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Centad: Given the fact that trade in industrial goods still
constitutes an important component of global trade, in your
view, will reduction in the tariff rates from the present level,
result in better market access for the products of developing
countries into the markets of developed countries?
Rudi Dicks: Market access will not likely be the case for
many developing countries. A recent report from the World
Bank estimates that projected welfare gains from concluding
the Doha Round would be less than $ 16 billion (0.2% of
the national income of all developing countries put together).
This means the estimated global gains in 2015 would
be $ 96 billion, with only $ 16 billion going towards the
developing world. In any event, these gains are expected to
benefit a few developing countries such as Brazil and China.
In contrast, industrial tariff losses in NAMA are expected to
be at least $ 63 billion, including real declines in the relative
value of exports.
Secondly, the unequal rate of exchange in the current round will
make it impossible for developing countries to gain any trade
benefit. The current NAMA text fails to take into consideration
one of the fundamental principles of the Round and that is the
principle of less than full reciprocity (LTFR). While developed
countries are expected to reduce their tariffs by less than
25 percent, on the other hand developing countries will see
average reductions in excess of 60 percent of industrial tariffs.
Much of the tariff cuts will be in industries that are relatively
labour intensive or where there is an active industrial policy
initiative intended to support growth, economic development
and employment creation.
Centad: One of the important modalities in the NAMA
negotiations is related to the tariff reduction formulas.
In this light, do you think that the present architecture
of the tariff reduction formula, where the coefficients in
the formula are linked to the flexibilities that a developing
country may enjoy, is appropriate to take into account
various concerns of developing countries?
Rudi Dicks: As unions, we have always objected to the
current NAMA formulation of tariff reductions. This relates
to the unequal rate of exchange between NAMA and
agriculture. Why is there for agriculture an average tariff
(Uruguay Round type cut) formulae cut and in NAMA a
simple Swiss Coefficient formulae cut? The Swiss coefficient
or simple Swiss coefficient is unlike any other tariff
reduction formula negotiated. With the Swiss coefficient,
we will see tariff reductions on a line by line basis not
only of bound rates but deep cuts in applied rates. This
means that every tariff line is affected, unless of course the
country opts for one of the flexibility arrangements that
allows for exemption from a total cut on a very limited
number of sensitive lines.
This to me indicates that the concessions or in this case limited
concessions, which the developed countries are prepared to
make in agriculture, must be paid for through NAMA. Ultimately,
developing countries will have to bear the massive cost of
adjustment (loss of jobs and industries) when industrial tariffs
are significantly reduced, while on the other hand, developed
countries will continue to provide the significant protection and
subsidies to farmers in Europe, USA and Japan.
Here in lies the conundrum. It is very unlikely that any outcome
based on the Swiss coefficient/s, given the past and current
NAMA text, would provide developing countries a good outcome
that supports a round which is intended to be developmental and
secondly, supports the principle of LTFR. If developed countries
stick to these principles then a Swiss coefficient of 140 and more
would be required and not in the range of 19-26 for developing
countries, as suggested by the NAMA chair.
Centad: Developing countries have argued in the
present negotiations that developed countries are not
honouring the principle of LTFR. What in your view is the principle
of LTFR and how this principle should be operationalised in the
present negotiations?
Rudi Dicks: I have provided some insight into the principle
earlier, but in essence the principle means developing countries,
least developed countries (LDCs), and small and vulnerable
economies (SVE) cannot be expected to take the same level
of reduction in tariff cuts, whether in agriculture or industry,
as developed countries. This is an important principle since
it recognises that all countries do not have the same level
of development. In reality, developed countries are more
developed. Their development was historically and still is based
on a very active and supportive state. In fact, their development
was based on the very same principles that developing countries
are arguing for today – central to all, our national, economic and
development agenda should be driven by local conditions that
support a re-distributive growth strategy and reduce poverty
and unemployment.
The NAMA proposals will severely limit the ability of developing
countries to develop, reduce poverty and create jobs. Trade will
now determine our national developmental objectives or policy
development instead of our national policy interventions,
determining a more acceptable trade negotiated outcome.
The LTFR principle would, in my view, mean developing
countries cannot be expected to take a larger cut in industrial
tariffs than developed countries. This implies that a higher
coefficient would be required for developing countries, including
a higher degree of flexibilities against adverse impacts of tariff
reductions where there are more sensitive tariff lines.
Centad: How significant are the negotiations on the issue of
sectorals? Should developing countries, in your view, negotiate
on sectorals along with the other modalities?
Rudi Dicks: This is voluntary as I understand it but more recently
the recommendation emerging from a text prepared by Pascal
Lamy during the July Ministerial, promotes greater flexibilities to
developing countries who participate in the sectoral processes.
This is preposterous when one considers that no agreement
can be reached on fundamental areas of the NAMA text. How
can countries proceed to sectorals on this basis? It seems fairly
clearly that the strategy of sectorals is intended to undermine
the strong views of many developing countries, including the
NAMA 11 on rejecting the NAMA proposal. As unions, we have
always voiced our opposition to sectorals.
Centad: In the NAMA negotiations, the focus always remains
on the tariff reduction formula and as a result, non-tariff
barriers are not discussed fully. How, in your view, the present
round of negotiations is focusing on the issue of non-tariff
barriers, especially the barriers that developing countries face
in the developed countries market?
Rudi Dicks: Dealing with non-tariff barriers is certainly a
pertinent area of the negotiations. Many of us tend to focus
on the key, but important issues and forget about non-tariff
barriers. We may wish for a good deal on market access for
our goods, but then encounter a number of significant barriers,
rules and regulations that prohibit the entry of our industrial
goods into developed country markets under the guise of a risk
to health and safety, not meeting standards etc. These nontariff
barriers pose a significant threat to our export markets.
So while we may gain access to developed country markets
through the support we provide to our local industries, we will
continue to struggle in gaining “real” access because existing
or new non-tariff barriers are erected continuously that are
unnecessary, onerous and prohibit trade.
Rudi Dicks is the Director of the National Labour and
Economic Development Institute (NALEDI), Johannesburg,
South Africa and can be contacted at rudi@naledi.org.za
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