WTO NAMA NEGOTIATIONS: ILLUSTRATION ON SELECTED ISSUES Saad Belghazi, Economist, consultant Beirut, November, 11,

P LAN 1. Building on Uruguay Round results 2. NAMA negotiations process: present situation Negotiation Agenda Formula 3. Some comments from the Arab countries and Morocco point of view 2

I – B UILDING ON U RUGUAY R OUND RESULTS 3

R EMINDING THE GATT AIMS AND MECHANISMS Aims raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, expanding the production of and trade in goods and services, allowing for the optimal use of the worlds resources in accordance with the objective of sustainable development Mechanisms Trade as a way to enhance domestic competition, improve commodities supply and reduce monopoly inefficiencies Non discriminatory market access 4

R ESULTS OF THE U RUGUAY R OUND 1/2 The countries commitments Elimination of Non Tariff Protection (alleviation of subsidies; adoption of value rules) Tariffs bound between negotiating partners Tariffs reduction Adaptations for developing countries Tariff reduction: 24% during 10 years (versus 36% during 6 years for developed countries) Delaying the custom value rule implementation (5 years – plus 3 years) 5

R ESULTS OF THE U RUGUAY R OUND 2/2 The NAMA products importance 90 % of the World exports. Negotiations impacts Developed countries: average tariffs decrease from 6,3% to 3,8 %. Developing Countries : rise of average bound lines from 21% to 73 % ; better trade predictability Improvements resulting from the Uruguay Round appear insufficient Tariffs too high Persistence of tariffs peaks Tariffs escalation 6

II - NAMA NEGOTIATIONS PROCESS : PRESENT SITUATION 7

NAMA D OHA A GENDA NAMA negotiation aim Following the paragraph 16 of the Doha Ministerial Declaration, To reduce or as appropriate eliminate tariffs, including the reduction or elimination of high tariffs, tariff peaks and tariff escalation as well as Non-Tariff Barriers, in particular on products of export interest to developing countries The negotiations shall take fully into account the special needs and interests of developing and least- developed Members, including through less than full reciprocity in reduction commitments 8

T HREE CRUCIAL ELEMENTS IN THE NEGOTIATION To cut tariffs according to general formula based on a coefficient. Overall around 40 countries, which include the world's largest traders, will apply the formula. All the others have different specific provisions. Flexibilities for developing countries (that would allow these countries to shelter limited percentages of their most sensitive sectors from the full impact of a reduction in tariffs). Special treatment for small, vulnerable economies (31); least-developed countries (LDCs) (32); recently acceded members (RAMs) (13); members with low binding coverage (12); and others 9

A DVANTAGES OF THE FORMULA APPROACH Transparency Each member will be enabled to know how the other decrease their tariffs Efficiency Formula approach is more simple than the bargaining process Equity The tariffs decreases result from rules and are independent from bargaining power Predictability 10

F ORMULA ADOPTED AFTER THE FOURTH REVISION – R EPORT BY D ECEMBER, 6, 2008 The following formula shall apply on a line-by-line basis: {a or (x or y or z)} x t 0 t 1 = {a or (x or y or z)} + t 0 where, t 1 =Final bound rate of duty t 0 =Base rate of duty Coefficients Developed Members: a = 8 Developing Members: x = 20, y = 22, z = 25 11

E LEMENTS REGARDING THE FORMULA All HS chapters are included Minimum 20% of bounded tariff lines et 9% of imports Tariffs Reduction base Bound rates in 2001, after full implementation of current concessions Calculus of non bound tariff Non bound rates: applied rates plus 25 % Non- ad valorem duties All shall be converted to ad valorem equivalents and bound in ad valorem terms. Implementation tariffs reduction calendar All the first of January, after the entry in force of DDA Developed Members : 6 reductions, in equal rates in 5 years Developing Members : 11 reductions, in equal rates in 10 years 12

F LEXIBILITIES ON THE FORMULA FOR D EVELOPING C OUNTRIES Depending on the chosen coefficient X= 20Y=22Z=25 And on the preference on tariff lines binding total bound partial bound total bound partial bound total bound partial bound A decrease lower than the formula result is allowed For a percent of tariff lines lower than 14%6,5%10%5%0% Which corresponds to a percent of total imports in the period lower than 16%7,5%10%5%0% 13

III - COMMENTS FROM THE A RAB COUNTRIES AND M OROCCO POINT OF VIEW 14

I MPACTS ON A RAB C OUNTRIES Tariff binding situation On 10 Arab Countries, members of WTO, participating to NAMA negotiations, 5 have bound 100 % of their tariff lines (Morocco, Djibouti, Oman, Qatar, UAE) and 3 near 100% (Kuwait, Jordan and Egypt) Tunisia and Bahrain have bound respectively 51,1% and 71 % Tariffs level 4 countries have average bound tariffs level lower than 30% (Oman, United Arab Emirates, Qatar, Jordan), 1 country has a tariff close to 30 % (Egypt) 4 countries have average bound tariffs higher than 35% (Morocco, Djibouti, Tunisia and Kuwait) 15

B OUND D UTIES FOR N ON - AGRICULTURAL P RODUCTS OF A RAB COUNTRIES 16 Import Market Binding coverage (percent ) Simple average Standard deviation Maxi- mum Last year of implemen- tation Duty free (percent) Others duties and charges (ODC ) Simple average Maxi- mum Bahrain 7135, Djibouti , Egypt 98,728,317, UAE 10013,13, ,100 Jordan 99,915,29, ,300 Kuwait 99, Morocco 10039,23, Oman 10011, ,100 Qatar 10014,54, ,133 Tunisia 51,140,615, ,930

R ESULTS OF THE FORMULA IMPLEMENTATION FOR A RAB C OUNTRIES Reduction of overall bound tariffs the highest tariff is 20% (Kuwait) and the lowest is 7,92% (United Arab Emirates) For each country, the results for the formula coefficients (20, 22 and 25) are very close the tariff peaks disappeared Using flexibilities Only Bahrain and Tunisia may use the flexibility allowed by the choice of the coefficient x or y The other countries would choose the z coefficient because they had already bound all or almost all their tariff lines. 17

S IMULATION 18 Arab countries Average bound tariffs Swiss formula – calculus based on average bound tariffs x=20y=22z=25 Bahrain 35,1 12,74 13,52 14,60 Egypt 28,3 11,72 12,38 13,27 United Arab Emirates 13,1 7,92 8,21 8,60 Jordan 15,2 8,64 8,99 9,45 Kuwait ,67 18,03 20,00 Morocco 39,2 13,24 14,09 15,26 Oman 11,6 7,34 7,60 7,92 Qatar 14,5 8,41 8,74 9,18 Tunisia 40,6 13,40 14,27 15,47

PREFERENCES : ENHANCED EROSION The Turkey and Quad partners did not introduce in the NAMA negotiation a list of products exception. The results of the DDA on the NAMA negotiations would substantially reduce the preferential margins on these FTA partners markets. 19

POLICY ISSUES Industrialization objectives: globalized value chains and local value chains Informal economy, inclusion and macroeconomic policy package For a new and consistent policy package: fiscal policy and incentives to local development and new status to VSE in development policy