The International Centre for Trade & Sustainable Development reports that 22 developing countries have tentatively agreed to reduce tariffs and other trade barriers as a means to boost trade between their countries.
“Trade officials report that negotiators from 22 nations on Wednesday reached an outline agreement on a new round of concessions under the Global System of Trade Preferences among Developing Countries (GSTP), following days of meetings at the Geneva headquarters of the UN Conference on Trade and Development (UNCTAD).
The draft agreement will be submitted to ministers from participating countries for discussion and approval at a meeting scheduled for 2 December. The ministers will be in Geneva for the WTO’s ministerial conference starting 30 November.”
The countries participating vary from Brazil to Zimbabwe, South Korea, Indonesia, and India, however South Africa and China are not participating.
Under the terms of the tentative accord, participating states would lower tariffs on exports of some 70 percent of each others’ agricultural and manufactured goods. These tariff cuts would not be extended to other countries. Once the deal is adopted, each country will draw up a list of products eligible for tariff cuts, and then submit them to other participants for negotiation and verification. The ‘margin of preference’ appears likely to be at least 20 percent below currently applied MFN tariff levels.
What this would mean in practice is that if India levied a 10 percent duty on car parts imported from the US, identical parts coming from Brazil would face a tariff of 8 percent or lower.
Although it could put US exporters at a disadvantage in these countries, importers who are already operating in any of these countries will see great benefits to the reductions in tariffs.
For example a apparel manufacturer that sources raw material from India for production in Indonesia, will still see the cost savings even though they may export their finished product to the EU or US. The key is intelligent low-cost country sourcing.
Read more at ICTSD: Developing Countries Close to Deal to Boost South-South Trade
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