India talks tough ahead of Nairobi WTO talks

By: | Published: December 8, 2015 1:17 AM

India seeks concrete work plans on food security, agriculture, and the conclusion of the Doha round.

Nirmala Sitharaman, FDI, Foreign Trade policy, FTP, Service sector, health, education, tourism, entertainment, economy news, Indian economyRejecting arguments that the Doha round negotiations are dated in today’s reality, commerce minister Nirmala Sitharaman said: “We are not raising the Doha issue because it was raised in 2001, but we are raising it because even today we don’t see a work plan on such issues.” (Express photo)

In a firm stand against pressure tactics of some developed nations, India will seek concrete work plans on a permanent solution to food security, a mechanism to safeguard the interests of domestic farmers from sudden spurts in imports and the conclusion of the Doha round at the upcoming meeting of the World Trade Organisation (WTO) at Nairobi next week.

Rejecting arguments that the Doha round negotiations are dated in today’s reality, commerce minister Nirmala Sitharaman said: “We are not raising the Doha issue because it was raised in 2001, but we are raising it because even today we don’t see a work plan on such issues. We don’t see a work plan on even many of the things agreed upon in the last ministerial in Bali in 2013. So if the argument against raising the Doha round is built on the premise that the issues are more than a decade old, we want to point at the declaration of the Bali ministerial meetings, which ought to be worked upon.”

Late last month, a panel of facilitators at the WTO was reported to have set aside a demand from India and a majority of developing and poor countries to reaffirm the commitment to continue negotiations on all outstanding issues of the Doha Development Agenda in the declaration to be adopted at Nairobi. The latest firm stance by India signals some stormy sessions at Nairobi. The final draft for the Nairobi ministerial, however, is yet to be firmed up.
The Doha negotiations encompass safeguard mechanism for countries like India to protect farmers against a sudden spike in farm imports from developed nations that offer massive subsidies for agriculture, services liberalisation and tariff reduction, among others.

Revealing India’s strategy before the Nairobi ministerial from December 15 to 18, Sitharaman said: “Our efforts are to ensure that unfulfilled elements of the Doha round find a place in the final declaration, work plans on each of them are given and differential treatment to India vis-a-vis other developing countries is not meted out and that we have enough tools in our hands to protect ourselves from the sudden surge in imports.” The US is reportedly pressing ahead with differential treatment to India compared with other developing nations.

On the question of developed countries’ insistence that the mandate of the Nairobi ministerial be expanded to include new issues to reflect today’s reality in trade, the minister said India is fine with discussions initiated on some of the issues such as e-commerce, but there won’t be any “binding commitment on them” nor should such issues be a part of the draft ministerial declaration. Moreover, India would also like the negotiations on services (Mode 4), which relates to the free movement of professionals, to be discussed.

Subsequent to the Bali ministerial, India managed to get a permanent peace clause against its stock holding of commodities for the public distribution system as sort of quid pro quo for its support to the trade facilitation agreement (TFA), which the developed had pushed hard. A peace clause means no WTO member can drag India to the dispute panel for offering more product-specific support to farmers through procurement of grains than stipulated under the WTO until a permanent solution to the issue is found. According to the norms, the amount of subsidy should not exceed 10% of the value of production of a commodity and in India’s case, this ceiling, some members alleged, was breached in rice. While the Bali declaration sought to finalise work plans on some of the Doha issues, members have still not agreed on issues on which the work plans would be concretised.

Without adjusting for inflation, the product-specific supports for rice and wheat in 2010-11 was much higher than the WTO-mandated cap, at 26% and 17.9% of the total output value, respectively. Another irritant for India is that the WTO’s appellate body had ruled in 2000 that product-specific price support could be determined assuming subsidy persists on the entire crop output. If this methodology is applied, then India’s price support to rice sans inflation adjustment works out to be 76.5% of production value as in 2010-11 and that to wheat, 69.7%. However, sections of domestic analysts argued that the country’s product-specific subsidy for rice stood at -2.87% and that for wheat at -10.22% of the respective production values in 2010-11 when calculated on a fully inflation-adjusted basis.

During the Doha round, a group of developing countries known as the G33 sought a policy instrument, similar to the provision of special safeguard duties (SSG) enjoyed by some developed nations, to control irrational import surges through what is known as a special safeguard mechanism (SSM). In the general council division of the WTO, it was agreed that an SSM would be established, which was slightly amplified in the Hong Kong ministerial declaration.

However, the flexibility of imposing volume-based SSM was subsequently constricted. Still, it could be an important policy instrument for developing countries to protect farm livelihoods from a surge in imports of agricultural products or dip in import prices, said analysts. As there is no consensus on reduction in domestic support by the developed countries, farmers in developing countries face a persistent risk of injury from cheap and subsidised imports from the developed countries.

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