INDIA’S DEFENSIVE INTERESTS IN AGRICULTURE FULLY SAFEGUARDED IN WTO FRAMEWORK
Date : 10 Aug 2004
Location : New Delhi
Shri Kamal Nath, Union Minister of Commerce & Industry, has said that India’s defensive interests in agriculture have been fully accommodated in the recent WTO Framework Agreement of 31st July, 2004, which lays the basis for further negotiations in the Doha Round of multilateral trade negotiations. "A huge gain for us at Geneva was a clear and unequivocal support on the part of developed countries to completely eliminate – not just to reduce, but eliminate - all export subsidies by a specific end date. Furthermore, we got them to commit to an across the board 20% reduction on trade distorting domestic support in the first year itself… On the other hand, the principle of special and differential treatment with regard to developing countries has been given primacy. We have ensured that not only will developing countries have access to Sensitive Products but over and above this we will have Special Products, and also a Special Safeguard Mechanism. We thus believe that we can adequately accommodate all our defensive interests in Agriculture", Shri Kamal Nath said while addressing the Seminar on "WTO’s July Framework Agreement" Implications for Indian Business" organised by Federation of Indian Chambers of Commerce & Industry (FICCI).
He reiterated that in agriculture "our main objective was to secure the interests of millions of farmers in our country. In India, we have subsistence farming, not commercial agriculture. In developed countries, huge subsidies amounting to more than 300 billion dollars a year are given by way of support to their farmers. This creates artificial prices. I have repeatedly said that the Indian farmer can compete with the US farmer, but not with the US Government!" Shri Kamal Nath said that by insisting on a tariff formula with deeper cuts in higher tariffs, India had, in fact, been able to open a window to market access to developed countries in agriculture for India’s own products. (This is because the developed countries have very high tariff levels for their sensitive products, whereas it is just the opposite in the case of India). "I am specifically keen on developing on agri export sector because I believe that this will contribute extensively to our agricultural development. Due to reduction of subsidies in developed countries, our agricultural products will be able to compete with products of other products of international markets", Shri Kamal said adding that the tariff rate quota (TRQ) expansion in developed countries would create another window opportunities for Indian agri exports. (NB: Tariff rate quota is a trading mechanism that provides for the application of a customs duty at a certain rate to imports of a particular good up to a specified quantity (in quota quantity), and at a different rate to imports of that good that exceed that quantity).
On Non-Agricultural Market Access (NAMA), Shri Kamal Nath said "The July Framework creates additional market access for our industries through provision for tariff reduction in non-agricultural merchandise goods. Tariff peaks and tariff escalations, which at present reduce our ability to export value added items, will now be specifically addressed".
Referring to the issue of Services, he said the July framework provided for improvement of quality of offers, since this is an area which functions on an "offers and request approach". The area of particular interest is Mode 4, in which "we see as a vehicle for getting better opportunities for our professionals abroad. We will now seek greater market access in Professional Services, Construction and Engineering Related Services, Computer Related Services, Medical Services, Audio Visual Services and Financial Services.
Shri Kamal Nath said that India strongly resisted -- and succeeded – in getting the issues of Investment, Procurement and Competition off the table. "This is not because we do not want to do anything in these areas, but because we do not want international interference in the formulation of our domestic policies in this regard. However, the fourth issue on Trade Facilitation is certainly to our benefit. Essentially, Trade Facilitation means improvement and transparency in customs procedures, cutting down on transaction costs. This not only means improvement in Indian Customs procedures, but also improvement in Customs procedures of other countries. Hassle-free customs is of fundamental importance if international trade is to flourish. We strongly believe that trade facilitation would ensure a greater participation in international trade by small and medium enterprises, reduce transaction costs (estimated to be between 6 to 10 per cent) and generally improve the prospects of developing countries in multi-lateral trade", he said.