With the European Union (EU) and the US moving closer to a common position on agriculture, trade experts contend there will be increased pressure on India at the high-level trade meetings being hosted here next week to reduce its import duty on agricultural items, and prune the list of special products that will be kept outside the purview of market access.
There will be three rounds of deliberations. On 11 April, the G3—India, Brazil and the EU—will meet. On 12 April, the G4—the EU, the US, Brazil and India; and the G-6—the G4 group, Australia and Japan—will meet.
According to one trade negotiator, the compromise between the US and the EU on some aspects of agriculture was struck during recent bilateral meetings, including the one held in Paris earlier this week.
Prior to this, the two had divergent views on agriculture, which and their differences had actually delayed the progress of the Doha round of trade negotiations under the auspices of the World Trade Organization (WTO).
Unlike these two trading blocks, India has very defensive positions on agriculture, as it is a net importer.
“The convergence is with regard to the correlation between import tariff and tariff rate quota. The EU is now veering round to the US position that an agricultural item attracting a higher import duty should have a higher tariff rate quota in order to provide increased market access,” said this negotiator who didn’t want to be named.
Under a tariff rate quota, a country lowers the import duty for a fixed quantity of imports of a select item from another country in a year. Once this annual quota is breached, all additional imports will attract the regular tariff. A tariff rate quota is offered to provide limited market access to select imported items.
The negotiator, however, added that the US and the EU continued to differ over the reduction of what the WTO describes as “trade-distorting subsidies”.
According to WTO expert Biswajit Dhar, “There is still a considerable distance in terms of the ambitions of the individual countries. Unless there is a talk of different set of numbers, it is difficult to state if there will be progress. Even the G-20 is now opening its front on the green box subsidies (which is the non-trade- distorting subsidies). They are increasing their ambitions and seeking a review of the green box. This will not go down well with the US and the EU.”
India could also be targeted at the G-4 meeting on the issue of market access.
Given the potential political fallout, no government is willing to cede ground on opening up of agricultural imports. Another trade expert, who did not wish to be identified, concurred with this view.
“There will be pressure on India regarding its special products. Attempts will be made to restrict the number of special products by linking it to the level of imports,” he said. “So if an item accounts for more than say 10% of imports, India would not be allowed to designate that item as a special product.”
Special products are those on which developing countries seek to offer either little or no tariff cuts.