RESTRICTEDWORLD TRADE
ORGANIZATIONTN/MA/M/3
30 October 2002
(02-5961)
Negotiating Group on Market Access
MINUTES OF THE MEETING
Held in the Centre William Rappard on 12-13 September 2002
Chairman: Ambassador P-L. Girard (Switzerland)
Subjects discussed:               Page
1. (i)-(ii)  Tariffs and Non-Tariff Barriers on Non-Agricultural Products ..............................1
2. Other Matters................................................................................................................ ..........31
(i) Data Availability and Software Tools for Tariff Negotiation s (TN/MA/S/2) ............................32
(ii) WTO Members' Tariff Profiles (TN/ MA/S/4 )............................................................................33
(iii) Formula Approaches to Tari ff Negotiations (T N/MA/S/3 ) .......................................................35
(iv) Annotated Selective Bibliography of Research on Market Access (TN/MA/S/1/Add.1) ...........37
(v) Agenda for the next meeting ................................................................................................. ....38
The proposed agenda was adopted by the Negotiating Group as contained in document
WTO/AIR/1880.
_______________
1. (i)-(ii)  Tariffs and Non-Tariff Barriers on Non-Agricultural Products
1.1 The Chairman stated that the documents circulated under agenda "Item A" were listed in
WTO/AIR/1880, which had convened this meeting. They covered a communication from
New Zealand entitled "The Scope of the Negotiation on Non-Tariff Barriers", circulated asTN/MA/W/4. Contributions from Japan and Korea entitled "Market Access for Non-Agricultural
Products" were circulated as documents TN/MA/W/5 and 6, respectively. There were recent
communications from Norway and Singapore also entitled "Market Access for Non-Agricultural
Products" which were circulated in TN/MA/W/7 and 8, respectively. Additionally, studies and the
minutes of the last meeting prepared by the Secretariat, as well as the previous communications fromthe European Communities and the United States were available in the room.
1.2 The representative of Japan introducing Japan's paper (TN/MA/W/5) stated that through the
past several rounds of negotiations, tariffs on non-agricultural products had been substantially
reduced, and accordingly the average tariff rate in Japan on non-agricultural products  stood at 1.7%,which was among the lowest. As a result, Japanese imports of manufactured goods from developing
countries had almost doubled during the period of 1995 to 2000. Japan was of the view that there wasTN/MA/M/3
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still room for further improvement in market access among Members, in order to expand international
trade including South-South trade and to promot e economic growth. Japan was prepared to engage
actively in these negotiations with other Members in accordance with the Doha Ministerial
Declaration. He highlighted the following main issues for further discussion:  1) the binding of tariffs
was a basic commitment in the GATT/WTO which had proved to be useful in providing predictabilityand credibility in world trade. The binding commitment should be strengthened by improving binding
ratios and the quality of concessions; 2) taking into account the limited time-frame and the large
number of participants in these negotiations, a co mbination of some form of formula-cut with a
zero-for-zero approach was a reasonable method for achieving substantial reductions in tariffs. He
suggested a formula-cut, namely a "Target Average Tariff Rate" approach, which would reduce the
trade weighted tariff average to a certain targeted level, corresponding to the level or degree of
development and the current average tariff rates of the participant. The targeted level was to bedefined by the average tariff rate figure, and flexibility would be allowed for tariff rate adjustments.
Special and differential treatment  should be given according to the level of development. In
combination with the Target Tariff Rate appr oach, he believed that the "zero-for-zero" or
"harmonisation" approach, which had achieved certain positive results during the Uruguay Round
(UR) was worth pursuing in these negotiations. In this regard, Japan was proposing a group ofproducts not only of interest to developed countries but also to developing countries including toys,
rubber and textiles. Japan was in the process of finalising the details of this modality and intended to
submit it in time for the November 2002 meeting. In this context, he urged Members to submit their
tariff data to the IDB and requested the Secretariat to accelerate this process. Furthermore, tariffs
peaks and tariff escalation needed to be properly addressed taking into account their trade-distortingeffects among Members. In this connection, the methodology to measure tariffs peaks and tariff
escalation had to be fully discussed; 4) the base rate should, in principle, be the bound rates based on
the Harmonisation System (HS) 2002 version. Japan also intended to give carefully consideration to
the issue of credits for voluntary liberalization; 5) On implementation periods and staging, such
elements were a core part of special and differential treatment and, in principle, a five-year period asthe maximum was suggested taking into account the precedent set by the UR;  5) On non-tariff
barriers, his delegation appreciated New Zealand's paper.  He added that considering the various and
diverse nature of NTBs and the experience in the UR, his delegation preferred a measure-specific
approach rather than a comprehensive or rule-making approach. In that context, Japan thought that it
was necessary to consider not only border measures on the importing side, but also trade distorting
measures on the exporting side, such as export duties and export restrictions; 6) special and
differential treatment was a key issue for a successful conclusion of the negotiations and that specialattention had to be paid in formulating the modality for special and differential treatment.
Implementation periods and staging were a core part of special and differential treatment. He recalled
that the capacity-building seminar hosted by the Secretariat in May 2002 was useful, and it might be a
good idea to hold a new seminar with a view to explaining the positive effect of improved market
access; 7) it was necessary to pay due attention to the protection of the environment and thepromotion of sustainable development, as provided in paragraph 6 of the Doha Declaration. From this
viewpoint, Japan, in collaboration with other Members, was prepared to elaborate a list of
environmental goods in accordance with paragraph 31 of the Doha Declaration, taking into account
the OECD study.
1.3 The representative of Korea stated that at the previous meeting of this Negotiating Group,
Korea had introduced its paper and shared its prelim inary views on some of the key issues involving
the market access negotiations on non-agricultural products. He wished to further elaborate Korea's
views on the negotiations.  On the objectives of the negotiations,  he shared the view of many other
delegations that given the open and comprehensive nature of the Doha Mandate, the level of ambitionshould be higher than the achievements of the UR. In order to conduct negotiations effectively, the
terms "tariff peaks", "high tariffs", and "tariff escalation" had to be clearly defined early in the
process. For example, he wondered whether the Negotiating Group was going to establish different
criteria for determining tariff peaks for different Members depending on their level of development.TN/MA/M/3
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Or what rate would be considered a high tariff and what reduction should Members aim for in these
negotiations? How should tariff escalation be defi ned and what methodology would be employed to
address this issue in the negotiations? These questions  had to be answered at the initial stage in order
to achieve negotiating objectives within the limited time-frame . In connection with the negotiating
objectives, his delegation was concerned about tariff peaks and high tariffs which were levied by wayof non ad valorem  tariffs. Unlike ad valorem  tariffs, non ad valorem  tariffs lacked transparency,
complicated the tariff structure and had the potential of working as disguised tariff peaks or high
tariffs, thereby acting as serious barriers to ma rket access. According to a recent WTO study entitled
"Market Access: Unfinished Business" , the share of non ad valorem  tariff lines was considerably
high, amounting to 3-4% for some major developed countries and 20-30% for some developing
countries. Korea was not concerned about their proportion per se, but about the actual effects that
such tariffs might have on trade. Mindful of these concerns, his delegation was now working on apaper on how to address this issue during the negotiations. He noted that Singapore in its paper had
also raised transparency issues in relation to non ad valorem  tariffs. As a way of reducing tariff peaks
and tariff escalation, he noted that Norway in its paper had introduced the idea of establishing a
"ceiling" for all tariffs. His delegation found it a very useful suggestion as well as the introduction of a
"floor" concept in order to eliminate nuisance tari ffs. He noted that both suggestions deserved due
consideration. However, the negative impact of those proposals on government revenue must be taken
into account, particularly for developing country Members. He noted that Japan had also made several
suggestions to deal with these issues. In general terms, he shared Japan's concerns. However, in
regard to Japan's proposal on zero-for-zero and ha rmonisation approaches, he pointed out that specific
products for which these approaches were applicable should be carefully chosen with a view toensuring that the fruits of reduction commitments would benefit the entire WTO Membership. On
modalities, Korea was in favor of a formula approach, supplemented by a limited use of the request
and offer approach. This did not mean that Korea would rule out the possibility of employing other
options through the so-called "cocktail" approach. However, in view of the complexity of negotiations
involving a large number of participants and the time constraints, the modalities should be limited inscope. Otherwise, it would be almost impossible to complete the negotiations within the timeframe
and achieve the negotiating objectives. As to the basis for tariff negotiations, Korea was of the view
that the base rate  should be the bound rates agreed during the UR negotiations and, for unbound tariff
lines, the applied rates at the time of launching the Doha Development Agenda (DDA). Negotiations
based on the applied rates should contribute more to enhancing "effective market access", but given
the tariff structure of developing countries, such an approach did not appear to be realistic.  However,
Korea believed that the difference between bound and applied rates should be narrowed with a viewto making meaningful improvements in market access. In the same vein, the reference year should be
a year which was closer to the start of negotiations. On autonomous liberalization, this issue boiled
down to whether or not credit should be given for tariff reductions and unilateral bindings undertaken
by Members since the UR negotiations. If this was agreed to then it would have a de facto effect of
using the year 1995 as the base year for certain products or products groups on a selective basis.While understanding the need to acknowledge Members' contributions to international trade
liberalisation, Korea believed that more careful studies were required to address these and other
implications. On environmental goods, Korea supported the reduction of trade barriers on such goods.
From a short term perspective, it might appear that developed countries would benefit more from this
exercise than developing countries. However, in the long run, developing countries would also reap
great benefits because it would reduce the cost of environmental degradation and foster the
development of their own environmental industries.  However, more careful studies on how to define
"environmental goods" were required, including the question of whether to extend the scope to
"environment-friendly goods". In this connection, he noted that many delegations, including some
developed countries, had expressed their concerns about definitional elements introduced in the ECpaper. On NTBs, his delegation had found the paper submitted by New Zealand a very useful guide
for future discussions. Korea fully agreed with New Zealand that the work of this Negotiating Group
should be done in consideration of its relationship with other areas of the Doha Mandate or with the
regular WTO work programme.  Korea believed that future discussions on this subject should beTN/MA/M/3
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focussed on classification issues identified by New Zealand. In this regard, particular attention had to
be paid to the need of avoiding the risk of confli ct or duplication of work in other negotiating bodies.
At this time, Korea only wished to reiterate the urgency of defining and listing the different categories
of non-tariff barriers. Market access negotiations on non-agricultural products should proceed on a
two track basis with tariffs on one side and NTBs on the other.  A stalemate or lack of progress in thenegotiations on NTBs should not derail or delay the entire negotiating process. In an effort to
contribute to moving the process forward, Korea intended to do some thinking on how to proceed
with the identification of NTBs in this Negotiating Group. Finally, on special and differential
treatment, he made reference to the Doha mandate which stated that the reduction or elimination of
tariffs and NTBs "shall be aimed in particular, on products of export interest to developing countries."
Special needs as well as interests of developing and the LDCs had to be taken into account in the
negotiations through less than full reciprocity in reduction commitments. These were the basicprinciples guiding the negotiations. But given the growing share of South-South trade and its impact
on world trade, it was equally important for developing countries to contribute as much as possible
within their respective capacity. A formula had to be designed by which developing countries could
participate more actively in the reduction commitm ents, while maintaining the overarching principles
and goals of development dimension.
1.4 The representative of Norway, in introducing Norway's paper (TN/MA/W/7), stated that to
ensure comprehensive product coverage, the modali ties would need to include tariff reductions
across-the-board for all non-agricultural products without excluding any sector or group of products
from the initial offer.  This would be ensured through a formula approach which worked across alltariff lines. The Secretariat paper (TN/MA/S/3) was a useful study of different formulas that had been
proposed or applied in previous rounds. While the paper had clearly illustrated the flexibility that a
formula approach allowed through the number of coefficients and other mathematical permutations,
the basic value of a formula was the very fact that it automatically ensured  a comprehensive product
coverage.  To fulfil the ambitious mandate, such a formula had to include a high minimum rate ofreduction so as to ensure  that all tariffs were substantially reduced. On tariff peaks and tariff
escalation, the Doha Mandate specifically gave prio rity to reducing or eliminating tariff peaks, high
tariffs, and tariff escalation. To achieve these goals, the modalities should set a maximum tariff rate
and generally reduce high tariffs by more than lower ones. This meant that the formula needed to
include an element of tariff harmonisation, and be supplemented by a "ceiling" for all tariffs. On tariff
elimination, the modalities should include an elem ent that secured tariff elimination on an across-
the-board basis as a supplement to the formula.  This was a new element that had not been included inthe modalities developed in previous rounds and therefore it needed a thorough discussion.
Supplementary sectoral agreements based on a zero-for-zero approach might be envisaged where a
critical mass could be established. To eliminate "nuisance" tariffs, the formula should be
supplemented with a "floor" where the calculations that resulted in all rates below the "floor" should
be set at zero.  The modalities should include a commitment to bind all tariff lines for non-agriculturalproducts at the rate resulting from the negotiations.  Where, in exceptional cases no tariff reduction
had taken place, the binding should be at a mini mum the present applied rate.  On special and
differential treatment, the modalities had to include specific provisions to ensure the achievement of
the ambitious special and differential goals incorporated in the Doha Mandate. Such provisions could
include: (a) substantial reductions or possible elimination of tariffs on products of interest todeveloping countries and a minimum tariff elimination for products of importance to LDCs; (b) non
reciprocal tariff concessions from LDCs; (c) tariff reductions in line with the level of development of
other developing countries, particularly through the use of differentiated coefficients in the different
elements of the formula and the supplementary provisions, such as minimum reductions, "ceiling" and
"floor" for tariff rates and rate of harmonisation; (d) counting of binding of present applied rates asconcessions from poorer developing countries. On environmental goods, the modalities needed to
include an agreed definition of environmental goods based on a set of objectives and recognisable
product criteria.  Korea had requested some studies in order for the Group to carry out this work, but
work done by APEC and the OECD should be used in  this respect. While this Negotiating Group wasTN/MA/M/3
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the appropriate forum for negotiations, the development of such criteria would most efficiently be
done by the Committee of Trade and Environment (CTE) in Special Session.  Modalities for
environmental goods should be based on the zero-for-zero approach. In short , negotiations should be
carried out on the basis of a composite set of modalities, but with a traditional formula approach
cutting across the whole range of non-agricultural products as its basic element. The formula shouldinclude a high minimum level of tariff reduction, an element of harmonisation so as to reduce high
tariffs more than low ones and be supplemented by a "ceiling" for all tariff rates as well as a floor in
order to eliminate "nuisance" tariffs. In addition, the elimination of tariffs on environmental goods as
well as supplementary sector agreements where a critical mass could be established based on a
zero-for-zero approach should be envisaged. Finally, the modalities should also include a commitment
to bind all tariff lines as well as a specific commitment to facilitate special and differential treatment.
1.5 The representative of Singapore stated that paragraph 16 of the Doha Declaration had
stipulated an ambitious mandate for the negotiations in this Group.  Singapore's paper sought to
consider the various aspects and issues concerning these negotiations. Her delegation viewed the
objective of this Negotiating Group as aiming to achieve a comprehensive but fair and balanced
package, comprising of products of interest to all Members, but in particular, products of export
interest to developing countries. On tariffs her delegation suggested the following:  (a) expanding the
scope of bindings and having meaningful binding rates that would result in real greater market access;
(b) eliminating nuisance tariffs, and reducing, if not  eliminating tariff peaks. The negotiations would
need to define what constituted nuisance tariffs and tariff peaks; (c) the definition of tariff escalation
and the methodology to address this issue would need to be addressed in the Negotiating Group;  (c)enhancing transparency and comparability of tariff profiles at the outset of negotiations through for
example converting non ad valorem tariffs to ad valorem  tariffs, ceasing the use complex or mixed
tariffs, simplifying tariff structures by harmonising similar products within similar HS
headings/classifications; (d) on modalities, her delegation proposed the use of a "cocktail" approach
since it was particularly effective in the UR in terms of achieving broad-based tariff reductions. Itwould provide greater harmonisation in tariff rates and significant tariff cuts/elimination in areas of
common interests as well as flexibility for countries; (e) Singapore believed that the base rates for the
negotiations should be the applied rates and a year of reference could be the one closer to the start of
the negotiations; (f) various staging periods to take into account developing country needs. The
Singapore delegation hoped to develop their ideas on modalities as the negotiations progressed. NTBs
was a potentially limitless area and Singapore agreed with New Zealand that a pragmatic way forward
would be to avoid duplication of work.   As a start, Singapore was proposing that potential NTBswhich Members were concerned with should be identified. Such  measures should be categorised into
issue-specific (e.g. rules, TBT, SPS) or sector-specific (ITA, chemicals, pharmaceuticals).  In the case
of the latter group, Singapore was of the view that it could be discussed in this Negotiating Group.
On environmental goods her delegation was proposing to draw on the work done by APEC and
OECD.  However, it did not see the need, as proposed by one Member, to pay "particular attention togoods whose sustainable materials or production characteristics meant that increased trade in such
products would also be environmentally supportive". In conclusion, Singapore reiterated the
importance attached to an ambitious and comprehensive outcome in the market access negotiations. It
was an area of negotiations where  both developed and developing countries could reap real
dividends.
