W A S H I N G T O N U P D A T E
U.S. “Tariff-Free World” WTO Proposal
Aimed at Eliminating Aluminum Tariffs by 2015
"President Bush believes that American workers, farmers, ranchers and businesses must have more than just the ability to compete globally, they must also have the opportunity to do so," U.S. Commerce Secretary Don Evans recently said in announcing the WTO tariff-elimination proposal. "This proposal says that ‘no one wins unless we all win' and ensures a level playing field for America's goods and ingenuity to compete fairly around the world."
Jobs supported by goods exports typically pay 13 percent to 18 percent higher than the average U.S. wage, according to the USTR. A University of Michigan study found that the elimination of industrial tariffs by other countries could increase U.S. exports by $83 billion annually. Highly-traded goods exports, such as chemicals, paper, and scientific equipment, which are targeted in the U.S. proposal for expedited tariff elimination, account for 60 percent of total U.S. goods exports.
U.S. consumer and industrial goods exports totaled more than $670 billion in 2001, supporting an estimated 12 million American jobs, according to the USTR. Total aluminum exports in 2001 totaled just over 3,700 million pounds, mostly in semi-fabricated products and scrap exports that totaled 3,276 million pounds. This is compared to 3,088 million pounds of imported semi-fabrications and scrap in 2001, making the aluminum industry nearly balanced in import and exports of semi-fabrications and scrap, and disregarding primary aluminum. (The U.S. became a net-importer of primary aluminum by 1993, and remained the largest global producer of primary aluminum until 2002 when China surpassed reaching 17 percent of global primary production.)
The Aluminum Association is committed to a fair and open world market for aluminum by its statement adopted in 2002. The Association strongly supports the initiation of global trade negotiations in the WTO and supports a comprehensive approach to the reduction and eventual elimination of tariffs over a multi-year phase-in period, not to exceed ten years. In addition, we believe that all aluminum producing, importing and exporting countries should participate, and that no country should be required to immediately reduce or eliminate its tariffs on a unilateral basis.
The United States proposal to World Trade Organization countries calls for elimination of all tariffs on consumer and industrial goods by 2015. The U.S. plan for zero tariffs seeks comprehensive measures for implementation and compliance, and would benefit both developed and developing nations, according to USTR. This proposal would eliminate tariffs on the nearly $6 trillion in annual world goods trade.
The U.S. proposal would eliminate tariffs on a full-range of consumer and industrial goods including non-ferrous metals and aluminum. It calls for a two-step approach to tariff elimination. First, WTO members must cut and harmonize their tariffs in the five year period from 2005 to 2010. Specifically, they would eliminate all tariffs at or below 5 percent by 2010, cut all other tariffs through a "tariff equalizer" formula to less than 8 percent by 2010, and eliminate tariffs in certain highly traded industry sectors as soon as possible, but not later than 2010.
The second step is for all members to make equal annual cuts in remaining tariffs between 2010 and 2015, resulting in zero tariffs. The proposal also calls for a separate program to identify and eliminate non-tariff barriers, which would run on a parallel track with the negotiations on industrial tariffs.
The Bush Administration believes the elimination of U.S. tariffs would significantly benefit U.S. families and consumers through lower import taxes and a more competitive economy. In 2001 import taxes cost American consumers $18 billion. Duty-free trade would eliminate these hidden costs and lower prices for consumers. The University of Michigan study found that the U.S. economy would expand by $95 billion as a result of tariff-free trade contributing to job-creation and higher wages.
Developing countries also would gain from a tariff-free world, according to the USTR. According to a World Bank estimate, there would be a world income gain of $832 billion from free trade in all goods including agriculture, of which $539 billion (65 percent) would flow to developing countries. This represents $544 for a family of four. The World Bank estimates that free trade in goods and services could help lift 300 million people out of poverty, a number greater than the entire population of the United States.
The U.S. proposal on consumer and industrial goods tariffs would result in tariff-free trade for 91 percent of world goods trade. For the remaining 9 percent of world goods trade, the U.S. agriculture proposal would cut global tariffs by 76 percent in five years as a step towards eventual tariff elimination.
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