This article is written by Ayushi Mahajan, currently pursuing BBA LL.B from Centre for Legal Studies, Gitarattan International Business School. This article talks about the non-agricultural market access negotiations and its various concepts.

Introduction

The non-agricultural market access (NAMA) came to be known after the Doha Round of negotiations in The World Trade Organization (WTO). NAMA means to cut off the tariffs and non-tariff barriers in almost all goods which are not foodstuffs, basically on primary products and industrial goods. Presently the average tariffs in most of the developed countries have seen a decline from 40% to 6% in the present day after the continuous rounds of General Agreement on Trade and Tariff (GATT).

India and the World Trade Organization

India is considered as one of the most prominent members of the World Trade Organization. India seems to be the leader of the developing and underdeveloped world. India stands to benefit from various issues, being negotiated in the forum, provided it remains constructively engaged with various development groups, while protecting its development concerns.

Cases of complaints against India

• Complaint made by the United States about certain measures regarding solar and solar cells.
• Complaint made by Chinese Taipei regarding anti-dumping duties on flash drives from The Territories of Taiwan, Kimmen, Matsu and Pengu.
• Complaint made by European Communities about some taxes and other measures on the import and export of wines and some other spirits and chemicals.
• Complaint made by United States regarding the importation of certain agricultural products.

Cases of complaints by India

• Complaint made against United States about countervailing measures on certain hot-rolled carbon steel flat products
• Complaint made against the European Union regarding the seizure of certain generic drugs in transit.
• Complaint made against Turkey about the safeguard measures on imports of cotton yarns.

All in all India is committed to various development agendas, special safeguard mechanisms, permanent solutions to the issue of public stock holding, etc.

Aim of NAMA

Negotiations are aimed at reducing or eliminating tariff peaks, including tariff peaks for non-agricultural commodities, higher tariffs, tariff increases and non-tariff barriers, particularly on products of export interest to developing countries. Product coverage will be comprehensive and will have priority exclusions.

Special and differential treatment for developing as well as the least developed members will be fully taken into account, including measures for less than full reciprocity in reduction commitments and helping LDCs participate effectively in negotiations.

Issues under NAMA

The tariff reduction is considered as the main issue under NAMA. Its methodology is considered as one of the typical issues. The developed and developing countries are too divided for the extent to which tariff reductions should be carried out. The negotiations offered by NAMA are opted out in the favour of a formula approach of tariff reductions rather than a linear approach. The Swiss formula proposes to cut tariffs without taking into account the current tariff profile of a country. This formula is adopted by developed countries such as Norway, Japan, United States, etc.

On the other hand, this revised Swiss formula takes the tariff profile of countries into account while meeting tariff reductions. This approach is also supported by developing countries.

An Asian perspective on NAMA issues

The views of Asian countries on NAMA issues are as follows: 

Bangladesh

Till now Bangladesh has not undertaken any tariff reduction commitment. Although there are a number of concerns regarding corrosion, at present preferential margin is available for Bangladesh under various GSP schemes. Continued NAMA conversation should highlight this issue and search for appropriate and adequate mechanisms for the safety of Bangladesh with other LDCs.

India

India wants to gain more and more markets, reaching out to developed countries, not through the reduction of its tariffs, which are lower than before, but through the disintegration of NTBs and some GSPs for trade [e.g. Proposed EU-GSP (T&C)]. India also wants to oppose the rapid reduction in tariffs and can force it to developed countries. This would autonomously reduce charges at the speed of a judge suitable for Indian industry. India will accept that the fee reduction formula is only at binding rates and will. India was also against the proposal to reduce zero to seven specific products by 2015.

Since they form the bulk of India’s export basket, there are also products reserved for the small-scale sector. By naught for naught, the rule will boost its doom by giving grants. Unified access to large foreign firms at the same market, India also highlighted the need to link adoption. Tariff reduction formula with solid time bound progress on finishing NTB.

