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JAITLEY TO INAUGURATE UPASI CONFERENCE
FOCUS ON INTERESTS OF PLANTATION GROWERS

New Delhi: September 26, 2003

Shri Arun Jaitley, Union Commerce & Industry Minister, will formally inaugurate the 110^th Annual Conference of UPASI (United Planters’ Association of Southern India) at Coonoor, Tamil Nadu, on 27^th September. Shri Ch. Vidyasagar Rao, Minister of State for Commerce & Industry and Shri L.V. Saptharishi, Additional Secretary in the Department of Commerce, will also be participating in the functions being organised during the 2-day Conference (26-27 September) by UPASI, which is one of the premier associations looking after the interests of growers of plantation crops in South India.. It is expected that a tea delegation from Pakistan will also be attending the Conference. There has been an exchange of tea trade delegations between India and Pakistan during the recent months and the visit of the tea delegation from Pakistan for attending the Conference is expected to provide a boost to the tea trade between the two countries.

A number of important issues are expected to come up for discussions at the Conference in the context of the crisis situation prevailing in the plantation sector, especially in coffee and tea, arising out of a general over-supply and slowing down of the rate of consumption growth which has led to fall in prices of these commodities. The increase in cost of production, declining export and fall in export price realisation has further aggravated the situation. Thus, there is an urgent need for the plantation industry to collectively reflect on these aspects and find urgent solutions so as to compete with the existing and emerging producing countries. The health of the plantation industry has an immediate socio-economic impact on the remotely located plantation districts of the country. This is causing great concern as this sector has all along been playing a significant role in the economic development of the country.

Government of India has taken a number of measures to support and revive the plantation sector including restructuring/rescheduling of the loans availed of by the growers of tea and coffee from commercial banks, establishment of a Price Stabilisation Fund, notification of the Tea Marketing (Control) Order 2003 and changes in auction rules to provide for a more transparent price discovery mechanism for tea etc. UPASI, being a growers association, has also been taking a number of measures to assist the growers. One of the major initiatives being undertaken by them is the setting up of a Tea Futures Exchange.

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New Delhi: September 26, 2003

India’s engineering exports has scaled an all time high of US $ 7.17 billion during the year 2002-03 surpassing the target of US $ 7.1 billion set during the last fiscal. Phenomenal growth has been achieved in the sectors such as prime steel, automobile, passenger cars, industrial machinery, power generating machinery etc. This was indicated by Shri Arun Jaitley, Union Minister of Commerce & Industry and Law & Justice, while giving away the all India export awards by Engineering Export Promotion Council (EEPC) here today. "The significant part of these exports have been those of capital goods and that too to the developed countries", Shri Jaitley said. Shri L. Mansingh, Director General of Foreign Trade and Shri Satish Dhanda, Chairman, EEPC were present at the function along with large number of exporters.

In his address, Shri Jaitley emphasised that India has excelled in services exports, especially those based on knowledge based resources. India has been recognised as a leading knowledge economy across the world. At the same time, every effort should be made to achieve the similar results in manufacturing and capital goods sector, the Minister said. "We should see to it that how we effectively use our institutions to achieve the desired economic growth", Shri Jaitley said and complimented the award winning exporters for having achieved such significant growth.

Shri Satish Dhanda informed that USA proved to be single major market for engineering exports accounting for approximately 18% of our global merchandise. He said the Council would achieve the target of US $ 8 billion set for 2003-04. As a part of promotional activities of the Council, INDIATECH Exhibition has been planned in Sao Paulo from 11-14 November this year. Also, the Council is opening INDIAMART-a large-scale showroom-in Sao Paulo for introduction of Indian engineering products in whole of Latin America.

The Minister gave away the All India Trophy for top exporters for the year 2000-01 in non-SSI category to Tata Motors Ltd. while Enfield Industries Ltd. bagged the trophy in SSI category. In project exporter category Bharat Heavy Engineering Limited got the top trophy whereas IRCON International Ltd. won the top trophy in merchant exporter category.

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INDIA’S FDI POLICY FRAMEWORK MOST LIBERAL, SAYS JAITLEY

New Delhi: September 25, 2003

Shri Arun Jaitley, Union Minister of Commerce & Industry and Law & Justice has said that India has one of the most liberal policy frameworks for foreign direct investment (FDI) and foreign technology transfer. Entry under automatic route only requires post-entry notification and no prior approval. FDI up to 100% is permitted on the automatic route in most sectors. There is no restriction on repatriation of original investment as well as returns on investment. Many new sectors have recently been opened to FDI, such as integrated townships (100%), insurance (26%), airports (100%), mass rapid transit systems (100%), etc. Foreign technology collaborations are also allowed on the automatic route within specified ceilings. Recently, companies who have entered into foreign technology collaboration agreements on the automatic approval route have been permitted (irrespective of the extent of foreign equity in the share holding) to make royalty payments @ 8% on exports and 5% on domestic sales without any restrictions on the duration of royalty payments. The Minister said this while speaking at an Investors’ Meeting in Hong Kong yesterday. "India’s foreign exchange reserves exceed US $ 85 billion, with accretion of US $ 20 billion last year alone. The balance of payments position has strengthened considerably. Exports have registered 19% growth during 2002-03, against a target of 12%. India’s share in service exports has double in the past ten years", he said.

On the overall policy front, Shri Jaitley highlighted several major initiatives that had been taken. These include " industrial delicensing, simplification of investment procedures, enactment of competition law, liberalisation of trade policy, full commitment to safeguarding intellectual property rights, financial sector reforms, liberalisation of exchange regulations, and above all a liberal, attractive, and investor-friendly regime for investment".

"The trade policy has also been greatly liberalized and most items have been placed on the open general licence system. The tariff levels have been brought down substantially (the present average tariff level is 25%) and are gradually moving towards the ASEAN levels. India’s trade policies are fully WTO compatible", Shri Jaitley said.

