Beginning of February, few manufacturing industry associations: ACEA (Automobile), Businesseurope, CEFIC (Chemicals), CEPI (Paper), EFPIA (Pharmaceuticals), EUROMETAUX (non ferrous metal), ORGALIME (machinery) & EURATEX (Textiles) were invited to attend a meeting called by the EC Commission on the DDA. The main aim was to provide industry with a common understanding of the NAMA Draft Modalities text as seen by the Commission. Unsurprisingly and since the outset the Commission made clear that very little of those draft modalities resulting from July 2008 negotiations will change in so far EU member states do not want to undermine the agriculture draft modalities as they stand today. Country specific provisions and sectoral approach still to be agreed this year. Technical work at WTO level will be carried out this year. The results are not satisfactory for our industry.
Summary of Commission presentation
Commission started the presentation stressing that there is no way to redress the equilibrium between agriculture and draft NAMA modalities despite the wish of some EU Member States. Those draft modalities on NAMA, once agreed will be applied only by 41 WTO members’ countries as the remaining members will benefit from exclusions or tailored measures. Only few elements need to be fixed:
- Special treatment for three countries seeking more flexibility (Argentina, South Africa & Venezuela): South Africa: the solution is nearly found and should be agreed politically. For the two other countries the EU is not very much concerned by this except that Commission is upset by the fact that to please Mercosur, who had a problem with Argentina, the EU and the USA accepted to increase the flexibilities to which Brazil did not respond in trying to convince Argentina not to oppose the draft modalities text.
- The sectoral approach: this part of the negotiation is complex and nearly in a deadlock unless emerging countries accept to formally support some of the sectors listed by the chair in the draft modalities. There is up to now no uptake from the emerging countries on this issue as they consider that sectorals are not mandatory since the Hong-Kong WTO Ministerial decision[1].
As far as textile and clothing is concerned there is little or no apparent interest except from China and few other Asian countries. India, Brazil and other Latin American countries do not show intentions to participate in it.
Commission underlined that:
– On the Formula & Flexibilities: it is foreseeable that looking at tariff averages India will be the country with the
highest tariffs while others will see their tariffs cut substantially but still far away from the EU levels and with
a lot of exceptions as identified in the table below.
| Coefficient | Flexibility | Country (examples) | Possible sectors concerned |
| 25 | No flexibilities | Chile, Costa Rica | |
| 22 | 5% lines = 5%
Volume = No tariff cut or unbound tariff |
India | Textiles, Chemicals |
| 10% lines = 10%
Volume = half tariff cut |
ASEAN countries | Car, Steel, Chemicals | |
| 20 | 6,5% line = 7,5%
Volume = No tariff cut or unbound tariff |
China | Chemicals,
Cars |
| 14% lines = 16%
Volume = half tariff cut |
Brazil, Mexico & other Latin America | Textiles,
Cars |
[1] Pro memoria: sectorals were traded off with limited preferences during Hong-Kong under the pressure of the USA
In this context after agreement on modalities, WTO members will be obliged to pass through a “request and offer” process for the products that will be subject to those flexibilities. This will be a lengthy process and the timing foreseen in the draft Modalities (7 to 9 months) is unrealistic. It is well possible that Textile & Chemicals will have to work hard to avoid additional unforeseeable results.
– The anti concentration clause: even though this should be seen as a success for the EU it will have a limited
impact overall due to the figures included in the draft text even though this will be a clear constraint for bigger
sectors with a great homogeneity of products (i.e. non ferrous metals).
– China: will have a 13 years implementation period instead of the 10 years for all the other developing
countries (sic!)
– On non tariff barriers (NTBs): the Commission stressed that the current draft modalities are ambitious as
negotiations will have to be finished within the 2 months following the adoption of the modalities. Among the
NTB’s:
(a) the horizontal mechanism is high in the priority list of the Commission but the USA are resisting as this country does not want to be bound by commitments and are on the defensive in particular because of SPS[1] issues.
(b) on textiles labelling the Commission is trying to broaden the base of the co-sponsorship [2] and could be an area of agreement if the text is not seriously watered-down..
(c) among the other NTB proposals very few will succeed in particular the ones of interest to EC (ex: export taxes).
[1] SPS : Sanitary and Phyto-sanitary measures
[2] Submitted by the European Communities, Sri Lanka and the United States and supported by Ukraine, Mauritius
Final Considerations
EURATEX reacted quite strongly to this presentation (see EURATEX letter to Commissioner Ashton) stressing that the result is not acceptable for the textile and clothing industry. Interestingly no sector opposed this stance but Commission reacted defending the results achieved so far.
Euratex will remain vigilant to ensure no further blow will be imposed on the textile and clothing industry during the “technical work” expected this year. It is self-evident that WTO Director General P. Lamy will push for an agreement on the modalities to be reached this year.