The Hindu Business Line : India seeks effective cuts in overall farm support from rich countries

New Delhi, Jan. 3 As the agriculture negotiations for trade liberalisation have begun in Geneva on Thursday, India would continue to insist on “effective cuts” in the Overall Trade-Distorting Domestic Support (OTDS) being liberally extended by the rich countries to their farmers.

Dwelling on the recent four working documents circulated by the Chairperson of the Agriculture Negotiations Ambassador, Mr Crawford Falconer, to members of the WTO, the Commerce Secretary, Mr Gopal K. Pillai, told Business Line that a tiered formula advocated in the new working documents only suggested the familiar path of proposing a notional cut in the first year and the remaining reductions in equal steps over five years.

He said this sort of approach did not make any great difference. He said more important issues were in terms of the cotton subsidy on which there was no agreement so far, as well as on the blue box. Blue box subsidies are an exemption from the general rule that all subsidies linked to production must be reduced or kept within defined minimal levels. It covers payments directly linked to acreage or animal numbers, but under schemes which also limit production by imposing production quotas or requiring farmers to set aside part of their land.

Mr Pillai contends that in blue box, members seek more cushion and more flexibility and the Agriculture Chair has said people could shift from amber box (any support payments that are deemed to be trade-distorting and are subject to limitations and disciplines fall into the amber box) to blue box. “We have concerns on that,” he added. He said the Indian team composed of senior officials of the Ministries of Commerce and Agriculture was currently in Geneva to take part in agriculture negotiations on the new working documents.

He said: “What we want is that total subsidy finally should not remain the same and I could care less if it comes from blue box, amber box, de minimis. If you have given the rich world farmers Rs 100, at the end of the Doha Round at least you must be able to say that you are giving Rs 60”.

Mr Pillai asked if “you still pay Rs 100 at the end of the Doha Round by box shifting, why should I cut my subsidies/tariffs for no apparent or real reason?” Hence, he said, there must be an effective cut in the OTDS of the rich world at the end of it all and their budget should show less on this.

Domestic tariff

Asked whether India’s demand for domestic tariff cuts and export subsidies would cut any ice with the rich world when it had pitched its domestic tariff rate for farm goods at a very high level which might work against import of farm goods, Mr Pillai said: “We are importing wheat at zero duty and so I believe the case with pulse imports”.

He said India imposes high import duty where the same product is sold at throw-away cost because of heavy subsidies there. However, when palm oil pries went up by 100 per cent abroad, India reduced import tariffs so that “import remains the same and domestic price remains the same”.

Pointing out that there were two schools of thought on this issue, Mr Pillai said one believed that “if the Americans give subsidy, let them do it and it is good for us as we get cheap food”. But the drawback on this thinking, he said, is that “if you get cheaper food, our domestic farmers or food producers would not get the price and this would have an adverse effect on their farming”.

Hence, he said reasonably food prices going up was good for Indian farmers as they would get remunerative prices to further grow farm produce.