November 23, 2005: GENEVA UPDATE: LETTING GO OF EXPECTATIONS: but keeping the game in play

Geneva Update 23rd November, 2005

LETTING GO OF EXPECTATIONS: but keeping the game in play By Alexandra Strickner and Carin Smaller, TIP/IATP

CONTENTS I. LETTING GO OF EXPECTATIONS: but keeping the game in play II. THE BLAME GAME III. THE LAMY FACTOR IV. AGRICULTURE: a month of offers ends with no agreement V. SERVICES: the true nature of complementary approaches VI. NAMA: stepping into dangerous waters VII. IMPORTANT DATES TO REMEMBER VIII. DOCUMENTS IX. THE FORMULA GLOSSARY

I. LETTING GO OF EXPECTATIONS: but keeping the game in play

The 6th WTO Ministerial Conference is a few weeks away. From 13th - 18th December, Trade Ministers of the 148 WTO Members will meet in Hong Kong. In September, WTO Director General, Pascal Lamy, had his sights set on completing two-thirds of the Doha Round at the Hong Kong Ministerial by achieving modalities (detailed commitments including numerical targets). Many members supported Lamy; particularly the largest trading powers. However, serious divergences remain, and last week WTO Members indicated they would drop their ambition for modalities. Some WTO Members still hope something will happen and continue to push for an agreement. The U.S. Trade Representative, Rob Portman, called a Ministerial-level meeting this week in Geneva for the E.C., Brazil, India and the U.S. Also, in July 2004, WTO Members were at a similar stage. They thought they would not manage to reach an agreement and yet at the last minute the "July Framework" was agreed to at the General Council meeting. It is not quite time to sit down and relax.

Progress reports in agriculture and non-agricultural market access (NAMA) (see links below) were submitted on 22nd November and will be sent to the Chair of the Trade Negotiating Committee (TNC), Pascal Lamy. In services, a draft Ministerial text exists, which remains highly contested. It is still unclear whether the chair of the services negotiations, Ambassador de Matteo, intends to submit this text to the chair of the TNC or to issue a progress report similar to the chairs of the agriculture and NAMA negotiations. Based on these reports, Pascal Lamy is expected to draft a Ministerial text by the end of this week. It is still unclear what the text will look like.

Lowering the expectations for the Hong Kong Ministerial Conference makes sense from the viewpoint of the WTO and the membership; it avoids the possibility for another failure. If WTO Members can reach an agreement, no matter how symbolic, this will be celebrated as a step forward and a success for the WTO.

What is particularly worrying at this stage of the negotiations is that success for the Doha Round is less and less measured against the original intentions of launching the round: increasing development and redressing the imbalances of the Uruguay Round Agreements. Instead, the conclusion of a successful round today is measured in relation to how much members will be able to increase market access for their exporters in agriculture, manufactured products and services. The key demands of developing countries are not seriously addressed. Worse, developed countries - in particular the U.S. and the E.C. - shamelessly propose reforms in agriculture which they know will not address key problems in developed country agriculture, such as overproduction and dumping (the sale of products abroad at prices below their cost of production). In exchange for these empty promises, developed countries refuse to allow developing countries to protect their farmers and farm workers and demand far-reaching liberalization commitments in NAMA and services. Developed countries profess a commitment to a balanced outcome of the Doha Round in order to help lift millions of people out of poverty. Yet developed countries are pushing for a highly unbalanced trade deal that will in most part serve the interests of transnational corporations who will be the major beneficiaries of increased trade from the Doha Round.

II. THE BLAME GAME

The focus for the next few weeks is to ensure a success at the Hong Kong Ministerial Conference. The major trading powers are setting the stage to avert any chance of blame. After the summer break, the U.S. was in the hot seat. On 10th October the U.S. presented a proposal to reduce domestic support. Despite the fact that actual cuts to U.S. spending would be slight, the proposal was contingent on other members, particularly developing country members, making steep tariff cuts. Nevertheless, the U.S. received widespread praise from the media and the WTO Secretariat and the E.C. was left in the spotlight.

