A Comparison of the Barriers Faced by Latin American and ACP Countries’ Exports of Tropical Products
by Jean-Christophe Bureau, Anne-Célia Disdier and Priscila Ramos
Agricultural Trade and Sustainable Development Series • Issue Paper 9
There have been persistent differences between World Trade Organization (WTO) Members, more specifically a group of Latin American (LA) countries and the African, Caribbean and Pacific (ACP) countries, on how to liberalise trade in tropical products while also addressing the effects of trade preference erosion. The two mandates have neatly placed them in opposing camps: while some want developed countries to remove all tariffs and quotas on ‘tropical products’ such as sugar and bananas, others have long benefited from trade preferences for these very commodities, and thus stand to lose from across-the-board liberalisation. While the preference beneficiaries would like rich countries to be able to slate these products for lower tariff cuts, thus preserving more of their margin of preference, the others would like to prohibit the same products from being designated as ‘sensitive.’
The present Issue Paper (No.9) on “A Comparison of the Barriers faced by Latin American and ACP Countries’ Exports of Tropical Products”, by Jean-Christophe Bureau, Anne-Célia Disdier and Priscila Ramos, is intended as a contribution to a knowledge-based discussion in this area. The purpose of the study is to shed a light on the reality of market access conditions for tropical products in the main import markets, namely the EU, the US, Japan and Canada, for both the ACP and the group of LA countries. To do so, the paper focuses not only on most favoured nation (MFN) tariffs but also analyses trade under different preferential schemes as well as bilateral free trade agreements. The paper, however, does not enter in a discussion on the pros and cons of multilateral liberalisation versus a more selective liberalisation under preferential schemes. Nor does it address prospects for the possible evolution of such schemes in the near future.
With those limitations in mind, the paper indicates that a detailed analysis of the tariffs faced by tropical products in major developed countries shows that the situation looks very different depending on whether one focuses on bound tariffs or on applied tariffs. LA countries, as well as most Asian countries, are often seen as being discriminated against by the EU and US preferential schemes that ACP countries benefit from. However, the study indicates that a thorough analysis of applied tariffs shows that the LA group benefit from tariff concessions in the EU, US, Canadian and Japanese markets that are quite similar to the ones granted to ACP countries.
This study establishes a list of products for which both groups face high tariffs, and where they might have common interest in pursuing further trade liberalisation. With a complete liberalisation, LA and ACP countries would gain more access to the Japanese market, and eliminate the remaining tariffs barriers in EU and US markets. They would also benefit from a more predictable environment thanks to the binding of low tariffs under the WTO. Full multilateral liberalisation would nevertheless reduce the benefits LA countries currently draw from their preferential access to OECD markets relative to third countries.
Furthermore, because of the various preferential regimes, tariff escalation does not appear to be a serious issue for the ACP and the LA, with the exception of the Japanese market. Both the ACP and the LA groups would probably benefit from more relaxed rules of origin so as to allow sourcing of material in other developing countries. Because of the complexity of the overlapping preferential agreements, these possibilities of sourcing materials in other countries eligible to similar preferential agreements are presently limited. In several cases, non tariff barriers, including the sanitary, phytosanitary and technical barriers seem to be the main obstacles preventing their exports to enter developed countries markets.
This paper was produced under an ICTSD dialogue and research project which seeks to address the opportunities and challenges of the full liberalisation of trade in tropical and diversification products, and explores possible areas of convergence between different groupings and interests in WTO negotiations. In doing so the project seeks to address legitimate concerns associated with particularly controversial products such as sugar or bananas, and generate solution oriented analysis and possible policy responses from a sustainable development perspective.