1.6 The representative of Canada stated that at the last meeting there seemed to be an underlying
level of debate as to whether all Members should participate in and contribute to this part of the Doha
Development Agenda (DDA). This question was addressed, unequivocally, by Ministers in
November 2001 when they agreed to undertake a broad and balanced work programme founded onthree major areas: Enhanced market access, balanced rules, and well-targeted sustainable-financed
technical assistance and capacity-building. He understood the point made by some Members that they
needed approaches which took into account their level of development and allowed for phase-in
periods.  However, this was amply addressed both in the Declaration as a whole and more specificallyTN/MA/M/3
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in paragraph 16.  In this regard, Canada would be ready to accommodate specific needs.  However, all
Members should participate in liberalisation in the Non-Agricultural Market Access Negotiations for
reasons of the collective and individual best interest, in order to benefit from the increased
opportunities and welfare gains that were generated through participation in a liberalised multilateral
trading system. Members at all levels of development should consider the potential for an expansionof economic gains which could result from widespread improvements in access to markets,
particularly in recognition of the increasing trade taking place among developing countries. He added
that meaningful participation by developing countries would be an indispensable ingredient in any
successful tariff negotiation.  Development for all Members depended on investment, which of course
could be both domestic and internationally-based. The extent to which international investment could
be attracted to any country depended significantly on its trade regime, including the degree to which it
provided transparency, predictability, efficiency and effective access for imports. There were anumber of conspicuous examples of success in this room where Members whose trade policies had
followed those principles had seen their economies prosper. On the other hand, protective approaches
aimed at creating relatively closed economies by using aggressive forms of import substitution had
been relatively less successful.  The efforts of this Negotiating Group should be directed to secure a
share in the growth of world trade by both mainta ining and advancing further the process of reform
and liberalisation of trade policies that contributed to this needed growth. Canada had a number of
major objectives for the tariff negotiations including reducing and binding applied tariff levels which
were not bound, reducing high bound rates and re-binding them at lower rates and expanding the
scope of duty free trade.  In addition, Canada also favoured the elimination of nuisance tariffs and
maximising the use of ad valorem  rates. These goals were built on the challenge that Ministers had set
in paragraph 16 of the Declaration "to reduce, or as appropriate, eliminate tariffs". The Negotiating
Group would need to address the gaps, some quite substantial, that existed between many bound and
applied rates in the case of some Members. In these cases, even large percentage cuts in bound rates
would, for many items, result in little or no cuts in applied rates. In that context,  Canada would not
agree to bind valuable real cuts in Canada's applied rates in return for purely pro forma liberalisation,i.e tariffs cuts on high bound rates which would not result in improved marked access. On modalities,
in order to best meet the interests of all Members, a combination of approaches would be needed,
including sectoral zero-for-zero agreements; formula-based approaches and the request/offer process.
With respect to the existing sectoral agreements ,  expanded membership would have positive spin-off
benefits for all, such as in the case of the Chemical Tariff Harmonization Agreement. As for possible
new zero-for-zero sectoral agreements, Canada would support covering sectors such as fish products,
forest products, fertilizers, energy-related equipment and non-ferrous metals.  Other additional sectorsmight also be of interest and Canada would be considering with an open mind the proposals made by
others. On environmental goods, some delegations had questioned whether liberalization in this area
should go beyond the average which might be ultimately achieved in these negotiations. Other
delegations had appeared to question the priority to be given to this sector.  Canada found these views
difficult to understand given that Ministers at Doha had specifically singled out this sector for specialattention. Canada would support a zero-for-zero agreement in this sector. As for product coverage,
Canada could recommend the work done by APEC, which in turn had taken into account work done
by other organizations including the  OECD. The product coverage, a list of HS tariff items, was
based mainly on the principle of "predominant end-use", as opposed to using concepts such as
"sustainable materials" or "production characteristics" which were difficult to operationalize andadminister. However, this was not to say that Ca nada considered the APEC list closed, since his
delegation was open to adding products. On formula-based approaches to the negotiations,  Canada
was not ready to be specific about the most appropriate equation or equations that might be used. This
was a subject for further analysis, reflection and discussion.  Canada was, however, in favour of
having a formula-based approach which was sensitive to the varying levels of development and to theexisting tariff structures of various Members. Some had suggested that it would be wrong to
differentiate amongst participants according to such elements. On the other hand, it would be unfair to
use a "one-size-fits-all" approach to a tariff cutting formula. He added that it would be far more
defensible to use a formula-based approach which would take account of the individual coreTN/MA/M/3
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differences among Members. In addition to credits to be gained for liberalisation during these
negotiations, Canada supported the concept of giving credit for prior autonomous liberalisation, and
specified that credit was for liberalization measures which were bound or would be bound. On the
Integrated Data Base (IDB), he joined those delegations that had already spoken on the importance of
completing this data base. He encouraged Members to facilitate the Secretariat's efforts to finish this
work, as it would be to the benefit to all. He added that the question of a base year for the tariff
negotiations would depend to a large degree on the state of submissions to the IDB. In principle he
suggested using the most recent year for which data were available for the vast majority of Members.
On the phase-in period for the results of the tariff negotiations, he considered that in general a
five-year time-frame might be the most reasonable.  This should be combined with the use of linear
cuts, so as to provide greater simplicity and predictability. Members would be free to make a case for
longer transition periods. He added that in ca ses where zero-for-zero or tariff harmonization
agreements were reached, implementation periods could be set on a case-by-case basis, according to
the situation in each sector and could also include some country-specific flexibility.
1.7 The representative of Brazil stated that on the question of less than full reciprocity, he
recalled that paragraph 16 of the Doha Ministerial Declaration clearly stated that "the negotiations
shall take fully into account the special needs and interests of developing and least-developed country
participants, including through less than full reciprocity in reduction commitments …".  The current
round of negotiations were dubbed "The Doha Development Agenda", and to give concrete
expression to such a concept,  to which his delegatio n attached importance, the aspect of less than full
reciprocity had to be a central element of the work, in particular in the drafting of appropriatenegotiating modalities. Several opinions had been expressed to the effect that the current tariff
structures of Members had led to a situation where the greatest obstacle to the expansion of market
access for developing countries lay in the tariffs of other developing countries, and therefore the
Negotiating Group should adopt some type of South-South emphasis to its work. He did not want to
go into that discussion; the Mandate stressed a development focus through less than full reciprocityand the provisions of Article XXVIII bis. Attempts to reinterpret the elements of the Mandate would
not help move the negotiations forward. The attainment of "less than full reciprocity" would face an
obstacle in the fact that tariffs in developed Members were, on average, quite low, reducing the
possibilities for the granting of significant concessions. This would be aggravated by the fact that the
reduction in very low tariffs or "nuisance tariffs" would not constitute a concession and such a
reduction would not provide any real enhanced market access opportunities. It was important that the
modalities to be agreed upon factored in this aspect, to avoid the semblance of concessions strictlythrough the reduction or elimination of nuisance tariffs. Non-tariff barriers were in many ways the
principal obstacle to the expansion of world trade today. However, tackling such barriers was
extremely difficult due to the diffuse and multi-faceted nature of such measures and to the fact that
many of them were already disciplined by specific WTO Agreements. His initial conclusions were
that it would be extremely difficult to proceed without initially embarking on an exercise ofidentifying the measures to be dealt with. A system of notification and counter-notification could be
the most appropriate way to start work in this area.  On environmental goods, the main problem
derived from the absence of a universally accepted definition of an environmental good. In the
submissions made to this Group, his delegation could clearly perceive conflicting views of what might
be comprised within this definition. This was an issue on which the Group would have to reflect onfurther and perhaps seek some expertise. On base rates, Brazil considered that there could be no
alternative to using bound tariffs as the base rate for the negotiations. The bound tariffs represented
the legal commitments of Members within the WT O. To propose otherwise was to undermine the
development dimension of the current round by imposing a unilateral reduction of tariffs, at the outset
of the implementation period, essentially upon developing countries. The use of bound tariffs wouldcontribute to the transparency and predictability of the negotiations, as these rates were reflected in
each Member's Schedule. While information on applied rates was not always immediately available.
However, Brazil was also ready to examine, in a sp irit of flexibility, possible means of addressing
situations of unbound rates. In order to assist the negotiations, Brazil encouraged every effort toTN/MA/M/3
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update contributions to the IDB. It would be also important if ad valorem  equivalents of specific and
mixed duties were provided, along with the methodology used in order to further enhance the
transparency of the negotiating exercise. On modalities, the elaboration of negotiating modalities was
the Group's first target. He considered it a complex task, particularly in light of the many factors that
had to be taken into account.  In this connection, he thanked the Secretariat for the interesting paperon this subject, as it would contribute to Brazil's analysis of the issue, both domestically and in the
Group.  Brazil had not reached any firm conclusions in this regard, but would continue to evaluate all
possibilities with equal interest. On the one hand, it seemed that a request and offer approach might
provide the most flexible means of achieving the multiple desired objectives, by permitting a focus on
tariff peaks and tariff escalation while preserving the concept of less than full reciprocity. On the other
hand, a formula approach might provide an overall degree of "user-friendliness" that would seem
attractive. The latter might have to be complemented by other modalities, such as request and offerand possibly harmonization and zero-for-zero approaches, in order to effectively tackle tariff peaks
and tariff escalation. Finally, Mercosur countries were considering the issue of modalities in detail
with a view to possibly circulating a specific proposal in the future.
1.8 The representative of Chile stated that the written contributions by Norway, Korea and Japan
had set a high level of ambition for these negotiations.  It would have been good to have had such
levels of ambition also expressed by those delegations on issues of market access in another very
important sector.  Norway had said that there should be no exclusion in the application of the
modality to be chosen in the course of the negotiations. Japan and Korea had not referred to that
concept and he asked whether those countries also envisaged such an approach. He asked the questionbecause it would help the Group to better define what type of modality it was looking for and the
different approaches adopted by each delegation.  The section of Norway's paper on tariff elimination
was interesting because it referred to the reality of many Members, including Chile, that were
involved in a far-reaching exercise of tariff elimin ation in the framework of free-trade agreements.
There was a sort of hidden force that was slowly emerging which was bringing Members closer to afairly large scale elimination of tariffs.  This was a factor which had been flagged by Norway and
which had to be kept in mind when modalities were defined and the level of ambition set. If the logic
as outlined by Norway were to be applied to this negotiation, the question could be asked whether all
Members should not aim, in given time-frames to be established, to achieve duty free regimes.  This
was a very important point because what would be done in the WTO context would be similar to what
some other Members had already done. Therefore, those Members that had not participated in free
trade agreements would have the problem of be ing discriminated against or would suffer the
consequences of trade deviation. Therefore, he welcomed the contribution made by Norway which
would help  put things in the right perspective for this negotiation. On staging of  tariff cuts , he noted
that developed-country Members seemed to suggest a relatively short period of time. He wondered
whether there was a ratio between a high level of ambition and the period of implementation of tariff
cuts? In other words, if there was a longer implementation period could the level of ambition ofreductions or elimination of tariffs be raised? In principle, his delegation preferred to have high levels
of ambition even if they were accompanied by longer implementation periods which, in fact, would
facilitate the elimination or reduction of tariffs in the more sensitive sectors. He agreed that a single
formula would seem to be the most efficient way to ensure substantial liberalisation and that
consideration should be given to the implementation of a coefficient which would permit deeper cuts.If a formula with a coefficient was applied it could have an impact on both tariff peaks and tariff
escalation, and therefore, a well-constructed formula might help avoid discussions on a definition of a
tariff peak or tariff escalation since such a formula would solve such problems in a relatively short
period of time and in an effective manner.  He stated that some Members had proposed that
negotiations could be complemented by sectoral exercises using the zero-for-zero approach. He addedthat this approach could be a useful complement to the negotiations but it contained certain risks. All
countries had sensitive sectors and, the general trend was to reduce tariffs as less as possible in the
more sensitive sectors.  Reductions were more likely to take place in less sensitive sectors.  So, if
Members adopting the zero-for-zero approach only liberalised the non-sensitive sectors then the resultTN/MA/M/3
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would be that every Member would keep the more sensitive sectors protected, such as footwear, or
textiles depending on the country. Negotiations implied a certain internal balance. Therefore, if the
zero-for-zero approach was applied and reductions were only made in the less sensitive sectors, the
more sensitive sectors would become increasingly difficult to liberalise, since countries would not be
able to make the internal trade-offs necessary to get the support of the private sector to liberalise andto make the necessary adjustments in the less competitive sectors.  A formula like zero-for-zero
should permit the reduction of tariffs, tariff peaks and tariff escalation. Another important concept that
had stemmed from the submissions, particularly Norway's, was that of having 100 per cent product
coverage.  This was an important approach since it would give security to economic transactions and
also would generate a good climate for attracting investment.  On environmental goods, there were
diverging views as to what these products were and how they should be addressed. His delegation
believed that a pragmatic approach would be desirable, and instead of embarking on a definitionaldiscussion, it would be preferable to go into the negotiations with a formula or several good formulas
which would allow for  substantial reductions or elimination of tariffs on all the products, within a
period of time to be agreed. In this way, all en vironmental goods would come within the purview of
this substantial liberalizing approach, and thus the Group could avoid a discussion on the definition of
an environmental good.  At the end of the negotiation, each Member could evaluate the situation ofthe goods it considers to be in the category of "environmental goods" and obtain through other
mechanisms, like request and offer or zero-for-zero, deeper cuts.  In short, discussions on definitions
could be avoided if a formula was applied without any exclusions.  His delegation was working on its
own proposal, and was hoping to submit one at the appropriate stage.  A good special and differential
treatment approach was extremely important in order to ensure that developing countries could, in aflexible manner, undertake commitments which were compatible with their fiscal needs, industrial
policies and development goals.  In this regard, the use of one formula would not be suitable for the
particular needs of all countries since there were different situations. Therefore, the Group had to be
creative to see how special and differential treatment could be applied as was said by Brazil, in order
to carry out the negotiations on the basis of "less than full reciprocity".   How special and differentialtreatment would be defined in the modalities was possibly one of the elements that could contribute to
the interest of developing countries, for example, by the use of a formula with a coefficient which
made it possible to eliminate tariff peaks and tariff escalation. Experience had shown in past
negotiations that if the main emphasis was laid on mechanisms like request and offer, then the
negotiations were limited to Members that had diversified economies and very large markets. Such a
process excluded smaller developing countries with small and less diversified economies.
1.9 The representative of Hong Kong, China  stated that this was one area of the negotiations to
which Hong Kong, China accorded a high priority. The Doha Declaration gave an ambitious mandate
for the negotiations on non-agricultural market access. It set out a clear aim to reduce or as
appropriate eliminate tariffs and NTBs. This Group had a daunting task to work out the modalities of
the negotiations and with diligence and determination it should finish the work by the target date.  On
modalities, the  Doha mandate did not set a numerical target for overall tariff reductions. He did not
wish to repeat his comments at the last meetin g about comparative advantage or an increasingly
globalised economy to support his delegation's call for substantial tariff reductions. Without a magic
number, the Group should be guided by the need for a credible and commercially meaningful target.
The Group should aim for ambitious results at a level not less than those achieved during the UR.  Onthe other hand, the Doha Declaration outlined several key parameters for the forthcoming tariff
negotiations which included tariff peaks, high tariffs and tariff escalation, comprehensive product
coverage without a priori  exclusions and special and differential treatment.  Hong Kong, China
preferred a formula approach because it was simple to apply and helped Members address many
issues at the same time. A carefully designed formula could bring down or eliminate tariff peaks andhigh tariffs and through flattening the tariff structure address tariff escalation as well.  He drew
participants' attention to the fact that the scenarios set out in the Secretariat Note on formula
approaches were just examples to illustrate the effect of different modalities or formulas. There were
unlimited variations which were possible and it should be possible to find a formula that wouldTN/MA/M/3
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achieve the Group's targets.  A formula approach could also take into account special and differential
treatment.  One possible method was to choose a different set of coefficients in the formula for
developing Members. To achieve an effective outcome, the formula should ensure a substantial
minimum rate of tariff reduction and should introduce deeper cuts for higher tariffs.  In addition to the
formula, other approaches might be adopted to help address the interests or sensitivities of individualMembers. His delegation had an open mind on, for example, zero-for-zero initiatives, harmonisation
proposals, an expanded Information Technology Agreement or an initiative on environmental goods.
Hong Kong, China supported the elimination of low tariffs.  Low tariffs were a costly administrative
burden to the business sector as well as to customs and offset the revenue generated. His delegation
also shared Norway's view that it was time for tariff elimination on an m.f.n. basis, especially by
developed economies. His delegation was thinking about an idea for developed economies to
eliminate all remaining tariffs by a certain date and for developing economies to adhere to an ongoingprogramme of tariff reductions.  On other elemen ts of modalities, his delegation supported the
increase of the scope of bindings and the reduction of the gap between bound and applied rates.  His
delegation also proposed the use of bound rates and had no problem with either 2000 or 2001 as the
reference year. His delegation also noted with interest the ideas expressed on credit for autonomous
liberalisation and the "targeted tariff rate approach" proposed by Japan. All these ideas requiredcareful study and discussion in the Group.
