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TO RUEHBE/AMEMBASSY BELMOPAN PRIORITY 0000
RUEHWN/AMEMBASSY BRIDGETOWN PRIORITY 0000
RUEHLP/AMEMBASSY LA PAZ SEP 0000
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 0000
RUEHQT/AMEMBASSY QUITO PRIORITY 0000
RUEHSN/AMEMBASSY SAN SALVADOR PRIORITY 0000
RUEHGE/AMEMBASSY GEORGETOWN PRIORITY 0000
RUEHGT/AMEMBASSY GUATEMALA PRIORITY 0000
RUEHTG/AMEMBASSY TEGUCIGALPA PRIORITY 0000
RUEHKG/AMEMBASSY KINGSTON PRIORITY 0000
RUEHMU/AMEMBASSY MANAGUA PRIORITY 0000
RUEHZP/AMEMBASSY PANAMA PRIORITY 0000
RUEHAC/AMEMBASSY ASUNCION PRIORITY 0000
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RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 0000
INFO RUEHGV/USMISSION GENEVA 0000

UNCLAS STATE 131348 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
BRIDGETOWN FOR BARBADOS AND GRENADA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD WTRO
SUBJECT: DEMARCHE REQUEST ON WTO DOHA INDUSTRIAL GOODS 
TARIFF NEGOTIATIONS 
 
 
SENSITIVE BUT UNCLASSIFIED; PLEASE PROTECT ACCORDINGLY 
 
¶1. (U) This is an action request.  Please see paragraph 8. 
 
¶2. (U) Summary and action request:  WTO Doha Round 
negotiations on potential approaches for global reductions on 
industrial goods tariffs (known as Non-Agricultural Market 
Access or NAMA) resumed in Geneva September 17 with informal 
meetings taking place the week of September 10.  Action 
addressee host countries make up part of a group of 
developing countries within the WTO negotiations known as 
small, vulnerable economies (SVEs), which are defined in the 
NAMA negotiations as countries with less than .01 percent of 
global non-agricultural goods trade.  Within the NAMA 
negotiations, these countries would be granted a 
specially-tailored solution, yet to be finalized, 
commensurate with their SVE status.  Small, vulnerable 
economies are defined separately in the WTO Agriculture 
negotiations and will be granted a special solution in that 
context, as well.  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 in the NAMA negotiations only 
and to encourage them to pursue an ambitious result for the 
Round.  End summary and action request. 
 
¶3. (U) Background:  After the G4 (Brazil, the European 
Communities, India and the United States) did not reach 
agreement on the basic outlines of a Doha package in June 
2007, negotiations returned back to a WTO Members-led process 
in Geneva.  In mid-July, the chairmen of the agriculture and 
NAMA negotiating groups issued papers detailing their 
proposals for a potential framework for modalities.  (The 
NAMA paper is available at www.wto.org, under recent 
documents, JOB(07)/126.)  In subsequent meetings on the NAMA 
Chair's paper in late July, most WTO Members supported the 
paper 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, including the 
small, vulnerable economies.  However, in the paper, the 
Chairman proposed a special solution for the countries 
meeting the SVE definition.  In the Americas/Caribbean 
region, these countries include: Antigua and Barbuda, 
Barbados, Belize, Bolivia, Dominica, Dominican Republic, 
Ecuador, El Salvador, Grenada, Guatemala, Guyana, Honduras, 
Jamaica, Nicaragua, Panama, Paraguay, St. Vincent and 
Grenadines, St. Kitts and Nevis, St. Lucia, Trinidad and 
Tobago and Uruguay. 
 
¶4.  (U) In the NAMA negotiations approximately 30 developing 
countries globally 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.) 
 
¶5.  (SBU) Under the Chairman's proposal, the small, 
vulnerable economies would be exempt from undertaking the 
much larger commitment -- applying the developing country 
tariff reduction formula (the so-called Swiss formula above) 
-- which would require much deeper cuts to their tariffs. 
U.S. interests in these markets are limited, especially in 
the Latin American and Caribbean regions where much of our 
trade is covered by free trade agreements (FTAs).  Therefore, 
the United States has been supportive of special treatment 
for SVEs in the hopes that: (1) the SVEs' defensive concerns 
would be addressed; (2) that the SVEs could then focus on 
their own offensive interests, and (3) that the SVEs, as a 
result, could support ambitious tariff cuts (through a low 
formula coefficient) for other, more advanced developing 
countries, such as Argentina, Brazil, Chile, Colombia and 
Venezuela. 
 
