The Global Politics of NAMA Implications For Southern Africa: Key Issues and Concerns Prepared by Temwa Gondwe, MEJN Phone: (+265) at Southern Africa CSO Consultation on Trade & HIV/AIDS: ROAD TO HONG KONG Held at Kempton Park, J’burg,RSA On 27 th -29 th November,2005 MALAWI ECONOMIC JUSTICE NETWORK “Promoting Participatory Economic Governance”

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Presentation Outline Southern Africa Economy What is NAMA Why NAMA: Contextual Comments Purpose of NAMA Effects and Threats of NAMA Positions of Developing Countries Current State of Negotiations Strategies Soul Searching Malawi Economic Justice Network Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Southern Africa Economy Malawi Economic Justice Network. Promoting Participatory Economic Governance  Diverse economies: economic size; structure of output; performance…Regional Integration Initiatives  Trade: RSA & Zimbabwe≈ 91.3% of total exports to ROW 1990s; SADC Exports: 15.3% of Africa exports; 3.8% of world exports. Fast track trade liberalisation under WB & IMF Programmes.  Given these disparities in a regional and indeed the global context, suggest that further liberalisation and trade harmonisation policies would not be beneficial to the small countries unless mutual transitional arrangements are put in place (Evans, 1997).

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" What is NAMA?  Non Agricultural Market Access  Objective: GREATER MARKET ACCESS Tariffs reduction or elimination; tariff peaks, and the prevention of tariff escalation as well as tariff bindings. NAMA is therefore an agreement for reduction of tariffs on not just industrial products but products like fish and fishery products, forestry, shoes, toys, jewelries and others not covered under AoA. Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Why NAMA… Contextual Comments Malawi Economic Justice Network. Promoting Participatory Economic Governance  The WTO most powerful institution  Enforcing powers…dispute settlement & sanctions  Scope: Economic, environment, cultural & social policy  Trade for 98% of world population  NAMA: most comprehensive and offensive drive to fast track neo-liberalism to further the capitalist drive…together with GATS.  The final nail on the coffin????

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" NAMA & the July Framework  Annex B describes parameters for establishing modalities on market access…controversial:- Developing countries were against Chairman’s text.  Elements of Annex B Formulas Unbound tariffs Flexibilities for developing countries Preferences Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" July Framework…contd Annex B should not be taken as framework for negotiation…at best only an indicator of the wishlist of major developed countries, since it amply accommodates their interests. Developing countries should be weary of pressures to negotiate on the basis of Annex B rather than Paragraph 16 of the Doha Declaration. Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Purpose of NAMA (Dev’d countries are trying get all countries to agree ‘multilaterally’ to) 1.Fix their tariff systems; 2.Reduce rates / levels at which the majority of their tariffs are bound or set; also reduce, although at different speeds, the levels at which even the unbound tariffs can be used; 3.Harmonise tariffs across the world by making those countries with higher tariffs make larger reductions in order all countries’ tariffs are at more or less the same levels; 4.Eliminate tariffs completely on a selected range of key industrial sectors as the first stage towards a generalised free trade on all products in all sectors, and 5.Accelerate the process of tariff / trade liberalisation to achieve the above within the next 5-10 years

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" EFFECTS & THREATS OF NAMA 1.Annex B resurrects the Derbez Text that was already rejected by majority of the WTO-member countries in Cancun. 2. NAMA is an obligation to cut tariffs across the board. It locks-in countries to tariff structures that would be difficult to change in the future. Some say the obligations would be irreversible. 3. NAMA constricts the flexibilities for countries to use tariff protection as a tool for industrial policy and national development. - Policy space for protection that allowed developed countries to achieve industrialization at the turn of the 19th and 20th centuries are now being closed to developing countries. Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" E&F…contd 4. Tariff cuts would be drastic. It would bring industrial tariffs to the lowest levels since the 19th and early 20th century. 5. Also the harmonization of tariffs between industrial and developing countries is anchored on the principle of FULL RECIPROCITY – that is that tariff reductions should be undertaken by developed and developing countries alike. 6. On tariff bindings, compared to agriculture where almost all products were bound under the AoA with few exemptions, not all non-agricultural products were bound under the GATT-Uruguay Round. A considerable percentage of products and tariff lines remain unbound. Annex B would force countries to bind these products. 7.The inclusion of Fisheries. The fisheries sector is considered an economically important yet sensitive sector in many developing countries. It is a sector that provides livelihoods to millions of small fishers. Across the globe however, small fishers remain one of the poorest sectors. Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Why Developing Countries Need Tariffs Malawi Economic Justice Network. Promoting Participatory Economic Governance  Economies are unstable with infant industries  Tariffs provide revenue for development needs  It is a policy tool to help develop industries and better cope with external shocks  This is particularly so for countries that followed the IMF policy regarding free capital flows and liberal exchange rate regime.

