Tariff cuts: Numbers don't add up for EU, India-Brazil

The deadlock between the developed and the developing countries on agriculture and industrial tariffs took an ugly turn when the European Union today accused India and Brazil of misleading the WTO members by alleging that the 25-member Union was seeking a 70 per cent reduction in industrial tariffs.

A statement issued by the EU said the "real cuts requested in industrial tariffs were 16 per cent for Brazil and 29 per cent for India".

"The value of a tariff rate cut must be measured by the extent to which it creates new market access, which means the extent to which it cuts actually applied tariff rates, and not the bound rates notified in Geneva. If the cuts were applied to Brazil and India, they would cut bound tariffs by more than 70 per cent. But this reduction would cut into applied tariffs by 16 per cent and 29 per cent, respectively," it said.

The statement came a day after India and Brazil said EU's proposal on Non-agricultural Market Access sought a duty cut of 75 per cent for developing countries against a mere 25 per cent for the developed countries.

India and Brazil reacted sharply to the EU statement. Calling it a "statement of confusion", Commerce and Industry Minister Kamal Nath pointed out that the entire WTO negotiations were carried out on the basis of bound rates.

"How is he (Peter Mandelson) trying to twist it and apply it on applied rates when the whole basis of the framework agreement is bound rates," he asked.

Supporting India's stance, Brazil's Foreign Minister Celso Amorim said bound rates were part of the Doha development package.

"The developing countries have been asked to undertake cuts from their bound rates as they were asked to cut tariffs in the Uruguay round. We are also looking at cuts only in the bound rates because we want some policy space that is provided for under Article 18 of the General Agreement on Trade and Tariffs (GATT)," he said.

EU Trade Commissioner Peter Mandelson has blamed the US and developing countries for the lack of progress on Nama and agriculture. Today, he said the EU had made serious offers on agriculture and Nama, while there was lack of credible and serious offers from the others.

Hinting at the developing countries, he said some of the proposals "were so reckless that they must have been tabled for tactical reasons only". He said the G-20 was still to respond to the proposals on Nama.