1.10 The representative of Colombia wished to refer to some common points which were starting
to emerge from the discussions. These points related to the base year, the tariff nomenclature,
implementation periods, staging, general formula or sectoral zero-for-zero and/or harmonisation
approach, commitments on unbound tariffs, treatment of environmental goods, tariff peaks, tariff
escalation and special and differential treatment. Fo r his delegation it was clear that these negotiations
were to be carried out on the basis of bound tariffs.  Therefore, there was a need for the Group to
commit to reaching a 100 per cent product coverage and to making the greatest possible effort to
having a list of concessions in a common nomenclature, which should at least be the 1996 HSnomenclature,  and to updating all the trade figures and other variables of the IDB up to 2001. On
modalities, it was opportune to work on a general formula in order to go forward with tariff
reductions.  Colombia agreed with the comments made by the representative from Chile who had said
that the request and offer approach would not be advisable because it would exclude developing
countries that did not have a diversified industrial base. He considered appropriate the idea expressed
by Norway and repeated by Singapore on complementing the formula with a "floor", to eliminate
nuisance tariffs since they were an obstacle to trade rather than a source of revenue to countries. This
would be a trade facilitation measure that would have efficient economic consequences for revenue
and business purposes.  He asked Japan to further illustrate its proposal of the targeted tariff rate
approach, particularly the method of calculation and the analysis of the level of development and
competitiveness of each developing country Member. It was very important to know the scope and
implications of the application of a formula whose objective was to reduce tariffs to an indicativelevel, which corresponded to different levels of development. Likewise, his delegation was concerned
about Japan’s statement in its paper that "negotiations should proceed, giving due consideration to the
situation surrounding individual products".  He w ondered how this phrase should be interpreted in
view of the suggestion to employ a general formula and in view of the mandate from Ministers not to
exclude a priori  any product from the negotiations. For Colombia it was clear that no product should
be excluded from these negotiations. The suggestions for a zero-for-zero and harmonization approach
were also valuable, in particular in the perspective of advancing towards the facilitation of trade.
However, as a developing country with serious fiscal deficiencies, Colombia would have great
difficulty in committing to a zero-for-zero approac h.  However, Colombia was interested in the idea
of harmonizing tariffs since that would contribute to diminishing tariff dispersion which characterisedthe tariff structures of both developed and developing countries. His delegation was  ready to discuss
the aspect related to the difference between applied and bound rates, but could not accept beforehand
a commitment to eliminate this gap.  However, it was worth noting that as Members undertook to
reduce bound tariffs and to eliminate  tariff peaks and tariff escalation the most likely result would beTN/MA/M/3
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to also substantially reduce the gap between bound and applied duties. The arguments made on the
periods of implementation and staging were interes ting as well as the need to operationalize this
treatment in order to guarantee its effectiveness.  However, none of the written contributions had
addressed one aspect contained in the mandate which related to non reciprocity in the reduction or the
elimination of tariffs and NTBs by developing countries. On environmental goods, his delegationbelieved that it was necessary to agree on a definition before a discussion was held on the treatment of
these goods. In this connection, it was imperative that the CTE in Special Session agreed to a list of
non-agricultural environmental goods. He thanked New Zealand for its document on non-tariff
barriers and pointed out that these measures had to be tackled if real improvements in market access
were to be seen. Colombia shared the views presented by New Zealand regarding the overlapping of
functions of various Committees and other Negotiating Groups and supported the classification that
New Zealand had proposed. Finally, his delegation attached importance to Chile’s statement on thetrade-off between the level of ambition and the implementation period for tariff reductions and the
elimination of NTBs. The Group had to look for the highest level of ambition regardless of whether
more time was required for implementation.
1.11 The representative of Venezuela stated that these negotiations on non-agricultural products
were very important to Venezuela. There was still room for improvement in this area to allow for a
fair expansion of international trade, as had been said by Singapore.  This question of fairness and
equity of the system depended on the achievement of a liberalisation which resulted in economic
development.  In other words, one had to recogniz e the asymmetries and existing inequalities in the
capacity of developing countries and LDCs to assume new commitments though special anddifferential treatment that went beyond longer pe riods for implementation, and through the creation of
capacity in order for such Members to participate in these negotiations.   For Venezuela, the bound
rate should be taken as a basis for the negotiations since these levels reflected the obligation of
Members and were contained in the schedule of concessions.  Any proposal which suggested the use
of another level as the basis for the negotiations would be unacceptable.  He sought clarification fromJapan concerning its proposal on "Targeted Tariff Rate Approach". Venezuela would have
reservations if that proposal implied a categorisation of developing countries. This reservation was
based on the fact that such a proposal might result in the fragmentation of special and differential
treatment and complicate the effective participation of developing countries in the negotiations.
Special and differential treatment had to be extended to all aspects of modalities, for example the
formula, and could not be limited to implementation and staging. In this connection, he drew attention
to the Doha mandate which stated that these negotiations "shall fully take into account the specialneeds and interests of developing and least-developed country participants including through less than
full reciprocity in reduction commitments." Venezuel a agreed with the need to have a complete and
updated IDB, and the proposal for the Secretariat to use information in other data bases if authorized
by  governments was acceptable to Venezuela. He thanked the US delegation for its offer of technical
assistance in this regard. Venezuela attached importance to the discussion on modalities for thereduction of NTBs as it was a very important component to improving market access. However, he
noted that there were difficulties in assessing the scope of these negotiations and reaching a definition
or classification of  NTBs. As concerned the dr awing up of an inventory of NTBs which would be
used as a basis for the negotiations, Venezuela thought that this inventory might be elaborated on the
basis of existing notifications and through the work of the regular Committees such as the TBTCommittee.  On environmental goods, the proposal to define such goods on the basis of the
production process might have systemic implications since the process would have to be evaluated in
function of its implications on different agreements.
1.12 The representative of United States stated that at the August 2002 meeting her delegation had
noted several key concepts in the discussion that were fundamental to the overall conduct of these
negotiations.  First, that the Group demonstrate ambition; second, that it demonstrate flexibility as it
remained faithful to the important concept of recipr ocity and, finally, that it provide meaningful new
market access that would help spur all economies to new growth and vibrancy.  As noted at the lastTN/MA/M/3
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meeting,  the United States Congress had recently passed the Trade Promotion Authority (TPA) that
gave the President broad negotiating parameters. With this mandate, her delegation expected to
develop an ambitious modalities proposal in non-agricultural market access, as it had already had
done in agriculture. It was considering a wide range and mix of options at this time and hoped to be in
a position to table a proposal in November 2002.  The US Congress' action demonstrated the U.S.willingness to be an active and aggressive player in the Non-Agricultural Market Access negotiations
and to work actively with others to produce further trade liberalization by all WTO Members. But her
delegation also intended to recognize the need for flexibility among other WTO Members. Looking at
the negotiating history, the expansion of the WTO and the current situation in the global trading
system, it would appear that now was the time for al l Members to act boldly.  Non-agricultural tariffs
had been subject to seven rounds of negotiations since the creation of the GATT in 1947, yet
Members still faced a significant amount of unfinished business. For example, as the Secretariat'stariff paper revealed, there were still wide dispersions between many Members' bound and applied
rates, and the scope of bindings needed to be expanded to cover all products. The WTO Secretariat
had estimated that 55 percent of global trade was conducted on a duty free basis but only 6 percent of
trade was bound duty free within the WTO. Her delegation did not believe that modest proposals and
negotiating approaches would serve anyone's interest.  In a recent study at the University of Michigan,which attempted to measure the dollar value of trade liberalization in a new multilateral round, it was
estimated that a 33 percent cut in tariffs on industrial products would result in a $210 billion annual
increase in world economic welfare. Combined with a 33 percent cut in agricultural tariffs and
elimination of barriers to trade in services, the study estimated an annual welfare gain of $610 billion.
The study also suggested that complete elimination of tariffs on agricultural and industrial productsand barriers to trade in services would increase world economic welfare annually by $1.9 trillion
dollars. Through regional agreements, many WTO Members had committed to eliminate their tariffs.
APEC Members would have done so by 2010 and 2020.  Members of the Free Trade Area for the
Americas expected to eliminate most duties by 2015. Such agreements laid the foundation for a
multilateral effort to significantly improve market access for non-agricultural products and the Groupshould commit to build on them.  Even if the Group ultimately was not able to fully replicate those
achievements in this multilateral negotiation, those initiatives should serve as an inspiration which
would give participants confidence that significant liberalization was both desirable and possible.  In
this regard, she was encouraged to hear other delegations expressing a high level of ambition in this
negotiation.  Her delegation was also pleased to hear the point made by several developing country
Members that they intended to fully participate in these negotiations, with the objective of improving
market access in both developed and developing country markets. Her delegation was not suggesting,as some Members had indicated, that this negotiation was solely about South-South trade. However,
her delegation believed that Members would have failed the trading system, and failed to support the
Doha development goals if significant South-South trade liberalization was not one key outcome of
this negotiation. The path to development was not solely dependent on access to developed country
markets. Through GSP and other preference prog rams, most developed country markets had made
significant efforts to expand duty free access for developing country products. In this connection, in
addition to "TPA", the United States had also approved legislation that renewed and expanded the
preferential benefits to countries eligible for the Andean Trade Preferences Act and had also
substantially expanded preferential treatment for sub-Saharan African countries and Caribbean and
Central American countries under the "AGOA" and "CBI" programs. This included expansion oftextile benefits. Despite the contribution that these tariff preferences provided to supporting
development, it was important that Members recogniz ed the evidence that the real economic gains for
developing countries existed among themselves. Recent World Bank and other academic studies,
many of which were listed in the Secretariat's bibliography, had made the important point that over
seventy percent of tariff payments were made from developing countries to each other.  Members hadto recognize that future developing country economic gains were highly dependent upon internal
economic reforms beyond tariff liberalization. Studies had suggested that the largest gains from trade
liberalization for developing countries would come from the removal of their own barriers to trade.
Furthermore, tariff liberalization had to be complemented by broader domestic reforms includingTN/MA/M/3
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implementation of transparent rules and capacity building, which were major initiatives for the United
States and the WTO.  NTBs also had to be examined since a tariff reduction or elimination was only
one part of improved market access.  Many Members had indicated their strong desire to participate in
these negotiations and some had stressed the need for technical assistance and further studies. The
United States understood this position and stood ready to work with Members to educate and toexplore the effects of tariff liberalization. However, her delegation was  surprised to hear some
developing country Members state that they saw no need for further liberalization. This was not a
flexible position, nor was it one that the United States could accept. The outcome of any Round had to
be judged on the basis of the liberalization achieved and that was how it would be judged by the US
Congress and constituents.  The Group had to find a way forward that was bold, that established a
level of participation among all WTO Members, but which took into account Members' individual
development and economic situation. A cooperative approach had to include consideration of revenueconcerns but also the broader implication of domes tic reform measures that would attract investment
and improve export competitiveness. Based on the concepts of ambition, flexibility, reciprocity and
meaningful market access for both tariff and NTBs, her delegation would present a more detailed
proposal on modalities later in the autumn.
1.13 On the various submissions by Members, her delegation considered the New Zealand paper
particularly important as the Group began to consider NTBs.  While tariff liberalization was a key to
opening the door to exports, the NTBs component had the potential of closing it. There might be
horizontal issues they could be resolved in ways that the Group had to determine. However, her
delegation's preliminary view was that there would need to be a way to address NTBs bilaterally.However, her delegation agreed that the NTBs negotiation had to take into account other negotiations
and disciplines within the GATT and WTO. The non-agricultural market access negotiation should
not interfere with other negotiations. However, this Group might be in a position to make
recommendations or provide information to other bodies, as appropriate. The NTBs discussion should
not be used as a mechanism to re-open existing agreements, since those political decisions already hadbeen made. So the focus of the Group's efforts on NTBs should be legitimate issues that fell outside of
the classification areas noted by New Zealand.  Her delegation welcomed Japan's paper and ideas on
the conduct of the tariff negotiations. She noted Japan's ideas regarding sectoral initiatives, which the
US strongly supported.  Her delegation believed that these negotiations should capture and expand on
many of the sectors suggested in Japan's paper. Th e US saw such an approach as an important, but not
necessarily exclusive component of possible modalities approaches. With respect to Korea's paper,
her delegation appreciated Korea's efforts to identify key issues in this negotiation and took particularnote of Korea's comments regarding the feasibility of a request/offer negotiation and the issue of non
ad valorem  tariffs. Both would be important issues for early discussion. Norway's contribution helped
to begin to focus more on the details ahead. Her delegation thanked Norway for providing a clear
outline of the range of substantive and technical issues upon which the Group had to focus. Her
delegation believed that the Norwegian paper could perhaps serve as an initial outline for discussionof these and other issues at the next meeting.  Singapore's paper was also most welcome, and her
delegation shared Singapore's view that negotiations on the basis of applied rates, in contrast to bound
rates, offered the greatest promise of producing real market access in these negotiations in situations
where ceiling bindings prevailed.  Her delegation was also  interested in Singapore's thinking on how
to address the issues of environmental goods. The Group needed to think carefully about a pragmaticway to proceed in this area so that it was not caught in an endless discussion on definitions.
1.14 The representative of Poland stated that the negotiations should be broad and cover all
industrial products without exceptions.  The negotiations should lead to a harmonization and
substantial reduction of duty rates relating to all products including environmental goods. However, inthe case of  environmental goods, the Group had to start elaborating a definition of such products and
preparing a list of such products.  The basic aim of the negotiations should be improved transparency
and stability of bound rates including elimination of tariff peaks, high tariffs and tariff escalation as
well as NTBs, in particular relating to products exported by developing countries.  In looking atTN/MA/M/3
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modalities, the Group had to take into account the target to be achieved, experiences gained during the
earlier negotiating rounds and the interests of developing countries and LDCs, in particular.  The most
effective negotiating modality would be to base negotiations on a mathematical formula or formulas
which took into account the level of development of particular groups of Members. The use of
complete and accurate databases like the IDB or CTS was a precondition for a smooth negotiatingprocess.  It was also necessary to work out a suitable software program to analyze the data.  The
reference year for concessions should be 2001 and the basis for the negotiations should be the bound
rates based on the HS2002 version. The market access negotiations for industrial products should also
aim at a significant reduction of NTBs which restricted and distorted international trade in face of
generally low levels of tariffs.  It was an important and urgent task at the present stage to create a
complete list of existing NTBs and to evaluate their impact.  In this regard, Poland welcomed the New
Zealand submission which should lead to further constructive discussion on this subject. The mostimportant task faced by the Members now was to meet negotiating deadlines agreed upon during the
Doha Ministerial Conference. The Group should accelerate and intensify the phase of presenting
proposals concerning principles and modalities of negotiations and to work out the modalities by the
forthcoming Fifth Ministerial Conference at the latest. It was very important to submit realistic and
balanced proposals which could be accepted by Members representing different levels ofdevelopment.
1.15 The representative of Argentina stated that MERCOSUR Members were working on a
common paper to be submitted to this Group.  For Argentina, market access for non-agricultural
products was one of the pillars that would give an overall balance to the negotiations.  He wished tohighlight a few points, first, product coverage should be broad-based without any a priori  exclusion.
Second, it was essential to respect the calendar of work and the timetable established in Doha as well
as the time-frame contained in the document adopted on 19 July 2002 by the Group. Third, tariff
negotiations should be carried out on the basis of bound tariffs. These negotiations should aim to
achieve an overall balance which reflected the interests of all countries and in particular he wouldhighlight the aspect of special and differential treatment. This was the Development Round and
developing countries were going to require that all the principles set out in both GATT 1994 and the
Doha Declaration were complied with, particularly through "no full reciprocity in reduction
commitments". Argentina did not believe that special and differential treatment could be implemented
by establishing new categories of countries.  This applied not only to this area of the negotiations, but
also to other areas. There had been proposals and suggestions made which had implied a
categorisation of countries.  Some more wealthy developing countries had made suggestions whichmight imply this idea.  Argentina had been at one stage a more wealthy developing country but not so
now. From this it should be clearly understood that the vulnerability of developing countries could not
be reflected in the form of indicators such as GDP per capita at any given time.  There were certain
situations in which a developing country might have a relatively good position or a relatively greater
capacity to act for a limited period of time. Some countries had greater potential than others asregarded their economies or in producing certain goods and this was all part of the reason which made
international trade a useful tool for development. The ability of certain countries to pay lower salaries
or to have certain natural resources that they could draw upon  gave those countries certain
advantages in particular circumstances.  Because of this whole galaxy of different factors, it was very
possible that some countries had certain advantages in certain circumstances and situations, but thatwas not a reason to not define them as “developing countries” and deprive them of special and
differential treatment. As a result, characteristics which defined a developing country should not be
used to create categories of developing countries.  On NTBs, the mandate called for the reduction or
elimination of NTBs.  Difficulties existed in defining the scope of the mandate due to the fact most of
the NTBs were covered by other WTO Agreements or by the negotiating mandate assigned to anotherNegotiating Group. As suggested by Brazil, a possible way forward could be to envisage a mechanism
which would identify these restrictions through a system of notification and counter-notification. This
would impart greater transparency to the process.  Whatever the results of this process, Argentina's
position was that in no case should existing WTO Agreements on NTBs be re-opened.  OnTN/MA/M/3
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environmental goods, there was no universally accepted definition of such goods and the discussion
for the moment was not clear. Since there were no limitations within the mandate as regarded
negotiations on non-agricultural products, it might be reasonable to continue with the negotiations,
make progress and subsequently take a decision on this matter.
