WB paper on farm products may hit Doha round: G33

NEW DELHI: The G33 group of developing countries, which includes India and 46 other nations, has warned the World Bank that its “misleading” paper on potential implications of agricultural special products (SPs) on poor countries could have adverse consequences for the Doha round of negotiations of the World Trade Organization.

SPs are the products to be excluded from tariff reduction commitments by developing countries as per the formula agreed to by WTO members as part of the ongoing negotiations.

The World Bank paper, co-authored by Maros Ivanic and Will Martin, which was first published in November last year, has inferred that raising agricultural prices substantially through SPs would create large increases in poverty — sufficient in some cases to undo decades of development progress — and push the already poor deeper into poverty.

Following strong protests from G33 members, the authors have recently come out with a re-worked paper, but have been unable to appease the group. The G33 countries claim that even the revised draft paper remains essentially the same, with the slight difference that instead of assuming a direct price increase of 50%, it assumes unjustifiably high import substitution elasticities to get a similar effect on prices.

According to an official release, the G33 has repeatedly explained that the aim of SPs is not to raise prices of qualifying products over an extended period of time. Rather, SPs are a flexibility intended to enable developing countries to address externally generated shocks that could disrupt incomes and food security, particularly for low-income and resource-poor agricultural producers.

G33 members had conveyed to the World Bank that there would be a serious reputation risk for the world body in promoting such a paper based on fundamentally flawed assumptions and methodology ignoring the reality of the prevailing agrarian structures in most developing countries.

It pointed out that the Ivanic-Martin paper ignores the reality of price declines, price volatility and predatory competition, including dumping of heavily subsidised products, which raises the risk levels of developing countries without providing an adequate safety mechanism or flexibility to deal with the adverse impacts of trade policy changes for their vulnerable agricultural sectors.