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TA/W/1 TARIFFS and TRADE Special Distribution

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TA/W/1 TARIFFS and TRADE Special Distribution RESTRICTED GENERAL AGREEMENT ON TA/W/1 TARIFFS AND TRADE Special Distribution Technical Assistance Series AREA STUDIES ON PRODUCTS OF PARTICULAR INTEREST TO DEVELOPING COUNTRIES Hifrdsnf Dkind, Leather and Leather Articles This note is one of& series of factual area studies referred to in paragraph 7 of COM.TDA//211 concerning technical assistance by the secretariat to developing contries in the context of their preparations for the multilateral trade negotiations. At its twenty-seventh session in June 1974, the Committee on Trade and Development endorsed the technical assistance programme outlined in the above document. It will be noted that this information which is being given special distribution under a Technical Assistance symbol, has been presented in a format for the specific purpose of presparations for the trade negotiations and not for discussion at meetings of GATT committees or bodies. The details are subject to modification in the light of further developments or comments that might be received. Delegations are invited to contact the secretariat for clarification of any point referred to in the note or in regard to other matters relevant to this area of international trade. TA/W1 Page 2 Contents Pame I. Introduction 3 II. Trade of developing countries in hides and skin-s leather and certain leather article Imports into developed countries from developing countries as.a .whole 7 Imports into developing countries from individual developing countries 8 Imports into the main markets from individual developing countries 11 Imports of hides and skins and leather into developing countries exporting finished leather products 11 Price movements 12 III. Tariffs and non-tariff measures affecting trade in hides, skins, leather and leather articles 14 iMost-favoured-nation tariffs 14 Generalized System of Preferences 24 Non-tariff measures 25 IV. Possible approaches for trade liberalization 26 Annexes I. Tariffs, GSP, non-tariff measures and trade flows by country and tariff lines 29 1. Australia 6. New Zealand 2. Austria 7. Norway 3. Canada 8. Sweden 4. EEC 9. Switzerland 5. Japan 10. United States II. Imports of hides, skins, leather, leather clothing and leather footwear into selected industrial countries 91 III. Measures taken by developing countries to encourage exports of processed products 94 IV. tractss from the inventory of non-tariff measures 95 TA/W/1 Page 3 Hides and Skins, Leather and Leather Articles I. Introduction 1. This study of trade in hides and skins, leather and leather articles and the trade barriers affecting these items has been prepared with a view to assisting in the identification of possible approaches to the reduction and elimination of tariffs and non-tariff measures affecting these products. 2. Raw hides and skins and their semi-manufactures and manufactures which are covered in the present study are classified under BTN Chapters 41 and 42 and also under BTN headings 64.02 and 64.05. It may be noted, however, that BTN headings 42.02 (travel goods, handbags, purses etc.), 64.02 (footwear) and 64.05 (parts of footwear) cover not only leather goods, but also goods of non- leather materials (including textiles and plastics). Because of this classifi- cation, the Tariff Study undertaken in connexion with the Programme for the Expansion of Trade established two different product categories, i.e. one for hides and skins, furskins and products thereof except travel goods and footwear, and another for travel goods and footwear of all materials. Non-leather goods included in these categories have not been covered in this note. 3. As far as import barriers in developed countries are concerned, the sector interest lies almost exclusively in semi-manufactures and manufactures. Barriers remaining on raw hides and skins are limited. Moreover, developing countries are endeavouring to the extent possible, to export their raw materials in processed form and/or to produce and export labour intensive leather goods using imported ram materials. This is one of the sectors in which developing countries have progressively upgraded their exports: while their exports of raw hides and skins have tended to decline, exports of semi-manufactures and manufactures have increased (see Section II below). 