Duties likely to be slashed worldwide

16 August 2008

Leather and leathergoods exporters could see decisions slashing tariffs on their goods worldwide this year, as the World Trade Organisation's (WTO) Doha Development Round approaches its conclusion. WTO director general Pascal Lamy has directed senior trade officials to start debating swapping liberalisation concessions for trading industrial goods (including leather, hides and products made from them) with those for food, drink and services. This should start the final stage of the round, which was launched in 2001, and key decisions could be made as early as July.

The goal is to cut or even abolish import duties on as many goods as possible traded between the WTO's 151 member countries, (which include most important countries except Russia). Until now, negotiators have focused separately on the round's constituent agreements and, as far as the leather sector is concerned, what matters is the round's market access for non-agricultural products (or NAMA) talks, which WTO member countries hope to write into a completed Doha agreement later this year. For the European Union (EU), such a deal would affect leather and leathergoods imported in and out of the EU, which is considered one country at the WTO. What diplomats and trade officials aim to secure by July is agreement on a universal formula for cutting tariffs (called modalities in WTO jargon) for the industrial goods talks. There are grounds for optimism: substantial agreement has already been secured. A final industrial goods trade talks paper issued in February by NAMA chairperson Don Stephenson, is very full and comprehensive, giving the leather industry a clear idea of what may happen at the end of the round. ‘A lot of the architecture for the various modalities are agreed or close enough that I would risk proposing them. That's real progress', he told a press conference at the WTO's Geneva headquarters. Work is still required on the numeric formula for reducing all industrial goods tariffs but even there a consensus is emerging. This should deliver significant worldwide import duty reductions, which could even come into force by 2010. Although the final reduction figure has not yet been agreed, the range of cuts being debated is steep. For industrial goods, an agreed sliding-scale formula would ensure existing higher duties are cut more than smaller duties, and developing countries reduce tariffs less than developed countries. The steepest likely cut to a 10% (for example) import duty for any industrial good for a developed country would be reducing it to 4.4%; with 100% coming down to 7.4%. The weakest cut so far under discussion for developed countries would be 10% down to 4.7%; 100% down to 8.3%. For developing countries, the steepest range is 10% down to 6%; and 100% to 16%; while at its weakest, 10% falling to 7.7%; and 100% down to 18.7%. It can be expected that the general industrial goods duty cuts will fall within these minimums and maximums. Meanwhile, an ad hoc group of diplomats and trade specialists at the WTO have been working on a separate sectoral agreement for footwear (including leather footwear), textiles and clothing, that would reduce duties for these products ‘to as close to zero as possible', said a WTO briefing note. If agreement is struck on this, it would be written into the final overall Doha deal as a bonus, on top of the general duty reduction. For this to go ahead, such a supplementary deal would have to be supported by a sufficient number of WTO members to give it sufficient critical mass, probably representing at least 90% of world trade in these goods.

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