Agricultural exporters welcomed the U.S. proposal. However, it was clear from the start that the tariff cuts the U.S. proposed could never be met by the E.C., nor even by the Group of 20 (G-20) developing countries. Members of the G-20 such as India, which has a primarily defensive agenda for agriculture, could not accept such a proposal. The G-20 made the next move and presented a middle ground proposal: a less ambitious market access demand in comparison to the one of the U.S., but still one that went far beyond what the E.C. could accept. With the focus on the big players, the broader public did not notice that the G-20 market access proposal demands significant cuts to developing country tariffs. It proposes steeper tariff cuts than developing countries undertook during the Uruguay Round, threatening to intensify the imbalances that the Doha Round was meant to redress.

Since the U.S. offer, the E.C. has been struggling to get out of the "blame" spotlight - so far with little success. Their new offer in agricultural market access did not satisfy either the U.S. or the G-20. The E.C. is trying to defend itself by tabling aggressive demands in services and NAMA (see further details below), linking its offer in agriculture to securing substantial commitments from developing countries in these areas.

It was widely expected that at the FIPS (Five Interested Parties - U.S., EU, Brazil, India and Australia) meeting in London on 7th November, the E.C. would lower its expectations for services and NAMA, to allow the others to find a compromise, particularly since Brazil appeared to be offering substantial cuts from its bound industrial tariffs. In relation to services, Brazil has signaled openness to include complementary negotiating methods, such as plurilateral negotiations where friends of a particular services sector can invite a WTO member to negotiations, while clearly opposing the E.C. suggestion of numerical benchmarks for the services talks. E.C. Trade Commissioner Mandelson, however, did not show enthusiasm for any of the compromises offered. Instead Mandelson continued to insist the E.C. had made a far-reaching offer on agriculture, at the absolute limit of what Common Agricultural Policy (CAP) reform allows, and thus its request (if not expectation) was that other members meet this offer.

How might the E.C. shift the blame for impending failure away to other members? Besides using the argument that their offer in agriculture needs to be matched by commitments and offers in services and NAMA, one other possible scenario is to use its "Round for Free" for Least Developed Countries (LDCs) and other vulnerable and small economies, to play up how much the E.C. cares for development in the Doha Round, while others do not. The main features of this package are to exempt LDCs from any market access commitments in agriculture, NAMA and services; an aid for trade package; and, duty and quota free market access to be provided by all other WTO members for these countries. The duty and quota free market access proposal has been clearly rejected by developing countries such as Brazil, India (as well as the U.S.) and some others because it suggests differentiating among developing countries. The E.C. will certainly try to fuel this issue and has been trying to work the following spin on outcomes: the more advanced developing countries (such as Brazil) are not willing to offer anything substantial and of importance to the E.C. on market access in services or NAMA and are also not willing to offer duty and quota free market access to the poorest WTO members, so they are the ones holding up progress. The E.C. has a tough sell, but the blame game continues.

In an ideal world, the crafting and revision of trade rules would be based on evidence, pragmatism and the wider development needs of a country. In an ideal world, when WTO members express their commitment to the multilateral trading system, they would not try to undermine this by negotiating WTO Plus agreements at a regional or bilateral level. Yet this hardly happens. Instead, the dominant WTO members craft their negotiating strategies around specific offensive and defensive market access interests, with an eye to ensuring that others get the blame if no progress is achieved. Any progress and success must and can only be measured against the extent to which the Doha Mandate is really taken seriously and development issues are really put at the core of the agenda.

While during the Uruguay Round hardly any of the information was available and no large public debate existed, this time neither developed nor developing country negotiators can hide behind the "we did not know what we signed up to" language.

