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Public Hearing: Non-Agricultural Market Access Negotiations (NAMA) in the WTO

Public Hearing: Non-Agricultural Market Access Negotiations (NAMA) in the WTO. Tariff Commission 4 August 2006. The Swiss Formula: Coefficient. a. x. t 0. t 1. =. a. +. t 0. where:  t 1 = new bound rate t 0 = base rate a = coefficient. Proposals Re: Coefficient.

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Public Hearing: Non-Agricultural Market Access Negotiations (NAMA) in the WTO

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  1. Public Hearing: Non-Agricultural Market Access Negotiations (NAMA) in the WTO Tariff Commission 4 August 2006

  2. The Swiss Formula: Coefficient a x t0 t1 = a + t0 where:  t1 = new bound rate t0 = base rate a = coefficient

  3. Proposals Re: Coefficient • At WTO • US, EC, others: 10 (developed); 15 (developing) • Hong Kong: 5 (developed) • New Zealand, Canada, US, Hong Kong, Switzerland, Chinese Taipei: developed country coefficient of at most five less than the developing country coefficient • NAMA 11: below 10 and possibly 5 (developed); at least 30 (developing) - Brazil, India: can live with 15 - RP: at least 35; coefficient for developed countries should result in a percentage reduction of their bound rate average that is not less than the percentage reduction of the bound rate average of developing countries • China: can go with 15 • Thailand and Malaysia: comfortable with 20 • TC PH of 18 April • 30 - 90 • target of 50 or minimum of 35 (Alyansa Agrikultura; FTA; FPI; PCCI; PPIA)

  4. The Swiss Formula: Mark-Up a x t0 t1 = a + t0 where:  t1 = new bound rate t0 = base rate = final bound rate, for bound lines = 2001 MFN rate plus mark-up, for unbound lines a = coefficient

  5. Proposals Re: Mark-Up • At WTO • range: 5 - 30 • developed Members and other developing Members (like Chile, Costa Rica, Hong Kong): 5 • US: cannot consider 30 for high unbound rates • NAMA 11: at least 30 - RP: at least 35; binding should be considered as a concession in itself • TC PH of 18 April • 30 - 50 • target of 50 or minimum of 35 (Alyansa Agrikultura; FTA; FPI; PCCI; PPIA)

  6. The NAMA Framework: Flexibilities 01 August 2004 Annex B, Paragraph 8: “ We agree that developing-country participants shall have longer implementation periods for tariff reductions. In addition, 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, as an exception, 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. We further agree that this flexibility could not be used to exclude entire S Chapters. ”

  7. Proposals Re: Para. 8 Flexibilities • At WTO • Developed Members not keen • Mexico: add 5 points to coefficient for any developing Member that doesn’t exercise its right to use para. 8 • NAMA 11: numbers in brackets are bare minimum; higher number of tariff lines and larger trade coverage may be required - RP: leaning toward the use of para. 8(b); change bracketed number to 10%; has proposed a paragraph “c” for Members who have undertaken substantial autonomous tariff liberalization “(c) for Members who have undertaken substantial autonomous liberalization since the conclusion of the Uruguay Round, the numbers in (a) and (b) above will be higher by [ ] % of those numbers” • TC PH of 18 April • 10% - 20% (para. 8b) • minimum of 10% (para. 8b); adjustment factor of 1.5 in the coefficient as credit for autonomous liberalization (Alyansa Agrikultura; FTA; FPI; PCCI; PPIA)

  8. Impact of Swiss Formula: Bound Rates

  9. Impact of Swiss Formula: Unbound Lines

  10. Impact of Swiss Formula: Overall * average of final bound rates and marked-up unbound tariff rates of NAMA lines ** after application of Swiss formula *** average percentage reduction rate for all NAMA lines

  11. The NAMA Framework: Nomenclature 01 August 2004 Annex B, Paragraph 5: “ We further agree on the following elements regarding the formula: x x x - negotiations shall commence on the basis of the HS96 or HS2002 nomenclature, with the results of the negotiations to be finalized in HS2002 nomenclature; x x x ”

  12. Limitations: Paragraph 8(b) flexibility • 5% of NAMA lines: 253 HS 2002; 504 AHTN • 5% of 1999 - 2001 annual average NAMA imports: • US$ 1.5 billion

  13. Impact on Binding Overhangs • Number of unbound lines with binding overhangs of • less than 10 percentage points

  14. BOI - Proposed Criteria: Paragraph 8(b) flexibility • First Filter (ranking approach) •  local availability •  trade balance •  MFN tariff level •  presence of request for trade remedies/emergency measures •  degree of processing • Second Filter •  local availability  low MFN tariffs already (3% or below) •  with safeguard/special safeguard/anti-dumping history •  with interventions for SL inclusion •  strategic importance

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