[PEN-L:32554] the future of tariffs

["Ian Murray" <seamus2001@xxxxxxxxx>]

[NYTimes]
November 26, 2002
U.S. to Seek to Abolish Many Tariffs
By EDMUND L. ANDREWS


WASHINGTON, Nov. 25 - The Bush administration, hoping to jump-start global
trade negotiations, will propose a plan on Tuesday to eliminate all tariffs
on industrial and consumer goods by 2015, officials said tonight.

The plan, which will be submitted to the World Trade Organization in Geneva,
would cover not only big industrial products like cars and machinery but
also labor-intensive consumer goods like clothing, textiles and leather
handbags that are still fairly heavily protected in the United States.

Administration officials said their plan would "turn every corner store into
a duty-free shop" and would eliminate about $18 billion in tariffs that
American consumers pay each year.

While the offer to open American markets is in many respects radical, it
also plays to the United States' strengths and would require most other
countries to cut their tariffs more drastically and more rapidly than the
United States.

Trade experts say the Bush administration may also be trying to regain
credibility on free-trade issues, after giving into demands for
protectionist measures from the steel industry and from American farmers
earlier this year.

The proposal is almost certain to run into objections from many countries in
Latin America and Asia, which are likely to argue that their domestic
industries would have to endure severe competitive jolts on the industrial
side while still facing steep barriers to the American markets for
agriculture.

American tariffs on manufactured products average about 5 percent, lower
than those in many developing countries, but they run as high as 20 percent
for certain kinds of clothing, 16 percent for many kinds of luggage and 13
percent for some leather goods.

The United States also imposes a wide variety of "anti-dumping" and
"safeguard" tariffs on imported steel, which run well above 30 percent in
some cases and are not expected to be affected by the new plan.

"The strategy could be to get on the good side of the rhetorical fight,"
said Gary Hufbauer, a trade analyst at the Institute for International
Economics, a research group in Washington.

Scott Otteman, director of trade policy at the National Association of
Manufacturers, expressed cautious support for the idea. Many manufacturing
groups have lobbied in favor of negotiating for deep reciprocal tariff cuts
in particular industrial sectors, but Mr. Otteman said the group is leery of
relying only on across-the-board tariff reductions.

The new proposals will be announced on Tuesday by the United States trade
representative, Robert B. Zoellick, and the secretary of commerce, Donald
Evans.

They are being submitted as part of the global trade talks that were started
last year in Doha, Qatar. American officials hope to inject some electricity
into the talks, which have lost considerable momentum over the last year in
large part because both the United States and the European Union have been
backsliding toward greater protectionism.

The Bush administration infuriated governments around the world by imposing
new "safeguard" tariffs on imported steel last March. Attitudes toward free
trade soured even more after Congress passed and President Bush signed a
sweeping farm bill that could provide up to $180 billion in farm subsidies
over the next six or eight years.

Under the plan, any tariff that is 5 percent or lower would be eliminated in
2005, the year that countries hope to adopt a new global trade agreement.
Other, higher tariffs would then be "harmonized" and reduced to no more than
8 percent by 2010. The most difficult tariff issues would be dealt with by
2015.

The European Union has submitted a somewhat more modest proposal, which
calls for cutting the highest tariffs on manufactured goods rather than
eliminating all tariffs.

The biggest objections are likely to be about the "harmonization" period,
because countries with high tariffs would be required to push through the
biggest reductions and suffer far more disruption than those with lower
tariffs.

The White House came up with a similar plan last summer to reduce
agricultural tariffs and subsidies. That plan called for reducing tariffs
from an average of 62 percent to 15 percent over five years. But the plan
calls for the deepest tariff cuts by countries with the highest duties, and
it has been greeted coldly by the European Union.