III. THE LAMY FACTOR

The way things work in the WTO have changed with Pascal Lamy assuming the role of Director General and, with it, the role of Chair of the TNC. Lamy is playing a dominant role in the negotiations. Unlike the preparations for the last Ministerial meeting in Cancun, in which the Chair of the General Council took responsibility to write the first draft Ministerial text, it is now Lamy as Chair of the TNC who has assumed the responsibility for Hong Kong. Moreover, until now all the so-called mini-Ministerials had been proposed and organized by a WTO member, yet recently Lamy has played a central role, often acting as Chair of the meetings. There is plenty of precedent in the WTO (and GATT's) history for strong leadership from the head of the secretariat. The WTO has few formal rules of procedure, which allows the Director General considerable leeway in how active they wish to be. A strong personality such as Lamy can make a significant difference to the direction and outcome of talks. Given the crisis in the talks right now, might Lamy become another Arthur Dunkel, widely credited for saving the Uruguay Round with his 1991 "Dunkel Draft."

Lamy is also engaging actively with civil society organizations (CSOs). Following a first meeting with Lamy, asked for by CSOs and held during the General Council meeting in October, Lamy is now inviting CSOs to regular briefings. The first such briefing took place on 11th November. In this meeting, Lamy clearly said he would continue to hold such meetings in the future. This is certainly part of his intention to increase the perceived transparency of the WTO and its processes, and as such is a welcome step. Of course, such meetings do not of themselves change the fact that trade policy-making continues to be characterized by undemocratic and untransparent processes, in which the most powerful members make very few concessions to the needs or even participation, of the majority. The vital first step is to push all WTO members to democratize their trade policy-making back home.

IV. AGRICULTURE: a month of offers ends with no agreement

After many attempts throughout October to revive the WTO agriculture negotiations, the major players in the negotiations failed to reach agreement. WTO members have now abandoned the hope of agreeing to modalities at the Hong Kong Ministerial in December. Agriculture negotiations Chair, Ambassador Falconer of New Zealand, released a progress report highlighting convergences and pointing Ministers to the areas where divergence remains, calling on members to take the next step. (see link below)

The detail below reviews the various proposals submitted on the three pillars of the WTO Agreement on Agriculture: export competition, domestic support and market access. Links to more detailed analyses of the U.S. and E.C. proposals are provided at the end of the story.

EXPORT COMPETITION (which includes export subsidies, export credits, food aid and state-trading enterprises.) The E.U., the major user of export subsidies, has not offered a firm date for the elimination of its export subsidies. The U.S. proposes an end date of 2010; since the U.S. barely uses export subsidies, it can afford to be aggressive. On the other hand, the U.S failed to offer anything significant to curb their own export support mechanisms: food aid and export credits. The U.S. food aid proposal sidesteps the issues of commercial displacement and its export credit proposal adds nothing to the talks.

DOMESTIC SUPPORT includes a range of programmes categorized into three boxes - amber, blue and green - and the de minimis (the minimum threshold below which spending on domestic support does not need to be included in the amber box calculation). The U.S. proposes to cut the amber box by 60 percent, cap the blue box at 2.5 percent and possibly expand the green box to explicitly allow some measures used by developing countries. The U.S. proposes to halve the permitted de minimis spending. The proposal looks ambitions but actual U.S. spending would hardly be affected by the proposal. But without knowing how the U.S. plans to classify its support, a precise appraisal is impossible. The E.C. proposes to cut the amber box ceiling by 70 percent, cap the blue box at 5 percent (as contained in the 2004 "July Framework") and leave the green box as is. The E.C. proposes to cut permitted de minimis spending for developed countries by 80 percent. Neither the U.S. nor the E.U. will face real significant spending constraints with their proposals, because of the changes to their agricultural support programs which makes them eligible now for the green box, where spending is unlimited.

MARKET ACCESS is the most complex yet important part of the agriculture negotiations. The central component is the tariff reduction formula. This is complemented with a range of flexibilities including sensitive products for use by developed and developing countries, special products (SPs) for use by developing countries on the basis of food, livelihood security and rural development criteria, a special safeguard mechanism (SSM) for use by developing countries to protect against import surges, and proposals to address preference erosion.

