Developing countries ready tariff deal without WTO

As the World Trade Organisation's Doha round stumbles into its ninth year with no end in sight, a group of 22 developing countries are poised to clinch their own deal to cut tariffs and boost trade among themselves.

The deal to expand the General System of Trade Preferences (GSTP) could be announced during the WTO's own three-day ministerial conference starting November 30, when trade ministers from most of its 153 members will be in Geneva.

The 22-member GSTP includes heavyweights such as Brazil, India and South Korea, as well as some of the poorest countries including North Korea and Zimbabwe. China and South Africa are not involved.

The GSTP is one of the few forums where both North and South Korea sit and negotiate together.

Trade officials and diplomats said the likely deal would involve countries cutting their actual, or "applied", tariffs by 20% or more, on 70% of goods.

This outline deal, or formula, known in trade jargon as "modalities", would then be implemented in the coming months in detailed work applying the tariff to individual products.

Countries could also negotiate deeper cuts with each other that would then be available to the whole group.

A study by the United Nations Conference on Trade and Development (UNCTAD), which is providing technical assistance to the GSTP talks, estimates that a 30% cut in tariffs by the 22 countries would boost their exports by USD 11.7 billion, while a 20% cut would increase them by USD 7.7 billion.

Trade among developing countries is still relatively small but they are keen to expand commercial links to take advantage of each other's growth and reduce dependence on rich nations.

The GSTP proposals, in which participants would have the leeway to exempt 30% of goods from any tariff cuts, are also much less demanding than proposals in the Doha round for all 153 WTO members, although these too offer special treatment for developing countries and the poorest states.

"One of the problems in South-South trade is the base from which you start is quite low, so you don't have the shipping lines," said one Latin American diplomat involved in the talks.

"If you start developing, when you reach a certain critical mass of trade then things start to flow," he said.

International trade rules allow special treatment for developing countries, for instance through preferential low tariffs providing a waiver to the normal WTO principle of non-discrimination which requires that all WTO members benefit from the same treatment.

Most such preferences are offered by rich trading powers like the United States or European Union, but developing countries also provide them.

The GSTP itself was agreed in 1988 after negotiations following a meeting in 1976. An attempt to expand it in the 1990s came to nothing.

The present round of negotiations, currently chaired by Argentina's ambassador to the WTO, Alberto Dumont, began in Sao Paulo in 2004.

The 22 GSTP member countries are WTO members Argentina, Brazil, Chile, Cuba, Egypt, India, Indonesia, Malaysia, Mexico, Morocco, Nigeria, Pakistan, Paraguay, South Korea, Sri Lanka, Thailand, Uruguay, Vietnam and Zimbabwe, and non-members Algeria, North Korea and Iran.