Australia and European Communities respond to issues raised by Pakistan during their trade policy reviews:
WTO held trade policy reviews of the European Communities and Australia during February and March 2007 respectively. Availing the opportunity, Pakistan raised a number of concerns relating to the difficulties being faced by its business community in those markets and urged the respective governments to help resolve the issues. The official replies furnished by the delegations of Australia and European Communities are reproduced below:
Written Replies by Australia:
Question 1:
According to the Secretariat report (Paragraph 9), Australian tariffs on primary products are considerably lower than on semi-processed goods. Thus, tariff escalation constitutes a potential obstacle for industrialization of developing countries. Are there any plans to address this issue in the near future?
Answer:
Australia’s applied average tariff is 3.5%. For most sectors, tariffs are either zero or 5%. There are no plans to lower the 5% general tariff. The only escalation is between products which are duty free, and products subject to the general 5% tariff.
Of sectors where tariffs remain above 5%, Australia has legislated to reduce tariffs on automobiles, including components and parts, to no higher than 5% by 2010. In the case of textiles, clothing and footwear, Australia has legislated to reduce tariffs in this sector to no higher than 5% by 2015.
Question 2:
Although Australian applied MFN tariffs are low, there are more than 40% of bound rates currently exceeding applied MFN rates by at least 5 percentage points. Is Australia keeping this differential as a policy space for future adjustment?
Answer
Australia has in place a legislated program of tariff reductions to 2015. The difference in bound and applied tariffs arises entirely from the continuing program of unilateral tariff liberalization undertaken by Australia. It is in no way reflective of my desire for “policy space”.
Written Replies by the European Communities:
Question 1. EC's MFN tariff is applicable to only nine WTO Members accounting for its 30% of merchandise imports (Para 9). Such a trade policy regime of one of the major trading nation hints to undermine the multilateral trading system. How would EC reconcile its commitment to the Multilateral System in this backdrop?
Answer
The nine partners referred to in the question are all the first trading partners of the EC. It is therefore correct to say that the EC has a strong interest in the multilateral system. It is equally important to note that while the EC grants preferential treatment to many countries, such preferences go largely unreciprocated. This second aspect is again clear evidence of the attachment of the EC to the multilateral system since the bulk of its exports are under MFN treatment and hardly receive any preferences.
Question 2. Despite having average tariff of 4% for non-agricultural goods, EC maintains tariff peaks as well as tariff escalations especially on the products of export interest to the developing countries like textile and clothing and leather products. On one hand, EC through its EBA and GSP scheme is helping some developing countries and on the other hand, its trade policy is discriminated against products of interest to the remaining developing countries. How would EC justify such a dichotomy in its policies?
Answer
The Community's common commercial policy is consistent with and consolidates the objectives of its development policy. It is to this end that developing countries benefit in the access to the EC market from non-reciprocal tariff preferences granted under the Community's scheme of generalised tariff preferences (GSP). 178 independent countries and territories, classified by the World Bank as developing countries, are benefiting from a preferential access to the EC market under the current GSP scheme.
In 2005, out of the 10000 products in the Combined Nomenclature, almost 3000 were duty free (MFN zero) and the vast remaining majority – more than 6000 products – benefited from GSP trade preferences, including the majority of industrial products and a great many agricultural and fish products, of interest for developing countries. Half of the GSP covered products entered the EC market duty free.