Shri Jaitley also said that Government of India had been attaching very high priority to the development of infrastructure. "The telecom sector in India is amongst the fastest growing in the world today. Similarly, a lot of progress is taking place in the roads and ports sector. The government has undertaken a US $ 12 billion project for development of national highways. The government has also announced the Special Economic Zone to attract private investment in industrial infrastructure. This scheme offers a lot of fiscal incentives and other incentives that are comparable to those offered elsewhere in the world", he said.

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New Delhi: September 22, 2003

Shri Arun Jaitley, Minister of Commerce & Industry and Law & Justice, has said that the recent Cancun Ministerial meeting of the WTO was testimony to the close cooperation and coordination between India and African countries. "On all important issues, whether the Agreement on Agriculture, TRIPS or the ‘Singapore Issues’ there was not only a meeting of minds but also close cooperation between Indian delegation and delegations from African countries", he said. While inaugurating a seminar on Focus: Africa Programme here today, Shri Jaitley informed that the first year results of the programme were quite encouraging with an increase of 35% in the bilateral trade from the 7 focus countries amounting to US $ 3915 million in the year 2002-03. Shri S.B. Mookherjee, Minister of State for Commerce & Industry and Shri L. Mansingh, Director General of Foreign Trade were present at the meeting along with several Heads of African Missions in Delhi and representatives of Export Promotion Councils and trade and industry.

Shri Jaitley said that the Focus: Africa programme had not resulted only in one-way flows from India to Africa, thus while imports from the 7 focus countries rose by 39.31% during 2002-03, India’s exports to these countries rose by 6.21%. India’s bilateral trade with the whole Sub-Saharan Africa increased to US $ 5335 million during 2002-03 indicating a growth of about 57%. India’s exports during the financial year 2002-03 stood at US $ 2452 million recording a growth of 36%. Keeping in view the potential that the Africa region offers and India’s insignificant presence in that market, the Focus: Africa Programme has been extended to 11 other countries with effect from 1^st April 2003. Shri Jaitley indicated that the government has made an allocation of Rs.2 crore out of the Marketing Development Assistance starting from 2002-03 and other institutional mechanisms like trade agreements, joint trade committees and joint business councils had been activated.

In his address Shri Mookherjee gave the outline of some important activities to be carried out under this programme in coming months, which includes the Africa Health Summit in November 2003, signing of Framework Agreement with members of South African Customs Union, meetings of Joint Trade Committee (JTC) and Joint Business Council (JBC) with Kenya, Mauritius, Ghana, Ivory Coast and Seychelles.

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New Delhi: September 15, 2003

India did not yield on any issue at Cancun and engaged pro-actively in the negotiations, Mr. Arun Jaitley, Minister of Commerce & Industry and Law & Justice told newspapers at the conclusion of the 5^th Ministerial Conference of the World Trade Organisation (WTO) in Cancun (Mexico) on 14 September, 2003. ¨The fact that we brought the concerns of developing countries to the centrestage reflects the success of Cancun¨, Mr. Jaitley said, adding that the most important factor which helped the delegation in Cancun was the unanimity of national opinion behind the broad stand that the government took after extensive consultations with political parties, trade unions, industry associations and others, prior to the Cancun Ministerial. He said India was able to carry the debate into the camp of those with whom it was negotiating and the coalitions forged on Agriculture and the Singapore Issues remained intact till the end.

The G-22 coalition on Agriculture has left its impact on the WTO agenda, he said.

Speaking to newspersons on the outcome of the Cancun Ministerial Conference, Mr. Jaitley said: "The Conference has concluded today without reaching a consensus or a detailed Ministerial Declaration. We had all come here with the hope of getting a good deal on agriculture and on non-agricultural market access. We have effectively put across our views on the Singapore issues which found wide support and pursued our proactive interest in services. I have a sense of satisfaction in as much as, both before and during the Ministerial Conference, India actively engaged in the trade talks. We were continuously pro-active. We played our role to the best of our abilities to push certain issues to the centrestage of the agenda. But I regret that the Draft Declaration which came out yesterday after the first three-and-a-half days of negotiations did not properly reflect the aspirations of a very large number of WTO member countries – especially those on Singapore issues and agriculture. And, after this Draft, consensus kept on eluding the Conference. Efforts were made to build up a consensus in the course of last 24 hours, but consensus could not be reached….. Trade negotiations (however) are an ongoing process. There is never a last day as far as the calendar of trade talks is concerned, and I am sure that, notwithstanding a consensus eluding us here, trade negotiations will continue where we will effectively put across India´s concerns, as we have done in the last few days in Cancun".

Earlier, during the meeting of the G-22 on Agriculture, Mr. Alec Erwin, Trade Minister of South Africa, said the Group had "altered the balance of negotiations in the WTO". Several other Ministers observed that coalitions at Cancun both on agriculture and Singapore issues had deepened the integration of developing countries into the multilateral trading system.

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INDIA HAILS ACCESSION OF NEPAL AND CAMBODIA TO THE WTO

New Delhi: September 13, 2003

India has welcomed the accession of Nepal and Cambodia to the World Trade Organisation (WTO). Welcoming the successful completion of the accession procedures of these two countries to the WTO at the Cancun Ministerial Conference, Mr. Arun Jaitley, Minister of Commerce & Industry and Law & Justice, Government of India, has said that India has always been a votary of universal membership of the WTO and has consistently supported early accession of Least Developed Countries. "The accession of Nepal and Cambodia is of particular interest to us since we share with them close economic and trade ties spanning several centuries. Nepal is also a friendly neighbour. We hope that our economic cooperation and trade relations will be further strengthened by the accession. We look forward to closely working with them in the WTO for ensuring that the multilateral trading system responds positively to the needs and concerns of developing countries", Mr. Jaitley said.

