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IV

URUGUAY ROUND

1. BROAD FEATURES

The recently concluded (April 1995) Uruguay Round of multilateral trade negotiations is expected to usher in a new era in world trade. Estimates of the benefits to the world economy of GATT tariff cuts on all goods range from US$ 212 to US$ 270 billion a year by the year 2003 (Dunn, 1994). A study by the World Bank and the Organization for Economic Cooperation and Development (OECD) envisages 90% of the annual benefit will come from trade reform, with the remainder reflecting tax cuts on industrial goods. The wealthy industrialized nations of the OECD are expected to reap two-thirds of the benefit from trade liberalization in goods and almost all the gains from liberalization of services. Most countries, developed and developing, will gain on balance, but those likely to suffer most from the new agreement are those which can least afford it: the poorest food importing countries, such as those of the Sahel.

Enhanced market access, through a general reduction in tariff rates, is a feature of the agreement. This will have positive effects on trade not only between developed countries but also between the developed and less developed countries. Developed countries have agreed to reduce tariffs on manufactured goods by 38%, which would mean that the average tariff rate on manufactured products will come down to 3.9%. At the moment, 7% of the total imports of developed countries are subject to high tariff rates (15% and above); after the new trade agreement, only 5% of their imports will be subject to such high rates.

The implementation of the Agreement on Agriculture, which covers many of the products considered to be NWFPs, will start in 1995. There are three elements to the commitment on market access: tariffication, tariff reduction and access opportunities. Tariffication means that specific non-tariff barriers (quotas, variable levies, minimum import prices, discretionary licensing, state trading measures, voluntary restraint agreements and similar border measures) should be converted to equivalent tariff levels. Ordinary tariffs, including those resulting from tariffication, should be reduced by an average 36% (24% by developing countries), with a minimum rate of reduction of 15% for each tariff item. These tariff cuts will be implemented over a period of six years (by the year 2000) for the industrialized countries, while the period being ten years (by the year 2004) for the developing countries.

Of note is the fact that while the commodities included are those normally considered as part of agriculture,/ forest products are excluded as are rubber, jute, sisal, abaca and coir, but includes essential oils and spices/. Forest products were covered under a separate category in the GATT negotiations, not that on agriculture, and agreements of relevance include tariff reductions and changes to regulations relating to NTMs.

2. EFFECTS ON NWFP TRADE

Trade in NWFPs is expected to benefit from the overall trade liberalization policies adapted in the Uruguay Round, as well as from direct tariff reductions.

Although tariff rates with few exceptions are already quite low for most of the NWFPs, the situation will improve further after reductions are implemented. Average reductions of 49.85%, 67.62% and 44.88% are expected in the tariff rates for NWFPs entering EC, USA and Japanese markets, respectively. Average bound rates of custom duty on NWFP-containing tariff lines are 1.70%, 1.95% and 2.96% in the markets of EC, USA and Japan, respectively.
 
 

Table 4. Detail of NWFP-containing tariff lines facing import duty of
more than 10% in EC, USA and Japanese markets
 
 
Market 
HS code 
Product description 
Bound rate of duty (%) 
EC  04090000  Natural honey 
17.3 
  07123000  Mushrooms and truffles 
12.8 
  20032000  Truffles 
14.4 
USA  20049090  Other (bamboo shoots) 
11.2 
  45039060  Some articles of natural cork 
14.0 
  46021029  Some articles of rattan or of palm leaf 
18.0 
Japan  040900  Natural honey 
25.0 
  110620  Flour and meal of sago for purposes other than feeding 
15.0 
  130110  Shellac and other refined lacs 
17.0 
  152190  Beeswax 
12.8 
  170220  Maple syrup 
17.5 
  200320  Some kinds of truffle packings 
10.5 
  200490  Bamboo shoots 
13.6 

Source: UNCTAD 1994. Uruguay round of multilateral trade negotiations,
Vol. 8a, 11 and 19.

After the GATT reductions have been implemented, duty on the majority (more than 97% of the tariff lines) of NWFPs will be less than 10% (largely less than 5%) in the three major markets of EC, USA and Japan. Only three NWFP-containing tariff lines will be facing duty rates higher than 10% in EC and USA markets, while seven tariff lines will do so in the Japanese market. A few products like natural honey (EC, USA), some articles of rattan or of palm leaf (USA), flour and meal of sago (Japan), shellac (Japan) and maple syrup (Japan) will, however, still be facing custom tariffs higher than 15%.

______________________
17/. A forthcoming FAO report will provide details of the conditions and likely effects concerning forest products.
18/. Underlined products also contain NWFPs

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