Non-Agricultural Market Access (NAMA)
In the Non-Agricultural Market Access (NAMA) negotiations, which cover industrial goods, fish, and fish products, the United States is seeking significant new competitive opportunities for U.S. businesses through cuts in applied tariff rates, and the reduction of non-tariff barriers.
The outcome of these negotiations is crucial for trade in industrial goods, which accounts for over 75 percent of total global trade in goods and more than 90 percent of total U.S. goods exports.
In 2008, U.S. exports of industrial goods grew to an annualized $1.2 trillion (based on data from January to September) -- more than nine times the level of U.S. agricultural exports. This figure is up 16 percent from 2007 and up 166 percent from 1994.
The Doha Development Agenda provides an opportunity to lower tariffs in key emerging markets like India and Egypt, which still retain ceiling tariff rates as high as 150 percent. Likewise, developing country Members, which currently pay over 70 percent of duties collected to other developing countries, will directly benefit from tariff reductions made as a result of the Doha Round.
Background
In November 2001, at the Fourth Ministerial Conference in Doha, Qatar, 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."
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 have 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 cuts product by product).
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 General Agreement on Tariffs and Trade 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. For industrialized countries, tariffs of percent and above are generally recognized as "tariff peaks".
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 take place in a Market Access Negotiating Group in the Trade Negotiations Committee and its subsidiaries.
Major Issues
The key U.S. NAMA objective is to achieve an ambitious outcome that results in significant new market access through cuts in applied tariff rates in both developed and key developing country Member markets.
In 2008, WTO Members focused on a number of substantive elements relating to tariff liberalization in NAMA:
the tariff-cutting formula and specifics on the level of ambition to be achieved by developed and developing country Members;
the scope of exceptions available to developing countries applying the tariff-cutting formula;
flexibilities to be provided for least-developed country (LDC) Members and other developing country Members;
a sectoral tariff component; and
work on non-tariff barriers.
Members attempted to finalize these elements at the WTO Ministerial in Geneva in July 2008. Discussions resumed in September and continued to the end of the year.
The United States supports a combination of tariff cuts achieved through applying a Swiss formula with different coefficients for developed and developing Members and sectoral tariff elimination initiatives to most effectively achieve the objectives laid out in the Doha mandate.
The United States also believes that all the elements of NAMA from the Framework in the July 2004 Package must be considered in tandem. There is an inextricable link between the formula, flexibilities, and sectoral initiatives.
In negotiations leading up to the July 2008 meeting of Ministers, the formula coefficients and flexibility options were a primary area of discussion. With regard to coefficients, Members discussed options that reflect the appropriate levels of ambition, through the depth of tariff cuts they will produce, for developed and developing countries.
The Chair's text from December 2008 proposed a choice for developing countries between three coefficients (20, 22 and 25 depending on the level of flexibilities taken) and a coefficient of eight for developed countries.
Prospects for 2009
In 2009, the United States will continue to seek an ambitious NAMA outcome that will deliver new market access in key developed and developing country Member markets, while supporting elements of flexibility for developing country Members that does not operate to undermine the overall level of ambition.
The United States remains committed to the view that true development gains can best be achieved through further real market liberalization by both developed and developing Members.
Formula Tariff Cuts
In the current NAMA negotiating text, approximately 30 self-designated developing countries are expected to apply the tariff cutting Swiss formula, choosing between the three available coefficients in the Chair's text, each linked with a different level of flexibilities.
These countries include nine members of the so-called NAMA-113, which has advocated a high developing country coefficient in the formula and expanded flexibilities for developing countries, as well as the members of Middle Ground group, which has generally supported stronger market opening results and more limited exceptions to the formula.
Also among the countries expected to apply a developing country coefficient are the four Recently Acceded Members (RAMs) that are not considered small, vulnerable economies or Very Recently Acceded Members (VRAMs).
Flexibilities
Discussions also continued on flexibilities -- or special and differential treatment for developing country Members -- including "less than full reciprocity," with a number of specific and general approaches under consideration. Decisions on the levels of flexibility for developing countries will be integrally linked to the outcome of negotiations on the formula and sectoral agreements.
Small, vulnerable economies, whose share of world trade in industrial goods is less than 0.1 percent, as well as Members that have low levels of tariff bindings (the so-called "Paragraph 6 countries") have raised concerns regarding their contributions to a final outcome and will be required to make smaller commitments.
In addition, several developing country Members continue to raise concerns with the potential erosion of preferences or loss of government revenue due to tariff cuts.
Sectoral Initiatives
Doha Round sectoral initiatives are voluntary agreements by WTO Members to significantly reduce or eliminate tariffs on specific categories of industrial goods.
Further progress was made on sectoral tariff initiative discussions in 2008.
The United States continued efforts to inform other Members of the benefits of sectoral liberalization and proposed specific flexibility options for developing country Members based on sensitivities they raised in sector-specific discussions.
The United States worked with other sponsors of sectoral initiatives to refine sectoral proposals and draft the structure of individual sectoral agreements. To date, Members have proposed fourteen sectors that are being considered for such agreements.
Non-Tariff Barriers (NTBs)
Non-Tariff Barriers (NTBs) are measures other than a tariff that restricts imports, such as quotas or discriminatory regulations and remain an integral and equally important component of the NAMA negotiations.
In line with the Hong Kong Ministerial Declaration, WTO Members continued to consider how NTBs could be addressed horizontally (i.e., across all sectors), vertically (i.e., pertaining to a single sector), and through a bilateral request/offer process.
In 2008, the United States tabled three draft proposed texts:
on transparency in export licensing,
on non-tariff barriers pertaining to safety and electromagnetic compatibility for electronic products, and
on nontariff barriers relating to technical barriers to trade for automotive products.
The latter two, as well as five other NTB proposals -- including the U.S. proposal on remanufactured products and the U.S. proposal to facilitate and harmonize labeling requirements for textiles, clothing, footwear, and travel goods -- were identified by Members in July 2008 as priorities for further negotiation to reach legal agreements.
