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Issue #592

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2014 Media Kit

WTO members at odds on industrial goods trade

By: | at 08:00 PM | International Trade  

World Trade Organization members remain apart on key proposals to free up commerce in industrial goods, the WTO mediator in industry talks said.

“We have too many issues still unresolved,” Canada’s WTO ambassador Don Stephenson, who chairs the industry talks, told WTO members, according to a participant in the meeting.

Stephenson was briefing the WTO’s 152 members on the past month’s detailed consultations on trade in industrial goods such as footwear and machinery, and told them he would issue revised negotiating proposals.

That new text, together with a similar new draft on agriculture also expected this week, will serve as the blueprint for ministers when they come to Geneva to negotiate an outline deal in the WTO’s long-running Doha round.

While some of the differences are fundamental, such as the size of overall tariff cuts, Stephenson said some of the gaps were “absurdly small”. He said it would “insane” to leave ministers to deal with some of these small gaps.

That is because ministers will have their agendas full taking the big political decisions on the headline cuts in industrial tariffs for rich and poor countries, plus a host of other contentious issues.

Foremost among these is the scope of exceptions for developing countries to overall tariff cuts.

Rich countries, such as the United States, Japan, the European Union, and Canada are preparing to open up farm trade to developing nations in return for a bigger slice of poor countries’ markets for industrial goods.

So they are concerned that developing countries could use the exceptions to tariff cuts to shield entire sectors, such as garments or automobiles, from greater market access.

They want to write into the proposals specific limits to the extent to which a sector can be excluded from tariff cuts.

But developing industrial countries such as Malaysia, China, India and Brazil say the current wording ruling out the exclusion of entire sectors already goes far enough.

Another tricky area involves voluntary agreements in which groups of countries eliminate tariffs altogether in sectors such as bicycle parts or healthcare products.

Fourteen such sectoral agreements are currently under discussion, and the United States wants to reward developing countries that opt for them with smaller overall cuts in tariffs. But many developing countries object to this linkage.

One area where WTO members have converged, although differences remain, is how to apply the developing country tariff waivers to the Latin American trade bloc Mercosur.

Brazil, which sees Mercosur as a vital political project, was concerned that the flexibilities would result in different import duties for the smaller members such as Argentina, breaking up the bloc’s common external tariffs.

But Washington wants to make sure that any special arrangements for Mercosur do not allow Brazil and Argentina effectively to protect entire sectors from market opening.

WTO Director-General Pascal Lamy has called in ministers to negotiate an outline deal in the most difficult trade areas—farming and industry—and also to discuss the prospects for further liberalization of services such as banking or telecoms.

Lamy believes the Doha round, launched in November 2001 to free up world trade, risks years of delay if the outlines are not wrapped up now, leaving enough time to wrap up the full deal before a change in the US administration next year. (Reuters)