1.16 The representative of Australia stated that his delegation found the New Zealand contribution
to be useful.  His delegation shared the concerns raised in the paper and the approach outlined to
better define the universe that the Negotiating Group would be dealing with.  Australia agreed that the
open nature of the mandate on NTBs carried the risk of overlap with the mandate of other negotiating
groups. To minimize the risks that uncertainty over the mandate in this area might create, an early
start should be made on defining the scope of the mandate of the negotiations on NTBs. The New
Zealand experience as outlined in its paper which led to the identification of the top 7 categories ofNTBs was interesting.  Members could usefully follow this example.  However, in such a case  each
Member would come up with its own list and the ch allenge would be to agree on a core set of NTBs
that Members would wish to address.  New Zealand had also identified a procedural challenge in
following this approach and as its paper correctly pointed out the question that arose in this context
was where individual NTBs should be addressed and specifically which of them should be the subjectof negotiations in this Group.  The classification approach outlined by New Zealand in paragraph 10
was the best way forward to address that procedural challenge.  Australia strongly supported the need
for caution about any suggestion that this Group had a broad mandate to re-open existing agreements
dealing with NTBs.  Japan's paper contained a useful listing of points for negotiating modalities.
However, his delegation wished to clarify a few points.  Firstly, the paper correctly identified the needfor an overall balance in the outcome of the negotiations; negotiations which should aim for a
comprehensive package without a priori  exclusion of products. Then the paper stated that the
negotiations should proceed "giving due consideration to the situation surrounding individual
products".  His delegation sought clarification as to the meaning of this sentence, and whether in
particular it signalled some reservation on the concept of no a priori  exclusions. His delegation hoped
not. His delegation looked forward to the forthcom ing submission by Japan on its Target Tariff Rate
proposal, including how this could be applied to different levels of development in developing
countries. On tariff peaks, the paper stated that "tariff peaks that would have serious trade distorting
effects should be rectified efficiently".  On this issue. Australia wondered whether Japan was seeking
to introduce the idea that some tariff peaks might be less distorting than others and could be treated
differently. Again, his delegation hoped that this  was not the case and would welcome explanations
from Japan. On sectoral and zero-for-zero approaches, his delegation was interested in hearing moreabout the harmonisation approach mentioned for text iles and clothing.  In particular, his delegation
would be interested to hear how this would relate to the integration process under the Agreement on
Textiles and Clothing that would conclude by 1 January 2005.   Japan had proposed bound rates based
on HS2002 be used as a basis for the negotiations. As a practical matter, he could not see how
HS2002 could be the basis for negotiations being that only a few Members had implemented theHS2002 nomenclature. His delegation proposed, therefore, that HS96 should be the basis for the
negotiations, as almost all Members had completed those changes and only relatively few reservations
remained. Australia agreed that negotiations should be on  the basis of bound rates. On environmental
goods, his  delegation had a query about the Japanese proposal relating to the protection of the
environment. The paper talked of special consideration being given to goods which had to be"appropriately addressed in terms of global environment issues and the sustainable use of exhaustible
natural resources".  His delegation looked forward to the forthcoming proposal on this topic.
Australia wished to flag at this stage its concern about defining  environmental goods in terms of
Production and Processing Methods; this would raise difficult and controversial issues.   On Korea's
paper, his delegation shared Korea's concern about the need to deal with tariff peaks, high tariffs andtariff escalation.  However, his delegation was a little more cautious about the proposal to define these
terms at the outset of the negotiations.  Australia's concern was that should this prove to be a
controversial issue, his delegation would not want to lose time negotiating on definitions if that meant
introducing a further step in the process of working towards an agreement on the modalities. AsTN/MA/M/3
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pointed out by Chile, a formula itself could automatically deal with tariff peaks without the need to
spend a lot of time defining tariff peaks.  Australia also had a query about the environment section in
Korea's paper. His delegation wondered what Korea had meant by "foster the development of
environment industry world-wide".  The concept of the "environment industry" could be seen as
rather different from the concept of negotiations on market access for environmental goods asmandated at Doha. Australia’s preference was to define environmental goods in terms of their end-
use.
1.17 The representative of Indonesia stated that while, it was recognized that product coverage
should be comprehensive without a priori  exclusions, this should not preclude Members, mainly
Members with different levels of economic development, from excluding sensitive products, which
were sensitive to their domestic industries. Japan appeared to have a similar view since in its paper ithad stated that "negotiation should proceed by giving due consideration to the situation surrounding
individual products".  As to the “target tariff ra te” approach, Japan's proposal contained interesting
ideas on how to use a formula-cut approach that  corresponded to the degree of development and
competitiveness. This was apparently one way to respond to the Doha mandate to give special
consideration to developing countries. However, his delegation was not sure about the relevancy ofintroducing the concept of competitiveness which could complicate the proposal. The zero-for-zero
approach was best used by Members having the same level of economic development and should be
complementary to the main modalities to be agreed upon.  It was necessary to develop a set of
parameters as a basis for specific sectors to be negotiated under this approach. The suggestion by
Norway on  a critical mass was one possible parameter. Regarding tariff peaks, high tariffs and tariffescalation, his delegation believed that these terms should be defined before the Group moved
forward on these issues.  In the same vein, it was clear that Ministers had recognized the difficulty of
eliminating all tariffs as the Doha Declaration only stated "to eliminate tariffs as appropriate".
Therefore, the negotiating exercise should focus on reducing tariffs instead of eliminating tariffs.   His
delegation was of the view that the bound tariffs resulting from the Uruguay Round should be thebasis of the negotiations.  Where there were no bound tariffs, a starting point could be the year of
completion of the Uruguay Round.  One way of addressing development provisions was to provide
different implementation periods and staging, however, this was not sufficient. Such measures had to
be strengthened by other measures such as non-reciprocity and credit for autonomous liberalization.
On  staging, the Group might also consider other objective criteria such as GNP per capita, instead of
a certain period of time, since the latter might not suffice as an adjustment period for developing
countries, as was proved by the experience in Uruguay Round.  On environmental goods, although hisdelegation saw the benefit of liberalising this sector in order to promote environmental protection,
given the fact that this type of good had a high technological content, there was a possibility that
developing countries and LDCs would only be net impor ters of this type of product.  Therefore, the
Group had to address this issue, while at the same time conducting negotiations to liberalize this
sector.  It was also not appropriate to address the issue of "production characteristics" as part of the
current negotiations.  On non-tariff measures, some Members had alluded to export restrictions
including export duties as being a non-tariff measure, however, his delegation did not consider this a
proper categorization. The mandate of this negotiation was about access to Members' markets and
export restrictions were not about market access. Therefore, neither export restrictions nor export
duties fell under the purview of this negotiat ion.  His delegation found New Zealand's proposal on
how to define NTBs interesting.
1.18 The representative of Nicaragua stated that the basis for the negotiations should be the bound
rates and not applied rates because his country's WTO commitments were based on the former rates.
Taking the negotiations as a whole, it was necessary to compensate tariff reductions with theelimination of other obstacles which affected exports. The particular export needs of LDCs and
developing countries should be taken into account, particularly in respect of barriers such exports
encountered in the form of internal subsidies, tariff  peaks, high tariffs, tariff escalation etc.  On non-
tariff barriers, his delegation hoped to achieve the complete elimination of NTBs which would beTN/MA/M/3
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based on a system of prior identification of these barriers through a process of notification and
counter-notifications.  In this regard, his delegation believed that it could work on the basis of the
proposal by New Zealand.  The principle of special and differential treatment had to exist across-the-
board. Instead of creating categories of countries, the Group should review the realities of each
Member, since not one Member was equal to another. The reduction of bound rates should becompensated for by taking into account the realities of Members and the differences in their
economies, such as Nicaragua which had a small-size economy. This particular attention to
Nicaragua's situation could take different forms, e.g. less than full reciprocity in reduction
commitments, competitiveness to be fostered through technical cooperation and assistance, a gradual
application of the rules and longer implementation periods and staging.  Fiscal problems were an
important issue, since fiscal deficits were chronic in countries with small economies, and this should
be taken into account at the time of tariff reductions.  Tariff reductions should be uniform and not byproduct, i.e. if tariffs were bound at a uniform level, then that level should be reduced uniformly.
1.19 The representative of Switzerland stated that on the coverage of bound tariffs, Switzerland
considered that a comprehensive coverage was of outmost importance for the predictability of the
tariff regime and for the functioning of the whole system.  Coverage had to be improved and all tarifflines had to be to covered.  As to the level of the binding, there had been proposals that the minimum
level should be the applied rate. However, this subject would need to be discussed in the Group.  On
modalities, Switzerland favoured a formula-cut approach. Such an approach ensured comprehensive
product coverage and, as explained by Chile, if it was well chosen it could also address issues like
tariff peaks, high tariffs and tariff escalation. A formula-cut approach was also flexible, since theformula could be tailored to take into account the level of development and competitiveness of
developing countries. Although there had been delegations proposing that the formula should be used
across-the-board, there was a lot of merit in having some flexibility for zero-for-zero sectorial
initiatives or even request and offer mechanisms. Experience had shown that zero-for-zero could  be
very useful in enhancing market access in specific sectors. Regarding the basis for the negotiations,Switzerland wished to use the final bound rates re sulting from the Uruguay Round.  Her delegation
was also of the view that the HS2002 nomenclature should be used, but her delegation understood that
not everybody was ready to apply it and the Group woul d have to see how to deal with this issue. If
there was no bound rate, then the rates in force at the launch of the Doha Development Agenda should
be used.  On staging, there had been proposals made of 5 years or a flexible approach.  Switzerland
was sympathetic to the approach proposed by Chile that there should be a ratio between the level of
the concession and the length of the period. This approach had been used in some of the accessionnegotiations and was found to be a useful way to move forward. On nuisance duties, she was
surprised to hear some Members proposing the elimination of such duties, because it concerned
Members which had already liberalized to a very large extent, and such a measure would amount to
penalizing such Members for having done the job.  Any elimination of nuisance duties would need to
be matched by concessions, and it would not be made for free. Furthermore, she was puzzled by theargument of costs associated with the levying of such duties, since in Switzerland the levying of low
duties was not more costly than the levying of high tariffs.  Furthermore, Switzerland was in favor of
talking about promoting cost effectiveness and efficiency in customs procedures which was why her
delegation was in favor of talking about trade facilitation and of holding negotiations on this subject.
Switzerland attached importance to addressing the issue of non-tariff barriers.  In this regard, NewZealand's contribution was valuable in that it offered an interesting approach regarding classification.
The Negotiating Group had not as yet identified the concrete problems faced by Members, and in this
regard, she proposed that the first step was to have Members notify the concrete problems they faced.
Then the Group could see how it wished to address them.  There were several possibilities.  Some of
these problems could be problems of application and could be solved between Members. Otherproblems might go further and might need negotiations and might overlap with negotiations in other
fora.  In those cases the Group would have to discu ss how it wished to go forward on those issues.  In
any case, the starting point was to identify the concrete problems and in fact Switzerland was in the
process of drawing up such a list with its concerns.TN/MA/M/3
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1.20 The representative of Costa Rica stated that the basis of the negotiations should be the final
bound tariffs as contained in Members' schedules as they were the only legal reference in the WTO.
The use of applied tariffs would have the negative effect of penalizing those Members that had made
an effort to liberalise on a unilateral basis in the last years. On modalities, Costa Rica preferred to
apply a formula or formulas - yet to be defined- because such an instrument was better suited toaddress the current situation of a large WTO Membership. This formula or formulas should be
carefully selected and designed to address the problems, and take into account aspects enumerated in
paragraph 16 of the Doha Declaration. Costa Rica fully supported improving the statistical and tariff
data available for these negotiations. Like Brazil, it considered that it was essential that Members,
using  non ad valorem  tariffs in their schedules or in their applied tariffs, notify the ad valorem
equivalent to the database. The Secretariat document TN/MA/S/4 reflected the methodological
complications that the Group might encounter when analysing the various modalities if thecalculations on ad valorem  equivalents were not available. The use of some of the formulas described
by the Secretariat in document TN/MA/S/3 necessitated the use of ad valorem  tariffs or their
equivalents because they could not be applied on specific tariffs, either compound or mixed. Costa
Rica was of the view that all tariffs contained in new schedules of commitments should be ad valorem
and, to this end, it might be necessary to agree on a common methodology to calculate the official ad
valorem  equivalent.  On the question of the definition of environmental goods, his delegation was of
the view that it should not take into account the methods and production processes. Moreover such a
debate on definitions could be premature as pointed out by Chile, and it might be better to leave this
discussion and consider the subject at an appropriate moment in the future and then determine
whether such a debate was necessary or not.  This would undoubtedly be a solution that wouldfacilitate the work of this Negotiating Group, and which would allow it to concentrate on the question
of modalities.   On non-tariff barriers, his delegation believed that the New Zealand document
provided a good framework in which to start discus sions on this issue.  It was important that the
Group did not duplicate the work in other negotiating groups.  It was also desirable to not open
agreements not explicitly envisaged in the mandate.  Moreover, it was necessary to adhere strictly tothe timetable established in the mandate and in the Group's work programme.
1.21 The representative of India stated that the mandate for the negotiations on market access for
non-agricultural products, was quite clear.  The Group had to aim "to reduce or as appropriate
eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs and tariff
escalation, as well as non-tariff barriers, in particular on products of export interest to developing
countries".  These negotiations "shall take fully into account the special needs and interests ofdeveloping and least-developing country participants, including through less than full reciprocity in
reduction commitments, in accordance" inter alia with the provisions of Article XXVIII bis of GATT
1994.   He had quoted paragraph 16 of the Declaration so as to focus on the fact that the modalities to
be agreed upon took fully into account the needs and concerns of developing countries. In this
context, he drew attention to the fact that developing countries for the first time had participated fullyin the tariff reduction commitments in the Uruguay Round, and had made substantial contributions. In
real terms, the concessions granted by developing countries were much larger and contributed more
significantly to growth and world trade than the concessions made by developed countries. This fact
had been analysed and documented in several studies like a recent one by Michael Finger and
Julio J. Nogues wherein it had been pointed out that the tariff cuts of developing countries whenmeasured by how they would affect importers' expenditure were deeper than those of the developed
countries. In return, however, tariff reductions on items of particular interest to developing countries
got less attention in the developed markets. He added that Mr. A. Hoda, in his book, had also
concluded that "the tariff cuts in the developed countries on industrial products, except petroleum (in
the Uruguay Round), imported from the developing and least-developed countries were again loweras compared to the cut on imports from all sources. "  It would be important that this time around the
Group adhered to the mandate to ensure that substantial gains accrued to the developing countries.
There had been several proposals as well as approaches, which had been suggested on the modalities
issue.  However, for any particular approach or  a combination of approaches to be effective inTN/MA/M/3
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fulfilling the mandate outlined by Ministers, it was necessary that the fiscal, developmental strategic
and other needs of developing countries were fully factored in.  This had also been provided for in
Article XXVIII bis: 3(c) of GATT.  India took note that Japan's proposal on a targeted tariff rate
referred to giving consideration to the level of development and to countries' current trade weighted
average tariff rate. The reference, however, to a "targeted level" was unclear. Norway had alsoreferred to differentiated coefficients for developing countries, which would need to be further
clarified.  His delegation had reservations regardin g differentiation among de veloping countries.  His
delegation would also have liked to see in these proposals some indication of how the Doha mandate
for elimination of tariff peaks and tariff escalation on products of export interest to developing
countries was intended to be carried out. This was important to ensure that substantive tariff reduction
contributions were made by developed countries in sectors of particular interest to developing and
LDCs so that these were in consonance with their average tariff levels. His delegation noted withinterest the frequent references to South-South trade by some important trading partners. He agreed
that there should be more South-South trade. In fact, the countries of the South were in constant
contact with each other to promote trade and commerce amongst themselves.  Such trade took place
whenever possible and wherever possible within the context of the fiscal and developmental needs of
developing countries. However, no one could deny the fact that the big markets were in the North andthat sizable segments of this market were closed through the devices of peak tariffs and tariff
escalation, and NTBs of various kinds.  Furthermore, no one could also deny the fact that the intention
of the Ministers at Doha was to promote overall development of the poorer countries and that this
could be achieved only through greater access to developed country markets for the products of
developing countries, including textiles. He fully endorsed the views of Brazil that the Doha mandateshould not be diluted or re-interpreted.  His delegation had also perused the Secretariat papers
prepared for this meeting, and wished to flag a few points with respect to TN/MA/S/3.  The various
approaches outlined in the paper might provide factual information, but did not indicate how the
concerns of developing countries and LDCs could be incorporated. For instance, the result of the
Swiss formula was shown to be dependent upon the co-efficient which was finally agreed upon.India's concern in this reference stemmed from the fact that apparently it did not take into account the
circumstances of developing countries and LDCs, with specific reference to their developmental and
fiscal needs. India considered that an analysis needed to be undertaken whereby the developmental,
fiscal and strategic needs of developing countries and LDCs would also be factored in. The special
needs of labour-intensive small-scale enterprises in de veloping countries might also have to be kept in
view. Without such considerations any modalities for tariff negotiations would not be appropriate. His
delegation would have also liked the Secretariat document to examine the request and offer approach,particularly to know when this had been normally accepted as a modality, namely whether in
predominant cases the requesting country in question had a Principal Supplying Interest (PSI) or an
Initial Negotiating Right (INR)  status or this was done even otherwise.  His delegation had proposed
at the last meeting that the Secretariat prepare a paper on all the elements relevant to modalities with
particular reference to guiding principles and th e manner in which the question of factoring in the
special needs of developing countries had been addressed in the past and also the impact of trade
liberalisation, especially on economies of developi ng and LDCs. His delegation thought that it would
still be useful to have this detailed information in addition to what the Secretariat had prepared on the
formula approaches. There had also been suggestions for following a sectoral approach in the
negotiations. In this context, it needed to be kept in mind that developing countries in general hadhigher levels of tariff both due to their revenue needs as well as to afford some measure of protection
to their industry, which while being employment providing was handicapped not only due to a lack of
resources, older technology and high interest rates but also due to infrastructural and other constraints,
which added to their costs. Therefore, the zero-for-zero or harmonization of tariffs in select sectors,
which would sharply bring down tariffs in a short period could create distortion in their economiesand domestic production structures, not to mention the sharp drop in revenue that might ensue.
