India, China Defend Right to set farm Duties.

NEW DELHI: India and some other developing countries have rejected a proposal to restrict their ability to impose stiff duties to protect farmers in the case of sudden surges in imports of farm goods at the ongoing talks for opening up global trade in goods and services.

Costa Rica’s proposal was backed by other big exporters of farm produce such as Australia and Thailand and had suggested that the use of such safeguard measures in the case of import surges should be circumscribed with additional clauses to restrict their use.

"We are categoric about not making the special safeguard mechanism too restrictive as we have the responsibility of protecting livelihoods of our millions of farmers," a government official told ET, reflecting the views of the 43-member group of developing countries (g-33) with defensive interest in agriculture in the WTO negotiations.

The agenda of the contentio US and stalled Doha Round of the WTO includes creation of a special safeguard mechanism, or SSM, for use in the case of sudden increase in imports or drop in prices, essentially allowing developing countries to temporarily increase their customs duties over and above the ceiling rates.

But the big agricultural producers fear the proposal could reduce their exports opportunities. Costa Rica, a big exporter of coffee and plantation crops such as bananas, sugar and cocoa, has made a formal submission to the WTO saying that the proposal should consider the views of developing country exporters as well.

It cited a study that shows nearly a quarter of its exports could have been affected in 2009 if the SSM measures were allowed in their current form. Interestingly, Costa Rica recently bought dollars to curb the appreciation to its currency to bolster exports.

But the hard-line taken by India, China and other members of the G-33 puts more pressure on the WTO committee on agriculture struggling to strike a compromise between members taking opposing stands on the issue of special safeguard mechanism, or SSM.

One of the reasons the negotiations on the on-going Doha round grinded to a halt at the last meeting of WTO trade ministers in July 2008 was disagreement between India and the US over SSMs.

The differences largely relate to the price trigger for the use of these safeguard measures. The US has also argued that countries should not be allowed to increase their tariffs beyond the levels committed to in the > Uruguay round that preceded the ongoing Doha round.

Costa Rica has added another string that farm products that are designated as special products under the on-going Doha development round that are to be shielded from formula tariff cuts should not have the protection of safeguards.

This means that if India has a fruit, say oranges, that it designates as a special product, it will not be able to take the recourse of SSMs if imports of oranges rises sharply and domestic prices fall because of it.

Source : economictimes.indiatimes.com