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US agrees to reduce domestic support

July 23, 2008 15:12 IST

As the negotiating chips are slowly unveiled in the make-or-mar Doha trade negotiations, the United States announced today that it will reduce its overall trade-distorting domestic support to $15 billion as compared to a range between $13 billion and $16.4 billion.

With OTDS being central issue in the Doha agriculture negotiations, trade negotiators said the latest move by the US was too little compared to its last year spending level of about $7 billion.

US trade representative Ambassador Susan Schwab told reporters that its offer to bring the OTDS to $15 billion is contingent up on other advanced countries responding to ambitious market access offer in non-agricultural products and services.

Commerce Minister Kamal Nath repeatedly said that unless Washington brings its current OTDS to $7 billion, there cannot be an agreement, suggesting that those ask developing countries to bring their industrial tariffs below the current applied levels must do the same.

In response to such demands, Ambassador Schwab said those who are asking us to do more than what is spelt out in the ranges are not serious engaging in the Doha negotiations.

India has made it known to its counterparts about the political difficulties New Delhi will face should its demands on special products, special safeguard mechanism, liberal access for movement of short-term providers under Mode 4, fisheries subsidies, and disclosure provisions for the genetic material are not comprehensively met.

During the first major closed-door green room meeting of some 30-odd countries, India's top commerce trade official Gopal Pillai spoke about the political situation in the country, warning that India can only accept an agreement at this juncture if its demands are fully addressed.

He also told the ministers that New Delhi had showed sufficient flexibility by tabling a liberal market access offer in Doha services negotiations, especially in areas such as telecom, retail and computer services.

He said it is time that other countries reciprocate to India's liberal access in services by providing market access in Mode 4 and Mode 1 that would help convince the domestic constituencies, the commerce secretary told Business Standard.

Schwab, European Union trade commissioner Peter Mandelson and several industrialised countries' ministers spoke a common theme during meeting, saying they have all paid heavily in agriculture by undertaking substantial commitments and it is now the turn of developing countries -- especially big emerging markets like China, India, Indonesia, South Africa, Brazil and Argentina -- to make ambitious offers.

Most trade ministers at the 'green room' indicated their 'red-lines' along with the maximum positions that they can take and still maintain support of their domestic constituencies. Key developing countries -- including India, China, South Africa and Brazil -- said in varying degrees that they were ready to work towards an agreement, but not on the basis of the proposals contained in the NAMA draft.

They insisted that the balance between agriculture and NAMA was badly skewed against them.

"There remains a fundamental imbalance between agriculture and NAMA," South African trade minister Mandisi Mpahlwa told Business Standard. Many industrial nations continue to press for limiting flexibilities in NAMA while they continue to maintain unlimited exceptions in agriculture for themselves.

China, South Korea, Indonesia and India maintained that without strong flexibilities for 'special' products and the special safeguard mechanism, it will be difficult for them to settle on an agreement.

D Ravi Kanth in Geneva