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DE RUEHC #1146 2611629
ZNR UUUUU ZZH
P 181614Z SEP 07
FM SECSTATE WASHDC
TO RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0000
RUEHPE/AMEMBASSY LIMA PRIORITY 0000
RUEHSJ/AMEMBASSY SAN JOSE PRIORITY 0000
RUEHME/AMEMBASSY MEXICO PRIORITY 0000
RUEHBO/AMEMBASSY BOGOTA PRIORITY 0000

UNCLAS STATE 131146 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD WTRO
SUBJECT: DEMARCHE REQUEST ON DOHA NON-AGRICULTURAL MARKET 
ACCESS TARIFF NEGOTIATIONS 
 
 
SENSITIVE BUT UNCLASSIFIED, PLEASE PROTECT ACCORDINGLY 
 
¶1. (U) This is an action request.  Please see paragraph 7. 
 
¶2. (U) Summary and action request:  Negotiations on potential 
modalities for global reductions of tariffs on industrial 
goods (known as Non-Agricultural Market Access or NAMA) as 
part of the Doha Round in the World Trade Organization (WTO) 
resumed in Geneva on September 17, with informal meetings 
taking place the week of September 10.  Posts are requested 
to demarche host country trade ministries at the highest 
appropriate level to convey U.S. views on the specific 
commitments host countries are being asked to undertake and 
to encourage them to pursue an ambitious result for the 
Round.  End summary and action request. 
 
¶3. (U) Background:  After the G4 (the United States, European 
Union, Brazil and India) did not reach agreement on the basic 
outlines of a Doha package in June 2007, Doha negotiations 
returned back to a WTO Members-led process in Geneva.  In 
mid-July, the chairmen of the agriculture and NAMA 
negotiating groups issued draft texts detailing their 
proposals for a potential framework for modalities.  (The 
NAMA text is available at www.wto.org, under recent 
documents, JOB(07)/126.)  In subsequent meetings on the NAMA 
Chair's text in late July, most WTO Members supported the 
text as a starting point from which to build further when 
negotiations resume in September, but several Members 
(Argentina, Bolivia, South Africa and Venezuela) came close 
to rejecting the text, mainly because of the requirements 
that it would impose on developing countries. 
 
¶4.  (SBU) In the NAMA negotiations, Chile, Colombia, Costa 
Rica, Mexico, and Peru are among the 30 or so developing 
countries globally that will apply the tariff cutting "Swiss" 
formula through the use of a developing country coefficient. 
(Note: Under the Swiss formula, the "coefficient" becomes the 
highest bound tariff.  For example, under a "Swiss 19," no 
bound tariff after full implementation of tariff reduction 
commitments would be higher than 19 percent.  End note.) 
Developing countries applying the formula in the Americas are 
split between two informal groupings: Members of the 
so-called "NAMA 11" and Members associated with the "Middle 
Ground." Argentina, Brazil and Venezuela are members of the 
NAMA 11 and have proposed a developing country tariff-cutting 
formula coefficient of 30-35.  Coefficients in this range 
would provide no new, meaningful market access in terms of 
cuts to actual, applied tariffs for the United States or 
other trading partners of those countries.  The "Middle 
Ground" developing countries (including in the region Mexico, 
Costa Rica, Chile, Colombia and Peru) put forward a position 
quite distinct from the NAMA 11 position shortly after the 
Potsdam G4 breakdown. The Middle Ground countries suggested a 
developing country coefficient "between the upper teens and 
the low twenties."  We are aware that the Latin Middle Ground 
countries - Chile, in particular - have faced significant 
pressure from Brazil to change their position. 
 
¶5. (SBU) Meaningful tariff reductions on industrial goods in 
the advanced developing country markets would be one of the 
major deliverables of the Doha Development Round for U.S. 
exporters.  The United States is seeking the lowest possible 
developing country coefficient, preferably in the upper teens. 
 
¶6.  (U) Several of the Middle Ground developing countries 
worked with the United States at APEC in early July to 
develop a stand-alone Ministerial statement underscoring that 
Doha "must deliver meaningful new market access opportunities 
to significantly expand trade," and noting "expectations that 
(then) forthcoming draft texts set a high standard for 
ambition." Most recently, on September 9, the United States 
issued with the same countries at the APEC Leaders Summit in 
Australia a stand-alone statement on the Doha negotiations. 
In this statement, APEC members "insist that consensus (on 
Doha) will only be possible on the basis of an ambitious, 
balanced result that delivers real and substantial market 
access improvements for agricultural and industrial goods and 
for services and real and substantial reductions in 
trade-distorting agricultural subsidies. This would deliver 
new trade flows for the benefit of all, including developing 
economies."  The APEC countries agreed to resume discussions 
using the Agriculture and NAMA Chairs' texts as a basis. 
 
