In the World Trade Organization negotiations, agriculture is critical, having not been part of multilateral liberalization before the Uruguay Round (1986-94). Agricultural liberalization proposed in the Uruguay Round in three sectors of export competition (subsidies), market access and domestic support is at best imperfect and incomplete. There were loopholes in the agreement, and developed countries exploited these. Base levels of export subsidies and domestic support were high, so that despite reductions, there continue to be large export subsidies and domestic support. The formula for calculating domestic support (through the aggregate measurement of support) allowed exemptions through green, blue and amber boxes. Quantitative restrictions on imports were converted into high-tariff equivalents, and there are high tariffs and tariff escalation in developed countries, apart from market access being impeded through standards and the special safeguards clause. This protectionism in some developed countries is known, and at the Doha ministerial meet in November 2001, the European Union linked agricultural liberalization to negotiations on environment. Agricultural negotiations were due, independent of whether there was a new round of negotiations or not. However, now that there is a new round, known as the Doha Development Agenda and scheduled for completion by 2005, agricultural negotiations have become spliced with overall talks. Preliminary negotiations have started and there is an initial deadline of March 2003 for agriculture.
The question of India’s negotiating stance is thus relevant. In deciding this, the developed versus developing dichotomy is not useful. For example, net food-importing developing countries do not necessarily want liberalization that may lead to increases in global food prices. India is not such a country. India’s interests are more aligned with the Cairns Group, a group of 14 developing and developed agriculture-exporting countries. This group would like more aggressive liberalization, such as through caps on tariffs, export subsidies and ASM levels. Unfortunately, India’s confused negotiating strategy prevents aligning with the Cairns Group. India would like developing countries to be exempted from liberalization commitments because of the special and differential treatment clause and has proposed a food security box. Since India is not a least developed country, S&D can amount to nothing more than reduced commitments and longer timeframes for implementation. And if exemptions through a food security box are permitted, developed countries will circumvent the liberalization, as was done with the Uruguay Round.
Commerce ministry officials mistakenly believe that India has much to lose from liberalization. On the contrary, agricultural bound tariffs are so high that reductions will not hurt. India has no export subsidies in agriculture. Domestic support is well below the 10 per cent AMS threshold. Thus, India can afford to aggressively push for liberalization. That this is not done is partly due to the historical mindset of self-reliance being desirable and the failure to recognize that India is no longer a shortage economy.