At this point, governments are looking at a tariff reduction formula structured in four bands or "tiers" according to the level of the tariff. (Earlier editions of the Update review how we got to this point in more detail). Governments have not yet agreed what the thresholds for each band should be. An example would be all products with tariffs between 0-30 percent in a first band, products with tariffs between 30-60 percent in a second band, between 60-90 percent in a third band, and 90 percent and over in the fourth and final band. A formula is then applied to each band to reduce tariffs. The higher the tariffs, the steeper the cuts (the top band is cut by more than the bottom band).

There are currently six proposals on market access: from the U.S., E.C., G-20, G-10, G-33 and Africa, Caribbean and Pacific Group (the ACP Group). (See links below to the six proposals)

The U.S. thresholds for the four bands are 0-20 percent, 20-40 percent, 40-60 percent, and 60 percent and above. The U.S. proposes a Swiss-type formula to be applied to each band (see Formula Glossary below for further details). Developed countries are expected to cut the highest band on average by 90 percent and the lowest band by 60 percent. Whilst the U.S. did not specify the cuts for developing countries, developing country members assume they will be expected to make two-thirds of the cut expected of developed countries, in other words, an average cut of 60 percent on the highest band and 40 percent on the lowest band. In relation to flexibilities, the U.S. proposes 1 percent of tariff lines to be designated as sensitive products, SPs are to be transitional and should still allow for "meaningful improvements" in market access, and the SSM is also described as transitional. The U.S. does not address the issue of preferences.

The E.C. thresholds for the four bands for developed countries are 0-30 percent, 30-60 percent, 60-90 percent, and 90 percent and above. The thresholds for developing countries are 0-40 percent, 40-80 percent, 80-120 percent, and 120 percent and above. The E.C. proposes a linear formula cut to apply to each band. Developed countries are expected to cut tariffs by 35 percent in the lowest band up to 60 percent in the highest band. Developing countries are expected to cut by 23 percent in the lowest band up to 40 percent in the highest band. In relation to flexibilities, the E.C. proposes 8 percent of tariff lines to be designated as sensitive products but does not offer much else in terms of flexibilities for developing countries. The E.C. simply says that an appropriate number of products be designated as SPs and should be eligible for more flexible treatment.

The G-20 thresholds for the four bands for developed countries are 0-20 percent, 20-50 percent, 50-75 percent, and 75 percent and above. The thresholds for developing countries are 0-30 percent, 30-80 percent, 80-130 percent, and 130 percent and above. The G-20 proposes a linear formula cut to apply to each band. Developed countries are expected to cut tariffs by 45 percent in the lowest band up to 75 percent in the highest band. Developing countries are expected to cut by 25 percent in the lowest band up to 40 percent in the highest band. In relation to flexibilities, the G-20 proposes 1 percent of tariff lines to be designated as sensitive products and they support the proposals of the G-33 on SPs and the SSM.

The ACP Group thresholds for the four bands for developed countries are 0-20 percent, 20-50 percent, 50-80 percent, and 80 percent and above. The thresholds for developing countries are 0-50 percent, 50-100 percent, 100-150 percent, and 150 percent and above. The ACP Group proposes a linear formula cut to apply to each band. Developing countries are expected to cut by 15 percent in the lowest band up to 30 percent in the highest band. The ACP Group does not specify tariff cuts for developed countries. In relation to flexibilities, the ACP Group proposes that products relating to preferences be designated as sensitive products, they support the proposal of the G-33 on SPs and the SSM. The group also calls for specific modalities on cotton that include the elimination of domestic support measures and all forms of export subsidies as well as improved market access for cotton originating from least-developed country (LDC) cotton producers and exporters.

The G-10 thresholds for the four bands for developed countries are 0-20 percent, 20-50 percent, 50-70 percent, and 70 percent and above. The thresholds for developing countries are 0-30 percent, 30-70 percent, 70-100, and 100 percent and above. The G-10 proposes a linear formula cut to apply to each band with a second option of a linear formula with flexibilities in applying the cut. Both developed and developing countries are expected to cut by 45 percent in the lowest band and 27 percent in the highest band. In relation to flexibilities, the G-10 reaffirms the importance of sensitive products but does not make any specific proposal.

