Tariffs are not subsidies, Nath tells rich nations

Washington: India has told the rich nations not to confuse subsidies with tariffs. Union minister for commerce Kamal Nath told reporters at the Indian embassy in Washington that if a country like the US wanted "headroom" for distortions in subsidies, then developing nations would seek the same headroom for reducing tariffs.

"Subsidies are distortions, tariffs are not," he emphasised and added, "We need to correct subsidies and while subsidies are being corrected, I don''t see there needs to be an exchange rate in correcting distortions and looking for tariffs."

He pointed out that India had very low tariffs, and, therefore, its position may be more flexible, but we must go by our groups. "The group formations are very important and that''s what we will be doing."

He said India would continue to push for a successful conclusion to the Doha Round of trade talks.

"The US must also be demonstrating because this town says effective cuts in trade distortions. What does that mean? Effective cuts does not mean the right to be able to increase your subsidies," he said.

"The G-20 offer (on agricultural subsidies) is 12.1 (a cap of $12.1 billion as US subsidies to its farmers that developing nations had asked for). That''s where it stands at the moment. There was a big gap between 12.1 and 17 (the US had concede to a higher cap of subsidies at $17 billion). Now since the US wants some headroom, there are countries which say that if you want headroom in your distortion, we want headroom in our tariffs," Nath said.

"So you can''t have headroom for distortions without having headroom for tariffs and market access of subsidised products is very different from market access to agricultural products," Nath emphasised.

Making the point that non-agricultural market access had to be discussed as a stand alone with market access, he stated, "When you are negotiating commerce, there is an exchange rate, but when you are negotiating livelihood security, you are not negotiating commerce. When you are negotiating distortions, you are not negotiating commerce."

He also disagreed that no consensus came out of Potsdam pointing out that there was indeed the consensus on food aid, disciplines and export competition.

He also said not only India and Brazil, but also Australia, Canada, and the European Union would not agree to tariff cuts unless there was full reciprocity on subsidy cuts by the US.