France backs support to rural development

By Our Special Correspondent

CHENNAI, NOV. 13. State support to ``rural development", which is an important issue for both India and Europe, should remain in the ``green box" (of allowable, non-actionable subsidies) of the World Trade Organisation (WTO) regime, as distinct from direct subsidy granted to farmers, the French Ambassador, Mr. Bernard de Montferrand, said here today.

Declaring that Europe had honoured its commitment under the Uruguay Round to reduce by 36 per cent over six years its subsidies to the farm sector, Mr. Montferrand said (direct) subsidies were in vogue in both India and France in view of the ``volatility" of prices of agricultural produce and the vulnerability of the farm sector to the vagaries of the weather.

Mr. Montferrand, who was addressing a meeting organised by the Confederation of Indian Industry-Southern Region (CII-SR), said it was a right decision to reduce the extent of these (direct) subsidies to prevent distortion of the market, but efforts should at the same time be made to improve the ``rural environment", including roads and other infrastructure, in a way that does not influence the market, ``that is to say, grant green box subsidies".

The implementation of the Uruguay Round commitment on farm subsidies had led to a ``revolution" in the European Union's Common Agricultural Policy (CAP) and ``hurt" European farmers. Import of agricultural products by Europe exceeded the aggregate of farm imports by the U.S., Canada, Japan, Australia and New Zealand.

This would hardly have been possible if the European farm market was closed to the outside world. The Ambassador said Europe's operation of its farm sector policy had ``a lot of transparency" because of the requirement of reporting to the European Parliament.

Similarly, in textiles, quotas of developing countries had already been removed to the extent of 50 per cent and some enhancement of quotas more than envisaged in the Uruguay Round had also been agreed upon, the Ambassador said.

Emphasising the advantages offered by the WTO as a rule-bound multilateral forum as distinct from plurilateral or unilateral mechanisms, Mr. Montferrand said the organisation was not a ``bureaucratic" mechanism imposed from above but on created by member-countries themselves in their own interest. The fact that on an average the rulings of the dispute settlement mechanism in the WTO went 50:50 per cent in favour/against complainant countries showed that the organisation represented a balance of interests.

He called for continuation of the cultural exception for cinema from the WTO regime (namely, MFN treatment and national treatment) under the General Agreement on Trade in Services (GATS) in view of the need to preserve the cultural identity and heritage of member-nations by allowing State support to domestic cultural products.

Mr. Montferrand listed infrastructure, food processing, information technology (IT) and consumer goods as areas in which French companies had plenty to offer to industry in Tamil Nadu.

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