The Hindu Business Line : Industrial tariffs: India assails proposals from some developed countries

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New Delhi Feb 22 India today voiced serious concerns over proposals flowing from a few developed countries in recent months on industrial tariff reductions, which not only "blatantly flout the less than full reciprocity mandate but seem to be looking at effacing the developmental dimension of the Doha Round."

A statement issued by the Department of Commerce today said that in view of the adverse effect high tariffs in developed world have on developing country exports, the Doha mandate for non-agricultural market access (NAMA) negotiations at the WTO requires reduction of tariff peaks, high tariffs and tariff escalation on products of export interest to developing world.

While making this demand on developed countries, the Doha Mandate, the July 2004 Framework Agreement and the December 2005 Hong Kong Ministerial Declaration unequivocally asserted that there should be "less than full reciprocity in reduction commitments (LTFR) and special and differential (S&D) treatment through flexibility to exempt certain tariff lines from formula cuts for developing countries to meet their domestic developmental objectives."

Stating that recent proposals referred to Swiss coefficients of 10 and 15 in tariff cut proposals for developed and developing countries, the statement said that this meant reduction commitments of 33 per cent for most developed countries and a whopping 66-70 per cent for most developing countries.

"If this is what the proposers believe that a development round should deliver, we need to re-examine the etymology of development."

The acceptance of the non-linear Swiss formula is itself a statement of a broad commitment by the developing countries. But a coefficient of 15 for the developing world seems more in tune with honouring a non-existent Doha mandate of "reduction of tariff peaks, high tariffs and tariffs escalation only on products of export interest for developed countries."

The mandate, on the other hand, prescribes the tariff cuts especially on products of export interest for developing countries.

Referring to number crunching on the developed world proposal, a Swiss coefficient of 10 for developed countries that is more than double of their average bound rates (such rates range from 4-5 per cent) would lead to "insignificant tariff liberalisation in terms of a one-third reduction commitment."

On the other hand, most developing countries with average bound rates in the region of 30-40 per cent are being asked to take on a Swiss coefficient less than half of their average bound rates, thereby cutting their average bound rates by two-third.

This reveals the "inequity of the proposals which inverts the mandate of the Doha Round. Ambition in reduction commitments must be circumscribed by the well-entrenched principle of LTFR."

It further noted that LTFR for a Swiss coefficient of 15 for developing countries as proposed by some developed countries would translate into a Swiss coefficient of less than one for developed countries.

"Are developed countries prepared to accept this? If not, they will need to rework the proposal," the statement said.

The contention that developed countries have made large commitments in the earlier rounds merits little consideration "when one considers that most of the tariff peaks and high tariffs maintained by them are on products of export interest for the developing world." India said that the reduction commitments by the developed world should harmonise its tariffs on "products of export interest for developed countries" with its tariffs on "products of export interest for developing countries."

This could only be construed as a correction in the historical tariff imbalance and could be met only by coefficients below four (for developed countries).

Incidentally, it must be noted that higher the coefficients, the lower the percentage tariff cuts.