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Jaitley ploughs through farm doles

Cancun (Mexico), Sept. 9: Commerce minister Arun Jaitley has held a series of high-level meetings here with US trade representative Robert Zoellick and European trade commissioner Pascal Lamy where he made it clear that India and other developing nations would not back off on their demand that the rich nations must first roll back their billion-dollar farm subsidies before the latter would even consider starting negotiations on granting greater market access for agriculture products.

The issue has snowballed into a major casus belli two days ahead of the five-day meeting of the world’s trade ministers which begins here on Wednesday.

“India is taking the offensive on agriculture,” said commerce secretary Dipak Chatterjee. “The commerce minister said bluntly that we are determined to prise them open on the subsidy issue — both in terms of domestic support to their farmers and export subsidies.”

“Reforms on the agriculture front will have to start at your end,” Jaitley apparently told both Zoellick and Lamy.

Agriculture is scheduled to dominate the talks at the fifth ministerial meeting of the 146 members of the World Trade Organization, with the poor and developing nations in a funk after the US and EU narrowed their differences on agriculture issues just weeks before the Cancun round.

The US-EU agreement was thin on specifics — but the prospect of a deal between them has thrown everyone into a tizzy since they control over 40 per cent of the global farm trade.

The talks with Zoellick and Lamy took place within hours of the arrival of the Indian delegation at Cancun, giving some indication of how seriously the two trading giants view India’s attempts to forge an alliance of 20 developing nations that include China, South Africa, Brazil and Mexico to resist any attempt by the rich nations to hijack the trade round and ram unpalatable decisions down their throats.

Jaitley is already working behind the scenes to widen the coalition of like-minded countries by initiating discussions with nine countries today to protect their collective trade interests. These included Guyana, Jamaica, Nigeria, Botswana, Zambia, Bangladesh (which is the co-ordinator for the LDC nations), China, Brazil and Venezuela.

Some of them are already part of the so-called G-20 — a broad coalition that Jaitley hopes will not wilt under pressure from the rich nations. “The G-20 is broadly in place,” he said.

The commerce minister said the discussions with Zoellick and Lamy — especially the latter who has been critical of India’s attempts to cobble the coalition of developing nations — had provided the opportunity “to discuss our respective stands on agriculture, non-agriculture market access and the Singapore issues”.

The EU has tried to play down the talk on trade-distorting subsidies by trying to break up the discussion into blue, amber and green boxes — a WTO mandated system that lumps the least trade-distorting support measures into the green box and so forth.

“We have used FAO (Food and Agriculture Organisation) statistics to show that cereal production in the rich countries have actually risen as a result of the payouts to their farmers — exactly what they said would not happen when these support measures were put into the green box,” Indian officials told reporters after the meetings.

“It stopped Lamy in his tracks. He’s ordered his officials to check the veracity of the FAO statistics,” officials said.

Jaitley also conferred with Mexico’s foreign minister Luis Ernesto Derbez to decide on the procedural modalities for the Cancun round which is scheduled to review the pace of trade negotiations since the Doha round in November 2001.

One big bone of contention is the rag-bag of Singapore issues — multilateral negotiations on trade and investment, competition policy, transparency in government procurement, and trade facilitation. Developing nations, including India, have been opposing the attempts by the US and the EU to widen the agenda for the trade discussions ever since they first came up at the ministerial meeting in Singapore in 1997.

Investment is an issue that none of the developing countries want to hear about since any discussion on this will put pressure on them to open up their markets in sectors like banking and insurance where most have rigid ceilings on foreign investment. India, for instance, allows only 26 per cent in insurance and 49 per cent in banking and has been under pressure from the US to raise those levels to around 74 per cent — which it is loathe to grant.

Jaitley will continue with a flurry of bilateral and plurilateral meetings with ministers from several developing countries.

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