WORLD TRADE
ORGANIZATIONTN/MA/W/39
2 July 2003
(03-3513)
Negotiating Group on Market Access Original:  English
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS
Communication from Papua New Guinea
The following communication, dated  26 June 2003, has been received from the Embassy of
Papua New Guinea.
_______________
I. BACKGROUND
1. Papua New Guinea attaches great importance to the Doha Development Agenda, as it
constitutes a great opportunity for the fuller integration of developing countries into the multilateraltrading system.
2. Negotiations on Market Access for Non-Agricultural Products are part of the overall effort
and improvements are needed for the benefit of all WTO Members. The Doha Ministerial Declaration
states the following:
“16. […] negotiations which shall aim, by modalities to be agreed, to reduce or as appropriate
eliminate tariffs, including the reduction or elimin ation of tariff peaks, high tariffs, and tariff
escalation, as well as non-tariff barriers, in particular on products of export interest to
developing countries. […] The negotiations shall take fully into account the special needs and
interests of developing and least-developed country participants, including through less than
full reciprocity in reduction commitments […]”
3. Members were unable to reach agreement on modalities for the conduct of negotiations by the
agreed target of 31 May 2003. Nevertheless, at the 26-28 May meeting of the Negotiating Group on
Market Access most countries appeared to have accepted the Chairman’s “Draft Elements of
Modalities” as a basis for negotiation. Papua New Guinea shares this perception about the Chairman’sDraft with the other Delegations, and would like to contribute to ongoing negotiations through this
communication. The text includes basic information on market access conditions for Papua New
Guinea and consequently a set of preliminary positions on the various proposals put forward by the
Chairman.
4. It has to be noted that some of the views expressed in the following reflect the concerns of
small, vulnerable economies, especially on the implementation of the concept of “special and
differential treatment”, on the need to preserve the existing margins of preference for products
exported by developing countries, and on Special Safeguards Mechanisms. With respect to this, Papua
New Guinea would like to reconfirm its full support to the document “Concrete Proposals to addresscertain specific concerns and problems affecting the Trade of Small Economies”
(WT/COMTD/SE/W/3) which forms integral part of the country’s position in current Market Access
negotiations.TN/MA/W/39
Page 2
II. BASIC INFORMATION
5. This note provides a brief overview of the current flows of non-agricultural exports of Papua
New Guinea. The structure of tariff rates faced by Papua New Guinea exporters on foreign markets is
outlined, to put in context Papua New Guinea’s positions with respect to WTO market access
negotiations. (The evidence provided is the outcome of analysis conducted by the Papua New GuineaDepartment of Trade and Industry, and is based on UN COMTRADE and UNCTAD TRAINS
databases, at the HS 6 digit level).
6. In 2001 exports of non-agricultural products accounted for about 83.4 % of total exports of
Papua New Guinea. The major source of export income is the Mining and Petroleum sector with
about 66% of the total, followed by forestry (12%) and fishery (4.6%) (agricultural products represent
16,6 % of total exports). Papua New Guinea believes the manufacturing sector (especiallydownstream processing) is the crucial element for the sustainable growth of the economy in the long
run. The country’s trade and negotiating strategies do reflect this consideration.
7. As shown in Table 1, a first level of analysis gives an aggregate picture of relatively fair
degree of market access for Papua New Guinea’s exports. Of the 278 tariff lines faced, 63 % are dutyfree; non ad-valorem  tariffs are only 1 % of the total and “ ad-valorem  rates over 5 %” are 14 %
(bottom end of the table). Many tariff rates based both on MFN and preferential schemes are zero (62
and 69.7 % respectively, in the third column).
8. Nonetheless, the patterns of protection ag ainst non-agricultural goods from Papua New
Guinea present a number of worrying aspects. Only in 20% of the product lines of exports Papua New
Guinea benefits from preferential market access (this questions the effectiveness of the WTO
discipline of “special and differential treatment” for developing countries); moreover, 30% of the GSP
tariff lines are not duty free. The picture gets worse if the value of exports is considered: only 1% of
non agricultural products receive preference.
9. The different relative distribution of exports into the tariff categories when considered as
number of tariff lines and as value of trade, together with the clear predominance of goods exported
(i.e. the value) into the “duty free” and “0-5%” cate gories, suggest that the current structure of tariffs
is a major constraints on the markets effectively affordable by Papua New Guinea exporters. Duty
free tariff lines are only 62% and 70% of the total for MFN and GSP schemes, but they attract
respectively 75% and 90% of the value of exports; similarly, Papua New Guinea faces quantitativerestriction on 9.3% of the tariff lines, but only 1% of the exports falls within this category, as
producers cannot expand freely here and would choose other products to trade in.