¶6. (SBU) The specific solution proposed by the NAMA chairman 
for the small, vulnerable economies is to reduce their bound 
tariffs to one of three target averages (14, 18 or 22 
percent), based on the level of their current average bound 
tariff rates (the outer boundary of where they could legally 
raise their tariffs to).  The Chair's SVE proposal also 
contains other elements, such as a requirement that 95 
percent of bound tariff lines must be subject to at least a 
10 percent tariff cut.  The SVEs themselves had been the 
proponents of a three-band type solution with targeted 
averages to account for the vast differences among their 
economies (some being quite wealthy as a result of services - 
mainly tourism - income).  However, many of them are likely 
to complain that the 14, 18 and 22 target averages are too 
low and burdensome for their economies and that the 10 
percent cut will present difficulties.  In reality, the vast 
majority of them will not make cuts to the tariffs that they 
actively apply (i.e., their applied tariffs), just to their 
bound tariffs.   Panama and Ecuador are slight exceptions to 
this -- according to USG calculations the SVE proposal will 
cut into their applied rates on seven and four percent of 
their non-agricultural tariff lines respectively.  The 
countries that will end up making large reductions to their 
bound tariffs under the proposal are the Caribbean countries. 
 This is because they currently have very high starting 
points, with tariffs bound in the 50 to 70 percent bound 
range, and would have to bring these tariffs to an average of 
22 percent.  However, because these countries' applied 
tariffs are much lower than their bound tariffs, even the 
Caribbean countries do not have to make any changes to 
applied tariff rates. 
 
¶7.  (U) The new average bound tariffs that will be required 
for individual SVE countries in the Americas is as follows: 
22 percent: Barbados, Belize, Guyana, Trinidad/Tobago; 18 
percent: Bolivia, the Dominican Republic, El Salvador, 
Guatemala, Honduras, Jamaica, Nicaragua, Paraguay and 
Uruguay; and 14 percent: Ecuador and Panama. End background. 
 
¶8. (U) Action Request:  Post is requested to meet at the 
highest practical level in trade ministries to convey the 
talking points below.  Some Geneva-based representatives of 
the SVEs argue that the solutions in the text are too onerous 
for their countries.  In July, some of the SVEs did not have 
the chance to do in-depth analysis to see what the proposal 
would actually mean for all of their tariff lines and may 
have spent the August break at the WTO doing this analysis or 
consulting further at home.  Insights into the current views 
of capital-based representatives on the SVE proposal, 
including specific problems that it may present, and views on 
the overall NAMA negotiations are sought.   Posts are advised 
that it is acceptable and even recommended 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: 
cara morrow@ustr.eop.gov. 
 
Begin talking points: 
 
-- Appreciate your country's ongoing support for the Doha 
Round negotiations, which have the potential to significantly 
open markets and increase global trade. 
 
-- Regarding the non-agricultural market access (NAMA) 
negotiations, we encourage support for an ambitious outcome 
on the tariff cuts that the advanced developing countries 
will make.  As a trading partner of those countries, your 
country would benefit from a lower coefficient for them. 
 
-- A special solution for small, vulnerable economies (SVEs) 
has been put forward by the NAMA Chairman that adopts many of 
the proposals that the SVEs themselves suggested, such as 
three bands with different average target bound rates.  This 
distinguishes SVEs from those developing countries - some of 
which are your neighbors - that have to apply the tariff 
reduction formula.  You not having to apply the formula is an 
important concession. 
 
-- Use of an average target bound rate (as opposed to the 
line-by-line tariff reduction requirement in the formula) 
allows your country to make adjustments to account for 
product sensitivities.   This is a major flexibility afforded 
to reflect the specific concern that, given their limited 
administrative and industrial capacity, small, vulnerable 
economies are not in a position to liberalize as deeply as 
the larger, advanced developing economies, such as Brazil, 
Argentina, Chile, etc. 
 
-- Flexibility is also provided by excluding 5 percent of 
tariff lines from the 10 percent minimum cut in each bound 
rate line.  There is no trade cap on this exemption, so this 
is more generous than the flexibilities available to the 
advanced developing countries.  We have not heard any 
product-specific problems with this requirement.  Are there 
specific products that would be a problem? 
 
-- We encourage support your support for working with the 
Chair's text, including the small, vulnerable economies 
proposal, as a basis for further negotiations in September. 
We want to understand details of any concerns you have about 
the SVE proposal. 
 
-- (If raised: Difficulties in lowering tariffs to the ranges 
proposed by the Chair):  Averages provide you with 
flexibility to shield sensitivities.  As small, vulnerable 
economies, you also have narrow import and export bases, so 
there are limited tariff lines where you trade, which gives 
you further ability to shield sensitive areas with the 
current flexibilities, as well as tariff lines important for 
government revenue (such as vehicles). 
 
