The Hindu : India's cautious approach to agriculture at WTO

Online edition of India's National Newspaper
Friday, Jul 25, 2003

International

International - India & World

India's cautious approach to agriculture at WTO

By C. Rammanohar Reddy

GENEVA July 24. India has chosen a cautious approach towards liberalisation of agriculture at the Doha round of trade talks at the World Trade Organisation.

A new global agreement on agriculture is not yet round the corner; trade officials are still struggling to take a decision on the framework of negotiations, called the "modalities" at the WTO, but India has allied with a formidable group of 77 countries comprising the European Union, Japan, Switzerland and a number of developing countries who have expressed their preference for a framework that could lead to only a moderate reduction in import duties on agricultural products. These are the modalities adopted in the previous Uruguay Round of GATT, where the developing countries agreed to reduce tariffs by an average of 24 per cent over 10 years, while the developed countries signed on to a 36 per cent cut.

In contrast, the WTO package now on the table calls for a larger import duty cut on products attracting high import duties.

Tariff reduction or market access is only one of the "three pillars" of the ongoing agriculture negotiations in the Doha round; the other two are domestic and export subsidies. The negotiating positions on the three issues are so closely inter-linked that it does not look likely that the tariff reduction approach favoured by India will be accepted without change.

Agricultural subsidies in the developed countries total more than $360 billion a year. While there is a universal demand from the developing countries and from major farm exporters like Australia on the U.S., the E.U. and Japan to reduce domestic support to agriculture, the big powers have, in response, taken differing positions on market access. The E.U. is willing to reduce its domestic support but is unwilling to consider any major cuts in tariffs. The U.S., which will have little flexibility if it were to lower subsidies by more than 50 per cent, has asked in return that all WTO members undertake a substantial relaxation of their import regimes. Japan wishes to neither reduce subsidies nor cut tariffs.

The Harbinson package, named after Stuart Harbinson, the chairman of the WTO negotiating group on agriculture, attempted to bridge the divergent positions. But this package has not been endorsed at the WTO, although some countries like India have been positive about individual elements like an exemption from tariff reduction for a select group of "special products" that a country may consider necessary to protect. "The Harbinson modalities have not been viewed with favour, but nor will the Uruguay Round approach on tariffs, as suggested by the E.U. and its allies, find more takers," says a senior trade official at the WTO.

India, like most other developing countries, provides farm subsidies which are well below the WTO norms, but resource constraints do not allow an increase in domestic support. This is why India is more keen on maintaining its current tariffs to protect agriculture, even as it calls on all the developed countries to reduce both subsidies and import duties.

If India had joined the Cairns group of agricultural exporters, as some had suggested within the country, it would have had to reduce domestic subsidies and, more important, make major cuts in import duties.

As all countries jostle to derive the most from the negotiations, opinion is guarded about the possibility of even a bare agreement on the modalities for the "three pillars" before the WTO ministerial meeting in Cancun, Mexico, in September. Carlos Perez del Castillo, the chairman of the General Council, the main decision-making body at the WTO, can only say, "I see some movement, but to be honest I do not know if we can make it on all three pillars before Cancun."

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