10. Moreover, 39,6% of the tariff lines present some sort of Non Trade Barrier, including testing
to protect human life, quarantine, laws concerning standardization and proper labelling, technicalrequirements, import licensing, strict rules of origin and other internal taxes on importers.TN/MA/W/39
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Table 1. Non- agricultural Market Access for Papua New Guinea exports in 2001
  Number of
tariff lines
(HS 6 digit)Percentage
of the total
numberExported value
in
correspondent
lines (US$
thousand)Percentage
of total
export
 Total 278  1405152,8  
 NON PREFERENTIAL
ACCESS 222,2 80% 1384469,2 99%
 MFN rates     
(A) of which 0% 137,5 62% 1041929,6 75%
 0-5 % 50,7 23% 272016,0 20%
 5-10% 18,6 8% 7393,8 1%
 10-20% 4,9 2% 1916,8 0%
 20-35% 3,9 2% 1575,8 0%
  >35% 4,0 2% 34379,0 2%
 Non ad-valorem tariff 2,6 1% 25258,3 2%
 PREFERENTIAL ACCESS 55,8 20% 20683,6 1%
(B) ACP 29,3 52% 7569,1 37%
(C) SPARTECA (0%) 1,5 3% 766,2 4%
 SPARTECA (10%) 0,7 1% 62,4 0%
 Other GSP    0%
(D)                       of which 0% 8,1 15% 10145,7 49%
          0-5 % 11,1 20% 1933,0 9%
           5-10% 5,1 9% 207,2 1%
 Overall duty free GSP (B+C+D)  69,7%  89,4%
 Overall Market Access     
(A+B+C+D) DUTY FREE 176,4 63% 1060410,6 75%
 0-5 % 61,7 22% 273949,0 19%
 5-10% 24,4 9% 7663,4 1%
 10-20% 4,9 2% 1916,8 0%
 >20% 7,9 3% 35954,8 3%
 Non ad-valorem tariff 2,6 1% 25258,3 2%
Quantitative restrictions 26 9,3% 9980,1 1%
Products facing technical regulations, standards,
sanitary measures. 110 39,6%   
Note: decimals for tariff lines refer to further disaggregation at HS8 level
11. It is important to note that in the case of non-agricultural goods tariff structures are extremely
heterogeneous across industries, within the same industry and also for the same trading partner; in
addition, for 74 out of 278 tariff lines further analysis at the 8 digit level is needed as different rates
are set for different subgroups of the H6 industries. Some general patterns are clear though: among the
three traditionally important sectors, minerals is facing on average the lowest tariffs and fishery thehighest (with more tariff peaks), whereas forestry is in between; Papua New Guinea’s developing
trading partners have higher tariff barriers than developed (and than Singapore and Hong Kong,
China); comparing  agricultural and non-agricultural goods, market access conditions for the latter are
more difficult and involve also a higher number of developing countries’ markets.
12. Table 2 shows that Australia and Japan account respectively for 44.8 and 20.5% of non-
agricultural exports. Interestingly, the EU, Papua New Guinea’s major importer for farm products,TN/MA/W/39
Page 4
only rank fifth with 5.4% per cent. Considering that  Australia and Japan’s GSP systems with respect
to this area of trade are not as generous as in the case of agriculture, that the favourable Cotonou
initiative is not very significant in terms of share of Papua New Guinea’s exports covered, and that the
rest of the trading partners are developing countries themselves, Papua New Guinea really needs to
make an impact on current negotiations to improve market access.
Table 2:  Major markets for Papua New Guinea non-agricultural products
 Value in US$
thousand,
2001Share of
total exports
Australia 629418 44,8%
Japan 287732 20,5%
People's Rep. of China 122256 8,7%
Korea, Rep. of Korea 85426 6,1%
EU 75694 5,4%
Thailand 69252 4,9%
Philippines 66190 4,7%
TOT  95,1%
13. Importantly, further analysis will be conducted before Papua New Guinea takes its final
stance on market access negotiations. Papua New Guinea will share the outcome of such analysis with
other Delegations, in order to clarify: the expected outcome of formula for tariff reductions on PapuaNew Guinea’s own tariff structure; the real imp act of NTBs faced by Papua New Guinea exporters;
relevant future and potential markets of interest to Papua New Guinea and their tariff structures.
