WORLD TRADE  
ORGANIZATION  TN/MA/W/60 
21 July 2005 
 (05-3268) 
Negotiating Group on Market Access Original:   English 
  
 
 
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS 
 
The Way Forward
 
 
Communication from Pakistan 
 
 The following communication, dated 20 July 2005, is being circulated at the request of the Delegation of Pakistan. 
 
_______________ 
 
 
1. The objective of this document is not to present a new proposal for NAMA modalities, but to 
put forward some ideas for bridging the gap between the current proposals relating to the key issues of 
tariff reduction formulae and treatment of unbound tariffs: 
 
I.       Tariff Reduction Formula  
2. The proposals currently on the ta ble can be summarized as under: 
 
•     Swiss formula with a single coefficient, but conditional flexibilities for developing countries 
to use the provisions of paragraph 8 of the July Framework (EU) 
•     Swiss formula with conditional flexibility of applying two coefficients (Norway and the US) 
or four coefficients (Chile, Colombia and Mexico) 
•     Swiss-type formula with multiple coeffici ents based on tariff averages and with paragraph 8 
flexibilities (Argentina, Brazil and India); with addition of a credit system for developing 
Members (Antigua & Barbuda, Barbados, Jamaica and Trinidad & Tobago) 
 
3.   The first option is being advocated on the gr ounds that it is ambitious and simple to understand. 
However, this approach places disproportionate bur den on developing countries  who would be obliged 
to make major cuts in their tariffs as against deve loped countries that may not be required to carry out 
any major adjustments or reductions in their tariffs, if the coefficient for them is substantially higher 
than their average tariffs.  
 
4.   In the second option, use of more than one  coefficient is allowed for developing countries. 
However, no criterion is indicated as to how those coe fficients would be determined.  It seems that the 
proposals of this category envisage that different co efficients should be “within sight of each other”. 
Furthermore, flexibility allowed to developing count ries (except in the case of the Norwegian proposal) 
through the use of another coeffici ent is conditional. Thus, many deve loping countries consider that the 
overall impact of these proposals may not be much different from the first proposal.  5.   The third option is based on the objective crite rion of current tariff profiles.  Additionally, this 
approach is effective to deal with  tariff peaks and tariff escalations of  developed countries, which is one TN/MA/W/60 
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 of the major objectives of this development round. However, this does not seem to be acceptable to 
developed countries and countries with low tariffs ha ve expressed their reservations on the grounds that 
it favours countries with higher tariffs. Moreover, it is fe lt that this may not create any additional market 
access in some countries.  
6.  Since none of the proposals currently on th e table seem to attract consensus, either new 
approaches are considered or the gap in the pr esent proposals is bridged. Considering the time 
constraints and the fact that the li mitations of the existing proposals are well-known, Pakistan feels that 
the preferred way forward would be to narrow the gap without making the formula too complicated and at the same time ensuring that the ambition of the Doha Round is not compromised. The result should 
be such that while providing additional opening of ma rkets, it should not put disproportionate burden of 
restructuring of tariff rates for any group of countries. 
 
7.     This could be achieved by the adopti on of a simple Swiss Formula with two distinct 
coefficients for developed and de veloping countries. These coefficients should be based on an objective 
criterion; taking the over all average of the bound tariff lines for developed and developing countries as 
their respective coefficients . These averages have been  worked out to be 5.48% for developed countries, 
and 29.12% for developing countries
1. For the sake of simplicity these could be taken as 6 and 30. 
 8.  Some of the advantages of such an approach are:   
 It is simple, transparent and easy to comprehend. WTO Members can clearly be aware of the 
consequences of their commitments.  
 It results in a significant reduction of tariff peaks and tariff escalations.  
 It would cut higher tariffs much more than lower tariffs. 
 It would make everyone contribute, and everyo ne will gain through additional market access. 
 It is based on an objective criterion. 
 
9. The impact of the above proposal on the tariff rates has been calculated and reflected in annex 
to this document. For developing countries, the cu rrent bound rates up to 30% would reduce to 15% or 
lower, rates ranging between 30 - 60% will reduce to  15-20% and rates betwee n 60-200% will reduce to 
20-26%. For developed countries the rates of 5, 10, 15 and 30% would reduce to 2.73, 3.75, 4.29 and 
5% respectively.  
 