7: (U) Action Request:  Post is requested to meet at the 
highest practical level in trade ministries to convey the 
talking points below.  Insights into the current views of 
capital-based representatives on the Chair's proposal, 
including specific problems that it may present, and views on 
the overall negotiations are sought.   Posts are advised that 
it is acceptable unless otherwise indicated to leave the 
points below with host country as a non-paper.  If Posts have 
questions about this demarche, please contact USTR Director 
of Tariff Affairs Cara Morrow via email at: 
cmorrow@ustr.eop.gov. 
 
Begin talking points: 
 
-- The United States remains committed to a successful Doha 
outcome.  September will be a critical time - negotiations 
have started in Geneva over the draft texts issued by 
negotiating group chairs in mid-July on agriculture and 
industrial goods. 
 
-- We appreciate your stance in the Non-Agricultural Market 
Access (NAMA) negotiations as part of the "Middle Ground" 
group.  It is important for the Middle Ground countries to 
continue to demonstrate leadership and to be vocal in 
negotiations in Geneva this month. 
 
-- The NAMA Chair has proposed a range of coefficients under 
the Swiss formula from (19 to 23).  This treatment would 
apply to all South American countries except Bolivia, 
Ecuador, Paraguay and Uruguay - who are designated as small, 
vulnerable economies - as well as to Mexico and Costa Rica. 
 
-- We urge you to continue to push for ambition and for a 
developing country coefficient of no higher than the lowest 
end of the Chair's range for developing countries (a Swiss 
19). 
 
(For Chile) 
-- This means an extremely modest contribution from Chile: 
 
-- Under a Swiss 19 with developing country flexibility taken 
into account, Chile would be required to reduce its current 
average bound tariff rate from 25 percent to 11.5 percent. 
 
-- However, under a Swiss 19, Chile's average applied tariff 
rate would remain the same as it is at present: 6 percent. 
Its highest tariff (assuming use of flexibility allowed in 
the Chair's text) would also remain 6%.  Only two of Chile's 
dutiable, applied 8-digit tariff lines would be cut. 
 
-- These tariff lines are: H/S 26210010 (slag/ash including 
seaweed ash "kelp") and H/S 89019010 (vessels for the 
transport of goods and/or persons).  These lines would be cut 
by 100 and 15 percent, respectively, under a Swiss 19. 
 
-- By contrast, a coefficient of (8-9) has been proposed for 
developed countries, with no access to flexibilities. 
 
-- This would require the United States to reduce 100 percent 
of its remaining dutiable, applied tariffs by more than 35 
percent on average.  Our average bound and applied tariff 
would be reduced to approximately 2 percent.  Our highest 
tariff would be less than 8 percent.  40 percent of U.S. 
non-agricultural tariffs are already bound at zero. 
 
-- (Note to Post: The following point should only be 
delivered orally and should not be included in any 
non-paper):  The United States recognizes the significant 
pressure placed on Chile from Brazil to change its position 
in NAMA.  We appreciate your willingness to continue to push 
for an ambitious NAMA result. 
 
(For Colombia) 
-- This means a measured contribution from Colombia: 
 
-- Under a Swiss 19 with developing country flexibility taken 
into account, Colombia would be required to reduce its 
current average bound tariff rate from 35.4 percent to 13.6 
percent. 
 
-- Under a Swiss 19, Colombia's average applied tariff rate 
would fall from 11.3 percent to 9.9 percent.  Its highest 
applied tariff (assuming use of flexibility allowed in the 
Chair's text) would be 26.4 percent.  Colombia's average 
reduction in its dutiable, applied tariff rates would be 8 
percent, but it would not reduce 66 percent of its dutiable, 
applied tariff lines below currently applied levels.  Thus, 
the average reduction in those dutiable lines that Colombia 
actually cut below applied rates would be 24 percent. 
 
-- By contrast, a coefficient of (8-9) has been proposed for 
developed countries, with no access to flexibilities. 
 
