Overview of The WTO

 Objective of presentation

 WTO: The Beginnings

 Growth in Trade Underway

 A New Multilateral Organization

 The WTO: what is it?

 How does the WTO function?

 Principles of the Trading System

 Provisions for developing countries

 Progressing by packages

 The Round to end all rounds

 The WTO Agreement

 Liberalising trade in goods

 Textiles - back in the mainstream

 Agriculture: fairer markets for all

 Trade remedies

 Standards and procedures

 Administrative procedures

 Services: rules for growth and investment

 Services: the key rules

 Services: Better Access to Markets

 Intellectual Property: protection and enforcement of rights

 TRIPS: what does it cover?

 Settling Disputes: the heart of the system

 Meetings of Ministers

  Singapore Ministerial

 Geneva and Seattle Ministerials

 Doha Ministerial Meeting

 Cancun Ministerial Meeting

 Recent Developments

Liberalising trade in goods

Industrial Goods: tariffs

Perhaps a good place to start is with the state of play with trade liberalization ... and in that context, reducing tariffs on industrial goods. WTO negotiations produce general rules that apply to all members, and specific commitments made by individual member governments. The specific commitments are listed in "schedules of concessions". For trade in goods, in general, these consist of maximum tariff levels that a country can apply to a specific product. For agriculture they also include tariff quotas, limits on export subsidies, and some kinds of domestic support.

Tariffs and developed countries

With the implementation of the Uruguay Round results, tariffs on industrial products imported by developed countries were reduced by 40 per cent on average - from 6.3 per cent to 3.8 per cent. These tariff reductions are now fully implemented. The proportion of industrial products which enter the markets of developed countries and face zero MFN duties more than doubled - from 20 to 44 per cent of industrial imports. The share of industrial imports facing duties of 15 per cent or more decreased from 7 per cent before the Uruguay Round to 5 per cent after the full implementation. Tariff peaks, that is high tariffs on individual items, continue to be of concern mainly in textiles, clothing, leather, rubber, footwear and travel goods.

Tariffs and developing countries

As far as developing countries are concerned, tariff levels and the continuing process of negotiated reductions varies considerably. India, for example, will have reduced its average tariff on industrial goods from 71 to 32 per cent by 2005, and Korea's average tariff will be reduced from 18 to 8 per cent.  Most other developing countries have offered a mixture of tariff reductions and ceiling bindings. The tariff reductions agreed to by developing countries in the Uruguay Round are to be fully implemented at the latest by the year 2005.

Binding of tariffs

As noted, market access schedules are not simply announcements of reduced tariff rates. They are also commitments not to increase tariffs above the listed bound rates. For developed countries, the bound rates are generally the rates actually charged. Most developing countries have bound the rates somewhat higher than the actual rates, so the bound rates serve as ceilings.

Tariffs are bound ... but ...

Countries can break a commitment not to raise a tariff above the bound rate - but only with difficulty. To do so they have to negotiate with the countries most concerned, and that could result in compensation for trading partners' loss of trade.