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UK `sympathetic' to India's stance on farm subsidies

G. Srinivasan

New Delhi , March 14

EVEN as the talks for resuming modalities on the agreement on agriculture (AoA) are all set to begin in Geneva on March 22, the United Kingdom has assured New Delhi that it is "very sympathetic" towards agriculture reform, particularly in removing product support being vigorously pressed by developing countries like India.

This reassurance and support for India in ongoing agriculture talks was conveyed to Dr S. Narayan, Economic Advisor to Prime Minister of India, when he met Dr Arnab Banerji, the Senior Policy Advisor to British Prime Minister Mr Tony Blair, in London recently, official sources told Business Line here.

The sources said that even as Britain is keen on ending product support and replacing it with direct farmer support, other major farm producers such as France and Germany did not agree on the way forward to end the logjam as to how to eliminate costly farm subsidies being doled out by rich countries to their farmers. The issue of subsidy reduction was one of the key areas of contention that stalled the fifth Ministerial of the World Trade Organisation in Cancun in September 2003.

Referring to the broader issues pertaining to WTO and Cancun, Dr Banerji is said to have stated that elections in the US, the trading major, made it difficult to achieve much at present, though he believed that the US had already taken a decision to move forward on these issues and was endeavouring to maintain a momentum through the US Trade Representative, Mr Robert Zoellick's recent visits across the globe canvassing support for resumption of talks and narrowing down differences on key issues, the sources said.

It might be noted that in a testimony to the US Senate Finance Committee on March 9, Mr Zoellick said that the critical next steps for the WTO talks are agreement on a framework for agricultural trade reform and abandoning three of the four contentious "Singapore issues" such as competition policy, investment and transparency in government procurement. Under the US's latest approach, negotiators would focus exclusively on the fourth Singapore issue - trade facilitation such as customs reforms to reduce transaction cost to trade and industry.

It is also interesting to note that Mr Zoellick told senators that movement on agriculture would require all countries to agree to eliminate export subsidies, reduce trade-distorting domestic subsidies and end state-trading monopolies, and discipline food aid in a way that permits countries to meet humanitarian needs.

With France and Germany totally opposed to removing product subsidies to replace it with direct farmer support, the UK's sympathy with New Delhi on ending bloated farm subsidies might help in seeking a solution if more rich countries came forward to backing the proposition for reduction in farm subsidies, the sources said.

Besides WTO issues, the sources said, Dr Narayan and Dr Banerji also discussed the growing outcry against outsourcing. Though the UK is very keen on free trade issues, the British Prime Minister Mr Blair and his team were taking a lot of criticism on account of their approach towards outsourcing, Dr Banerji said.

Dr Narayan responded that India greatly set store by the maturity with which this matter was being handled in the UK.

Referring to the recent Ranbaxy-Glaxo agreement on joint research and development, Dr Narayan suggested increasing opportunities for drug development as a cooperative exercise between Indian and British players. Dr Banerji suggested that besides drug companies, India could also work with university laboratories and non-profit organisations in the UK, the sources added.

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