III. NEGOTIATING PROPOSALS
14. In line with this preliminary analysis of market access for Papua New Guinea’s export, and
taking into account the status of current negotiations on non-agricultural market access, the following
proposals are put forward. Importantly, the text reflects the document proposed by the Chairman ofthe WTO Negotiating Group on Market Access as a compromise between different positions (in
square brackets are some details of modalities which are necessarily to be open to negotiations).
1. General approach
15. Papua New Guinea commends the effort by the Chairman to find a compromise between the
interests of developing and developed countries and appreciates the emphasis on Special and
Differential Treatment placed in “Draft Elements of Modalities”. Nonetheless, Papua New Guinea
would like to see the current round of negotiations to be a turning point in the way developing
countries interact with developed Members at the WTO level. Papua New Guinea therefore proposes
to stress even more the importance of Special and Differential Treatment and to agree on modalitieswhich effectively implement such concept.
16. At Doha, the Ministers agreed that “[…] The majority of WTO Members are developing
countries. We seek to place their needs and interests at the heart of the Work Programme adopted in
this Declaration. Recalling the preamble to the Marrakech agreement we shall continue to makepositive efforts designed to ensure that developing countries, and especially the least developed
among them, secure a share in the growth of wo rld trade commensurate with the needs of their
economic development. […]” (Paragraph 2). In particular, paragraph 44 of the Doha Declaration
states: “…we therefore agree that all Special and Differential Treatment provisions shall be reviewed
with a view to strengthening them and making them more precise, effective and operational.. In thisTN/MA/W/39
Page 5
connection, we endorse the work programme on Special and Differential Treatment set out in the
Decision on Implementation-Related Issues and Concerns”.
17. The aforementioned Work Programme on SDT have not progressed and the Special Session
of the Committee on Trade and Development could not fulfil its mandate, as contained in paragraph44 of the Doha Ministerial Declaration and paragraph 12 of the Decision on Implementation-Related
Issues and Concerns. Many deadlines were missed and no consensus exists in these negotiations. SDT
is too important for developing countries to be simply set aside. Papua New Guinea therefore
proposes to implement the concept of SDT in each of the specific negotiations and through the
effective application of “non-reciprocity” between developed and developing countries. Accordingly
the goals of SDT stated in the Doha Declaration should be achieved through concessions in current
negotiations, including on Market Access.
2. Tariff reductions
(a) Core modality: Formula
18. Product coverage. Papua New Guinea is of the view that the negotiations should include all
non-agricultural products with no exceptions for developed countries; developing countries insteadshould have the flexibility to calibrate the level of reductions for “sensitive” bound tariff lines.
Developing countries would be allowed to deem some  [3, 5 or 10] products “sensitive” [either at HS 4
or 6 digit level] : these tariffs will be excluded from reduction under the agreed formula, and either
left at current bound rates or subject to other modalities to be agreed upon. Unbound items under this
category will have to be bound at an agreed level [2 or 3 times the MFN applied rate] before they aredeemed “sensitive”.
19. Binding coverage and base rates. Papua New Guinea proposes that all countries commit to
bind all tariffs on non-agricultural products. Developing countries will have longer periods to
implement the binding of all products. Bound rates wi ll be the starting-point for tariff reduction; for
unbound items, the basis for reduction shall be 2 times the MFN applied rate (developing countries
will decide which of the equal annual stages of reduction constitutes the ceiling to be intended as
bound rate for subsequent reductions). In addition, developed countries are expected to reduce the gap
between bound and applied rates; only developing countries shall maintain the related flexibility
which is needed for the formulation of trade and industrial development policies.
20. Formula. Given the extent of tariff escalation and tariff peaks which still distort international
trade, the formula proposed in the Chairman’s draft is acceptable (though a number of qualifications
are needed):
00
1ttBttBt
aa
+ ×× ×=
where,
t1 is the final rate, to be bound in ad valorem  terms
t0  is the base rate
ta is the average of the base rates
B is a coefficient with a unique value to be determined by the participants
21. Papua New Guinea proposes the following adjustments for Special and Differential
Treatment:
- developing countries shall be granted longer implementation period for reductions;
- developing countries can deem some [3, 5 or 10] products “of strategic interest” [either at HS
4 or 6 digit level] : upon notification of relevant evidence demonstrating “strategic interest”TN/MA/W/39
Page 6
[criteria to be agreed upon, ex: infant industry, employment level, export revenue generation]
these tariffs will be cut using 2*B instead of B;
- priority reductions in sectors of “substantial export interest” to developing country shall be
integral part of this formula approach. Each country should apply 0.5*B for the relevant tariff
lines, once the concept of “substantial export interest” has been clarified under currentnegotiations;
- a mechanism for review/adjustment of liberalization paths should be in place; after the first
two years of implementation of tariff cuts developing countries can, on a limited number of
products, replace B with 2*B if it is demonstrated that the initial equal annual stages of
reduction are causing injury to the local industry.
