India's negotiations in the World Trade Organisation (WTO) should centre around gaining adequate market access for agro-produce by seeking to remove distortions like discriminatory sanitary and phytosanitary standards (SPS) and other technical barriers. Along with this, the country should seek a reduction in the high level of tariff and abolition of tariff rate quotas (TRQs). The developed countries should also reduce their high level of domestic support to agriculture.Though SPS is not slated for discussion in the ensuing review of the WTO agreements on agriculture, the member countries are free to raise the issue, as discriminatory use of SPS is a major deterrent to free and fair trade.
There is also need to adopt common SPS standards. The standards set by the Codex Alimentarius Commission, OIE, IPPC and International Federation of Organic Agriculture Movements (IFOAM) should be adopted in global trade.
Unfortunately, this has not been happening as many developed countries are formulating their own SPS standards and are using them as a weapon to restrict imports from developing countries.
But India and other developing countries have a comparative advantage in the field of organic food exports. Therefore, these countries should get together and demand that such foods be subjected only to standards laid down by IFOAM.
Agriculture in India has the potential to be globally competitive if trade is truly free and fair. Despite the removal of quantitative restrictions (QRs) on imports, the farm sector is likely to remain unaffected. And the country's negotiators should take up the issue of reduction of high level of domestic support given to the sector in developed countries and rationalisation of bound rates of tariff, particularly for edible oils.
All edible oils are used as cooking mediums and, therefore, there is no logic in accepting different bound tariff rates for different varieties. At present, India's bound tariff rate for palm oil, groundnut oil, sunflower oil, safflower oil and coconut oil is fixed at 300 per cent. That for soyabean oil is only 45 per cent, whereas for rapeseed oil, colza oil and mustard oil it is 75 per cent. For other edible oils, the rates range between 126 per cent and 300 per cent.
The low bound rate for soyabean oil, however, can pose a problem in the future. The import inflow of soyabean oil cannot be controlled by raising tariff beyond 45 per cent. In this context, India's negotiators should seek a cut in bound tariff rates on palm oil, groundnut oil, coconut oil, sunflower and safflower oil from 300 per cent to 150 per cent. In exchange, it should demand raising the bound rates for soyabean oil, rapeseed oil and mustard oil to 150 per cent.
India is also facing the problem of massive imports of palm oil from Malaysia and Indonesia that are backed by massive export subsidies. The solution to this problem lies in demanding a huge cut in subsidies and other such support given to agriculture. Here the Prime Minister, Atal Bihari Vajpayee's `Look East Policy' may not really work. In fact, India has to think in terms taking all SAARC nations into confidence as they have similar problems and can work out a common position. Support can also be sought from the Cairn group of nations. A common SAARC position may also help tackle the issue of imports of cheap vanaspati from Nepal.
If the current distortions in trade are removed, the demand for creation of a separate `Livelihood Box' and `Food Security Box' for developing countries may not be necessary. Total abolition should be sought of domestic support given under the `Blue Box'. In fact, support given by developed countries to agriculture should be placed under a single box and should be subjected to a ceiling of 5 per cent of the country's agricultural GDP. Under this single-box system, developing countries should be allowed to extend support to the extent of 10 per cent of their agricultural GDP. The ceiling on support to agriculture should be subject to reduction over a period.India should also seek deletion of clauses 4, 5, 6 and 7 of the `Green Box' dealing with direct payment to producers under environment programmes, de-coupled income support to farmers, government participation in income insurance programmes and payments to farmers for relief from natural disasters. In this regard, a call for re-estimation of the aggregate measures of support (AMS) to agriculture on a scientific basis and rational definition of `resource poor farmer' can also be given.
Another aspect that relates to agriculture is the bound tariff rate on fertilisers. There is no such rate for urea imports while that for DAP is only 5 per cent. India is nearly self-sufficient in urea production.
However, domestic production of DAP is not too much. India should, therefore, negotiate for fixing a bound rate for urea and in return seek to reasonably increase the rate for DAP.
If India is able to raise all these issues in the WTO talks and get some kind of a settlement through, there is no doubt that Indian agriculture can soon be competitive in the global market.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.