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How should India respond to WTO drafts?

(Dr. krishan Bir Chaudhary)

27 5 2008 - The two new drafts for negotiations in agriculture and industrial goods (Nama) issued by the WTO on May 19 this year is a mockery of the current situation. The two drafts do not accommodate the concerns of the developing world.

The WTO is practically hopeless and helpless after successive failures of a series of attempts to revive the multilateral trade negotiations. This is primarily due to the adamant attitude of the developed world to continue their protectionist regime in agriculture through high subsidies and tariff and ask for market access in the Third World.

Interestingly, trying to encash upon the current food crisis, the WTO director-general, Pascal Lamy instead of urging the developed world to remove the distortions in trade suggested the developing countries to open up their doors.

The chair of the agriculture negotiating committee, Crawford Falconer, while issuing the draft, claimed that it was a result of discussions held since September last year. Similarly, the chair of the Nama group, Don Stephenson, claimed that his revised text was the product of the bilateral and plurilateral consultations he had over the last few weeks and was also built upon the past years of negotiations. He, however, said, “this revised text is another step in the process and might be subjected to further revision.” At least Stephenson is more frank in his admission than Falconer.

The two new drafts show very little areas of convergence despite the WTO director-general Pascal Lamy claiming to the contrary.

The Nama draft has completely ignored the Doha mandate of less than full reciprocity in tariff reduction for developing countries. It has linked the tariff reduction coefficients with the flexibilities for developing countries.

If the Doha mandate is to be followed then the issue of flexibilities for developing countries should be treated separately and not in the way Stephenson has done. Stephenson has also sought to divide the developing countries by extending additional flexibility to some members.

The Nama text, if accepted would doom the future of many small and medium sized units and also cause problems to the fishery sector. The farm draft has ignored the very basic aspect of food and livelihood security of the Third World.

Though it has recognised the developing countries’ right to self-designate their special products based on food and livelihood security and rural development, it has proposed the minimum limit of 8% of the tariff lines and maximum limit of 20% of the tariff lines. The crucial issue is the maximum extent of self-designation of special products by developing countries which is in square bracket, implying the need for further negotiations.

The draft has recognised the developing countries’ right to self-designate special products guided by indicators based on the criteria of food and livelihood security and rural development. G-33 countries suggested the minimum limit of 20% for self-designation of special products.

The problem is more for a multi-crop country like India where farmers depend upon a large number of crops for their livelihood security. Thus, capping of special products by a fixed percentage would not be enough to protect the farmers.

The Falconer draft has presented a complex and complicated process for implementing special safeguard mechanism (SSM) to prevent a surge in imports in the developing countries, while the special safeguard (SSG) remains simple for developed countries.

The draft does not provide for conversion of all the complex and specific tariffs in the developed countries into their ad valorem equivalent, which is necessary for transparency and effecting realistic reduction. It reflects an uncertainty related to desired reduction in subsidies in the developed world. It only indicates some range of cuts that too within square brackets, implying the need for further negotiations.

(Economic Times)

 

 

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