Update on the Trade Negotiating Agenda for the

Industry Forum

Prepared by ITED, the dti, Pretoria

August 2007


WTO Doha Negotiations


·         On 17 July 2007, the Chairs of the negotiating groups on Agriculture and Non Agricultural Market Access (NAMA) submitted “compromise texts” which they judge to be the basis for concluding the current phase of negotiating modalities for agriculture and NAMA.

·         This follows failure of the G4 negotiations between the EU, US, Brazil and India at their meeting in Potsdam, 22 June. Where the US and EU appeared to collude as they had done prior to Cancun in 2003 by shifting pressure to developing countries, but this time explicitly on NAMA. They called for a NAMA coefficient of 18 for developing countries. This was rejected by India and Brazil. While the WTO DG, Pascal Lamy, had indicated that a positive outcome from Potsdam would have assisted, he also indicated that the multilateral process would in any case go ahead multilaterally through such “compromise texts”.

·         In shifting focus to the multilateral process at the WTO in Geneva, the compromise texts signal an important change in the negotiating dynamic. Our collective (G20 and NAMA 11) analysis suggest that, comparatively, the texts are unbalanced. They have tilted the process in favour of developed countries and against most developing countries in the area of NAMA.

·         The agriculture text, in large measure, accommodates all the positions and sensitivities of the major players. The range proposed for limits in domestic support runs between US$13-16.5 billion, accommodates the US which had proposed to go below US$17 billion and then, informally, indicated it could accept a ceiling of US$15 billion. Importantly, theses numbers provide the US “headroom” to increase domestic support from the current spending of around US$10 billion/year. While the agriculture text proposes tariff cuts closer to the G20 ambition, with deeper cuts in higher tariffs, it also allows the EU considerable flexibility to deviate from those cuts. It thus largely accommodates EU sensitivity in agriculture tariff cuts. The G20 assessment is that the agriculture text nevertheless keeps the negotiations on track and could be a basis for moving to convergence.

·         By contrast, the NAMA text proposes a tight range of coefficients for developing countries - between 19 and 23. This goes below the bottom line of many NAMA 11 country members (including South Africa). While some Members may be able to end up accepting such a range towards the end of the negotiations (Brazil and India), the range offers limited negotiating flexibility until then. The text also limits the flexibility to apply 50% of the formula cut to 10% of lines.

·         Our assessment of the draft modalities text was that the Chair’s NAMA text suffers from some basic flaws that will need to be addressed:


Ø       First, the draft text prejudges the outcome of the NAMA negotiations before members have had an opportunity to negotiate these outcomes in the multilateral process. This is in sharp contrast with the agriculture draft text where members positions are substantially preserved allowing them significant scope to negotiate further;

Ø       Second, the draft text changes what has become the principle of the Doha Round, that Agriculture should lead the ambition of the Doha Round, with the Developed countries making the greatest reforms in their trade distorting policies. Instead the draft text makes developing countries pay first in the NAMA negotiations and requires them to make severe cuts in their industrial tariffs;

Ø       Third, the draft text seeks to re-interpret the mandates of the Doha round, that has called for less than full reciprocity in reduction commitments by developing countries, by asking developing countries to contribute disproportionately, compared to the contributions requested from developed countries;

Ø       Fourth, whilst we agree with the chair’s assertion that all must contribute, the draft text has called for contributions by developing countries that is not consistent with their development needs and levels of development;

Ø       Fifth, the draft text has also undermined an agreement reached at the Hong Kong ministerial meeting to ensure that the level of ambition of the NAMA negotiations shall be comparable to that in agriculture;

Ø       Sixth, the draft text makes loose claims about reflecting the majority view when this is clearly not the case;


·         The above flaws in the draft text must be corrected to secure a fair, balanced and development-oriented outcome in the Doha round. This can be achieved through a genuine bottom-up and inclusive process that allows for genuine negotiation and engagement in September to address these flaws.

·         In short, the texts, taken together, have established an unbalanced negotiating process against developing countries in NAMA.

