Moving towards the end of customs barriers

Under the auspices of GATT, tariff negotiations were one of the main instruments used to further thc liberalisation of world trade. The most significant result of the Uruguay Round (l986-1993) was a 22,500-page document containing the agreements reached by the Member States in terms of reductions of customs duties. Each country detailed its commitments for goods and services, category by category, and the schedule was attached in appendix to the Marrakech Protocol. As the system is based on the principle of non discrimination, the commitments must be respected for imports from all WTO member coun­tries, including those which did not make commitments.
Most of the reductions granted by the developed countries were spread over a period of five years from 1st January 1995. The present result should be a reduction of 40% in industrial customs duties from an average of 6.3% to 3.8%. In certain cases the duties have even been completely removed. The value of manufactured goods imported free of duty has risen from 20% to 44% in deve­loped countries.
The schedules concerning market access are not just tariff schedules. They repre­sent a commitment not to raise customs duties above the indicated rates, such duties being "bound”. If a State raises the rate of duty, it is obliged to negotiate with its trading partners and may have to pay them compensation for possible losses of sales. All the Countries have made efforts in terms of bound duty rates. Progress has been remarkable in developing countries, where products at bound rates of duty have risen from 21% to 73%. Countries in transition (i.e. that have recently changed from a centrally-planned economy) have increased the level from 73% to 98% and industrialised countries from 78% to 99%. This has made the market far more stable for traders and investors.

Information technology
The results of the Uruguay Round were further enhanced by the Information Technology Agreement (ITA) which came into effect on 26th March 1997, signed by 40 countries representing 92% of world trade in this sector. It allowed for the removal of import duties and other duties on these Products by 2000, or 2005 in some cases. 48 countries from most regions in the world now participate in ITA (including the 15 EU Member States). However, no further products have been added to the initial list.
Tariff barriers have therefore been signi­ficantly reduced in all areas. But ave­rages nonetheless mask great differences and high rates of duty do still exist. The percentage of products subject to duties of over 15% is falling, but tariff " peaks " still remain a problem, as underlined during the preparatory work for the Ministerial Conference to be held in Seattle from 30th November to 3rd December. For example, Singapore and Hong Kong consider that such peaks are a major obstacle to exports from develo­ping countries, as most apply in sectors that are of interest for these countries, such as clothing and textiles. Tariff peaks generally range from 15-30%, but can sometimes go as high as 320%, e.g. for leather shoes.

Tariff peaks
There is also criticism from countries such as Australia. New Zealand and the European countries. A proposal from the European Communities targeting other OECD countries stated : "We are still observing tariff structures in deve­loped countries that are manifestly unjustifiable with respect to the decla­rations on the subject of liberalisation made by the countries concerned". Although the United States and Japan have average rates of 15% (3% for EU) they have retained tariff peaks on cer­tain products. Emerging countries are not above reproach either. They maintain high bound duty rates (around 30%) and even though the duties effec­tively applied are lower, they are sub­ject to change at any time, thus crea­ting a certain degree of uncertainty.

Non-discrimination
The Least Favoured Nation clause is one of the guiding principles of GATT and now the WTO. Exceptions to the rule are strictly controlled : either for the purpose of aid to developing coun­tries, or in the case of regional integra­tion enabling States to enter into free trade agreements or customs unions.