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US pushes for aggressive tariff scrapping

By SHIHOKO GOTO, Senior Business Correspondent

WASHINGTON, Nov. 26 (UPI) -- Trade barriers for manufactured goods should be completely eliminated by 2015, U.S. Trade Representative Robert Zoellick said Tuesday.

Accompanied by Commerce Secretary Don Evans at a news briefing to unveil the latest proposal, Zoellick emphasized the need for breaking down trade barriers, "which are effectively taxes," pointing out that eliminating tariffs would benefit $670 billion worth of U.S. industrial and consumer goods.

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Specifically, the Bush administration called for all member countries of the World Trade Organization to reduce their tariffs for non-agricultural products down to a maximum rate of 8 percent by 2010, which would then be whittled down to zero by 2015.

Meanwhile, those goods that at present have tariff rates below 5 percent will be cut down to zero by 2010. The proposal will be put forward officially to the WTO next week in Geneva.

"This proposal says that no one wins unless we all win, and ensures a level playing field for America's goods and ingenuity to compete fairly around the world," Evans said.

Calls for gradually reducing tariff barriers have been in the pipeline since the last WTO meeting in Doha, Qatar, last year, but the latest U.S. proposal is the most aggressive and specific yet. The U.S. call to eliminate tariff barriers completely is likely to be most damaging for developing nations, rather than industrialized countries and regions such as the United States, the European Union, and Japan, given that emerging markets are usually more dependent on high tariffs to protect their own nascent economies against steep foreign competition.

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U.S. tariffs average about 4 percent under WTO rules, compared to an average of 40 percent among developing nations, particularly to protect industries such as textiles and apparel, which are often the first steps for emerging markets to progress on the industrial ladder. But precisely because the U.S. trade barrier reduction will be far less than that for developing countries, the Bush administration's proposal will be less palatable for those countries that are often the weakest.

Zoellick, however, rejected such arguments.

"If India wants the United States to lower its tariffs on apparel, while its own level is far higher than ours ... how can that be fair? We need a level playing field," he said.

Already, the EU has stated the U.S. proposal is far too aggressive and thus unlikely to be adopted by other WTO member countries. Indeed, when questioned which countries are likely to support the U.S. stance, Zoellick failed to name any country except for New Zealand.

Still, the U.S. push to step up tearing down trade barriers has been in the pipeline for some time, and indeed, U.S. Treasury Secretary Paul O'Neill pointed out the need for freer trade in light of U.S. trade relations with Japan over the decades, in a speech at the Confederation of British Industry conference Monday.

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"In the 1970s and early 1980s, U.S. manufacturers marveled at Japan's efficiency, and many thought we had lost our edge for good," O'Neill said in his keynote address in Manchester. "But the openness of the U.S. economic system forced us to think harder, to learn from the best practices of firms like Toyota, and to learn from each other as well. The competition from Japan shook us out of our malaise."

O"Neill added that "The lessons of those days" cemented his belief that the world economic system should eliminate trade and tariff barriers.

"Not only because open trade gives consumers around the world more choices and better prices, but because open trade spurs innovation and productivity growth," he said.

The latest U.S. proposal to reshape the global trade arena comes only months after the Bush administration proposed eliminating export subsidies in the agricultural sector. The July 25 proposal also called for negotiating a specific date for eliminating agricultural tariffs altogether.

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