GENEVA — The U.S. is leading a group proposing that countries reduce chemical tariffs and eventually eliminate them, a move that would help slash costs for cosmetics, footwear, plastics and other goods.
The objective is to get “a critical mass of countries that account for about 90 to 95 percent of global trade in the sector to support the initiative,” said a high-level U.S. official, who spoke on the condition of anonymity.
The written proposal has circulated in the market access for industrial goods segment of the World Trade Organization talks. It has “strong support from U.S. industry,” the official said.
High tariffs in the $792 billion annual global chemicals trade “translate into costs that significantly raise the price of intermediate and finished goods,” according to the proposal submitted by the U.S., Canada, Japan, Norway, Taiwan, Singapore and Switzerland.
The plan says chemicals make up 35 percent of the value needed to manufacture and package footwear products and 15 percent for jewelry. In some countries, tariffs on chemicals are as high as 60 percent.
Products included in the proposal include tanning or dyeing extracts, essential oils, soap, prepared waxes, candles, pine oil, plastics such as resins, polymers and inorganic and organic chemicals.
Trade diplomats said the thrust of the proposal is to get major developing countries such as Brazil, India, Indonesia and Malaysia to join the initiative that builds on the Chemical Tariff Harmonization Agreement that rich industrialized countries agreed to in the Uruguay Round of talks that ran from 1986 to 1993.
Under that accord, nations agreed to tariffs at three levels: zero, 5.5 percent and 6.5 percent. Basic chemicals were set at 5.5 percent. More highly processed goods such as cosmetics and plastics were set at 6.5 percent, and tariffs on pharmaceuticals and primary petrochemicals were eliminated.
Most countries that joined the WTO since 1995, including China, have signed the CTHA package as part of their entry terms, officials said.