Home / Politics / Policy /  Will not cut farm subsidies unless India and China do: US

Geneva: The US says it will not cut its trade-distorting domestic farm subsidies unless India and China agree to substantial subsidy cuts of their own, a demand that fundamentally undermines all the existing mandates of the Doha trade negotiations.

The US also wants India and China to provide enhanced market access for five products—beef, pork, poultry products, wheat and corn.

The US trade envoy ambassador Michael Punke made the demands during closed-door meetings convened by the chair for Doha agriculture negotiations ambassador John Adank with a group of 10 select countries over three days from Monday to Wednesday, people familiar with the meeting said.

India’s trade envoy ambassador Anjali Prasad has rejected the US’s demands on the grounds that they are inconsistent with the Doha mandate.

The objective of the chair-led meetings are to formulate what is called the post-Bali work programme with precise modalities (benchmarks) for reducing agriculture tariffs and subsidies so as to conclude the Doha trade negotiations by the end of this year. Taking part in the meeting were: the US, the European Union (EU), China, India, Brazil, Japan, Canada, Australia, Norway and Switzerland.

Prime Minister Narendra Modi and US President Barack Obama had agreed during their recent meeting in New Delhi to cooperate at the World Trade Organization (WTO) for formulating the post-Bali work programme.

As part of the new “India-US Delhi Declaration of Friendship", India and the US had agreed that “the two sides also committed to continuing to cooperate on the finalization of the Post-Bali Work Programme in the spirit of the Doha mandate".

Despite this understanding between Modi and Obama, the US is asking India to agree to substantial commitments in agriculture which are inconsistent with the Doha mandates. Countries which are required to undertake commitments in the Doha round are only those which had taken commitments in the previous Uruguay round of trade negotiations.

As India did not take any commitments in the Uruguay round in amber box (producer subsidies) like the US, the EU, Japan, Norway and Switzerland, New Delhi is not required to take any commitments in the Doha round. The Doha mandates—which include the 2001 Doha work programme, the July 2004 modalities and the 2005 Hong Kong Ministerial Declaration—coupled with the 2008 revised draft modalities have clearly indicated what WTO members are required to do for concluding the final agreement.

The US, according to these mandates, is required to do the most for reducing its trade-distorting farm subsidies.

But the US, along with the EU, Japan and Canada, is maintaining that the existing Doha mandates are irrelevant due to changed conditions.

The US says it had never agreed to the 2008 revised draft modalities on the ground that they were imbalanced. Washington also maintains that there is a sea change in the subsidies provided by different countries, particularly India and China.

“Just last year, a group representing agriculture-exporting countries, developed and developing alike, published a report listing the top four users of trade-distorting agricultural subsidies in today’s world, with India first, followed by China, the European Union, and the US," said ambassador Michael Froman, the US Trade Representative, in an article published by Reuters last month.

Ambassador Punke told the closed-door meeting on Wednesday that if China and India are not ready to undertake substantial reduction commitments for subsidies, then Washington will not do anything either.

The US wants to abandon a tiered-formula for reducing subsidies and tariffs, thereby causing uncertainty about the way forward, said a South American trade official. Last year, the US passed its new farm bill which will be in force for the next five years. The new US farm bill goes against what is envisaged in the Doha agriculture negotiations, the trade official said.

It remains to be seen whether Modi will agree to the US’s demands that will severely jeopardize Indian agriculture, several analysts said.

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