A key element of the Doha Round of trade negotiations is the liberalisation of trade in industrial products, commonly known as non-agricultural market access (NAMA). Negotiations under NAMA focus on market access for all products that are not covered under the negotiations on agriculture or services and aim to reduce, if not possible to completely eliminate, tariff and non-tariff barriers (NTBs) that restrict trade in these products. The framework adopted for modalities for negotiations under NAMA, known as the ‘July Package’, envisages reduction of industrial tariffs in both developed and developing countries, according to a formula that is yet to be agreed. These negotiations are important for developing countries, as these will determine the market access opportunities available to developing countries through which they can improve their growth prospects. As per the WTO text on NAMA of December 6, 2008, the developing countries have been asked to undertake tariff reductions of 60 - 70 per cent while the developed countries are offering a reduction of only 20 - 30 per cent based on Swiss formula for tariff reduction which gives a coefficient of 8 for developed countries and 22 on an average for developing countries. The insistence on developing countries to cut their bound tariffs in NAMA or agriculture until they go below the applied levels along with the continuation of US practice of having a bound level that is twice its actual spending on agricultural domestic subsidies has been objected by India and China. India desires that the modalities for tariff cuts should reflect the mandate of less than full reciprocity in reduction commitments and comparability in ambition between NAMA and Agriculture. So far as the tariff reduction is concerned, it may be mentioned that the Swiss formula should not be used for making commitments on tariff reduction as it involves the use of an arbitrary coefficient, a, which can be manipulated by member countries. Even, the simple average formula has its own limitations. For instance, it overlooks the values that are either very high or very low and thus cannot solve the problem of tariff peaks. The simplest way is to reduce the bound levels of developed countries to 5 or 10 per cent for all tariff lines as their industries have already developed. Otherwise, the developed countries can be asked to bring their bound tariff rates to 5 to 8 per cent for those tariff lines that cover at least 98 per cent of the potential exports, and not the actual exports as that may be lower because of existing high import tariff or domestic support in importing country, of developing countries to developed countries. This potential of exports for developing countries can be calculated through revealed comparative advantage or by matching the developing countries exports and developed countries imports at different commodity classification levels.

1. WTO’s Non-Agriculture Market Access
Issues and Concerns for India
Yogesh Bandhu
Workshop on WTO
U.P. Academy of Administration & Management, Lucknow
August 28th , 2012

2. What are NAMA products?
 NAMA refers to all products not covered by the
Agreement on Agriculture. In other words, in
practice, it includes manufacturing products,
fuels and mining products, fish and fish
products, and forestry products. They are
sometimes referred to as industrial products or
manufactured goods.
Why is NAMA so important?
 Over the past years, NAMA products have
accounted for almost 90% of the world
merchandise exports.

3. Why are there NAMA negotiations in
the DDA?
 Despite the significant
improvements in market access for
NAMA products that previous GATT
rounds and the Uruguay Round
produced, tariffs continue to be an
important barrier to world trade, as
tariff peaks, high tariffs, and tariff
escalation remain.

4. Why has a formula approach been
agreed to in the NAMA negotiations?
Following intensive discussions, participants
recognized the advantages of the formula
approach. A formula approach provides
transparency (every Member will know how
the other will reduce its tariffs); efficiency
(simpler process than request/offer
approach), equity (tariff reduction depends
on rules rather then “bargaining power”);
predictability (easy to foresee the results of
the negotiations).

5. Background
 Reduction in tariffs and non-tariff barriers on
industrial goods was at the core of multilateral trade
negotiations under the GATT.
 Over the past decades, multilateral trade
negotiations have achieved significant reductions in
tariffs. The process of liberalization has led to:
 A substantial reduction in overall tariff barriers
 A commitment to keep tariffs below a given level
(binding tariff lines)
 Greater transparency of trade impediments
through conversion of quantitative restriction to
tariff barriers.
 A legal framework to minimize the use of policies
and measures to unfairly distort trade, and
 A set of measures and safeguards to provide
flexibility to developing countries and least
developed countries.

6. Background (cont.)
 Given the current extent of protectionism
still prevalent in both developed and
developing countries, there is still a great
deal of room for further trade liberalization.
 Therefore, the issue continues to remain
central to the negotiations agreed in Doha.
 Most countries support this mandate,
though many LDCs are concerned about
 Loss of government revenue
 Potential weakening of their competitiveness
 Expected erosion of preferential access margins.

7. Background (cont.)
 From Doha to the “July Package”
 Modalities
 Formula approach based on bound tariffs
 Binding
 Unbound tariffs to be bound at twice the average rate
in each country
 Sectoral Elimination
 Complete elimination of tariffs in seven sectors
 Electronics and electrical goods; fish and fish products;
footwear; leather goods; motor vehicle parts and
components; stones, gems and precious metals.
 Special and Differential Treatment
 Longer implementation periods.
 Non-tariff Barriers
 Proposals to identify, categorize and select NTBs that
fall within the NAMA negotiating mandate.
 Credit for autonomous liberalization

8. NAMA Negotiations
 The objectives of NAMA negotiations
include:
 Reduction or elimination of:
 Tariff peaks and high tariffs
 Tariff escalation
 Non-tariff barriers
 Increased market access on
products of export interest for
developing countries.