He also urged WTO members to refrain from seeking onerous commitments from acceding LDCs and preserve the spirit of the decisions taken at Doha in this regard. Observing that Nepal had applied for accession to the GATT – predecessor of the WTO – as early as 1989, Mr. Jaitley said that for a Least Developed Country 14 years was a long time to wait to become a member of the WTO rule-based multilateral trading system. "Though the accession process for both Cambodia and Nepal had been accelerated during the past few months, I am constrained to point out that the onerous obligations that had to be undertaken by these two LDCs in their accession process go well beyond the generally applicable obligations of LDC member countries. This was despite the guidelines adopted by the General Council in December 2002 for facilitating and accelerating negotiations with acceding LDCs. Our apprehension is that this may discourage other LDCs from pro-actively pursuing their accession to the WTO", he added.

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NO NEGOTIATIONS ON SINGAPORE ISSUES WITHOUT EXPLICIT CONSENSUS

New Delhi: September 13, 2003

India has reiterated today that there can be no negotiations on the Singapore issues without explicit consensus on the modalities for negotiations as per the Doha mandate. In a letter addressed to Mr. Pierre S. Pettigrew, Minister for International Trade of Canada and Facilitator for the Singapore issues at the Cancun Ministerial Conference, Mr. Arun Jaitley, Minister of Commerce & Industry and Law & Justice, Government of India, along with Ms. Dato´ Seri Rafidah Aziz, Minister of International Trade & Industry, Government of Malaysia, on behalf of the delegations from Antigua & Barbuda, Bangladesh (on behalf of the LDCs), Barbados, Botswana, Belize, Chine, Cuba, Dominica, Egypt, Grenada, Guyana, Haiti, India, Indonesia, Jamaica, Kenya, Malaysia, Nigeria, the Philippines, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Surinam, Tanzania, Trinidad & Tobago, Uganda, Venezuela, Zambia and Zimbabwe, have again underlined the concerns they have about the impact of multilateral rules on the four new issues on their domestic policies and consider that they yet to fully comprehend the implications of having WTO rules on these four issues. These concerns include, among others, implications for domestic policies and availability of resources. Also, these issues are highly technical and complex and require more analysis.

A number of other countries, apart from the above, have also conveyed similar views at the open-ended meeting of the Facilitation Group chaired by Mr. Pettigrew. Hence, there is no explicit consensus on the modalities for negotiations on Singapore issues, as mandated in the Doha Declaration. The four Singapore issues are: Relationship between Trade & Investment, Interaction between Trade & Competition Policy, Transparency in Government Procurement and Trade Facilitation.

Further, many developing countries do not have the capacity to implement obligations arising out of commitments that such multilateral rules would entail, besides which there are also doubts on the benefits of a multilateral framework on such issues. The delegations also have concerns about the process through which these issues have been brought to the Cancun Ministerial without any prior discussion on the modalities for negotiations.

Therefore, these delegations have underlined their firm view that there is no option other than the continuation of the clarification process and urged that these concerns as outlined in the Annex to the letter be incorporated into any revised of the Draft Cancun Ministerial Declaration.

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Ministers and representatives from 16 developing countries namely, Bangladesh (on behalf of the Group of Least Developed Countries), Botswana, China, Cuba, Egypt, India, Indonesia, Jamaica (on behalf of the Caribbean Community), Kenya, Malaysia, Nigeria, the Philippines, Tanzania, Venezuela, Zambia and Zimbabwe met on 10 September, 2003 in Cancun to discuss the Singapore issues viz., relationship between trade and investment, interaction between trade and competition policy, transparency in government procurement and trade facilitation.

They expressed concerns about the impact of multilateral rules on these Singapore issues on their domestic policies and were yet to fully comprehend the implications of having WTO rules on these issues. The issues are technical and complex and some of them are quite unrelated to trade.

Many developing countries do not have the capacity to implement obligations arising out of commitments such multilateral rules will entail, and there were also doubts on the benefits of WTO frameworks on the new issues.

As such, there is no explicit consensus on the commencement of negotiations on modalities.

They agreed to transmit these views to the facilitator for the new issues, together with a proposed language for the continuation of the clarification process to be incorporated in to the final text emanating from the fifth Ministerial.

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New Delhi– September 11, 2003

India and China have re-emphasised their solidarity on WTO issues at the Cancun Ministerial Conference of the World Trade Organisation (WTO) which commenced yesterday. At a meeting with Mr. Arun Jaitley, Minister of Commerce & Industry and Law & Justice, the Chinese Minister of Commerce, Mr. Lu Fuyuan, said that both China and India belonged to the developing country group and as such shared many common interests and common positions. "China and India are close neighbours especially after the visit of the Prime Minister Atal Bihari Vajpayee when bilateral relations have entered a new phase. In the areas where we have a common consensus, we should offer support to each other", the Chinese Minister said adding that both should exchange views on a frequent basis in the next few days at Cancun.

India and China are already part of the 21 member coalition on agriculture in the WTO which is pressing for elimination of trade distorting subsidies and a more equitable world agricultural trade. They are also together in the group of 15 countries on Singapore issues.

Agreeing with the Chinese Minister, Mr. Jaitley underlined that coalition building had ushered in a new area of cooperation between India and China and observed that together both could shape the WTO negotiations and leave an impact on the functioning of the WTO system. Both the Ministers highlighted that the initiatives taken by the countries like China, India, Brazil and South Africa had put the focus squarely on the issue of trade distorting agriculture subsidies given by the developed countries and their determination to hold together, so that their aspirations could find reflection in the Cancun Ministerial Declaration.