Products of such sectors could be raw materials, intermediates or inputs even in other manufacturing
sectors not so covered by the sectoral approaches. The net effect in such a case could be seriously
unsettling to the prevailing effective rate of protection and the balance between efficiency and fairTN/MA/M/3
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competition that might currently be in play in a developing economy. While this might not be the case
for countries at more advanced stages of development, this might seriously harm developing countries
where an emerging industry was trying to devel op a foothold and consolidate. Furthermore, he
considered that such a zero-for-zero approach might not involve any substantial concession on the
part of developed countries whose average tariff in the indicated select sectors were already quite low,in most cases being less than 3-5%. The same woul d not be case for developing countries who might
be required to make very substantial concessions which would be negating the Doha mandate where
the developing countries were not expected to fully reciprocate in reduction commitments to the
extent that concessions are made by developing countries.  Norway's paper appeared to recognise this
in some way when it noted that such approaches s hould not lead to an unbalanced result favouring
major trade partners. Such approaches might also divert attention from a principal element of the
Doha mandate, which was to address tariff peaks, tariff escalation, and NTBs particularly on productsof export interest to developing countries.  For bound tariff lines, India welcomed Japan's suggestion
that the bound rates should be the base. Such an approach was practical in that the bound rates
signified the last negotiated level of commitments of a Member. Any future commitments must be in
continuation of the same exercise so as to offer each Member a balance in its commitments vis-à-vis
the advantages it derived from those of others.  With respect to unbound tariff lines, it needed to bekept in mind that Members had not bound these earlier precisely because of their sensitivities.
Generally, they were also more sensitive as compared to the items, which had been bound.  In this
context, he referred to Norway's proposal wher ein Norway had suggested that the unbound tariff line
had to be bound at the generally applied rate at the start of the Doha Negotiations.  While certain
items might have become less sensitive since the Uruguay Round, it would be illogical to considerany base rate for them which was less than the higher of the bound rates prevailing for other products.
While there might be no a priori exclusion of product groups, a provision had to be made for keeping
certain specific tariff lines unbound in view of their sensitivities to individual developing countries.
India attached great significance to the removal of specific NTBs on tariff lines of particular export
interest to developing countries. By their nature, NTBs did not lend themselves to securingcommitments which could be easily defined or monitored.  To the extent that the Group could come
up with creative ideas in this regard it would be useful.  A compilation of comprehensive data with
regard to NTBs was an essential requirement for furthering discussion in this area. However, he
cautioned against the inclusion of legitimate instruments that developing countries might use under
the various WTO agreements for development of their industries in the negotiations. For instance,
export tariffs or levies were generally used to generate resources to develop an industry by
diversification in the product profile and development of value added products for exports. Therefore,the suggestion that export duties be negotiated would be outside the Doha mandate.  The product
coverage on environmental goods would need to be discussed in the light of the products of export
interest to developing countries, including LDCs and might also include environment friendly
products. India was, however, opposed to including products in this category on grounds of
production and process-method considerations.
1.22 The representative of China stated that in order to improve market access opportunities
through these negotiations as well as to increase transparency and predictability of trade regimes,
China was of the view that negotiations or work  on modalities should focus on enlarging the scope of
bindings and limiting tariff peaks and escalation as well as reducing the use of non ad valorem  tariffs.
The negotiations on NTBs should be based on a clear definition of what NTBs should be taken into
account and the scope of those NTBs. Special and differential treatment should be granted to
developing Members of WTO and to LDCs in order to have successful negotiations. He hoped that
there would be a full participation by all Members in this exercise.  It was necessary, in this regard,
that technical assistance and capacity building be carried out fully and practically so that the results ofnegotiations could reflect the increase of all Members in a fair, balanced and sufficient manner.  As
stated in the Doha Declaration, the newly acceded Members had made extensive market-access
commitments upon accession including on non-agricultural products. Further, tariff reductions would
predictably have a serious impact on their domestic industries and fiscal revenues. As a result, in theseTN/MA/M/3
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current negotiations on modalities, the situation of those newly acceded Members should be fully
taken into account by allowing them more flexibility and granting them credit.
1.23 The representative of Guatemala agreed with the need to consider possible guidelines for the
treatment of different areas of non-tariff barriers, since this would be necessary for the negotiations to
progress smoothly. It was also important to identify the relationship between the mandate of this
Negotiating Group and that of other WTO bodies.  Ot herwise, there would be a risk of duplication of
work given the open nature of this Group's negotiating mandate.  New Zealand's experience, as
contained in document TN/MA/W/4, would be useful for the work of this Negotiating Group with
respect to categorising or classifying non-tariff barriers.  The Doha mandate had to be respected,
particularly with respect to the situation of developing countries and LDCs and this through special
and differential treatment, capacity-building and technical assistance.  Japan's paper raised issues thathad not been dealt with in detail so far.  The purpose of the paper was to define available modalities,
paying particular attention to the specific situation of each product specifically.  He wondered how
Japan could define those products with special circ umstances and how this definition would be valid
for each country.  Guatemala was of the view that bound tariffs had to be the basis for the
negotiations, and that the HS96 nomenclature should be used for the negotiations because mostMembers were using the HS96 nomenclature.  Guatemala also felt that it would be useful to have a
formula which respected and paid particular attention to the special needs of developing and least-
developed countries.   His delegation was also of the view that NTBs must be identified by Members
but, at the same time, the Secretariat would have to pay particular attention to the situation of
developing countries that were not in a position to identify those measures and to evaluate the harmthat such measures were causing them. The Japanese proposal for the  Secretariat to hold a second
seminar was a useful one particularly if officials from capital were present. He hoped that funds
would be available so that a maximum number of  delegates from developing countries and LDCs
would be able to attend.  He supported the Korean statement to the effect that there was need to
clarify concepts, like tariff peaks, high tariff and tariff escalation.  His delegation felt that it wasimportant to complete the data in the IDB.   A complete data set would be useful especially for
developing countries and LDCs.   The Secretariat document TN/MA/S/3 entitled "Formula
Approaches to Tariff Negotiations" would assist capitals in acquiring a better understanding of
negotiations, modalities and formulas.
1.24 The representative of Chinese Taipei stated that Chinese Taipei had decided to participate
actively in these negotiations and to make contributions on non-agricultural market access
negotiations. However, his delegation's position on several specific issues were still under discussion.
He expected to submit a paper on Chinese Taipei's position in a shortly.  On the negotiating scope and
product coverage, Chinese Taipei welcomed the comprehensive nature of these negotiations as
endorsed by the Doha Ministerial Declaration, that specified that the non-agricultural negotiations
should incorporate all tariff items and avoid a priori  exclusions. In addition, his delegation believed
that the negotiations should take into account th e different levels of development and the particular
needs of developing and least developed country Members.  Tariff peaks and tariff escalation
remained significant market barriers for export from developing countries due to the fact that
numerous tariff peaks and escalating tariffs were applied precisely on industrial products in which
developing and LDCs had the greatest comparative export advantage. Since tariff peaks andescalating tariffs were believed to have greater trade distorting effects, Members had to focus on
rationalization of tariff peaks and tariff escalation as high priorities. On implementation periods and
staging, he hoped that ambitious goals would be achieved and his delegation would be open-minded.
The contribution paper from Japan (TN/MA/W/5) on implementation periods and staging provided a
good basis for further discussion.  Considering that  the special needs and conditions affecting the
trade of developing and LDCs was one of the cornerstones of the DDA, Chinese Taipei supported a
balanced package which reflected the needs and interests of developing and least-developed countries.
To achieve this outcome, there had to be a systematic, transparent and comprehensive application of
special and differential treatment. Therefore, Chinese Taipei proposed that emphasis continue to beTN/MA/M/3
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given to coordinate appropriate studies and capacity-building measures for these countries, and that
the aim of the relevant measures should be to help these countries participate actively in the
multilateral trading system. Accordingly, he recommended that an individually custom-tailored
capacity building program of activities with milestones and assessment criteria be designed to show
the steps that each country was taking internally. This would help to ensure that the assistanceprovided was not wasted and there was maximum eff ect. He drew attention to the fact that the DDA
was scheduled to conclude in 2005.  Considering the situation of some newly-acceded WTO Members
that were obliged to implement enormous market access commitments for non-agricultural products
until 2008 and 2010, further concessions in the Doha round would cause significant effects on the new
Members' domestic industries. The negotiations had to take this element into consideration.
1.25 The representative of the European Communities recalled that the EC general position had
been indicated in writing in June 2002 and he was pleased to hear that many other contributions
seemed to go in the same direction.  In his dele gation's view,  the following  keywords would serve as
a guide in the negotiations. Ambition was the very first one and it meant that the Group had to come
up with a comprehensive approach without any a priori  exclusion, as was laid down in paragraph 16
of the Doha declaration. For that reason, he was concerned by  some of the statements, for example byIndonesia, which had referred to the exclusion of ce rtain products. This would be a dangerous path for
the overall outcome of the negotiations.  He had taken note of the very interesting remarks made by
the representative of Chile, when he had referred to the possibility of a trade-off between ambition on
the one hand and implementation on the other hand.  This was a constructive way of thinking which
might also be used as an element when discussing the issue of special and differential treatment.NTBs had become more apparent today since in many  countries the level of tariff protection had been
lowered. For the EC, this was a key element in the negotiations and in this regard he thanked
New Zealand  for their constructive proposal.  On the ideas by Switzerland, there might be a scope to
combine the two proposals.  The question of environmental goods was complicated. However, in
determining such products some basic considerations had to be kept in mind.  Such goods shouldcontribute to sustainable development and should enhance mutual supportiveness of trade and
environment.  This was not what his delegation was saying this but it stemmed from the DDA.   His
delegation was confident that a solution around these principles would be found but he wished to
caution against any conditional approaches which might be based on end-use.  He recalled that his
delegation was also examining ways and means to improve trade facilitation measures and the
introduction of specific administrative burdens would be counterproductive.  This round was certainly
not a round which was exclusively based on South-South trade, but it was also not a round which only
had a North-South dimension. The statistical data  showed the growing importance of South-South
trade and around 70% of South-South trade was made in manufactured products.  Therefore, he
shared the view which had already been expressed by the United States that a significant South-South
trade liberalisation was one key issue for success.  On the basis for the negotiations, there was a very
good GATT tradition in the past rounds of negotiations which was based on bound rates.  With regardto the nomenclature to be used, the Communities and some other Members had already switched to
the HS 2002. However, the use of HS96 would be the appropriate basis for negotiations since
statistics would be available and that was the basis on which most of the countries were working.
With regard to the data, his delegation preferred the most recent average of 3 years which would be
available but it would depend on what was feasible for most of the participants.  His delegation was in
the process of drafting its proposal on modalities and it was hoped that the draft would be ready to be
presented in the November 2002 meeting.  The EC’s approach would endeavour to address in a
comprehensive way the key elements already referred to  and the issues of tariff peaks, high tariff and
tariff escalation.
1.26 The representative of Hungary stated that Hungary attached high importance to the further
improvement of market access for non agricultural products. The relevant part of the Doha mandate
was very ambitious and therefore required an ambitious and comprehensive approach to the
negotiations.  Hungary favoured a formula approach that ensured that comprehensive tariff reductionsTN/MA/M/3
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would take place across the whole range of non ag ricultural products. The formula might include a
minimum rate of reduction ensuring that all tariffs were reduced through the implementation of the
formula. The mandate gave priority to reducing or  eliminating tariff peaks, high tariffs and tariff
escalation. Therefore, the formula would need to include a tariff harmonization element. In general
Hungary did not like the zero-for-zero approach but did not preclude the possibility of elaborating
such an approach as a supplement to the formula.  Her delegation was not against granting credit for
autonomous tariff reduction if the Members concerned were ready to bind these tariff rates as part of
their commitment in the Doha round.  It was Hungar y's strong belief that the modalities should
include a firm commitment to bind all non-agricultur al tariff lines at the rate resulting from the
negotiations.   As to the basis of the negotiation, Hungary proposed the bound tariff rates at the start
of Doha round.  On non-tariff measures, Hungary stated that the starting point should be to identify
these measures and compile an inventory of the NTBs on the basis of notifications. On environmentalgoods, her delegation believed that the establishment of a list of environmental goods would be a
more efficient way for fulfilling this part of the mandate than to start a long discussion on certain
criteria. Hungary preferred to negotiate on products instead of criteria.  Developing countries'
participation in these negotiations was reflected in the mandate and her delegation was ready to
discuss the specific commitment to facili tate special and differential treatment.
1.27 The representative of Paraguay stated that the question of market access was of vital
importance and occupied a central place in the Doha negotiations. The Doha mandate on this issue
called for the elimination of tariffs and the reduction or elimination of tariff peaks and tariff
escalation, as well as  NTBs.  These issues covered some of the concerns of his country which was adeveloping landlocked country.  As a developing landlocked country, Paraguay's integration into the
international trade system as well as its ability to benefit from the advantages of the system had been
slowed down.  The statement by Brazil was timely in that the representative from Brazil had indicated
that Mercosur might table a negotiating proposal.  Paraguay would work on this so that the sub-region
could continue to contribute to the liberalization of trade in all sectors.  Paraguay would have liked tosee the questions which were to be negotiated clearly defined.  He referred in particular to
environmental goods.  The special and differential treatment for developing countries also had to be
taken into account in these negotiations to facilitate the implementation of the results of these
negotiations.  For that reason his delegation agreed with the statement made by Nicaragua.  His
delegation would table a proposal which would take into account the situation of some countries such
as his, i.e. landlocked countries and which would enable them to develop more quickly and to
integrate into the international trading system. This question was linked to the issue ofcapacity-building. A parallel programme on technical assistance should accompany this negotiating
process.  As to the timetable for these negotiations, what had been decided in Doha should be
respected.  Paraguay was also of the view that the negotiations should be based on bound tariffs, and
that the negotiations should cover all products without any a priori exclusions.  Tariffs and NTBs
should be eliminated or reduced, particularly for products which were of export interest to developingcountries.
1.28 The representative of Kenya stated that the prime objective of the Doha Ministerial
Declaration on market access for non-agricultural products was the promotion of the special needs
and interests of developing and LDCs. This objective could only be achieved on the basis of a clearunderstanding of the fundamental challenges for industrialization for these countries, particularly in
Africa. In this regard, the main objective of the negotiations on market access should be to facilitate
and enable the development and industrialization process in developing countries. The liberalization
of imports should only be seen as a possible means towards this goal. For many developing countries
further liberalization, especially on products where their industries were weak, would be
counter-productive to this overriding development goal. On the other hand, liberalization by
developed countries of products that could be exported by developing countries could contribute to
the development of developing countries, although supply constraints also prevented many
developing countries from being able to take advantage of market access improvements. This shouldTN/MA/M/3
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be at the heart of the modalities and actual negotiations and should be central in all aspects of the
Group's Work Program.  If the DDA was to achieve its stated goals, developing and LDCs with  weak
industrial bases should be allowed to choose levels of liberalization and protection that would enable
their weak industrial sectors to remain viable and to develop in future with greater efficiency with the
assistance of complementary measures.  These negotiations had to give the highest priority toproducts of export interest and export potential to developing countries with a weak and vulnerable
industrial base. This would be in line with paragraph 16 of the Ministerial Declaration which stated
that negotiations would focus on reducing or eliminating tariff peaks and tariff escalation in particular
on products of export interest to developing countries. This focus had to be reflected in the modalities.
Tariff peaks and tariff escalation prevailing in developed countries, especially on products of export
interest to developing countries, should be the main target of this exercise. On the other hand,
developing countries should be given flexibilit y to rebuild their domestic capacity, otherwise
improvement in market access could end up being an unrealised potential for higher industrial output.
