By IPS Correspondents
GENEVA, Mar 5 2007 (IPS)

Several developing countries have sharply criticised fresh attempts by the European Union and the United States to pry open their industrial markets through a controversial Swiss formula.

Several developing countries have sharply criticised fresh attempts by the European Union and the United States to pry open their industrial markets through a controversial Swiss formula.

The formula aims to bring down high tariffs in developing countries by a wide margin – in return for relatively limited commitments by Brussels and Washington to address age- old distortions in global farm trade, trade diplomats said.

As trade ministers of the United States, the European Union, India and Brazil hold bilateral meetings in London and Geneva this weekend as part of heightened efforts to arrive at a breakthrough in negotiations on a world trade agreement, developing countries are angry that rich countries are turning the Doha Development Agenda trade negotiations upside down.

Developing countries are being compelled to agree to what is called a coefficient of 15 under a Swiss formula, which would effectively bring all import tariffs on industrial products to below 15 per cent.

On the other hand, the rich countries which took almost 60 years to bring their industrial tariffs down to about 6 percent said they will accept a coefficient of 10 under the Swiss formula that would allow them to retain their industrial tariffs almost unchanged.

“The concept of Swiss 10 for industrialised countries and 15 for developing countries hides the reality that in actual percentage terms the developed countries have to make a cut of 23-25 percent in their industrial tariffs while developing countries will have to cut their industrial tariffs by 60-70 percent, ” Faizel Ismail, South African trade representative to the World Trade Organisation told IPS Thursday.

“This is totally unfair, imbalanced, and disproportionate to the level of commitments that members will have to undertake in a development round of trade negotiations,” he argued.

More disturbingly, “this does not reveal the enormous imbalance in the efforts that have to be made by developed and developing countries, as the degree of adjustment involves loss of jobs and employment in developing countries,” he said.

European Union trade commissioner Peter Mandelson has indicated to his counterparts from India and Brazil that Brussels will not accept anything other than coefficient 10 for industrialised countries and 15 for developing countries on the ground that it is making a huge effort to reduce its farm subsidies and tariffs.

The United States has already said that the figures for the coefficients should be fixed at 10 and 15.

The EU and the United States have repeatedly argued that developing countries can remove barriers for trade in industrial products between themselves. Many developing countries see this as an attempt to ignore developmental issues in the current Doha Round of trade negotiations.

The South African trade envoy said a coalition among developing countries on non- agricultural market access, NAMA 11, is ready to accept a balanced agreement but not an “unfair” deal in which they pay a “disproportionately” high price for cutting down industrial tariffs while the industrialised countries do significantly less in agriculture.

South Africa is the coordinator of NAMA 11 coalition at the WTO. The coalition includes Brazil, Argentina, India, Namibia, Cuba and Venezuela.

The EU and the United States are yet to indicate how far they are willing to cut agricultural subsidies; this remains the most contentious area in Doha trade negotiations. Besides, the EU and other industrialised countries such as Japan, Norway, and Switzerland maintain complex trade barriers to protect their farm markets from import competition.

In the Doha Round, which was launched in 2001 in the Qatar capital Doha, the industrialised countries were expected to significantly reduce their farm subsidies and import tariffs. They were also expected to provide enhanced market access to industrial products from developing countries.

More importantly, WTO members agreed in July 2004 that developing countries will cut their industrial tariffs less than the industrialised countries on the basis of less than full reciprocity principle.

The EU and the United States want to ensure that developing countries agree first to liberalisation of trade in industrial goods and services before they indicate what they are prepared to do in agriculture.

But many developing countries are not in a position to make such far-reaching commitments, said Sam Laird, an advisor on industrial trade to the United Nations Conference on Trade and Development. “It is nonsense to ask the developing countries to pay while industrialised countries can sit pretty without any pain,” he told IPS.

Laird said industrialised countries have relatively low tariffs of around 6 percent on average for industrial products, compared to about 30 percent in many developing countries. But he said there needs to be a balanced agreement that gives time and space for developing countries to reduce their industrial tariffs in line with the developmental dimension of the Doha mandate.

Pakistan’s ambassador Dr Manzoor Ahmad suggested that given the disagreement among industrialised countries and the developing countries on what each is required to do on the basis of less than full reciprocity, a balanced deal would have to settle around a coefficient of 5 for industrialised countries and 25 for developing countries.

