Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts

Vol. V,    No. 13      May 8- 14, 2005      Quezon City, Philippines

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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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© 2004 Bulatlat  Alipato Publications

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