utilization rates under preferential trade
arrangements for least developed countries under the LDC duty scheme
Note by the Secretariat[1]
1. Paragraph 4.3 of the 2015 (Nairobi)
Ministerial Decision on preferential rules of origin for least developed
countries (LDCs) stipulates that the Secretariat may calculate the rates of
utilization of Preferential Trade Arrangements (PTA) implemented by WTO Members
for LDCs. Preferential utilization rates
could indeed provide a useful tool for the examination of preferential rules of
origin in light of the objectives and provisions of the Ministerial Decision.
2. In this connection, Members have adopted,
at the end of 2016, modalities for the calculation of utilization rates as
recommended in paragraph 3.2(a) of document G/RO/W/161. This modality compares the value of imports
which "reportedly" benefitted from preferences with the value of
total imports which would have been "eligible" for such preferences.
Only MFN dutiable lines are considered under this modality. In other words, the calculation only takes
into account those tariff lines on which there is an actual LDC duty scheme preference.
3. This note provides a preliminary report on
preference utilization granted to products exported from LDCs in the year 2015
(or latest year available) on the basis of the data currently available with
the Secretariat. In fact, the calculation of utilization rates for a given PTA
is only possible if the following information is available[2]:
(i) The list of tariff lines
for which a tariff preference is available under a Member's LDC duty scheme;
and
(ii) The value of imports for
each of these tariff lines under both:
a.
The LDC duty
scheme (i.e. reported as having actually received preferences), and
b.
Other treatment
(MFN dutiable or other preferences that may be available).
4. The Secretariat has been notified of data as follows:
(i) Data is complete and currently
available for the schemes of nine WTO preference-granting Members: Australia; Canada; Chile; EU; India;
Korea; Norway; Chinese Taipei; and the United States.
(ii) Data is currently
not available for the schemes implemented by China; Iceland; Japan; Kazakhstan;
Kyrgyz Republic; Morocco; New Zealand; Russian Federation; Switzerland;
Tajikistan; and Turkey.
(iii) A recent data submission by
Thailand is currently under review.
5. On that basis, the Secretariat has prepared
the following two tables:
(i) Table 1 presents
information for each preference-granting Member, detailed by 22 product
categories as used in the WTO World Tariff Profiles. It should be noted that the exact list of LDC
beneficiaries under each duty scheme may vary as they are defined by each preference
granting Member.
(ii) Table 2 presents preference utilization of
each preference granting Member's LDC duty scheme for products from LDC
beneficiary countries which are WTO Members.
6. The percentage shares shown range from 0%
to 100% (full utilization). They refer exclusively to preference-granting
Members' WTO LDC duty scheme. For developed Members these are defined by the
"Enabling Clause" - paragraph 2 of the Decision of 28 November 1979
on Differential and More Favourable Treatment Reciprocity and Fuller
Participation of Developing Members. For
developing Members these are notified under the 1999 waiver granting developing
country Members a waiver to the extent necessary to provide preferential tariff
treatment to products of least developed countries, which was renewed in 2009
for another 10 years[3].
7. It should be noted, as a consequence, that
other preferential duty schemes which may be available to the LDCs are not
taken into account in this analysis. These are, for example, Australia's
preferential duty scheme for countries of the "Forum Islands" or the
US "African Growth and Opportunity Act (AGOA)", among others. In the
presence of such competing preferential schemes for LDCs traders are likely to
select the preferential duty scheme that makes their transaction easier. Hence,
the utilization rates of some members' LDC duty schemes are likely be lower
than they would have been in the absence of other, possibly more favourable,
schemes.