WORLD TRADE  
ORGANIZATION  TN/MA/W/54 
15 April 2005 
 (05-1595) 
Negotiating Group on Market Access Original:   English 
  
 
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS 
 
Communication to the Negotiating Group on Non-Agricultural Market Access
 
from Argentina, Brazil and India  
 
 
 The following communication, dated 15 April 2005, is being circulated at the request of the Delegations of Argentina, Brazil and India.  
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1. The Framework contained in Annex B to the July Framework Agreement
1 represents the mandate 
provided for the non-agricultural products negotiations in paragraph 16 of the DMD.  Accordingly, the 
formula shall reduce tariff peaks, high tariffs and tariff escalation and take fu lly into account "less than 
full reciprocity in reduction commitments" and special & differential treatment for developing countries. 
 
2. The concepts of "less than full reciprocit y in reduction commitments" and "special and 
differential treatment" are different:    (i) "Less than full reciprocity in reduction commitm ents" has to be an in-built component of the 
formula and would be achieved through the incorporation of sufficiently higher coefficients for 
developing countries as compared to developed countri es, resulting in higher percentage reductions for 
developed countries and taking into account the di fferences in tariff profile amongst Members; 
 (ii) Special and differential treatment relates to  flexibilities in the application of the formula, 
including longer implementation periods, less than fo rmula cuts and the exclusion of some tariff lines.  
The present structure of the S&D provisions in the Fr amework contained in para graph 8 of Annex B is 
the minimum necessary to meet the development goals  of the developing countries in this regard.  
 3. Harmonization of tariffs is not an objective of th is Round.  It has not been envisaged in the 
Mandate and was not included in the July Framework as one of the necessary features of the formula.  
Harmonizing the customs tariffs amongst countries w ith differing industrial/ economic structures and 
with varying societal needs is not desirable and would not deliver the development objective of the 
Round.   
 4. After consideration of the various formulae pr oposed for these negotiations, a Swiss 'type' 
formula incorporating each country's tariff average seems best suited to address the mandate in its 
entirety.  This could be expressed as:  
                                                     
 
1 Document WT/L/579 dated 2 August 2004. TN/MA/W/54 
Page 2  
 
 00
1ttBttBt
aa
+×××=  
 
         where ,  
t1 is the final rate, to be bound in ad valorem  terms 
t0  is the bound base rate 
ta is the average of the current  bound rates 
 B is a coefficient, its value(s) to be determined by the participants 
 
The defining features of this formula are as follows: - The 'formula' would apply to bound tariff lines;  and 
- The coefficient 'B' will be modulated to reflect th e ambition  in other areas relevant to market 
access agreed to for this Round;  
 
5. All non- ad valorem  duties shall be converted to ad valorem  equivalents before the adoption of the 
formula, and bound in ad valorem terms.  
 6. This is an equitable formula as it takes into account the present tariff commitments of Members.  
It improves the tariff profiles by compressing the di spersion of tariffs within each Member.  It is 
transparent as it uses a well known factor, each Member’s tariff average, as the basis.  It seeks to match 
the ambition level in all areas of market access negotiations  in the WTO, with the inclusion of a 'B' factor.  
The overall reduction commitment it imposes in percen tage terms is proportiona l amongst developed and 
developing countries, removing the shortcoming in the simple Swiss formula that imposes much greater 
reduction requirements on the partic ipating developing countries.   
 
7. The impact of any tariff reduction formula depe nds on the numbers which are the essence of the 
formula.  At this stage the important consideration is  whether the formula by its nature complies with the 
mandate, i.e. whether it reduces or eliminates tariff peaks, high tariffs, and tariff escalation taking fully 
into account the special needs and interests of de veloping and least-developed country participants, 
including through less than full reciprocity in reducti on commitments.  We believe the above formula is 
still the most appropriate because: 
 (i) it is based on the current tariff profile; (ii) it has an element of progressivity in national tariffs; (iii) it allows for less than full reciprocity in reduction commitments;  and (iv) its liberalizing effect can be adjusted  by variations in the coefficient 'B'. 
 
8. Having agreed on the basic structure of the formula, Members would have to address the part of 
the mandate related to Special and Differential trea tment for developing country participants in the 
application of the formula on current bound tariffs. Pa rticular sensitivities of developing countries would 
be attended by longer implementati on periods, less than formula cuts for some tariff lines and the 
exclusion of some tariff lines from any formula cut.  The figures related to those flexibilities would have 
to be negotiated after an agre ement on the formula itself.   
 Treatment of unbound tariff lines
 
 
9.   Increasing the binding coverage to 100 per cent is a desirable objective for this Round.  However, 
it must be recognized that appropriate flexibilities ar e required by developing countries to achieve this 
objective.  The average as on the base date of  presently unbound lines will be marked up by x times,  
which shall be negotiated as indicated in the framewo rk agreement.  Thereafter, the marked up unbound 
tariff lines could be bound at an average  level after the application of th e formula.  Developing country 
Members would then have the flexibility to fix indi vidual tariff lines around this average.  The formula  TN/MA/W/54 
 Page 3 
 
 
 for unbound tariff lines will be slightly modified i.e., the formula would apply only on the tariff average 
and not on a line by line basis.  The  modified formula for unbound tariff lines shall be as follows: 
 
A AA A
At xtBt xtBt+×××=1  
  
    Where: 
tA1 is the average for newly bound lines 
xtA  is the marked up tariff average of MFN applied rates as on the base date 
tA  is the tariff average of MFN applied rates as on the base date 
B is a coefficient, its value(s) to be determined by the participants 
 
10. Members covered by paragraphs 6 and 9 of Anne x B of the framework shall not undertake tariff 
reductions in this Round.  Members should also recognize liberalisation recently undergone by newly 
acceded Members.  
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