GENEVA- A group of big developing countries said on Thursday they would only cut their tariffs for industrial imports by a lot less than reductions sought by the European Union and the United States.
The move underlined how deep differences remained between
leading players at the World Trade Organisation who are meeting in Geneva this week in an attempt to save the WTO’s Doha round.
The 11 big developing countries — including Brazil, India, Indonesia, Egypt and South Africa — said in a statement they were being asked to make cuts of 60-70 percent to their industrial goods tariffs, far more than rich countries whose tariffs are already generally low.
Countries such as Brazil fear that big cuts to such tariffs would threaten entire sectors of their economies, such as local carmaking or chemicals.
But the United States and the EU want to see those kinds of markets opened up in return for scaling back some of their barriers to trade and subsidies in agriculture, a key export sector for many developing countries.
Subsidies were declared illegal in manufacturing trade years ago.
In their statement on Thursday, the developing countries said the coefficient used for cutting their industrial tariffs should be at least 25 points higher than that used for developed countries.
The EU and the United States, backed by other developed states such as Japan and Switzerland, have been pushing for a differential of just five points.
Under an agreement already reached at the WTO, industrial tariffs will be cut according to a so-called ‘Swiss’ formula under which the number of the coefficient acts as both the ceiling for future duties and determines the depth of cuts.
The United States and the EU want a coefficient of 15 for developing countries and 10 for developed countries, saying numbers above 15 would deny new access for their exporters to some of the world’s fastest-growing markets.
On Wednesday, the WTO’s Director-General Pascal Lamy suggested a coefficient of 20 could be part of a possible solution to unblock the negotiations.
A senior U.S. trade official said on Thursday that figure “certainly doesn’t work for us.”
“Every single point above a coefficient of 15 exponentially diminishes the amount of liberalisation that even developing countries would get on products of interest to them in other developing country markets,” the official said.
The question is complicated by the fact that tariff ceilings agreed under previous global trade rounds — so-called bound rates — are often far higher than the tariffs that developing countries currently apply.
But developing countries are insisting it is the bound rate that counts for making cuts just as in earlier trade rounds. — Reuter