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Transcript of 1 Market Access: Whats At Stake Christopher A. Padilla Co-Chair, WTO Working Group National Foreign...
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Market Access: What’s At StakeMarket Access: What’s At StakeMarket Access: What’s At StakeMarket Access: What’s At Stake
Christopher A. PadillaChristopher A. PadillaCo-Chair, WTO Working GroupCo-Chair, WTO Working Group
National Foreign Trade Council (U.S.)National Foreign Trade Council (U.S.)
April 2002April 2002
Christopher A. PadillaChristopher A. PadillaCo-Chair, WTO Working GroupCo-Chair, WTO Working Group
National Foreign Trade Council (U.S.)National Foreign Trade Council (U.S.)
April 2002April 2002
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Tariffs Remain An IssueTariffs Remain An Issue
Implied Tariff Collections, 1995
190
87
5.8
0
50
100
150
200
$US
Bill
ion
s
Industrial
Agriculture
Minerals
Two-thirds of collected tariffs are on industrials
Source: The World Bank
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Where the Money GoesWhere the Money GoesIndustrial Tariff PaymentsIndustrial Tariff Payments
Tariff Payments By Country
19%
40%
14%
27%North to North
North to South
South to North
South to South
Developing countries pay 40% of tariff bill, but only 22% of GDP
High tariffs on developing country exports are a significant problem
But developing countries pay most tariffs to each other Source: The World Bank
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Developing Countries Pay Most of their Developing Countries Pay Most of their Tariffs Tariffs To Each OtherTo Each Other
Developing Country Tariff Payments(Industrial Goods)
29%
71%
To High Income To Developing
$23 billion
$57 billion
Source: The World Bank
5
Where The Money GoesWhere The Money GoesIndustrial TariffsIndustrial Tariffs
Tariffs on South-to-North trade are typically 4X higher than tariffs on North-to-North trade
But rates on South-to-South trade are the highest
0.8%
3.4%
10.9%
12.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Industrial Tariff (Avg)
North to North
South to North
North to South
South to South
Source: The World Bank
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Rapid Growth in South-South TradeRapid Growth in South-South Trade
South-South TradeDeveloping Country Exports to Developing
Countries
21.0%23.5%
27.0% 26.0% 28.0%32.5%
39.5%
0%
10%
20%
30%
40%
50%
1965 1970 1975 1980 1985 1990 1995
Nearly 40% of developing-country exports are to other developing countries
May rise to 50% by 2005
Source: The World Bank
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Major Regional Free Trade Agreements, 2005(Major FTAs covering a significant portion of world trade)
FTAA
EU & Associates
ASEAN FTA
Mexico - EUMexico - EFTAMexico - many
Mercosur - EU
South Africa - EUSADC - EU
Australia-NZ
Egypt - EU?
Aus/NZ/AFTA?Various Intra-Africa
More than half of world trade covered by an FTA in 2005
8
Major Regional Free Trade Agreements, 2010(Major FTAs covering a significant portion of world trade)
FTAA
EU & Associates
China- ASEAN FTA
Mexico - EUMexico - EFTAMexico - many
Mercosur - EU
South Africa - EUSADC - EU
Australia-NZ
Egypt - EU
Aus/NZ/AFTA?Various Intra-Africa
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Major Regional Free Trade Agreements, 2020(Major FTAs covering a significant portion of world trade)
FTAA
FTAA and APEC
EU & Associates
APEC
Trade Covered by FTAs (est.)
Covered70%
Not Covered30%
Mexico - EUMexico - EFTAMexico - many
Mercosur - EU
Egypt - EU
South Africa - EUSADC - EU
Various Intra-Africa
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The U.S. “Basic Necessities Tax”The U.S. “Basic Necessities Tax”
Percentage of U.S. Import Value7%
93%
Percentage of U.S. Tariffs Collected
47%
53%
Clothes & Shoes
All Other Goods
Source: Progressive Policy Institute, using ITC data
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Backpack: 18.3%
Pencils, Markers: 4.3%
Jeans: 16.4%
T-Shirt: 17.8%
Shoes: up to 48%
Peanut-butter sandwich: 30%
The “Basic Necessities Tax”The “Basic Necessities Tax”Average U.S. Tariffs On Back-to-School ItemsAverage U.S. Tariffs On Back-to-School Items
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The “Cheap Goods Tax”The “Cheap Goods Tax”U.S. Import TariffsU.S. Import Tariffs
Source: Progressive Policy Institute, “America’s Hidden Tax on the Poor”
Ladies’ Undergarments
Silk: 2.4%
Polyester: 16.2%
Tableware - Forks
Silver-plated: 2.4%
Stainless steel: 15.8% +
Footwear (90% imported)
<$6.50/pair: up to 48%
>$12/pair: 20%
Tariffs on luxury items are lower. “Every-day” goods
are taxed more.
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““Cheap Goods Tax” Not Unique to Cheap Goods Tax” Not Unique to Developed CountriesDeveloped Countries
Nepal exports more to the United States than it does to India, which borders Nepal on three sides.
Same is true for Sri Lanka, Maldives
Nepal's Exports - 2000
$177
$220
$0
$50
$100
$150
$200
$250
$U
S M
illio
ns
To India
To U.S.
Source: Progressive Policy Institute
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Getting to ZeroGetting to ZeroModalities for Industrial Tariff EliminationModalities for Industrial Tariff Elimination
Bucket 2005
Multilateral Tariff Elimination
Bucket 2010 Bucket 2015 Bucket 2020
Immediate elimination Many zero/zero sectors are ready now
Equal annual reductions ov er 5 years 80% of lines in buckets 2005 or 2010
Equal annual reductions ov er 10 years No more than 15% of lines
Equal annual reductions ov er 15 years No more than 5% of lines and 20% of trade
Request/offer process
S&D through phasing
2020: Industrial Tariffs Eliminated
Eliminate LLDC tariffs
BEFORE 2005
More products in later buckets for developing countries
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1. Developing countries:
Pay most tariffs to each other, on growing South-South trade
Face high tariffs in developed countries on key export items
Need to reduce costs of production to attract investment
2. Developed countries:
Pay $16 billion in “residual” tariffs on North-North trade
Face broadly high tariffs in key developing markets
Should eliminate “basic necessities tax” on poor consumers
Summary: Why Zero?Summary: Why Zero?
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3. We’re halfway there already:
42% of world trade is duty-free, percentage is growing
Web of FTAs threatens:
more complexity
economic distortions
second-class status for many poor countries
4. Grand political bargain:
Addresses high tariffs on selected goods in developed countries AND broadly high rates in developing countries
If no bargain, little progress likely on either front
Summary: Why Zero?Summary: Why Zero?