-- This would require the United States to reduce 100 percent 
of its remaining dutiable, applied tariffs by more than 35 
percent on average.  Our average bound and applied tariff 
would be reduced to approximately 2 percent.  Our highest 
tariff would be less than 8 percent.  40 percent of U.S. 
non-agricultural tariffs are already bound at zero. 
 
(For Costa Rica) 
-- This means a modest contribution for Costa Rica: 
 
-- Under a Swiss 19 with developing country flexibility taken 
into account, Costa Rica would be required to reduce its 
current average bound tariff rate from 43.4 percent to 14.4 
percent. 
 
-- Under a Swiss 19, Costa Rica's average applied tariff rate 
would fall from 4.7 percent to only 4.6 percent.  Its highest 
tariff (assuming use of flexibility allowed in the Chair's 
text) would be 14 percent.  Costa Rica's average reduction in 
its dutiable, applied tariff rates would be very shallow at 1 
percent, and it would not reduce 90 percent of its dutiable, 
applied tariff lines below currently applied levels.  Thus, 
the average reduction in those dutiable lines that Costa Rica 
actually cuts below applied rates would be 14 percent. 
 
-- By contrast, a coefficient of (8-9) has been proposed for 
developed countries, with no access to flexibilities. 
 
-- This would require the United States to reduce 100 percent 
of its remaining dutiable, applied tariffs by more than 35 
percent on average.  Our average bound and applied tariff 
would be reduced to approximately 2 percent.  Our highest 
tariff would be less than 8 percent.  40 percent of U.S. 
non-agricultural tariffs are already bound at zero. 
 
(For Mexico) 
-- This means a relatively modest contribution for Mexico: 
 
-- Under a Swiss 19 with developing country flexibility taken 
into account, Mexico would be required to reduce its current 
average bound tariff rate from 35 percent to 13.4 percent. 
 
-- Under a Swiss 19, Mexico's average applied tariff rate 
would fall from 12.2 percent to 10 percent.  Its highest 
tariff (assuming use of flexibility allowed in the Chair's 
text) would be 31.9 percent.  Mexico's average reduction in 
its dutiable, applied tariff rates would be 12 percent, but 
it would not reduce 51 percent of its dutiable, applied 
tariff lines below currently applied levels.  Thus, the 
average reduction in those dutiable lines that Mexico 
actually cuts below applied rates would be 24 percent. 
 
-- By contrast, a coefficient of (8-9) has been proposed for 
developed countries, with no access to flexibilities. 
 
-- This would require the United States to reduce 100 percent 
of its remaining dutiable, applied tariffs by more than 35 
percent on average.  Our average bound and applied tariff 
would be reduced to approximately 2 percent.  Our highest 
tariff would be less than 8 percent.  40 percent of U.S. 
non-agricultural tariffs are already bound at zero. 
 
(For Peru) 
-- This means a relatively modest contribution for Peru: 
 
-- Under a Swiss 19 with developing country flexibility taken 
into account, Peru would be required to reduce its current 
average bound tariff rate from 30 percent to 12.5 percent. 
 
-- Under a Swiss 19, Peru's average applied tariff rate would 
fall from 9.2 percent to 8.9 percent.  Its highest tariff 
(assuming use of flexibility allowed in the Chair's text) 
would be 20 percent.  Peru's average reduction in its 
dutiable, applied tariff rates would be only 2 percent, and 
it would not reduce 64 percent of its dutiable, applied 
tariff lines below currently applied levels.  Thus, the 
average reduction in those dutiable lines that Peru actually 
cuts below applied rates would be only 5 percent. 
 
-- By contrast, a coefficient of (8-9) has been proposed for 
developed countries, with no access to flexibilities. 
 
-- This would require the United States to reduce 100 percent 
of its remaining dutiable, applied tariffs by more than 35 
percent on average.  Our average bound and applied tariff 
would be reduced to approximately 2 percent.  Our highest 
tariff would be less than 8 percent.  40 percent of U.S. 
non-agricultural tariffs are already bound at zero. 
 
End talking points. 
 
¶8.  (U) Please slug responses for USTR Washington (CMorrow), 
Geneva (LMolnar), USDOC (JJanicke and EDunn), State 
(AScheibe), and Treasury (WSchall).  Post's efforts are 
appreciated. 
RICE