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Although we have tried to use plain English content on the site, you may come across specialist terms and acronyms. Find out what they mean in our glossary of terms.
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Non-agricultural products (also known as industrial products) cover a diverse range of New Zealand exports. They include all manufactured goods (from textiles, clothing and footwear to steel and aluminium) as well as forest and fish products, chemicals, and minerals. Non-agricultural products made up 46% of New Zealand’s export receipts in the year to December 2005, worth NZ$14.2 billion. For most World Trade Organisation members, non-agricultural products make up the overwhelming majority of their goods trade.
Negotiations on these industrial goods in the current Doha Round of trade talks are known as the non-agricultural market access or the "NAMA" negotiations. These negotiations, along with those on agriculture, services, rules, and trade facilitation form the core of the Doha Round's work programme.
Tariffs are taxes on goods being exported from one country to another. The effect of these measures is to raise the price of imported goods and make them less competitive in the importing country, to the disadvantage of exporters in the exporting country and consumers in the importing country. The direct and indirect costs of administering such protection may be similar to or exceed the revenue gained.
Non-tariff barriers (NTBs) have a similar effect to tariffs by increasing the compliance costs of getting a product into an overseas market. An NTB is a measure other then a tariff which protects domestic industry. Not all NTBs are “bad” – some are based on legitimate goals, such as the protection of human health (see Sanitary and Phytosanitary and Technical Barriers to Trade).
Reducing tariffs and NTBs is advantageous for both those selling and those buying a product.
During the Uruguay Round, General Agreement on Tariffs and Trade (GATT) members agreed to cut their bound tariffs for non-agricultural products by at least one-third. Bound tariff rates are negotiated levels which tariff rates applied at the border may not exceed. Tariff bindings give a country the flexibility to increase its current applied rate if economic conditions require it, without breaching its WTO obligations. Bindings also provide greater certainty for the exporter.
A number of major industrial countries (Japan, US, EU and Canada) and some other developed countries, including New Zealand, also agreed to eliminate tariffs in some specific product areas (pulp and paper, beer, medical equipment, pharmaceuticals, construction equipment, furniture, scientific equipment, toys, brown spirits and agricultural equipment), and to harmonise tariffs on chemicals. The Uruguay Round also saw a large increase in the number of tariff lines for which tariffs were bound.
A series of additional multilateral agreements were also further developed to restrict the use of NTBs to trade (for all products) such as anti-dumping duties, technical regulations and standards, import licensing, and subsidies and countervailing measures.
The current Doha round of negotiations committed WTO members to negotiate the reduction, or where appropriate, elimination of tariff barriers, including tariff peaks, high tariffs, and tariff escalation, and NTBs to trade in non-agricultural products. The mandate also required the negotiations to take into account the needs and interests of developing countries.
Although the average tariff on non-agricultural products in developed countries had been reduced to 4.7% by the end of the Uruguay Round in 1993, tariffs remained high on some products of key export interest to New Zealand, including fish and forest products. This is especially the case for products with higher value added content - the issue of "tariff escalation" which hampers exports of value added product from New Zealand. As tariffs reduced, NTBs to trade became much more of a problem.
New Zealand’s objectives for non-agricultural market access are to:
The WTO Hong Kong Ministerial meeting held in December 2005 did not produce the breakthrough in negotiations that was hoped for, though some progress was made on issues of concern to developing countries. This result was largely due to the unwillingness of the major players (US, EC, Brazil and India) to move from their stated positions. Further progress on the main tariff cutting formula will not be possible until agriculture market access has been unblocked. The EU’s limited market access offer for agricultural products remains a key stumbling block to progressing both agriculture and NAMA negotiations.
In order to conclude Doha Round negotiations WTO members will need to:
The major players (US, EC, Brazil and India) are the key to unlocking progress in NAMA and the wider negotiation. New Zealand’s objective remains to promote as ambitious a result as we can realistically secure in NAMA.
The Hong Kong Ministerial Declaration sets out the agreements on NAMA negotiations in paragraphs 13 to 24 [WTO website].
As with the agricultural negotiations, WTO Members failed to reach agreement on core “modalities” (WTO jargon for the mechanisms by which tariff reductions and other trade barriers are reduced) for NAMA by the deadline of 30 April that Ministers had set in Hong Kong. This means that an intense period of negotiation is now underway in Geneva in order to ensure substantive progress is achieved by what most Members consider the more critical deadline of 31 July. The key NAMA issues that need to be resolved or substantially advanced by this date are set out below.
There are three key interconnected issues to be resolved so that modalities can be agreed:
Tariff cutting formula. Ministers agreed in Hong Kong that the tariff cutting formula would be a simple “Swiss” harmonising formula (ie one that cuts high tariffs more than low tariffs, which is what New Zealand favours). The numbers or “co-efficients” to be used in that formula have not yet been decided. These figures would set the maximum tariffs that developed and developing Members would have after applying the formula (for example, if a co-efficient of 15 was used, all tariffs subject to the formula, no matter how high they were before the application of the formula, would be cut to 15% or less. This would be true of a tariff of 30% or 300%). There are some exceptions to this rule - see ‘flexibilities’ below. New Zealand is seeking the adoption of numbers at the low end of the spectrum for both groups in order to achieve a meaningful level of improved market access.
Unbound tariff lines. There has been some progress on the technical issue around the treatment of unbound lines (ie those tariffs that Members have retained the right to raise to any level they wish). Achieving comprehensive binding of tariffs is an important objective of the WTO as it ensures tariff certainty for exporters.
Flexibilities. New Zealand and others are also pushing for clarification of the use of flexibilities by developing countries. Under the negotiating framework, developing countries have the option either to apply less-than-formula cuts to a yet-to-be-agreed percentage of tariff lines or to exclude a smaller percentage of lines entirely from cuts. New Zealand and others are arguing that there needs to be transparency on what lines developing countries intend to shield in order for Members to know how or if their trade will be affected.
Another important issue likely to have an impact on overall NAMA liberalisation is the treatment to be accorded to three key groups, namely the Newly Acceded Members or NAMs (notably China and Chinese Taipei), Small, Vulnerable Economies (SVEs) (including Fiji and Papua New Guinea) and tariff preference receiving countries. These groups have argued they that require special treatment due to concessions already made in WTO accession negotiations or because of the vulnerability of their economies. New Zealand recognises the challenges faced and contributions made by these Members and wishes to see these issues addressed in the least trade-distorting manner possible.
New Zealand is also actively engaged in sectoral negotiations. These sector specific negotiations aim to provide additional market access beyond that achieved through the tariff cutting formula (such as the complete elimination of tariffs in that sector). Sectoral proposals include two proposals co-sponsored by New Zealand on fisheries and forestry.
The Doha Round offers a valuable opportunity for New Zealand to make progress on NTBs, which are a serious impediment for New Zealand exporters.
A New Zealand and US proposal aimed at tackling NTBs affecting the use of timber in building construction: NTBs: Building codes and the wood products sector (PDF 235KB) was submitted to the WTO NAMA Negotiating Group in January 2005. New Zealand is continuing to work with the US to develop this proposal and hopes to submit to the wider Membership a final text for negotiation shortly.
New Zealand is also interested in a European proposal based on a quasi-arbitration model for resolving problems that arise from the misapplication of law by public authorities. This proposal may offer one way of dealing with the kind of nuisance problems exporters/importers sometimes experience.
The Ministry of Foreign Affairs and Trade continues to be interested in feedback from New Zealand exporters about NTBs affecting businesses.