22.    To further address the issue of tariff escalation, Papua New Guinea proposes that where the
tariff on a processed product is higher than the tariff for the product in its primary form, t
1 for the
former shall not be more than the double of t 1 for the latter, whatever the determined level of B and
the resulting degree of tariff cuts. If t 0 for the primary product is 0% t 1 for the processed good shall
not exceed [5% or 7% or 10%].
(b) Other modalities
23.     Credit for autonomous liberalization. Credit should be accorded for autonomous tariff
liberalization undertaken through Structural Adjustment Programmes facilitated by International
Financial Institutions. Papua New Guinea is of the view that the negotiations should fully take into
account such autonomous efforts and the exact definition of “credit” be the subject of further technicalwork.
24. Erosion of Preferential Margins. Historically, preferential treatment is a very important
element of Papua New Guinea’s trade. Papua New Guinea proposes, as an exception to the Core
modality, that tariff reductions affecting Preferential Schemes in respect of products of vitalimportance for developing countries may be implemented in equal annual instalments over a period
which is [the double of the one for Formula reductions or 8 or 10 years] by preference-granting
members concerned, with the first instalment being deferred to [third] year of implementation period.
“Vital importance” of a product shall be demonstrated by notification of relevant statistics (in the case
of Papua New Guinea for example referring to share of non-mineral exports).
25. In addition, preference-providing members shall undertake technical assistance and other
measures to support developing countries in their transition out of the preferential schemes.
26. Sectorial Tariff Elimination. In addition to the formula, Papua New Guinea agrees on the
proposed sector elimination approach in order to eliminate all tariffs on products of particular export
interest to DC. Proposed sectors are: Fish and Fish products, Textile & Clothing, Stones Gems &
Precious Metals, Wood and Wood products [Electronics & Electrical goods; Footwear; Leather
goods; Motor Vehicle parts & components].  The sectorial tariff elimination will be achieved in three
phases of equal length. Developed countries shall eliminate tariffs at the end of the first phase;
developing countries will reduce tariff to [10% or 15%] during phase 1 and achieve elimination at the
end of phase 3.
(c) Additional provisions for Special and Differential Treatment
27. Tariffs Peaks. Papua New Guinea is of the view that only developing countries should be
allowed to retain part of their protective tariffs for development purposes. Therefore developed
countries should reduce their tariff peaks to a maximum level which is not higher than [3] times theaverage of bound rates, whereas developing countries may set tariff peaks at a maximum of [4 or 5]
times the average.TN/MA/W/39
Page 7
28. Least Developed Countries. LDCs shall not be required to undertake reduction commitments
indicated above; as contribution to the round of negotiations they are however expected to increase
their level of binding commitments. Furthermore, developed countries shall grant duty-free and
quota-free access for products originating from LDCs by the year [2007].
29. Elimination of low/nuisance duties. Papua New Guinea proposes that developed countries
reduce to 0% all their bound rates below [5 or 4 or 3%]. Developing countries only may retain those
tariffs if they are important for government’s revenues.
3. Non-Tariff Barriers
30. Preliminary analysis suggests Papua New Guinea exporters are damaged by NTBs. Such
measures should be dealt with comprehensively at the Negotiating Group on Market Access. Papua
New Guinea commits to: exactly identify the NTBs about which it is concerned; choose which of
them should be dealt with by the Negotiating Group (considering other agreements for which there is
no negotiating mandate); select the appropriate modalities to be used, which could include
request/offer, horizontal, or vertical approaches.
31. Papua New Guinea proposes that while the Negotiating Group progresses in its work of
identification and examination of various types of NTBs, two steps are undertaken to assist
developing countries:
- WTO Secretariat considers funding specific technical assistance to help developing countries
analysing NTBs faced and quantifying economic damages;
- developed countries imposing NTBs to developing countries provide technical and financial
assistance to comply to such measures, as already provided for in the Agreement on Sanitary
and Phytosanitary Measures.
32. NTBs that have a specific negotiating mandate in the Doha Declaration in other areas should
continue to be addressed in that body but information on the progress or outcome of those
negotiations should be reported to the Negotiating Group for transparency.
__________