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Africans back India on cutting tariffs at WTO

NEW DELHI, AUG 28: The African group of countries has extended its support for the tariff reduction proposal of Argentina, Brazil and India (ABI) for non-agriculture market access (Nama) at the World Trade Organisation (WTO).

In a recent intervention, Egypt, on behalf of the African group of countries, stated that the group had decided to support the ABI formula, which includes a variable reduction coefficient based on average bound tariff rate of members; (reduction coefficient determines by how much tariffs have to be brought down).

Developed countries, including the US and the EU, have been pushing for a Swiss formula with a single coefficient which calls for countries with higher tariffs to bring about sharper reductions. As average tariffs of developing countries are much higher than those of developed countries, it would put a greater reduction burden on developing countries.

Speaking to FE, commerce ministry officials said that with the Caribbean group of countries proposing a formula similar to the ABI formula and the African group giving its outright support to the ABI formula, India’s bargaining position in the on-going Nama negotiations was strengthening. “Once negotiations restart at the WTO next month, we can argue our case with greater confidence,” an official said.

The ABI formula submitted in May this year has two components. It calls for application of a ‘Swiss-type’ formula on a line-by-line basis to countries’ bound tariffs in which the country’s average tariff rate is part of the formula.

For treating unbound tariffs, the formula suggests that reduction from base values would be made on average tariffs (rather than line-by-line cuts through a formula), thus giving flexibility for countries to choose by how much to reduce each tariff line.

Developed countries are particularly opposed to the ABI’s proposal on unbound tariffs as it would give developing countries the freedom to keep certain tariff lines untouched.