Trade Policy Steep Tariff Reductions Necessary In WTO Talks to Benefit U.S. Exporters

Members of the World Trade Organization will need to agree to cut import tariffs on selected consumer and industrial products by at least 75 percent from current bound rates to benefit U.S. companies exporting to a number of key developing countries, according to a study released May 19.The study, conducted by International Trade Services Corp. on behalf of the National Foreign Trade Council (NFTC), said that hundreds of millions of dollars a year worth of priority NFTC-member non-agricultural exports to six countries--Brazil, Egypt, India, Malaysia, South Africa, andTurkey--currently face 'uncertain' or 'prohibitive' tariffs.

But it said that nearly half of the applied tariffs important to NFTCmember companies would remain unchanged for U.S. exports to the sixcountries, worth some $715 million a year if WTO members were to decide to reduce tariffs by less than 75 percent of bound rates in the current round of WTO trade talks.

Bound tariffs are duties required under WTO agreements; applied tariffsrefer to duties actually levied at the border (usually lower than boundrates).

The NFTC-sponsored study--National Foreign Trade Council WTO TariffAnalysis Project: Making the Case for Ambitious Tariff Cuts in the WTO's Non-Agricultural Market Access Negotiations--said that, in the current WTO non-agricultural market access (NAMA) negotiations, the tariff differential between bound and applied rates needs to be 'minimized' in order to achieve significant gains in market access for U.S. manufacturers.

It said that tariffs on nearly two-thirds of the product lines selected for the study, which included certain consumer goods, pharmaceuticals, chemical products, construction and farming equipment, and medical devices, arebound at 20 percent or more in the six markets that were examined.

As a result, it said, more than $689 million worth of exports from NFTCmember companies to the six countries could face higher tariffs--of 20percent or more.

The NFTC currently comprises more than 300 U.S. companies ranging from the Bechtel Group Inc. to The Boeing Co., Caterpillar Inc., General Electric Co., Motorola Inc., Procter & Gamble Co., and Wal-Mart Stores Inc.