If adequate safeguards were not put in place in form of special and differential treatment, some
developing country Members, particularly those from Africa, were likely to experience adverse
effects on their industrial development.  The third line of paragraph 16 of the Doha Declaration stated
that "the negotiations shall take fully into account the special needs and interests of developingcountries and LDCs, including through less than full reciprocity in reduction commitments."  The
same paragraph also referred to various provisions, e.g. Article XXVIII bis of GATT 1994 and
paragraph 50 of the Doha Declaration that dealt with special and differential treatment for developing
countries.  These sentiments had to be fully and effectively operationalized including through the
suggestions Kenya had made at this meeting.  The legal and practical effect of transferring the locusof paragraph 31 (iii), Negotiations in the Committee on Trade and Environment, in Special Session to
that of the Market Access Negotiating Group under paragraph 16 implied that paragraph 31 (iii)
negotiations must be considered a subset of paragraph 16 negotiations, that and therefore the
provisions and mandate of paragraph 16 must also be made applicable to paragraph 31 (iii)
negotiations. In this regard paragraph 16 emphasized that the negotiations, and by extension those onparagraph 31 (iii), must refer in particular to products of export interest to developing countries and
take full account of the special needs and interests of developing and LDCs.  He hoped that when
environmental goods were being discussed this aspe ct would be taken into consideration.  In these
circumstances, therefore, Kenya considered that the proposed categorisation of environmental goods
as drawn up by the OECD or the APEC could be relevant for paragraph 31 (iii) negotiations, but
might not be appropriate or reflect the trading interest of developing countries within the context of
the paragraph 16 negotiations. In many instances, because of the general lower levels of industrialcapacity and technological developments in the domestic manufacturing and export industries of
developing countries, many of the illustrative environmental goods listed by the OECD or APEC
would generally not be manufactured, much less export ed from developing countries.  In this regard,
Kenya proposed additional work on environmental goods, including capacity-building measures needs
to be undertaken in order to identify those environmental goods which might be of export interest todeveloping countries in order to shift the focus of the negotiations solely from goods that were of
export interest to developed countries.  On a final point, the only deadline that Kenya saw in the Doha
Declaration was 1 January 2005.
1.29 The representative of Malaysia stated that Malaysia wanted significant tariff cuts using a
suitable formula that would address high tariffs, tariff peaks and tariff escalation in all markets,
developed and developing countries with no a priori  exclusions. The basis of the reductions should be
the bound rates using the HS96 nomenclature, given that not all Members had implemented the
HS2002 nomenclature. With regard to unbound tariffs, developing countries should be given the
flexibility to bind them at higher than the applied levels.  Therefore, Malaysia could not acceptproposals that called for reductions to be made from applied tariffs, nor  proposals that called for
binding of current unbound tariffs at the applied levels. A formula approach would be the neatest
approach. Other approaches that appeared to be formula-based and were complemented with other
considerations such as the level of development and competitiveness, could give rise to severalTN/MA/M/3
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complications and long debates and delay the process. Such approaches would also have serious
implications on the treatment of Members and would create different sub-categories of Members,
particularly among the developing countries. Similarly, Malaysia would have difficulties in proposals
that explicitly provided that no developing country should have at the end of the reform process,
tariffs above a certain percentage. The use of a suitable formula that allowed significant tariff cutswould have the intended effect of a ceiling.  Some Members had stated that the formula approach
should be complemented with sectoral initiatives and zero-for-zero and the request and offer
approach.  Malaysia could only agree that the request and offer approach should complement the
formula approach. The zero-for-zero and sectoral initiatives could be limited to developed country
Members. If developing countries were to participate in these initiatives, they should do so in a
strictly voluntary basis and where there was a critical mass to did so.  Some Members had urged the
elimination of nuisance duties.  Although the Negotiating Group had yet to define a nuisance duty, the
broadly referred to definition of the Uruguay Round was a duty below 5%.  In his view, developing
countries had to be allowed to retain those duties as they afforded some protection particularly in
instances of violent currency fluctuation.  Malaysia had no objections to the elimination of such duties
by developed countries or those developing countries which had proposed such measures; but such
elimination should be done on voluntary basis exclusively.  On conversion of specific duties to ad
valorem  duties, Malaysia supported this approach.  Similarly, Malaysia wished to propose that the use
of seasonal duties be examined further by this Negotiating Group.  All goods had to be subjected to
the same modalities and not, as was being proposed by some, that environmental goods be subjected
to deeper cuts.  In other words, environmental goods defined under the APEC approach which was
based on end-use had to be subjected to the same modality as other goods.  He did not agree with therepresentative from the EC that the use of the APEC approach would lead to customs problems.  If the
same modality was applied to all goods then there would be no problems in the implementation.
Export taxes and export restrictions were not NTBs and not part of the mandate, thus Malaysia could
not accept proposals that called for disciplines on these development policy tools.  No one should
attempt to interpret or expand the mandate provided in paragraph 16 of the Doha MinisterialDeclaration. On the treatment of NTBs,  Malaysia supported the approach proposed by New Zealand.
There was also a proposal made at this meeting that existing Regional Trading Agreements (RTAs)
extend the opportunity for duty free competition to those outside such RTAs on a mfn basis.
Malaysia was not ready to subscribe to such a proposal.  It was convenient to suggest such approaches
when one was not a Member of any RTA. However, if this approach was to be accepted, it should be
applicable only to those RTAs involving developed countries; developing countries should be left out
of this initiative.  All developing countries should be treated in the same manner. Proposals that linked
the provision of special and differential treatment to the level of development of developing Members
would result in the creation of sub-categories among the developing countries. However, Malaysia
was agreeable to proposals that suggested longer im plementation periods for developing countries as a
whole, for specific products that were sensitive to them.  The particular concerns of all LDCs had to
be fully taken on board.  He had heard statements to the effect that credit should be given only on
bound duties. However, it was Malaysia's view that reductions made on applied duty levels should
also be given credit.  In this connection, he informed Members that Malaysia had liberalised its
applied tariffs substantially.
1.30 The representative of the Czech Republic stated that according to the mandate, product
coverage should be comprehensive and without any a priori  exclusions.   He agreed that the
appropriate approach to achieve the objectives of further tariff reductions would be a formula
approach. It was his delegation's expectation that modalities to be agreed would also acknowledge
autonomous tariff reductions.  His delegation supported modalities for strengthening commitments
regarding increased binding coverage and elimination of tariff peaks.   Even the most ambitious
outcome regarding further  tariff reductions would be diminished by NTBs. Therefore, his delegation
was looking for a comprehensive solution which would eliminate grey areas regarding the
improvement of market access for non agricultural products. His delegation welcomed New Zealand's
submission on NTBs which was very useful.  His dele gation was in favour of three-year averages, andTN/MA/M/3
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concurred with the proposal that all Members make an effort to submit missing data.  Access to the
data was a precondition to undertake meaningful negotiations. He pointed out that the IDB and CTS
were not linked which was inconvenient.  He wondered whether this situation could be improved.
1.31 The representative of the Slovak Republic stated that her delegation attached great importance
to the further liberalization of non agricultural products. In accordance with the mandate, the product
coverage should be comprehensive, without a priori  exemptions and should aim for a substantial
reduction of tariffs, to achieve further improvement in market access. This goal could be achieved
through tariff harmonization, elimination of tariff peaks and reduced tariff escalation. The Slovak
Republic was ready to fulfill this ambitious mandate and to commit also to reaching an improved
access of markets through the reduction of tariffs and non-tariff barriers. In this regard her delegation
could agree with the EC proposal that no sector or products was to be excluded, and that completetariff elimination for groups of products or sectors should be taken into account as well as the
different levels of development of developing c ountries and LDCs.  The formula approach could be
the best way to achieve these objectives. In establishing the modalities, which had to correspond to
the mandate's objectives, credit for autonomous liberalization should be duly taken into account.
Furthermore, a significant increase in the number of tariff bindings was necessary. The modalitiesshould include commitments to bind all tariff lines for non-agricultural products.  On NTBs, her
delegation fully supported the reduction and elimination of those trade distorting measures. In this
process, it would be necessary to identify the concrete problems and then to negotiate the way
forward.  In this connection, the submission by New Zealand was appreciated which could be a good
basis for further discussion on this issue.
1.32 The representative of Pakistan stated that his delegation was hesitant to make specific
comments or give a final view on any particular aspect of this negotiation.  His delegation believed
that such comments might be premature at this preliminary stage of negotiations and when capitals
were still examining the issues in hand.  Pakistan's thinking on modalities was still in an evolutionaryprocess.  The issues were complex and difficult and would have far-reaching implications for not only
national economies, but also the world economy on the whole. His delegation's cautious approach
could well be understood, especially from a devel oping country's perspective. Therefore, he did not
wish to make any specific comments on the papers submitted for the meeting except that the papers
were positive and interesting and touched a range of subjects which this Group would be dealing with.
His delegation would be looking at these submissions in a constructive and positive manner.  He
agreed that tariff negotiations were not new to this organisation. Such negotiations had been going onsince the time of the GATT.  But yet, it remained unfinished business and hence Members had the
mandate to move further in this regard.  His delegation understood the different levels of ambition in
this regard but, at this stage of the negotiations he could only say that the mandate gave full
recognition to the special needs and interests of de veloping countries and LDCs and thus made it an
integral part of the negotiations. Pakistan attached immense importance to these negotiations and waswilling to actively and positively participate in all the deliberations of this Group. As a word of
caution, he noted that there were wide differences in the level of development among Members and to
move forward in the negotiations and make progress, the Group would have to bear in mind the
concerns of developing countries and the LDCs in all aspects of the negotiations be it the reduction of
tariffs,  elimination of tariff peaks, or tariff escalation and/or  elimination or reduction of NTBs. Hestrongly cautioned against any attempt to create differentiations among developing countries. The
Doha Declaration, by virtue of paragraph 16 or paragraph 50, did not give any latitude to any Member
to interpret the provisions of special and diffe rential treatment under GATT 1994 or the Ministerial
Decisions cited in paragraph 50, in a manner which would have the potential of creating divisions or
fragmentation within the group of developing countries and LDCs. This would be a very dangerouspath to follow.
1.33 The representative of Thailand stated that on modalities his capital was still considering all
possible options.  While, his delegation had not decided which option was the most suitable, it wasTN/MA/M/3
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clear that the agreed modality would have to take fully into account the needs and interests of all
developing countries through less than full reciprocity, as was stated clearly in the mandate.  His
delegation still did not clearly understand what was meant by tariff peaks and high tariffs in the Doha
mandate. Even Thailand's domestic industries had different views on this matter. Many theories had
been floated about tariff peaks and high tariffs, however, this Group needed to clearly define theseterms before further steps were taken.  In principle, his delegation agreed that the negotiations should
diminish the gap between bound and applied tariffs. However, Thailand strongly believed that the
bound tariff should be the starting point of the negotiations due to reason that the bound tariff was the
legal tariff.   All NTBs faced by Members should be brought into discussion in the Negotiating Group
through a system of notification. The result of NTB negotiations had to be well balanced with the
results of tariff reductions.  Thailand believed that the non-agricultural market access negotiations
should avoid any discussion about the definition of environmental products, including defining theproduct coverage. The best approach would be to treat this particular product in the same manner as
the other products. It was not necessary to repeat the importance of special and differential treatment
in the negotiations, however, he wished to mention that this issue was one of the key elements which
would drive the negotiations forwards.  As to the base year, his delegation was of the view that 2001
was the most suitable one for use in the negotiations. He thanked Korea for reiterating the importanceof looking at non ad valorem  duties, in particular specific and seasonal duties.  His delegation
strongly believed that the results of the negotiations in non-agricultural market access must be well
balanced with the results of other negotiations, such as agriculture and services.
1.34 The representative of the Philippines stated that his delegation had an open mind to the
various ideas on modalities that had been suggested.  For his delegation, it was important that the
modality should be faithful to the Doha mandate which took full account of the special needs and
interests of developing and LDCs and also the principle of "less than full reciprocity in reduction
commitments". Any country's reduction commitment woul d invariably be influenced by the sectorial
and overall outcome of this negotiations. Therefore, his delegation would continue to be cautious indrawing up its commitments.  The basis for the nego tiations should be the final bound rates. In terms
of unbound rates,  he would study further the Indonesia's proposal that the basis should be the applied
rates at the conclusion of the Uruguay Round.  He cautioned delegations who had suggested that
HS2002 should be the basis of the tariff negotiations because, as a practical matter, only a handful of
countries had implemented HS2002 unlike the HS96 which most Members were applying.  On
minimal tariffs, and he noted that he had not us ed the term "nuisance tariffs", because for the
Philippines, a minimal residual tariff and uniform tariff common on all imported goods wasmaintained for revenue purposes.  This formed the basis for Philippines' fiscal balance and financing
of development objectives.  This was not a protectionist measure, but a developmental one which was
levied on all goods  on a uniform basis.  So, his delegation did not consider a 0 to 5 % tariff as a
nuisance tariff.  His delegation attached a very high priority to the issue of NTBs since any reduction
in tariffs would become meaningless if it was not complemented by the elimination of NTBs,especially for developing countries. All Members were aware of the challenges and difficulties of
addressing this aspect of the  mandate. Discussions in this area should not lag behind discussions in
tariffs. NTBs might have to be approached as product-specific issues or generic issues.  His delegation
thanked New Zealand for its contribution on this topic.  Tariff peaks and tariff escalation had proven
to limit investments and export opportunities for developing countries, to retard development and tocontribute to widespread poverty as  was shown in  the Johannesburg submit. Therefore, he attached
high importance to this issue that Members would have to deal with, especially on basic commodities
that were produced and exported by developing and LDCs. He agreed with Malaysia that zero-for-
zero approach was relevant to sectors or industries that were fully mature and competitive.  If
developed countries and other mature developing countries wished to engage in a zero-for-zeroapproach, his delegation would only encourage this, but no Member should be compelled to negotiate
on this basis.  On environmental goods, his delegation found the definition proposed by the EC
disturbing. His delegation had reservations about the reference to "sustainable materials", "production
characteristics" or "end-use" criteria, because of the multiple uses of such goods.  All Members wereTN/MA/M/3
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aware that any criteria would necessitate a new set of standards or classifications which might limit
the benefits arising from this negotiation to only a selected number of goods and to the producers of
those goods.  If this became the outcome of the exercise on "environmental goods", then the
developmental dimension of the negotiations would be lost.  Credit for autonomous liberalization was
an important issue. It should not be forgotten that a number of developing countries had engaged inautonomous liberalization and it was only fitting that due credit be given for this in the negotiations.
1.35 The representative of Japan stated that his response could not be comprehensive since his
delegation was in the process of finalizing all the details of the modalities. Regarding coverage, Japan
was considering coverage based on the relevant paragraphs of Doha Declaration. On the "target tariff
rate approach",  his delegation was finalising the details in time for the November 2002 meeting.
Regarding the harmonisation approach on textiles mentioned in Japan's paper, such liberalizationshould be pursued taking into account the strong interest of most developing countries. With respect
to the use of HS2002 nomenclature he had taken note of the practical problems raised.  However, as
was expressed by Switzerland, the HS2002 nomenclature should be used. As to the exclusion of
border exporting measures, Japan had a different view on this matter.
1.36 The representative of Norway stated that her delegation's paper did not address the question
of NTBs and she wished to address the subject now.  The New Zealand classification was an
important and helpful input in order to structure the work. She agreed with the EC and others that the
Group could benefit by looking at notifications of  NTBs in other WTO fora.  As pointed out in
Singapore's paper, the Group should look at inventories developed by regional fora as a starting point.
This would be important in order to define the universe of NTBs as a basis for categorization.
Norway was engaged in an exercise at the national level that started out with the problems and
barriers that Norway's industries were facing when approaching export markets.  The questions
emerging in this process were, inter alia , whether the problems were already regulated by existing
WTO agreements, in which case the problems at hand were actually questions of implementation byimporting Members and if so how to deal with this.  One possible way would be to request a Panel or
another less confrontational approach would be to try to deal with it bilaterally. She hoped that the
process started in this Group would shed light on the problems encountered and help the Group deal
with them.  A second question which emerged was whether the problem was adequately dealt with by
a WTO agreement because the relevant provisions were not clear enough..  If the Agreement was
included in the negotiating agenda, the problem could be dealt with as part of those relevant
negotiations. However, if the problem was relevant to an Agreement that was not under negotiations,what should the Group do?   Her delegation was of the view that the Group could not ignore this part
of the mandate. The Doha mandate did not a priori  exclude such NTBs.  The third category of
problems were those originating from a lack of WTO rules and regulations.  The challenge would then
be more clear-cut with the Group having to agree on appropriate rules.  Based on the input of
Norway's exporters a number of those issues had already been addressed in the context of tradefacilitation. Even if this were the case, it should not prevent this Group from addressing these issues.
At this stage, the scope of the negotiations should not be limited since the Group needed to get a
better picture of the range of problems faced by exporters. Based on the outcome of such an initial
exercise of transparency, the Group would be better equipped to identify the main features of the
problems as well as to develop the categories that would help to structure the work.  The area ofenvironmental goods was one of the difficult issues.  How should the Group deal with this part of the
mandate?  One issue at hand was whether to establish criteria in order to define environmental goods.
Chile had made a proposal of first applying a general formula across-the-board and then evaluating
whether further reductions were required for environmental goods. However, even this approach
would require a definition of environmental goods .  The question was not if the Group was going to
define environmental goods, but when it was going to define them.  To that effect, she proposed
looking at the work ongoing in the CTE in Special Session.  In the agenda of this Committee's next
meeting, there was one item concerning the AP EC and OECD lists on environmental goods. Such
goods included devices or equipment or gadgets to clean water, hamper emissions of poison gases,TN/MA/M/3
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etc.  Looking at these lists, she considered that one obvious criteria could be to define environmental
goods as goods that in their use contributed positively to the environment. At this stage, a criteria
definition should be broad and inclusive and that the lists of products developed from such criteria
should be open-ended. For Norway, the mandate of paragraph 31 implied additional market access
over and above what was achieved in the general negotiations of market access of non-agriculturalproducts. In Norway's view, the mandate did not open up for providing less market access for goods
that were not labelled environmental goods, inter alia  through exclusions or less than equal tariff cuts.
