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Home > Business > PTI > Report

Agri subsidies impact farmers' plight: India

K R Sudhaman in Cancun | September 11, 2003 14:45 IST

Turning the tables on the developed countries, India has made a forceful plea at the 5th World Trade Organisation Ministerial at Cancun, Mexico, saying that the plight of poor farmers were directly linked to the subsidies given by the industrialised nations to their farmers and the answer lay in correcting such distortions in agriculture.

In an apparent attack on the European Union and the United States trying to thrust their agenda, particularly on agriculture, through the backdoor, Commerce Minister Arun Jaitley wanted development dimension to take the centrestage in the negotiations and demanded that the conference move towards a more "inclusive and transparent" decision making process.

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In his statement, Jaitley pointed out that the protection to agriculture in developed countries was four to seven times more than that for manufactured goods.

This stimulated over-production in high cost rich countries, shutting out potentially more competitive products from the developing nations.

"It is not surprising that over the past few years, agricultural exports from developing countries to the developed countries grew at just half the rate they did to other developing countries", he said.

"Let us also remind ourselves that the agriculture subsidies provided by OECD (Organisation for Economic Co-operation and Development) countries are more than six times they spend on official development assistance," the minister said.

Rich gives huge subsidies

The OECD governments support sugar producers at the rate of $6.4 billion annually, an amount nearly equal to all developing countries' exports.

Subsidies to cotton growers in a developed country totalled $3.7 billion last year, which was three times that of the country's foreign aid to Africa, Jaitley said, reeling out statistics to highlight how distortions in agriculture were affecting developing countries.

US, EU bury differences

The EU and the US came together at the eleventh hour to provide a pro-developed framework, which they sought to smuggle into the revised ministerial draft text and this was widely opposed by several developing countries including India, which gave an alternative proposal.

Both EU Trade Commissioner Pascal Lamy and United States' Trade Representative Robert Zoellick had said that the draft ministerial text would form the basis for the agriculture negotiations in Cancun.

But after protests from the developing countries, chairman of the conference, Mexican Foreign Minister Louis Earnesto Debrez agreed that the facilitator appointed for agriculture would also take the G-21 developing countries' proposal into consideration.

The Singapore trade minister was appointed as the facilitator for agriculture, who would assist the chairman and submit a proposal by Friday after taking the views of various parties.

"India along with 19 other members has put forward joint proposals on agriculture that we believe offer a constructive and meaningful alternative. We look forward to discussing it at the conference," Jaitley said.

Non-agricultural products

On market access negotiations for non-agricultural products, also known as industrial tariffs, Jaitley said suggestions for mandatory harmonisation and elimination of tariffs would be most iniquitous to developing countries.

As various countries are in different stages of development, "we did not have capacities to understand binding obligations in all the seven sectors proposed for tariff elimination", he said.

'Cancun draft inadequate'

Disappointed over development dimension envisaged in the Doha work programme having been given "short shrift", Jaitley said the draft Cancun Ministerial Text was grossly inadequate on implementation issues and would severely affect the interests of developing countries in agriculture, industrial tariffs and Singapore issues.

"We cannot escape the conclusion that it does not accommodate the legitimate aspirations of developing countries and instead, seeks to project and advance the views of certain developed countries," he said.

"If we do not restore the priority accorded to the outstanding implementation issues, the developing countries would be forced to conclude that the development elements in the Doha Development Agenda is only rhetoric," he said.

Singapore issues

On Singapore issues, he said "we do not believe that all the Singapore issues are trade related".

"Our strongest arguments still remain that WTO is not the right forum, that the traditional principles of non discrimination particularly national treatment are not appropriate for a development policy related issues like investment and the trade negotiators are not the right people to deal with movements of capital that have dynamics of their own.

Service negotiations

Jaitley said for developing countries including India, the balance of benefits in the negotiations would accrue to the extent to which their service providers were allowed to supply services in important overseas markets either from remote locations or through temporary movement of natural persons.

"In case the resistance among developed countries for agreeing to the request of developing countries for enhanced market access continues, this would substantially erode our flexibility to make commitments in sectors of interest to developed countries," he warned.

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