WORLD TRADE  
ORGANIZATION  TN/MA/W/47 
30 March 2004 
 (04-1471) 
Negotiating Group on Market Access Original:   English 
  
 
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS 
 
Communication from Trinidad and Tobago on  behalf of the ACP Group of States 
 
 
 The following communication, dated 31 March 2004, is being circulated at the request of the 
Delegation of Trinidad and Tobago, on behalf of the ACP Group of States.  
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The main concerns of ACP countries with respect to the on-going non-agricultural
 
market access negotiations in WTO  
 
Tariffs and non-tariff barriers  
 
1. Economists generally argue that trade libera lisation leads to efficient allocation of scarce 
resources, lifts economic welfare and contributes to economic growth.  Despite nearly 20 years 
experience of reform, there is no clear-cut formula that guarantees that reform will bring about increased level of welfare.  Thus, for many countri es, especially ACP, a more cautious approach to 
liberalisation is needed. 
   
2. The ACP believes that the objectives of the current negotiations on non-agricultural market 
access are to facilitate the development and industri alization processes in this group of countries and 
thus these negotiations must give attention to:  (i )  providing and/or maintaining market access for 
products of export interest to ACP States;  (ii)  ensuring that ACP States ar e allowed to choose their 
own rate and extent of future impor t liberalization, so as not to cause further adverse effects on local 
industries;  (iii)  addressing the problems that ACP States will face from erosion of preferences; (iv) 
addressing the need for ACP States to build their suppl y capacity so that they can take advantage of 
any increased market access opportunities (v) the imp act of the decline in government revenue on 
sustainable levels of development and (vi) it would be recommended to undertake impact studies on 
previous tariff reductions on ACP countries. We have highlighted these issues individually and 
collectively in the Negotiating Group. 
 3. The ACP also calls for the adoption of a ta riff reduction formula that provides sufficient 
flexibility and scope to enable ACP States to conti nue to have adequate a nd effective levels of 
preferences necessary for the maintena nce of their competitiveness in th eir export markets.  Only such 
an approach guarantees balance, equity and benefi ts for all WTO members in the outcome of the 
Doha Round.    4. However market access may not be achieved through tariff reduction alone.   There are other 
non-transparent, discretionary and complicated non-ta riff barriers against ACP  exports, such as TBT, 
SPS  measures, environmental standards and regulati ons, rules of origin and other conditions that 
must be addressed in these negotiations. TN/MA/W/47 
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5. The various formulae that have been tabled and the Cancun draft text would remove some of 
the latitude for the use of tariffs for developmen t purposes, as envisaged by GATT Article XVIII  
(and as was practiced by the major developed countries at the early stages of their own 
industrialisation).  However, some of the proposals presented imply a more rapid or deeper reform in 
trade policy than others.  While a few developing c ountries that have already moved far in their own 
trade reforms might find this to be feasible, for  ACP states such an approach may mean going “too 
far, too fast” with reform, and could entail unacceptable adjustment costs.  6. The modalities to be adopted should allow AC P countries to maintain sufficient margins 
between the MFN liberalization and the preferential treatment under the GSP, the AGOA, the EBA, 
the CBI, the CARIBCAN and the Cotonou Agreement.  7.          The modalities to be adopted must not include any sectoral approach which would be 
detrimental to the interests of the ACP States.  
 
Less than full reciprocity and S&D
 
 
8. From GATT past practice, the principle of “less than full reciprocity” that is referred to in 
paragraph 16 of the Doha Declaration includes but  is not limited to lesser tariff cuts applied by 
developing countries and  LDCs and that longer transition periods would be available for the 
implementation of negotiated tariff cuts. It is theref ore crucial that in this round of negotiations the 
principle of “less than full reciprocity” and the issu e of special and differential treatment be fully 
addressed. Hence, among the important variables fo r consideration in the formulation of the 
modalities are the percentage rates for tariff reduc tions, special treatment for sensitive products and 
sectors, exemption from tariff cuts and implementation time periods. 
 
