TWN Info Service on Trade and WTO Issues (July08/11)
11 July 2008
Third World Network

Trade: US should revise its OTDS offer to $7 billion, says Indian Minister
Published in SUNS #6514 dated 10 July 2008

Geneva, 9 July (Martin Khor) -- The Indian Commerce Minister Mr. Kamal Nath has indicated that a proper offer by the United States on overall trade-distorting domestic support (OTDS) during the forthcoming WTO mini-Ministerial would be around US$7 billion, in contrast to the range of $13-16.4 billion which is contained in the May text of the Chair of the agriculture negotiations.

Nath gave this assessment of what he expected in this key aspect of the Doha negotiations at a meeting with the European Trade Commissioner Peter Mandelson a few days ago.

A report in the Washington Trade Daily said that at the Nath-Mandelson meeting in London on 7 July, both sides discussed what ought to be the US revised offer on overall domestic support for its agriculture. Nath suggested a proper US response would be some $7 billion, which is the current US level, according to the WTD report, which was based on a telephone interview with the Minister.

India and its Commerce Minister is one of the key players in the Doha negotiations. The OTDS, and whether the US will revise its offer on it, and if so what the number will be, are perhaps the most eagerly awaited questions that the mini-Ministerial is expected to answer.

The Chair of the WTO's Doha agriculture talks, Ambassador Crawford Falconer of New Zealand, last year formulated his target range of $13-16.4 billion OTDS for the US.

The US had indicated in WTO informal meetings at the end of last year that it could accept working within this range if other countries also accepted other figures in the Chair's draft, which was widely taken to mean that the US could revise its original formal offer down from $23 billion to at least $16.4 billion. The $16 billion number was also reportedly given by the US at the failed Potsdam meeting of G4 Ministers in mid-2007.

Since then, however, it is widely believed that the actual OTDS spent in the US had dropped from about $19 billion in 2005 to $11 billion in 2006 and to only $7 billion in 2007. These are the numbers that are commonly used and heard in the WTO and the negotiations. The fall in US spending could be the result of the recent rise in prices of agricultural commodities.

Thus the demands that developing countries like the G20 had made a few years ago (i. e. that the US bring its OTDS allowable level to $12 billion) no longer seem adequate to some of these countries.

Nath's target of $7 billion for the US will thus be an important figure for consideration in the run up to the mini-Ministerial.

However, it is now not clear whether Nath will make it to the mini-Ministerial, or at least for its first days. At the time of writing, according to latest media reports from New Delhi, the Manmohan Singh led coalition government is expected to convene a special session of Parliament for 21-22 July to seek a vote of confidence in the lower house of the Indian Parliament, following the withdrawal of support by the left parties over India's nuclear deal with the United States.

This would mean that Nath will probably not be able to be present when the mini-ministerial convenes, as envisaged by WTO Director General Mr Pascal Lamy, on 21 July.

Meanwhile, Nath has also written a letter to Lamy outlining his concerns about the issues and process of the mini-Ministerial.

In his 27 June letter to the Director General, the Commerce Minister said that the Ministerial meeting cannot be allowed to fail and thus he wanted to share his thoughts on how to significantly increase the chances of success.

Nath said he would first like to strike a note of caution. He said a large number of important issues still remain unresolved in Agriculture.

"For India, there has to be much greater clarity on Special Products and the Special Safeguard Mechanism, which are vital to protect our livelihood concerns," he said. "The architecture of these two measures must be stabilized by the end of next week, so that is could be reflected in the revised text, preferably with no square brackets."

Rapid progress also needs to be made simultaneously on Tropical Products and Preference Erosion, Tariff capping, Tariff Simplification, Green Box disciplines and Cotton. Without satisfactory closure on these issues, it is open to debate as to what the Ministers will be able to achieve, said Nath.

On NAMA, the Minister told Lamy that "despite your attempts to mediate among a few countries on anti-concentration, wide divergences still persist. Moreover, the question of two sets of coefficients, the concept of the sliding scale, preference erosion list and anti-concentration provisions for the duty-free quote-free scheme, are subjects which hold the potential to be divisive and need to be addressed."

Nath added that it is important to recognize that while the Ministerial meeting should result in Agriculture and NAMA modalities, that cannot and was not intended to be its only goal.

"Other equally important issues will have to be taken up by Ministers for consideration and decisions," said Nath. "These include Services, Rules and the TRIPS issues. These issues should not be left to be raised by Ministers in the meeting. Such an approach can only lead to disruption and contentiousness.

"It is, therefore, essential that a structured process is instituted from now on to develop these issues for Ministerial consideration and, where required, decision making. The agenda for the Ministerial meeting has to provide for a discussion on these issues."

The Minister added that on Services, while the Signalling Conference has been agreed to as an integral part of the Ministerial meeting, its structure and objectives are still unclear.

"I have mentioned to you a number of times, our expectations from the Signalling Conference," said Nath. "It has to be a Conference in negotiation mode with clear deliverables in terms of the request that Members have made of each other. Let me reiterate that if India draws out a blank in regard to its requests, it cannot be expected to show great enthusiasm on the other issues.

"Regarding Rules, the concerns of the Members on the proposals in the Rules text do not require reiteration. The issues of anti-dumping and fisheries subsidies are too important to be simply taken note of by the Ministers.

"I voiced my sense of disappointment first with the draft Rules text and then with the working document on the cavalier manner in which they deal with this important livelihood issue. I am afraid the message does not seem to have got across.

"I am intrigued that while meetings of senior officers are being convened in haste on certain issues of concern only for a few developed countries, there is reluctance to take a similar initiative when it comes to addressing this most vital concern of developing countries.

"We expect the initiation of a process immediately leading to a revised text which clearly indicates the way to resolving these issues for the Ministers. For us, the fisheries issue which involves the livelihoods of millions of poor fishermen is absolutely vital and we need a clear Ministerial decision on the concerns that we have expressed."

The Indian Minister also expressed his concerns about the negotiating issues of the TRIPS agreement.

His letter stated: "I understand that on the TRIPS related issues, your view is that given the differences among Members, it is for the proponents to discuss with other Members to bring them around and that no process can be instituted. Quite frankly, I find this approach difficult to understand.

"More than a hundred Members have demanded a Ministerial decision on these issues. Persisting with such an approach would create the ground for disruption. It is absolutely essential that a process be instituted based on the request of the Members to take these issues forward."

Regarding the process in general, added Kamal Nath, it is important that the Agriculture and NAMA text are released well in advance of the Ministerial meeting. After the release of the texts, there has to be a process for senior officials to prepare the text for Ministerial decisions. The text cannot go directly to the Ministerial meeting without such a process, concluded the letter. +