4. The statistics available show that in recent years developing countries have, as a group, attained the position of major supplier with regard to certain items in this sector in a number of markets (see Table I and Annex I). With respect to leather, supplies from developing countries accounted for well over one half of total imports into the EEC and Japan, and 44 per cent of imports into the United States. In the case of leather articles other than leather footwear, developing countries as a whole mere the major suppliers to the EEC and the United States. Although the share of developing countries in the trade in leather footwear is somewhat smaller than for other leather goods, these countries supplied approximately 45 per cent of total EEC imports from third countries in 1971 and 43 per cent of United States imports in 1972. Developing country suppliers to developed country markets include: (i) for leather - Argentina, India, Brazil, TA/W/1 Page 4 Uruguay, Pakistan, Algeria, Spain, Lebanon, Yugoslavia, INigeria, Morocco, Mexico, Kenya, and Colombia; (ii) for leather foo endear - Spain, Brazil, India, Greece, Mexico, Haiti, Jamaica, Colombia, Yugoslavia, Xorea, Romania and Hong song; (ii-i) for other leather articles - Korea, Mexico, Argentina, India, Spain, Hong Kong, Lebanon, Philippines, Pakistan, Colombia, Haiti, Brazil, Turkey, Israel, Yugoslavia, Uruguay, Morocco and Greece.1 1FAO document CCP:HS/COQiS.74/2, refers to developments in exports from developing countries and certain problems facing these countries in their efforts to increase the degree of processing as follows: While in fact till the end of the sixties most developing countries confined themselves to exporting rough-vegetable and chrome-tanned material, new production and trade patterns have emerged over the past few years for which a few examples may be representative. Argentina's raw bide exports dropped from more than 8 million in 1969 to 1.3 million in 1972. Simultaneously, shipments of met-blue hides increased to a peak of 2 million in 1970, but have since fallen and are expected t6 be nil in 1974 in favour of ready-to-finish leather. Exports of the latter, in turn, are likely to decline in the second half of this decade in favour oif finished leather . Brazil has gone yet a step further and entered the leather footwear market on a large scale, exporting more than 15 million pairs in 1972 compared to none three or four years agc,,, This country had exported considerable quantities of hides up to the mid-sixties but is now a net importer of raw hides and skins. Ind-a has imposed export restrictions on rough-tanned materials with the aim of eventually shipping only finished leather. (Information on export measures applied by developing countries may be found..in Annex III.) There is, in fact, no technological reason why in the longer run certain, if not most, developing countries should not produce and export processed or manu- factured hides and skins. If this shift is to take place, however, a number of measures have to be taken to enable market penetration in industrialized countries and ensure that maximum benefits are obtained. One of the most vital problems undoubtedly concerns the ability to meet the rapidly changing fashion and colour requirements of importing countries. In the past the stumbling blocks have in fact been the lack of close liaison between exporters and importers on questions of colour shades, substance, texture, etc., and failures on the part of some developing country exporters to meet delivery schedules. A close association between exporters and importers is therefore of paramount importance in order to change samples and give advance notice of fashion changes. In some cases, the developing countries themselves rmay find it advantageous to locate more advanced finishing of the leather in the consuming countries. This would not only facilitate the satisfaction of consumers' requirements but mould also make sophisticated chemicals, auxiliaries an-d machinery more readily available. TA//W/1 Page 5 5. Because developing countries generally have a comparative advantage in the labour intensive leather industry, they have recently increased their share of world trade in the sector. Technical improvements and the availability of more precise market information have played a role in these developments. It may be noted that on occasion some developed countries have faced labour shortages for the leather and leather goods industry as well as pollution problems. It has been stated that in this situation the interests of leather industries of developing and developed countries are, to a certain extent, complementary. 6. While comprehensive statistics on imports and consumption of leather and leather goods in developed countries are unavailable in sufficient detail to assess the share of imports of the many different items in domestic consumption, some estimates have been made on the basis of available OECD quantity data for the year 1971. With respect to bovine, calf and horsehide leather for footwear uppers etc. (except sole and industrial leather), imports from developing countries represented about 6.5 per cent of apparent consumption in developed countries. The developing country share of apparent consumption ranged from about 10 per cent in the United States and SwitzerlarA, a little over 5 per cent in the EEC to negligible in Japan. For sheep and goat leather, the share of imports from developing countries in apparent consumption of developed countries was about 11 per cent (12 per cent in the EEC and 5.5 per cent for the United States). On the basis of very limited data for Japan it would appear that the developing country share of apparent consumption of this item significantly exceeded the share in other developed country markets.
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