The G-33 submitted proposals on SPs and the SSM. On SPs, the G-33 elaborated on the concepts of food and livelihood security and rural development to provide guidelines for the designation of SPs. Importantly, the G-33 proposes that any product that receives amber or blue box subsidies or export subsidies, should automatically be eligible for SPs in developing countries. The G-33 proposes that the SSM include both volume and price triggers. The proposal provides further details on the operation and implementation of the safeguard measure.

For further information on the U.S. proposal read the analysis by IATP's Sophia Murphy: http://www.tradeobservatory.org/library.cfm?refid=77195

For further information on the E.C. and U.S. proposals read the analysis by Jacques Berthelot: http://www.tradeobservatory.org/library.cfm?refid=77426 (E.C.) http://www.tradeobservatory.org/library.cfm?refid=77425 (U.S.)

V. SERVICES: the true nature of complementary approaches

Services negotiations continue to be heated. Two draft Ministerial texts have already been circulated, which include the central proposals of the so-called "Friends of Benchmarks," a group of developed and developing countries who promote quantitative and qualitative benchmarks to increase the level of ambition in services negotiations. The Friends of Benchmarks wish to ensure that countries commit a minimum number of service sectors and make a certain quality of commitments. A third draft of the Ministerial Text in services is expected this week. According to Geneva sources, the E.C. continues to insist on compulsory quantitative and qualitative benchmarks, supported by Japan and Australia. The U.S. also put forward a proposal for compulsory quantitative benchmarks (also known as numerical targets). (see links below)

Much attention is given to the issue of quantitative and qualitative benchmarks with widespread rejection from most developing countries. Less attention is given to the issue of "plurilateral" negotiations. At present, market access negotiations in services are undertaken via the so-called bilateral request and offer process. While this negotiating method is far from perfect, the proposed plurilateral approach could turn out to be worse. Under a plurilateral approach, for example, the friends groups that exist in various services sectors (e.g. Friends of Energy Services, Financial Services etc.) can invite a country to negotiate the sectors which the group has requested liberalization commitments. The country will then be confronted with requests from a large group: most likely a large group of developed countries plus a few developing countries. While larger developing countries might be able to handle such a negotiating forum the situation for smaller developing countries will be difficult. Some developing countries support the inclusion of the plurilateral approach believing it will allow developing countries to team up and jointly defend themselves. However, due to the specific nature of the GATS, the fact that requests target domestic regulations in particular sectors of interest, it will be extremely difficult to establish common interests between developing countries that would encourage alliances to defend themselves.

Moreover, it can be expected that - while the approach is nicely named to be a "complement" to existing negotiation methods, it will ultimately turn out to be a replacement. Why should those having offensive interests continue to pursue a bilateral request and offer process when via a plurilateral approach they will be able to exert much more pressure on the respective country? Both in the first and in the second draft of the Ministerial text on services, the language in relation to the plurilateral approach does suggest that any invitation to such a negotiation would be compulsory. Under point 10 b) of the second draft, the text suggests:

"A Member or group of Members who have made such requests (i.e. of collective negotiations - note of the editor) in a specific sector or mode, together with Members to whom such requests have been made, and any other interested Member, shall enter into plurilateral negotiations on the basis of such requests."

Therefore, if the Friends of Financial Services invites a country to discuss their requests, the invitee must accept and enter into such a negotiation, regardless of whether they are in a position to discuss or commit the respective sector under the GATS agreement.

