The Empowered Group of Ministers on SEZs will be considering a proposal next week that will make it easier for developers to acquire land

The World Trade Organisation (WTO) talks being held for the past nine days in Geneva collapsed again on July 29, 2008, with India and China refusing to yield on the issue of offering safeguards to farmers against a surge in imports.

“There is no use beating about the bush. This meeting has collapsed,” WTO chief Pascal Lamy said.

The trade talks have been stuck on the issues of cutting agricultural subsidies in rich countries and opening the economies of developing countries to imports from rich countries.

The main sticking point this time was the Special Safeguards Mechanism (SSM) which enables poorer nations to impose a limited range of tariffs as an emergency measure if there is a surge in agricultural imports from rich countries; also when import prices fall sharply. India and China, reportedly, wanted to cap the SSM at 10% (that is, the SSM comes into force when there is a 10% surge in imports), while developed countries were pushing for a 40% cap.

Negotiations were also going on over a cut in subsidies to farmers in the European Union and the United States. Developing countries have been arguing that these subsidies distort trade and will lead to a huge surge in imports that would be disastrous for their farmers.

The US has offered to cut subsidies by 70% and the EU by 80%, but trade experts point out that this will still enable the US to increase its subsidies from the current $ 7-9 billion to $ 14.5 billion. Similarly, according to estimates, EU subsidies by 2014 would be around 12 billion euros while the 80% cut would cap its subsidies at 22 billion euros, according to the international aid agency ActionAid.

The Organisation for Economic Cooperation (OECD), the richest trading block, annually provides $ 374 billion in farm subsidies. The US Farm Bill 2008 makes provision for $ 307 billion in support to agriculture in the next five years. Developing countries want these shields to be substantially reduced otherwise there is nothing to stop the flood of imported agricultural goods into developing countries. While this may benefit consumers, it will be disastrous for local producers.

Not all developing countries, however, are on the same side. For many net food importing countries, cheap food imports are a huge benefit. The WTO has officially designated 76 countries “net food importers” -- 41 of them are in sub-Saharan Africa. Many of these countries import more food than they export. For them, a reduction in agricultural subsidies in rich countries would be disastrous as it will increase food prices on world markets.

Least developing countries (LDCs) may also stand to lose their preferential status. Some have preferential access to the markets of rich countries. So, where a Brazilian exporter selling bananas to the EU would have to pay a tariff of 176 euros per tonne, Cameroon can sell its bananas tariff-free. Most sub-Saharan countries benefit of these “preferences”. If the WTO negotiations lead to general cuts in tariffs, as some developing countries want, then the value of these preferences will be eroded.

The current round of trade talks was launched in Doha, the capital of Qatar, in 2001 and was to be concluded in Hong Kong in 2005. Failure to reach a consensus on key issues has seen the talks drag on inconclusively for seven years. The increased clout of countries in the developing world such as India, Brazil, China and others to negotiate a better deal for themselves has made it more difficult for the richer countries of the developed world to push their agendas through.

Source: DNA, July 31, 2008
           The Indian Express, July 31, 2008
           www.centad.org, July 2008