Cap export subsidies by rich nations: Indian lobby

Wednesday, 17 March 2004, 20:30 IST
Printer Print Email Email
NEW DELHI: Ahead of the WTO agriculture negotiations starting March 22, a leading Indian industry lobby Tuesday called for the stopping of "roll over" of exports subsidies by rich nations. The Federation of Indian Chambers of Commerce and Industry (FICCI), in its recommendations to the government, said developing nations should emphasise the need for limiting export subsidies on agriculture products on a per unit basis, besides commitment in value and volume terms. Under existing rules, WTO member countries are required to cut the value of export subsidies and the volume exported. "But there is no limit or ceiling on export subsidies provided on a per unit basis," the lobby said in a statement. "In such a scenario, it is quite possible that a country may provide export subsidy in accordance with its committed volume in Agreement on Agriculture (AoA) of WTO," FICCI pointed out. "However, in the process it may subsidise fewer exports at higher subsidy rates on per unit basis, which may be targeted for a particular export market." The meeting on March 22 called by the new chairman of the WTO Committee on Agriculture, Timothy Grosser, will be the first formal negotiating session after the Cancun fiasco. Since then, the G-20, nations including India and Brazil, have maintained their stand on elimination of export subsidies and scaling down domestic support to farmers by developed nations. FICCI feels that the practice of "roll over" of subsidies should be addressed in these negotiations. The FICCI study revealed that many developed countries provided higher export subsidies than those committed by them on an annual basis under AoA, during its implementation period of 1995-2000. This higher-than-committed amount was permitted under AoA by way of rolling over to a subsequent year the unused amount of subsidies or volume in previous years. "This has defeated the cause of reduction of export subsidies in WTO. Several developed countries and regions like EU, Norway and the US resorted to this practice in the past. "This has given them the flexibility to meet their commitments also and to increase their subsidies when the world prices of agricultural commodities are low," FICCI noted. On the issue of the "base" for carrying out further reduction or elimination of export subsidies, FICCI said reduction commitments should be carried out on the actual level of subsidies and subsidised volume of developed countries. Currently 25 WTO members can subsidise their agricultural exports belonging to 22 product categories. These products include wheat, coarse grains, rice, oilseeds, vegetable oils, oilcakes, sugar, butter and butter oil, skim milk powder and cheese. The EU is the largest user of export subsidies accounting for over 70 percent of the world total. Out of the 22 product categories, FICCI has identified many products that are of interest to India and for which export subsidies need to be phased out in the first period of the two-phased programme suggested by G-20. These products include sugar, wheat, rice, fruits, vegetables, tobacco, butter, butter oil, cheese, bovine and other meat, eggs and cotton. India's tariff for these products may not be sufficient to neutralise the effect of export subsidies fully, FICCI said.
Source: IANS
siliconindia