The Chinese Minister made the point as a newly acceded member of the WTO, China had already undertaken heavy commitments by way of tariff cuts and it would be improper to expect newly acceded members to take on further commitments without giving them the benefit of special & differential treatment provisions as had been made clear in the joint proposal on agriculture by the group of 21 countries.

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New Delhi: September 11, 2003

 Dr. Supachai Panitchpakdi, DG-WTO, released a publication titled "Doha Development Agenda -- A Global View" brought out by the Confederation of Indian Industry (CII) at Cancun (Mexico) on 9 September in the presence of Mr. Arun Jaitley, Minister of Commerce & Industry and Law & Justice, Government of India. The event also saw the presence of Singapore Trade Minister, Mr. George Yeo.

The book is essentially an inquiry into the prospects of the much debated Doha Round. The volume assembles, in one place, various points of view from diverse thinkers on the issues currently under negotiations.

Trade experts like WTO Dr Panitchpakdi and eminent personalities who are participating in the Cancun Ministerial Conference of the WTO including Mr. Jaitley, European Trade Commissioner Pascal Lamy, UK Secretary of State for Trade & Industry Patricia Hewitt, Australian Trade Minister Mark Vaile, New Zealand Minister for Trade Negotiations Jim Sutton, have contributed to the publication with their valuable inputs to address the primary concern behind the idea of this volume.  

The Fourth WTO Ministerial at Doha had an ambitious negotiating mandate in a Work Programme that was launched on September 14 2001, to be completed by 2005. However, ever since its launch, the Doha Development Agenda, has been facing rough weather. Missed deadlines have been the main stumbling block in the way of negotiations and threaten to undermine the credibility of multilateral trade dialogues. The CII publication has, therefore, a special significance in the above context.

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New Delhi: 11 September 2003

The plight of farmers in developing countries is directly linked to the level and kind of subsidy given in the farming sector in the developed world, Mr. Arun Jaitley, Minister of Commerce & Industry and Law & Justice, Government of India said in a forceful statement at the Opening Plenary of the 5^th Ministerial Conference of the World Trade Organisation (WTO) in Cancun (Mexico) yesterday. Clearly flagging agriculture as a key concern for India, Mr. Jaitley made it plain that the commitment by the developed countries to eliminate distortions in world agriculture caused by their policies held the key to resolving differences among member countries in this vital area. Stressing that the development dimension must occupy centre stage of the negotiations, he called for the Ministerial Conference to move towards a more inclusive and transparent decision making process.

Pointing out that the protection in the developed countries faced by developing country exporters in agriculture is four to seven times higher than in manufactures, Mr. Jaitley said that the effect was to stimulate over production in high cost rich countries and to shut out potentially more competitive products from developing countries. "It is no surprise that over the past few years, agricultural exports from developing countries to developed countries grew at just half the rate they did to other developing countries….. Let us also remind ourselves that the agriculture subsidies provided by OECD countries are more than six times what they spend on official development assistance for developing countries. OECD governments support sugar producers at the rate of US $ 6.4 billion annually – an amount nearly equal to all developing country exports. Subsidies to cotton growers in a developed country totalled US $ 3.7 billion last year, which is three times that country’s foreign aid to Africa. The net effect of subsidising agriculture in developed countries at the expense of products of the relatively poor in developing countries is to aggravate global income inequalities. On the other hand, against equity, justice and fair play, developing countries are being asked to liberalise their agriculture. What the farmers in developing countries demand is protection from distortions in the trade of agricultural commodities, created through the high level of subsidies in the developed countries. The plight of these farmers is directly linked to the level and kind of subsidies… in the developed world. Hence, it would be difficult for us to agree to negotiations, which could potentially place at high risk the very livelihood of 650 million people in India, who are solely dependent on agriculture. It is only when the developed countries agree to take five steps forward in the removal of trade distorting subsidies that the developing countries can take one step forward in the area of market access. The legitimate concerns of billions of farmers in developing countries, for whom agriculture means survival and not commercial operation, cannot be sacrificed to sub-serve agri-business profits of a few millions elsewhere sustained through $ 1 billion subsidies each day in the OECD countries", Mr. Jaitley said.

Mr. Jaitley underlined the urgent need to bring down the high tariffs and non-tariff barriers on products of export interest to developing countries in order to secure sufficient gains from globalisation for them. Special & Differential (S&D) Treatment for developing countries and policy space to deal with sensitive products in agriculture taking into account their development needs, including rural development and food security and livelihood concerns remained an integral part of all elements of negotiations. "India reiterates that under no circumstances can it accept any form of harmonisation of tariffs in agriculture or obligations to create and expand tariff rate quotas. 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", the Minister added.

On market access negotiations for non-agricultural products (industrial tariffs), Mr. Jaitley emphasised that suggestion for mandatory harmonisation and elimination of tariffs would be most iniquitous to developing countries. Further, he pointed out that being at different stages of development, we did not have capacities to understand binding obligations in all the seven sectors proposed for tariff elimination.

Expressing deep disappointment that the development dimension envisaged in the Doha Work Programme had been given short shrift, Mr. Jaitley said that 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…. If we 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. He also referred to the unresolved issues relating to the special & differential provisions for developing countries and stressed the need to make all S&D provisions precise, operational and effective as well as non-mandatory S&D provisions be converted into mandatory ones within a specified time frame.

On Singapore issues, Mr Jaitley 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 WTO principles of non-discrimination particularly national treatment are not appropriate for a development policy related issue like investment and that trade negotiators are not the right people to deal with movements of capital that have dynamics of their own". Pointing to the significant and deep differences in the views of members on many elements of these issues, Mr. Jaitley said – "Hence, we are not convinced of the appropriateness of taking a decision on modalities (for negotiations) as it does not give us any idea of the substance and direction of obligations that agreements in this area may require us to undertake".

