WORLD TRADE  
ORGANIZATION  TN/MA/16 
24 November 2005 
 
 (05-5579) 
Negotiating Group on Market Access  
  
 
NEGOTIATING GROUP ON MARKET ACCESS 
 
Progress Report by the Chairman, Ambassador S. H. Jóhannesson, to 
 
the Trade Negotiations Committee  
 
 
A. INTRODUCTION  
1. A Chairman's commentary of the state of pl ay of the NAMA negotiations was prepared in 
July 2005 and circulated in document JOB(05)/147 and Add. 1 (hereinafter referred to as the "Chairman's commentary").  The current report, made on my responsibility, reflects the state of play 
of the NAMA negotiations at this juncture of th e Doha Development Agenda , and supplements that 
commentary.    2. With an eye on the forthcoming Ministerial, Section B of this report attempts to highlight 
those areas of convergence and divergence on the elements of Annex B of document WT/L/579 
adopted in July 2004, (hereinafter referred to as the “NAMA framework”) , and to provide some 
guidance as to what may be a possible future course of action with respect to some of the elements. 
Section C of the report provides some final remarks about possible action by Ministers at Hong Kong.   3. In preparing this report, use has been made of documents provided by Members (as listed in  
TN/MA/S/16/Rev.2) as well as the discussions in th e open-ended sessions of the Group, plurilateral 
meetings and bilateral contacts, as long as they  were not in the nature of confessionals.  
 
B. 
SUMMARY OF THE STATE OF PLAY  
4. Full modalities must have detailed language and, where required, final numbers on all 
elements of the NAMA framework.  Such an agre ement should also contain a detailed work plan 
concerning the process after the establishment of full modalities for the purpose of the submission, 
verification and annexation of Doha Schedules to  a legal instrument.  While acknowledging that 
progress has been made since the adoption of the NAMA framework, the establishment of full 
modalities is, at present, a difficult prospect given th e lack of agreement on a number of elements in 
the NAMA framework including the formula, pa ragraph 8 flexibilities and unbound tariffs.   
5. Regarding the structure of this section , generally Members recognize that the issues identified 
in the preceding paragraph are the three elements  of the NAMA framework on which solutions are 
required as a matter of priority, and that there is a ne ed to address them in an interlinked fashion. So, 
this report will commence with these three subjects be fore moving on to the other elements of the 
NAMA framework in the order in which they are presented therein.  TN/MA/16 
Page 2  
 
 Formula (paragraph 4 of the NAMA framework)
 
 
6. On the non-linear formula, there has been  movement since the adoption of the NAMA 
framework. There is a more common understanding of  the shape of the form ula that Members are 
willing to adopt in these negotiations. In fact, Me mbers have been focusing on a Swiss formula. 
During the past few months, much time and effort has been spent examining the impact of such a 
formula from both a defensive and offensive angle. In terms of the specifics of that formula, there are 
basically two variations on the table: a formula with  a limited number of negotiated coefficients and a 
formula where the value of each country's coeffici ent would be based essentially on the tariff average 
of bound rates of that Member, resulting in multiple coefficients.    
 
7. In order to move beyond a deba te on the merits of the two options (and in recognition of the 
fact that what matters in the final analysis is the level of the coefficient) more recently Members have 
engaged in a discussion of numbers. Such a debate has been particularly helpful, especially as it 
demonstrated in a quantifiable manner to what exte nt the benchmarks establis hed in paragraph 16 of 
the Doha Ministerial Declaration would be achieved.  While it is evident that one of the characteristics 
of such a formula  is to address tariff peaks, ta riff escalation and high tariffs (as it brings down high 
tariffs more than low tariffs), one  benchmark which has been the subj ect of differences of opinion has 
been that of "less than full reciprocity in reducti on commitments" and how it should be measured.  
Some developing Members are of the view that this means less than average percentage cuts i.e. as 
translated through a higher coefficient in the form ula, than those undertaken by developed country 
Members. However, the latter have indicated that there are other measurements of less than full 
reciprocity in reduction commitments including the final rates after the formula cut which in their 
markets would be less than in developing country ma rkets. Also, in their view, such a measurement of 
less than full reciprocity in reduction commitments has to take into account not only the additional 
effort made by them in all areas but also of paragraph 8 flexibilities and the fact that several 
developing Members and the LDCs woul d be exempt from formula cuts.   
 8. Other objectives put forward by developed Members and some developing Members as being 
part of the Doha NAMA mandate are: harmonization of tariffs between Members; cuts into applied 
rates; and improvement of South-South trade. However, these objectives have been challenged by other developing Members who believe that, on the contrary, they are not part of that mandate. 
 