Nepal 

Nepal, an LDC with low level of industrialization, has a significant stake in the ongoing negotiations in the World Trade Organization. Although Nepal has tied 99.3 percent of it. Policy flexibility, export competitiveness and priority erosion on the Nepalese manufacturing sector in terms of the loss of tariff lines during their accession to the World Trade Organization and are not required to make any tariff reduction commitment, the consequences of the negotiations will have a far-reaching impact. Nepal’s objectives in NAMA for regional initiatives and approaches to zero, oppose zero, Emphasis on developed and developing countries expand market access for products of export interest Nepal.

Pakistan

Pakistan, like other Asian countries, believes that tariff peaks should be removed, with tariff hikes minimized and developing countries provided free access to the market. Pakistan is concerned.

The point is that there is hardly any tariff on goods. Tariff rate for goods of developing countries is about 4 times that of developed countries.

Sri Lanka

Status of Sri Lankan talks on NAMA holds the fact that what developed countries should do eliminating barriers to freeing and ensure market conditions duty-free, quota-free market access for non-agriculture products developed and generated from less developing countries. Sri Lanka also sheds light on issues such as tariff reductions, formula binding tariff peaks and tariff reduction or elimination Increase, regional outlook and decrease in NTBs. The proposed tariff reduction formula penalizes countries in terms of tariff reduction limits.

Meaning of tariff bindings and their working procedure

Tariff bindings mean a promise made by a country to not to increase its tariffs for the future. Tie tariffs are considered favourable for international trade because it gives a level of certainty to potential exporters and importers that they would not otherwise have. The World Trade Organization encourages tariff binding.

Governments may impose tariffs to increase revenue or protect domestic industries  especially from new ones and from foreign competition. By making foreign-produced goods more expensive. Particularly those who use tariffs to protect industries and jobs to use tariffs to benefit particular industries. Tariffs can also be used as an extension of foreign policy: one way to impose tariffs on the main exports of a trading partner is to increase economic leverage.

However, major side effects may occur. They can make domestic industries less efficient and innovative by reducing competition. They can harm domestic consumers, as prices rise due to lack of competition. They can cause stress by favoring some industries, or geographic areas, over others. For example, tariffs designed to help manufacturers in cities may hurt consumers in rural areas who do not benefit from the policy and are likely to pay more for manufactured goods. Finally, attempts to pressure a rival country using tariffs can develop into an unproductive cycle of retaliation, commonly known as a trade war.

Achievements of Uruguay rounds on tariffs for NAMA negotiations

It took seven and a half years, almost twice the original schedule. By the end, 123 countries were participating. It covered almost all trades, from toothbrushes to pleasure boats, from banking to telecommunications, from wild rice genes to the treatment of AIDS. It was the largest trade talks ever and the largest of any kind in history.

The Uruguay Round was the 8th round of multilateral trade negotiations (MTN), held within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1993, and rounding out 123 countries as “contracting parties.” The GATT was predetermined to adopt the rest of the World Trade Organization as an integral part of the WTO’s agreements with trade rules as areas not previously liberalized (agriculture, textiles) and Important new areas (trade in services, intellectual property) investment policy trade distortions). In 1995, this round was newly scheduled administratively. The direction came into force. 

Achievements

A long list of about 60 agreements, observations, rulings and understandings were adopted. In fact, the agreements come in a simple structure with six main parts:

• An umbrella agreement (the establishment of the World Trade Organization);
• Goods and investment (Multilateral agreement on trade in goods and Trade Related Investment Measures (TRIMS) in GATT 1994);
• Services (General Agreement on Trade in Services (GATS));
• Intellectual property (agreement on Trade-Related aspects of Intellectual Property Rights (TRIPS));
• Dispute settlement (DSU);
• Review of Business Policies of Governments (TPRM).

The negotiating group work

NAMA-11

A group of 11 developing countries called NAMA-11 is working towards strengthening NAMA. The group has two main objectives:

1. To support resilience for developing countries; and
2. To strike a balance between NAMA and other regions under negotiation.

