India Should Present Alternative Farm Draft At WTO

ASHOK B SHARMA / Financial Express (India) 10mar03

There are serious doubts about the World Trade Organisation (WTO) committee on agriculture (COA) meeting its March 31, 2003 deadline for finalising the modalities for negotiations. The discussions on the topic may be deferred to be finalised at Cancun meet.

COA’s special session chairman Stuart Harbinson had presented a draft text on modalities for negotiations on February 17, 2003. This draft document has come under severe criticism. Member countries are also rigid on their stated positions. This situation has made the finalisation of the negotiating modalities difficult.

India and other developing countries need to do well to negotiate properly for finalisation of the modalities for negotiations. If this opportunity is lost, it will be lost for ever. Later exercises will only be limited to only cosmetic changes.

The Harbinson draft not addresses the basic concerns of the developing countries. The draft gives only few concessions to developing countries like elimination of in-quota tariff for tropical products in primary and processed form, increase in tariff rate quotas (TRQs) which will used on most favoured nation (MFN) basis, category of strategic products for developing countries for ensuring food security and rural development, application of ‘Green Box’ subsidy by developing countries for protecting small family farms. But the creation of a category of strategic products is with a tag.

The benefit is only in respect of commitment for tariff reduction or use of special safeguard (SSG). The identification of the products has to be made at six digit level which may put constraints on the composition of the list. In all the protection suggested for small farms and qualifications for benefits intended under category of strategic products does not seem to help the developing countries much.

Another positive feature of the Harbinson draft is that it intends to establish a harmonious relationship between the developing and least developing countries. It has proposed duty-free and quota-free entry of products from least developing countries into developing countries.

But these positive features in the Harbinson draft should not allure us to agree to it in totality. There are many pitfalls !

Now, let’s consider the basic structure of the draft. The basic structure of the draft has retained almost all the privileges of the developed countries. It has failed to ensure a level playing field for developing countries. The draft has not called for immediate elimination of export subsidies given by developed countries. It has said that half of the export subsidies shall be phased out in next five years and the other half in next nine years.

That means that export subsidies would continue for next 14 years. In fact, there is no justification for rendering export subsidies. Export subsidies are given by developed countries to push their goods into developing countries and thereby affecting the economies of the importing countries. The draft has not said a ‘no’ to export credit being given in developed countries.

Regarding domestic support, the Harbinson draft says that subsidies being given under ‘Green Box’ will continue and can even be enhanced. As a matter of diplomacy and to rope in the support of the developing countries, the draft has allowed developing countries to render support under ‘Green Box’. Here a vital question arises - With the ‘Green Box’ facilities open to all can the developing countries compete in race with the developed countries? Why has the draft not called for total elimination of ‘Green Box’ support?

The draft says that half of the ‘Blue Box’ subsidy would be eliminated within five years while the other half would continue indefinitely. This would give scope for the developing countries to conveniently shift half of their ‘Blue Box’ subsidies to ‘Green Box’ which is allowed to be enhanced and continue indefinitely.

The draft also allows the developed countries to retain 40 per cent the subsidies given under ‘Amber Box’, while phasing out the 60 per cent over five years. Here, in this context, it should be noted that subsidies under ‘Amber Box’ are reducible and no percentage for retention should be fixed.

Strangely, when the draft allow massive domestic support to continue in developed countries, it asks for very substantial reduction in tariffs in developing countries, though the required levels are about two-third of the levels applicable in developed countries.

Applicable tariffs have been grouped into three categories for reduction. A cursory look at the grouping show that the developed countries will have to reduce tariff on few items while the developing countries on many items. The SSG facility will continue for developed countries for five to seven year, while the developing countries will be denied of its benefits. This shows India should outrightly reject Harbinson draft and present an alternate draft before WTO.

source: http://www.financialexpress.com/fe_full_story.php?content_id=29754 10mar03