India Inc advises caution against US, EU farm offer

Financial Express, India, January 30, 2007

Economy Bureau

India Inc and civil society groups welcomed the new impetus given to the WTO negotiations at Davos, but said India should be cautious about the reported ‘offers’ made by the EU and the US on agriculture.

Ficci said this renewed activity would lift growth in merchandise and services trade.

FICCI president Habil F Khorakiwala said, “What we need is the real cuts in trade-distorting farm subsidies in the US, which will mean a budget cut of around $10 billion from the current ceiling of $23 billion.”

The chamber said even if the US agreed to bring down its agriculture support level to around $12 billion, developing countries must also ask for disciplines in subsidy reduction on product-specific basis to avoid any concentration of subsidy in two or three products.

Similarly, the offer made by the EU to cut its average level of tariffs by over 50% need to be supplemented by commitments on tariff cuts on product on tariff line basis.

The issue of “less than full reciprocity” and significant cut in tariff peaks and tariff escalation in developed countries are key to the Nama negotiations.

Pradeep S Mehta, secretary- general of CUTS International, said “If the deal could be clinched, with the US agreeing to freeze its domestic support at $15 billion, then it is a matter of $4 billion (from what the US is insisting as a cap in its domestic subsidies) only, which benefits mostly big agri-businesses of the US. Should global welfare of billions of dollars, which is likely to result from successful conclusion of the Doha round be mortgaged to the US resistance to reduce domestic subsidies by another $4bn”?

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