9. During the informal discussions, many Member s engaged in an exchange on the basis of an 
approach with two coefficients.  In the context of such debates, the coefficients which were mentioned 
for developed Members fell generally within the range  of 5 to 10, and for developing Members within 
the range of 15 to 30, although some developing  Members did propose lower coefficients for 
developed Members and higher coefficients for de veloping Members.  In addition, a developing 
country coefficient of 10 was also put forward by  some developed Members. However, while this 
discussion of numbers is a positive development, the inescapable reality is that the range of 
coefficients is wide and reflects the divergence that exists as to Members’ expectations regarding the 
contributions that their trading partners should be making.   
 Flexibilities for developing Members subject to a formula (paragraph 8 of the NAMA 
framework ) 
 
10. A central issue concerning the paragraph 8 fl exibilities has been the question of linkage or 
non-linkage between these flexibilities and the coefficient in the form ula. A view was expressed that 
the flexibilities currently provided for in paragraph 8 are equivalent to 4-5 additional points to the 
coefficient in the formula, and as  a result there was need to take this aspect into account in the 
developing country coefficient. In response, th e argument has been made by many developing 
Members that those flexibilities are a stand alone provision as reflected in the language of that 
provision, and should not be linked to the coefficient.   Otherwise, this would amount to  re-opening  TN/MA/16 
 Page 3 
 
 
 the NAMA framework.  Some of those Members ha ve also expressed the view that the numbers 
currently within square brackets are the minimum required for their sensitive tariff lines, and have 
expressed concern about the conditions attached to th e use of such flexibilities, such as the capping of 
the import value. In response, the point has been  made by developed Members that they are not 
seeking to remove the flexibilities under paragraph 8,  and therefore are not re-opening the NAMA 
framework. They further point out that the numbe rs in paragraph 8 are within square brackets 
precisely to reflect the fact that they are not fixe d and may need to be adju sted downwards depending 
on the level of the coefficient.  In addition, the need for more transparency and predictability with 
regard to the tariff lines which would be covered by  paragraph 8 flexibilities has been raised by some 
of these Members.  Some developing Members have also advanced the idea that there should be the 
option for those developing Members not wanting to use paragraph 8 flexibilities to have recourse to a 
higher coefficient in the formula in the in terest of having a balanced outcome.   
 
Unbound Tariff Lines (paragraph 5,  indent two of the NAMA framework ) 
 11. There has been progress on the discussion of u nbound tariff lines. There is an understanding 
that full bindings would be a desirable objective of  the NAMA negotiations, and a growing sense that 
unbound tariff lines should be subject to formula cuts  provided there is a pragmatic solution for those 
lines with low applied rates. However, some Me mbers have stressed that their unbound tariff lines 
with high applied rates are also sen sitive and due consider ation should be given to those lines. There 
now appears to be a willingness among several Member s to move forward on the basis of a non-linear 
mark-up approach to establish base rates, and in th e case of some of these Members, provided that 
such an approach yields an equitable result.  A non-linear mark-up approach envisages the addition of 
a certain number of percentage points to the applied rate of the unbound tariff line in order to establish 
the base rate on which the formula is to be applied. There are two variations of such an approach. In 
one case, a constant number of percentage points are a dded to the applied rate in order to establish the 
base rate.  The other variation consists of having  a different number of pe rcentage points depending 
on the level of the applied rate. In other words, th e lower the applied rate the higher the mark-up and 
the higher the applied rate, the lower the mark-up.   There is also one proposal on the table of a target 
average approach where an average is established through the use of a formula, with the unbound 
tariff lines expected to have final bindings around that average.   
12. On a practical level, in their discussions on unbound tariff lines, Members have been referring 
mostly to the constant mark- up methodology to establish base rates. In the context of such 
discussions, the number for the mark-up has ranged fro m 5 to 30 percentage points.  Once again the 
gap between the two figures is wide, but Member s have displayed willingness to be flexible.  
  Other elements of the formula (paragraph 5 of the NAMA framework
) 
 
