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Tuesday, February 1, 2011

The World Trade Organization: The Non-Agricultural Market Access (NAMA) Negotiations

Ian F. Fergusson
Specialist in International Trade and Finance

Non-Agricultural Market Access (NAMA) in the World Trade Organization’s (WTO) Doha Round has emerged as a major stumbling block in the seven-year Doha Round negotiations. NAMA refers to the cutting of tariff and non-tariff barriers (NTB) on industrial and primary products, basically all trade in goods which are not foodstuffs. While the agriculture negotiations have often overshadowed the NAMA talks, trade of industrial and primary products continues to make up the bulk of world trade. Average tariffs in developed countries have declined from 40% at the end of World War II to 6% today through successive rounds of General Agreement on Tariffs and Trade (GATT)/WTO trade negotiations. Developed countries seek the reduction of continuing high tariffs in the developing world, particularly from such countries as Brazil, India, and China. Developing countries seek special and differential treatment and tie their cuts in industrial tariffs to reductions in agricultural tariffs and subsidies.

Several econometric studies have modeled the possible effect of industrial tariff liberalization on the global economy. The studies vary based on the assumptions and data used. All but one found a greater net welfare benefit from liberalization of manufacturing tariffs than from agriculture. The studies indicate that developing countries in the aggregate would gain the most from manufacturing liberalization, at least in relative terms, and that the single largest gainer in terms of net welfare benefit would be China.

In response to the global economic crisis, the Group of 20 (G-20) leading economies have repeatedly called for conclusion of the Doha Round as a way to bolster economic confidence and recovery. WTO Director-General Pascal Lamy has referred to 2011 as a window of opportunity to conclude the round and announced an intensive work program to achieve this goal. The subject of the current NAMA negotiation is a draft text—revised several times since its initial release in 2007—that has been subject to much disagreement.

The negotiation of the tariff reduction formula was initially the main stumbling block in the negotiations. Members agreed to a Swiss-formula non-linear tariff reduction formula approach at the December 2005 Hong Kong Ministerial, one in which higher tariffs are decreased more than lower tariffs. However, disagreements persist about the size or amounts of the tariff cuts. The talks also seek to reduce the incidence of non-tariff barriers, which include import licensing; quotas and other quantitative import restrictions; conformity assessment procedures; and technical barriers to trade. The use of sectoral tariff elimination and special and differential treatment for developing countries has also proven controversial.

Legislation to implement any agreement that results from the Doha Round negotiations would need to be passed by Congress. U.S. Trade Promotion Authority (TPA), under which Congress agreed to a time line for voting on implementing legislation with no amendments in return for consultation and adherence to congressional negotiating objectives, expired on July 1, 2007. Consequently, there may be attempts to revise or extend TPA in order to consider legislation resulting from a Doha agreement.

Date of Report: January 11, 2011
Number of Pages: 19
Order Number: RL33634
Price: $29.95

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