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A file photo of an Indian farmer. Photo: Bloomberg
A file photo of an Indian farmer. Photo: Bloomberg

US seeks reduced farm subsidies from India, China

Under the Doha talks, the developing countries don't have to undertake any substantive commitments under the existing mandates, something the US cannot endorse

Geneva: The US wants like-for-like from a new category of countries such as China and India to reduce domestic farm subsidies as part of the post-Bali work programme to conclude the Doha Development Agenda trade negotiations.

At a World Trade Organization General Council meeting on Friday, US trade envoy Michael Punke suggested that while his country is going to “pay blood" to reduce its domestic farm subsidies, other countries with huge domestic subsidy programmes such as China and India will only reduce water, implying that they will not have to alter their current farm subsidy programmes due to the existing mandates.

Punke suggested Washington is going to pay “blood for water" or “blood for air" to reduce its domestic subsidies because of the existing Doha mandates, especially the 2008 draft revised modalities.

But countries such as China and India, which are categorized as developing countries, will not have to undertake any substantive commitments under the existing mandates, including the draft modalities. “This is not an outcome we can endorse," the US trade envoy maintained.

While the US is not proposing “differentiation" among developing countries, it wants to talk about “categorization" and the need to differentiate among developing countries based on their existing agriculture subsidy programmes. The US wants members to “recalibrate" on what needs to be done to conclude the Doha trade negotiations, particularly in the wake of new realities.

As India did not take any commitments in the Uruguay Round in amber box (producer subsidies) like the US, the European Union, 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 to conclude the agreement.

The US, according to these mandates, is required to do most for reducing its trade-distorting farm subsidies. For example, the US will have to bring down its overall trade-distorting support (OTDS) from $48.224 billion to $14.467 billion, amber box subsidies to $7.6 billion, de minimize support to around $9 billion, and blue box subsidies $4.8 billion.

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

Close on the heels of a sustained campaign by the US’s farm lobbies at the WTO that agriculture subsidies provided by India, China, Brazil, Turkey, and Thailand have not only reached phenomenal levels, the US seems determined to introduce new concepts and approaches to conceal its farm programmes, several trade envoys maintained.

A private American legal outfit presented findings on Wednesday at WTO pointing that India, China, Brazil, Thailand and Turkey are providing huge farm subsidies to their farmers. The US firm has suggested that India is paying $90 billion for its domestic subsidies.

An Indian official who was present at that meeting dismissed the findings as baseless. The official said the total budget of 10 ministries in India will not be $90 billion.

Under the new farm bill passed last year, the US is going to implement what are called “deficiency" payments that are aimed at compensating farmers for reduced returns when prices are yields go down. These new coupled policies are, therefore, production-linked trade distorting payments, said a trade envoy from an industrialized country.

India’s trade envoy Anjali Prasad urged the members, including the US, to respect the “existing mandate" where progress is already achieved in the Doha trade negotiations. “It should remain our collective endeavour to seek equitable, balanced and development-oriented outcomes in all areas of our work," India maintained at the GC meeting.

“We need to remember that trade for development is the focus of this Round not trade for new market access as is continually emphasized by some," India argued.

China sharply disagreed with the US’s stand on comparing its domestic subsidies provided by to rich farmers and domestic subsidies given to poor peasants in the developing world.

WTO director general Roberto Azevedo has also suggested the need to “explore alternative approaches and alternative paths" for concluding the Doha trade negotiations.

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