13. Concerning product coverage (indent 1) , Members have made good progress to establish a list 
of non-agricultural products as reflected in documen t JOB(05)/226/Rev.2.  The main issue is whether 
the outcome of this exercise should be an agreed li st or guidelines.  It would appear that several 
Members are in favour of the former outcome, however, some have expressed their preference for the 
latter.  In any event, there are only a limited nu mber of items (17) on which differences exist and 
Members should try and resolve these differences as quickly as possible.   14. On ad valorem  equivalents (indent 5)
, agreement was reached  to convert non ad valorem  
duties to ad valorem  equivalents on the basis of the methodol ogy contained in JOB(05)/166/Rev.1 and 
to bind them in ad valorem  terms.  To date, four Members have submitted their preliminary AVE 
calculations, but there are many more due. Those Me mbers would need to submit this information as 
quickly as possible so as to allow sufficient time for the multilateral verification process.  
 TN/MA/16 
Page 4  
 
 15. The subject of how credit is to be gi ven for autonomous liberalization (indent 4)
 by 
developing countries provided that the tariff lin es are bound on an MFN basis in the WTO since the 
conclusion of the Uruguay Round has not been discu ssed in detail since the adoption of the NAMA 
framework.  However,  this issue may be more usefully taken up once there is a clearer picture of the 
formula.  
 
16. All the other elements of the formula  such as tariff cuts commencing from bound rates after 
full implementation of current commitments (indent  2), the base year (indent 3), the nomenclature 
(indent 6) and reference period fo r import data (indent 7) have not been discussed any further since 
July 2004, as they were acceptable to Members as currently reflected in the NAMA framework.   
 Other flexibilities for developing Members
 
 
Members with low binding coverage (paragraph 6 of the NAMA framework)  
 
17. A submission by a group of developing Me mbers, covered under para graph 6 provisions, was 
made in June 2005. The paper proposed that Members falling under this paragraph should be 
encouraged to substantially increase their binding c overage, and bind tariff lines at a level consistent 
with their individual development, trade, fiscal and strategic needs.  A preliminary discussion of this 
proposal revealed that there were concerns about this proposal re-opening this paragraph by seeking 
to enhance the flexibilities contained therein.  Fu rther discussion of this proposal is required.  
However, it appears that the issue of concern to so me of the paragraph 6 Members is not related so 
much to the full binding coverage, but rather to th e average level at which these Members would be 
required to bind their tariffs. 
 
Flexibilities for LDCs (paragraph 9 of the NAMA framework)  
 
18. There appears to be a common understanding that  LDCs will be the judge of the extent and 
level of the bindings that they make. At the same time, Members have indicated that this substantial 
increase of the binding commitments which LDCs ar e expected to undertake should be done with a 
good faith effort.  In this regard, some yardstic ks for this effort were mentioned including the 
coverage and level of bindings  made in the Uruguay Round by other LDCs as well as the more 
recently acceded LDCs.   
 
Small, vulnerable economies  
 
19. A paper was submitted recently by a group of Members which proposes inter alia  lesser and 
linear cuts to Members identified by a criterion using trade share. While some developing and 
developed Members were sympathetic to the situa tion of such Members, concerns were expressed 
with respect to the threshold used to establish e ligibility, and also the treatment envisaged. Other 
developing Members expressed serious reservations about this proposal which in their view appeared 
to be creating a new category of developing Members,  and to be further diluting the ambition of the 
NAMA negotiations.  The sponsors of this proposal stressed that the small, vulnerable economies had 
characteristics which warranted special treatment.  
 20. This is an issue on which there is a serious divergence of opinion among developing Members. This subject will need to be debated further. Discussions may be facilitated through 
additional statistical analysis.   Sectorals (paragraph 7 of the NAMA framework
) 
 
