Non-farm Tariffs: Draft For Staggered Phase-out

New Delhi, May 22: | Updated: May 23 2003, 05:30am hrs
The chairman of the negotiating group on market access for non-agricultural products has come out with the first draft of the elements of modalities for negotiations. The report circulated among the WTO members on May 16 proposes a formula approach for reduction or elimination of tariffs on all industrial products.

The draft proposal also seeks sectoral elimination and binding of all tariffs on products of export interest to the Third World and the least developed countries in three phases, subject to negotiations. Besides, a longer implementation period for tariff reduction for the developing countries and allowing them to keep up to 5 per cent of their tariff lines unbound, also have been outlined in the draft.

The modalities to be established by May 31 will set the parameters of the final agreement on the subject to be reached by January 1, 2005.

The draft comes ahead of the negotiating groups three-day meeting starting in Geneva from May 26-28. A senior official from the commerce ministrys trade policy division is expected to attend the meeting. As per the formula, the basis for reduction or elimination of tariffs on all industrial products will be the base rate, that is, the final bound rates after full implementation of the current concessions.

For unbound items, the basis for commencing the tariff reductions shall be two times the most-favoured-nation (MFN) applied rate and the base year (for applying the MFN rate) shall be 2001. Non-ad valorem duties shall be converted into ad valorem equivalents according to the procedure laid down for the purpose.

The sectors of export interest to the Third World and the least developed countries listed in the draft are electronics and electrical goods, fish and fish products, footwear, leather goods, motor vehicle parts and components, stones, gems and precious metals and textiles and clothing. Officials, however, clarify that the list is subject to negotiations among the members, indicating that it can be changed.

The sectoral elimination shall be achieved through three phases in equal installments. Industrialised countries shall eliminate tariffs at the end of the first phase while the developing ones shall reduce tariffs to a level of not more than 10 per cent at the end of the first phase, maintain the level during the second phase and achieve elimination at the end of the thirdphase.