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Ranabir Ray Choudhury

Since market access is one of the main instruments which the poor world can use to prise open the markets of the developed countries, there is little doubt that some very hard bargaining will be witnessed in the weeks ahead between the opposing camps. Clearly, the issue of `reciprocity' will be exploited to the hilt by the rich economies to extract their pound of flesh for any concessions they are forced to make on this front.

THE draft proposal circulated by the WTO negotiating group on market access in mid-May comprises the latest development on the subject, which forms a major part of the Doha agenda on the new round of multilateral negotiations. (The proposal — which is already delayed if the Doha deadline for completing the modalities negotiations is considered, May 31, 2003 — relates only to the modalities of the interaction among the member states of the WTO, actual negotiations on the contents of the proposed agreement commencing hopefully in another two months' time at Geneva. According to the Doha schedule for market access talks, the agreement concerned is expected to be ready by January 1, 2005.)

Before one goes any further, what precisely is the Doha mandate on the market access issue? Paragraph 16 of the Doha Declaration says: "We agree to negotiations which shall aim, by modalities to be agreed, 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. Product coverage shall be comprehensive and without a priori exclusions. 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, in accordance with the relevant provisions of Article XXVIII bis of GATT 1994 and the provisions cited in paragraph 50 below. To this end, the modalities to be agreed will include appropriate studies and capacity-building measures to assist least-developed countries to participate effectively in negotiations."

Para 50 of the Doha Declaration states: "The negotiations and the other aspects of the Work Programme shall take fully into account the principle of special and differential treatment for developing and least-developed countries embodies in: Part IV of the GATT 1994; the Decision of 28 November 1979 on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries; the Uruguay Round Decision on Measures on Favour of Least-Developed Countries; and all other relevant WTO provisions."

Para 3 of Article XXVIII bis of GATT 1994 says: "Negotiations shall be conducted on a basis which affords adequate opportunity to take into account: a) the needs of individual contracting parties and individual industries; b) the needs of less-developed countries for a more flexible use of tariff protection to assist their economic development and the special needs of these countries to maintain tariffs for revenue purposes; and c) all other relevant circumstances, including the fiscal, developmental, strategic and other needs of the contracting parties concerned."

The WTO secretariat's explanation of the Doha Declaration points involved with market access is useful and needs to be cited for a proper grasp of what precisely the declaration means. Thus, on the issue of `modalities', the point is made that in the Tokyo Round, the tool used to conduct the tariff-cutting exercise was an "agreed mathematical formula to cut tariffs across the board". In the case of the Uruguay Round, the procedure adopted was discrete in that the participants agreed to cut tariffs product by product.

As regards `tariff peaks' and `tariff escalation', the point is made that "While average Customs duties are now at their lowest levels after eight GATT Rounds, certain tariffs continue to restrict trade, specially on exports of developing countries — for instance 'tariff peaks', which are relatively high tariffs, usually on 'sensitive' products, amidst generally low tariff levels". `Tariff escalation' refers to the higher import duties that are "applied on semi-processed products than on raw materials, and still higher on finished products". The explanation says that "This practice protects domestic processing industries and discourages the development of processing activity in the countries where raw materials originate".

It is against this general background that the mid-May first draft of the WTO proposals on the market access issue should be seen although the point must be made that the proposal is just the start of a process and that the final shape may differ greatly from what has been placed on the table now. The central point of the proposal is the targeting of a zero-tariff regime for access of certain non-agricultural products and binding tariffs for other items. The proposal seeks to "eliminate and bind tariffs on products of particular interest to developing and least-developing country participants", the sectors pinpointed being electronics and electrical goods, fish and fish products, footwear, leather goods, motor vehicle parts and components, stones, gems and precious metals, and textiles and clothing. The product coverage in each of these sectors will reportedly be decided after negotiations between WTO member countries.

A rough framework of implementation has been proposed, which would be broken up into three phases `of equal length', the longevity or otherwise of each phase however being a matter for negotiation among the member-countries. In consonance with the texts cited earlier in this article, the proposal includes `special and differential treatment' and `less than full reciprocity' for developing and least-developed countries'.

Further, for developing countries, the proposal suggests `longer implementation periods for tariff reductions', and suggests that "up to five per cent of tariff lines may remain unbound provided that they do not exceed five per cent of the total value of a member's imports, calculated for the reference period". LDCs are not required `to undertake (tariff) reduction commitments' although they are expected `to substantially increase their level of binding commitments'.

Since market access is one of the main instruments which the poor world can use to prise open the markets of the developed countries, there is little doubt that some very hard bargaining will be witnessed in the weeks ahead between the opposing camps. Clearly, the issue of `reciprocity' will be exploited to the hilt by the rich economies to extract their pound of flesh for any concessions they are forced to make on this front.

The Cancun Ministerial meeting of the WTO is expected to consider the `modalities' agreement and give the go-ahead for the actual market access negotiations to begin which, in turn, are expected to be completed by the end of next year. Of course, schedules must be kept if implementation is to begin, which must be the basic target of the entire Doha effort to liberalise further international trade with the focus on development. What the developing world, including India, will have to be careful of is that they must not succumb to the pressures of sticking to schedule at the expense of jettisoning some of the vital market access interests of the poor world.

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