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U.S. Tariff Plan Raises Concerns

Some countries and industries say they have little to gain from the proposal to eliminate levies on manufactured products by 2015.

November 28, 2002|Blair Pethel | Bloomberg News

The U.S. proposal to end tariffs on manufactured products by 2015 may meet resistance from countries and industries that see little gain for the sacrifice.

Poor countries that need tariff revenue and want to export more agricultural goods say the United States, Japan and European Union need to end protections for their farmers first. Makers of protected U.S. goods such as textiles and trucks say ending trade barriers other than tariffs must take precedence.

The proposal probably will revive talks at the World Trade Organization on opening global markets for industrial goods, services and farm products, a spokesman for the Geneva-based organization said.

"It's very ambitious," said Keith Rockwell, spokesman for WTO Director General Supachai Panitchpakdi. "Some developing countries will have a problem with this, but it's equally true that even those countries critical of this proposal would benefit greatly from enhanced access to the U.S. market."

U.S. Trade Representative Robert Zoellick said Tuesday that the United States will cut to zero its tariffs on everything from apparel and electrical goods to furniture and consumer housewares by 2015 as long as the 143 other members of the WTO agreed to do the same.

Rubens Barbosa, Brazil's ambassador to the U.S., was guarded about the proposal, saying the details are what matter.

"I would have thought there would be in the proposal something related to the developing countries," he said.

The November 2001 declaration in Doha, Qatar, that launched the WTO negotiations contains a paragraph that says "special consideration" will be given to developing countries in negotiations on industrial tariffs.

"If the proposal is across the board, without taking this into consideration, it will make our life difficult," Barbosa said.

The average U.S. industrial tariff is 4%. In Brazil it's almost 20%, meaning his country will have to do more, he said.

Ed Gresser, a former official in the office of the U.S. trade representative and now an analyst at the Democratic Party-backed Progressive Policy Institute, said that's an unreasonable excuse.

"If very, very poor countries have a problem because of lost revenue, then they have legitimate concerns that should be addressed," said Gresser, whose study this year detailing the benefits of ending industrial tariffs was cited by Zoellick as one of the motivating factors behind the U.S. plan.

"For very big, wealthy economies -- Brazil, India -- it's probably politically difficult, but I don't have that much sympathy with the fiscal argument," he said.

U.S. industries that would lose protections also have reservations about the tariff-elimination plan.

Auggie Tantillo, Washington coordinator of the American Textile Trade Action Committee, said the proposal does nothing to advance the textile industry's interests abroad.

"It's not tariffs for us so much, although they're important," he said. "How is the U.S. going to address the nontariff barriers that are being used to keep our products out?"

Tantillo cited testing regimes in India and Pakistan, mandated distribution systems in China, customs-clearance processes around the world and other foreign impediments to U.S. apparel and textile makers.

Bill Reinsch, president of exporter group the National Foreign Trade Council, said U.S. car and truck makers face the same problems.

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