Market Access (NAMA) before and after Nairobi: Opportunities and - PowerPoint PPT Presentation

Negotiations on Non-Agriculture Market Access (NAMA) before and after Nairobi: Opportunities and Challenges for Indonesia Jully P. Tambunan Directorate of Multilateral Cooperation Directorate General of International Trade Cooperation

Key Presentation Points • Introduction to NAMA in the WTO • NAMA negotiations in DDA: key Issues • Progress made in NAMA negotiations prior to Nairobi • Key Positions and Differences on NAMA of major WTO members/groups • What happened in Nairobi on NAMA • Opportunities and Challenges for Indonesia

(1) Introduction to NAMA in the WTO

INTERNATIONAL TRADE AND GROWTH • Trade becomes an engine of economic growth for any countries • For Indonesia, trade is also very important as an engine of economic growth. • In the 1980 ’s, Indonesia issued its export development policies (Tambunan 2005). • International trade supports countries to focus on special production that has comparative advantages 4

History of the WTO • During the multilateral trade negotiations of the Uruguay Round, It was agreed to set up the World Trade Organization (WTO) on 1 January 1995. • Since 1 January 1995, multilateral trade negotiations were organized by the WTO. The scope of the negotiations cover goods, services and IPR . • Indonesia was an original member of the WTO (now total 164 members); Indonesia has ratified the agreement of WTO in the Law number (UU) No. 7/1994 (2 November 1994) re Ratification of the WTO. • Main task of WTO is to support free trade, to eliminate and erase the trade barrier (tariff and non tariff); provide international negotiation forum; solve trade disputes and conduct trade policy reviews among member countries.

Three Pillar of the world economy Based on the three pillars of the “ Bretton Woods” system: • IMF ( International Monetary Fund )  the year 1946; • IBRD ( International Bank for Reconstruction and Development )/ World Bank  the year 1945; • ITO ( International Trade Organization ) failed due to the rejection of the US Congress  but GATT survived. – GATT ( General Agreement on Tariff and Trade ) in 1947  World Trade Organization/ WTO in 1995.

ORGANIZATIONAL STRUCTURE OF THE WTO

Base Principal of the MULTILATERAL TRADING SYSTIM • Non-discrimination  MFN Most Favoured Nation : non discrimantion among WTO member countries  National Treatment: non discrimination among imported products and domestic product. • Transparency:  TPRM: Review on trade policies of the WTO member coutries on a regular basis  Notifications: submit rules and policies of the trade of WTO member countries. 8

The basic principles of multilateral trading system • Reduce trade barriers (tariff and non-tariff)  To create trade with more open and predictable • Special and Differential Treatment  Allowing the members of developing countries to adjust, the flexibility and other treatments • Tariff Protection to protect with tariff  mechanism only; • Reciprocity  Apart from the above, trade policy issues that are developed can create more competitive because it eliminates unfair trade practices. Furthermore, trade systems which are developed by WTO can be more competitive becaus it reduces tariffs.  More competitive because it reduces unfair trade practices such as dumping and subsidy 9

NAMA negotiations in DDA: key Issues

Doha Mandate on NAMA: “…reduce or as appropriate eliminate tariffs, including reduction or elimination of tariff peaks, high tariffs & tariff escalation, as well as NTBs, in particular on products of export interest to developing countries” “… take fully into account the special needs & interests of developing & least-developed country participants, including through less than full reciprocity in reduction commitments” the overarching principle remains: development 11

Progress Made in NAMA Negotiations prior to Nairobi

Swiss Ave. Bound Tariff Average Average Selected Binding Applied Bound Coe 8 Coe 20 Coe 22 Coe 25 Members Coverage Tariff Tariff US 100 3.1 3.3 2.34 EU 100 4.2 3.9 2.62 Brazil 100 14.1 30.8 12.13 12.83 13.80 China 100 9.1 9.0 6.21 6.39 6.62 Costa Rica 100 4.6 43.1 13.66 14.57 15.82 Egypt 99.2 9.3 27.5 11.58 12.22 13.10 India 70.5 10.2 34.6 12.67 13.45 14.51 Malaysia 81.9 5.5 14.9 8.54 8.88 9.34 Nigeria 7.0 11.1 49.2 14.22 15.20 16.58 Thailand 71.3 8.3 25.4 11.19 11.79 12.60 Indonesia 96.1 6.7 35.6 12.81 13.60 14.69 Source: unknown 13