In response to Malaysia's point on RTA, she st ated that Norway was party to nineteen RTAs.
1.37  The representative of Korea stated that the representative of Australia had made two
comments on Korea's paper, one on tariff peaks, high tariffs and tariff escalation and the second one
on environmental goods. On the first issue, the representative of Australia had mentioned that todefine tariff peaks, high tariffs and tariff escalation would be a controversial exercise and, therefore, it
was better to start working on modalities rather than loosing time dealing with definitions. Korea
admitted that given the limited timeframe for the negotiations, the Group's work programme should
be focused on core elements of negotiations. Howeve r, he wondered how the Group could  tackle the
modalities issue without a clear definition of core concepts such as tariff peaks and high tariffs.Contrary to Australia's observations, discussions on subjects without a common understanding of their
meaning would be a waste of time since negotiations would go nowhere.  In response to Australia's
request for clarification on Korea's intention to include language which would foster the development
of the environment industry world-wide, he stated that there was no special meaning attached to it.
The elimination or reduction of trade barriers of environmental goods would facilitate North-South aswell as South-South trade in this area thereby fost ering environment industry world-wide, including in
developing countries in the long run.
1.38 The representative of Canada wished to address the issue of NTBs and to comment on the
New Zealand paper as well as on other contributions .  Canada agreed with those delegations who
sought to avoid duplication of work on NTBs.  So  the Group should not focus on issues which were
already addressed under other WTO agreements or other Groups such as trade facilitation. On the
other hand, information was very useful but information gathering should be measured. If the Group
engaged in an inventory exercise through notification or otherwise, the burden should be on those that
notify to indicate that the measure was not covered elsewhere and why it needed to be addressed in
this Group.
1.39 The representative of Malaysia stated that the approach used by APEC in defining
environmental goods was based on end-use which was different from that proposed by the EC.  At the
last meeting, Malaysia had already stated the downs ide and the dangers of following the EC approach,
and many delegations had shared Malaysia's views.  At the same time he wished to clarify that
Malaysia had not endorsed the APEC list.   Malaysia had problems when reference was made todifferent modalities that would provide for special treatment or deeper cuts for environmental goods.
This was because, in general, developing countries did not have the technological capacity to produce
such products. Therefore, deeper tariff cuts on such products would be to the benefit of the developed
countries which would have greater access to developing country markets to sell these products.  Of
course, those products were also needed by developing countries to improve their environment in thecontext of sustainable development, but at the same time, Malaysia viewed it as greater market access
for developed countries. If the idea was that through the reduction of tariffs, developed country
investors would be enticed into developing countries to invest, produce and export such goods, that
was fine.  However, by the time these goods were produced by developing countries– it took a long
time to set up manufacturing capacity and to build factories – new NTBs would surface to impede theexport of such products from those countries. Therefore, Malaysia was of the firm view that the same
modality should apply to all goods without having special treatment for environmental goods.
1.40 The Negotiating Group took note of the statements.TN/MA/M/3
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1.41 The Chairman stated that with respect to both environmental goods and NTBs there was need
for further reflection in the Group and that the Group should not rush to reach conclusions. This was
reflected, for example, in the discussion on environmental goods. Not only were there different views
on the definition of environmental goods but also on how this issue should be treated.  Some
participants  wished to have environmental goods defined early enough and to treat them as such inthe negotiations.  Others wished to wait until the e nd of the negotiating exercise to see whether more
needed to be done on environmental goods. It was precisely on this point that the Group needed time
to clarify ideas and to find a way to move forward.   However, he drew attention to the fact that
Ministers had felt it necessary to have a special paragraph on environmental goods and to give an
indication of the direction which negotiators should follow.  The second point was that there had been
broad support in the Committee on Trade and Environment in Special Session to give part of what
was its initial mandate to this Negotiating Group, in a spirit of cooperation and taking into account thesubstance of this matter. This Group should take responsibility for the confidence that had been
placed in it. It would also be unfair to the Chairperson of the CTE in Special Session to not respond in
a responsible and substantive manner. He hoped that participants would keep this in mind when
reflecting on this issue.  In practical terms, he suggested that he would establish on a permanent basis
contact with the Chairperson of the CTE in Special Session, in order also to share with her the senseof the discussions in this Negotiating Group and to exchange views with her.  This proceeding would
be done at the level of the Chairpersons and he would report to this Negotiating Group if there was
anything of interest which needed to be brought to the attention of the Group.  The second thing was
to follow the same procedure as the one followed by the US regarding its submission on
environmental goods i.e. make a double submission simultaneously to the CTE in Special and Sessionand to this Negotiating Group when a delegation wanted to deal with the question of market access of
environmental goods. This could only enrich the debate and it could only create a good basis for
cooperation between CTE in Special Session and this Negotiating Group.   There had been a number
of participants in this Negotiating Group th at had mentioned the APEC and OECD lists of
environmental goods. The representative of Norway had made a reference to these lists in herstatement.  He was sure that not many participants had seen these two lists; he himself had not seen
these lists. Therefore, he proposed that the Secretariat circulate these lists so that the Group could
analyse them.  In short, he was proposing the follow ing three  steps for agreement in the Group: 1) As
Chairman of this Group, he would establish contact with the Chairperson of the CTE in Special
Session on a regular basis, to exchange views on the discussion which had taken place and he would
report anything of substance to this Group; 2) If delegations were going to make submissions on
environmental goods, then they should also notify the submission to the CTE in Special Session forreasons of courtesy, efficiency and transparency; 3) the Secretariat would circulate the list of
environmental goods as defined by APEC and by the OECD.
1.42 The Negotiating Group took note of the statement and agreed
 to the Chairman's proposals.
1.43 On non-tariff barriers, the Chairman felt that this was a point on which participants wished to
reflect further. Some participants had indicated th at they would make a submission in the future and
others had already made interesting comments on this matter.  In terms of approach, he pointed out
that there was the New Zealand paper, and many comments had been made on that paper. He recalled
that at the last meeting of this Group there was a request for the Secretariat to compile a list of NTBsapplied by Members. He had indicated that the Secretariat would look into this matter and the
following information could be provided to the Group: the UNCTAD TRAINS database provided
information on NTBs by countries and at a 6-digit HS tariff line. Within the non-tariff measures
category, the following categories existed: There was a broad category of price control measures
which was intended to ensure that imported goods were not sold below a certain price level. The
finance measure category comprised the measures that restrained access to or increased the cost of
foreign exchange for imports, or which had an impact on the import cost through the advance
payment requirements. The category of quantity control  measures comprised non-automatic licensing,
quotas, prohibitions, export restraint arrangements, and enterprise-specific restrictions. TheTN/MA/M/3
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monopolistic measures  required imports to pass through a limited number of channels or that obliged
the importers to contract certain national services. Finally there was a broad category of technical
measures  which required imports to comply with technical characteristics and standards. This
database was available free-of-charge to all participants.  Once again, at the last formal meeting
another suggestion was made that the Secretariat could used the TPRM studies as a basis to compile alist of NTBs.  However, in examining the situation it was found that, apart from the fact that some of
the TPRM studies were out of date, the process of extracting and simply listing the NTBs in these
studies was not as easy as it might appear.  Reproducing the relevant textual portions of the TPRM
studies covering non-tariff measures would be a possibility but the utility of such a document was
highly questionable.  Nevertheless, he had requested the Secretariat to circulate the "Table of Contents
of Inventory of Non-Tariff Measures". This document was circulated as document TN/MA/S/5.
Following the discussions at this meeting, he felt that rather than going through a theoretical exercise
in this matter, it would be more fruitful for pa rticipants to identify the problem that they had
encountered. This was basically what should have  been done through the "Decision on Reverse
Notification of Non-Tariff Measures (G/L/60).  However, only one notification had been received
pursuant to this Decision. Participants were right to  think that NTBs were an important issue for the
negotiations in terms of market access.  However, an effort had to be made from Members to identifythe measures which were making life difficult for their exporters to export to foreign markets. He
hoped that there would be  action from the part of the participants to make the necessary  enquiries
from their private economic operators on the basic problems faced by them in terms of exporting and
accessing other markets.  He was sure that a lot of elements would be brought to the attention of the
Members. In the meantime, the Group would have that time to reflect on the matter, discuss furthersubmissions and also come back to the New Zealand paper.  In this connection, he proposed that he
write to all Members underlining the importance of th is information gathering exercise and asking for
Members to take the initiative to obtain, at the domestic level, the material that would individually
and collectively be used in the negotiations. This process would take some time, therefore, Members
could reflect more on the general aspect of this question. Subsequently, the work would be morefocused on the material that only delegations were in a position to provide.
1.44 The representative of Chile stated that there might be another category of NTBs.  For
example, if two countries signed a FTA and in the process they agreed to have very stringent rules of
origin in a particular product sector, creating a huge disincentive to outsource from third parties.
Therefore, the third parties, i.e. parties which were not part of the agreement would be facing a barrier
that did not exist before. Legal as it might be, such a case might represent a non-tariff measure.Perhaps this could be brought up in the context of these negotiations.
1.45 The Negotiating Group took note of the statements and agreed
 to the Chairman's proposals.
2. Other Matters
2.1 The Chairman stated that under this agenda item the Secretariat would introduce its papers.
However, on the subject of Secretariat papers he wished to state that the papers had been prepared
because it was felt that it would be useful for participants to have factual information or because
participants had asked for these papers.  In response to the point raised by India in its statement, he
stated that the Group was not yet at the stage of  integrating into the so-called Swiss formula new
elements which were of a political nature. At this stage, the Secretariat paper was important from a
factual point of view, and would permit participants to  further reflect on issues. He recalled that the
Swiss formula had not originated from the Secretariat.  It was devised by a number of mathematicians
in the Swiss national administration.  If there was to be an improved formula it would have to be
proposed by Members or from the specialists of the Secretariat on the basis of clear indications givenby Members. He requested Members not to consider the Secretariat papers as an attempt to bring the
discussion in one direction or another.  These papers were simply elements on which the Members
could base their reflections if they so wished.TN/MA/M/3
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(i) Data Availability and Software Tools for Tariff Negotiations (TN/MA/S/2)
2.2 A representative of the Secretariat (Ms. Jackson), in introducing the paper, stated that the
paper was in two parts: 1) Data availability, and 2) Software tools. On data availability, the paper
concentrated on the Integrated Data Base (IDB).  Potential sources of IDB compatible data that could
possibly be used to fill the many gaps in the data base were identified. The 5 sources identified werethe data bases maintained by the UNCTAD, UNSD, ITC, IADB and APEC. The results were
presented in tabular form for each Member plus those acceding countries which had supplied
information to the IDB. In these tables the latest IDB submission that had either been disseminated or
processed by the Secretariat was compared to the latest information in the other data bases as obtained
from the organizations concerned. The tables demonstrated quite clearly that the IDB was far from
complete with respect to up to date information, defined as covering the years 1998 to 2002. Only 72
Members had provided up to date tariff data and only 76 Members had provided import data. If thetable was used to make a comparison between the databases, it would possible to identify some
Members where the IDB had in fact the most updated information. However, at the other end of the
scale there were Members who did not yet appear to be in the international statistical system at all.
There were also a number of Members for whom the incidence in other data bases were more
comprehensive than the IDB.  There was an omission in Table 1 concerning Lithuania. On the importstatistics, there was one year in the WTO IDB but the year was omitted in the table and it was 2001.
On the software tools, the paper concentrated on th e tools that could run off the IBD/CTS information
or similar information. Those were the tools developed by the WTO, the World Bank, the ITC and the
IADB.  The paper briefly described the tools and detailed the access rights for Members. These tools
should be seen as complementary since they had been developed for a variety of user requirements inthe various organizations.  The Secretariat was ready to provide further technical information on these
tools, as required.
2.3 The representative of the United States stated that it was very useful to have all this
information in one place.  She hoped that the Group could find a way to fill in the gaps and perhaps
the Chairman could help through some mechanism. Her delegation remained willing to help other
Members in terms of technical assistance, if there were additional needs.
2.4 The representative of the Philippines stated that she was struck by the fact that there were 144
WTO Members, but only 72 submissions to the IDB.2.5 The representative of the European Communities stated that the Group had now these
valuable tools, the IDB and the CTS database.  of course, the IDB was not complete and his
delegation regretted that, and everything should be done to fill these gaps.  His delegation was ready
and willing to provide whatever assistance it could in order to help those participants which had not
yet been able to deliver the required data to do so as soon as possible.
2.6 The representative of Australia stated that from what he had understood, part of the problem
was that some of these data existed in organisations other than the WTO. He recalled that the United
States in an earlier proposal had suggested that one  option was to try and get authorisation to approach
those organisations with the view to having that data released so that the WTO could input it into the
IDB.  It would also be useful, as the US had suggested, to set a deadline for the end of this year bywhich time the Group should aim to have this information available.
2.7 The Chairman stated that it had appeared from the Secretariat paper and from the statements
made by participants that there was a weakness in  the data gathering process and the availability of
data.  When reading the Secretariat document he was struck by the fact that at the end of almost eachparagraph which identified a certain database and explained its contents, that a sentence had been
included to the effect that information in these databa ses could be used in the IDB if authorized by the
relevant organization and the Member concerned.  Sometimes, the problem was that not all MembersTN/MA/M/3
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were in a position to provide the appropriate or updated data.  In this context, he noted with interest
the offer made by the EC, US and other participants to provide help to countries which needed to
fulfil these tasks.  In this respect, he proposed that  this might be one of the issues that the Secretariat
could discuss with delegations having  indicated their readiness to provide assistance and with those
which still had gaps in their data to see how such assistance could be dynamised.  On the question ofdata located in other databases.  A number of databases existed such as that of the APEC, IADB etc.
A number of countries were Members of WTO, APEC  and/or IADB and had access to all the data. On
the other hand, some other countries were only WTO Members and did not have access to other
sources of data. Therefore, they were less well-placed than the others; there were some elements of
inherent discrimination in this fact. The WTO should be the place where there should be a
consolidation of the information in the various databases.  He understood that efforts had been made n
the past in order to transfer data from the other databases to the WTO.  However, he understood thatbureaucratic obstacles had been encountered.  He proposed to write a letter to all participants urging
them to provide updated information to the IDB and if that were not possible, requesting them to
authorize the Secretariat to source the required information from other intergovernmental agencies on
that Member's behalf by a certain target date. An  example of an authorization letter would also be
attached to facilitate matters for participants.
2.8 The representative of Brazil asked if the expectation was that all Members signed such
authorisation or only those Members for whom gaps existed in the data. He said this because Brazil
had made it a point to keep scrupulously up to date on the IDB submissions and wondered if it would
be useful at this point, for those Members whose data was up to date, to add more data from otherorganisations.
2.9 The Chairman stated he had looked at this exercise from a long term perspective.  He had
wished to use this occasion to ensure that even if  there were developments in the future the flow of
information would continue and that the Group would not need to meet again to decide on thisexercise at least in the course of these negotiations. The point made by Brazil was a good one, and the
matter would have to be clarified with the Secretariat. At this point, he asked for agreement that
subject to adjustments and real needs he would write to all Members on the basis outlined above.
2.10 The Negotiating Group took note of the statements and agreed 
to the Chairman's proposal.
(ii) WTO Members' Tariff Profiles (TN/MA/S/4)
2.11 A representative from the Secretariat (Mr. Richtering), in introducing the paper, stated that
this document presented a set of aggregate figures describing the tariffs of Members, both for the
MFN applied and final bound duties. The information for MFN final bound duties had been taken
from the Consolidated Tariff Schedules (CTS) database which covered basically all WTO Members.
Only 2 Members could not be included in the prof iles for the time being. The information for MFN
applied duties was taken from the IDB for which the Secretariat had not yet complete data coverage.
77 Members and acceding countries were covered in this document.  The following three important
methodological issues  had to be kept in mind when interpreting the results: 1) For the calculation of
averages and standard deviations only ad valorem  duties,  including ad valorem  equivalents, if
supplied by the Member, had been used. There were only three instances where ad valorem
equivalents had been used in this document; 2) For the calculations of bound duty averages only
bound tariff lines were taken into account. No assumptions were made as to the duty of unbound tariff
lines  which were excluded from the calculations;  3) To avoid a possible bias due to different levels of
disaggregation in Members' tariffs and to improve cross-country comparability, tariff line data were,
in a first step, aggregated up to the HS 6-digit level.  All subsequent calculations were based on these
pre-aggregated HS 6-digit duty averages. The results have been presented in ten tables: Tables 1 to 6
showed summary statistics for MFN final bound and applied duties across all Members. Tables 7 to
10 showed the detailed information for individual Me mbers. In each set of tables information for allTN/MA/M/3
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products and non-agricultural products was presented separately. In order to introduce the various
indicators used in the tables it was best to start with the presentation of the detailed tables with the
Members-based information. On page 23, table 10, there was information on the MFN applied duties
for non-agricultural products compiled from IDB data.  Following the name of the Member, the table
showed: The year of the tariff and the number of national tariff lines  followed by the simple
unweighted average  or mean value, which gave an indication of the overall average level of tariff
protection, excluding though, for lack of ad valorem  equivalents in most cases, the effect of non ad
valorem  duties. The next column showed the standard deviation  which was an indicator of the
distribution of the ad valorem  tariff duties around its mean value, which gave some idea of the degree
of tariff harmonization. For example, a tariff structure which used only a limited range of low duties
would show a very low standard deviation, whereas one with many peaks would show a higher value.
