USA: Tariffs on Manufactured Goods Proposed to be Dropped

The United States, recently criticised for its protectionist trade policies, on Tuesday proposed removing world tariffs on manufactured goods no later than 2015.

Under the proposal, all tariffs of five percent or less on consumer and industrial goods would be completely eliminated while those above five percent would be capped at no more than eight percent.

In the second step of the plan, all World Trade Organization (WTO) members would make equal annual cuts in their remaining tariffs between 2010 and 2015 until they reached zero tariffs.

The proposal also calls for a separate programme to identify and eliminate non-tariff barriers, which officials said they would publicise inJanuary. It would run on a parallel track with the negotiations on industrial tariffs.

The plan, unveiled Tuesday by U.S. Trade Representative (USTR) Robert Zoellick and Commerce Secretary Don Evans at a news conference, would reduce the tariffs on nearly six trillion dollars worth of traded goods.

"The U.S. plan for zero tariffs is comprehensive, and would benefit both developed and developing nations," declared the USTR in a statement.

Washington's trade partners have grown sceptical of U.S. tariff plans over the years. Earlier this year, they rebuked officials for a protectionist farm bill that gives billions of dollars in subsidies to its farmers and criticised high U.S. tariffs on imported steel.

The new plan would open the U.S. market to many manufactured goods from the developing world but would also require developing nations to open their markets even further for U.S.-made consumer goods.

Zoellick told reporters that the plans would help both U.S. exporters, by lowering tariffs on their products, and U.S. consumers, by bringing cheaper and more diverse products into the country.

The changes would also open markets around the globe for U.S. workers, farmers, and companies, and create new export opportunities, he added.

"Our proposal would turn every corner store in America into a duty-free shop for working families," said Zoellick.

"This historic proposal would benefit the average American family of four with an extra 1,600 dollars a year, while also removing high foreign tariff barriers on more than 670 billion dollars in U.S. industrial and consumer goods exports."

U.S. Commerce Secretary Don Evans said the proposal would ensure a level playing field for America's goods and ingenuity "to compete fairly around the world".

U.S. tariffs on manufactured goods average around two percent and about four percent in other rich nations. They average 20 percent in many developing nations, and the tariff on industrial machinery averages 35 percent in Argentina and 36 percent in India.

Some U.S. industrial lobbies, which fear competition from cheaper products made in the developing world where labour costs are much lower, have been resisting the plan.

Textile makers, for instance, have reportedly said they will fight the plan, while other industries that stand to benefit have complimented the proposal.

According to the U.S. National Association of Manufacturers, industrial goods make up more than 80 percent of U.S. exports so a boost in such exports would be a definite boon to the economy.

Exports of U.S. consumer and industrial goods totalled more than 670 billion dollars in 2001.

A recent University of Michigan study found that the U.S. economy would expand by 95 billion dollars as a result of tariff-free trade, contributing to job creation and higher wages.

According to the WTO, trade figures for the United States, and North America in general, declined more than in any other region last year -- five percent for exports and 3.5 percent for imports.

The new U.S. proposal will be formally submitted next week during trade talks in Geneva, Switzerland among 144 members of the WTO.

The European Union and Japan might welcome the ambitious plan because it could mean more access for their goods in the United States, but developing countries may hesitate as the proposal could strike a blow to their flagging local manufacturing industries.

Already developing countries are suffering from double standards in international trade in agriculture, where rich nations adopt protectionist policies and provide their farmers large subsidies but at the same time ask that developing nations "open up" and "liberalise" even further.

The European Union has suggested targeted tariff cuts on manufactured goods rather than complete removal of these taxes.

Last November, the United States played a key role in launching a new round of world trade negotiations as part of the WTO Doha Development Agenda.

The administration of President George W. Bush has been pursuing an aggressive free trade agenda and plans to enter into negotiations with Morocco and five nations of Central America.

Officials are working towards completing ongoing free trade negotiations with Singapore and Chile and for the Free Trade Area of the Americas (FTAA).

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