MODALITAS NAMA WTO Draft Text NAMA Modalitas – Fourth Revision, Dec 6 th , 2008 • Instrumen Modalitas NAMA a) Tariff Reduction Simple Swiss Formula b) Special and Differencial Treatment (S&D) Azas perlakuan khusus yang berbeda bagi Negara Berkembang (NB) dibandingkan Negara Maju (NM) dalam implementasi modalitas NAMA. • Swiss Simple Formula : (untuk Negara Berkembang) koefisien (b) x t 0 (tarif awal) t 1 (tarif akhir) = --------------------------------- koefisien (b) + t 0 (tarif awal) where , t 1 = Final bound rate of duty t 0 = Base rate of duty x = 20, y = 22, z = 25 (to be chosen) = Coefficients for Developing Members. 8 =Coefficient for Develop Members

MODALITAS NAMA WTO • Coefficient and Flexibilities for Developing Members Fleksibilitas: Opsi 1 Fleksibilitas: Opsi 2 (Pemotongan Tarif separuh dari (Tidak dikenakan formula Koefisien pemotongan tarif dengan formula) atau Formula Untuk “ post tarif unbound ”) NB Jumlah Post Tarif Nilai Impor Maks Jumlah Post Tarif Nilai Impor (%) (%) (%) Maks (%) Opsi X: 20 14% 16% 6,5% 7,5% Opsi Y: 22 10% 10% 5% 5% Opsi Z: 25 0 0 0 0

MODALITAS NAMA WTO 2. Simulasi Pengurangan Tarif NAMA (Simple Swiss Formula) (1) Current position: • Average bound tariff : 36.79% • Number of Post Tariff Unbound : 443 • Number of total tariff line (2003) : 6446 (2) Application of Swiss formula: Coefficient opt.; Flexibility X Y Z No Description 20 22 25 Coefficient: Flex. for Un-Bound: 6,5% 5% 0 a New average bound tariff (%) 12,86 13,66 14,77 b Average discounted per bound tariff (%) 65,06 62,87 59,85 c Average Applied Tariff (2003) (%) 7,03 7,03 7,03 d New average Applied Tariff (2003) (%) 6,60 6,72 6,87 e Average discounted per Applied Tariff (%) 6,19 4,44 2,32 f Post Tariff which are discounted to get avg new bound tariff: - Number of (%) post Tarif (2003) 15,45 15,45 9,83 - Number of Post Tarif 997 997 634 g -Number Unbound Tariff which have to be bounded 24 120 443 -Number of tariff which are remain unbound (443-419)= 419 323 0 Source: Tariff Schedule Indonesia (HS 2002); WTO Sekretariat ( Tariff Simulation ) Note : 1. Simulation is not including Unbound tariff; 2.Total of Tariff Unbound : 6,87%; 3. Aplied Tariff average of 2010 : 6,7%

Results of Uruguay Round: Bound vs Applied Rates 40 AVG Final Bound 35 AVG MFN Applied 30 25 AVG (%) 20 15 10 5 0 Hong Kong… EC-15 India Canada Japan USA China, PR Indonesia Korea Malaysia (*) Philippines Singapore Thailand Argentina Brazil Chile Mexico South Africa 17 (*) Binding coverage could be overestimated due to partial bindings; Courtesy of South Center

 What on the table? 2008 Draft Modality Rev.3. Some consider it too complex & needs simplification (Argentina’s non -paper)  HK Declaration: “ We adopt a Swiss Formula with coefficients….” applied on a line-by-line basis: {a or (x or y or z)} x t 0 t 1 = ___________________________ where {a or (x or y or z)} + t 0 t 1 = Final bound rate of duty t 0 = Base rate of duty a = 8 = Coefficient for developed Members x = 20, y = 22, z = 25 Coefficients for developing Members.  Other issues to address: anti-concentration, preference erosion, tariff peaks, high tariffs, tariff escalation, NTBs, sectoral initiatives (14), DFQF, remanufactured goods, environmental goods, different tariff structures 18