1. Non-agricultural market access negotiations Marc Bacchetta ERSD WTO

2. 2 Outline Background –Trade flows –Tariff landscape The mandate Current standing of the negotiations African perspective

3. 3 World merchandise exports by product, 2000 and 2004 Percentages of total value

4. 4 Africa merchandise exports by product, 2004

5. 5 Merchandise trade of Africa, 1994-04 (Billion dollars)

6. 6 Share of Africa in world merchandise trade, 1994-04

7. 7 Africa. Exports of manufactures by region, 2004

8. 8 Which tariffs ? Bound MFN tariffs Applied MFN tariffs Reciprocal or non-reciprocal preferences

9. 9 NAMA landscape: developed countries ~100% binding coverage No or limited binding overhang Relatively low tariff average Peaks on limited number of product groups –Textiles and clothing –Leather, rubber, footwear –Fish and fish products (Non Ag in WTO) –Transport equipment Preferences

10. 10 NAMA landscape: developing countries Variable binding coverage in Asia and Africa Often substantial binding overhang Average bound and applied higher than that of developed countries Higher tariffs concentrated on limited number of product groups –Textiles and clothing –Leather, rubber, footwear –Fish and fish products –Transport equipment

11. 11 NAMA landscape: LDCs Variable binding coverage Often substantial binding overhang Highest bound averages Peaks on limited number of product groups –Fish and fish products –Textiles and clothing –Leather, rubber, footwear

12. 12 Two sides Members involved in the negotiations need to consider both access to their own market and access to foreign markets for domestic exporters

13. 13 We agree to negotiations which shall aim, by modalities to be agreed, to reduce or as appropriate, eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. Product coverage shall be comprehensive and without a priori exclusions. The mandate: par.16 of the Doha Ministerial declaration

14. 14 The mandate: par.16 of the Doha Ministerial declaration The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments,...

15. 15 Where do we stand ? Formula Flexibilities Treatment of unbound tariffs Preference erosion Link with agriculture Sectoral negotiations Newly acceded Members Flexibilities for small and vulnerable economies Non tariff barriers

16. 16 Formula Members have agreed to use a Swiss formula to reduce tariffs Several options are still on the table –Swiss formula with 1 or 2 coefficients –Swiss formula with one coefficient per Member based on

17. 17 Swiss formula New bound rate= –Maximum tariff < ‘a’ –‘base rate’ = a then cut = 50% –‘base rate’ > a then cut > 50% –‘base rate’ < a then cut < 50%

18. 18 Swiss formula – ABI version New bound rate= –t a is the average of bound tariff rates –B is a coefficient that can be modulated

19. 19 Tariff cut simulation - a=20 or 30 Dvg, 6 or 10 Dvd

20. 20 Tariff cut simulation - a=tariff average (ABI, with B=1)

21. 21 Flexibilities LDCs are not required to apply the formula but are expected to substantially extend the level of their binding commitments (par.9) Developing countries with a binding coverage of less than [35] percent are exempt from applying the formula but expected to bind [100] percent of their tariff lines at an average level that does not exceed the overall average of bound tariffs for all developing countries (par.6)

22. 22 Flexibilities Developing-countries shall have longer implementation periods for tariff reductions They shall be given the following flexibility: –a) applying less than formula cuts to up to [10] percent of the tariff lines provided that the cuts are no less than half the formula cuts and that these tariff lines do not exceed [10] percent of the total value of a Member's imports; or –b) keeping tariff lines unbound or not applying formula cuts for up to [5] percent of tariff lines provided they do not exceed [5] percent of the total value of a Member's imports.

23. 23 Africa: distribution of binding coverage (non agricultural products)

24. 24 Bound vs. Applied tariffs - Africa Source: WTO Secretariat based on CTS for bound and IDB and UNCTAD for the MFN applied tariffs.

25. 25 Conclusions Only 8 African countries (including 4 SACU Members) will apply the formula Another 8 will have to extend their binding coverage to 100% at an average level of ~28.5 LDCs will only have to increase their binding commitments substantially MFN access to export markets will improve but preferences will be eroded Effects will depend on level of ambition

26. 26 Bound vs. Applied tariffs - Asia AVG binding “overhang” Source: WTO Secretariat based on CTS for bound and IDB and UNCTAD for the MFN applied tariffs.

27. 27 Bound vs. Applied tariffs Latin America AVG binding “overhang” Source: WTO Secretariat based on CTS for bound and IDB and UNCTAD for the MFN applied tariffs.