The Bush administration, hoping to jump-start global trade negotiations, will propose today a plan to eliminate all taxes on imported industrial and consumer goods by 2015, officials said Monday night.
The plan, which will be submitted to the WTO in Geneva, would cover not only big industrial products like cars and machinery but also labor-intensive consumer goods like clothing, textiles and leather handbags that are still fairly heavily protected in the US.
Administration officials said their plan would "turn every corner store into a duty-free shop" and would eliminate about US$18 billion in taxes that American consumers pay each year.
While the offer to open American markets is in many respects radical, it also plays to the US' strengths and would require most other countries to cut their import taxes more drastically and more rapidly than the US.
Trade experts said the Bush administration may also be trying to regain credibility on free-trade issues, after caving into demands for protectionist demands from the steel industry and from American farmers earlier this year.
The proposal is almost certain to run into objections from many countries in Latin America and Asia, which are likely to argue that their domestic industries would have to endure severe competitive jolts on the industrial side while still facing steep barriers to the American markets for agriculture.
American import taxes on manufactured products average about 5 percent, lower than those in many developing countries, but they run as high as 20 percent for certain kinds of clothing, 16 percent for many kinds of luggage and 13 percent for some leather goods.
The US also imposes a wide variety of "anti-dumping" and "safeguard" taxes on imported steel, which run well above 30 percent in some cases and are not expected to be affected by the new plan.
"The strategy could be to get on the good side of the rhetorical fight," said Gary Hufbauer, a trade analyst at the Institute for International Economics, a research group in Washington.
Scott Otteman, director of trade policy at the National Association of Manufacturers, expressed cautious support for the idea.
The new proposals will be announced today by the US trade representative, Robert B. Zoellick, and the secretary of commerce, Donald Evans.
They are being submitted as part of the global trade talks that were started last year in Doha, Qatar. US officials said they hope to inject some electricity into the talks, which have lost considerable momentum over the last year in large part because both the US and the EU have been backsliding toward greater protectionism.
The Bush administration infuriated governments around the world by imposing new "safeguard" taxes on imported steel last March. Attitudes toward free trade soured even more after Congress passed, and President Bush signed, a sweeping farm bill that could provide up to US$180 billion in farm subsidies over the next six or eight years.
Under the plan, any import tax that is 5 percent or lower would be eliminated in 2005, the year that countries hope to adopt a new global trade agreement.
Other, higher import taxes would then be "harmonized" and reduced to no more than 8 percent by 2010.
The most sensitive import taxes would be dealt with by 2015.
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