Bound to Applied Rates, Then Cut * US

Original Publication Date: 
7 August, 2005
Geneva * The final formula for reducing industrial tariffs in the Doha Development Agenda negotiations must bring down high bound tariffs to existing applied rates, according to a US demand enunciated last week (WTD, 8/3/05). The United States conveyed to India last week that it would like to close the gap between bound rates and applied rates * implying that the current bound tariffs for India, which hover around 30 percent, must come down to the below 15-percent applied rate. During a meeting with US Trade Representative Rob Portman here, Indian trade minister Kamal Nath suggested that New Delhi would consider Washington's request for any products that the US industry is having difficulties * but ruled out across the board reduction, sources said. A 'middle ground' proposal suggested by Pakistan at last month's Dalian informal ministerial meeting involved six coefficients for industrialized countries and 30 for developing countries to reduce tariffs. For developing countries, it would bring down current bound rates between 20 percent and 30 percent to 15 percent or lower. For tariffs ranging between 30 percent and 60 percent ad valorem, the formula would reduce them to between 15 percent and 20 percent. Bound rates between 60 percent and 200 percent would be reduced to between 20 percent and 26 percent. For industrialized countries, the Pakistan proposal would bring down rates of 5 percent, 10 percent, 15 percent and 30 percent to 2.73 percent, 3.75 percent, 4.29 and 5 percent, respectively. It is a 'simple, transparent and easy to comprehend' formula and results in a significant reductions of tariff peaks and tariff escalations, Pakistan has argued. But key industrialized countries * including the United States * are not happy about the proposal, arguing that the gap between the coefficients for industrialized and developing countries is too wide.