9. Major Issues of NAMA
 Tariff Peaks
 Tariff Escalation
 Non-Tariff Barriers
 Binding Coverage

10. Figure: Trade Weighted Bound and Applied Average
Industrial Tariffs
3.4 3
12.5
8
12.4
13.5
0
2
4
6
8
10
12
14
Developed Countries Developing Countries Least Developed
Countries
Weighted Average Bound Rates
Weighted Average Applied Rates
Source: UNCTAD and WTO database.

11. Figure: Simple Bound and Applied Average Industrial
Tariffs
12.3
5.5
29.4
11.6
45.2
12.6
0
5
10
15
20
25
30
35
40
45
50
Developed Countries Developing Countries Least Developed Countries
Simple Average Bound Rate Simple Average Applied Rate
Source: UNCTAD and WTO database.

12. Tariff Peaks
 Tariff peaks are high tariffs usually
defined as tariffs that are three times
the national weighted average.
 The Problem of tariff peaks occurs
largely in the following sectors
 Food industry
 Textiles and clothing
 Footwear, leather and travel goods
 Automotive sector and a few other
transport and high technology goods.

13. Tariff Peaks (cont.)
 Food Industry
 The food industry is a major area where
tariff peaks are widespread and high in
major developed countries even after the
implementation of Uruguay Round
concessions.
 Tariff peaks and a range of additional
measures extend far beyond the initial
processing stages in a large variety of
industries.
 The EUs food industry accounts for 30% of all
tariff peaks ranging (with some exceptions) from
12% to 100%.
 In the US, the food industry accounts for one-
sixth of all tariff peaks and these also fall mainly

14. Tariff Peaks (cont.)
 Textiles and Clothing
 In the major textile importing
countries like the US, EU and
Canada, large proportions of
clothing and textiles imports are
subject to high tariffs.
 Most tariff peaks are in 12-32%
range.
 These high tariffs are also combined
with quantitative restrictions.

15. Tariff Peaks (cont.)
 Footwear, Leather, and Travel
Goods.
 Footwear of various types is still
protected by high tariffs in most
developed countries.
 Post Uruguay Round MFN rates are
close to 160% in Japan, 37.5-58%
in the US and 18% in Canada.
 MFN duties remain relevant, as
General System of Preferences
(GSP) benefits are limited in this
sector.

16. Tariff Peaks (cont.)
 Automotive, Transport and Electronics
 With the exception of Japan and the
Republic of South Korea, level of protection
for one or the other branch of the transport
industry is rather high.
 In the developed countries, MFN tariff
protection is more selectively applied in the
automotive and transport sector.
 In addition, various developed countries
apply high tariffs on TV receivers, TV
picture tubes and some other high
technology products.
 It is important for developing countries to
ensure that a tariff reduction approach
addresses not only average tariff rates but
also tariff peaks on key sectors of export

17. Figure: Distribution of Tariff Peaks in Applied
Tariff Rates
7%
28%
65%
Developed Developing Least Developed
Source: UNCTAD and WTO database.

18. Tariff Escalation
 Tariff escalation occurs when tariff levels increase
with the degree of processing
 Tariff escalation is clearly observed in all groups of
countries as tariffs are higher for intermediate and
final products
 Among developing countries there is an escalation
between raw materials/low technology products and
intermediate technology goods, tariff rates diminish
between intermediate goods and final products.
 Tariff escalation in developed countries may prevent
the development of value-added industries in
developing countries where they might more
suitably be located.

19. Figure: Tariff Escalation of Weighted Applied Tariff on
Industrial Products
0.5
3.3 3.6 3.2
9.4
8
1.2
17.2
12.3
0
2
4
6
8
10
12
14
16
18
Developed Countries Developing Countries Least Developed Countries
Low Intermediate High
Source: UNCTAD database.

20. Non-Tariff Barriers
 Non-tariff barriers are the set of trade
distorting measures and policies other than
tariffs. These include:
 Quantitative restrictions
 Administrative procedures and unpublished
government regulations and policies
 Market structure and
 Political, social, and cultural institutions
 There are committees in WTO on technical
barriers to trade, sanitary and phyto-
sanitary measures and trade facilitation,
whose objective is to ensure that the
various non-tariff barriers are reduced.

21. Non-Tariff Barriers (cont.)
 The Doha Ministerial Conference rightly
calls for removal of all the non-tariff
barriers on industrial products as they are
least transparent and have major
distortionary impact.
 Important non-tariff barriers on the export
interest to developing countries are:
 Use of licensing procedures particularly automatic
licensing procedures
 Technical regulations applicable to such products
as electric machinery, chemicals, and
pharmaceutical products
 Contingency protection measures such as
safeguards and anti-dumping countervailing
measures, and
 Quantitative restrictions on imports particularly
those which apply to Textiles and Clothing sector.

22. Binding Coverage
 Bound tariff lines are lines on which there is a
commitment not to increase tariffs above a specified
level.
 Tariff bindings make trade more predictable
 The binding coverage (% of tariff lines that are
bound) among developed countries is almost
complete
 However it is much lower in developing countries,
and for some LDCS it is as low as 10%.
 Proposals within multilateral trade negotiations have
called for increased binding coverage, especially
among developing and least developed members.
 LDCs are concerned that increasing binding
coverage can lead to less flexibility and higher level
of obligations in future rounds of tariff reductions.

23. Guidelines for NAMA
Negotiations
 Tariff reduction modalities in NAMA
negotiations should at least have
the following features:
 Effectiveness
 Equity
 Flexibility
 Simplicity
 Transparency