The member countries of NAMA-11 are Argentina, Venezuela, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa, Pakistan and Republic of Bolivia and Tunisia.

Latest negotiating text

The new NAMA modus operandi, released on 6 December, 2008 by the chairman of the negotiations on non-agricultural market access, is based on the last three texts, and provides a broader option for ministers to negotiate a balanced final package for more details. The lesson is now almost complete.

The formula approach which has been agreed to in the NAMA negotiations

After in-depth discussion, participants recognized the advantages of the sutra approach. A formulaic approach provides transparency (each member will know how the other will reduce their tariffs), efficiency (simple process compared to request/proposal approach), equity (tariff reduction depends on rules, then “bargaining power”), predictability (easy to overcome negotiation results).

Flexibilities applied to developing countries and LDCs

Flexibility provisions for developing countries

According to the July, 2004 framework, developing countries will enjoy long-term implementation to cut their tariffs; and choose between them:

1. Less than [10%] of the formula deduction of their tariff lines representing up to [10%] of their import value; or
2. Do not apply formula deductions, or leave unbound tariff lines up to [5%] of their tariff lines, representing [5%] of their fee value.

Flexibility provisions for least developed countries

Participants from the least developed country are not required to apply the formula or participate in the regional approach, their contribution significantly increasing their binding coverage across levels according to their needs and development.

Newly acceded members

These members will also be provided with special tariff reduction provisions.

Process of NTBs being addressed in NAMA negotiations

The negotiating group is identifying, classifying and examining various NTBs. Many NTBs are being resolved bilaterally, others are being addressed on a regional basis. Some are also part of other existing multilateral NTB agreements. Results on NTB are also expected from other negotiating groups such as business facilitation. The NTB results will have a multilateral effect and therefore,  benefit all members.

Conclusion

The World Trade Organization’s Non-Agricultural Market Access (NAMA) negotiations are based on the 2001 Doha Declaration, which specifically calls for the reduction or elimination of tariffs on exported goods of interest to developing countries. NAMA includes manufacturing products, fuel and mining products, fish and fish products and forestry products. These products are not covered by agreements on agriculture or negotiating services. The World Trade Organization considers the NAMA negotiations important because NAMA products account for about 90% of the world’s merchandise exports. Since South Asian countries are heavily dependent on labor surpluses, There are agriculture sectors and limited domestic markets, liberalization efforts will be a long way towards achieving their growth potential. However, they have to see given the misuse of security measures, watch their interests carefully, include environmental and labor standards, and non-implementation Special provisions for developing and least developed countries. The reduction in industrial tariffs under NAMA is likely to be far-reaching. Impact on market access in products of export interest to South Asian countries. South Asian countries have a strong interest in liberalization and tariffs cohesion approach because their major concern is market access. Likewise, tariff peaks are another major issue for exporters in developing countries, and the formula for tariff reduction that facilitates a degree of tariff reconciliation is required.

References

• https://www.everycrsreport.com/reports/RL33634.html 
• https://www.wto.org/ 
• https://www.wto.org/english/tratop_e/markacc_e/nama_negotiations_e.htm 
• https://www.wto.org/english/docs_e/legal_e/gatt47.pdf 
• https://www.wto.org/english/tratop_e/markacc_e/nama_negotiations_e.htm 
• https://cuts-citee.org/pdf/No.3-NAMA.pdf 
• https://www.investopedia.com/terms/t/tariff.asp 
• https://www.wto.org/ 
• https://www.wto.org/english/tratop_e/invest_e/trims_e.htm 
• https://www.wto.org/english/tratop_e/trips_e/trips_e.htm 
• https://www.wto.org/english/docs_e/legal_e/26-gats.pdf 
• https://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm 
• https://www.wto.org/english/tratop_e/tpr_e/tprm_e.htm 
• https://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm

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