*EPF212 11/26/2002
Text: USTR Elaborates WTO Proposal for Ending Non-Ag Tariffs
(It would eliminate tariffs on highly traded goods by 2010) (530)

Following is a fact sheet issued November 26 by the Office of the U.S. Trade Representative (USTR) elaborating the U.S. proposal to the World Trade Organization (WTO) on eliminating tariffs on non-agricultural goods and comparing it to the European Union (EU) proposal:

(begin text)

U.S. Proposes A Tariff-Free World -- Modalities

Phase One, 2005-2010 -- Cut and Harmonize

1. Eliminate low tariffs of 5 percent or less by 2010.

2. Eliminate tariffs in highly traded goods as soon as possible, but no later than 2010.
-- Expand participation in Uruguay Round "zero-for-zero" sectors and seek new sectoral initiatives. Sectors should include, but are not limited to:

Agricultural equipment
Bicycle parts
Chemicals and allied products including photo film and soda ash
Civil aircraft
Construction equipment
Environmental technologies
Fish and fish products
Furniture
Information technology and electronics products
Medical equipment
Non-ferrous metals
Paper
Pharmaceuticals
Scientific equipment
Steel
Toys
Wood products

(Distilled spirits, beer, and oilseeds covered under negotiations on agricultural tariffs.)

3. Harmonize remaining tariffs to less than 8 percent.
-- Cut highest tariffs fastest
-- The formula: T1=(T0*8)/(T0+8) [T1=new tariff; T0=current tariff]

Phase Two, 2010-2015 -- Equal Annual Cuts to Zero

1. With tariffs harmonized, countries make equal annual cuts to zero.
-- A parallel process will seek to identify and eliminate non-tariff trade barriers.

Comparison to EU Proposal

-- The U.S. proposal on consumer and industrial products calls for comprehensive tariff elimination while the European Union proposal(1) calls only for tariff compression and reductions and would retain high duties on products of interest to developing countries.

-- The U.S. proposal eliminates duties of 5 percent or less, making more than three-quarters of imports to the U.S., Europe and Japan duty free by 2010. The EU proposal is vague on cutting low tariffs.

-- The U.S. proposal calls for zero tariffs in highly traded sectors no later than 2010. The EU proposal does not contain a sectoral approach.

-- In 2015, tariffs under EU proposal would remain unchanged from 2010 rates shown above. But under U.S. proposal, all tariffs would be zero.

(1) Estimates based on EU presentation to WTO November 4, 2002

Effects of U.S. Proposal On Average Textile and Apparel Tariffs

-- Graph [not shown here] shows effects of the "Tariff Equalizer" formula.

-- Higher foreign tariffs are cut fastest to gain reciprocal market access for U.S. exporters.

-- Tariffs are harmonized at levels below 8 percent before final linear cuts to zero.

-- Meets objective set by Congress in Trade Promotion Authority:
To "obtain competitive opportunities for U.S. exports of textiles and apparel in foreign markets [that are] substantially equivalent to the competitive opportunities afforded foreign exports in U.S. markets and to achieve fairer and more open conditions of trade in textiles and apparel." [Section 2102(b), Trade Act of 2002]

-- A parallel process will seek to identify and eliminate non-tariff trade barriers.

Tariff Calculator -- Results by 2010

The following chart shows the results of the "Tariff Equalizer" formula [in percentages]:

If the initial rate is:... Then the 2010 rate is:

...... 1...........................0.0
...... 2...........................0.0
...... 3...........................0.0
...... 4...........................0.0
...... 5...........................0.0
...... 6...........................3.4
...... 7...........................3.7
...... 8...........................4.0
...... 9...........................4.2
......10...........................4.4
......11...........................4.6
......12...........................4.8
......13...........................5.0
......14...........................5.1
......15...........................5.2
......20...........................5.7
......25...........................6.1
......30...........................6.3
......35...........................6.5
......40...........................6.7
......45...........................6.8
......50...........................6.9
......55...........................7.0
......60...........................7.1
......65...........................7.1
......70...........................7.2
......75...........................7.2
......80...........................7.3
......85...........................7.3
......90...........................7.3
......95...........................7.4
... 100...........................7.4

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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