ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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WTO Negotiations on Industrial Tariffs

The key issue in industrial tariffs is how to reconcile multilateral discipline with the policy flexibility needed for industrial development. Developing countries do not need high tariffs for all sectors and all the time. But they should have the option of using tariffs on a selective basis as and when needed for progress in industrialisation. They should not be expected to keep moving tariffs downward from one trade round to another, but be able to move them in both directions in different sectors in the course of industrial development. The analysis in this paper suggests that this kind of flexibility is best accommodated by binding the average tariff without any line-by-line commitment; that is, to leave tariffs for individual products unbound, subject to an overall constraint that the average applied tariff rate should not exceed the bound average rate. Clearly, the average bound rate should be high enough to accommodate the needs of different sectors at different stages of industrial maturity. This would not necessarily lead to high bound average tariffs, but could in fact result in lower average tariffs than would be the case under line-by-line commitments.

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