21. It appears that good progress is being made  on the sectoral tariff component of the NAMA 
negotiations.  Work which is taking place in an  informal Member-driven process has focused on inter  TN/MA/16 
 Page 5 
 
 
 alia identification of sectors, product coverage, particip ation, end rates and ad equate provisions of 
flexibilities for developing countries.  Besides the sectorals based on a critical mass approach 
identified in the Chairman's commentary – bicycles, chemicals, electronics/electrical equipment, fish, 
footwear, forest products, gems and jewellery, phar maceuticals and medical equipment, raw materials 
and sporting goods – I understand that work is ongo ing on other sectors  namely apparel, auto/auto 
parts and textiles.  
 22. While this component of the NAMA negotiations is recognized in the NAMA framework to be a key element to delivering on the objectives of  paragraph 16 of the Doha NAMA mandate, some 
developing Members have questioned the rationale of engaging in sect oral negotiations before having 
the formula finalized. Many have also re-iterated th eir view that sectorals are voluntary in nature.  The 
point has also been made by other developing Me mbers that sectorals harm smaller developing 
Members due to an erosion of their preferences.  However, the proponents of such initiatives have 
argued that sectorals are another key element of the NAMA negotiations and an important modality 
for delivering on the elimination of duties as manda ted in paragraph 16 of the Doha Ministerial 
Declaration. In addition, they have pointed out that  some of the sectorals we re initiated by developing 
Members. Moreover, such initiatives require substan tive work and were time-consuming to prepare. 
Concerning preference erosion, this was a cross-cutting issue.   23. Members will need to begin considering time- lines for the finalization of such work, and the 
submission of the outcomes which will be applied on an MFN basis.   Market Access for LDCs (paragraph 10 of the NAMA framework
) 
 
24. In the discussions on this subject, it was not ed that the Committee on Trade and Development 
in Special Session is examining the question of duty-free and quota-free access for non-agricultural 
products originating from LDCs.  Consequently, ther e is recognition by Members that the discussions 
in that Committee would most probably have an impact on this element of the NAMA framework, 
and would need to be factored in at the appropriate time.   
 
Newly Acceded Members (paragraph 11 of the NAMA framework ) 
 25. Members recognize the extensive market access commitments made by th e NAMs at the time 
of their accession.   From the discussions held on this subject, it was clarified that those NAMs which 
are developing Members have access to paragraph 8 flexibilities.  As special provisions for tariff 
reductions for the NAMs, some Members are willing to consider longer implementation periods than 
those to be provided to developing Members. Othe r proposals such as a higher coefficient and "grace 
periods" for the NAMs were also put forward, but a number of Members have objected to these ideas.  
There has also been a submission by four low-inco me economies in transition who have requested to 
be exempt from formula cuts in light of their s ubstantive contributions at the time of their WTO 
accession and the current difficult state of their eco nomies.  While some Members showed sympathy 
for the situation of these Members, they expressed the view that other solutions may be more appropriate. Some developing Members also e xpressed concern about this proposal creating a 
differentiation between Members.  Further discussion is required on these issues. 
  
NTBs (paragraph 14 of the NAMA framework
) 
 
26. Since adoption of the July 2004 framework, Me mbers have been focusing their attention on 
non-tariff barriers in recognition of the fact that they are an integral and equally important part of the 
NAMA negotiations. Some Members clai m that they constitute a greater barrier to their exports than 
tariffs.  The Group has spent a considerable amount  of time identifying, categorizing and examining 
the notified NTBs.  Members are using bilateral,  vertical and horizontal approaches to the NTB 
negotiations.  For example, many Members are raisi ng issues bilaterally with their trading partners. TN/MA/16 
Page 6  
 
 Vertical initiatives are ongoing on automobiles, el ectronic products and wood products.  There have 
been some proposals of a horizontal nature concerning export taxes, export restrictions and remanufactured products.  On export taxes, some Members have expressed the view that such 
measures fall outside the mandate of the NAMA ne gotiations. Some Members have also raised in 
other Negotiating Groups some of the NTBs they had notified initially in the context of the NAMA 
negotiations. For example, a number of trade fac ilitation measures are now being examined in the 
Negotiating Group on Trade Facilitation. Some other Me mbers have also indicated their intention to 
bring issues to the regular WTO Committees.  NTBs  currently proposed for negotiation in the NAMA 
Group are contained in document JOB(05)/85/Rev.3.  
27. Some proposals have been made of a procedur al nature in order to expedite the NTB work, 
including a suggestion to hold dedicated NTB sessions.  Further consideration will need to be given to 
this and other proposals.  Members will also need  to begin considering some time-lines for the 
submission of specific negotiating proposals and NTB outcomes.  
 
