Biased Nama text could spell doom for India
Issue that India, face is with respect to the coefficient ranges for the rich and developing countries for cutting tariffs, and the percentages of tariff lines which can have flexibilities from full tariff cuts.
By Sheila Mathrani, ET Bureau |
GENEVA: As the major parameters of the controversial revised Non-Agricultural Market Access (Nama) text are the same as the previous texts, the issue developing countries, particularly emerging countries like India, face is that with respect to the coefficient ranges for the rich and developing countries for cutting tariffs, and the percentages of tariff lines which can have flexibilities from full tariff cuts. While the imbalance between the Nama and agriculture texts continues (developing countries are asked to give higher degree of commitments in Nama than developed countries are to give in agriculture), the Nama text itself is heavily loaded with inequities against developing countries.
The flexibilities for shielding of developing countries from full formula cut have been reduced by the anti-concentration clause which Canadian ambassador Stephenson introduced in the revised text.
Developing countries like India will have to negotiate hard and make trade-offs to ensure that it is not on the losing end of the Nama negotiations and that its industrial development does not go backwards.
The flexibilities for shielding of developing countries from full formula cut have been reduced by the anti-concentration clause which Canadian ambassador Stephenson introduced in the revised text.
Developing countries like India will have to negotiate hard and make trade-offs to ensure that it is not on the losing end of the Nama negotiations and that its industrial development does not go backwards.
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The big tug-of-war will be on the coefficients. India will have to ensure that it does not lose out on the choice of numbers for the coefficients of developing countries and the percentage of tariff lines for developing countries, permitting them to deviate from the formula. The text puts the coefficient range for developed countries as 7-9, whereas the middle ranges for developing countries is 21-23 with a flexibility of 10% if lines that are allowed up to 50% leniency from the full cut, or 5% of lines that can be exempt from any cut. Countries like India, which cannot be classified as industrialised countries, will therefore have to cut their tariffs by an approximate 60% on average before the limited flexibilities are counted. On the other hand the industrialised countries, will have to cut their tariffs by an average of less than 30%. The imbalance in the Nama text is therefore glaring.
However, the rich countries like the US and the EU are also unhappy at the text. They feel that the new Nama draft provides the possibility for emerging countries to ask for ���even more flexibilities��� to protect their industries from international competition. For example, the text gives developing nations, which benefit from preferential access, more time for lowering duties on textiles and apparel imports. Eurocoton, representing national associations in the EU, has stated that European countries would reduce their duties by more than half but are getting nothing because emerging countries are permitted ���flexibilities���.
Another fight will be on the anti-concentration clause. According to the anti-concentration clause, retained by Stephenson in his revised text, a developing country using the flexibilities will have the additional condition that it must not exclude an entire sector, or a certain percentage of tariff lines of the value of imports in a sector from the full formula cut through the use of flexibilities. This could mean that 10% of Nama tariff lines will be subjected to only 50% of the formula���s normal tariff cut, which is restricted to only 10% of the total value of the country���s Nama imports.
Fortunately the sectoral clause, pushed by the rich countries, which linked the participation of a developing country in sectoral initiatives and being rewarded for being able to have a higher coefficient with a resultant lower rate of tariff reduction, has been eliminated from the text after the developing countries opposed it strongly as it was outside the mandate.
However, the rich countries like the US and the EU are also unhappy at the text. They feel that the new Nama draft provides the possibility for emerging countries to ask for ���even more flexibilities��� to protect their industries from international competition. For example, the text gives developing nations, which benefit from preferential access, more time for lowering duties on textiles and apparel imports. Eurocoton, representing national associations in the EU, has stated that European countries would reduce their duties by more than half but are getting nothing because emerging countries are permitted ���flexibilities���.
Another fight will be on the anti-concentration clause. According to the anti-concentration clause, retained by Stephenson in his revised text, a developing country using the flexibilities will have the additional condition that it must not exclude an entire sector, or a certain percentage of tariff lines of the value of imports in a sector from the full formula cut through the use of flexibilities. This could mean that 10% of Nama tariff lines will be subjected to only 50% of the formula���s normal tariff cut, which is restricted to only 10% of the total value of the country���s Nama imports.
Fortunately the sectoral clause, pushed by the rich countries, which linked the participation of a developing country in sectoral initiatives and being rewarded for being able to have a higher coefficient with a resultant lower rate of tariff reduction, has been eliminated from the text after the developing countries opposed it strongly as it was outside the mandate.
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