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Lower Tariffs Key To Tackling Poverty, Report Says

by Mike Godfrey,, Washington

02 July 2015

The World Trade Organization (WTO) and the World Bank said in a new joint report that reducing tariff and non-tariff barriers to trade is essential to eliminating extreme poverty.

The report, The Role of Trade in Ending Poverty, says that tariff and non-tariff measures continue to generate significant trade costs for exporters in developing countries, including for goods that are important for the poor.

According to the report, average tariffs levied by importers on products from least-developed countries (LDCs) have been decreasing over time, in line with global declines in most favored nation (MFN) tariffs, preferential tariff schemes, and the WTO Decision on Duty-Free Quota-Free market access – an agreement by WTO members to enhance market access for least-developed countries.

However, despite these overall declines, tariffs and tariff rate quotas on agricultural products remain, on average, higher than those applied to non-agricultural products, and relatively high duties persist on a number of products of importance for low-income producers, especially in agriculture and clothing, the report said.

The report calls for further progress on the Doha Round, a global agreement on the reduction of tax and non-tariff barriers to international trade. In particular it urged negotiators to secure a substantive outcome regarding talks on tariff reductions for agricultural goods. The talks have been hampered by disagreements among WTO members.

"The agriculture sector, which employs most of the poor, will continue to play a key role in lifting people out of poverty," the report said. "Its role could be strengthened if more was done to remove remaining obstacles to agricultural exports."

The report also noted that, although trade liberalization may appear to create risks for poorer territories by lowering tariff revenue, strategies to increase revenue collection capacity or raise new taxes can be pursued to offset lost income.

TAGS: tax | export duty | tariffs | World Trade Organisation (WTO) | agreements | import duty | trade

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