Non-agricultural products include industrial goods, manufactured goods, textiles, fuels and mining products, footwear, jewellery, forestry products, fish and fisheries, and chemicals. Collectively, they represent almost 90% of world merchandise exports.
Aim of the negotiation
"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".
Three 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.
Formula for tariff reduction and its flexibilities
Tariff reductions would be made using a “simple Swiss” formula with separate coefficients for developed or for developing country members. A Swiss formula produces deeper cuts on higher tariffs (a higher coefficient, as envisaged for developing members, means lower reductions in tariffs). But whereas the coefficient for developed members will be the same applicable to all of them, there will be three different coefficient options for developing members that will apply according to the scale of the flexibilities they choose to use. The lower the coefficient the higher the flexibilities and vice versa. Flexibilities cannot be used to shelter entire product groups from cuts.
Members could negotiate tariff cuts which go beyond formula cuts in at least fifteen specific sections. Participation in these negotiations is voluntary.
The latest "modalities" negotiating text was issued on 10 July 2008. It includes in square brackets (which means they are open to negotiation) a formula for tariff reductions with the following coefficients: 7 to 9 for developed members and between 19 and 26 for developing. But not all developing countries applying the formula would apply the same coefficient. The new text proposes three different ranges: 19-21, 21-23 and 23-26.
Developing countries will be entitled to "shelter" a percentage (to be negotiated) of its most sensitive industrial tariff lines from the full effect of the formula under certain conditions related to their volume of trade on those products, and provided they do not exclude entire chapters (entire range of products).
THE STORY SO FAR
2001: Doha Development Agenda launched (November). Background
2002: Industrial goods Negotiating Group (NAMA) created by the TNC (February)
2002: First meeting of the Negotiating Group (July)
2005: Further agreement at Hong Kong Ministerial Conference (December)
2007: A draft modalities text, “The July 2007 text”
2008: Revised draft modalities text, (February, May and July)
The latest text submitted to members by the chairman of the Negotiating Group introduces precisions for the possible treatment of special cases such as:
South Africa, Botswana, Lesotho, Namibia and Swaziland. They would have additional flexibilities
The Bolivarian Republic of Venezuela, who argued to be treated as a special case because of the very special concentrated structure of the country's imports and its development needs
Argentina, Brazil, Paraguay and Uruguay, concerning the calculation of the value of trade limitation affected by the flexibilities. The total value of Brazil's non-agricultural imports would apply.
The text also contains provisions for a possible "anti-concentration" mechanism. The aim of this is to prevent members from excluding from liberalization a large concentration of products belonging to the same category (in technical terms, the same "Harmonize System Chapter"). Examples of these categories are vehicles and apparel and clothing.
The proposed coefficients would result in:
the maximum tariff in developed countries being less than 7 or 9 per cent, depending on the coefficient agreed. This would mean that developed countries would have bound tariffs at an average of well below 3 per cent, and tariff peaks below 7 to 9 per cent even on their most sensitive products.
the majority of tariff lines for developing country members applying the formula being less than 12 or 14 per cent, depending on the coefficient agreed and the flexibilities used. In the developing countries applying the formula, bound tariffs would be at an average of between 11 to 12 per cent, and only a limited number of developing countries would have averages above 15 per cent.
Taking into account the extensive commitments by Members which have acceded since 1995Some very recently acceded members will not be required to undertake tariff reductions beyond their accession commitments. Others such as China, Chinese Taipei, Oman and Croatia, subject to the formula, would have an extended implementation period of three to four extra years to phase in their Doha commitments.
Special and differential treatment
Least-developed country participants would not be required to undertake any reduction commitments. But as part of their contribution to this round of negotiations, they are expected to substantially increase the number of products whose maximum tariff rates are legally bound in the WTO. Furthermore, and as an exemption, participants with a binding coverage of non-agricultural tariff lines of less than 35% would be exempt from making tariff reductions through the formula. Instead, members expect them to bind non-agricultural tariff lines at a percentage to be negotiated at an average level also to be negotiated.
Non-tariff barriers are government measures other than tariffs that restrict imports or that have the potential for restricting international trade. Examples include standards and certifications, customs procedures, food safety and health requirements. A mechanism will be established to deal with these measures.
Countries wanting to go further in their tariff reduction
Countries wanting to go further in their tariff reduction can participate in a special voluntary initiative (sectors initiative) that contemplates the total elimination of tariffs in some sectors. But a "critical mass" of countries joining the initiative is needed for it to take off. There are 14 sectors currently under negotiation: automotive and related parts; bicycles and related parts; chemicals; electronics/electrical products; fish and fish products; forestry products; gems and jewellery products; raw materials; sports equipment; healthcare, pharmaceutical and medical devices; hand tools; toys; textiles, clothing and footwear; and industrial machinery.