Appropriate Studies and Capacity Building Me asures (paragraph 15 of the NAMA framework
) 
 
28. There has been no discussion as such on this element as it is an ongoing and integral part of 
the negotiating process. Several papers  have been prepared by the Secretariat during the course of the 
negotiations and capacity building activities by the S ecretariat have increased considerably since the 
launch of the Doha Development Agenda.  Such ac tivities will need to continue taking into account 
the evolution of the negotiations.  
 
Non-reciprocal preferences (paragraph 16 of the NAMA framework ) 
 
29. In response to calls by some Members for a better idea of the scope of the problem, the ACP 
Group circulated an indicative list of products (170  HS 6-digit tariff lines) vulnerable to preference 
erosion in the EC and US markets as identified th rough a vulnerability index. Simulations were also 
submitted by the African Group. Some developing Me mbers expressed concern that the tariff lines 
listed covered the majority of their exports, or cove red critical exports to those markets and were also 
precisely the lines on which they sought MFN cuts.  As a result, for these Members, it was impossible 
to entertain any solution which relate d to less than full formula cuts or  longer staging. In this regard, 
concern was expressed by them that non-trade solutio ns were not being examined. For the proponents 
of the issue, a trade solution was necessary as th is was a trade problem. According to them, their 
proposal would not undermine trade liberalizati on because they were seeking to manage such 
liberalization on a limited number of products.   
30. This subject is highly divisive precisely becau se the interests of the two groups of developing 
Members are in direct conflict.  Additionally, it is a cross-cutting issue which makes it even more 
sensitive. While, the aforementioned list of products  has been helpful in providing a sense of the 
scope of the problem and may help Members to engage  in a more focused discussion, it is clear that 
pragmatism will need to be shown by all concerned.  
 
Environmental Goods (paragraph 17 of the NAMA framework
) 
 
31. Since the adoption of the July framework in 20 04, limited discussions have been held on this 
subject in the Group. However, it is noted that much work under paragraph 31(iii) of the Doha 
Ministerial Declaration has been undertaken by the Committee on Trade and Environment in Special 
Session.    There would need to be close coordi nation between the two nego tiating groups and a stock 
taking of the work undertaken in that Committee would be required at the appropriate time by the 
NAMA Negotiating Group.  
  TN/MA/16 
 Page 7 
 
 
 Other elements of the NAMA framework   
 
32. On the other elements of the NAMA framework, such as supplementary modalities (paragraph 12), elimination of low duties (paragra ph 13) and tariff revenue  dependency (paragraph 
16) the Group has not had a substantiv e debate. This has in part to do with the nature of the issue or 
because more information is required from the propon ents. Regarding supplementary modalities, such 
modalities will become more relevant once the form ula has been finalized. On elimination of low 
duties, this issue may be more suitable to consider once there is a better sense of the likely outcome of 
the NAMA negotiations. On tariff revenue dependenc y, more clarity is required from the proponents 
on the nature and scope of the problem.  
 
C. F
INAL REMARKS  
33. As may be observed from the above report, Members are far away from achieving full 
modalities.  This is highly troubling.  It will take a major effort by all if the objective of concluding 
the NAMA negotiations by the end of 2006 is to be realized.  
 
34. To this end, I would highlight as a critic al objective for Hong Kong a common understanding 
on the formula, paragraph 8 flexibilities and unbound tariffs.  It is crucial that Ministers move 
decisively on these elements so that the overall out come is acceptable to all.  This will give the 
necessary impetus to try and fulfil at a date soon thereafter the objective of full modalities for the 
NAMA negotiations.    
35. Specifically, Ministers should:  
 
• Obtain agreement on the final structure of th e formula and narrow the range of numbers.  
 
• Resolve their basic differences over paragraph 8 flexibilities.  
 
• Clarify whether the constant mark-up approach  is the way forward, and if so, narrow the 
range of numbers.  
 
__________