India May Be Isolated Yet Again At Cancun Meet

Written by Malcolm Subhan | Brussels, Aug 24: | Updated: Aug 25 2003, 05:30am hrs
The 15-nation European Union (EU) and the United States have set the stage for a major confrontation with India and other leading developing countries, including China, Brazil and Argentina, at the meeting of trade ministers from the 146 WTO countries, to be held in Cancun, Mexico, from September 10 to 14.

The framework document on the WTO agricultural negotiations, submitted jointly by the EU and the US, divides developing countries into three categories: net food exporters, food importers and the least developed countries (LDCs).

In other words, while agreeing to special and differential treatment for developing countries, the EU and the US clearly want to treat net food exporters less generously than other developing countries. India is certain to be classified as a net food exporter by the EU and the US. However, determined opposition to their framework document could leave India isolated once again.

The fact is that the EU-US policy of dividing the developing countries should make it easier for them to impose their views at the Cancun meeting. After all, they successfully followed very similar tactics during the Uruguay Round in 1992.

For the European Commission (EC), which negotiates on behalf of the 15 EU countries, the joint framework paper represents a balanced base for all WTO members to engage in constructive negotiations. In other words, it is now up to other WTO members to assume their responsibilities too, by engaging in the negotiations in a flexible and constructive manner.

To allow such negotiations, the EU and the US have not included any precise figures as regards levels of reduction in market access, domestic support and export subsidies. The paper provides an outline of how to carry the negotiations forward, while leaving the details, and in particular the extent of future commitments, to be negotiated, according to EC

officials. They point out that the earlier paper on negotiation modalities, by Stuart Harbinson, chairman of the WTO Agriculture Committee, found no support because it was too detailed. But the absence of precise figures from the framework document also reflects the sharp differences between the EU and the US. Thus on the issue of market access, the EU-US paper provides for a blended system. Under this system, some tariffs would be reduced using the Uruguay Round formula, others the Swiss formula. The EU favours the first formula, which results in gradual, flat-rate tariff reductions, the US the second, because it reduces tariff peaks quickly. The US in fact wants the EU to reduce agricultural tariffs substantially.

The EU-US paper also calls for the elimination of export subsidies for a range of products of interest to developing countries, but fails to list the products in question. It is just as silent on the period over which these subsidies would be eliminated.

The framework document retains earlier provisions that allow developing countries to take special safeguard measures for sensitive products. The list of such products would require unanimous agreement among WTO countries. And the document calls on developed countries to provide duty-free access for an unspecified percentage of imports from developing countries.

Many developing countries will feel that the two largest trading powers have presented them with a fait accompli. Indian sources here expect the EU and US to engage in a good deal of arm-twisting, in order to get their way.

However, the EC which negotiated the framework document with the US, maintains that they are doing no more than accepting their responsibility to pave the way for a successful and ambitious conclusion in Cancun.