The Global Politics of NAMA

The Global Politics of NAMAThe Global Politics of NAMA

Implications For Southern Africa: Key Implications For Southern Africa: Key Issues and ConcernsIssues and Concerns

Prepared by Temwa Gondwe, MEJNEmail: [email protected] Phone: (+265) 1 750 533

at Southern Africa CSO Consultation on Trade & HIV/AIDS: ROAD TO HONG KONG

Held at Kempton Park, J’burg,RSAOn 27th-29th November,2005

MALAWI ECONOMIC JUSTICE NETWORKMALAWI ECONOMIC JUSTICE NETWORK

“Promoting Participatory Economic Governance”

mailto:[email protected]

TRADE PROGRAMME-"WORKING TOGETHER IN MAKING TRADE WORK FOR THE POOR"

Presentation Outline

• Southern Africa Economy• What is NAMA• Why NAMA: Contextual Comments• Purpose of NAMA• Effects and Threats of NAMA• Positions of Developing Countries• Current State of Negotiations• Strategies• Soul Searching

Malawi Economic Justice Network

Promoting Participatory Economic Governance


Southern Africa Economy

Malawi Economic Justice Network.


Diverse economies: economic size; structure of output; performance…Regional Integration Initiatives

Trade:

RSA & Zimbabwe≈ 91.3% of total exports to ROW 1990s;

SADC Exports: 15.3% of Africa exports; 3.8% of world exports.

Fast track trade liberalisation under WB & IMF Programmes.

Given these disparities in a regional and indeed the global context, suggest that further liberalisation and trade harmonisation policies would not be beneficial to the small countries unless mutual transitional arrangements are put in place (Evans, 1997).


What is NAMA?

Non Agricultural Market AccessObjective: GREATER MARKET ACCESS

Tariffs reduction or elimination; tariff peaks, and the prevention of tariff escalation as well as tariff bindings.

NAMA is therefore an agreement for reduction of tariffs on not just industrial products but products like fish and fishery products, forestry, shoes, toys, jewelries and others not covered under AoA.




Why NAMA… Contextual Comments



The WTO most powerful institution Enforcing powers…dispute settlement &

sanctions Scope: Economic, environment, cultural & social

policy Trade for 98% of world population

NAMA: most comprehensive and offensive drive to fast track neo-liberalism to further the capitalist drive…together with GATS. The final nail on the coffin????


NAMA & the July Framework

Annex B describes parameters for establishing modalities on market access…controversial:-Developing countries were against Chairman’s text.

Elements of Annex BFormulasUnbound tariffsFlexibilities for developing countriesPreferences




July Framework…contd

• Annex B should not be taken as framework for negotiation…at best only an indicator of the wishlist of major developed countries, since it amply accommodates their interests.

• Developing countries should be weary of pressures to negotiate on the basis of Annex B rather than Paragraph 16 of the Doha Declaration.




Purpose of NAMA• (Dev’d countries are trying get all countries to agree

‘multilaterally’ to)1. Fix their tariff systems;2. Reduce rates / levels at which the majority of their tariffs are

bound or set; also reduce, although at different speeds, the levels at which even the unbound tariffs can be used;

3. Harmonise tariffs across the world by making those countries with higher tariffs make larger reductions in order all countries’ tariffs are at more or less the same levels;

4. Eliminate tariffs completely on a selected range of key industrial sectors as the first stage towards a generalised free trade on all products in all sectors, and

5. Accelerate the process of tariff / trade liberalisation to achieve the above within the next 5-10 years


EFFECTS & THREATS OF NAMA

1. Annex B resurrects the Derbez Text that was already rejected by majority of the WTO-member countries in Cancun.

2.NAMA is an obligation to cut tariffs across the board. It locks-in countries to tariff structures that would be difficult to change in the future. Some say the obligations would be irreversible.

3.NAMA constricts the flexibilities for countries to use tariff protection as a tool for industrial policy and national development.

- Policy space for protection that allowed developed countries to achieve industrialization at the turn of the 19th and 20th centuries are now being closed to developing countries.




