The Hindu Business Line : Cancun draft ignores concerns: Jaitley<br> `Extremely insensitive to people living in poverty'

THE developing countries in general and India in particular reacted strongly to the Draft Cancun Ministerial Text as it has bypassed their concerns on a range of issues like agriculture and Singapore issues such as investment and competition and non-agricultural products access.

Speaking to newspersons on Saturday night, the Commerce and Industry Minister, Mr Arun Jaitley, said: "In agriculture, not only are the distortions prevalent today being perpetuated, but a slew of new measures to increase such distortions are being proposed."

He also said that the heightened ambition on market access, which ironically provides for special and differential (S&D) treatment in favour of developed countries was "utterly incomprehensible and extremely insensitive to the large number of people living in poverty in the developing countries. The revised text has arbitrarily disregarded the views and concerns expressed by us."

The seven-page draft with five annexures allows developed countries to maintain or even increase domestic support and avoid eliminating export subsidies and credits, while imposing even stiffer cuts on developing countries and providing less S&D treatment to them.

On domestic support, developed countries would be able to retain their high subsidies and raise them as the blue box category continues to be maintained, while there is no assurance that the green box would be adequately disciplined.

On market access, the blended formula for developed countries, originally sought by the EU-US, remains which enables them to place their high-tariff items in a category for lower tariff cuts and thus avert removing tariff peaks which thwart developing country export products.

Developing countries are badly treated in market access. The draft imposed a blended formula on them and they now have to reduce some tariffs by an average formula (which is not so steep) but another portion (probably much larger) of tariffs would be subjected to a Swiss formula, under which the higher the tariff the steeper would be the cut.

Since many developing countries have rather high agricultural tariffs, they would be subject to steeper cuts. Under a third category, some tariffs have to be brought down to 0-5 per cent.

Thus, for a majority of tariff lines, developing countries would have to reduce their tariffs in a very pronounced manner. In the absence of capacity to provide higher subsidies, the serious erosion of their ability to use tariffs to safeguard their farmers against imports would have major fallout on rural livelihoods and poverty reduction objectives, Mr Jaitley argued in the plenary after the text was released.

Even as the draft speaks of special products and safeguard mechanism for the developing countries, they are inadequate.

The draft calls for the beginning of negotiations on trade facilitation and transparency in Government procurement, even as there is no explicit consensus to do so nor on the modalities.

In a new twist, the draft keeps investment and competition policy on the agenda of the WTO - as the EU wants - by setting a date to agree on the modalities for commencing negotiations and investment pacts without the explicit consensus and by continuing consideration for modalities for negotiating an agreement on competition.

The text also linked the date of agreeing modalities on investment negotiations with those of agriculture and non-agricultural market access (NAMA).

Linking the report on exploring modalities for competition negotiations would make it difficult for the developing world to resist agreement on new negotiations in the future.

Even as the Doha declaration promised that decisions would be taken by the end of 2002 on 100 implementation issues dear to the developing countries, not only has no decision been taken but the draft downgrades the promises to negotiate implementation issues by merely referring to "appropriate action" to a later date.

Even on S&D, the draft offers only the `best endeavour clause' and disregards the long-list of S&D issues proposed by the African group.

On NAMA, Mr Jaitley sought a specific reference to the Chairman's formula and on sectoral initiatives for zero duty cut, the participation must be voluntary as the extant text makes a bid to render the sectoral initiatives mandatory.

He said that the end-tariff for developing counties in the sectoral initiatives must be higher than that of the developed countries.

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