Analytical Note, August 2005

A Formula for Tariff Cuts: Some Considerations with Respect to Developing Countries’ Tariff Profiles.

One of the most important elements of the mandate contained in Paragraph 16 of the Doha Ministerial Declaration, and one that has attracted the foremost attention of negotiators after the adoption of the Declaration, concerns the reduction or, as appropriate, the elimination of tariffs.

As members approach the Hong Kong Ministerial Conference in December, some options of formula have been discussed by the Negotiating Group on Market Access. Nonetheless, one cannot discern convergence towards any of the options proposed yet. As a matter of fact, divergences have actually widened over the past weeks, with many members increasingly uncomfortable with the options under the discussion.

This note briefly presents some considerations concerning NAMA tariff reductions and the formulae proposed to that end. First, it presents some arguments against undertaking tariff reductions in the WTO and possible negative impacts on developing countries (I). It then presents some of the elements contained in the current framework modalities (II). Finally, the note presents and compares the effects of the US Simple Swiss formula and the Argentina, Brazil and India (ABI) Girard-type formula (III).

This note concerns the reduction of tariff lines that have already been bound under the GATT/WTO and does not tackle the issue treatment of unbound tariffs.

Annexes at the end of this note contain tables (1) presenting examples of adjustment costs, (2) showing the effect of simulations using the US and ABI formulae on national bound averages, and (3) on national maximum rates. Finally, (4) a categorisation of countries under current Annex B conditions is presented in a last table.

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