Industrial Tariff Reduction: Why the Best Might Still Turn Out to Be the Worst?

Abstract

The issue of tariff reduction modality in negotiations on non–agricultural market access (NAMA) in the World Trade Organization (WTO) assumes importance in light of the role that industrial tariffs play in the industrial policy of many developing countries. This article analyzes the tariff reduction modality in NAMA in light of the basic principle of less than full reciprocity in reduction commitments that has been recognized as an integral component of NAMA negotiations in the Doha ministerial declaration, the General Council decision of 1 August 2004 and the Hong Kong Declaration. The article interprets less than full reciprocity in the NAMA negotiations and discusses the different tariff reduction formulas that could be used to fulfil the mandate of less than full reciprocity. It also provides a critique of the proposed tariff reduction modality given in the NAMA document issued on 8 February 2008. The article shows that the proposed tariff reduction modality with the proposed set of coefficients for developed and developing countries will fail in honouring the less than full reciprocity principle in reduction commitments.