INDIAN GOVT DENIES REPORTS OF INTERNAL DISAGREEMENT ON SPECIAL PRODUCTS

The Indian government has vehemently denied media reports of internal disagreement over the number of 'special' farm products for which it will seek lenient tariff treatment in the Doha Round trade negotiations. These reports suggest that the ministry of commerce wants the agriculture ministry to lower its estimate for the number of 'special' products from about 80 -- a figure already significantly below New Delhi's past demands.

An article published 16 March in The Hindu Businessline newspaper claimed that the Indian agriculture ministry had identified a list of some 80-odd special products. These included many cereals, edible oils, and dairy products, and covered about 12 percent of India's 690 agricultural tariff lines at the 6-digit harmonised system (HS) level. The story cites 'official sources' to say that commerce ministry officials want this number substantially reduced. Although these officials did not specify a precise number, the sources were quoted as saying that "80 is far too large and reduces flexibility for negotiations."

WTO Members have agreed to let developing countries designate special farm products "guided by indicators' linked to food and livelihood security as well as rural development concerns. Agreement on their number and treatment has been prevented by deep divisions between several competitive agricultural exporters eager for new market access opportunities (notably the US), and countries keen to retain the ability to shield some sectors from further liberalisation.

New Delhi has thus far been a staunch defender of making at least 20 percent of tariff lines eligible for special product status, in accordance with the demands of the G-33 group of developing countries. The government issued a press release "categorically" denying the news reports within hours of their publication, describing them as "factually incorrect in many important respects." It insisted that the agriculture and commerce ministries had been following a common approach "without any exceptions." In addition, the statement added that it would be "premature" to discuss numbers for special products before the thus-far inconclusive discussions on indicators are finalised.

US officials have been among the most vocal opponents of extensive special product flexibilities, arguing that they are part of a 'black box' of loopholes that could potentially undermine the value of market access offers. They insist that they cannot agree to deeper cuts to its farm subsidies - thought by many countries to be necessary to break the deadlock in the Doha Round negotiations - unless it can assure farm groups that they will receive expanded export opportunities.

At the other end of the spectrum from the G-33, Washington has proposed limiting developing countries to five 'special' tariff lines at the 6-digit HS level. This would not be enough to cover fresh and powdered milk and cream.

According to the sources cited in The Hindu Businessline article, the Indian agriculture ministry wanted to accord special product status to crops on which more than 100,000 families were dependent for their livelihoods, but was feeling pressure to be flexible.

A 17 March news article related to the reports dismissed by the Indian government provided greater detail about the potential special products that had allegedly been identified by the ministry. According to the Asian News International agency, the cereals included rice, wheat, maize, sorghum, and millet. Soybean, rapeseed, and castor oil were also present on the list. Onions and garlic were included, as were several spices, dairy products, poultry, coffee, and tea.

Although India's current applied tariff rates are currently far below the bound ceiling level for some of these commodities, crop failures can result in drastic changes in domestic production from year to year. The government is thus particularly eager to preserve its latitude to levy duties to the maximum extent possible - not least because fluctuating food prices have helped determine election results in the past.

Palm oil was excluded from the ministry's list - potentially in a nod to Malaysia's considerable interest in exporting it. Other noteworthy omissions from the list were cotton, sugar, and pulses.

Whiskey and wines were also reported to be on the agriculture ministry's list, despite tenuous links to livelihood security and rural development.

How to address special products in the Doha Round farm trade negotiations is one of the key issues under discussion at the G-33 group's ongoing ministerial meeting in Jakarta (see related story, this issue). The Indian government said that the release of the "inaccurate" news reports days before this gathering made them "all the more unfortunate."

ICTSD reporting; "Agri Ministry identifies 80 products for lower tariff cut," HINDU BUSINESSLINE, 16 March 2007; "Agri Ministry identifies 80 products for lower tariff cut," DAILYINDIA.COM/ASIAN NEWS INTERNATIONAL, 17 March 2007; "Commerce, Agriculture Ministries Have Closely Coordinated Position on WTO Agriculture Issues - News Report on Special Product Incorrect, Say Commerce and Agriculture Secretaries," GOVERNMENT OF INDIA PRESS INFORMATION BUREAU, 16 March 2007; "Not import liberalisation, but justified protection needed for farm sector," FINANCIAL EXPRESS, 19 March 2007; "Saving Doha," BUSINESS STANDARD, 19 March 2007.