Rich nations mount duty pressure on country cousins

NEW DELHI: Developed countries apply higher average tariffs to developing countries’ products than to those from other developed countries, signifying a bias against export opportunities for developing countries, an Unctad report has said. This is the case particularly for labour-intensive manufactures.

The Trade and Development Report 2006 released on Friday points out that between 1994 and ’05, developed countries reduced weighted average tariffs on their imports from other developed countries more sharply than they reduced import tariffs on developing countries. This difference in tariff reductions is especially significant for agricultural products and labour-intensive manufactures.

The report also expressed concern on the increasing volatility in the stock, commodities, and currency markets of developing countries and emerging economies. It warned that without quick international action to reduce global trade imbalances, the tumbling dollar will lead to a financial crisis threatening the “benign” growth performance of the world economy.

It called for a multilateral effort to redress global imbalances, in part through an expansion in domestic demand in key industrialised countries other than the US such as Japan and Germany which currently have considerable surpluses.

Elaborating on market access problems faced by developing countries, the report said that a big factor hindering developing countries’ exports was the tariff peaks (unusually high tariffs) which are applied by developed countries mainly to agricultural products and labour-intensive manufactures.

Between 1994 and ’05, the number of international tariff peaks applied by developed countries to developing countries' exports increased by over 13% with the corresponding maximum levels of tariffs increasing from 800% to 1,235%.

Tariff peaks on agricultural exports of developing countries to developed countries more than doubled during the period, accounting for 29% of total tariff peaks in ’05, the report said. The number of peaks in labour-intensive manufactures, which in ’05 accounted for almost 90% of total peaks in manufactured exports, increased by 10.5% between 1994 and ’05.