India not to accept 'diluted' safeguard mechanism offer

Commerce Minister Kamal Nath has conveyed unmistakably to World Trade Organization (WTO) chief Pascal Lamy that New Delhi would not accept a “diluted” or “semi-SSM (special safeguard mechanism)” for developing countries as proposed by the European Union (EU).

India is ready to conclude the Doha modalities agreement in agriculture and market-opening for industrials by the end of this year, but it would not tolerate attempts to foist a cosmetic SSM agreement.

Apparently, Lamy spoke to the commerce minister on Monday suggesting that the Group of Seven members had reached a deal on the SSM. Lamy said India is a party to this new understanding reached among the G-7, comprising the United States, the EU, India, Brazil, Japan, Australia and China.

In a three-page letter issued to Lamy on Wednesday, a copy of which is provided to Business Standard, Nath offered his assessment based on what his negotiators had discussed on a range of unresolved issues in the Doha agenda.

The commerce minister said there was no progress on any issue, including on the SSM proposal tabled by the EU, which was later described as a “take it or leave it proposal” by the EU, Brazil and Australia.

The G-7 members held marathon meetings for four days last week to explore ways to bridge the gaps on SSM for developing countries, farm tariff simplification, creation of new tariff rate quotas, cotton, head room in the blue box payments for the US, and green box in the agricultural dossier.

“Unless the SSM as envisaged in the Framework Agreement and the Hong Kong Declaration is adequate, both in terms of triggers and remedies as well as the ease of use, it would not be possible for India to accept any compromise solution,” Nath said.

It is patently wrong to attribute the failure of the mini-ministerial meeting in July to SSM “when there were several unresolved issues which remain unsettled even today,” Nath told the director general. He added that the US was responsible for the breakdown of July talks.

SSM is not the only the issue, Nath insisted, pointing that “there are several other unresolved issued which remain unsettled even today”.

He said US trade representative Ambassador Susan Schwab had agreed with him during a conversation last week that all issues in the Doha agriculture dossier must be discussed along with the SSM.

Nath said the G-7 officials spent one-and-a-half days discussing the growth-factor approach in the SSM which was rejected by China. Subsequently, the EU had tabled a two-trigger proposal on September 19 which was not acceptable to China, the US and India.

Besides, there was no progress on how to address tariff simplification or the creation of new tariff rate quotas, said Nath, accusing the EU of being stubborn on converting its opaque specific and compound duties. The EU, said Nath, was adamant on converting 80 per cent of its farm tariffs into ad valorem on Day 1 with no signs of progress till the end of the implementation period. “The EC also stated that even if it were a deal breaker for the rest of the membership, it would not do more as it had no flexibility in the matter,” he maintained.