INDIA BUSINESS WORLD - APRIL - MAY 2007
The Month that was ...

WTO FARM PAPER DRAFT TO BRING ALL AGRICULTURAL PRODUCTS WITHIN THE AMBIT OF TARIFF CUTS

INDIA'S attempts to protect its farm sector from indiscriminate liberalisation has come under threat from a recent draft paper circulated by the World Trade Organization's (WTO's) agriculture committee chairman Crawford Falconer. The paper lays down that no agricultural product should be outside the ambit of tariff cuts in the ongoing Doha round of talks and the number of special products (SPs), which developing countries can protect against steep cuts, should be restricted to just 5-8% of the total agricultural products.

India, which is still studying the document, will express strong objections to the dilution of the concept of SPs, a senior official said. SPs are items that developing countries can exclude from formula cuts agreed upon in the negotiations to address concerns such as food and livelihood security. India wants to protect a number of items from formula cuts, including wheat, rice, sugar, soya and dairy products as these could affect the farming community.

WTO spokesperson Keith Rockwell said that the chairman's paper was just a draft and would be the basis for future discussions. "The agriculture committee will be meeting again, and all members will give their comments on the paper. This is the best effort to find the centre of gravity in these negotiations, which is not an easy task," he said.

WTO members are trying to wrap up the Doha round by the year-end. For that to happen, the modalities for negotiations on agriculture and industrial goods have to be in place by June-end. While the deadline is ambitious, the buzz that the US Congress is unlikely to renew the trade promotion authority of the Bush regime has added momentum to the talks.

According to commerce ministry officials, the chairman's attempt to restrict the number of SPs to just 5-8% of the 690 agricultural tariff lines being negotiated went against the mandate of the talks. "The July framework talks about 'appropriate' numbers of SPs based on certain parameters and don't say that a numerical restriction should be applied. What is 'appropriate' for India, which has 15 agro-climatic zones and produces hundreds of farm products, may not be so for smaller countries such as Mauritius or Barbados," an official said.

India is also unhappy with the paper's suggestions on subsidy cuts. The document says it would be difficult to convince the US to bring down its trade-distorting domestic subsidies to the early teens from the current levels of $19 billion. "This means he (the agriculture committee chairman) is referring to a figure which would hover around $16-17 billion. This is way too high to be acceptable to us," the official said.