Excerpt:

By IPS Correspondents
GENEVA, Mar 3 2007 (IPS)

Several developing countries have sharply criticised fresh attempts by the European Union and the United States to pry open their industrial markets through a controversial Swiss formula.

The formula aims to bring down high tariffs in developing countries by a wide margin – in return for relatively limited commitments by Brussels and Washington to address age- old distortions in global farm trade, trade diplomats said.

As trade ministers of the United States, the European Union, India and Brazil hold bilateral meetings in London and Geneva this weekend as part of heightened efforts to arrive at a breakthrough in negotiations on a world trade agreement, developing countries are angry that rich countries are turning the Doha Development Agenda trade negotiations upside down.

Developing countries are being compelled to agree to what is called a coefficient of 15 under a Swiss formula, which would effectively bring all import tariffs on industrial products to below 15 per cent.

On the other hand, the rich countries which took almost 60 years to bring their industrial tariffs down to about 6 percent said they will accept a coefficient of 10 under the Swiss formula that would allow them to retain their industrial tariffs almost unchanged.

“The concept of Swiss 10 for industrialised countries and 15 for developing countries hides the reality that in actual percentage terms the developed countries have to make a cut of 23-25 percent in their industrial tariffs while developing countries will have to cut their industrial tariffs by 60-70 percent, ” Faizel Ismail, South African trade representative to the World Trade Organisation told IPS Thursday.

“This is totally unfair, imbalanced, and disproportionate to the level of commitments that members will have to undertake in a development round of trade negotiations,” he argued.

More disturbingly, “this does not reveal the enormous imbalance in the efforts that have to be made by developed and developing countries, as the degree of adjustment involves loss of jobs and employment in developing countries,” he said.

European Union trade commissioner Peter Mandelson has indicated to his counterparts from India and Brazil that Brussels will not accept anything other than coefficient 10 for industrialised countries and 15 for developing countries on the ground that it is making a huge effort to reduce its farm subsidies and tariffs.

The United States has already said that the figures for the coefficients should be fixed at 10 and 15.

The EU and the United States have repeatedly argued that developing countries can remove barriers for trade in industrial products between themselves. Many developing countries see this as an attempt to ignore developmental issues in the current Doha Round of trade negotiations.

The South African trade envoy said a coalition among developing countries on non- agricultural market access, NAMA 11, is ready to accept a balanced agreement but not an “unfair” deal in which they pay a “disproportionately” high price for cutting down industrial tariffs while the industrialised countries do significantly less in agriculture.

South Africa is the coordinator of NAMA 11 coalition at the WTO. The coalition includes Brazil, Argentina, India, Namibia, Cuba and Venezuela.

The EU and the United States are yet to indicate how far they are willing to cut agricultural subsidies; this remains the most contentious area in Doha trade negotiations. Besides, the EU and other industrialised countries such as Japan, Norway, and Switzerland maintain complex trade barriers to protect their farm markets from import competition.

In the Doha Round, which was launched in 2001 in the Qatar capital Doha, the industrialised countries were expected to significantly reduce their farm subsidies and import tariffs. They were also expected to provide enhanced market access to industrial products from developing countries.

More importantly, WTO members agreed in July 2004 that developing countries will cut their industrial tariffs less than the industrialised countries on the basis of less than full reciprocity principle.

The EU and the United States want to ensure that developing countries agree first to liberalisation of trade in industrial goods and services before they indicate what they are prepared to do in agriculture.

But many developing countries are not in a position to make such far-reaching commitments, said Sam Laird, an advisor on industrial trade to the United Nations Conference on Trade and Development. “It is nonsense to ask the developing countries to pay while industrialised countries can sit pretty without any pain,” he told IPS.

Laird said industrialised countries have relatively low tariffs of around 6 percent on average for industrial products, compared to about 30 percent in many developing countries. But he said there needs to be a balanced agreement that gives time and space for developing countries to reduce their industrial tariffs in line with the developmental dimension of the Doha mandate.

Pakistan’s ambassador Dr Manzoor Ahmad suggested that given the disagreement among industrialised countries and the developing countries on what each is required to do on the basis of less than full reciprocity, a balanced deal would have to settle around a coefficient of 5 for industrialised countries and 25 for developing countries.

Excerpt: