NAMA NEGOTIATIONS STANCE AND STRATEGY OF PAKISTAN ITC, GENEVA 12 DECEMBER 2006 Dr. Mohammad Saeed Permanent Mission of Pakistan to the WTO Geneva

Introduction Reduction of tariffs and NTBs Reduction of tariffs and NTBs Tariffs impede market access in exporting markets but necessary for Industrial protection in your own country. Tariffs impede market access in exporting markets but necessary for Industrial protection in your own country. An optimal balance is required to address national needs An optimal balance is required to address national needs A solution acceptable to the whole Membership A solution acceptable to the whole Membership There is no such thing as free lunch There is no such thing as free lunch

US Imports of T & C ( ) Selected exporting countries U.S. MARKET Import value in million US$ Share Exporter China 3,5564,8006,52714,55822, %10.9%25.1% Mexico 6783,0369,6937,7937,2462.4%6.9%8.1% Pakistan ,8352,5462,9041.5%2.2%3.3% Honduras ,3282,6782,6290.4%2.1%2.9% Jordan ,0830.0% 1.2% NAFTA 1,1624,68713,04310,87910,0914.2%10.7%11.3% CBI 2,0255,5449,62910,0239,6617.2%12.6%10.8% Andean ,3891,4961.0%1.3%1.7% AGOA ,7861,4900.6%0.9%1.7%

Change in Relative T&C Import Shares in US, EU and Canada Selected exporting countries US MarketEU Market Canadian Market EXPORTER Bangladesh1.6%2.8%1.1%5.2%1.2%4.0% Cambodia---1.9%---0.7%0.2%1.2% India2.8%5.2%5.3%7.3%5.0%5.2% Indonesia2.5%3.5%2.4%2.2%1.7% Pakistan1.5%3.3%2.5%2.8%1.9%1.6% Sri Lanka1.6%1.9%0.6%1.2%0.6% Thailand2.1%2.4%2.6%1.5% 1.2%

Existing Scenario for Pakistan NAMA the most important area despite its comparatively lower share in our GDP NAMA the most important area despite its comparatively lower share in our GDP ( Services 52%,Agriculture 23%,Manufacturing 19%) More than 80% of our exports are for manufactured goods More than 80% of our exports are for manufactured goods Approx 70% of our exports are of Textile and Clothing (T&C) concentrated in two markets EU & US Approx 70% of our exports are of Textile and Clothing (T&C) concentrated in two markets EU & US T&C suffer tariff Peaks in our major export markets (EU 12% vs 4%, US up to 32% vs 3%) T&C suffer tariff Peaks in our major export markets (EU 12% vs 4%, US up to 32% vs 3%) Many of our competitors enjoy duty free access. Many of our competitors enjoy duty free access.

Pakistans Objectives in NAMA To reduce tariff peaks and high tariffs on products of our export interest To reduce tariff peaks and high tariffs on products of our export interest Reducing disadvantages suffered from preferences enjoyed by our competitors Reducing disadvantages suffered from preferences enjoyed by our competitors To ensure that any cuts to our current applied tariffs are of a small magnitude To ensure that any cuts to our current applied tariffs are of a small magnitude To protect sensitive products against deeper cuts (such as automobiles) To protect sensitive products against deeper cuts (such as automobiles) Early and ambitious results Early and ambitious results

Pakistans Proposal Simple Swiss formula with two coefficients Simple Swiss formula with two coefficients Coefficients to represent tariff averages of developed and developing countries (6, 30) Coefficients to represent tariff averages of developed and developing countries (6, 30) For unbound tariffs: 30 + MFN rate 0f 2001 For unbound tariffs: 30 + MFN rate 0f 2001 Flexibilities for developing countries Flexibilities for developing countries no cuts for 5% of the tariff lines- not more than 5% of the NAMA imports no cuts for 5% of the tariff lines- not more than 5% of the NAMA imports less than half the formula cuts for 10% of their tariff lines- not more than 10% of the NAMA imports less than half the formula cuts for 10% of their tariff lines- not more than 10% of the NAMA imports