E&F…contd4. Tariff cuts would be drastic. It would bring industrial tariffs to the lowest

levels since the 19th and early 20th century.

5.Also the harmonization of tariffs between industrial and developing countries is anchored on the principle of FULL RECIPROCITY – that is that tariff reductions should be undertaken by developed and developing countries alike.

6.On tariff bindings, compared to agriculture where almost all products were bound under the AoA with few exemptions, not all non-agricultural products were bound under the GATT-Uruguay Round. A considerable percentage of products and tariff lines remain unbound. Annex B wouldforce countries to bind these products.

7. The inclusion of Fisheries. The fisheries sector is considered an economically important yet sensitive sector in many developing countries. It is a sector that provides livelihoods to millions of small fishers. Across the globe however, small fishers remain one of the poorest sectors.




Why Developing Countries Need Tariffs



Economies are unstable with infant industries

Tariffs provide revenue for development needs

It is a policy tool to help develop industries and better cope with external shocks

This is particularly so for countries that followed the IMF policy regarding free capital flows and liberal exchange rate regime.


ON THE ROAD TO HONG KONG…Positions

• ACP Group:

“NAMA negotiations be conducted in a manner that is sensitive to the

developmental needs of the of the ACP countries”




Positions

• AU Position:“We are concerned that some of the proposals on the

formula submitted by WTO Members would result in deep tariff reductions by some African countries in comparison to developed countries; contrary to the principle of less than full reciprocity and S&D enshrined in the Doha Mandate. In addition, African countries would be adversely affected as these proposals would result in erosion of their preferences. This would undoubtedly deepen the crisis of de-industrialization and accentuate the unemployment and poverty crisis confronting African Countries. “




Positions

• Malawi Government Position– The WTO must fully respect LDCs, exemption from

tariff reduction commitments;– Introducing flexibilities for least developed countries

to determine the levels of binding commitments of their tariff lines consistent with their trade, development and financial needs;

– It is imperative to ensure that the modalities identify an appropriate formula or tariff approach that would allow African countries to undertake industrial policy and diversification objectives and takes as priority the principles of non-reciprocity, special and differential treatment and less than full reciprocity;




State of Play

Negotiations held hostage by AgricultureWork has concentrated on clarifying product

coverage.Key area for LDCs has been NTBLittle progress in addressing the problems

associated with preference erosion. In view of this lack of progress regarding the LDC

request on duty free quota free market access, it is important that LDCs participation in NAMA negotiations is enhanced and specific pronouncements by the LDCs are made and put on the table.




Positions..contd

• Malawi Civil Society Position“We vehemently reject NAMA in its current

anti-developmental form and demand untrammelled access for Malawi’s products to developed country markets through unbound, duty and quota free, non-reciprocal market access, with zero extra tariffs for value addition.”




Strategies

• PLENARY + DAY 2




SOUL SEARCHING



• While stressing defending …., how many LDCs do actually have clear national industrial development and diversification programmes

• Impact assessments … are these repeated demands used as information and planning need, or simply a stalling device, or whether thy anticipate that the findings of such analyses will be so inclusive to challenge the fundamental assumptions of NAMA and stop it in its track

• If the latter is the intention, then decision of WHO will carry out the assessment does matter – this has implication on type and offers of ‘technical assistance’

• Same with the ‘restrictive tariff barriers’ and other non-tariff barriers (NTBs)


Food for thought…contd

• Do LDCs see themselves as having ‘no choice’ but implement tariff policies that they inherited in 1994?

• Policies of ‘export-led growth’ paradigm and domestic ‘adjustments requires orientation. Is it not high time we tried other paradigms?




THINKING & BOULD IMPLEMENTATION

“Malawi is not poor country, but it is the people of Malawi that are poor”

President Bingu Wa Mutharika-2004

“ AFRICA IS NOT A POOR CONTINENT, BUT IT IS THE PEOPLE OF AFRICA THAT ARE POOR”

“DEVELOPMENT IS SWEET, LET US MOVE AWAY FROM POVERTY”




THANK YOU FOR YOUR ATTENTION



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The Global Politics of NAMA