Underlining India’s interests in the services negotiations, Mr. Jaitley reiterated that liberalisation of certain sectors was essential to accelerate growth in developing countries and emphasised that 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 under Modes 1 and 4 continues, this would substantially erode our flexibility to make commitments in sectors of interest to developed countries", Mr. Jaitley said.

Mr. S.B. Mukherjee, Minister of State for Commerce & Industry and Mr. Dipak Chatterjee, Commerce Secretary, Government of India, were present among others of the Indian delegation at the Opening Plenary Session.

Giving India´s assessment of the multilateral trading system, the Minister said that developing countries participated in the system in the hope that it would lead to their economic betterment and not because trade liberalisation was an end in itself. The system, he said, has to meet this expectation and "the multilateral trading system has to acknowledge that developing countries cannot afford to travel at the same speed as developed countries to achieve gains. Therefore, obligations to be undertaken by the developing countries should not arise out of coercion. Rather, they should have a feeling that these obligations are in their interest and that they are in a position to accept and implement them".

Mr. Jaitley also applauded the accession of both Nepal and Cambodia to the WTO and said that India had very warm and friendly ties with these two countries.

Earlier, India´s position found an endorsement in the message of the UN Secretary General Mr. Kofi Annan to the Ministerial Conference, which was delivered by Mr. Rubens Ricupero, Secretary General, United Nations Conference on Trade and Development (UNCTAD). In his message, the UN Secretary General said – "Those who press poor countries to open their markets may indeed have those countries´ best interests at heart. But can we be surprised that poor countries are reluctant to take them seriously, when they find the markets of rich countries still closed to their products, and when they have to compete at home, and in the world market, against subsidised products from those same rich countries? These barriers and subsidies in developed countries must be phased out, as fast as possible, for the sake of humanity. To do so is in the interests of rich and poor alike. Trade barriers and distortions can hurt a country´s health whether it is developed or developing. Developed countries spend vast sums on subsidies, often propping up relatively small and unproductive portions of their economies. In the process, they hurt their own citizens twice – as taxpayers and as consumers. There are surely better ways to help those farmers in rich countries who genuinely need help, than by subsidising big exporters so that much poorer farmers in poor countries cannot feed their families. It is not hard to imagine a system under which just about everyone would be better off. Agriculture is a crucial issue. But it is not the only area where the existing world trade order is imbalanced. Opportunities for developing countries must also be opened by effective liberalisation of trade in textiles, by specific agreements that allow them to participate actively in the growing trade in services and by faster transfer of technology. Of course, developing countries also have a responsibility to help themselves. But trade liberalisation is no panacea for developing countries. For many of them, it involves considerable adjustment and social costs. There is a need for synergy and proper sequencing – between the capacities of the developing countries, the level of obligations they are to take on, the cost of implementation and the adequacy of financial and technical resources available to them. Developing countries need aid for trade and such aid must not come at the expense of aid for development.

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ISSUES OF AGRICULTURE IN WTO NEGOTIATIONS

New Delhi: September 03, 2003

The WTO Agreement on Agriculture (AoA) came into effect as from 1 January 1995 incorporating the results in agriculture products of the Uruguay Round of Multilateral trade negotiations.

With the long-term objective of establishing a fair and market-oriented agricultural trade system through substantial progressive reductions in agricultural support and protection, the AoA initiated a reform process in world trade in agriculture. Its provisions are largely three-fold: improving market access, curtailing export subsidies and progressively reducing trade-distorting domestic support, generally over six years for developed countries and over ten years for developing countries.

Towards continuation of the reform process in agriculture, Article 20 of the AoA builds in a mandate to commence negotiations on 1 January 2000, taking into account the experience of Members from implementing their reduction commitments on support and protection, non-trade concerns, and special and differential treatment for developing countries. Article 20 of the Agreement, which mandates negotiations for continuation of the reform process, thus, also recognises that non-trade concerns such as Food Security* should be taken into account in the negotiations.

Based on this mandate in Article 20, negotiations commenced in the Committee on Agriculture (COA) of the WTO formally on 1 January 2000. Phase 1 (23-24 March 2000 to 26-27 March 2001) of the agreed work programme was analytical and discussed four technical submissions and forty-five initial negotiating proposals by 125 Member countries. Phase 2 (26 March 2001 to 7 February 2002) basically clarified concepts in the proposals.

The Doha Ministerial mandate of 14 November 2001 seeks to build on the work undertaken in agriculture since 1 January 2000, and brings these negotiations under a single undertaking with other negotiations launched at Doha. At Doha it was agreed to establish modalities for negotiations by 31^st March 2003, and for Members to submit draft Schedules based on these modalities by the Fifth Ministerial Conference in Cancun, Mexico, on 10-14 September 2003.

* Food Security, as defined by FAO, is the physical and economic access of all people at all times to enough food for an active, healthy life with no risk of losing such access and as such, is directly connected with livelihood in developing countries.

India’s position and approach to the negotiations on agriculture is formulated after consultations from time to time widely held with Governments of States/Union Territories, representatives of political parties, farmers associations, eminent agro-economists, research institutions and other stake holders in the agricultural sector.

The Department of Commerce has also constituted an Expert Group on Agriculture in May 2002 to provide advice and guidance in the negotiations on a continuous basis. The Expert Group has met 4 times since its constitution: 5 August 2002, 26 November 2002, 2 June 2003 and 22 July 2003.

Comments are solicited from the States/Union Territories from time to time on various negotiating documents, and consultations are also held, either jointly with the Union Ministry of Agriculture or individually. 4 Region-based consultations at Officials’ level were held in May 2002. The last consultation with State Agriculture Ministers was held by Union Agriculture Minister on 24 October 2002, with State Chief Secretaries and Agriculture Secretaries by Union Agriculture Secretary and Commerce Secretary on 23 October 2002. Consultations with representatives of political parties, farmers associations, and other non-governmental organizations were last held by the Union Agriculture Minister on 29 October 2002. The concerned Union Government Departments/Ministries are also consulted regularly, with the last held on 22 July 2003.