A uniform tariff rate, found in some Members' bound schedules, yielded a standard deviation of zero.The maximum value which was derived from duties found at the tariff line level; so this one was not
based on HS 6-digit duty averages. The next three columns gave the percentage of duty free and
dutiable items  and subdivided from the dutiable items, the percentage of non ad valorem  duties.  The
latter indicated the percentage of dutiable HS 6-digit subheadings which contained at least one non ad
valorem  tariff line without an ad valorem  equivalent. The last two columns showed the share of
international and national peaks  in the tariff structure, which was, to be more precise, the share of HS
6-digit subheadings with duty averages higher than 15 per cent for international peaks and duty
averages higher than three times the national simple average for national peaks which was shown in
the second column of this table. Table 9 showed the same  indicators based on all products, including
agricultural products. In tables 7 and 8 there were some additional indicators for bound duties. Table 8on page 15 showed: the estimated binding overage calculated on the basis of HS 6-digit subheadings
containing at least one bound tariff line; the last year of implementation  found for any one tariff line,
in this case non agricultural products; and at the end of the table, there were three more columns
showing information for other duties and charges.  Again simple average, standard deviation and the
share of HS 6-digit subheadings containing non ad valorem  other duties and charges were shown. To
get a better overview of the distribution of indicators across Members, summary tables had been
compiled corresponding to the detailed tables. The overall summary tables 1 and 4 gave some
indications of the overall distribution across the WTO Membership for bound duties and for applied
duties only for those Members with data. Tables 2, 3, 5 and 6 showed the distribution of tariff profile
indicators from the detailed tables and they showed in each case the number of Members that fell in a
certain percentage range. This was the first time that the Secretariat had produced such summary-
tables from CTS and IDB data and it was very important that Members looked closely at the data.
2.12 The representative of Brazil pointed out that tables 7 and 8 showed that for Brazil there was a
99.9 % coverage of bound rates. However, the correct number was 100%.2.13 The representative of Costa Rica stated that in its statement made the previous day, his
delegation had indicated that it was necessary to complete the database with ad valorem  equivalents
for those Members using non ad valorem  tariffs.  His delegation had now heard that only 3 of those
countries had provided ad valorem  equivalents. He asked how his delegation would recognize the
three countries in the tables.
2.14 The representative of Malaysia stated that this exercise showed how important it was to
contribute to the IDB.  He had three questions: 1) How accurate was this output given the fact that a
large number of specific duties had not been included? 2) When would Poland and Moldova be
included? and 3) Would it be possible to have this information in a CD version?
2.15 The representative of the Philippines stated that, in particular, table 4 had caught her attention.
The table reflected the total number of tariff lines on a minimum, maximum, medium and average,
and showed that some countries had many more tariff lines than others. She wondered how such
discrepancies could be taken into account in the negotiations.TN/MA/M/3
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2.16 The representative of Uruguay noted that  Uruguay had bound 100% of its products, but in
tables 7 and 8, the figure stood at 99.7%.
2.17 A representative of the Secretariat (Mr. J. Richtering) stated that with respect to the question
from Brazil and Uruguay regarding the calculation of percentages of binding coverage  in tables 7 and
8, the calculation was done using the CTS files which were submitted and approved by Members and
then those were matched against the standard list of HS96 subheadings. It was possible that in some
instances due to incorrect coding for some tariff lines certain lines were left out in the calculations.
Therefore, for countries that had 100% coverage, the Secretariat would need to check that all the duty
lines had been taken into account. He encouraged other Members having similar comments to contact
the Secretariat. On ad valorem  equivalents, only very few countries supplied ad valorem  equivalents,
and in fact the countries concerned were the EC, the US, Australia and Poland.  However, in hisintroductory statement, he had mentioned that only  three countries had provided this information
because in the case of the US, the ad valorem  equivalents for 2001 had not been provided.  To get a
clear picture of the effect of the exclusion of ad valorem  equivalents, in table 10 it was possible to see
that the percentage under dutiable items of which non ad valorem  indicated exactly the percentage of
HS 6-digit sub-headings that was affected by non ad valorem  duties. Some ad valorem  equivalents
were provided but not all the cases were covered. A striking example was Switzerland, where most of
the tariff actually consisted of non ad valorem  duties, therefore the figures that were shown for tariff
averages were meaningless because they did not reflect the level of protection. Concerning Poland
and Moldova, the problem with Poland was that the bound rates were sent in HS2002 and the
calculations were based on HS96 so there was no time to integrate that data into the calculations. Inthe case of Moldova, the Secretariat had had some technical problems that prevented the data from
being included into the tables in time.  As to the comment from the Philippines concerning the tariff
line disaggregation that showed very striking differen ces between  countries.  In fact this was why the
Secretariat had decided to pre-aggregate data at the 6-digit level to have a comparable basis and then
to base subsequent calculations for tariff averages and standard deviations on the basis of thestandardized-6-digit data. This took partly but not fully account of the effect that the very different
levels of disaggregation of tariff line data might have on the results. Regarding the proposal from
Malaysia to distribute these data electronically, there were various options. The CD-Rom was one
option, but publication on the intranet site might be an easier option to make the data available within
a very short time to all Members.
2.18 The representative of India requested clarification on how averages at a more disaggregated
level than a 6-digit level had been calculated.2.19 A representative of the Secretariat (Mr. Richtering) responded that the Secretariat had first
calculated a simple average for tariff lines going beyond a 6-digit level to a 6-digit level, and then the
general average was built on the averages at the 6-digit level.
2.20 The Chairman invited those Members who where interested in further discussing these issues
to attend a technical meeting with the Secretariat scheduled for the same day.
2.21 The Negotiating Group took note of the statements made.
(iii) Formula Approaches to Tariff Negotiations (TN/MA/S/3)
2.22 A representative of the Secretariat (Mr. Bora), in introducing the paper, stated that as to the
basic framework for this document, he had looked at the various proposals that had been made in the
past rounds in terms of formula approaches and al so Mr. Hoda's excellent coverage of these kind of
proposals. It struck him that essentially there was no basic way in which to compare the different
proposals that had been put forward. Hence, what the paper did in the first instance was to convert
various kinds of proposals into one common framework which was the reduction formula. TheTN/MA/M/3
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different proposals could be looked at in terms of the percentage reduction of initial tariff rates. In
order to be sufficiently neutral a hypothetical tariff profile was assumed which had the very simple
case of 25 tariff lines and tariffs increasing from one onwards. The idea of doing that was that it made
the exposition fairly simple because the impact of different kinds of formulas on that profile could be
analysed. In terms of the structure of the paper based on reduction formulas, a distinction was madebetween reduction formulas that were dependent upon the initial tariff rate. Therefore, it would be
possible to have a proposal on a specific percentage reduction regardless of the initial tariff rate. The
second type was more complicated or sophisticated and it was the case where there was a reduction
proposal based upon the original tariff rate. To give an idea of the different kinds of impacts, figure 1
on page 4 showed a situation where the proposal to reduce the tariff rate did not depend upon the
initial tariff rate at all and the various post-reduction tariff profiles were basically all straight lines
which matched the original profile. The net effect was produced in table 1 and the important thingwas that this kind of approach was not going to affect any of the relative tariff rates, i.e. the tariff rate
of one particular line relative to that of another line.  In figure 3 (page 9), a formula which was a
function of the original tariff rate and which was non-linear was used.  Looking at the example and at
the original tariff line and the bottom profile, it could be seen that the net effect of that formula was
not only to reduce higher tariff rates by a larger amount but also to reduce the higher tariff rates to thepoint that they were actually lower than the lower ta riff rates. Consequently, most of the tariff lines
got suppressed to zero and in fact the lower tariff ra tes become the peaks in this profile.  In terms of
interpreting which formula might suit particular needs or different Members' objectives, that was left
entirely up to Members. The point of the paper was simply to note that various kinds of formulas
could be elaborated to meet different kinds of objectives. Regarding the Swiss formula, despite itsuniqueness, the Swiss formula was simply one class of a formula within a general class of formulas. It
was an innovative formula which was simple and easy to use.  In page 13, the unique aspect of the
Swiss formula was that it depended upon a coeffici ent "A". Consequently, Members had negotiated or
decided upon the value of "A" and different values of  "A" had different kinds of impact so it was a
very simple and easy formula to use.  In the Annex, what he had done was to take the originalspecification of the Swiss formula and convert it into a reduction formula to try to have a common
framework. The use of the formula approach depended upon two things. The first one was ad valorem
tariffs. While one could use the formula on non ad valorem  tariffs, it would be quite complicated. The
second one was comprehensive coverage.  Therefore all 25 lines in the hypothetical profile were
subjected to the formula. In reality, as Mr. Hoda had pointed out, none of those two things actually
existed. Not all Members had ad valorem  tariffs in their tariff profile and when it came to applying the
profile many exceptions were used, be they sectoral, nuisance duties etc.
2.23 The representative of Chinese Taipei pointed out two mistakes in the table. On page 7,
Table 2, the heading relating to columns 3 to 5 s hould read "Final Tariff" not "Reduction Formula",
and the heading relating to columns 6 to 8 should r ead "Reduction Formula" not "Final Tariff". In the
third column when R=t o, the maximum rate should be 25 and not 3.75. The same error was repeated in
Table 3 (page 10), where the headings "New Tari ff" and "Reduction Rate (Per cent)" should be
exchanged.
2.24 The representative of Korea stated that in Table 1, line 2, the original tariff was 3 but the final
tariff was 2.25. He asked if the final tariff should not be 2.5.2.25 The representative of India sought clarification about the request and offer approach that was
not covered by the papers. He asked whether in the past the request and offer approach was used only
when the requesting country concerned had an INR or PSI status on those products or whether that
was more the exception than the rule. It would be useful to have an indication as to the scope ofrequest and offer approaches as going by past experience.
2.26 A representative of Secretariat (Mr. Bora) stated that the corrections would be incorporated in
the paper.TN/MA/M/3
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2.27 The Chairman stated that a revision of the paper would be distributed taking into account the
comments made by the delegations. He noted India's request for information and hoped to satisfy it.
2.28 The Negotiating Group took note of the statements.
(iv) Annotated Selective Bibliography of Research on Market Access (TN/MA/S/1/Add.1)
2.29 A representative of the Secretariat (Mr. Bora), in introducing the paper, stated that this
version of the bibliography included abstracts of all the studies for which abstracts had been written
by their authors.  Where abstracts or annotations were not available, a brief summary of the document
was included. The reason why the document was issued as an addendum as opposed to a revision was
that additional studies had been included.  The reason for annotating the bibliography and providing
the additional information was to allow the Members to guide their own research efforts to studiesthey thought were of interest to them.
2.30 The representative of Kenya stated that Kenya was among the delegations that had requested
studies to assess the impact of previous liberalisation and to obtain an indication of the results that
should be expected in these negotiations. He thanked the Secretariat for the bibliography since itcontained very useful information that strengthened Kenya's position. He had read the book, listed at
page 2 of the bibliography, written by a Cambridge University Professor, Pr. E. Buffie, that stated:
"… related to this last point some industries that po licy makers targeted as promising in Brazil, South
Korea and Taiwan did develop rapidly with the aid of protection and became efficient exporters in a
short period of time…".  This was the kind of in formation that all Members should have when the
Group was negotiating further liberalisation.  If there were missing materials, he suggested that the
Secretariat could cooperate with other organisations such as UNCTAD to fill in the gaps where the
point of view of developing countries especially those from Africa could be taken seriously.  His
delegation had also come across some UNCTAD disc ussion papers and thought that those papers
should be circulated to Members at least for information purposes.  One paper entitled "The Impact ofTrade Liberalisation on Export and GDP Growth in LDCs", contained some useful information; the
second paper entitled "How did Developed Countries Industrialise?" gave a historical perspective of
the case of Great Britain and the USA.  These were useful examples which could help the Group
better understand the position of his delegation.  In the same vein, when some Members argued that
an alternative approach to trade reform was required which would differentiate countries by their level
of development and industrial base, his delegation could be understood and not seen as posing an
obstacle to further liberalization.
2.31 The representative of the United States stated that this list would be very useful in helping the
Group target on relevant studies. After listening to the comments by Kenya on new papers, she
proposed that Members help the Secretariat to keep the list updated. This could be a useful way to
have the list as an on-going tool without posing a burden on the Secretariat.
2.32 The representative of Thailand asked why the Secretariat was using a 15% figure as a tariff
peak because there were several theories regarding tariff peaks. Furthermore, he wondered where this
figure came from originally.
2.33 A representative of the Secretariat (Mr. Bora) stated that the bibliography was open for
updating. However, he recalled that in the original bibliography it had been pointed out that it was
impossible to cover all the studies that had ever been published on the issue of trade policy. Therefore,
two simple rules had been used: 1) 1995 was used as a cut-off date, although some studies which were
considered to be "classics" were  included; and 2) studies that were more theoretical and requiredadvanced mathematics were excluded. The use of the first criteria was the reason for having excluded
from the list the two studies that Kenya had mentioned.  One was a 1988 publication and the other one
a 1990 publication.  In addition, he wished to draw the attention of the delegation of Kenya to theTN/MA/M/3
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comprehensive study by Bruton (1998) which covered a lot of the literature for the past 30 years.
Additionally, he wished to inform the Group that ther e was an initiative within the Secretariat to make
all the bibliographies currently under preparation or being updated available on the Members' website.
In response to Thailand's question, the figure of 15% was defined as an international peak as pointed
out in the modalities paper.  This was a fairly arbitrary but commonly used figure that had originatedfrom a study of the OECD, done in early 1990. One of  the key problems with using 15% was that for
Members that actually had most of their tariffs below 15%, such a figure was not appropriate;
therefore, a second criteria based on 3 times the national average was used. He added that the 15%
was not a fixed rule, and for example in studies on LDCs market access because of the existence of
preferences a peak of 5 % was used.
2.34 The Negotiating Group took note of the statements.
(v) Agenda for the next meeting
2.35 The Chairman drew the attention to the fact that when the programme of meetings for these
negotiations was adopted on 19 July 2002, a two-stage approach up to December 2002 had been
foreseen. During the first two meetings the agenda was structured in order to have discussions onissues such tariffs on non agricultural products, NTBs on non-agricultural products and other matters.
Then for the 4-6 November and 2-3 December 2002 meetings, the idea was that the Group would
discuss in a more focused way the possible modalities for negotiations on market access both in the
tariff and non-tariff barriers areas, and also other matters. So far there had been very substantive
discussions and he felt that the Group was on the right track in terms of discussion.  He noted that theGroup had entered into the substance of the discussion rapidly and had already begun to deal with
modalities or elements of modalities. Therefore, what he initially saw as two different phases had
been transformed into a progressive examination of the various key elements of this negotiation.  He
added that, perhaps, he would try to phrase the ag enda somewhat differently for the next meeting.
However, he would consult with Members before doing that. The type of discussion that the Grouphad engaged in during the first two meetings was the right type of discussion and the Group should
pursue this track in a very flexible way in order to arrive at the end of the year at a stage where a
synthesis of the discussions would be possible in order to see what the picture was and the basis on
which the Group could continue for the next year.  He urged Members which had announced
forthcoming submissions to table them well in advance of the 4-6 November 2002 so that a
substantive discussion could be held at that meeting.
2.36 The representative of the Philippines stated that he was a bit concerned with the Chairman’s
statement regarding a synthesis for the end of 2002.  The Group still had voluminous materials to
examine and discuss before reaching decisions on major issues. He thought that it would be difficult
for his country, and perhaps for other developing countries, to come up with decisions which would
allow the Chairman to do a synthesis. He would much rather continue with the open-endeddiscussions.
2.37 The Chairman stated that he did not want to enter into a discussion on procedures; that
question had already been dealt with on 19 July 2002.  His intention was to provide this Group with as
much factual material as necessary to facilitate its work.  So if a table identifying the various issues ina factual way would be useful for participants, then he would undertake to do it in his capacity as
Chairman.  He was not going to make a proposal on modalities by the end of the year; it would be for
Members to do that.  His only concern was  to ensure that delegations were in the best possible
position to take decisions.  However, the time for decisions had not arrived yet.  He underlined once
more the importance of having extensive participation in the debate.  The participation in the last two
meetings had been good, but the Group could do better.TN/MA/M/3
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2.38 The representative of India sought clarification from the Chairman about his statement
regarding rephrasing the agenda for the November 2002 meeting. He pointed out that the procedures
containing the programme of meetings had been adopted, and any modification to these procedures
might open up old issues.  His delegation would wish to be consulted in case of a rephrasing of the
agenda.
2.39 The representative of the Philippines emphasized that it would take his country some time to
react in a studied way to the various issues that were being discussed.  At this stage, his delegation's
views were preliminary in nature.  A synthesis paper would position participants and in the case of the
Philippines such a positioning would be misleading. On the question of rephrasing the agenda, he
noted that it was a sensitive issue for his delegation.
2.40 The Negotiating Group took note of the statements made.
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