The Hindu Business Line : WTO asks US to reduce trade barriers

New Delhi, June 9 Even as the global trade negotiations for modalities on agriculture and industrial goods are stuck for want of convergence among developed and developing countries on their contrasting position and postures, the World Trade Organisation (WTO) told the US to reduce its barriers to market access and other distorting measures.

“In the face of the economic uncertainty prevalent in early 2008, the US welfare would be best promoted by exploiting the adjustment capacity of the US economy and continuing to reduce barriers to market access and other distorting measures, including those that result from high levels of assistance in agriculture and energy”, the world trade monitoring body said in Geneva today in a report.

The WTO Secretariat report, along with a policy statement by the US Government, form the basis for the ninth trade policy review of the US by the Trade Policy Review body of the WTO from June 9 to 11.

Farm receipts

As measured by the OECD, the overall support to agriculture, including through border measures and government payments, accounted for 11 per cent of gross farm receipts in 2006, down five percentage points from 2004. But this decline largely reflects higher commodity prices, it said, adding that certain commodities, including sugar and milk, continue to receive high levels of assistance. Besides, payments under some commodity programmes (e.g., marketing assistance loans) provide incentives for resource use that might be inconsistent with market signals and might hit trade when supported output finds its way into world markets.

The simple average applied MFN tariff was 4.8 per cent in 2007, virtually the same as in 2004 (2.9 per cent). The applied MFN tariff for agriculture (WTO definition) fell from 9.7 per cent in 2004 to 8.9 per cent in 2007, reflecting the rise in commodity prices and the resulting decline in the ad valorem equivalent rates. At 4 per cent, the 2007 average applied MFN rate for non-agricultural products remained unchanged.

Tariff quotas

Around two per cent of all tariff lines of the US are subject to tariff quotas: high out-of-quota tariffs are one of the main forms of import protection for certain agricultural products. WTO said that manufacturing tariffs are generally low, but high tariffs have sheltered a few industries such as textiles, clothing and footwear and leather, from global competition.

Dealing with other measures affecting trade, the WTO said that besides export assistance, US domestic producers benefit from federal and sub-federal tax exemptions, financial outlays and credit programmes. In its latest notification to the WTO, covering fiscal years 2003 and 2004, the US lists around 430 programmes providing subsidies, of which 42 at the federal level and the rest at the sub-federal level. Agriculture and energy remain by far the largest recipients of notified federal support, it said adding that although not targeted at trade, and the US domestic support might affect global markets as the US is among the world’s largest producers and consumers of numerous products.

Customs bond

Besides tariffs, imports into US are subject to ad valorem harbour maintenance and merchandise processing fees, though the latter do not apply on imports from some preferential partners.

A customs bond must be posted for each import of merchandise into the US, while security considerations have continued to drive significant changes pertaining to customs procedures.

The SAFE Port Act of 2006 codified and expanded extant cargo and supply-chain security programmes and established additional filing requirements for importers. Under the Act, from mid-2012, all containers must be scanned prior to being loaded on a US-bound vessel.

On anti-dumping duty, it said that though the percentage of US imports directly affected by themeasures in force has been small, some 0.3 per cent of merchandise imports over 1980-2005, WTO said that it would be important to ensure that anti-dumping measures do not retard adjustment to changing overall conditions in global markets. Applied anti-dumping duties could be substantial up to 280 per cent and thus significantly affect the US domestic prices, it noted.