Preference erosion  
 
9. Changes will result from the erosion of tari ff preferences under non-reciprocal schemes, such 
as GSP, Cotonou, CBI, AGOA, EBA, CARIBCAN.  There is a need to look at the particular situation 
of the ACP with regard to specific products and main markets 
 
10 Reductions in MFN bound rates that also redu ce MFN applied rates will affect the preference 
margins with consequent effects on trade flows (trade diversion).  Countries whose margin of 
preference is eroded will face trade diversion.  AC P countries which have this preferential access may 
therefore experience trade diversion with no prospect for trade creation. 
   
11. One possibility could be to identify sp ecific tariff lines of products exported under 
preferences and then exclude such products and/or ac cord them a different treatment such that the mar 
gin of preference is less drastically and abruptly affected as a result of MFN tariffs reduction.    Tariff and government revenues
 
 
 12. Tariff revenues are an important source of government revenue for many developing 
countries. For instance, World Bank data indicates that the contribution of tariff revenues ranges 
greatly from virtually nothing in Italy to 75 per cent in Guinea.  In most African and Caribbean countries on average, more than 40 per cent of govern ment income comes from tariff revenues.  These 
are still substantial shares in revenues to be replaced  by alternative forms of  taxation.  Any revenue 
losses would need to be replaced with taxes on income, profits, capital gains, property, labour, 
consumption or non-tax revenues.  This is a long-te rm process that can be expensive to implement and 
many ACP states are not in a position to do so. Sales or consumption tax could replace tariff revenues, but such important changes to fiscal systems are co stly and may defeat the purpose of the exercise.  TN/MA/W/47 
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Tariff  bindings and coverage  
 13. Bound tariffs are the only legal basis for WTO negotiations; Members bind and reduce tariffs in accession or multilateral negotiations and these ar e included in schedules of commitments.  Binding 
tariffs means that in future a WTO Member is not allowed to raise bound rates without entering into 
Article XXVIII tariff renegotiations.  In the curre nt WTO negotiations, there are now considerable 
demands being put on developing countries to increase the share of their trade covered by binding commitments and also to reduce applied tariffs.  Si nce binding coverage for some ACP countries is as 
low as 3 per cent, this would constitute a disproportionate level of commitment. 
 
14. The gap between applied and bound tariffs that exists in most developing countries is a result 
of autonomous reforms by these countries in the last 10-15 years.  Many developing countries have 
reduced applied tariffs unilaterally under recent refo rm programmes, and they have sought credit for 
such liberalisation.  If developing countries are ob liged to reduce MFN bound rates to levels that are 
below their applied rates, then this would elimin ate any flexibility that developing countries have to 
use tariffs for development purposes, as discussed earlier. Whilst countries can have resort to anti-
dumping actions and other contingencies measures, for ACP countries the use of these instruments is 
very costly and therefore retaining bound tariffs at a sufficient level remains our primary defence 
mechanism.   
15. On the other hand, if after the current negotiations, developing countries cut MFN bound 
rates, leaving applied rates as they are or only partly reduced, such MFN reductions should still be 
seen as affording increased security of access to their market.  This would itself be considered a valid 
legal commitment in the negotiations in non-agricult ural products, even where rates are set at ceiling 
levels, higher than applied rates, as was done in the Uruguay Round agriculture negotiations by many 
developed and developing countries.   
 LDCs
 
 16. The ACP GROUP supports the proposal to exempt LDCs from making further reduction commitments.   
 
Conclusion 
 
  ACP Member States are deeply disappointed th at the elements of modalities proposed by the 
draft ministerial text does not take into account issu es outlined in this document but rather contains 
other provisions, including the complete elimination of tariffs in specific sectors that are likely to have 
serious negative consequences for LDCs and ACP States.   We therefore urge that the revised text on 
modalities take fully on board the elem ents proposed by the ACP States. 
 
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