New Tariff Analysis Urges Aggressive WTO Tariff Reduction 

Washington, DC – The National Foreign Trade Council (NFTC) today issued an updated set of recommendations on the Doha Development Agenda and a new tariff study that highlighted the critical importance to US exporters and advanced developing countries of reducing and eliminating industrial tariffs as a chief outcome of the Doha Agenda. The two papers will be a topic of discussion during an NFTC delegation visit next week to the WTO headquarters in Geneva. 

“This is a make or break year for the Doha Round.  The NFTC has updated its 2002 set of recommendations, which continue to focus on achieving an ambitious outcome across all major areas of the negotiation.  We view this overall objective as vital to the continued credibility and relevance of the WTO in advancing global trade liberalization and trade governance,” stated Mary Irace, NFTC Vice President for Trade and Export Finance and Co-Chair of the NFTC Doha Round Working Group. 

The NFTC is also releasing a separate new NFTC tariff study, prepared by the International Trade Services Corporation.  It reveals what is at stake in the negotiations on non-agricultural market access (NAMA).  According to Irace, “the tariff study’s findings demonstrate that the Doha Round must aggressively cut non-agricultural tariffs for any real new market access for US exporters and major developing countries.  A Swiss tariff-cutting formula and commitment to eliminate tariffs on a range of sectors among a critical mass of countries are crucial in the NAMA negotiations.  Tackling non-tariff barriers must also be a core outcome of the Doha Round on industrial goods.”

More specifically, the tariff analysis looked at the trade, and tariff rates, for 50 priority manufactured exports of NFTC members companies to five industrialized-developing countries — Brazil, Egypt, India, Malaysia and South Africa (Intra-Five).  It also looked at the five top manufactured exports from these five major developing countries and their trade, and tariff rates, in these products with each other. The countries were selected due to their importance as leading industrial-developing nations, their significant contribution to world trade, and their influence within the WTO negotiations. 

The study’s key findings include:

–         In 2003, NFTC member companies exported more than $26.5 billion of the selected products worldwide, of that only 3.7 percent ($922 million) was to the five developing countries.

–         More than 70 percent of the US exports studied to these countries are potentially exposed to the risk of duties increasing to 20% or higher.

–     If the formula for NAMA tariff reductions results in cuts of less than 75% off the bound rate, there would likely be no benefit of tariff liberalization on more than 60% of the trade in the selected priority US exports into the five industrialized-developing country markets.  

–         Applied duties as high as 160% are contributing to limited trade among the Intra-Five countries.  They exported more than $36.5 billion to the rest of the world and $1.3 billion to their free trade partners, but only $361 million – less than 1% — to each other.

–         High bound tariffs and unbound tariffs create uncertainty for exporters and importers in the Intra-Five countries, with almost 70% of the tariff lines in the analysis facing the possibility of unstable or potentially prohibitive tariffs among each other.

–         Ambitious cuts in bound rates are necessary for real market access opportunities for top exports among the Intra-Five countries. If the NAMA formula cuts bound tariffs by only 50%, more than half the sample’s applied tariffs would likely not be reduced at all.

“The NFTC tariff analysis highlights the potential for growth in both US and South-South trade through ambitious tariff cuts in NAMA.  It also underscores the importance of achieving substantial reduction and elimination of tariffs in major developing countries for a commercially meaningful result in the Doha Agenda on market access for US exporters,” added Irace.    

The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves 300 member companies through its offices in Washington and New York.

Statement by Bill Reinsch, President, National Foreign Trade Council

Washington DC – In the following statement, Bill Reinsch, President of the National Foreign Trade Council, praised President Bush’s announcement today that the United States will comply with the WTO panel ruling that U.S. Section 201 steel safeguard tariffs violate WTO rules, eliminating the disputed tariffs. 

“Today’s announcement goes a long way in showing the world that the United States does not simply use its world leadership to ‘point its finger’ but also to abide by the rules they help to set.

“As the NFTC urged weeks ago, the U.S. today set the example for all other countries seeking to ensure an effective dispute settlement process at the WTO.  The step the U.S. takes today in eliminating the tariffs demonstrates this country’s dedication to the stability and orderly function of the WTO.  This is critical to encouraging better and more open trade policies throughout the world. 

“Building on today’s announcement, the U.S. and the rest of the WTO member nations should now focus on ensuring the successful and timely conclusion of the Doha Round.  The NFTC calls on U.S. officials to use their prominent global position to boost efforts in getting those talks back on track.  The future of the WTO – and better global trade practices – depend on it.”

The National Foreign Trade Council is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves 400 member companies through its offices in Washington and New York.