Developing Nations barring China Joint Hands to Cut Tariff

The trade representatives from 22 nations of developing and emerging economies at the sidelines of the three-day WTO ministerial meet have signed an accord to reduce industrial tariffs. According to the deal, the signatories have agreed to cut tariffs at least 20 percent on a minimum 70 percent of goods.

The lack of topics beyond the existing issues at the WTO ministerial meet provided trade representatives from developing countries a platform to discuss the likely fallout of the forthcoming Doha talks and evolve strategies like the deal they had at the end of the meet. However, China’s absence in signing the agreement was conspicuous since the country has vented similar concerns as that of the other developing nations over Doha discussions until recent past.

The Doha Round was launched in late 2001 with a paramount aim of helping poor countries to prosper by removing all trade barriers. However, the aftermath of global economic meltdown has forced developed countries not to budge from subsidies to tariffs as it is feared to create losses to their farming, manufacturing and service sectors.

After several missed deadlines, the WTO members have set a new deadline for concluding the negotiations in 2010. But the recently concluded ministerial summit, appear to have made little progress, reinforcing skepticism that the 2010 target would be out-stretched as it had happened in the past.

The Washington-based International Food Policy Research Institute observed the global trade and the global economy had changed profoundly since 2001. It further added that a study showed that commodity market strains and environmental pressures were not part of the original Doha agenda then.

Lately, many countries are getting into individual FTAs and PTAs to ward off the likely trade talk failure at Doha Rounds next year. This week alone witnessed the launch of feasibility studies on PTAs between China and Switzerland, and between India, the Mercosur group of Argentina, Brazil, Paraguay and Uruguay, and the SACU.

The countries participating in the agreement are Algeria, Chile, Cuba, Egypt, India, Iran, Indonesia, Malaysia, Mexico, the Southern Common Market (MERCOSUR) nations – Argentina, Brazil, Paraguay and Uruguay – Morocco, Nigeria, North Korea, Pakistan, South Korea, Sri Lanka, Thailand, Vietnam and Zimbabwe. The agreement provides special treatment for Iran and Algeria, which are yet to become WTO members. The details of the tariff reduction will be made available by the end of September 2010 after extensive negotiations in the coming months.

The 22 countries represent a market of 2.6bn people accounting for 13 percent of world GDP, 15-18 percent of trade, 43 percent of farm and 16 percent of industrial production. Supachai Panitchpakdi, secretary-general of the UN Conference on Trade and Development who was instrumental in materializing the deal said it was estimated that the tariff cut would bring an additional trade of $8bn for these countries.

By Jose Roy