The Hindu : India forms new alliance on farm sector at WTO

Online edition of India's National Newspaper
Thursday, Aug 21, 2003

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India forms new alliance on farm sector at WTO

By Our Special Correspondent

NEW DELHI Aug. 20. As against the proposals of the European Union and the U.S. on agriculture, India today submitted an alternative framework for an agreement along with 15 other countries at the World Trade Organisation (WTO). The co-sponsors are Mexico and China, while several of the 18-member Cairns group have signed the framework proposals aimed at providing greater market access to developing countries and reducing huge subsidies of the developed world. Briefing newspersons on the new proposals tabled at the WTO in Geneva this afternoon, the Commerce and Industry Minister, Arun Jaitley, said the paper contemplated a drastic reduction in domestic support subsidies, cut in export subsidies and their eventual elimination along with a sharp disciplining of export credits.

The countries which have joined hands with India apart from the co-sponsors Mexico and China are Brazil, Argentina, Bolivia, Chile, Colombia, Costa Rica, Ecuador, Peru, Thailand, South Africa, Guatemala, Paraguay and Philippines.

On the contentious tariff issue, he said there are two separate proposals for developed and developing countries. For the South, the tariff cuts were proposed to be based on the Uruguay Round formula along with provision for special products and special safeguard mechanisms. In the case of developed countries, a hybrid formula of tariff cuts has been envisaged which included capping of some high tariffs and the elimination of special safeguard mechanisms available earlier to developed countries.

Mr. Jaitley said the countries backing the new agreement proposals accounted for 60 per cent of the world population and produced 60 per cent of the world's rice, 35 per cent of wheat and 57 per cent of sugarcane globally.

Evidently confident that more countries would support the new framework proposals, he said the proposals submitted jointly by the European Commission and the U.S. were "unacceptable''. Commerce Ministry officials also pointed out that most countries had "seen through the game'' of these two powerful groups and were anxious to ensure that agriculture is preserved in developing countries while market access barriers in developed countries are eliminated.

The new proposals have been finalised as the market access commitments sought to be imposed by the E.U. and the U.S. on developing countries "completely disregard the interests and concerns of developing countries with regard to their agriculture'', according to Mr. Jaitley. The response proposes the Uruguay Round approach to tariff reduction by developing countries and steeper reduction by the developed countries, using, among others, the Swiss formula.

The framework proposal does not lay down in numbers in terms of tariff reduction but the Uruguay Round approach is for lesser reduction commitments while the Swiss formula is for sharper cuts. Mr. Jaitley said the proposed reform of agriculture in the EU-US proposals to eliminate subsidies and distortions completely fails to meet the requirements and objectives of the Doha ministerial mandate on agriculture. Therefore, the alternative proposals envisage time-bound elimination of all export subsidies by developed countries, substantial reduction in all forms of trade distorting domestic supports including elimination of blue box measures which are subsidies meant to limit production in developed countries. It also proposes capping of specific green box measures such as payments decoupled from prices and production.

The proposal also emphasised the need to build in specific elements of special and differential treatment requirements of developing countries such as maintaining and enhancing support programmes for low income and resource-poor farmers, to maintain marketing and transport subsidies on export by developing countries. It also proposes to incorporate market access instruments of special products for rural development and food security and new special safeguard mechanisms for developing countries to protect against price variation, volatility and import surges.

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