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South-south trade can lift rural farm fortunes

Financial Express, India

South-south trade can lift rural farm fortunes

Ashok B Sharma

9 April 2007

NEW DELHI, APR 8 : Developments over the past few days have re-confirmed that the developing countries are more eager than developed countries to break the deadlock in multilateral trade. The developing countries have shown ample flexibility, without waiting for a response from the developed world.

In absence of any positive movement in the stalled WTO talks, it seems that the Third World is in a mood to foster South-South trade. In this context, it is worth noting what Pakistan commerce minister Humayun Akhtar said at the G-33 ministerial meet that concluded in Jakarta on March 21. He said: “We have to be realistic in our demands if we expect developed countries to be realistic in their offers.”

He elaborated: “Most of us import or export a very limited number of agricultural products. In our case, 50% of our agricultural exports are of rice and 50% of our imports are of edible oils. So if others were to declare rice as their Special Products (SP) and also apply Special Safeguard Mechanism (SSM) to avoid taking any cuts in their existing bound tariffs, we would be losing whatever markets we already have. Similarly if we were to declare edible oils, which is an important export product for Indonesia as a SP and also apply SSM, would that not be restricting rather than liberalising Indonesian exports?”

Akhtar’s suggestion that other developing countries should declare rice as SP as it would spoil Pakistan’s export prospects, however, is not in line with G-33 proposal for country’s right to designate staple food or part of the basic food basket as SP.

In a majority of Asian countries rice is a staple food or part of the basic food basket. Many resource poor farmers in Asia depend upon rice cultivation.

It is true that Indonesia and Malaysia earn substantially from edible oil exports, but at what cost. Intensive oil palm cultivation in Malaysia and Indonesia have denuded much of the natural forest cover. Many farmers have shifted from rice cultivation to oil palm cultivation and Indonesia and Malaysia became net importers of rice. India, which had achieved near self-sufficiency in oilseeds production, had to lose the ground on opening up for imports of edible oil. Farmers who grow oilseeds on marginal land had to suffer on account of largescale imports.

Akhtar had been over enthusiastic about trade. Announcing the G-33 decision over selection of indicators for SPs, he said : “We had proposed condensing the number from 24 to 10. This not only avoids duplication but also effectively refutes the criticism that the G-33 has not been serious with its proposal by using so many indicators. I understand that our technical experts and senior officials have also agreed to reduce the number of indicators to 12.” It is not only Akhtar, Commerce minister, Kamal Nath had also time and again offered to be flexible on SPs.

The 14th ministerial summit of South Asian Association for Regional Cooperation (Saarc) which concluded in Delhi on April 4 reaffirmed its commitment to rule-based multilateral trading system for ensuring centrality of development dimensions in all areas of negotiation. Trade dimensions dominated the conclusion of the Saarc summit. Six out of 29-point resolution deals with trade, including physical connectivity, integrated multi-modal transport, implementation of South Asia Free Trade Area (Safta), implementing trade facilitation measures, developing a road map for a South Asian Customs Union and a South Asian Economic Union and re-affirming commitment to WTO. Implementation of Safta got a boost after Prime Minister Manmohan Singh said India would open up its markets to its neighbours without insisting on reciprocity.