State of Play - Non-agricultural market Access

RUN-UP TO HONG KONG/ WTO SPEAK: Ashok Taneja, president, ACMA

The Nama negotiations aim at liberalising trade in industrial and natural resources like fisheries, gems and minerals. Since July, talks have focused on technical issues such as the tariff reduction formula, treatment of un-bound tariff lines and conversion of specific duties into ad-valorem.

For tariff reduction, the talks have focused on two variations of the Swiss formula "" the simple Swiss formula with one or two coefficients and a tariff average-based formula, suggested by Argentina, Brazil and India.

India

It has suggested that the co-efficient for each country should be determined by its average tariff level. India is now fairly isolated on this approach as Argentina and Brazil favour two coefficients "" one for the developed and another for developing countries. India also wants flexibility for developing countries to offer lower reduction than developed countries and does not want a reduction on a specified number of tariff lines.

India said it was willing to reduce its tariffs by 50 per cent with a co-efficient of 1 in the Swiss formula. This would reduce its average tariffs from 34 per cent to 17 per cent.

European Union

The EU has suggested that developed countries should have a maximum tariff of 10 per cent. They should be allowed a coefficient of 10 in the Swiss formula, with no exclusion for any product.

For the advanced developing countries, the EU has suggested a similar coefficient of 10 have but said they should be allowed the flexibility to undertake marginally lower cuts than the developed countries.

It has also said that the maximum tariff for advanced developing countries should not be over 15 per cent, while the least developed countries should be exempted from undertaking any cuts. It is also of the view that the unbound tariff lines should be marked up by 10 percentage points before the reduction.

United States

It has favoured tariff reduction based on the Swiss formula with coefficient of 10 for developed countries and 15 for developing countries. The US is keen on a sectoral approach under which it is seeking sectors of interest to other WTO members in an effort to build a critical mass of support.

A sectoral initiative can be launched for tariff reduction or elimination once a significant mass of exporters and importers in sectors agree to participate, it said. What's at stake?

The need is for a harmonious and sustainable development that recognises imperatives of developing nations. The way forward is to adopt a calibrated approach rather than an overly ambitious one.

What should Kamal Nath do?

Continue the good work and articulate ground realities as they prevail in developing countries. To arrive at a tariff-policy that facilitates the flow of technology and investments into the manufacturing sector in developing countries like India.

LEXICON

Tariff escalation : Higher import duties on semi-finished or finished products than on raw materials.

Tariff peaks : Relatively high tariffs, usually on sensitive products, amidst generally low tariff levels. For industrialised countries, tariffs of over 15 per cent are classified as tariff peaks.

Zero-for-zero: The approach lays down that all countries reduce their import tariff for certain sectors to zero.

Uruguay Round Formula: A linear reduction formula, requiring an average reduction of 36 per cent (24 per cent for developing countries) with a minimum 5 per cent (10 per cent for developing countries) cut for each tariff line.