VI. NAMA: stepping into dangerous waters

The detail on the table in NAMA is more advanced than agriculture. For months it has been clear that a Swiss-type formula will be used to reduce industrial tariffs (see Formula Glossary below). This was confirmed in the progress report issued 22nd November by the Chair of the NAMA negotiations, Ambassador Stefan Johanesson of Iceland. While Ambassador Johanesson keeps the debate open as to which type of Swiss formula will be used, the bias is clearly in favour of the simple-Swiss formula as proposed by the major developed countries, including the U.S., E.C., Norway and Japan. The simple-Swiss formula is the proposal which includes two coefficients - the number applied to tariffs in a formula in order to calculate the final tariff reduction - and which cuts tariffs more steeply. The less drastic proposals-one by Argentina, Brazil and India (the ABI), and the other from the Caribbean countries-include multiple coefficients but are not discussed in detail in the report.

Indeed, in the past few months, Members turned their attention to the coefficients and the flexibilities, leaving the debate over the structure of the formula aside. Many developing countries believe that if they can negotiate a relatively high coefficient they may be able to retain some policy space to use tariffs for industrial development. This was always going to be a difficult task, especially considering the E.C. demands for drastic cuts to developing country industrial tariffs in exchange for concessions in agriculture. Ambassador Johanesson's report has made this task even harder. The report states that the coefficients currently under discussion are within the range of 5 to 10 for developed countries and within the range of 15 to 30 for developing countries. While this does reflect some of the discussion in the negotiations, it ignores the fact that many developing countries totally reject this approach to tariff reductions. A coefficient of 30 for developing countries will still lead to drastic cuts in industrial tariffs and could have a disastrous impact on prospects for industrial development in developing countries.

More recently, developing countries have also focused on guaranteeing certain flexibilities and exemptions within the rules remain in tact. A recent communication from Argentina, Venezuela, Brazil, China, Egypt, India, Indonesia, Namibia, Pakistan, Philippines and South Africa, recalled the provisions for flexibility for developing countries under NAMA (see link below). They reaffirmed that flexibilities are 'stand-alone' and not to be traded away with other areas of the negotiations. The flexibilities include exempting a percentage of tariff lines from formula cuts and applying less than formula cuts to a percentage of tariff lines. Ambassador Johanesson's report reflects the debates on this issue.

Barbados submitted a proposal on behalf of 22 small economies, calling for exemptions from the tariff reduction formula for small economies whose average share in total world merchandise is less than 0.1 percent. The proposal by the 22 countries calls for tariff reductions to be made commensurate with their level of development and emphasizes the importance of tariffs as a policy instrument in industrial development.

Ambassador Johanesson's report about progress on sectoral initiatives is particularly worrying. Sectoral negotiations are driven by a few countries and take place outside the main negotiating forum. They completely lack transparency and exclude the majority of the membership, many of who reject the inclusion of such initiatives. Ambassador Johanesson has chosen to remain outside the remit of these negotiations and exercises no control over the process. Despite his lack of involvement, Ambassador Johanesson legitimizes sectoral initiatives in his report and accepts them as a fait accompli. He calls on Members to consider finalizing timelines and to submit outcomes that will be applied on a most-favored nation (MFN) basis.

Finally, in his concluding remarks, Ambassador Johanesson calls on countries to agree to the final structure of the formula including a narrower range of coefficients, the treatment of unbound tariffs and the flexibilities at the Hong Kong Ministerial. Despite the fact that Members agreed to lower expectations for the Hong Kong Ministerial, Ambassador Johanesson still seems determined to reach an agreement on the major elements of the NAMA negotiations. It is considerably more drastic than what Ambassador Falconer calls for in the agriculture negotiations.

In a recent publication on the NAMA negotiations, development economist Ha-Joon Chang from the University of Cambridge says, "The NAMA negotiations are heading towards a development disaster. If the developed countries have their way and force the developing countries to massively cut industrial tariffs on a line-by-line basis in an irreversible manner, the future prospect of industrial development, and therefore economic development, in today's developing countries is truly bleak." (Ha-Joon Chang, "Why developing countries need tariffs? How WTO NAMA negotiations could deny developing countries' right to a future," November 2005)

The more recent developing country proposals on NAMA raise some issues that Professor Chang discusses in his paper. More proposals like these are urgently needed to change the current direction of the negotiations. It is crucial that the Chair, Iceland's Ambassador Stefan Johannesson, reflect these concerns in the negotiating texts, and that Members work towards operationalising the demands of developing countries to be able to use tariffs as part of their industrial development strategy.

