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Rediff.com  » Business » India acts tough at WTO, softens on Pascal's truce

India acts tough at WTO, softens on Pascal's truce

July 26, 2008 11:43 IST

India on Friday stood its ground against attempts to dilute the triggers in the Special Safeguard Mechanism to check unforeseen rise in imports of farm goods, while showing flexibility to consider a compromise agreement prepared by World Trade Organization director-general Pascal Lamy on other elements of the Doha Development Agenda, like agriculture and market-opening for industrial commitments, Business Standard was told.

Japan is the other country that opposed capping of its high farm tariffs, trade negotiators said.

After hectic efforts, Lamy presented his "compromise" agreement to establish the modalities (parameters) in agriculture and market-opening for industrial goods among the newly formed Group of Seven members - the United States, the European Union, Japan, Brazil, India, Australia, and China - with middle ground benchmarks.

But the fate of this compromise proposal still hangs in the balance as other WTO members will approve it at a larger trade negotiations committee meeting, trade ministers said.

Commerce Minister Kamal Nath had earlier told Lamy that he will have to walk out if the WTO chief did not stop attempts to dilute the triggers for availing of special safeguard duties proposed by the US and Australia.

India also said it cannot accept mandatory sectoral tariff elimination as proposed by the US and the EU.

Negotiators from the US and Australia chose to adopt a tough stance during the hard bargaining that India must agree to a SSM flexibility with the triggers they had proposed for farm products.

The US wants India to agree to the SSM instrument when imports surge on a sustained basis by 40 per cent over the previous year, while India insisted that the mechanism can come into play if imports rise by about 10 per cent over the previous year.

The two sides still remain divided on the final figures for the triggers in the SSM, the negotiators added.

However, Brazil seemed receptive to the changes announced on several aspects of the compromise agreement, especially the sectoral tariff elimination being pushed by the US and the EU, trade ministers said.

India, however, managed to secure almost what it demanded on special products.

On special products, particularly the zero cut for certain percentage of tariff lines, India's demand for about 12 per cent of farm tariff lines to be designated as SPs with zero cut for 5 per cent of tariff lines and an average cut of about 12 per cent for the remaining tariff lines is more or less agreed.

Meanwhile, India continued to oppose anti-concentration pushed by the EU at the insistence of Germany, France and other major EU countries. The anti-concentration provision will prescribe certain benchmarks on the number of tariff lines that will have to be excluded from availing flexibilities.

Apparently, India will have to see whether it will get some relief in its demands in the Doha services package, especially Mode 4 relating to short-term services providers and mode 1 in cross-border services.

D Ravi Kanth in Geneva
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