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WTO package skirts major issues – analyst

Ndamu Sandu

THE framework adopted by the World Trade Organisation (WTO) this month enabling the Doha Round multilateral trade talks to move ahead after the collapse of the Cancun Ministerial Conference ignor

es other fundamental issues, a trade analyst said this week.

The WTO General Council adopted a decision on August 1 with a package of accords that will form the basis for the next stage of negotiations.

The new agreement put priority on the need to push ahead with talks in five negotiating areas – agriculture, non-agricultural market access (Nama), development issues, trade facilitation and services.

In a review of the framework’s package, tariffs division assistant director Anselmo Nhara, said the agreement “simply reaffirms continuing negotiations”.

“With regards to other existing commitments in the Doha mandate including intellectual property rights, dispute settlements, rules and environment, the agreement simply reaffirms continuing negotiations,” Nhara said.

On agriculture, Nhara said the text retains a tiered formula which classifies tariffs into various bands for subsequent reduction from bound rates with higher tariffs being cut than lower ones.

Bound rates are maximum tariffs beyond which a member may not increase its tariffs without the greenlight from other WTO members.

Zimbabwe’s agricultural tariffs are bound at a ceiling level of 150%.

The actual modalities pertaining to the number of bands, thresholds for defining bands and types of tariff reductions within each band remain subject to negotiations, Nhara said.

He said while the text provides for flexibility in tariff cuts and tariff quota expansion for sensitive products there was a requirement for “substantial improvement” in market access for each sensitive product. Elements considered critical in ensuring enhanced market access for developing countries’ agricultural exports such as tariff escalation, tariff simplification as well as special safeguard mechanism have been left for future negotiations, analysts say.

Nhara said he views the adoption of the Nama framework (trade mainly in industrial goods) as by far the worst decision which could worsen the threat in many developing countries of cheap industrial imports overwhelming local goods and industries.

Nhara identified three elements that could have serious negative effects on development when assessed from a developing country perspective.

Nama advocates a non-linear formula which effect steeper cuts for higher tariffs.

“Under a variation of this formula, a 40% tariff on a product will be reduced to 7%. Many developing countries including Zimbabwe should prepare their case on the type of approach or formula and the parameters that are more appropriate for them in order to avert any negative consequences,” Nhara said.

A second negative impact, Nhara said, was that developing countries would be required to give up the WTO’s present flexibilities for countries to choose how many of their industrial products’ tariffs they would like to bind and at what rate.

Currently Zimbabwe has bound only 8,8% of its industrial tariff lines while the General Council decision advocates at least 95% binding coverage.

There is also a “sectoral tariff component” in which many sectors would be fast-tracked for total tariff elimination. The General Council text calls for participation by all in what analysts say was implying that the sectoral component could be compulsory.

“If the selected sectors are important for a developing country’s domestic production, the risk to its domestic industries will be heightened,” Nhara said.

On services the text recommends that member states that have not yet submitted their initial offers must do so as soon as possible and that member states should table their revised offers by May 2005.

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