Tariff concessions for LDC exports announced

by Chakravarthi Raghavan

GENEVA: Over a score of leading trading nations, developed and developing, announced preferential tariff cuts to benefit exports of the least developed countries (LDCs) on 27 October, at a high-level meeting at the World Trade Organization.

However, most of these were concessions already announced elsewhere. And the WTO officials who relayed the concessions to the media in broad terms were unable or unwilling to provide estimates, either in volume or value terms, of the actual trade benefits to the 48 LDCs.

Also, all the concessions are autonomous under the Generalized System of Preferences (GSP) or others like the EC's Lom‚ Convention, and are not bound or committed in the WTO, and thus provide no "security" in terms of productive investments in the LDCs.

They could easily be withdrawn at some future point by the application of competitive or other tests (whether under the GSP or the Lom‚ concessions), when the duty free imports "compete" with domestic producers.

And an UNCTAD/WTO study, for an UNCTAD meeting in November, shows that despite all the claims about tariffs, particularly in industrial countries, in no longer being a barrier against imports, they are however, very much so, both in terms of tariff peaks and tariff escalation, for several items of export interest to developing countries, and even to the LDCs - across a range of products including for agricultural products, textiles and clothing, fisheries products, leather and footwear.

The study has looked in some detail on the markets of the Quad countries (the US, EC, Japan and Canada), and of Brazil, South Korea, China and Malaysia. UNCTAD officials said that the four developing countries were major traders and markets for other developing countries.

But a full survey of other developing countries had not been possible because of lack of data. The WTO's database itself is not up to date, and does not provide information about the Uruguay Round concessions and the tariffs when the cuts are fully implemented at the detailed Harmonized System (HS) tariff line, an official said.

But what little information is available shows that tariffs, whether peak or tariff escalation, is still a major market barrier for exports of the developing world, and even of least developed countries who supposedly get benefits under various schemes.

The UNCTAD/WTO report notes that while due to the application of more favourable GSP treatment to LDCs, their post-Uruguay Round situation will be more favourable than that of other developing countries, a substantial number of peak tariffs will continue to apply to their important export products in all major markets. But major sectors of exports - textiles, clothing, footwear and leather products remain outside the scope of GSP improvements in favour of LDCs, and they will continue to face many MFN peak duties for their major industrial exports.

In developing country markets, further improvements in market access for LDCs could come about as a result of the on- going negotiations for a Global System of Trade Preferences among developing countries, the staged tariff reduction programmes in many developing countries, and regional and sub- regional arrangments.

In all the major developed country markets, in the agricultural sector, quite a number of peak tariffs still remain applicable to LDCs.

Tariffs faced by LDCs

While the US provides duty-free access to most LDC agricultural exports within tariff quotas, outside these quotas they face peak tariffs. In Japan, LDCs face peak tariffs on beef and other meat products, sugar and sugar products, fruits and fruit juices and so on. In the EC, despite the GSP and Lom‚ preferences, high tariffs, including MFN peak rates, remain in effect for a number of major food products, in particular for imports beyond limited preferential tariff quotas or past trade levels - as for bovine meat, sheep and goat and other meat and meat products, major cereals, and several fruit, vegetable and food industry products.

The successful challenge to the Lom‚ benefits over the EC's banana regime, though not directly related to tariff concessions but over tariff quotas and marketing arrangements, nevertheless cast some cloud on the autonomous concessions being offered now by the US, EC and so on.

The original GATT waiver and decision of Contracting Parties is related to the GSP - in terms of its character of non-discriminatory, non-reciprocal and generalized preferences. Over time, the importing developed countries have bent it to achieve other purposes too.

The fact that the WTO has an automatic enforceable dispute settlement system for adoption of panel rulings, could trigger at some future point new challenges when the importing countries have used the schemes for other purposes or to "discriminate" against some developing country while favouring another for non-trade reasons.

Among those who made announcements on concessions were the EC, US, Canada, Norway, India, Egypt, Morocco, South Korea, Thailand and Turkey - with several of these in a regional context. Some others including Malaysia and Indonesia said they would provide some concessions, but could not make an announcement at this stage.

The two-day conference is the outcome of a decision of the Singapore Ministerial Conference of the WTO, aimed at improving the lot of the least developed countries, and is supposed to address market access, support in creating supply- capacities, infrastructure provisions and so on. Several multilateral agencies like the World Bank, IMF, regional development banks, UNDP, and the International Trade Centre are participating. Originally intended to be a joint effort with UNCTAD (which has special responsibilities within the UN system for the LDCs), problems about participation resulted in UNCTAD confining its role to support and preparations, including to the LDCs.

Along with the high-level meeting are some country round- tables, where the concerned countries could outline their needs to the multilateral and bilateral donors and aid agencies.

While the WTO and its officials attempted to put their best foot forward to make a big do and attract attention to the problems of the LDCs, and show that the trading system is acting to prevent marginalization of these economies, their best did not prove adequate. Both the cramped space at the WTO, and the normal WTO culture in dealing with media and civil society came in the way, despite special arrangements.

In any event, it is going to take sometime to assess what additional ben-efits the LDCs are actually going to get or whether it will be another case of promises of repackaged concessions, whether in market access or aid. (Third World Economics No. 173, 16-30 November 1997)

Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS) from which the above article first appeared.