India, China and other developing countries told the United States and the European Union on Sunday that they will not agree to an anti-concentration proposal that would severely whittle away their flexibilities in Doha package on market-opening for industrial goods.
"India will not agree if sectoral tariff elimination is made mandatory," India's chief trade negotiator Rahul Khullar told Business Standard ahead of an all-important members of Group of 12 countries at the US mission.
Senior officials from G-12, including the US, EU, India and China, stepped up efforts to keep the Doha trade negotiations on rails by placating Brazil, Argentina and South Africa, which have specific concerns with trade in industrial goods.
Brazil's chief trade negotiator Roberto Azevedo threatened to leave the negotiations if the special flexibilities for the four MERCOSUR Customs Union members -- Brazil, Argentina, Paraguay and Uruguay -- are not conceded.
In response, the US and the EU have repeatedly maintained they are willing to consider additional flexibilities for Argentina, which has a vulnerable industrial structure, but not the remaining members of the Customs Union.
To break the deadlock over the flexibilities for the four South American countries, a compromise formula is being thrashed out in which they will be given a special carve-out in flexibilities.
However, there is no agreement yet on the coefficients to be used by developing countries, an issue that sticks out like a thumb sore at this juncture.
"If the US and the EU insist that developing countries must use a coefficient between 21 and 23 in the Swiss formula to cut industrial tariffs along with 10 per cent flexibilities, that would include some exceptions for Argentina, then there in qualitative improvement from what prevailed a year ago when the chair for Doha industrial goods negotiations, Ambassador Don Stephenson, created all this mess," said a South American official.
More importantly, the US and the EU want developing countries to agree on what is called an anti-concentration framework that would place a threshold on the number of industrial products that can be subjected to half the formula cut.
India, China and Malaysia explicitly told that the anti-concentration proposal amounts to taking away flexibilities accorded to developing countries in one go.
The EU had suggested that it is willing to consider not more than 50 per cent of each chapter covering 50 per cent lines can be brought under the anti-concentration purview, implying that other 50 per cent of tariff lines in each chapter can be availed under flexibilities.
The EU's proposal is not acceptable at all," Khullar said, arguing that there is no mandate for the anti-concentration in the final modalities.
New Delhi insisted that negotiations on sectoral tariff elimination will start only on a voluntary basis, suggesting that members cannot be forced to enter into negotiations at this stage.
The industrialized countries also want to extract another concession, namely, to agree for negotiations on sectoral- zero-for-zero tariff elimination- that would require countries to bring their current tariffs on those items to zero.
The US, for example, is the main force on chemicals which cover numerous tariff lines covering a range of chemical products, which is not acceptable to India and other countries.
