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Market Access Summary

Market access is an umbrella term for a number of measures that a country may use to restrict imports. The most common form of such restrictions are tariffs on imported goods. Non-tariff barriers to market access also exist for goods, such as technical standards, antidumping suits, import quotas, import licensing, and variable levies, among others. Market access also concerns regulation of imported services; some countries may limit the number of foreign service suppliers in a sector, or limit the number of service transactions a foreign supplier may perform. The term “market access“ is now generally used to refer to non-agricultural market access, as the sensitivity of market access in agricultural sectors is very high, and generally treated as an issue unto itself. For more information on agriculture, see our Agriculture Summary.

As a result of the tough negotiations on market access during the Uruguay Round, most countries have cut tariffs significantly, and have adopted tariff bindings - levels above which tariffs may never rise - for almost all imports. Now, developed countries are particularly interested in reducing tariff barriers to imports of industrial goods in developing nations. The developed countries, however, still differ in their approaches to reducing these and other tariff barriers. As Robert Zoellick, the United States' Trade Representative, has argued, the United States pushes for “deepening“ of market access, while the EU tends to push to “widen“ the WTO's mandate in general and cover more global and governance issues.[1]

Many developing countries - including India, Kenya, Malaysia and Egypt - are reluctant to reduce industrial tariffs, as they are significant sources of revenue for their respective governments.[2] They also worry that opening up domestic industries to aggressive foreign competition will result in the decline of the domestic industries and job losses.

There are several possible approaches to tariff reduction that have been proposed over the course of negotiating market access. The four most prominent are the “request-offer,“ “formula,” “zero-for-zero,” and “sectorial” approaches.[3] In the first, each country puts forward tariff reductions to other nations and negotiates on a bilateral basis. The “formula” approach, in contrast, consists of a universal and mathematical formula to be applied to tariffs of all sectors, with supplementary negotiations around sectors where countries do not want the formula to apply. The “zero-for-zero” approach involves scrapping all tariffs on specific sectors, often ones which already have low tariffs. The “sectorial” approach singles out specific sectors which are of particular importance to developing economies for reduction or elimination.

The Doha Round

Recognizing that the main purpose of the original GATT was to ultimately eliminate tariffs on industrial goods, members agreed at the 2001 Doha Ministerial conference that more aggressive negotiations should begin toward that goal. In Paragraph 16 of the Doha Declaration, members affirmed their commitment “to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries.” They set January 1, 2005 as the deadline by which an agreement on how impediments to market access will be reduced or eliminated. Negotiations are being conducted within the Negotiating Group on Market Access.

After much disagreement over what deadline to set for a “common understanding” on negotiating modalities, the group finally set the date for 31 March 2003, and 31 May 2003 as the deadline for finalizing the modalities. However, the initial deadline was missed, with a draft of modalities released 16 March 2003, and no final agreement to date on negotiating modalities. The draft includes a medley of different measures toward reducing or eliminating tariffs, including a formula approach and sectorial tariff reductions and eliminations for goods of particular interest to developing economies.

The Cancun Ministerial conference is slated to be a “stocktaking” point for negotiations on market access. Although the countries are behind schedule on agreeing on general modalities for negotiations, some are still hopeful that a final agreement will be reached before the single undertaking deadline.

 

[1] Zoellick, Robert, “Unleashing the trade winds,“ The Economist, London: The Economist Newspaper Ltd., 5 December 2002 [online: web] URL: http://www.economist.com/displayStory.cfm?Story_ID=1477509.

[2] Sidley, Brown, Austin & Wood, Updated Analysis of the Doha Round of Trade Negotiations: New Opportunities and Challenges for Global Business, Washington, DC: Sidley, Brown, Austin & Wood, Autumn 2002, p. 23. [online: web] URL: http://www.sidley.com/db30/cgi-bin/pubs/dohaupdate.pdf.

[3] Descriptions from Sidley et al., pp. 21-22.

Last updated August 2003