-- (For Barbados):  Barbados' average bound tariff is 76.1 
percent and average applied tariff is 12.5 percent. 
According to our calculations, reaching a target average of 
22 percent under the Chair's proposal can be done with no 
changes to your applied tariffs. 
 
-- (For Barbados): In terms of specific products, are fish 
and jewelry for tourists a problem? 
 
-- (For Belize): Belize's average bound tariff is 51.8 
percent and average applied tariff is 9.8 percent.  According 
to our calculations, reaching a target average of 22 percent 
for bound tariffs under the Chair's proposal can be done with 
no changes to your applied tariffs. 
 
-- (For Bolivia): Bolivia's average bound tariff is 40.0 
percent and average applied tariff is 7.9 percent.  According 
to our calculations, reaching a target average of 22 percent 
for bound tariffs under the Chair's proposal can be done with 
no changes to your applied tariffs. 
 
-- (For Dominican Republic): The Dominican Republic's average 
bound tariff is 34.1 percent and average applied tariff is 
7.9 percent.  According to our calculations, reaching a 
target average of 22 percent for bound tariffs under the 
Chair's proposal can be done with no changes to your applied 
tariffs. 
 
-- (For Ecuador): Ecuador's average bound tariff is 20.9 
percent and average applied tariff is 11.0 percent.  Reaching 
a target average of 14 percent for bound tariffs under the 
Chair's proposal can be done with minimal changes to your 
applied tariffs and likely no change to your average applied 
rate.  With the five percent exclusion from line-by-line cuts 
taken into account, we calculate that only 4 percent of 
Ecuador's tariff lines would have to sustain applied tariff 
cuts under this proposal; 
 
-- (For Grenada): Grenada's average bound tariff is 50.0 
percent and average applied tariff is 10.2 percent. 
According to our calculations, reaching a target average of 
22 percent for bound tariffs under the Chair's proposal can 
likely be done with no changes to your applied tariffs. 
 
-- (For Guatemala): Guatemala's average bound tariff is 41.0 
percent and average applied tariff is 5.3 percent.  According 
to our calculations, reaching a target average of 18 percent 
for bound tariffs under the Chair's proposal can be done with 
no changes to your applied tariffs. 
 
-- (For Guyana): Guyana's average bound tariff is 50.0 
percent and average applied tariff is 10.3 percent. 
According to our calculations, reaching a target average of 
22 percent for bound tariffs under the Chair's proposal can 
be done with no changes to your applied tariffs. 
 
-- (For Honduras): Honduras' average bound tariff is 32.4 
percent and average applied tariff is 5.2 percent.  According 
to our calculations, reaching a target average of 18 percent 
for bound tariffs under the Chair's proposal can be done with 
no changes to your applied tariffs. 
 
-- (For Jamaica): Jamaica's average bound tariff is 43.3 
percent and average applied tariff is 6.6 percent.  According 
to our calculations, reaching a target average of 18 percent 
for bound tariffs under the Chair's proposal can be done with 
no changes to your applied tariffs. 
 
-- (For Nicaragua): Nicaragua's average bound tariff is 41.4 
percent and average applied tariff is 4.8 percent.  According 
to our calculations, reaching a target average of 18 percent 
for bound tariffs under the Chair's proposal can be done with 
no changes to your applied tariffs. 
 
-- (For Panama): Panama's average bound tariff is 22.6 
percent and average applied tariff is 7.2 percent.  Reaching 
a target average of 14 percent for bound tariffs under the 
Chair's proposal can be done with minimal changes to your 
applied tariffs and likely no change to your average applied 
rate.  With the five percent exclusion from line-by-line cuts 
taken into account, we calculate that only 7 percent of 
Panama's tariff lines would have to sustain applied tariff 
cuts under this proposal. 
 
-- (For Paraguay): Paraguay's average bound tariff is 32.3 
percent and average applied tariff is 8.7 percent.  According 
to our calculations, reaching a target average of 18 percent 
for bound tariffs under the Chair's proposal can be done with 
no changes to your applied tariffs. 
 
-- (For Trinidad and Tobago): Trinidad and Tobago's average 
bound tariff is 50.8 percent and average applied tariff is 
7.5 percent.  According to our calculations, reaching a 
target average of 22 percent for bound tariffs under the 
Chair's proposal can be done with no changes to your applied 
tariffs. 
 
-- (For Uruguay) Uruguay's average bound tariff is 30.1 
percent and average applied tariff is 9.4 percent.  According 
to our calculations, reaching a target average of 18 percent 
for bound tariffs under the Chair's proposal can be done with 
no changes to your applied tariffs. 
 
End talking points. 
 
¶6.  (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