In order to attain our objectives, India has been building coalitions with Members who pursue similar objectives. There may be no one set of Members, which fully shares our views in agriculture. We have been building coalitions with those who at least share our major concerns. In the process, along with UNCTAD, India had organised a meeting at Nyon near Geneva on 25 June 2003, of like-minded developing countries to discuss issues of common interest, namely, the instruments of Special Products (SP Products), and the new Special Safeguard mechanism (SSM), proposed for developing countries to enable them to address food security and rural development and/or livelihood concerns. This meeting also considered domestic support modalities for developed countries in order to better address the distortions in world agriculture markets, and sanitary and phyot-sanitary measures being used by some major trading partners to deny market access in products of export interest to developing countries.

At present there are two key groups, one led by the EC which includes its candidate States, Norway, Japan, Switzerland and Korea, which has a largely protectionist approach to domestic agriculture. The other group consists of the Cairns Group of major agricultural products exporting countries to whom support is provided by the US, and this group favours substantial liberalization of trade in agriculture and reduction of distortions in world agricultural markets due to high domestic support and export subsidies provided by the protectionist group. Interests and priorities vary significantly across developing countries, many of whom are heavily dependent on preferential trade with the EC and the US, some are net-food importing countries, some are small economies with single commodity exports such as Mauritius, or some like China have already undertaken extensive commitments in their process of accession to the WTO.

India’s proposals

In January 2001, India first presented its proposals to the Committee on Agriculture, covering the three pillars of the AoA, namely, market access, export competition and domestic support, and also measures to secure special and differential treatment for developing countries, with the following objectives:

(a)  To protect our food and livelihood security concerns and to protect all measures taken for poverty              alleviation, rural development and rural employment and maintain appropriate level of price support for              farmers;

(b) To create opportunities for meaningful expansion of agricultural exports by securing sufficient market access in developed countries;

(c)    To seek substantial reduction in tariffs, including tariff peaks and tariff escalations, elimination of domestic    support and export subsidies by developed countries;

(d)    To safeguard domestic producers in India from a surge in imports or a significant decline in import prices and to ensure food and livelihood security of our people.

In November 2002, India circulated an additional specific input on special and differential treatment for developing countries covering all the three pillars of domestic support, export competition and market access, and highlighting the importance of flexibility in domestic policy for agriculture to take full account of food and livelihood security concerns and rural development.

Briefly stated, India has highlighted that the real issue is to phase out distortions in trade through direct and indirect subsidization of domestic production and exports by developed countries. Providing flexibility in domestic policies for agriculture to enhance food and livelihood security and rural development is crucial for developing countries. Moreover, developing countries can be expected to reciprocate in market access, subject to their economic and social conditions, development needs, food and livelihood security and rural development requirements, only if they get adequate concessions and commitments by development countries in all three pillars. India has proposed moderating the notion of 'reciprocity' in the negotiations to incorporate the development needs and concerns of developing countries.

India has elaborated that any reductions in tariffs by developing countries should be such that the overall average reduction in bound rates for them is significantly lower than (at least half) that for developed countries. Moreover, no minimum reduction should be specified on each tariff line. Developing countries should be permitted to raise bindings on products bound at relatively lower levels in earlier negotiations, without offering compensation.

Key Elements of the Draft Modalities on Agriculture

Mr. Stuart Harbinson, Chairman COA, presented a First Draft of Modalities for the Further Commitments on 17 February 2003, and an initial limited revision of certain elements on 18 March 2003. Since positions of Members in key areas remained far apart, the deadline of 31 March 2003 for establishment of modalities could not be met. Members then agreed to continue and work in order to establish modalities for further reform as soon as possible.

In the negotiations, Members remain far apart on many key issues, and according to the Chairman, Committee on Agriculture, sufficient collective guidance has not been given to him to enable a significant modification of the first draft on modalities. In a general sense, the positions of various Members suggest a clear divide between the protectionists which include the European Communities (EC) and its candidates states, Japan, Norway and Korea and the pro-liberalisation Members led by Cairns Group and the US on each of these three pillars of the negotiations. The pro-liberalisation group favours substantial improvements in market access through tariff reduction and enhancement of tariff rate quota volumes in addition to substantial reduction in domestic support and the elimination of export subsidies. The protectionists favour gradual reductions in domestic support and export subsidies, and have suggested moderate tariff reductions based on the Uruguay Round approach. The EC also conditions its ability to offer commitments in these areas on appropriate incorporation of non-trade concerns, such as animal welfare and food safety in the negotiations. The EC has also conditioned its agricultural reform commitments on satisfactory resolution of the Singapore issues. Another group consisting of newly acceded countries, like China and Croatia, do not want any further commitments by them, though they favour substantial market access commitments from others. Among other developing countries, the-net-food-importing developing countries (NFIDCs) oppose substantial reductions in export subsidies, while small economies including those based on single commodity exports, such as Mauritius and the Caribbean, prefer maintenance of preferential market access into their major markets.

The negotiations are scheduled to be concluded by 1 January, 2005.

The Issues

The basic issue in agriculture negotiations is the extent to which the reform process in agriculture, initiated in the Uruguay Round through agreed reduction commitments in both support and protection will be continued and incorporated in the negotiated outcome of the Doha Work Programme.

Trade in agricultural products has been distorted through heavy subsidisation of agricultural production and exports by many developed countries with vast financial resources at their command on the one hand, and high tariff and non-tariff barriers on the products of export interest for developing countries.

India’s position in these negotiations is that developing countries can be expected to reciprocate in market access, subject to their economic and social conditions, development needs, food and livelihood security and rural development, only if they get adequate concessions and commitments by developed countries in all three pillars of agriculture negotiations (namely, domestic support or subsidies; export subsidies and market access).

