Smoke and Mirrors: Making Sense of the WTO Industrial Tariff Negotiations

Abstract

Tariffs for industrial products are a key element of the ongoing WTO negotiations. However, rather than clarifying the issues, the framework text agreed on 1 August 2004 leaves considerable uncertainty about the future direction of the talks. According to one view, the negotiations are back at first base, with little progress in evidence since the Fifth WTO Ministerial Conference, held in Cancun. Others see the texts as the basis for an ambitious approach to tariff cutting. The more ambitious proposals imply increased imports, lower tariff revenues, some labour market adjustments and reduced output in some key sectors in some developing regions. Furthermore, the main proposals do not fully resolve problems of tariff escalation and peaks. Proposals that take greater account of the need for special and differential treatment for developing countries seem less threatening and more likely to satisfy the wishes of the growing number of WTO members from developing countries. A successful outcome requires that the main focus be on high tariffs and market entry conditions in respect of products of export interest to developing countries. In addition, some way needs be found to assist some developing countries in coping with the likely adjustment costs of liberalisation.