Tariffs applied to imported goods have been decreasing over time across developed, developing and least developed countries. Key drivers of this global trend are the progressive liberalization achieved under the multilateral trading system, as well as, the expansion of preferential market access under regional trade agreements, unilateral tariff liberalization and non-reciprocal preference schemes in recent years.
Average applied tariffs; whether MFN (i.e. applied within the framework of the multilateral trading system) or preferential (related to bilateral or regional trade agreements and unilateral preference schemes) vary widely across country groups. LDCs and developing countries rely more heavily on tariffs as a revenue generator and this could represent a constraint to the expansion of South-South trade.
Average tariffs imposed by developed countries on imports from LDCs declined steadily for all product groups until 2005. After that year, the decline continued only for agricultural products, with average tariffs amounting to less than 1 per cent in 2014. Higher tariff rates still exist on clothing and textiles exports for LDCs due to the exclusion of some large Asian exporters from certain preferential tariffs. The majority of developed members apply non-reciprocal preferential tariffs to LDC exports. An increasing number of developing countries have also taken concrete steps to improve market access opportunities for LDC exports.
Most developed countries already provide full or significant DFQF coverage to the LDCs. Hence, the scope for additional progress in many developed markets is rather limited. DFQF access in Generalised Schemes of Preferences of developed countries show that duty-free coverage ranges from 100 per cent to 37.1 per cent in 2016 or latest available year. While all developed country members of the WTO (according to WTO definitions of developed) have identified schemes, so far, six other WTO members have also notified their DFQF schemes put in place in favour of LDCs. Other WTO Members are permitted to phase-in their DFQF commitments. DFQF access for those six other members ranges from 99.5 per cent of duty lines covered to 31 per cent. Further information on tariff profiles of members and time series on international trade are available through WTO Integrated Databases.
A large share of international trade today takes place under bilateral, regional or inter-regional trade agreements. Such agreements, by providing some trading partners with zero or a lower tariff, inevitably discriminate against countries outside the trade agreement. For this reason, the benefits of preferential tariff margins enjoyed by LDCs in many of their export-destination countries need to be assessed against market access conditions provided to other countries on a bilateral/regional preference basis.
The figure provides the relative preferential margins enjoyed by LDCs in developed countries, transition economies, and developing countries in different regions. In 2015, LDCs enjoyed on average 3 percentage point of tariff margin over the tariffs facing other countries exporting to developed-country markets. Among developing countries, the relative preferential margin for LDCs was the highest in Sub-Saharan Africa (3.6 percentage point), followed by South Asia (2.2 percentage point), two developing regions which participate less in bilateral or regional trade agreements. On the contrary, LDCs’ relative preferential margin is significantly negative in Latin America (-4.4 percentage point), indicating that tariffs applied to LDCs’ exports to this region is on average 4 per cent higher than competitors which are likely to be in bilateral or regional trade agreements made with Latin American countries.
At the Bali Ministerial Conference in 2013, WTO members decided to establish a monitoring mechanism on special and differential treatment. The function of the monitoring mechanism is to review the implementation of special and differential treatment provisions and, where appropriate, to make recommendations on actions or negotiations to improve the implementation. The status of recommendations emerging from the Mechanism will be included in the annual report of the CTD to the General Council, the WTO’s highest-level decision-making body in Geneva. At the Bali Ministerial Conference in 2013, WTO members decided to establish a monitoring mechanism on special and differential treatment. The function of the monitoring mechanism is to review the implementation of special and differential treatment provisions and, where appropriate, to make recommendations on actions or negotiations to improve the implementation. The status of recommendations emerging from the Mechanism will be included in the annual report of the CTD to the General Council, the WTO’s highest-level decision-making body in Geneva. Although six meetings of the CTD's Dedicated Session have been held, no written submissions have yet been made.