The EC (European Communities)-US joint paper on agriculture which was presented to the WTO on 13^th August, 2003 had the following major elements:

• A combination of Uruguay Round tariff reductions, Swiss formula based tariff reductions and zero duty in respect of the remaining tariff lines for all countries. (The Uruguay Round reductions involve lesser reduction commitments while the Swiss formula leads to steeper reductions in tariffs).

• Special safeguard mechanism enjoyed by the developed countries would continue while developing countries would have a special safeguard mechanism on import sensitive items only.

• All countries are required to offer additional market access through tariff rate quotas.

• Export subsidies would not be eliminated except for few products and export credits which are primarily given by developed countries will have corresponding lower disciplines.

• Most trade distorting Domestic support is sought to be only minimally reduced while Blue Box payments are sought to be retained.

• Non-trade concerns, such as animal welfare payments, and the peace clause (which prevents other members from raising disputes against subsidies which are provided not in conformity with the rules) would be left open for further negotiations.

India and other developing countries gave their response to the EU-US proposals for agricultural negotiations in the World Trade Organization (WTO) in a joint proposal presented in Geneva on 20/8/03. The co-sponsors of the joint proposal (which includes some members of the Cairns Group of agriculture exporting countries) are: India, Mexico, Pakistan, Argentina, Brazil, Bolivia, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, Paraguay, Peru, Philippines, Thailand, South Africa and Venezuela.

The key elements of the response of India and others are:

• The market access commitments sought to be imposed by the European Union (EU) and the United States (US) on developing countries completely disregard the interests and concerns of developing countries with regard to their agriculture. The response proposes Uruguay Round approach to tariff reduction by developing countries and steeper reduction by the developed countries using, among others, the Swiss formula.

• The proposed reform of agriculture in the EU-US proposals to eliminate subsidies (both domestic support and export subsidies) and distortions completely fails to meet the requirements and objectives of the Doha Ministerial mandate on agriculture. Therefore, it proposes time-bound elimination of all export subsidies by developed countries; substantial reduction in all forms of trade distorting domestic support, including elimination of Blue Box measures (i.e. subsidies meant to limit production in developed countries); and capping of specific Green Box measures such as payments decoupled from prices and production.

• It emphasises the need to build in specific elements of the Special & Differential (S&D) Treatment requirements of developing countries such as maintaining and enhancing support programmes for low income and resource poor farmers; to maintain marketing and transport subsidies on exports by developing countries; and to incorporate the market access instruments of Special Products for rural development and food security and new special safeguard mechanism for developing countries to safeguard against price variations/volatility and import surges.

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SB/PM/MRS\

Background Briefs

Press Information Bureau
Government of India
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NON-AGRICULTURAL MARKET ACCESS ISSUES IN THE WTO

New Delhi: September 03, 2003

Following the Mandate by the Ministers at the WTO Ministerial Conference in Doha 2001, market access negotiations on non-agricultural products (also known as industrial tariff negotiations) have commenced in the World Trade Organisation (WTO). These negotiations inter-alia would decide on the tariff reductions that different countries would be making on industrial goods.

The market access negotiations have commenced in the backdrop of a proliferation of preferential and regional trading agreements which today ensure that about 60% of the world trade takes place on preferential, or even zero, tariff terms. These regional trade arrangements are increasingly restricting the market access of countries like India which still is a minor player, insofar as regional agreements are concerned. Therefore, the WTO negotiations are very important for countries such as India as these would create, if not a level playing field, certainly reduce the disadvantage that exports from India face in its major markets owing to the regional agreements.

In WTO at present, three broad issues are under consideration of the Members; these include finalisation of modalities for the actual tariff negotiations, i.e. the tariff reduction method and the extent of tariff reduction to be offered by different countries; how to deal with non-tariff barriers; and special treatment, if any, of environmental goods in these negotiations. A decision on these issues is expected in the Cancun Ministerial Conference scheduled in September this year.

Regarding the modalities, several countries have made proposals exhibiting differing ambition levels as also methodologies. US, for example, suggested a tariff free world by 2016, while the EC wanted all countries to compress their tariffs between 2 and 15%. Korea recommended a trade weighted average tariff reduction of 40%. India proposed linear tariff reductions at differential rates with developed countries reducing tariffs by a higher percentage than developing. However, there was no consensus on adopting any one method or even the level of ambition. Several developing have indicated that the extent of reduction that they would be offering in these negotiations would depend on the concessions that they would get in the market access negotiations on agricultural products, which is also taking place in parallel in the WTO.

The Chairman of the negotiating group, who is also the Swiss Ambassador to the WTO, finally in May this year brought out on his own responsibility a set of elements on modalities for Members to consider. Implicit in his proposal is the right to accept, amend or reject any element that any Member felt it is not comfortable with.

The Chairman’s set of elements consists of a formula to be applied to all tariff lines of all Members coupled with a mandatory sectoral tariff elimination proposal on seven sectors of export interest to developing countries. The formula requires all members to reduce their tariffs on all industrial products to below their present average levels. Thus, countries maintaining higher tariffs on an average would de facto be able to retain marginally higher end tariff after these negotiations allowing the industry in these countries a longer time frame for adjusting to low tariff protection regimes. This impact of the formula has been characterised to be development friendly. Largely the formula has been seen to be addressing the diktats of the Doha mandate which has development as its central theme. Nonetheless, some aspects of the formula have been criticised by some Members. Developed countries, for example, have uniformly pointed out that the formula lacks ambition and countries with higher tariffs would continue to retain them after these negotiations, similar points have been made by other low tariff countries. These criticisms are blatantly unfair as the present tariff levels in different countries in a larger way reflect the Uruguay Round Negotiations and thereby represent what was given or received in those negotiations. Countries that reduced their tariffs more got greater market access as well – the tariff reduction in the Uruguay Round on developed country exports was much more that that on developing or least developed country exports. Therefore, to now claim that all countries should have same or similar tariff levels are blatantly self seeking and attempts at getting market access without offering anything in return.

