The nub of WTO talks: Tariffs on industrial goods
E-Mail Article
Printer-Friendly
3-Column Format
Translate
Share Article
Text Size
GENEVA: The way rich and poor countries react to a new proposal at the World Trade Organization for the scale of tariff cuts on industrial goods could be decisive for the long-running Doha round of trade talks.
A revised negotiating text for industrial goods seeks to break deadlock on the cuts within the WTO by setting no fixed limits for the exceptions that developing countries would enjoy.
Canada's WTO ambassador, Don Stephenson, who chairs the industry talks and made the proposal, is gambling that will satisfy poor countries who say their cuts in industrial tariffs must be in line with what rich nations will do in industry and agriculture.
But if rich countries feel the move gives developing countries too much leeway to avoid opening up their markets, the whole Doha round will suffer.
"It's moved things backwards," said one diplomat from a rich country who declined to be identified because he was not authorized to speak on the record. "The chairman has washed his hands of it. It's taken us back several months."
Today in Business with Reuters
John Engler, president of the U.S. National Association of Manufacturers, which would play a big role in getting any deal through Congress, cited the flexibility on developing country tariffs as an aspect of "regrettable retrenchment".
But he said the new revision "continues to provide a basis for negotiation."
Trade ministers hope to meet in March or April to agree an outline deal to open up world trade.
Revised negotiating drafts for industry and agriculture issued last Friday plus a text on services that came out on Tuesday, are intended to pave the way for that meeting.
But if a rich country feels that Stephenson's proposal is retrograde, it could slow down its contributions to the agriculture talks, where developing countries hope for the biggest gains, diplomats said.
The Doha round, started in 2001, is a "single undertaking" meaning nothing is agreed until everything is agreed.
At the same time ministers are looking for results that are comparable across the main areas of agriculture, industry and services, so that they can sell a deal involving concessions in one sector because it is matched by gains in another.
Because the Doha round is particularly intended to help developing countries, poor nations say that the scale of any opening they make should be less than that required of rich countries - an approach called "less than full reciprocity."
There is broad agreement on how to liberalize trade in industrial goods, which account for 74 percent of world trade.
The problem lies in the numbers.
Tariff cuts will be based on a formula using a variable, or coefficient, which both determines the size of cuts in tariffs and corresponds to the resulting maximum tariff.
The lower the number of the coefficient, the bigger the cut in tariffs, and the lower the resulting tariff ceiling.
In the absence of consensus among the WTO's 151 members about how big the tariff cuts should be, Stephenson proposed in July a coefficient range of 8-9 for developed countries and 19-23 for developing nations.
Most countries said that was at least a basis to talk, but several developing countries called for a bigger gap between the coefficients for rich and poor - rejected by developed nations.
The poorest countries are exempt from these cuts or have other waivers.
Stephenson said in July that the 31 developing countries that would use the formula could apply half the tariff cut to 10 percent of their most sensitive goods, or no cut to 5 percent of their goods.
And if they do not take advantage of these "flexibilities," they would enjoy a coefficient three points higher.
In Friday's revision, Stephenson blanked out the numbers for the flexibilities, and called on members to negotiate a "sliding scale" linking a developing country's coefficient with the size of its waiver.
Brazil, which has still not agreed to the 19-23 coefficient, welcomed the new approach.
"It is something that we had asked for," said Paulo Estivallet de Mesquita, a senior diplomat in Brazil's WTO mission. "If we are ever to work with this kind of coefficient we definitely need more flexibilities."
But Argentina, which rejected the developing country tariffs in July, said the sliding scale would not be enough.
Latest News
