Major victory for India in trade talks

India has scored a major victory in the World Trade Organisation(WTO) in being able to ensure significant gains and fully protects her interests in agriculture in the draft framework for negotiations adopted in Geneva yesterday.

The framework, adopted unanimously after five days of hard bargaining, foresees a dramatic opening up of the world market and reviving trade talks that collapsed almost a year ago in Cancun.

"Cancun was a realisation, and today is the culmination of that realisation," Commerce and Industry Minister Kamal Nath said after the framework was adopted.

The framework promises to slash state support and tariffs in the farm sector, lower import duties on manufactured goods, open up the world's services sector and harmonise customs procedures.

In a crucial concession to India, which threatened to walk out of the talks unless its subsistence farmers were protected, the deal provides for "flexible treatment" of tariffs on products that affect "livelihood security and rural development needs".

The deal promises the rich countries to cut farm subsidies and tariffs, while making allowances for developing countries to keep their trade barriers. This is aimed at allowing poor countries to compete effectively with the high subsidies granted by the rich countries to their farm sector.

"This is the beginning of the end of subsidies," Brazilian Foreign Minister Celso Amorim said. The US and the EU delegates acknowledged that their guarantees to cut the farm export subsidies were crucial to reviving the trade talks.

Nath said a ministerial round should now be held by the end of 2005 for implementation of a final trade treaty in 2006.

India worked closely with the G-20 and other developing countries in the adoption of a framework that meets its key demands aimed at preserving the country's domestic policy space by providing for special products; special safeguard mechanism; and special and differential treatment in respect of the market access in agriculture and the dropping of the three Singapore issues relating to investment, competition policy and government procurement from the Doha agenda, an official release said.

The release said India had also successfully resisted the move to reduce the de minimis, which would have adversely affected subsistence and resource poor farmers in developing countries by bringing down even the minimal level of domestic support being given to them. The issue has been excluded from the agenda for further negotiations in the Doha round.

India's long-standing demand (along with that of the G-33) for Special Products and a SSM in order to protect the interests of the farmers have been met with the framework agreement clearly stating that "developing countries will have the flexibility to designate an appropriate number of products as Special Products (SP) and a Special Safeguard Mechanism (SSM) will be established for use by developing country members".

SP refers to products of special sensitivity which would be exempt from tariff reduction commitments, while SSM is a mechanism which would enable the country to take safeguard measures against any surge in agricultural imports.

The tiered or banded approach for tariff reduction that has been accepted takes into account the sensitivities of developing countries in agriculture since their tariff structures are fundamentally different from that of the developed countries.

On domestic support, the framework provides that higher levels of trade-distorting domestic support will be subject to deeper cuts.

India and the G-20 had been pressing for this on grounds that the heavy subsidies given by developed countries were depressing world agricultural prices.

India's concerns on the creation of a new blue box for domestic support has also been addressed.(The earlier July 16 draft had permitted creation of a new blue box). The existing blue box used by developed countries has also been tightened.

Exclusion of three of the four Singapore issues from the Doha agenda marks a significant victory for India and other developing countries who have consistently opposed their inclusion in the WTO agenda as it would constrain their flexibility in important areas of domestic policy, the release said.

On Implementation Issues, the framework establishes a road map for resolving these long-pending issues by instructing the Trade Negotiations Committee (TNC) and other WTO bodies to redouble their efforts to find appropriate solutions as a priority, it added.