WORLD TRADE
ORGANIZATIONTN/MA/W/42
13 August 2003
(03-4201)
Negotiating Group on Market Access Original:  English
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS
Communication from South Africa
The following communication, dated 12 August 2003, has been received from the Permanent
Mission of South Africa.
______________
The attached proposal is intended to suppleme nt the basis that the Chair provided in his
document TN/MA/W/35 and is submitted by South Africa to assist discussions to ensure that all
Members' interests are taken into account in the final modalities.  The proposal is submitted without
prejudice to the final outcome of the negotiations and should not be taken to commit South Africa or
any participant in the negotiations or prejudice our negotiating position or any of the Membercountries.
_______________
South Africa's comments on the Draft Elements of Modalities for
Negotiations on Non-Agricultural Products
1. Introduction
1.1. This submission is made in the spirit of contributing to the search for a balanced approach to
negotiations on non-agricultural market access (NAMA).  It will begin by situating the current
negotiations in a broader context. It then takes up the Chair’s proposals as contained in the  "Draft
Elements" paper of 16 May 2003. Finally, it proposes some adaptations in an attempt to establish an
appropriate balance that may be the basis for acceptance by WTO Members.
1.2. A balanced approach will have to be found both within the framework of the NAMA
negotiations and within the overall framework of th e Doha Development Agenda.  Positive efforts by
developed countries in the agricultural negotiations and other developmental issues will encourage
greater efforts on the part of developing countries in the NAMA.
2. Background
2.1 It is now well-established that globalization opens up significant opportunities for both
developed and developing countries to promote th eir economic growth and development. whilst some
developing countries have been able to take advantage of these opportunities, the majority has
witnessed deteriorating market share, with declines in economic welfare of many, especially in
Africa.  volatility and the secular decline in comm odity prices have worsened the terms of trade forTN/MA/W/42
Page 2
many developing countries.  developed countries, on the other hand, continue to reap the most gains
from the processes of globalization.
2.2 Global trends in trade over the past decade have seen more rapid growth in the exports of
some countries, particularly in sectors that embody high value-added and high-skilled products.However, the bulk of developing country exports, made up agricultural products and labour intensive
manufacturing, has remained static, and their share of global markets has declined.
1
2.3 These negative trends for poor developing countries have been exacerbated by high tariffs,
tariff peaks and tariff escalation in developed country markets, preventing developing countries from
gaining market access for products of export interest to them.  Thus, some observers have noted that
the protectionist policies of developed countries constrain the potential of developing countries toexport their way out of poverty.
2
2.4 Structural adjustment policies driven by the World Bank and IMF have largely been
unsuccessful in contributing to either the diversification of developing country exports or greater
competitiveness in world markets.  These have also contributed to a lack of coherence to thedevelopment and trade policies of
2.5 Whilst preferential access granted by many developed countries to poor developing country
exports has as been successfully utilized by some countries, the strict rules of origin and uncertainty
associated with these unilateral measures have significantly reduced their effectiveness.
3  In addition,
the proliferation of free trade agreements has exacerbated the erosion of preferential access granted to
developing countries.
2.6 The Uruguay Round at least succeeded in bringing the agriculture and textiles and clothing
sectors under multilateral trade disciplines.  However, whilst developed countries achieved significantgains from the Uruguay Round including increased access to the services sector of developing
countries and new rules on anti-dumping and intell ectual property rights (TRIPS), most developing
countries did not secure benefits through access to developed country markets in products of interest
to them, and they continue to labour under implementation problems.
2.7 Since the Uruguay Round, some developed countries have increased their support for their
agricultural sector and delayed the process of the removing restrictions and tariffs on both clothingand textiles products, thus preventing many developing countries from advancing their economic
development strategies. In addition, the persistent prevalence of tariff peak and tariff escalations
continues to prevent developing countries from expanding their exports and diversifying their
economies.
2.8 World Bank and IMF studies show that up to 27 million jobs in the clothing and textile sector
have been lost in developing countries due to the combined effects of quotas and tariffs. On average,
each job saved in the textile and clothing sector in developed countries, through tariffs and quotas, is
estimated to cost 35 jobs in developing countries.
4
                                                     
1 World Bank (2002) Global Economic Prospects an d the Developing Countries , World Bank:
Washington, D.C.; UNCTAD (2002) Trade and Development Report 2002, UNCTAD: Geneva.
2 Stiglitz, J. (2001) Globalization and its Discontents,  Penguin Press: London. See also James
Wolfensohn in N. Krisfhof (2002) "Americans Sow Subsidies, Africans Reap Death: Agricultural Absurdity",International Herald Tribune , p 8., July 6.
3 Mattoo, A., D. Roy, and A. Sumbramaniam (2002)  "The Africa Growth and Opportunity Act and Its
Rules of Origin: Generosity Undermined?", International Monetary Fund Working Paper , IMF: Washington,
D.C.
4 World Bank (2002)TN/MA/W/42
Page 3
2.9 Agriculture and non-agricultural labor-intensive products constitute the bulk of production,
employment and exports for the majority of developing countries whilst these sectors have become
relatively insignificant in terms of total output and employment of developed countries.  Poor market
access conditions for these products have severely adverse effects on developing countries andincreased import penetration causes painful structural adjustment for many developing country
economies.
3. Approach
3.1 This proposal is based on the assumption that all industrial economies and a small group of
more advanced developing countries (the "leaders") have been able to make the necessary adjustments
in their economies to compete effectively in the global economy and have achieved gains from
increased global trade. Others (the "adjusters") have begun to make significant but painful
adjustments in their domestic economies and are beginning to compete more effectively in the globaleconomy.  Yet others are "new entrants" to the trading system, accounting for a small share of global
trade and are still making the necessary adjustments to participate effectively in the world trading
system.