II.        Treatment of unbound tariffs 
 
10. For the treatment of unbound tariffs, there are five proposals on the table: 
i. Multiplying the MFN applied rate of 2001 by [two] ( July Framework)  
ii. Marking up unbound lines by x times ( to be negotiated) and binding tariff lines at an 
average level after the application of the fo rmula  (Argentina, Brazil, and India or the 
ABI proposal)  
iii. Capping of new bound tariffs at a ceiling of 40% with target average of 25% and no 
tariff reductions in this round for new tariff bindings (Malaysia)  
iv. The “Rational Formula” Approach-a non –linear mark-up derived through a 
mathematical formula using  two coefficients.(Mexico) 
                                                     
 
 1 The calculation was based on the data taken from document TN/MA/S/4/Rev.1/Corr.1. The developed 
countries mean, Australia, Canada, EC, Iceland, Japan, New Zealand, Norway, Switzerland, and the US, and those 
developing countries that will apply the formula (i.e. excluding countries under Paragraph 6 &9). 
  
  TN/MA/W/60 
 Page 3 
 
 
 v. Non-linear mark-up. Adding 5 percentage points ( absolute) to each unbound rate 
(Canada, Hong Kong, China, New Zealand and Norway or the CHNN proposal) 
 11. Countries with low unbound tariffs are reluct ant to accept options i and ii i.e. marking up 
unbound tariff lines two times or x times as they f eel that this unduly favours those countries which 
have higher unbound tariffs. The Malaysian proposal may be workable for many developing countries, 
but countries with low bound tariffs feel that it conf licts with the July framework which requires that 
tariff reduction has to be comprehensive without ‘a  priori exclusion’. The Mexican proposal could 
answer the concerns of countries with low unbound tari ffs but the concept seems to be complicated and 
thus difficult to negotiate. The CHNN approach fo r non-linear mark-up is simple but the figure of 5 
percentage points (absolute) seems to favour those countries which have low bound tariffs and is not 
acceptable to a majority of developing countries.   12. Therefore, Pakistan would like to propose that instead of a non-linear mark-up of 5 percentage points (absolute), mark up of 30 should be added to the base rate  (applied rate of 2001) for each 
unbound line before the application of a formula.  
 13. By this proposal, the base rate of 5% would be marked up to 35% and through the application 
of the formula (with a coefficient of 30 proposed  for developing countries), it would get reduced to 
about 16% where it could be bound. This would give some policy space to developing countries with 
low unbound rates. For higher unbound rate of 100% a nd above it would result in lowering that rate to 
around 24% where it would be bound. The annex to this document would provide guidance to Members 
for determining the final bound rate for each unbound lin e in their own tariff and the tariffs of their 
trading partners.  
III.       Flexibilities  
 
14. The developing country Members shall be eligible to the longer implementation period and other flexibilities as already agreed in paragraph 8 of the July package. Members covered by paragraph 
6 and 9 shall not be subject to the tariff reduc tion formula. The newly acceded Members shall have 
special provisions for tariff reductions.  
 
 
 TN/MA/W/60 
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 A
NNEX  
IMPACT OF PAKISTAN ’S PROPOSAL  
 
 
    
 
     
 
    
 
    
 
     
 
    
 
     
 
 
 
  
 
 
__________ 
 % 
Swiss Formula 
 Tariff Rates 
C = 06 C = 30 
5 2.73 4.29 
10 3.75 7.50 
15 4.29 10.00 
20 4.62 12.00 
25 4.84 13.64 
30 5.00 15.00 
35 5.12 16.15 
40 5.22 17.14 
45 5.29 18.00 
50 5.36 18.75 
55 5.41 19.41 
60 5.45 20.00 
65 5.49 20.53 
70 5.53 21.00 
75 5.56 21.43 
80 5.58 21.82 
85 5.60 22.17 
90 5.63 22.50 
95 5.64 22.80 
100 5.66 23.08 % 
Swiss Formula 
 Tariff Rates 
C = 06 C = 30 
105 5.68 23.33 
110 5.69 23.57 
115 5.70 23.79 
120 5.71 24.00 
125 5.73 24.19 
130 5.74 24.38 
135 5.74 24.55 
140 5.75 24.71 
145 5.76 24.86 
150 5.77 25.00 
155 5.78 25.14 
160 5.78 25.26 
165 5.79 25.38 
170 5.80 25.50 
175 5.80 25.61 
180 5.81 25.71 
185 5.81 25.81 
190 5.82 25.91 
195 5.82 26.00 
200 5.83 26.09