The coalition of developing countries on agriculture, including India, China and Brazil, has won a minor battle at the World Trade Organisation.

The multilateral body has agreed to undertake a comprehensive study on the implications of the proposed tariff reduction formula for liberalising agricultural trade.

India and the WTO: News and Issues

A simulation exercise by India and Australia, using the formulae suggested for the reduction of agricultural tariffs, revealed that developed countries, primarily the US and the European Union, would have to cut tariffs by a much lower quantum than developing countries.

Government sources said the G 20 alliance had pressed its demand for the study to ensure that WTO members were aware of the implications of the US-EU formula.

Shielding the farm sector

A WTO draft declaration had suggested a formula for the reduction of agricultural tariffs, based on a blueprint proposed by the the US and EU However, a simulation exercise by India and Australia, using the formulae revealed that developed countries, primarily the US and the European Union, would have to cut tariffs by a much lower quantum The developed countries finally yielded towards the end of November and the WTO will now begin a comprehensive study on the implications of the proposed tariff reduction formula

Despite opposition from the US-EU combine, the G 20 alliance has convinced the WTO secretariat to conduct a simulation exercise for all member countries based on their individual schedule of commitments.

The move followed an exercise by India prior to the Cancun ministerial in September. This was when the harmonised tariff reduction formula, proposed by the US and the EU, was applied to the tariff schedules of developed countries, including the two proponents, as well as on select developing countries.

Following the September 13 draft ministerial declaration, which suggested a tariff reduction approach based on the US-EU formula, a larger exercise was undertaken.

The results showed that the US and the EU, with average tariffs of 10-12 per cent, would have to cut tariffs only marginally.

On the other hand, developing countries would have to undertake drastic cuts, given the higher duties they could levy now.

If the developed countries managed to push ahead with their demands, the argument of special and differential treatment for developing countries would have been defeated since the US-EU proposal did not envisage any noteworthy reduction in trade distorting subsidies, the sources said.

The G-20 alliance, during consultations in Geneva, had demanded that the WTO secretariat undertake an exercise to gauge the impact of the proposed tariff reduction formula on all member countries.

The US-EU combine, however, opposed the proposal and maintained that the exercise would not serve any.

Besides, it was also said the WTO secretariat was not meant to undertake impact analysis.

The coalition of the developing countries, however pointed out that the secretariat had undertaken a similar exercise for assessing the impact of the Giradformula for tariff reduction on industrial products.

The developed countries finally yielded towards the end of November and the WTO will now commence the exercise. The process is expected to take some time since analysing the impact on individual tariff schedules was a complicated exercise, researchers pointed out.