The Hindu Business Line : `Distortions in farm trade must be addressed'

THE persistent distortions in global agricultural trade as also protectionist barriers on certain industrial products where developing countries possess a competitive advantage remain as issues that need to be addressed urgently if the wider membership of the WTO is to benefit from the global trade talks.

Chairing a session on trade liberalisation and development at a seminar on "Development in Open Economies", the Special Secretary, Ministry of Commerce and Industry, Mr S.N. Menon, said here on Friday that multiple barriers in respect of textiles and clothing and leather items in the developed world were a case in point.

"It is now widely acknowledged that the extent of liberalisation achieved in the Uruguay Round was very small, in particular in sectors and products of specific interest to developing countries."

He said while the Doha Development Agenda was comprehensive, the importance of specific areas under negotiations for the wider membership of the WTO would need to be judged by their expectations of how it could be achieved in these negotiations and the magnitude of the extant economic distortions. Concerted efforts were needed to uphold the development mandate of the Doha Declaration, Mr Menon said.

Prof Ajit Singh of the Cambridge University said special and differential (S&D) treatment was of key importance to developing countries including India.

"Economic openness is a multi-dimensional thing and a policy of selective openness is likely to bring better results than the policy of free trade, especially if governments take a developmental approach," he said citing the instance of Japan, which was open in terms of exports but closed in terms of imports.

As late as 1978, when Japan was already the member of the OECD (Organisation for Economic Cooperation and Development), manufactured imports of Japan as a percentage of GDP was only 2 per cent compared to 15 per cent and above in other OECD countries. Both Japan and Korea used non-tariff barriers to protect their industries, he said adding that similarly S&D was allowed on a grand scale in the golden days of capitalism (from 1950s to 1970s) when S&D was given to Japan and Europe to restrict imports, he said.

In a presentation on effects of trade liberalisation on poverty and differential liberalisation approaches, Dr Veena Jha, Coordinator, Unctad-India Programme, said that the effects would be better if domestic reforms and stable macro-economic policies as well as institutional reforms accompanied trade liberalisation.

In a sectoral analysis of India, the presentation observed that in agriculture, India had high bound tariffs, but applied tariffs were low and yet, imports were small except in items such as cotton and oilseeds. Overall, protection in agriculture in India was not among the highest in comparison to many countries. In fact, total protection in India was estimated at 40.8 per cent, as against 93.7 per cent in Japan and 58.6 per cent in the European Union.