Liberalisation in a world in inequalities: A proposal for NAMA in the Doha Round Andrew Charlton Centre for Economic Performance, London School of Economics

NAMA negotiations Roadblock: March 2006 NAMA (Non-Agricultural Market Access) negotiations delivered “no material progress” Competing claims: –Developing countries (NAMA 11) Previous rounds have delivered too little liberalisation on the goods of export interest to the developing countries Developing countries want significantly lower coefficients Demand policy space –Developed countries Claim that developing countries should reduce more because –they have higher tariffs –They have ‘water’ between the bound and applied rates –Least Developed Countries Demand a ‘round for free’ – but may be pushed to the margins

Approach Understand developing countries’ liberalisation fears –Industrial erosion due to import competition from countries with scale advantages, or more advanced technology Find ways to placate these fears which is consistent with the most liberalisation –Blanket protection need not be the answer Preserve principles of –Simplicity –Enforceable rules-based system –Progressive (Development Round)

Proposal All WTO members commit to providing free market access in all goods to all developing countries which are both poorer and smaller than themselves. Thus all developing countries could expect free access to all countries with both a larger GDP and a larger GDP per capita.

Advantages (i) it involves significant liberalisation, (ii) it promotes south-south liberalisation, - 70% of the tariffs paid by developing countries ($57 billion annually) are paid to other developing countries. (iii) rights and obligations are distributed progressively to all developing countries, -median ratio of new opportunities to new obligations is 300

(iv) it gives developing countries the flexibility to use trade policy to promote development by protecting their key industries from - more efficient producers in larger and/or - more developed countries, (v) it complements MFN liberalisation, - does not involve any increase in tariffs - does not displace MFN negotiations Advantages

(vi) it brings preferential market access within the WTO, creating clear and enforceable rights - Existing GSP schemes are discretionary, and unenforceable (vii) it is simple, does not involve complex negotiations, and has built-in flexibility in the sense that national obligations change along a country’s economic growth path. Advantages

Conclusion Progress on NAMA market access has been slow, and likely outcomes will not deliver south- south trade. WTO members should re-examine the principle of reciprocity