Great expectations for new trade round

Date: 29/10/1998

By Simon Taylor

WHEN the 132 members of the World Trade Organisation begin negotiations on a new trade round at the end of next year, European industry leaders will be looking for major breakthroughs in further reducing tariffs on industrial products.

Manufacturers will also want guarantees that, as import duties are dismantled, new barriers to trade do not emerge in the form of technical requirements which amount to disguised protectionism.

Beyond that, leading industry players will be hoping for new rules to ensure that their major investments in production facilities in foreign markets are not discriminated against.

Every round of trade talks since the General Agreement on Trade and Tariffs (GATT) was launched in 1947 has produced major reductions in tariff protection of industrial goods. Under the Uruguay Round, which finally reached a successful conclusion in 1995, signatories agreed to reduce tariffs by an average of 40&percent; by 2000. Hopes are high that similar cuts can be made in the next round.

Despite the achievements of the past 40 years, a lot remains to be done, even in advanced industrialised countries. The US still maintains high external tariffs in sectors such as textiles and the EU's 10&percent; import duty on vehicles is a major source of friction.

European industry set out its priorities for the forthcoming WTO round in a statement last July from the employers' federation UNICE. This not only called for moves towards common tariff levels between countries, but also for non-tariff barriers to be eliminated. UNICE complains that such barriers are “most significant” in the areas of standards and certification.

Another gap in international rules is the lack of a framework for international investment. European industry leaders would also like a simplification of customs procedures, and say special provisions are needed for trade affected by environmental agreements and ecological labelling.

With just over one year before the next round of negotiations start, a number of key issues need to be settled. First, WTO members have to decide whether to accept a full round covering a wide range of sectors, as favoured by Trade Commissioner Sir Leon Brittan.

As the EU will have to make major concessions on agricultural subsidies, given its high level of support, negotiations will have to cover a wide range of sectors if it is to benefit in other areas where it is more competitive. But, so far, the US has resisted this, warning that negotiating on several sectors could slow the pace of liberalisation.