The Hindu : No action unless rich nations cut subsidies

Online edition of India's National Newspaper
Monday, Jan 27, 2003

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No action unless rich nations cut subsidies — Ajit Singh

While some rich countries and some Cairns Group members are concerned with access to markets and thus eye the Indian market, for India the entire issue is not agri-business, but agriculture and development.

`THERE IS no way we can reduce tariffs on agricultural products unless the rich nations cut their domestic support and subsidies as well as export subsidies,' Indian Agriculture Minister Ajit Singh declared on Wednesday at a press conference in Geneva.

Mr. Singh returned to India last week after a four-day visit to Geneva. He met the WTO Director-General Supachai Panitchpakdi and his chef de cabinet and chairman of the Special Sessions of the Committee on Agriculture Stuart Harbinson.

The agriculture negotiations under the Doha round are taking place in the Special Sessions of the Agriculture Committee. Mr. Ajit Singh also met other protagonists — the U.S., the EC, members of the Cairns Group and some of the African group countries — and said he had put forward India's position and stands.

His visit has come at a time when it is clear that the Doha deadline of agreeing on modalities of the agricultural negotiations by March 31 cannot and will not be met, with the European Union dragging its feet. The EU has so far failed to put its own proposals on modalities on the table.

The very modest proposals of the European Commission — which would not have involved any real cuts in domestic support or export subsidies, but would have merely shifted the method of support to farmers, and called them support decoupled from production and thus purportedly less trade distorting — have been virtually vetoed by France and a few others.

There is some talk of the Commission persuading members to agree to tabling some proposals before the end of summer.

But this will give no time for negotiating and agreeing on modalities, and for various country-members to table their offers or draft schedules by the September Cancun ministerial meeting of the WTO.

Mr. Singh noted that there was now agreement that the March 31 deadline for drawing up modalities cannot be met since the EU has not given its proposals. However, he did not seem unduly perturbed and said India was concerned not over the deadline but over the substance.

Over and above the various support measures, the rich nations deploy a range of instruments keeping out imports from the developing countries like India — through sanitary and phytosanitary (SPS) measures as well as technical barriers to trade (TBT) — though remedies on these two may need bilateral agreements also.

The Indian Minister called for restrictions on support through the socalled `green box' and complained that in terms of Annex 2 (domestic support) to the Agreement on Agriculture — para 5 (direct support), para 6 (decoupled income support) and para 7 (government financial participation in income insurance and income safety-net programmes), support to the farm sector had actually increased. Merely shifting support from one box to another did not solve the problem of market access.

Unless these distortions are first removed, countries like India cannot agree to cut tariffs, Mr. Ajit Singh made clear in response to questions from journalists.

All these have to be tackled to create a level playing field. With 650 million dependent on agriculture, with an average farm holding of 1-1/2 hectares, and 80 per cent of farms below 2 hectares, and with tariffs as the only tool of protection against unfair competition from the rich nations with their domestic and export subsidies, it is just not feasible for India to agree to cut tariffs. It might result in social disorders in the rural sectors, Mr. Ajit Singh said at his press conference.

The timing of the Minister's visit and talks in Geneva are somewhat still puzzling. During the Uruguay Round, the Agriculture Ministry was out of the loop. And so were the States, even though agriculture falls in both Central and

State domains. The Commerce Ministry handled those talks so close to its chest that in 1993, when the Agriculture Ministry officials came to Geneva to help in preparing the Indian schedules, including on quantifying the various supports (for Aggregate Measure of Support), some of the officials had frankly confessed to this writer that they had not been aware until then of the full implications of the agreement.

Now, there is probably a swing to the other end in India. Even now, overall it is not clear how far other parts of the government in New Delhi are really involved, and how far the public and Parliament are aware of what is being negotiated.

This time, it is even more complicated than in the Uruguay Round, since now all those issues as well as many others are being sought to be brought under the rubric of trade negotiations, going far beyond goods crossing borders, and involving so many complicated issues, ranging from harmonisation of standards to production, employment, treatment of capital and labour and indirectly of even levels of taxation and other economic activities.

Market access for Indian exports did not merely involve lowering of tariffs by trading partners in the industrialised world but cuts in domestic support and export subsidies. Shifting support from one kind to another, or calling it de-coupled does not change things very much.

Mr. Singh's visit at this time (when there are no ministers from other countries, though he could only interact with officials and trade diplomats) was described by him as aimed at getting an idea of other delegations with different interests and approaches.

On genetically modified organisms and their use in agriculture, he said the Government had allowed GM cotton. On other products, there was testing still being done. Shipments of U.S. food, including soy, with GM admixtures had been refused. India would undertake extensive tests to ensure that not only the issues of effects on the environment but also on humans and animals were looked at.

Many agricultural commodities in India are consumed both by animals and humans, for example mustard. Biotechnology was a frontier science and India was engaged in it, nevertheless they had to carry out extensive testing on safety and other issues, Mr. Ajit Singh said.

Chakravarthi Raghavan

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