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" ON THE ROAD TO HONG KONG…Positions ACP Group: “NAMA negotiations be conducted in a manner that is sensitive to the developmental needs of the of the ACP countries” Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Positions AU Position: “We are concerned that some of the proposals on the formula submitted by WTO Members would result in deep tariff reductions by some African countries in comparison to developed countries; contrary to the principle of less than full reciprocity and S&D enshrined in the Doha Mandate. In addition, African countries would be adversely affected as these proposals would result in erosion of their preferences. This would undoubtedly deepen the crisis of de-industrialization and accentuate the unemployment and poverty crisis confronting African Countries. “ Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Positions Malawi Government Position –The WTO must fully respect LDCs, exemption from tariff reduction commitments; –Introducing flexibilities for least developed countries to determine the levels of binding commitments of their tariff lines consistent with their trade, development and financial needs; –It is imperative to ensure that the modalities identify an appropriate formula or tariff approach that would allow African countries to undertake industrial policy and diversification objectives and takes as priority the principles of non-reciprocity, special and differential treatment and less than full reciprocity; Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" State of Play  Negotiations held hostage by Agriculture  Work has concentrated on clarifying product coverage.  Key area for LDCs has been NTB  Little progress in addressing the problems associated with preference erosion.  In view of this lack of progress regarding the LDC request on duty free quota free market access, it is important that LDCs participation in NAMA negotiations is enhanced and specific pronouncements by the LDCs are made and put on the table. Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Positions..contd Malawi Civil Society Position “We vehemently reject NAMA in its current anti-developmental form and demand untrammelled access for Malawi’s products to developed country markets through unbound, duty and quota free, non-reciprocal market access, with zero extra tariffs for value addition.” Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Strategies PLENARY + DAY 2 Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" SOUL SEARCHING Malawi Economic Justice Network. Promoting Participatory Economic Governance While stressing defending …., how many LDCs do actually have clear national industrial development and diversification programmes Impact assessments … are these repeated demands used as information and planning need, or simply a stalling device, or whether thy anticipate that the findings of such analyses will be so inclusive to challenge the fundamental assumptions of NAMA and stop it in its track If the latter is the intention, then decision of WHO will carry out the assessment does matter – this has implication on type and offers of ‘technical assistance’ Same with the ‘restrictive tariff barriers’ and other non- tariff barriers (NTBs)

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" Food for thought…contd Do LDCs see themselves as having ‘no choice’ but implement tariff policies that they inherited in 1994? Policies of ‘export-led growth’ paradigm and domestic ‘adjustments requires orientation. Is it not high time we tried other paradigms? Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" THINKING & BOULD IMPLEMENTATION “Malawi is not poor country, but it is the people of Malawi that are poor” President Bingu Wa Mutharika-2004 “ AFRICA IS NOT A POOR CONTINENT, BUT IT IS THE PEOPLE OF AFRICA THAT ARE POOR” “DEVELOPMENT IS SWEET, LET US MOVE AWAY FROM POVERTY” Malawi Economic Justice Network. Promoting Participatory Economic Governance

TRADE PROGRAMME- "WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR" THANK YOU FOR YOUR ATTENTION Malawi Economic Justice Network. Promoting Participatory Economic Governance