3.2 The Doha Round of WTO negotiations on non-agricultural market access provides
developing countries with the opportunity to increase the discipline of multilateral rules on their own
economies, creating transparency and certainty for both domestic and foreign investors, andstimulating carefully managed structural adjustments to help them diversify and integrate effectively
in the global economy.
3.3 Whilst recognizing the efforts of many developing countries in making autonomous
liberalization commitments, this Round provides an opportunity to increase the level of bindings forall WTO members thus creating a more inclusive and certain trading system.  This Round should
increase genuine liberalization and foster positive adjustments in all countries, developed and
developing, providing genuine market access for all.
3.4 However, due recognition must be given to the enormous imbalances in the global trading
system reflected in the inequitable distribution of the gains from globalization and the continued
protection in the developed countries of the products of poor people from developing countries.  Thus,the modalities for liberalization in NAMA must accomplish two things simultaneously: i) create a
single framework within which all Members can participate meaningfully in the negotiations; and ii)
ensure sufficient flexibility that accommodates the diversity in levels of development.
3.5 The core of the modalities for NAMA is the formula approach. It needs to address issues of
tariff peaks and tariff escalation.  However, the coefficient used in the formula would need to
differentiate between new entrants, adjusters and leaders. Exemptions for particularly sensitive sectors
could be accommodated under the proposal.
3.6 Whilst the sectoral approach provides Members with the opportunity to enhance market
access, this should be used as a supplementary approach and entered into on a voluntary basis.  In
addition, where developing countries choose to use this approach, it should include the principle of
asymmetry by allowing for limited exclusions, longer phase in periods, and the possibility for a tariff
end-rate above zero for developing countries.
3.7 Developing countries need more time to adjust given the significantly larger impact of tariff
adjustments on output, employment and revenue loss.TN/MA/W/42
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3.8 Due recognition has to be given too to preference-dependent countries who will suffer erosion
of preferences.  Appropriate adjustment support will need to be explored in the modalities. The
burden of these adjustments should not be borne by poor developing countries.  Rules of origin would
need to be addressed to enable effective utilizati on of existing preferences by developing countries. In
addition, all developed countries should extend duty free, quota free preferences to products fromleast developed countries.
4. Response to the Chair's proposal of 16 May
4.1 The Chair's paper has provided a workable basis to begin the negotiations on modalities.
However, it requires some adjustments suggested above to address existing imbalances in the trading
system and to give meaningful effect to the objective of development and the principles of "less thanfull reciprocity" to which our Ministers committed us in Doha.
5. A South African proposal
5.1 The categories advanced above of new entrants, adjusters  and leaders , could be used to
differentiate between the capabilities of different WTO members (see Annex I).  Countries should
select the category that accommodates and is comm ensurate with their level of development for the
purposes of the NAMA to reflect both their capabilities to adjust and the commitments they are
willing and able to accept.  This should be done on a voluntary basis.
5.2 All countries should strive to maximize the percentage of their bindings up to at least the
Chair's proposal of 95 percent.  Due recognition should be given to the autonomous liberalization of
developing countries in setting the new bound rates for these countries for the purposes of the
formula. The co-efficient (B) used in the formula sh ould be differentiated using the smallest number
for the leaders (e.g., 0.5), a larger number for the adjusters (e.g., 2), and an even larger number fornew entrants (e.g., 3).  Developing countries should be allowed to exclude a small percentage of their
imports from the formula (e.g., 5%).
5.3 The modalities should provide for longer implementation periods differentiating between the
leaders, adjusters and new entrants.  The sectoral and zero-for-zero approaches should only be used as
supplementary methods after the effects of the formula are understood and established for all
countries.  It should be entered into on a voluntary basis and developing countries should be grantedthe possibility of excluding some percentage of their trade in these sectors from the reduction
proposed.
5.4 The request and offer approach suggested by the Chair should be only used, if necessary, at
the end of the process.  The advantage of this self-selecting approach is it takes a systemic view,creates a single framework within which all Member s can participate, but also allows flexibility to
accommodate countries at different levels of development.
6. Non-tariff barriers
6.1 Reducing tariff barriers alone will not succeed in providing genuine market access for
developing countries. Non-tariff barriers such as anti-dumping, technical barriers to trade, and import
licensing in developed countries, often pose significant barriers to developed country exports. Some
issues, such as anti-dumping, are currently under discussion in other negotiating groups. Real progress
in these areas must be achieved as part of a single undertaking.  Other issues, such as technicalbarriers to trade and import licensing, are being addressed by WTO subsidiary bodies.  However,
these negotiations must be supervised strongly by the Non-Agricultural Market Access negotiating
group.TN/MA/W/42
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__________A. ANNEX I: A D RAFT MODALITIES PROPOSAL FOR NEGOTIATIONS ON NON - AGRICULTURAL MARKET ACCESS
Categories
proposed:BindingsFormulae
co-efficientExceptions TimingSectoral
Approach
and Zero for ZeroRequest and
OfferNon-Tariff
Barriers
New Entrants
Iincluding LDCs
and some
acceding
countries3
Adjusters
Most Developing
Countries2
Leaders
These include
OECD countries
and some more
advanced
developing
countries0.5
Voluntary
Selections by
CountriesMaximum
bindings by all
countries – atleast 95%. Credit
for auto
liberalization.Differential
formula for each
category.Example aboveDeveloping
countries allowed
a % ofexclusions/
exceptions
(eg 5 percent of
imports)Longer
Implementation
for differentcategories.After formula
effects known.
This should be ona voluntary basis.
Developing
countries should
be allowed a %
exclusion and endrate less than
zero.This should be a
supplementary
approach ifnecessary.Need to be
integral part of
work ofNegotiating
Group on Non-
Agricultural
Market Access.