NEW YORK (CNN/Money) -
The U.S. Tuesday will reportedly propose to eliminate tariffs on manufactured goods, calling for countries in the World Trade Organization to sweep away all duties no later than 2015.
The initiative, according to the Financial Times' Web site, is aimed at jump-starting a faltering round of international trade negotiations.
The FT said the proposal, to be rolled out in Washington by Robert Zoellick, the US Trade Representative, and Donald Evans, the commerce secretary, will be presented as the culmination of a 50-year effort to remove tariffs.
The FT, citing industry and congressional officials briefed on the plan, said the key elements of the US proposal are:
- A rapid reduction in high tariffs on non-agricultural products, so that by 2010 there would be no tariffs above 8 per cent. All tariffs would then be reduced progressively to zero by 2015.
- The elimination, no later than 2010, of all duties that are currently below 5 per cent.
- A parallel initiative calling for faster elimination of tariffs in many industrial sectors such as chemicals, paper, wood and construction equipment.
Under the plan, developing countries would have to make the biggest cuts because their average tariffs are much higher than in advanced economies, the FT said.
On industrial machinery, for example, tariffs are 1.2 per cent in the U.S. and 1.8 per cent in the European Union but 35 per cent in Argentina and 36 per cent in India, the FT said. Under the U.S. proposal, the US and EU would have to scrap those tariffs by 2010 while other countries would have to cut tariffs to about 6.5 per cent by that time.
The U.S. hopes to entice developing countries by promising rapid cuts in its own remaining high tariffs. The average U.S. tariff of 17.5 per cent on clothing would be cut to 5.5 per cent by 2010.
The U.S. is also trying to persuade developing countries that it is in their own interests to eliminate high tariffs. A recent study by the National Foreign Trade Council, a U.S. business lobby that provided the blueprint for the US scheme, says developing countries pay $80 billion a year in tariffs, more than 70 per cent of it on trade with each other, the FT said.
Paul O'Neill, Treasury secretary, hinted at the initiative in a speech on Monday in Manchester, England. He said the U.S. response to Japanese competition in the 1980s cemented his belief "that the world economic system should eliminate trade and tariff barriers not only because open trade gives consumers around the world more choices and better prices but because open trade spurs innovation and productivity growth," according to the FT.