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Developing Nations Agree Modalities To Tariff-Reducing Pact

by Mike Godfrey, Tax-News.com, Washington

07 December 2009


Developing country parties to the Global System of Trade Preferences (GSTP) met at ministerial level on December 2 and adopted a decision on "modalities" for slashing tariffs in the trade they carry out with each other.

The decision paves the way for participating countries to offer reductions of at least 20% on tariffs that apply to some 70% of the goods exported within this group of nations. A timeline was set for intensive negotiations next year to conclude the agreement by the end of September 2010.

These negotiations, known as the "Sao Paulo round", were launched in 2004 on the occasion of the UNCTAD XI quadrennial conference in Sao Paulo, Brazil. GSTP member states, through a technical cooperation agreement with UNCTAD, draw on the organization's trade and administrative expertise in negotiating and implementing the GSTP.

The GSTP, which was established in 1989, provides a framework for preferential tariff concessions and other measures of cooperation to stimulate trade between developing countries. Such concessions may take place under the "enabling" clause of the World Trade Organization. The clause allows developing countries to offer to each other tariff rates lower than those granted under Most Favored Nation status.

Two previous rounds of GSTP negotiations have been held, but without far-reaching results. The Sao Paulo round has been more successful. Tariff reductions applying to 70% of goods traded will be a major increase in GSTP coverage.

There are 43 member states to the GSTP, with 22 participating in the Sao Paulo round of negotiations.

The ministerial session was held at UNCTAD headquarters and chaired by Jorge Taiana, Minister of Foreign Affairs and International Trade of Argentina. Over 20 high-ranking ministers from states party to the GSTP attended the meeting, along with UNCTAD Secretary-General Supachai Panitchpakdi.

Commenting on the agreement, Canadian Minister of International Trade and Minister for the Asia-Pacific Gateway, Stockwell Day, said: “This is a positive step toward reducing trade barriers. By lowering tariffs, this initiative will increase trade and boost prosperity among developing nations in the south-south region.”


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