Developing countries in the world trade regime
Developing countries in the world trade regime

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Developing countries in the world trade regime

3.1.3 Tariff escalation

Added to this was the fact that, although the developed countries had reduced the average level of tariffs on manufactures to low levels as part of the UR agreements, this average concealed much higher tariffs on products that were imported mainly from developing countries. Moreover, higher tariffs were retained on products involving a higher degree of processing. In the EU, for example, cigars are subjected to a higher tariff than raw tobacco, processed foods to a higher tariff than unprocessed foods, and fabrics to a higher tariff than thread. (Many finished garments remained under quantitative restrictions, which is even worse.) This ‘tariff escalation’ means that developing countries are discouraged from graduating from their traditional colonial trading pattern of exporting raw materials and simple manufactures. Even if they can produce processed products more cheaply than the developed countries, tariffs tilt the balance against them.

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