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'India must seek tariff reduction by US, EU at WTO talks in Seattle'

The Associated Chambers of Commerce and Industry of India or Assocham has suggested to the Indian negotiating team at the Seattle round of trade negotiations to argue forcefully for a reduction in industrial tariffs by industrialised countries, particularly where industrial peak tariff rate is over 15 per cent in basic duty.

In a strategy paper designed to beef up India's negotiating stance at the Seattle World Trade Organisation round, Assocham president K P Singh said, ''This move is imperative as the US and EU countries together impose high tariff on 837 products, most of which are of export interest to India.''

The US imposes high basic tariff duty on 238 products and EU imposes high tariff on 599 products. Most of these products belong to textiles and clothing, organic and industrial chemicals, marine products and most of agriculture products.

These products are of export interest to India and other developing countries. An initiative therefore needs to be taken for reduction of tariffs in these products at least by ten percentage points.

More importantly, a reduction in bound rates is also required.

Reduction of basic rates of duty is critically important, Singh said, particularly in textile products in view of proposed dismantling of multi-fibre arrangement. Unless the tariffs reductions are achieved in the textile products, the market access would become an illusion.

It would be also desirable on the part of the negotiators to demand fewer levels of basic rate of duty and bound rates of duty. This would facilitate the flow of trade. The customs would benefit from such simplification.

The long-term objective should be to move towards one or two levels of basic bound rate of duty for agriculture and industrial products.

The Assocham chief suggested that the Indian side should prepare a list of products on which the negotiators should seek a further tariff reduction from India's trade partners.

Alongside, we need to be armed with two lists of commodities -- one which contains products which India considers ''sensitive'' and another of less sensitive items on which India can afford to further reduce the tariff rates.

Singh said tariff negotiations are hard and subject to various considerations. From the Indian point of view, the US and the EU markets are of critical importance.

These two markets together absorb over 40 per cent of our exports. The average tariff rate is likely to be 3.8 per cent in the US and 5.6 per cent in the EU by year 2002, (completion of the Uruguay round implementation period).

However, the peak tariff rates are high in as many as 238 products in the US and 599 products in the EU. The same holds good for a large number products which are bound to the WTO.

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