U.S. seeks complete elimination of trade tariffs
WASHINGTON (AP) – The Bush administration, trying to energize flagging global trade talks, announced Tuesday that it will seek the total elimination of all tariffs on manufactured goods over the next 13 years. The proposal, which was unveiled by U.S. Trade Representative Robert Zoellick and Commerce Secretary Don Evans at a news conference, would phase out border taxes on nearly $6 trillion in annual world trade in nonagricultural goods. The taxes would be cut in a two-step process.
By 2010, all tariffs that are currently below 5 percent would be eliminated and all tariffs currently higher than 5 percent would have to be capped at no higher than 8 percent. Then, over the next three years, these remaining tariffs would be progressively lowered until they were eliminated in 2015.
The administration said the effort would not only benefit exporters of American manufactured goods but also American consumers.
“Our proposal would turn every corner store in America into a duty-free shop for working families,” Zoellick said. “This historic proposal would benefit the average American family of four with an extra $1,600 a year, while also removing high foreign tariff barriers on more than $670 billion in U.S. industrial and consumer goods exports.”
The package will be presented as the U.S. negotiating position at trade talks being held in Geneva among the 144 nations who are members of the World Trade Organization.
These discussions were launched at a WTO trade ministerial meeting in Doha, Qatar, last year but so far have made little progress and have been overshadowed in the United States by the administration’s aggressive effort to strike free trade deals with individual countries, such as Chile and Singapore.
The U.S. proposal is likely to be opposed by U.S. industries such as textiles, who have lobbied Congress aggressively over the years for high tariffs as a protection against a flood of cheaper foreign imports.
But other American manufacturers expressed support for the U.S. proposal, noting that while the United States has very low tariffs on most manufactured goods, American companies face very high tariffs in many developing countries.
On industrial machinery, tariffs in the United States average less than 2 percent while American manufacturers face tariffs of 20 percent or higher in many countries. The tariff on industrial machinery averages 36 percent in India and 35 percent in Argentina.
Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers, said that the “bold scheme” is the type of initiative needed to energize the Doha Round of trade talks.
“Manufactured goods are over 80 percent of U.S. exports,” Vargo said. “As important as agriculture is in the Doha Round, the negotiations just can’t be successful without slashing the trade barriers that America’s manufacturers face abroad.”
Officials of the 15-nation European Union gave a cautious reaction to the U.S. proposal, declining to comment on the specifics but saying the EU was happy to see the administration was proposing a negotiating position on tariffs.
“We are very glad the United States has finally decided to engage on a discussion to further liberalize industrial goods,” said Arancha Gonzalez, trade spokeswoman at the European Commission in Brussels. “We were a little preoccupied by the lack of response from a major trading partner like the United States.”
But she said the EU wanted to be sure that the interests of developing countries were taken into account. Developing nations often use high tariffs to protect their fledgling industries.
“It may be a very ambitious proposal … but we know already that this is a target that may be very difficult to meet by developing countries,” Gonzalez said.
The EU has made its own proposal for the world trade talks that foresees targeted cuts of tariffs on manufactured goods rather than total elimination.
Gonzalez said the EU’s offer may be “less beautiful, but perhaps a little more realistic,” than the U.S. plan.