G7 Summit: Big four agree tariff cuts

TOKYO - Trade ministers of the four largest trading blocs yesterday agreed a framework for eventual agreement on perhaps the biggest cuts in tariffs on industrial goods in the history of international trade.

The framework 'market access' accord, which will be presented to the other 107 Gatt members in Geneva next Monday, was struck at the 11th hour in the wings of the World Economic Summit.

The main elements of the accord agreed by ministers of the so-called quadrilateral group - the US, Japan, the European Community Commission and Canada - were:

To eliminate tariff and non-tariff barriers covering pharmaceuticals, construction equipment, medical equipment and beer. Agreement on abolishing tariffs on steel depends on the outcome of current talks to reach a multilateral deal aimed at tackling overcapacity by major producers. Spirits such as whisky and brandy or cognac also qualify. But for other spirits, tariffs will not be abolished altogether. There will be partial elimination of tariffs and other trade barriers on furniture and farm equipment.

Tariffs on chemicals will be harmonised at low levels including zero rates for some products. The quad group also agreed to attempt to harmonise low tariffs for other goods.

Negotiations will aim to cut the highest tariffs, of 15 per cent and upwards, by a maximum 50 per cent, with some exceptions. This category chiefly covers textiles, clothing, glassware and ceramics. It could mean a big boost for high-quality British exporters, especially in the US market, where tariffs on some textiles are as high as 40 per cent.

Ministers will aim to reduce tariffs on all other goods by a third on average, with some possibly cut by as much as half. Electronics is a key sector in this category and deeper reductions were blocked by the EC; 25 per cent of all US exports to the Community are electronics.

The quad group revealed their negotiators have made substantial progress in freeing trade in services - an area of trade which the Uruguay Round aims to liberalise for the first time. They said there was an extensive list of offers to open markets for services ranging from banking, securities and insurance to engineering and accounting. Service economies such as Britain's could reap big financial rewards in the long run.

While a significant deal on financial services seems within reach, the quad acknowledged more problems are expected with telecommunications services, and much work remains to be done to liberalise shipping. The trade ministers also signalled their intention to open up further foreign bidding for government procurement contracts.

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