VII. IMPORTANT DATES TO REMEMBER

Trade Negotiations Committee 25 November General Council 1-2 December 6th WTO Ministerial Conference 13-18 December

VIII. DOCUMENTS

SERVICES:

Draft Hong Kong Ministerial Text, 3 November 2005: http://www.tradeobservatory.org/library.cfm?refid=77363

Draft Hong Kong Ministerial Text on Services, October 2005: http://www.tradeobservatory.org/library.cfm?refid=77247

U.S. non-paper on numerical market access targets for services negotiations: http://www.tradeobservatory.org/library.cfm?refid=77427

Statement by the African Group on complementary approaches (or "benchmarks") in services, October 2005: http://www.tradeobservatory.org/library.cfm?refid=77246

Statement by LDC Group on Complementary Approaches (or "Benchmarks") in services, October 2005: http://www.tradeobservatory.org/library.cfm?refid=77245

Non-paper from India on Benchmarks in services, October 2005: http://www.tradeobservatory.org/library.cfm?refid=77244

Non-paper on Benchmarks from Chile, Canada and Australia, October 2005: http://www.tradeobservatory.org/library.cfm?refid=77243

Statement on Complementary Approaches (or "Benchmarks) in services, September 2005: http://www.tradeobservatory.org/library.cfm?refid=77242

Statement by Brazil on Complementary Approaches (or "Benchmarks") in services, September 2005: http://www.tradeobservatory.org/library.cfm?refid=77241

Statement by Indonesia on Complementary Approaches (or "Benchmarks") in services, September 2005: http://www.tradeobservatory.org/library.cfm?refid=77240

Statement by Antigua and Barbuda, Barbados, Jamaica, Dominica, Grenada, St. Kitts and Nevis, and St. Vincent and the Grenadines on Complementary Approaches (or Benchmarks") for services, September 2005: http://www.tradeobservatory.org/library.cfm?refid=77239

Statement by Brunei Darussalam, Indonesia, Malaysia, the Philippines and Thailand on Services Benchmarks, September 2005: http://www.tradeobservatory.org/library.cfm?refid=77238

AGRICULTURE:

Draft Report of the Agriculture Negotiations, 22 November 2005: http://www.tradeobservatory.org/library.cfm?refid=77600

U.S. Proposal on Agriculture 9 October: http://www.ustr.gov/Trade_Sectors/Agriculture/US_Proposal_for_WTO_Agricu lture_Negotiations.html

U.S. proposal on food aid: http://www.tradeobservatory.org/library.cfm?refid=77003

EU Proposal 10 October: http://www.tradeobservatory.org/library.cfm?refid=77008

EU Proposal 10 October - with explanatory annotations: http://www.tradeobservatory.org/library.cfm?refid=77006

EU Revised Offer, 28 October: http://europa.eu.int/comm/trade/issues/newround/doha_da/pr281005_en.htm

EU Letter Complaining about Doha Round Negotiations: http://www.tradeobservatory.org/library.cfm?refid=77004

Letter from Commissioner Mandelson to WTO Director-General, Pascal Lamy: http://www.tradeobservatory.org/library.cfm?refid=77271

G33 Proposal on Special Products: http://www.tradeobservatory.org/library.cfm?refid=77130

G33 Proposal on a Special Safeguard Mechanism: http://www.tradeobservatory.org/library.cfm?refid=77235

G33 Ministerial Statement: http://www.tradeobservatory.org/library.cfm?refid=77047

G20 Proposal on Market Access and Domestic Support: http://www.tradeobservatory.org/library.cfm?refid=77077

G20 Proposal on Exporting STEs in Developing Countries: http://www.tradeobservatory.org/library.cfm?refid=77200

