more value adding activities, and hence, lesser jobs will be created.

His conclusion:

Because the tariff reduction under the Swiss formula will be much greater for the developing, including the Philippines, than the developed, and since the developed countries, in the course of the negotiations, are not taking into account the value of the sacrifice that will be made by the developing by binding their unbound tariffs at low rates and by reducing current bound tariffs (in the case of the Philippines at 54 percent), and the issues of balance, tariff peaks, tariff escalation, and the flexibilities, remain unresolved, (meaning, it is very clear that the new draft remains to have huge imbalances in favor of the developed), then the Philippine trade negotiators should:

(1) Fight for the Philippine NAMA bottomlines (joint position taken by the NAMA stakeholders) submitted to Amb. Teehankee and Sec. Favila last year. Do not succumb to the neoliberal pressure.
(2) Join forces with other countries and strengthen the NAMA 11 to address these huge imbalances.
(3) Or if worse comes to worst, if the developed countries remain really obstinate, and the development objectives of the Doha Round seem so distant to achieve because of this obstinacy, then we clearly have a choice: a no deal will be better than a bad deal.


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