US opposes India’s WTO proposal on unlimited farm subsidies

The United States has rejected India's proposal to the WTO seeking flexibility for developing and poor countries to continue a policy of price support to poor farmers, saying it would need a review of current trade rules.

The US rejection of India's proposal on farm support prices would complicate an already delicate agriculture agenda of the WTO Uruguay Round at the next ministerial meeting at Bali due in December.

''It will essentially blow up one of the main disciplines we have from the Uruguay Round. And for us that is a price too high,'' Michael Punke, US permanent representative to the WTO told media representatives.

G-33 developing countries, led by India have proposed that price-supported acquisition of food stocks by developing countries should not be considered trade-distorting as such action should not be subject to certain disciplines, failing which penalties are imposed.

However, the US pointed out at there is a present a limit on the so-called trade-distorting subsidies. If the limit is lifted, India cannot be dragged into a dispute if it breaches this cap under the proposed dispensation.

Negotiations on agriculture began in early 2000, under Article 20 of the WTO Agriculture Agreement. By November 2001 and the Doha Ministerial Conference, 121 governments had submitted a large number of negotiating proposals.

These negotiations will continue, but now with the mandate given by the Doha Declaration, which also includes a series of deadlines. The declaration builds on the work already undertaken, confirms and elaborates the objectives, and sets a timetable. Agriculture is now part of the single undertaking in which virtually all the linked negotiations are to end by 1 January 2005.

The declaration reconfirms the long-term objective already agreed in the present WTO Agreement: to establish a fair and market-oriented trading system through a programme of fundamental reform.

The programme encompasses strengthened rules, and specific commitments on government support and protection for agriculture. The purpose is to correct and prevent restrictions and distortions in world agricultural markets.

Without prejudging the outcome, member governments commit themselves to comprehensive negotiations aimed at:

• Market access: substantial reductions;
• Exports subsidies: reductions of, with a view to phasing out, all forms of these; and
• Domestic support: substantial reductions for supports that distort trade.

The declaration makes special and differential treatment for developing countries integral throughout the negotiations, both in countries' new commitments and in any relevant new or revised rules and disciplines. It says the outcome should be effective in practice and should enable developing countries meet their needs, in particular in food security and rural development.

The ministers also take note of the non-trade concerns (such as environmental protection, food security, rural development, etc) reflected in the negotiating proposals already submitted. They confirm that the negotiations will take these into account, as provided for in the Agriculture Agreement.