WTO’s NAMA:
A Threat to Philippine Industries, Workers
Once approved by WTO members, NAMA would hasten the entry of cheaper
industrial imports and provide greater foreign competition to small,
struggling industries in the country
By Jennifer del Rosario-Malonzo
IBON Features
Posted by Bulatlat
Negotiations for non-agricultural market access or NAMA in the World Trade
Organization (WTO) are gaining momentum. Much is at stake for
non-industrial countries like the Philippines due to the impact that
further liberalization will bring on already weak industries.
Yet the government remains mum on what is going on in trade talks and how
it intends to ensure that Philippine industries will not end up in greater
crisis.
Among the issues on the negotiating table are the tariff reduction
formulas and the proposed sectoral approach to eliminate import tariffs on
certain products.
All the proposals submitted on tariff reduction formulas feature a single
formula with different variables, known as coefficients, for developed and
developing countries. The formula is commonly known as the non-linear
formula but is also referred to as the “Swiss” formula or the harmonizing
formula.
The United States proposes a Swiss formula with two coefficients (one for
developed and one for developing countries) but stresses that there must
be small difference between the two coefficients “to provide real market
access.” The European Union also proposes a Swiss formula but imposes
conditions for the coefficients based on commitments developing countries
make on binding tariffs and giving up other flexibility to determine
import policy.
The harmonizing formula implies steep tariff cuts for products with high
tariff levels and relatively lower cuts to already lower tariffs. The
purpose of a single formula is to make tariff structures uniform.
This objective, however, defies the logic of industrial development --
countries need to protect certain products and allow access for other
products to develop their industrial base. It is essential that
governments retain this policy space.
Highly disturbing
However, the general
acceptance in the NAMA talks to work toward a formula with coefficients is
highly disturbing since Third World
countries have already raised concern over the threat of
de-industrialization posed by the adoption of a single formula to reduce
all industrial tariffs.
On the sectoral approach, the United States and Canada are pushing for
sectoral initiatives wherein a critical mass of WTO members participate in
a given initiative and then implement the initiative on a multilateral,
most favored nation (MFN) basis. The U.S. business lobby delegation from
the National Foreign Trade Council, representing over 300 American
corporations, were present in the NAMA talks to push for “ambitious tariff
cuts” in manufactured goods of developing countries.
Prior to the failed Cancun Ministerial, the Philippine government in
general proposed a formula with the provisions on special and differential
treatment supplemented by the sectoral approach. If the Arroyo government
still carries this position, industry sectors and workers are definitely
in for tougher times because this actually spells double whammy for them-–
overall tariff reductions and greater reductions in sectors targeted by
U.S. corporations (such as electronics and electronic goods; fish and fish
products; footwear; leather goods; motor vehicle parts and components;
stones, gems and precious metals; textiles and clothing; paper products;
wood products; processed foods; etc.).
The industry sector’s average nominal tariff rate fell from 26 percent in
1990 to 8 percent in 2000; the average applied tariff on industrial or
processed products is about 6 percent, which is one-fourth the maximum
(bound) tariff rate that the country is committed to in the WTO.
Due to foreign competition, many companies have lost market shares and
incurred substantial losses, forcing them to downsize and even close shop.
Everyday for the past four years, eight establishments retrench their
workers or close down. This translates to 196 workers displaced daily.
Unemployment, pegged at
10.9 percent as of October 2004, is the highest in
Asia.
Since the government has already severely lowered tariffs, it does not
firmly oppose NAMA and merely mouths “preserving flexibility” in managing
the tariff structure, which is a shameless stance in the face of the
growing economic crisis. Posted by Bulatlat
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