This story
was taken from Bulatlat, the Philippines's alternative weekly
newsmagazine (www.bulatlat.com, www.bulatlat.net, www.bulatlat.org).
Vol. V, No. 13, May 8-14, 2005
WTO’s NAMA: A Threat to Philippine
Industries, Workers 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. © 2004 Bulatlat
■
Alipato Publications Permission is granted to reprint or redistribute this article, provided its author/s and Bulatlat are properly credited and notified.
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.
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