Basis for talks

The World Trade Organisation's (WTO) general council, scheduled to meet in Geneva from Wednesday, has its task cut out.

It will have to decide which of the various proposals on agricultural tariffs, mooted by different groups, should form the basis for further negotiations aimed at evolving a consensus before the next ministerial meeting in December.

From this point of view, it is important for the G-20 group of developing countries led by India, Brazil, Argentina and South Africa, to lobby hard to ensure that the world body zeros in on the tariff reduction formula proposed by it.

There are reasons to believe that the G-20 can succeed in its effort. For one, the group accounts for 70 per cent of the world's farmers and 26 per cent of global agro-exports.

These are not numbers that anyone can ignore, so the G-20 voice is heard loud and clear. Besides, the G-20 is the only established group which has put forward proposals on all the three main segments of the WTO agreement on agriculture""domestic support, market access, and export competition.

Indeed, the proposal submitted by the G-20 on tariff reduction, which is the most contentious of all the issues, has been acknowledged even by the US and some other developed countries as the one that can provide a platform for further discussion.

There are rival proposals, of course, notably those floated by the Cairns group of agro-exporters and by Australia individually, the Swiss formula (which asks for deeper tariff cuts by the developing countries on the grounds that they have more room to cut) and the original Uruguay round recipe.

However, the Swiss formula has virtually been rejected by the majority of members at the recent mini-ministerial round at Dalion in China, and the Uruguay Round approach is essentially the one that is sought to be altered in the on-going parleys.

The underlying logic of the Cairns formula is not dissimilar to that of the G-20, and the two can even be considered together.

The salient features of the G-20 proposal include five tariff bands for developed countries and four for developing countries; a tariff cap of 100 per cent for the developed and 150 per cent for the developing countries; and a linear tariff cut in each band.

It also underscores the need for higher thresholds for each band and smaller cuts for the developing countries. Significantly, it calls for scrapping the special agricultural safeguard (SSG) clause, applicable so far to the developed countries, and creating an SSG mechanism for the developing countries.

The other noteworthy part of this formula is that it stipulates the ad-valorem equivalent duties to be bound in their ad-valorem format and not converted to specific rates after the application of the tariff formulas.

This would remove the risk of bound duties varying inversely as prices change on world markets.

The G-20 proposal, if enforced after diligent selection of thresholds and the level of linear cuts, can lead to meaningful liberalisation of global trade in agro-goods.

But it would require the tariff rates of the European Union, Japan and the US, now abnormally high for some products, to be slashed so as to introduce genuine international competition.

This may not be readily acceptable to them, but any foot-dragging will mean that the rich countries do not want to provide even basic market access to poor countries.