Geneva, Dec. 3: A US plan that aims at dismantling all tariffs on industrial goods to spawn a free-market utopia by 2015 has set the cat among pigeons at a WTO huddle here.
Developing nations have railed against the proposition, which calls for cutting all duties on manufactured goods world wide to less than 8 per cent by 2010, and then to zero over the next five years. Duties on goods now set at 5 per cent or less would be slashed to zero by 2010.
India, Malaysia, Pakistan and the Philippines argue that going ahead with the idea would deprive them of much-needed customs duty, which account for 30 to 40 per cent of overall tax revenues in developing countries. By contrast, these levies give the US only 1 per cent of its taxes.
As the US formally presented its proposal to WTO partners, poor-nation members trained their guns at the plan. India’s ambassador K. M. Chandrasekhar said calling on developing countries to prune their tariffs to zero was “clearly unfair and did not take into account their developing and budgetary needs,” a source said.
Outlining what she described as a ‘bold and fair’ proposal, US ambassador to the Geneva-based trade body, Linnet Deily, insisted poor countries stood to benefit.
Industrial goods make up about 89 per cent of developing countries’ exports, she said, on the first of two scheduled days of market access talks, part of the Doha development round of trade negotiations due to run until the end of 2004.
“Through the US proposal, developing countries would secure within five years bound duty-free market access for non-agricultural goods now entering developed country markets at tariff levels at or below 5 per cent. This accounts for more than three quarters of imports to the US, Europe and Japan,” she said.
“We are putting our own sensitive areas, textiles, apparel, footwear, glassware, on the table in an unprecedented manner,” Deily added. The US was mindful of concerns raised about the need to maintain revenues, and was ready to talk about special and differential treatment for poorer members to help meet their needs, she said.
Malaysia’s representative said the US plan was “highly ambitious” but urged the need to be realistic. “To completely surrender revenues was not something it could commit to “for the foreseeable future,” a source said.
Pakistan’s delegate said that although its reliance on revenues from tariffs had decreased from 45 per cent to 11-12 per cent of overall taxes, they still contributed a significant amount, the source said.
The proposal, unveiled last week in Washington, found backing among New Zealand, Uruguay, Singapore and Australia.
The US ambassador said access to developed country markets was only a part of the story for developing countries. “Developing countries stand to gain significantly, not only through better access to developed country markets, but also from each other.”