WORLD TRADE
ORGANIZATIONWT/GC/W/196
4 June 1999
(99-2259)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Industrial Tariffs
Communication from Singapore
The following communication, dated 2 June, has been received from the Permanent Mission
of Singapore.
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Background
1. As a result of the Uruguay Round and national tariff reforms, average tariff levels of many
countries have now been reduced to relatively low levels.  But problems of high tariffs are still
widespread.  Even after full implementation of Uruguay Round concessions, a substantial number of
high tariffs will remain which provide a high level of protection against exports of developing
countries.
2. Both the frequency and tariff levels are a matter of concern. In some important developed
country markets, there are still numerous products with tariffs above 30 per cent and even with rates
of several hundred per cent1. The problem of tariff peaks occurs predominantly in those sectors of
export interest to developing countries. More than half of the peak tariffs of developed countries are in
agricultural, fishery and food sectors.
3. The picture for developing country industrial exports is not much better.  Most peak tariffs are
concentrated in the leather, footwear, clothing and textile sectors.  Peak tariffs are normally within the
12-30 per cent range and reach levels as high as 320 per cent (e.g. leather shoes).  Numerous peaktariffs are also applied for a wide range of other industrial products, though the situation varies among
countries (e.g. plywood, ceramic and glassware, bicycles, trucks, buses, shipping vessels and other
transport equipment, consumer electronics and watches).  Thus, even in the industrial sector, tariff
peaks remain a significant market barrier for exports from developing countries.
4. A second problem is tariff escalation faced by developing country exports.  Such escalation is
often an effective barrier to export diversification.  Take for instance food processing, natural-based
products and tropical products.  They constitute the major export industries of developing countries
and comprise largely of products in the first stage of processing.  This is perhaps one reason why
developing countries find difficulties in expanding value-added industries and increase their share of
processed agricultural exports.
                                                     
1 See UNCTAD/WTO Joint Study “The Post-Uruguay Round Tariff Environment for Developing
Country Exports” TD/B/COM.1/14 dated 6 October 1997.WT/GC/W/196
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Basis for industrial tariffs negotiations
5. It is therefore proposed that industrial tariffs be included in the future negotiations as
provided for under Article XXVIII bis of the GATT 1994.
6. Article XXVIII bis of GATT states that “… customs duties often constitute serious obstacles
to trade; thus negotiations on a reciprocal and mutually advantageous basis, directed to the substantial
reduction of the general level of tariffs and other charges on imports and exports and in particular tothe reduction of such high tariffs as discourage the importation even of minimum quantities, and
conducted with due regard to the objectives of this Agreement and the varying needs of individual
contracting parties, are of great importance to the expansion of international trade. The
CONTRACTING PARTIES may therefore sponsor such negotiations from time to time.”
7. Future work on tariff reduction is thus already provided for in Article XXVIII bis of
GATT 1994.  This would also come under paragraph 9(a)(iii) of the May 1998 Ministerial
Declaration for commencing further negotiations on industrial tariffs.
Modalities
8. Paragraph 2(a) of Article XXVIII bis provides that:
(i) negotiations may be carried out on a selective product-by-product basis or by the
application of such multilateral procedures as may be accepted by the contracting
parties concerned ;
(ii) negotiations may be directed towards the reduction of duties, the binding of duties at
then existing levels or undertakings that individual duties or the average duties on
specified categories of products shall not exceed specified levels;  and
(iii) that the binding against increase of low duties or duty-free treatment shall, in
principle, be recognized as a concession in value to the reduction of high duties.
9. Paragraph 3 of Article XXVIII bis also provides that negotiations shall take into account:
(a) the needs of individual contracting parties and individual industries;
(b) the needs of less-developed countries for a more flexible use of tariff protection to
assist their economic development and the special needs of these countries to
maintain tariffs for revenue purposes;  and
(c) all other relevant circumstances, including the fiscal, developmental, strategic and
other needs of the contracting parties concerned.
Proposal
10. While the negotiations should aim to achieve a fair and balanced package, comprising
products of interest to all Members, it is crucial that  this be achieved within a short period of time, say
three years.
11. The Uruguay Round tariff negotiations were conducted using three methods:  (i) the “request
and offer” approach, (ii) sectoral negotiations and (iii) formula cut. Under the sectoral approach, the
majority of proposals suggested a zero-for-zero approach while others were premised on the tariff
harmonization model.  Whilst Members could select a combination of these methods or focus on aWT/GC/W/196
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particular approach, the modality so chosen should aim at maximizing benefits to WTO Members
across the board. It should aim to reduce distortions, be it tariff peaks, escalation or high tariffs. It
could include a range of zero-for-zero sectoral pr oposals, and build upon work done in other fora such
as the APEC Accelerated Tariff Liberalization Initiative (ATLI). This would avoid having to start
from scratch in having to determine the negotiating modalities.
12. Thus, at the Seattle Ministerial Conference, Ministers should call for comprehensive
negotiations on industrial tariffs without a priori exceptions and which are aimed at, inter alia :
(a) tariff cuts well above that agreed in the Uruguay Round;
(b) elimination of tariff escalation, tariff peaks and nuisance tariffs;  and(c) expanding the scope of tariff bindings.
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