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Sectoral tariff reductions emerge as next obstacle in WTO talks

Sectoral tariff reductions emerge as next obstacle in WTO talks
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First Published: Mon, Oct 12 2009. 12 44 AM IST

Differing view: A file photo of the WTO headquarters in Geneva. India has been opposing the bid to make sector-specific reductions an integral part of the non-agricultural market access negotiations.
Differing view: A file photo of the WTO headquarters in Geneva. India has been opposing the bid to make sector-specific reductions an integral part of the non-agricultural market access negotiations.
Updated: Mon, Oct 12 2009. 12 44 AM IST
New Delhi: Demands by developed countries for sectoral tariff reductions have replaced differences over farm tariffs as the big issue in the Doha Round of multilateral trade talks, according to an Indian commerce ministry official.
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Under the so-called sectorals, negotiating countries have to agree to a road map to cut import duties in some sectors more drastically than the general tariff reduction. Sectoral initiatives have been proposed in 14 areas, including auto parts, bicycles, chemicals, electronics, fish and forestry products, gems, and toys.
World Trade Organization (WTO) talks collapsed in July 2008 over a so-called special safeguards mechanism (SSM) that sought to provide a safety net to developing countries to raise tariffs in excess of current ceilings if imports of some agricultural products increased beyond a certain limit.
Developed and developing countries failed to agree on the details of the proposal, causing the talks to stall. WTO member countries in September resolved to conclude negotiations by the end of 2010.
“Special safeguard mechanism is no more a big issue,” said a senior commerce ministry official who didn’t want to be identified. “That could be resolved. Sectorals is now a big issue (in WTO negotiations).”
In an interview with Mint on 24 August, WTO deputy director general Harsha Vardhana Singh had said India’s concerns on the SSM had been addressed at the WTO’s G-7 (Group of Seven) level and “the next step is to take it and multilateralize”.
Later, when commerce secretary Rahul Khullar was asked to confirm or deny the report, he refused to comment.
“Maybe some developments on (SSM) have taken place which I am not aware of,” said Abhijit Das, deputy project co-ordinator and officer in charge of the India office of Unctad, or the United Nations Conference on Trade and Development. “However, it will be premature to say that the issue has been resolved.”
According to a declaration agreed on at the 2005 Hong Kong ministerial meeting of WTO, participation in sectorals should be purely voluntary. More recently, developed countries have urged “advanced developing countries” such as India, China and Brazil to commit such tariff reductions in up to three sectors at least.
“Since talks failed in July 2008, it was clear that sectorals will be one of the most contentious issues in Doha negotiations. The US and European Union were very aggressively pushing for sectorals,” said Manav Majumdar, who looks at trade issues at the Federation of Indian Chambers of Commerce and Industry, or Ficci.
Differing view: A file photo of the WTO headquarters in Geneva. India has been opposing the bid to make sector-specific reductions an integral part of the non-agricultural market access negotiations. Fabrice Coffrini / AFP
India has been opposing the bid to make sectorals an integral part of the Nama (non-agricultural market access) negotiations at WTO. The negotiations aim to reduce or eliminate tariffs and non-tariff barriers for non-agricultural goods. The Nama-11 coalition, of which India is a part, last year issued a strongly worded statement holding that any attempt to make sectoral negotiations compulsory was not acceptable as it would hurt the poorest developing countries that rely on preferential access to developed markets.
“Indian industry is broadly opposed to any mandatory sectoral tariff reduction. As long as nobody forces it on us, we can look into the pros and cons of participating in sectorals,” Majumdar said.
The Doha Round of WTO negotiations received a boost when member countries resolved to conclude the talks by the end of 2010. That decision came at an informal ministerial meeting hosted by India in New Delhi in September.
Official-level talks resumed on 14 September in Geneva. However, a lack of clarity on US demands, as its negotiating team needs the approval of the US Congress, is seen as a roadblock towards any significant progress in the talks.
“Until and unless the US comes on board and sends the right signals, WTO negotiations cannot move swiftly. The US is yet to move on services negotiations front,” Majumdar said.
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First Published: Mon, Oct 12 2009. 12 44 AM IST