G20 Proposal on Tropical Products: http://www.tradeobservatory.org/library.cfm?refid=77201

G20 proposal on export prohibitions and restriction: http://www.tradeobservatory.org/library.cfm?refid=77202

G20 proposal on improving monitoring and surveillance mechanisms: http://www.tradeobservatory.org/library.cfm?refid=77203

G20 proposal on Sensitive Products: http://www.tradeobservatory.org/library.cfm?refid=77204

G20 Proposal on Product-specific caps in AMS: http://www.tradeobservatory.org/library.cfm?refid=77205

Australian proposal on Sensitive Products: http://www.tradeobservatory.org/library.cfm?refid=77206

NAMA

Chairman's Progress Report of the NAMA Negotiations: http://www.tradeobservatory.org/library.cfm?refid=77599

Available on the WTO website www.wto.org:

Tariff Liberalisation in the Forest Products Sector (TN/MA/W/64)

NAMA Flexibilities for Developing Countries (TN/MA/W/65)

IX. THE FORMULA GLOSSARY

A HARMONIZING FORMULA: when a formula is referred to as having a "harmonizing" effect it is designed principally to make steeper cuts on higher tariffs, so as to bring all the final tariffs closer to the same level.

A COEFFICIENT: a number applied to tariffs in a formula in order to calculate the final tariff reduction. The number is negotiated by WTO members. The coefficient will have different effects depending on the type of formula used. For example, a Swiss formula with a small coefficient will result in bringing a country's tariffs into a narrower range.

SWISS FORMULA: this is a harmonizing formula that uses a single mathematical formula to produce a narrow range of final tariffs. The mathematical formulation is designed so that the coefficient also determines the maximum tariff. For example, if the coefficient is 25, then a very high starting tariff will end up with a final tariff of exactly 25 percent and lower starting tariffs will end up proportionately lower. Therefore, the coefficient is particularly important in the Swiss formula since it is indicative of where starting tariffs will end up.

See http://www.wto.org/english/tratop_e/agric_e/agnegs_swissformula_e.htm for further information.

A NON-LINEAR FORMULA: otherwise known as the Swiss formula or the harmonizing formula. The non-linear formula cuts each tariff line in such a way that steeper cuts are made to higher tariffs so as to bring all the final tariffs closer to the same level.

A LINEAR FORMULA: this formula cuts each tariff line by a given percentage. It differs from the non-linear formula because it does not bring all final tariffs closer to the same level. It differs from the Uruguay Round formula because it is not an average cut and therefore provides no flexibility to vary actual tariff reductions on individual products. Each product must be cut by the specified percentage.

URUGUAY ROUND FORMULA: this is the formula that was used in the Uruguay Round for agriculture tariff reductions. Tariffs are cut by a percentage average over a number of years. For example, developed countries agreed to cut tariffs by an average of 36 percent over six years with a minimum of 15 percent on each product. The combination of average and minimum reductions allows countries the flexibility to vary their actual tariff reductions on individual products so that some cuts will be greater than others.

CANADIAN "INCOME TAX" FORMULA: this is a new formula that was proposed in June 2005 in the Committee on Agriculture. It is a harmonizing formula. Instead of applying a single cut to the entire tariff, different percentages are applied to different portions of the tariff, in a similar way to which European income tax is calculated.

GIRARD FORMULA: this is a harmonizing formula that uses a single mathematical formula to produce a narrow range of final tariffs. It differs from the simple Swiss formula in that each country has its own coefficient calculated on the basis of the country's national tariff average. It is often referred to as a "Swiss-type" formula.

ABI FORMULA: the Argentina, Brazil and India (ABI) proposal for formula in NAMA. The formula is essentially a Girard formula.

Carin Smaller Project Officer, Trade Information Project Institute for Agriculture and Trade Policy, Geneva Office 15 rue des Savoises Geneva 1205 ph: +41 22 789 0734 fax: +41 22 789 0733 csmaller@iatp.org www.iatp.org www.tradeobservatory.org