Service on WTO and Trade Issues (Jul15/25)
29 July 2015
Third World Network
Major developing countries reject asymmetric tariff cut approaches
Published in SUNS #8069 dated 24 July 2015
Geneva, 23 Jul (D. Ravi Kanth) -- Major developing countries - China,
India, and Brazil - have rejected a renewed attempt to foist "asymmetrical"
approaches for cutting tariffs on agricultural and industrial products,
trade officials told the SUNS.
The approach was seen as a grotesque stratagem by the developed countries
to safeguard their highly protected agriculture sector with subsidies
and opaque tariffs, they said.
A meeting convened by the World Trade Organization Director-General
Roberto Azevedo on Tuesday with trade envoys from the United States,
the European Union, China, India, Brazil, Australia, and Japan broke
down because of the differing approaches adopted for market access
for agricultural products and industrial goods.
During the meeting, Azevedo has suggested variations of the average
formula cut based on the figures proposed in the 2008 tiered formula
for agricultural products and a Swiss formula for industrial products.
The two different approaches for market access for agriculture products
and industrial goods would deliver differing outcomes. Azevedo is
fully aware of the radical differences between the two approaches
as he had negotiated them in 2011, said a South American trade envoy.
In agriculture, for example, the tiered formula framework offered
a progressive scale in which tariffs higher than 75% are subjected
to 70% cut, followed by 64% cut for tariffs in the range between 50-75%,
57% cut for tariffs between 20-50%, and 50% cut for tariffs between
Even though in reality the average of the cuts in the four tiers came
down to 54% for industrialized countries, the tiered framework dealt
a body blow to the European Union and the United States which have
a high percent of their tariffs well below 20%.
Therefore, a 50% cut of tariffs in the low 0-20% would have brought
a significant outcome, the official said.
But by adopting an average cut of 54%, the industrialized countries,
especially the EU, can safely protect its low tariffs.
Besides, an average cut involved 54% reduction in agricultural tariffs
of industrialized countries and 36% for developing countries but also
accorded eleven different types of flexibilities for developing countries.
The tiered structure also involved converting the compound and specific
tariffs which are referred to as non-ad valorem tariffs in the schedules
of the industrialized countries into ad valorem tariffs.
Under the average formula framework mooted during Azevedo's meeting
with the seven countries, the developing countries are denied the
11 different flexibilities while the developed countries are allowed
to continue with their non-ad valorem tariffs, said sources familiar
with the meeting.
In industrial goods, the average approach involved applying the Swiss
harmonizing formula as proposed in the 2008 revised draft modalities
with complete binding of tariffs on an ad valorem basis.
The Swiss formula would force the developing countries to undertake
disproportionately higher reduction commitments of over 65% as compared
to a reduction commitment of less than 30% for industrialized countries
who have low tariffs with tariff peaks and tariff escalation.
Further, the average formula framework for industrial goods failed
to address the central problems of trade in industrial goods - tariffs
peaks and tariff escalation. The industrialized countries have a range
of peak tariffs for textiles and apparels, leather and leather products.
During the meeting, it was suggested that the developing countries
would need to bind all their unbound tariffs after converting them
into the ad valorem equivalents.
While the developed countries refused to convert their opaque compound
and specific tariffs for agricultural products into ad valorem tariffs,
the developing countries are asked to convert their unbound industrial
tariffs into ad valorem duties, a developing country official said.
Brazil and India flatly rejected the approaches on the ground that
they are fundamentally "asymmetrical" as under it, they
would undertake higher commitments in industrial goods while the industrialized
countries will have substantially lower commitments in agricultural
The major industrialized countries - the EU, the US, Japan, and Australia
- lent support to these two approaches.
In the face of the unbridgeable differences between the two sides,
Azevedo was forced to cancel another meeting of the seven countries
Meanwhile, at an informal meeting of the Doha agriculture negotiating
body, the European Union and other industrialized countries demanded
a simplified average formula approach based on the average figures
suggested in the tiered formula of the Rev. 4.
But a large majority of developing countries called for adopting the
2008 revised draft modalities as the basis for finalizing the work
The EU also called for a simple approach for overall trade distorting
support, without adhering to the 2008 revised draft modalities.
The US spoke of the need to take current realities of subsidy programs
across all countries into consideration for arriving at the work program,
said a participant familiar with the meeting.
Brussels maintained that it can follow the disciplines in the export
competition pillar of the 2008 modalities. The EU also threatened
that there would be no Doha negotiations after the Nairobi meeting.
After the summer break, sources said, Azevedo will make a renewed
push for the average formula framework by discarding the previous
2008 revised draft modalities.
"The December 2008 draft modalities are the basis for negotiations
and represent the end-game in terms of the landing zones of ambition,"
Azevedo had said, when he was Brazil's ambassador to the WTO in 2011.
"Any marginal adjustments in the level of ambition of those texts
may be assessed only in the context of the overall balance of trade-offs,
bearing in mind that agriculture is the engine of the Round ...
"The draft modalities embody a delicate balance achieved after
10 years of negotiations. This equilibrium cannot be ignored or upset,
or we will need readjustments of the entire package with horizontal
repercussions. Such adjustments cannot entail additional unilateral
concessions from developing countries," Azevedo had argued in
In his zeal to somehow conclude the Doha trade negotiations, Azevedo,
as Director-General, is now prepared to swallow all his previous pronouncements
and set a new record for touching the nadir in global trade negotiations,
said an African trade envoy. +