The Hindu : India to submit tariff reduction proposals to WTO

Online edition of India's National Newspaper
Monday, Dec 02, 2002

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National

India to submit tariff reduction proposals to WTO

By Our Special Correspondent

NEW DELHI Dec. 1. India will submit proposals on industrial tariff reductions to the World Trade Organisation by the end of December but they may be a far cry from the United States Government's proposals announced recently.

Describing the U.S. position as "drastic and ambitious", the Commerce Secretary, Dipak Chatterjee, said the whole issue of industrial tariffs had been viewed at in the context of reforms and the roadmap to bring down tariffs to 10 and 20 per cent by 2004. Speaking at a Round Table on WTO negotiations on industrial tariffs and market access, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), he said India's response to the U.S. proposals would be presented in its submission in December. The U.S. had recently announced the key elements of its paper, which suggest that the WTO member-countries should eliminate all tariffs on consumer and industrial goods by 2015.

Mr. Chatterjee said the U.S. proposal was not in keeping with the mandate for negotiations on market access for non-agricultural products. Even the European Union had termed the U.S. proposal as ambitious, he said.

Outlining the country's approach to the negotiations, he said India would take up the issue of peak tariffs in developed country markets and non-tariff barriers that Indian exports have to face so as to substantially increase market access for the country's goods and services. These issues have become onerous in view of the various preferential trade arrangements and free trade areas that had come up, giving many other developing countries a far better access.

The focus for the negotiations was on reduction or elimination of tariffs and a special reference had been made to reduce or eliminate peak tariffs, tariff escalations and high tariffs and removal of non-tariff barriers, especially for products of export interest to developing countries. Special and differential treatment including less than full reciprocity in reduction of commitments is built into the mandate.

He said under the timetable drawn up for the negotiations, the first stage would be for finalising modalities. Proposals on modalities have to be submitted by December 31. Based on these, the modalities have to be finalised by May next year. Only after that would actual negotiations on tariff concessions take place. The modalities had an important role in the negotiations. Normally these are taken to mean issues like the approach to tariff reductions, whether by formula or by request offer, whether all unbound items should be bound, what would be the base year for reference and the base duty rate from which to make reductions, he explained. "We need to exercise great care even at this stage since modalities will have a great bearing on the actual negotiations that will follow''.

In a presentation at the round table, the Commerce Ministry said it would not foreclose any modality but would emphasise the need for special and differential treatment and less than full reciprocity. While proposals of the European Commission, Japan and the U.S. are not in keeping with the mandate, the presentation expressed concern over the proposal by some African countries which had flagged the proposal that "sharp reduction in the most favoured nation (MFN) applied tariff in the developed market would hurt their market access, owing to the erosion in the preferential margin''. It was pointed out that this was in direct contrast to the general opinion among developing countries, which were pressing for a sharp reduction by the developed countries. The Ministry said India must strive to retain the flexibility to keep highly sensitive tariff lines as unbound. In addition, while reducing the level of bindings, India would have to identify particular sensitive items and should also lever the country's autonomous domestic liberalisation to seek concessions. At the same time, there was also a need to address specific non-tariff barriers affecting developing countries' exports.

The Ministry cautioned that while the negotiations were about bound rates, it was possible that countries would look for cuts in the current applied rates.

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