On the sectoral front, the Chairman has suggested that on seven sectors namely leather; footwear; textiles and clothing; gems and jewellery; auto components; electrical and electronic goods; and marine products all countries reduce their tariffs to zero, albeit in different time frames. Developing countries are to be given three times the reduction period that developed countries would get and also, developing countries could retain up to 10% tariff on these products for up to two thirds of the total time period that they are given to eliminate tariffs. Even this proposal has merits in terms of creating opportunities for developing countries. Some of the highest tariffs are found in developed countries in these sectors namely in textiles and clothing; leather and footwear; marine products; and gems and jewellery. Elimination of tariffs in these sectors would arguably be a big boost to exports. For India particularly, all these sectors are very important either from the export perspective or from the perspective of their importance for the domestic manufacturing industry. Consultations are now on within the government; with industry associations; and with research organisations to evaluate the impact of the proposals.

According to some experts, considering that the total phase out period for developing countries could extend up to 15 years, coupled with the autonomous tariff reductions that India is already making in any case, leveraging the autonomous reductions to ensure a predictable and global zero tariff regime in products that are most significant in India’s export basket makes a good negotiating strategy. However, what has to be ensured is that the domestic reforms – power sector; labour; financial; infrastructure etc. which are now chugging along are also pushed to a higher gear to improve the competitiveness of the industry in the shortest time period enabling genuine gains from these negotiations.

Non-tariff barriers which are also a very important aspect of these negotiations are being discussed in parallel. However, the issue of importance here is to clearly identify what is the measure, who is imposing it, how it affects trade and an estimation of the trade restricting impact of the measure. These issues are being clarified and it is expected that by October 2003, after the Cancun Ministerial Members would have a clear list of issues for discussions.

Special treatment for environmental goods has been separately mandated by the Doha Ministerial i.e. separate for the mandate initiating the market access negotiations. However, Members are not clear as to what constitutes an ‘environmental good’ whereafter what should be special treatment will be discussed.

Thus, while the later two issues are not yet mature for any decisions, the issue of modalities for the tariff negotiations is much advanced and will figure in the Cancun deliberations.

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SB/PM/MRS

Press Information Bureau
Government of India
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DRAFT AGREEMENT ON INDIA-ASEAN ECONOMIC COOPERATION DISCUSSED

New Delhi: September 03, 2003

The ASEAN Economic Ministers and the Commerce & Industry Minister from India held their Second Consultations in Phnom Penh, Cambodia today. The consultation was co-chaired by Mr. Cham Prasidh, Minister of Commerce, Kingdom of Cambodia; and Shri Arun Jaitley, Minister of Commerce & Industry.

The Ministers exchanged views on broad aspects of the present global economic climate in general and recent developments in ASEAN and India in particular. They noted that as per the ASEAN Secretariat trade data, the trade between India and ASEAN grew by 22.6% from US $ 9.88 billion in 2001 to US $ 12.11 billion in 2002. The Ministers underlined the importance of sustained regional economic cooperation as a means to promote trade and investment flows.

The Ministers also discussed the draft Framework Agreement on comprehensive economic cooperation between ASEAN and India which was prepared by the ASEAN-India Economic Linkages Task Force (AIELTF). The Task Force recommended for establishing an ASEAN-Free Trade Area (FTA) in goods, services and investment. The Ministers broadly agreed with the recommendations made by the Task Force.

The Minister felt that the Framework Agreement could be signed by the leaders at the forthcoming ASEAN-Indian Summit scheduled on October this year in Bali, Indonesia.

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Press Information Bureau
Government of India
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New Delhi: September 01, 2003

India’s exports during April-July, 2003-2004 are valued at US $ 17783.73 million which is 9.29% higher than the level of US $ 16271.53 million during April-July, 2002-2003. This is over and above the 18.12% growth rate in April-July, 2002-03 over corresponding period of 2001-02. In rupee terms, the exports were Rs. 83291.65 crore, during April-July, 2003-2004 which is 4.67% higher than the value of exports during April-July, 2002-2003.

Exports during July, 2003 are valued at US $ 4688.35 million which is 5.75% higher than the level of US $ 4433.53 million during July, 2002. This is over and above the 29.16% export growth rate in July, 2002 over July, 2001. In rupee terms, the exports in July, 2003 were Rs. 21674.23 crore, which is 0.25% higher than the value of exports during July, 2002.

India’s imports during April-July, 2003-2004 are valued at US $ 22719.90 million representing an increase of 22.73% over the level of imports valued at US $ 18512.49 million in April-July, 2002-2003.

Oil imports during April-July, 2003-2004 are valued at US $ 5899.11 million which is 7.72% higher than oil imports valued at US $ 5476.51 million in the corresponding period last year. Non-oil imports during April-July, 2003-2004 are estimated at US $ 16820.79 million which is 29.03% higher than the level of such imports valued at US $ 13035.98 million in April-July, 2002-2003.

Imports during July, 2003 are valued at US $ 5701.94 million representing an increase of 17.00 % over the level of imports valued at US $ 4873.60 million in July, 2002. In Rupee terms the imports increased by 10.92% during July, 2003.

The trade deficit for April-July, 2003-2004 is estimated at US $ 4936.17 million which is higher than the deficit at US $ 2240.96 million during April-July, 2002-2003.

Tables giving details of exports, imports and trade balance, according to the provisional estimates of Directorate General of Commercial Intelligence & Statistics (DGCI&S) are attached.

 *Final figures are given by DGCI&S