./.WORLD TRADE
ORGANIZATIONWT/GC/W/243
8 July 1999
(99-2837)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Industrial Tariffs
Communication from Japan
The following communication, dated 6 July 1999, has been received from the Permanent
Mission of Japan.
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1. This proposal is on industrial goods.  Japan has already made a separate proposal on forestry
and fishery products (WT/GC/W/221).
Proposal
2. For the sound development of world trade, it is critically important to realize a predictable
and credible trade environment.
3. From this viewpoint, industrial tariff negotia tions should be commenced with the objectives
of further reducing tariff rates, improving the coverage of bound products and simplifying and
harmonizing the tariff structure among the Members.
4. A comprehensive approach, where no sector is excluded a priori from the negotiations, should
be adopted so that all Members, whether developing, developed or a transition economy, can benefit
from the negotiations.
5. As for modality, a "formula-cut" approach, where all Members should reduce their tariff rates
by way of a formula to target rates, should be applied as a basis.  Such target rates would be set in
accordance with the scale of economic development, paying due attention to the situations ofdeveloping countries.  This general reduction should be effectively supplemented by a "zero-for-zero"
approach and a "harmonization" approach, etc. in so me of the important trading sectors to be agreed
among a certain number of Members, including major trading Members.
Background6. Past rounds of negotiations have realized a significant reduction in the tariff rates on
industrial goods, have increased the coverage of bound products and have improved predictability and
credibility in world trade.  Considering room for fu rther improvement, however, it is highly desirable
to cope with this issue in the next round of negotiations.WT/GC/W/243
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7. It is crucially important to negotiate on industrial tariffs and to conclude negotiations within
around three years under the principle of a single undertaking with the objectives of reducing tariff
rates down to target levels, set in accordance with the scale of economic development by paying due
attention to the situations of developing countries, and of improving bound rates on a line-by-line
basis by binding all products, if possible.
8. We should not limit the negotiating sectors in advance so that a wide range of benefits can be
achieved for all Members, whether developing, developed or transition economies.
9. Modality should be such that it enables an agreement to be reached within a short period of
time to cover effective tariff reductions in important sectors.  From this viewpoint, we should adopt
the "formula-cut" approach where all Members should reduce their tariff rates by a set formula
providing a basis for further well-balanced liberalization.  Additionally, Members, including major
trading Members would agree on a "zero-for-zero" and a "harmonization" approach, etc., whichwould make a critical mass on some important trading sectors in an effective way.
10. In the examination of a formula, we should bear in mind the harmonization of a tariff
structure among Members in a balanced manner, as well as other elements, such as:
- an efficient correction of peak tariffs that have enormous trade distortion effects;
- the abolishment of nuisance tariffs (for example, tariff rates of 2.5 per cent and
under).
11. In order to commence the next industrial tariff negotiations smoothly, a conversion of all
tariff schedules to the HS96, which is already behind time, should be completed immediately.
Note: As for the forestry and fishery sectors, it is  necessary to consider in a comprehensive manner
the relevant factors on these sectors from the viewpoint of a sustainable use of resources,
bearing in mind the global environment and resource preservation/control.  In order to
establish a negotiating framework allowing for such discussions, we propose to set up a
separate discussion group for these sectors apart from other non-agricultural goods sectors.
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