Non Agricultural Market Access

1. Non Agricultural Market Access Prabhash Ranjan National University of Juridical Sciences (NUJS), Kolkata, India. E mail – pragmaticranjan@yahoo.com

2. Presentation Scheme • Introduction to the concept of tariff on industrial goods. • Specific concepts related to tariffs • Specific issues related to industrial tariffs (including the Doha mandate on NAMA and the present state of play) • Conclusions

3. Significance of tariffs • Imposing tariffs is an the sovereign right of every country. • Tariffs can be used as important policy tools to pursue developmental needs • It can be a tool to boost domestic industry especially infant industry • It can also be a tool to mobilise or generate revenue.

4. Some basic concepts • Bound tariff – the tariff that a country has bound in its schedule • Applied tariff – tariff actually levied on a product. • Tariff escalation – higher tariff rates imposed on more processed products.

5. Doha Declaration (paragraph 16) • There should be reduction/elimination of tariffs …in particular on the products of export interest to developing countries. • The product coverage should be comprehensive • The special needs and interests of developing countries and LDCs will be taken into account • There will be less than full reciprocity by developing countries and LDCs in reduction of tariffs.

6. Specific Issues • Tariff Reduction • Binding coverage • Sectoral liberalisation • Implementation Period

7. Tariff Reduction • One of the most contentious issues in NAMA • Various approaches to tariff reduction • Request – Offer Approach • Reduction in average tariff • Formula approach

8. Formula approach • Reduction of tariffs will take place on a line by line basis by the application of a non linear (Swiss formula). • The Hong Kong Declaration stated that countries adopt a swiss formula with coefficients. • Swiss formula could be represented as – t2 = (a.t1)/(a+t1), where t2 is the final tariff rate, t1 is the initial tariff and a is a coefficient. • Another variation of the swiss formula is t2 = (a.x).t1/[(a.x)+t1], where x is the average tariff rate of the country (also known as the ABI formula).

9. Contd. • The advantage of the ABI formula is that it takes into account the average tariff rate of a country and hence any reduction is based on the present levels of tariffs. • The HK declaration also provided an interpretation where this formula could be adopted because of the presence of the word ‘coefficients’. • However, in the latest paper given by the NAMA Chair, there is mention of a Swiss formula with two coefficients (one for developed and other for developing country).

10. Contd. • The range for the coefficient indicated is 8-9 for developed countries and 19-23 for developing countries. • This will result in high cuts in tariffs of developing countries like India. • This will also not allow the fulfillment of the less than full reciprocity principle. • Flexibilities in terms of keeping certain tariff lines outside the tariff reduction process.

11. Binding Coverage • To bring in all the tariff lines within the fold of bound tariff rates. • Developing countries whose binding coverage is less than 35 percent will not have to undertake formula based tariff reduction but will have to bind 90 percent of their tariff lines at an average level that does not exceed 28.5 percent.

12. Implementation Period • Importance of implementation period in the WTO • Implementation period to implement the tariff reduction – why is it important or necessary? • The NAMA chair paper proposes that reduction by developing countries should be done in 9 equal annual installments.

13. Sectoral Liberalisation • What does it mean – in certain sectors countries set high ambitions to achieve greater or even deeper cuts. • In the present round modalities are yet to be worked out.