Warning of de-industrialization effects of NAMA talks

The proposals for cutting tariffs of industrial products in the WTO's negotiations will have significant adverse effects on developing countries' industrialization, according to a paper presented at the Group of 24 Technical Group meeting held in Geneva on 10 March.

'The application of the proposed Swiss formula (in the WTO's non-agricultural market access negotiations) has a significant detrimental long-term effect on industrialization of developing countries, besides their loss in government revenues,' according to Mehdi Shafaeddin, a development economist who was formerly head of UNCTAD's Macroeconomics and Development Policies Branch.

In a paper, 'Does trade openness favour or hinder industrialization and development?', Shafaeddin said the industrial sector of most developingcountries is underdeveloped, thus they need to apply higher tariffs to some of their industries than developed countries.

'The low tariffs rates, as proposed by developed countries, will make them lose an important policy tool for upgrading their industrial structure. Further, binding of tariffs at low levels would not allow a developing country to raise them beyond a certain low level when it faces balance of payments problems.'