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U.N.: Tariffs’ End a Two-Edged Sword

GENEVA — World Trade Organization countries could boost global exports by as much as $314 billion a year if they moved to drop their tariffs — one of the goals being pursued in the current Doha round of trade talks, according to a report...

GENEVA — World Trade Organization countries could boost global exports by as much as $314 billion a year if they moved to drop their tariffs — one of the goals being pursued in the current Doha round of trade talks, according to a report by a United Nations agency.

The study warned that such a move could result in the loss of many textile and apparel jobs in Western Hemisphere countries, with employment migrating to the Far East.

The report by the U.N. Conference on Trade & Development estimated that developing countries may potentially increase export revenues by $175 billion, with China and Hong Kong together seeing a $67 billion gain, representing 11.2 percent of their current exports, and India experiencing a 25.2 percent rise to $16 billion.

For industrialized economies, the study projects export gains of $139 billion with the benefits for the U.S. put at $36 billion, a 5.7 percent gain; the European Union rising $43 billion or 1.6 percent, and Japan up $27 billion or 5.7 percent.

The study notes that on average the weighed tariffs slapped on developing country exports “is twice the average faced by imports from other developed countries.”

However, the benefits are expected to vary from country to country and sector by sector, and the changes could bring economic setbacks such as loss of jobs and decreased wages.

“In some sectors we expect downside risks,” Sam Laird, UNCTAD’s chief of trade research, told reporters.

The tariff cuts are projected to spur large employment gains in some sectors such as textiles and apparel for low-cost producers such as China and India, but would result in large contractions in labor usage in the U.S., Mexico, the EU and Canada.

The projections are based on the ambitious “Swiss Formula,” the most sweeping proposal to date on tariff reductions, which would cut all tariffs in some sectors — including apparel and textiles — eliminate “nuisance tariffs” of 2 percent or less and trim peak tariffs for all countries.

The U.S. first proposed in 2002 the idea of lessening duties on all industrial goods by 2015, though it’s considered politically unrealistic by many developing countries.