·         There have been indications that South Africa will be offered a “special deal” based on the recognition that we undertook significant tariff cuts in the Uruguay Round as a “developed” country, and that the proposed current range of coefficients would imply disproportionate tariff cuts for us in the current round. However, no concrete proposal has been offered.

·         The NAMA text also compromises the negotiating positions of the Africa Group, ACP, and small, vulnerable economies (SVEs). For countries that have low binding levels, the text proposes binding level of 90 percent of tariff lines from their preferred 70 percent. For SVEs, the text has called for them to bind their tariffs at 14, 18 and 22 percent, increasing the burden of reduction that they envisaged. 


Other WTO negotiating Areas

·         While technical progress has been registered in other areas (Services, Rules, Environment, Trade Facilitation and TRIPs), there can be no agreement until the Agriculture and NAMA modalities are concluded. Ambition on NAMA and agriculture will determine ambition in the other areas.



      Proposed Way Forward

·         The NAMA 11, including South Africa, issued a statement indicating a willingness to seek further engagement to redress this imbalance, and while it will not reject these texts as part of the negotiating process, it cannot accept the range of numbers in NAMA as a fair basis for progress.

·         Given the widespread view that the NAMA text has prejudiced the interests of most, if not all, developing countries, a common G90 statement was issued that brought together the views of the NAMA 11, SVEs, LDCs, the Africa Group, the ACP and the G20, highlighting the imbalance in the NAMA text.

·         The negotiations are at a critical stage, and South Africa will need to consolidate its national position, as well as a regional position in SACU, and prepare for an intense engagement. It is expected that this process will continue until September before the US enters into presidential election mode. 



Economic Partnership Agreement Negotiations


·         With regards aligning the mid-term review of the TDCA and the SADC-EU EPA Negotiations, the third round is scheduled to take place at the end of August/beginning of September. Before the round SACU, will submit its response to the EC's offer and list of offensive interests. At the same time, SACU will communicate its additional offensive interests.

·         The key issue of contention has related to the EC insistence on including new generation issues in the negotiations. While some SADC EPA Members appear to be more open to considering how to address services, South Africa’s position remains that focus must for the time being remain on trade in goods, given the ending of the Cotonou waiver in December 2007. Other issues could be considered for negotiation following an adequate period of national capacity building and regional convergence in Southern Africa.   


SACU-MERCOSUR Preferential Trade Agreement

·         The two sides have not met since August 2006. The main outstanding issues are requests by Mercosur for improved market access for Uruguay and Paraguay on a limited number of agricultural tariff lines (beef, dairy, soy beans, hides and skins). SACU has in the mean time received a mandate from the BLNS to respond positively to some of these requests. Mercosur also has a very strong offensive ambition with regard to auto’s but the two sides have not been able to agree on the modalities for an agreement on auto’s.

·         South Africa has consequently proposed that auto’s be put on a separate track with a view to finalizing the rest of the agreement. The next meeting is planned for September at which time we expect to advance significantly to conclude these negotiations.

SACU USA Trade, Investment, Development and Cooperation Agreement (TIDCA)

·         The aim of such an Agreement is to provide a legal framework and mechanism for deepening cooperative trade and investment relations between SACU and the USA. The framework will seek to conclude cooperative arrangements on such issues as SPS, TBT and Customs, provide platforms for promoting trade and investment and explore possibilities for convergence around issues that lead to the suspension of the SACU-US FTA.

·         South Africa drafted possible text and that was submitted to SACU and the USA in April. The USA raised some questions and the text was further discussed with SACU and the USA on the sidelines of the AGOA meeting in July.

·         It is planned to conclude the framework before the end of the year.

SACU India Preferential Trade Agreement

·         India has received its mandate and the first round of SACU-India technical discussions is planned for September or early October.

SACU China Engagement

·         The intention on SACU’s side this year is to consolidate the findings of the various studies that have been undertaken and to begin to construct an approach to advancing the engagement with China. This will require an intensification of of the consultative process between government and constituencies/stakeholder, particularly in NEDLAC.