June 29, 2006

Press Statement

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

On the Forthcoming Mini-Ministerial Meeting of the WTO

A Mini-Ministerial Meeting of the WTO is scheduled to commence on June 29 at Geneva to finalise the modalities on Agriculture and Non-Agricultural Market Access (NAMA). The Draft Modalities on Agriculture and NAMA presented by the Chairpersons of the negotiating groups on June 22 reflect wide divergences in the negotiating positions of the developing and the developed countries. The fact that a small group of countries are meeting to negotiate on the modalities, excluding a large number of developing countries, exposes the undemocratic nature of the negotiations being held currently. Besides, the way the developed countries are trying to coerce the developing countries on the question of tariff cuts on agricultural and industrial goods raises serious questions regarding the development implications of the Doha Round. This has also been noted by the Indian Commerce Minister in his recent letter to the Trade Ministers of the member countries of the WTO. 

Agriculture: The Commerce Minister had stated in the Lok Sabha on 21 December 2005 that one of the key achievements of the Hong Kong Ministerial Declaration was “steep cuts in trade distorting subsidies by the 3 heaviest subsidizers (US, EU and Japan) as well as flexibility to developing countries to designate an appropriate number of Special Products (SPs)”. However, it is clear from the draft modalities on Agriculture that the proposed limits of domestic subsidies of the developed countries, especially the EU and the US, far from being reduced are actually higher than their current levels. On the other hand, ambitious tariff cuts for developing countries are being pushed. Moreover, the US is trying to limit the designation of Special Products to 5% of the tariff lines at the detailed duty level as opposed to the G 33 proposal that developing countries would have the right to self designate at least 20% of the tariff lines as Special Products which will not be subjected to any tariff cut and another 50% where tariff will be cut by 10%. The US proposal on Special Safeguard Mechanisms also envisions its use as a transitional tool to facilitate trade liberalization rather than an instrument for the developing countries to protect their agriculture sector against price fluctuations and import surges. India has nothing to gain from the negotiations on Agriculture but much to loose if steep tariff cuts on agricultural commodities are imposed and the provisions for SPs and SSM diluted considerably. India should therefore strengthen the G 33 alliance and ensure that the interests of Indian agriculture are not compromised under any circumstances. Unlike in the developed countries, Agriculture is a not a trade issue but a livelihood issue for millions of people in India, whose interests should be considered paramount by the UPA Government.

NAMA: On Non Agricultural Market Access (NAMA) the proposals on the table are based on the non-linear Swiss formulae for tariff cuts on industrial goods, which are intrinsically biased against developing countries as they are designed to effect steeper cuts on higher tariffs. The current draft modalities on NAMA only reinforce this bias towards the Swiss formulae. If steep tariff cuts according to such formulae are agreed to, it will have a detrimental impact on the industrial base of developing countries such as India, leading to deindustrialization, particularly vis-à-vis the small scale industries, and substantial loss of revenue for the Government. India should therefore oppose such proposals tooth and nail. Moreover, concrete commitments on non-tariff barriers (NTBs) need to be obtained since the developed countries use NTBs rather than tariffs to deny market access to the developing countries. India needs to highlight the point that the discipline on NTBs should be agreed to before the tariff reduction formula is adopted. The draft modalities have also called for liberalisation of trade in natural resources such as fisheries, forestry and mineral resources, which India should reject.

Approach towards the Negotiations: The letter issued by the Commerce Minister has taken on board some of these concerns. However, it is important that the UPA Government sticks to the basic positions. The CPI (M) had noted with concern the UPA Government’s softening of its position on Agriculture and NAMA at the Hongkong Ministerial, which was justified as necessary to advance India’s offensive interests in Services. Such a trade-off is unacceptable since it would compromise the interests of an overwhelming majority of the Indian population who are employed in the agriculture and industrial sectors. It was a matter of profound regret that India sided with the US and other developed countries in pushing Annex C on Services during the Hongkong Ministerial despite opposition from a large number of developing countries. The CPI (M) reiterates that the long-term interests of India are best served through steadfast solidarity with the developing countries and the UPA Government should uphold that principle during the forthcoming negotiations in the Mini-Ministerial. From the perspective of the developing countries no deal would be much better than a bad deal.