Pakistans Proposal - Formula Simple Swiss Formula Simple Swiss Formula C x T o C x T o Final rate, T f Final rate, T f C + T o C + T o Coefficient becomes ceiling-regardless of initial tariff Coefficient becomes ceiling-regardless of initial tariff Rates equal to the C will be cut 50%, Higher than C more than 50% and lower than C less than 50% Rates equal to the C will be cut 50%, Higher than C more than 50% and lower than C less than 50% All developed countriess rates will be less than 5% and for developing Countries less than 30% (except for flexibilities) All developed countriess rates will be less than 5% and for developing Countries less than 30% (except for flexibilities) =

Pakistans Proposal - Contd Flexibilities Flexibilities Figures of 5 & 10 are bare minimum Figures of 5 & 10 are bare minimum Flexibilities are independent of coefficients Flexibilities are independent of coefficients Self designation vs. Transparency Self designation vs. Transparency Treatment of unbound tariffs Treatment of unbound tariffs Non linear mark up Non linear mark up Add 30 to the base rate Add 30 to the base rate Pakistans binding is more than 98% Pakistans binding is more than 98%

Position of developed countries High coefficient for developing countries will not entail new market flows High coefficient for developing countries will not entail new market flows Difference between the two coefficients should not be too high: not more than 5 (10 vs.15) Difference between the two coefficients should not be too high: not more than 5 (10 vs.15) Scope of flexibilities should be restricted Scope of flexibilities should be restricted Transparency in use of Flexibilities Transparency in use of Flexibilities

Developing Countries Position Spread between two coefficient is the manifestation of Less than full reciprocity---- not less than 25 Spread between two coefficient is the manifestation of Less than full reciprocity---- not less than 25 Flexibilities are independent of coefficient and current numbers in brackets are bare minimum. Flexibilities are independent of coefficient and current numbers in brackets are bare minimum. New or Real Market access means discredit for autonomous liberalization. New or Real Market access means discredit for autonomous liberalization. Any agreement on NAMA will follow agreement on Agriculture. Any agreement on NAMA will follow agreement on Agriculture. Development dimension - Free Vs Fair Trade. Development dimension - Free Vs Fair Trade.

Concerns of certain developing countries- Making Things difficult Different treatment for textiles and clothing sectors (Turkish proposal) Adequate protection against erosion of preference Pakistan is peculiar on account of our export basket concentrated in T&C Tariff Solution vs. Non-tariff solution Longer timeframes for developed countries

How can an ambitious NAMA outcome promote our exports? Through additional market access Through additional market access Reducing the existing tariff Gap Reducing the existing tariff Gap Reduction of input costs Reduction of input costs Diversification of export markets and products Diversification of export markets and products Multilateral Route is the only option for Countries like Pakistan Multilateral Route is the only option for Countries like Pakistan

Missions strategy To participate actively in all NAMA meetings To be technically well-prepared To chair important Committees and Negotiating Groups To assume key role at Ministerial meetings Adopting constructive policies Coalitions?

Final thoughts on NAMA Defensive approach in the past has not served well for Pakistan Defensive approach in the past has not served well for Pakistan Ambitious outcome in NAMA negotiations extremely important for Pakistans future economic growth Ambitious outcome in NAMA negotiations extremely important for Pakistans future economic growth Multilateral Forum is the only option. Multilateral Forum is the only option.

Interested to Read More Doha Ministerial Declaration –Para 16 Doha Ministerial Declaration –Para 16 WT/MIN(01)/DEC/1 – 20 November 2001 July Frame work –Annex B) July Frame work –Annex B) WT/MIN(05)/W/3/Rev.2 – 01 August 2004 Hong Kong Ministerial Declaration – Annex B Hong Kong Ministerial Declaration – Annex B WT/MIN(05)/DEC – 22 December 2005 The Way Forward- Pakistans Proposal The Way Forward- Pakistans Proposal TN/MA/W/60 – 22 July 2005 Towards NAMA Modalities- Chairs Report Towards NAMA Modalities- Chairs Report TN/MA/W/80-19 July 2006

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