April 26 (Reuters) - A disagreement between the United States and major emerging economies like China, India and Brazil over how deeply to cut manufactured goods tariffs threatens to finally kill 10-year-old world trade talks.
Following the release of new negotiating documents last week, countries are expected to air concerns over the state of the Doha round in meetings on Thursday and Friday at the World Trade Organization in Geneva.
Here is a primer on where things stand in the so-called NAMA (non-agricultural market access) portion of the Doha round, which covers about two-thirds of world trade:
TWO FORMULAS FOR MOST TARIFF CUTS
* The 153 WTO members have already essentially agreed on two formulas for cutting tariffs on most manufactured goods.
* One would apply for developed countries like the United States, Japan and the European Union and the other for major developing countries like China, Brazil and India.
* Around 120 of the WTO's poorest members would not have to cut their tariffs at all.
* The formulas are based on what are known as "bound" tariffs, the maximum rates at which individual countries have agreed to cap their tariffs under WTO rules.
* Bound tariffs in developing countries are often higher than actual "applied" tariffs.
* According to World Trade Organization data, Brazil has an average bound tariff rate of 30.8 percent on manufactured goods versus an applied rate of 14.1 percent.
* India's average bound rate is 34.7 percent and its applied rate is 10.1 percent.
* China, which was required to make significant market openings when it joined the WTO in 2001, has an average bound rate of 9.1 percent and an applied rate of 8.7 percent.
* The same WTO data shows the United States has average bound and applied tariff rates of about 3.3 percent, Japan average bound and applied rates of about 2.5 percent and the EU average bound and applied rates of about 4.0 percent.
* The Washington-based National Association of Manufacturers estimates the developing country formula would not cut bound tariffs for China, Brazil and India to below currently applied level for a number of years, and even then would only result in small cuts in applied rates.
* The developed country formula would significantly cut remaining U.S. tariffs, including peak tariffs of more than 15 percent on goods like textiles and trucks, giving U.S. negotiators little negotiating leverage in future rounds to bring down developing country tariffs, U.S. officials say.
"UNBRIDGEABLE" SECTORAL DIVIDE
* Washington, unhappy with market openings created by the formula cuts, has pressed major developing countries to participate in "sectoral" talks to cut tariffs more aggressively in areas like chemicals, industrial machinery and electronics.
* Countries agreed in 2005 to sectoral negotiations on a voluntary basis. However, the United States has insisted sectorals are essential for a deal.
* China has informed the United States that it will only participate in sectorals if joined by India and Brazil, but those countries are reluctant to take part fearing more competition from China if they open their markets.
* China and the United States also disagree about how to manage tariff cuts within the sectorals.
* The United States backs an approach that divides cuts into three different "product baskets": one where countries cut tariffs to zero, a second where countries cut tariffs more than the formulas require and a third where countries could use "NAMA flexibilities" to shield certain products.
* China has proposed a four-basket approach: one where only developed countries would cut tariffs to zero, a second where countries would make greater-than-formula cuts, a third where developing countries would make formula cuts and developed countries go to zero and a fourth where developing countries could use flexibilities to shield products.
* In March, the United States described its differences with China on the sectorals as "a major gap."
* Echoing that assessment, World Trade Organization Director General Pascal Lamy last week described the fight over NAMA sectorals as "not bridgeable today."
* "One side considers tariff cuts achieved through the formula as being insufficient to meets its expectations for the level of ambition of the Doha Round on industrial tariffs ... The other side considers that the formula delivers a significant level of ambition," Lamy said.
* Other differences remain in the Doha negotiations, but none are as severe as the sectoral divide, he said. (Reporting by Doug Palmer in Washington; Editing by Eric Walsh)