Staying put: India not to align agri tariff limits with WTO standards

NEW DELHI: Even as the next dose of reduction in customs tariffs has been incorporated into the ’03-04 budget, the government has decided against lowering India’s tariff bindings at the World Trade Organisation (WTO), especially in the case of agriculture commodities.
As of now, India’s tariff bindings are up to 300% in the case of certain categories like processed foods and edible oils. Though the applied tariff on almost all items is much lower, the government has decided against lower bindings — a demand from a number of trade partners, including US and the Cairns group.
The bindings will be retained at the current level, according to commerce department sources. In effect, this means the government will retain its right to protect domestic producers with higher level of customs tariffs. If the tariffs are bound with the WTO at a lower level, then the government will not be in a position to impose higher customs duties.
While gradual reduction of import tariffs has not had any major impact on major items like food grains, some sectors like plantations have suffered during the past couple of years.
During the ongoing talks on agriculture, mandated by the in-built agenda set during the Uruguay Round of WTO negotiations, India had made it clear that there would be no compromise on farm tariff. A clear message to this effect was sent out during the recent deliberations at Tokyo, the sources said.
Commerce and industry minister Arun Jaitley as well as agriculture minister Ajit Singh had made this amply clear during their interventions at the Tokyo deliberations.
Since the issue concerns the livelihood of millions of farmers in rural India, it is not feasible to open the market further. The issue of lower tariff binding on agri products will be opposed strongly since it does not make sense to do so at a time when US and the EU continue to provide high subsidies, especially for their exporters.
How can Indian farmers compete against subsidised exports, the sources said. When contacted, Mr Singh said even the recent proposal for graded reduction in tariffs over a period of ten years is not acceptable to India. The subsidies provided by the developed world has to come down first, he noted. ``Apart from tariffs, we do not have any other form of protection for our farmers. We do not want any surge in imports that may threaten the livelihood of poor farmers,’’ the agriculture minister explained.
Mr Jaitley, too, came out with similar views. The US and EU are not even coming to a mutually acceptable position with regard to their respective subsidies. We know that the current global subsidy level for agriculture is around $365bn while the Indian farmers suffer from many drawbacks, he added. As of now, there is now scope for lower bindings on industrial tariffs too. The official stance, however, is that India is open for discussions on all issues, including agriculture and industrial tariffs. Any concession on these issues can be made only if a strong quid-pro-quo emerges, the sources said. As of now, India is looking for positive progress in opening up of services which is also under negotiation as per the in-built agenda.
On the ticklish debate over reduction of agriculture subsidies, India has adopted a flexible stand even as US and the EU have locked horns. Since Indian farmers suffer ‘negative subsidy’ and there have nothing to lose even if a cap is imposed, the government may use any offer to cut subsidies to bargain for concessions in other areas.
India is also upset that industrialised nations are blocking implementation of the Doha Declaration, especially the provisions pertaining to TRIPS and public health. In the garb of working out modalities, rich nations are trying to dilute the spirit of the Declaration which aims at providing affordable medical assistance to suffering people in poor nations which do not have the capability to produce pharmaceuticals.