Question of market access

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: The Draft Modalities Text (DMT) put forward by the Chair of the WTO’s Non-agricultural Market Access (Nama) negotiations ambassador Don Stephenson of Canada, on July 17, 2007, for the “consideration” of WTO members fails to take into account the concerns of most developing countries, including the Nama-11 grouping, of which India is a lead member. In many respects, it also fails to abide by the Nama Mandate as enshrined in Article 16 of the Doha Ministerial Declaration (2001) and subsequently in the July (2004) framework agreement and the Hong Kong Ministerial Declaration (HKMD), 2005.

Nama negotiations have been a big bone of contention of the Doha Round. This is primarily because of the aggressive tariff liberalisation that it seeks to achieve in developing countries. It is widely apprehended that these countries risk losing their policy flexibility in using tariffs as an instrument of development. Notably, industrial tariffs in developing countries are currently much higher than those in developed countries. Because, first, tariffs act as a protective shield for domestic industries against import competition, in line with “the infant industry” argument for protection; and second, tariffs contribute towards government revenue.

In India, for instance, tariffs account for over 23% of net tax revenue. Interestingly, for similar reasons, the developed countries of today had maintained high tariff walls during their earlier phases of development. It is ironical that once they have climbed up the development ladder, the same countries are now advocating drastic tariff liberalisation for developing countries.

Launched with this backdrop, the new tariff liberalisation initiative under the Doha Round, known as the Nama negotiations, calls for a line-by-line tariff reduction, as well as full binding coverage for nearly all tariff lines, except a few flexibilities for developing countries—the so-called “paragraph 8 flexibilities”.