By Doug Palmer
WASHINGTON, Oct 31 (Reuters) - World Trade Organization Director General Pascal Lamy urged U.S. manufacturers demanding deeper tariff cuts in world trade talks on Friday to consider the billions of dollars of savings that would come from proposals already on the table.
"We understand how important it is to have U.S. companies favorably disposed to the Doha round, and the director general made his case," Keith Rockwell, a spokesman for the Geneva-based World Trade Organization, told Reuters.
Lamy met with the National Association of Manufacturers after a round of meetings on Thursday with U.S. Trade Representative Susan Schwab, Treasury Secretary Henry Paulson, World Bank President Robert Zoellick and International Monetary Fund Managing Director Dominique Strauss-Kahn.
The WTO chief is trying to boost chances a breakthrough in the nearly 7-year-old negotiations by the end of the year after a July meeting of trade ministers ended in failure.
The powerful U.S. manufacturing group is unhappy with the proposed formula for cutting industrial goods tariffs in the long-running Doha round of world trade talks, which they believe will not provide significant new exports.
It has insisted, with strong backing from the Bush administration, that big developing countries like China, Brazil and India participate in some "sectoral" agreements where countries would cut tariffs to zero.
Proposed sectorals include electronics, chemicals, autos and autos parts, machinery, gems and jewelry, fish and fish products, raw materials and toys.
In the meeting, Lamy urged the manufacturers not to discount the value of tariff concessions already on the table under the proposed formula. Those amount to a $7 billion to $8 billion tax cut per year on U.S. exports, he said.
Much of NAM's unhappiness with the formula is that it allows countries to cut tariffs from their WTO-maximum, or "bound" level, which is often much higher than the "applied" rate countries actually impose on imports.
In too many cases, U.S. exporters would get no new market access because the bound tariff cuts are not deep enough to affect the applied tariff, said Frank Vargo, vice president at the National Association of Manufacturers.
"The new market access we get from the formula is inadequate. It's got to be bolstered by good participation in sectorals," Vargo said, even after Lamy presented figures showing 86 percent of India's applied tariffs would be cut by an average of 14 percent under the proposed formula.
Fifty percent of Argentina and Brazil's applied tariffs would be cut by an average of about 7 percent and 9 percent, respectively, Lamy told the group.
Lamy's figures assumed a key "coefficient" in the formula to cut developing country tariffs is set at 23. A lower coefficient would lead to deeper applied tariff cuts.
China's average bound tariffs -- which are very close to the country's applied tariffs -- would fall to 6.3 percent from 9 percent, Lamy told the group.
Current proposals would cut average developed country tariffs to 2 percent from 4 percent, creating savings for U.S. exporters in Japan and the European Union, Lamy said.
A Doha deal would also would be an insurance policy against countries drastically raising their applied tariffs, he said.
U.S. exporters would face about $12 billion in additional tariffs each year if their 14 biggest markets boosted applied tariffs to the maximum bound level now allowed, Lamy said.