Kamal Nath firm on re-negotiation of farm safeguards mechanism

SME Times, August 12, 2008

Kamal Nath, Minister for Commerce and Industry, maintained that there were still major issues to be sorted out and called upon developed countries to return to the negotiating table in a spirit of sacrifice to bolster the economies of the poor nations made at the mini-Ministerial meeting in Geneva last month.

Even as Pascal Lamy, WTO Director General, has reeled out statistics on how the developing countries would get the lion’s share of gains from scheduled commitments.

Addressing the CUTS-FICCI Conference on ‘Global Partnership or Development: Where do we stand and where to go”, the WTO chief’s first interface with Indian industry after the stalled mini- Ministerial meeting, Lamy said, “If the current round had come to a successful conclusion last month, import tariffs would have come down by half, resulting in a saving of US$ 150 billion. The developing countries would have contributed a third of the sacrifice, but benefited to the extent of two thirds by way of savings.”

He, however, added that although figures did not reveal which country would gain by how much, what is transparent is that the adherence to the scheduled commitments would have brought down trade distorting subsidies by the US to US$ 14.5 billion a year “Without the current round, this amount could reach a whopping US$ 48 billion a year,” he emphasised.

Lamy said, while it is agreed that increase in agriculture productivity was vital in developing countries, it was important to note that trade could play a better role in bringing this about.

He said while in purely technical terms, the issues agreed upon by the negotiating members would be sufficient for drafting the scheduled commitments, the political reality gained the upper hand and a few issues remained to be wrapped up, most significantly the issue of safeguards mechanism for agriculture.

On Special Safeguards Mechanism (SSM), he said, there were two diverging views which proved impossible to reconcile in the talks last month – one, developing countries need a safety net against a surge in imports to protect their farming system; and two, like all safeguards under the WTO rules, SSM should be subject to certain conditions and limitations in order to ensure that it does not hamper normal trade flows and that it should not be misused. “That was the main political difference, he said.

Kamal Nath doggedly maintained that the Doha Round is not about increasing the prosperity of the developed world but reducing the poverty of the developing countries.

“Unless this round is sees healthy economies in the developing world, there would be no market access for the developed countries, he said, adding that the truth is that because of the subsidies given by the rich nations, there have been no investments in agriculture in the developing countries.

On the issue of SSM for agriculture, Kamal Nath said, if developing countries were to reduce tariff and if there is huge import surge, the remedy lay in capping the surge at 40%. “By the time imports reach that level, my farmers would have committed suicide,” he remarked.

While it is being appreciated that agriculture subsidies by the developed nations are trade distorting, and these needed to be brought down, the sacrifice being asked for from developing countries was harsh. “It tantamounts to asking the developing countries to pay to the rich nations to stop doing what they should not be doing in the first place,” Kamal Nath declared.

He urged all WTO members to come to the negotiating table, not looking for what they can get but at what they can give.

The conference was also addressed by Supachai Panitchpakdi, Secretary General, UNCTAD; Ransford Smith, Deputy Secretary General, Commonwealth Secretariat; Rajan Bharti Mittal, Vice President, FICCI; Pradeep S Mehta, Secretary General, CUTS International and Dr. Amit Mitra, Secretary General, FICCI.

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