WB calls for 75% tariff cut

WASHINGTON – Developed countries must cut their highest farm tariffs by 75 per cent if the world’s poorest nations are to benefit from a World Trade Organisation attempt to liberalise agricultural trade, experts at the World Bank said on Wednesday.

WTO members will meet in December to put together a deal that would lower global trade barriers in an attempt to lift millions out of poverty. But efforts to agree first on cutting rich nations’ farm subsidies and duties have run into trouble.”Unless you have a 75 per cent cut in the highest tariffs there would be very little outcome at all,” Will Martin, lead economist of the World Bank development research group, told Reuters in an interview.Market access, or lowering duties on imported farm goods, is a major sticking point.The United States is calling for cuts of 90 per cent on the highest tariffs and the EU is saying it would only go to around 50 per cent on its top tariffs.”A 50 per cent cut in tariffs is nowhere near enough,” he said.”The 75 per cent would generate global welfare gains of about US$75 billion (N$495 billion) out of a potential welfare gain of US$182 billion if you had complete liberalisation of agriculture.”Citing figures from research just completed by the World Bank, Martin added this scenario envisaged no special protection for particular commodities, or politically sensitive products such as rice, sugar and dairy.The EU has proposed excluding eight per cent of sensitive products from tariff cuts.”Once you’ve got to eight per cent you’ve given away the whole game,” Martin said.Excluding even two per cent of sensitive products from tariff cuts means “the welfare gains dropped from US$75 billion down to US$16 billion,” he added.Deep cuts in tariffs are needed to make a real impact for less-developed nations, many of which depend on exports of agricultural goods to raise revenue, the World Bank says.Because the rate at which tariffs are set is often much higher than the actual tariff applied, smaller cuts could bring down the symbolic tariff but not the real, applied one.The tariff cap is “very important,” Martin said.”As long as that covers the sensitive products it can really bring back a lot of the potential benefits.An all-encompassing cap of 75 per cent would generate substantial benefits.”The new World Bank report also found that removing cotton subsidies would allow developing countries to raise their share of global exports to 85 per cent in 2015 instead of 56 per cent, and would raise the export price of cotton.”West African cotton is actually very competitive, both in terms of cost and quality,” Uri Dadush, director of the World Bank International Trade Department, said in the interview.”Yes, they have big competitiveness problems in terms of infrastructure.Yes, they have weak capacity.Even with weak capacity and weak infrastructure, they are actually competitive in that area, period, and the subsidies are hurting them.”The United States, the world’s biggest exporter of cotton, opposes special treatment for African cotton farmers.US cotton producers receive about US$4,2 billion in annual subsidies – more than the total gross domestic product of Burkina Faso.World Bank President Paul Wolfowitz has said that all WTO members must make concessions “to deliver a true development round on trade.””Everyone has work to do,” the former US Pentagon official wrote in Britain’s Financial Times newspaper this week, warning poor nations will suffer most if talks collapse.-Nampa-ReutersBut efforts to agree first on cutting rich nations’ farm subsidies and duties have run into trouble.”Unless you have a 75 per cent cut in the highest tariffs there would be very little outcome at all,” Will Martin, lead economist of the World Bank development research group, told Reuters in an interview.Market access, or lowering duties on imported farm goods, is a major sticking point.The United States is calling for cuts of 90 per cent on the highest tariffs and the EU is saying it would only go to around 50 per cent on its top tariffs.”A 50 per cent cut in tariffs is nowhere near enough,” he said.”The 75 per cent would generate global welfare gains of about US$75 billion (N$495 billion) out of a potential welfare gain of US$182 billion if you had complete liberalisation of agriculture.”Citing figures from research just completed by the World Bank, Martin added this scenario envisaged no special protection for particular commodities, or politically sensitive products such as rice, sugar and dairy.The EU has proposed excluding eight per cent of sensitive products from tariff cuts.”Once you’ve got to eight per cent you’ve given away the whole game,” Martin said.Excluding even two per cent of sensitive products from tariff cuts means “the welfare gains dropped from US$75 billion down to US$16 billion,” he added.Deep cuts in tariffs are needed to make a real impact for less-developed nations, many of which depend on exports of agricultural goods to raise revenue, the World Bank says.Because the rate at which tariffs are set is often much higher than the actual tariff applied, smaller cuts could bring down the symbolic tariff but not the real, applied one.The tariff cap is “very important,” Martin said.”As long as that covers the sensitive products it can really bring back a lot of the potential benefits.An all-encompassing cap of 75 per cent would generate substantial benefits.”The new World Bank report also found that removing cotton subsidies would allow developing countries to raise their share of global exports to 85 per cent in 2015 instead of 56 per cent, and would raise the export price of cotton.”West African cotton is actually very competitive, both in terms of cost and quality,” Uri Dadush, director of the World Bank International Trade Department, said in the interview.”Yes, they have big competitiveness problems in terms of infrastructure.Yes, they have weak capacity.Even with weak capacity and weak infrastructure, they are actually competitive in that area, period, and the subsidies are hurting them.”The United States, the world’s biggest exporter of cotton, opposes special treatment for African cotton farmers.US cotton producers receive about US$4,2 billion in annual subsidies – more than the total gross domestic product of Burkina Faso.World Bank President Paul Wolfowitz has said that all WTO members must make concessions “to deliver a true development round on trade.””Everyone has work to do,” the former US Pentagon official wrote in Britain’s Financial Times newspaper this week, warning poor nations will suffer most if talks collapse.-Nampa-Reuters