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

Publication Date: August 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

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Abstract:

Talks on Non-Agricultural Market Access (NAMA) in the World Trade Organization's (WTO) Doha Round refer to the cutting of tariff and non-tariff barriers (NTB) on industrial and primary products, basically all trade in goods which are not foodstuffs. The Doha Round was suspended for an indefinite period of time in July 2006 due to differences in the agriculture negotiations. While the agriculture negotiations have received greater scrutiny in the Doha round, trade of industrial and primary products, the subject of the NAMA negotiations, continue 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.

Negotiations on NAMA have proceeded slowly and have now been suspended after the agriculture talks collapsed in July 2006. The main stumbling block has been the negotiation of the tariff reduction formula. 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. Both the United States and the EU favor using sectoral tariff elimination as an alternative modality for NAMA negotiations, but negotiations have stalled on which products to cover and the extent of participation (i.e. whether developing countries would be able to exempt themselves from commitments). Developing countries have sought "less than full reciprocity in reduction commitments," as called for in the Doha Ministerial declaration. Developing countries generally seek special and differential treatment through longer implementation periods, less than formula cuts for some items, and outright exclusions from some reductions. While some countries believe that they need this special treatment to provide extra time for their industrial and manufacturing sectors to develop, some economists argue that more immediate trade liberalization with few or no exemptions would better serve developing countries. This report will be updated as events warrant.