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CABINET CLEARS IMPLEMENTATION OF SOUTH ASIA FREE TRADE AGREEMENT – A HISTORIC MILESTONE FOR SAARC, SAYS KAMAL NATH

 New Delhi: December 29 2005

 The Cabinet today cleared the implementation of the South Asia Free Trade Area (SAFTA) with effect from 1^st January, 2006.   Announcing this, Shri Kamal Nath, Union Minister of Commerce & Industry, said that the coming into force of SAFTA would be a historic milestone in the economic profile of the countries of the SAARC region.    “Implementation of SAFTA will further strengthen our trade relations with the SAARC countries”, he said.    

 The SAFTA was signed by all SAARC countries during the SAARC Summit held in Islamabad on 4-6 January, 2004 and the Cabinet had thereafter accorded approval for the SAFTA Framework Agreement in its meeting held on 20^th January, 2004.  The Agreement stipulated that SAFTA would enter into force from 1^st January, 2006, upon completion of formalities including ratification by all the Contracting States and issuance of notification by the SAARC Secretariat.  The completion of these formalities included completion of negotiations on Rules of Origin, Sensitive List, Mechanism for Compensation of Revenue Loss for Least Developed Contracting States and Technical Assistance to Least Developed Contracting States in agreed areas.  Since the signing of the Agreement, Committee of Experts (COE) had twelve meetings including the last one held on 29^th November – 1^st December, 2005 and finalised all the four Annexes to the Agreement.  For implementation of SAFTA, four Annexes had to be attached with the Agreement and, today, the Cabinet has accorded approval on all these issues.

             The basic objective of SAFTA is to reduce existing tariffs within the stipulated time frame in order to boost trade among the member countries of SAARC, namely, Bangladesh, Sri Lanka, Nepal, Pakistan, Bhutan, Maldives and India. At the same time, the sensitive tariff lines relating to agro-commodities have been kept in India’s Sensitive List (Negative List) under SAFTA. This means on items under Negative List, Trade Liberalisation Programme (TLP) under SAFTA would not be applicable.

             The salient features of these four issues approved by the Cabinet are as follows:

 i)          Rules of Origin (ROO):

             Under ROO, for giving preferential access to the Member Countries under SAFTA, the goods have to undergo substantial manufacturing process in the exporting countries.  The substantial manufacturing processes are defined in terms of twin criteria of Change of Tariff Heading (CTH) at four-digit Harmonized Coding System and domestic value content of 40% for non-LDCs and 30% for LDCs.  Apart from this general rule, Product Specific Rules (PSR) have also been provided for 191 tariff lines on technical grounds where both inputs and outputs are on the same four-digit HS level.

 ii)         Sensitive List:

             As per the Agreement of SAFTA, Trade Liberalization Programme (TLP) would not apply to the tariff lines included in the Sensitive List.  In order to protect interest of its  domestic stakeholders, India has finalized two separate Sensitive Lists – a longer list for non-LDCs (Pakistan, Sri Lanka) and a shorter list for LDCs (Bangladesh, Bhutan, Maldives and Nepal).  India has kept 884 tariff lines in the Sensitive List for non-LDCs and 763 for LDCs.  India’s Sensitive Lists include mainly goods from agriculture sector, textile sector, chemicals & leathers and sectors reserved for small scale industries.  On the market access to Bangladesh, Bangladesh was not happy with our Sensitive List which included 185 tariff lines out of 234 tariff lines in Chapters 61 & 62 of garments and hence in order to give a limited market access through Tariff Rate Quota (TRQ)*, the Cabinet has decided to accord 6 million pieces of fabrics with the condition that sourcing of fabrics should be either from India or of Bangladesh origin.  The Cabinet has also accorded approval of TRQ of 2 million pieces without any conditions of sourcing of fabrics.

 iii)         Mechanism for Compensation of Revenue Loss (MCRL) for Least Developed Contracting States (LDCs):

             The 10^th SAARC Summit had mandated that Treaty on SAFTA should provide an equitable distribution of benefits of trade to all States specially for smaller and least developed countries including MCRL.  Accordingly, Agreement on SAFTA provided for compensation of revenue loss to LDCs who suffer from loss of customs revenue due to the implementation of Trade Liberalization Programme (TLP) under this Agreement.  The compensation to LDCs except to Maldives will be available for four years and to Maldives for six years. The compensation shall also be subject to a cap of 1%, 1%, 5% and 3% of customs revenue collected on non-sensitive items under bilateral trade in the base year.  However, the extent of compensation shall not apply in case of claims of compensation by Maldives from India in the event of loss of revenue being higher than the above annual ceilings.

 iv)        Technical Assistance to Least Developed Contracting States in agreed areas:

             In order to promote capacity building in LDCs, non-LDCs would provide technical assistance in some of the agreed areas like capacity building in standards, protect certification, training of human resources, data management, institutional upgradation, improvement of legal systems & administration, customs procedures & trade facilitation and market development & promotion. 

 3.         Besides the above, the Cabinet has also given approval of the following:

 a)                  MFN (Most Favoured Nation)** applied rate existing on 1^st January, 2000, would be taken as base rate for the purpose of tariff reduction;

b)                  In order to adopt a uniform date of Tariff Liberalisation Programme, India would bring out the customs notification from 1^st July, 2006.

 India’s total trade with SAARC countries was valued at US $ 5205.57 million (US $ 5.2 billion) in 2004-05.

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SB/NSD/MRS

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 *    Tariff rate quota refers to a trading mechanism that provides for the application of a customs duty at a certain rate to imports of a particular good up to a specified quantity (in quota quantity), and at a different rate to imports of that good that exceed that quantity.

 **  This forms part of the WTO principle of non- discrimination, which require member countries not to discriminate between goods on the basis of their origin or destination.

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STC PAYS DIVIDEND CHEQUES TO THE GOVERNMENT

 New Delhi: December 28, 2005

The Union Minister of Commerce & Industry, Shri Kamal Nath received two dividend cheques of Rs. 4,09,60,200/- each from the Chairman & Managing Director of State Trading Corporation of India Ltd. (STC), Dr. Arvind Pandalai, here today.    The first cheque was on account of final dividend payment of 15% for the year 2004-05 to the Government.  This is in addition to the 15% interim dividend already paid, thus taking the total dividend payment for the year 2004-05 to 30%.   During 2004-05, STC had earned a net profit before tax of Rs.37 crore, which was 43% higher over 2003-04.

 The second cheque presented today was on account of payment of interim dividend of 15% by STC for the year 2005-06. Dr. Pandalai informed that during first six months of the current financial year, the Corporation has reported   a profit before tax of Rs.27 crore, which represents a growth of 11% over corresponding period of the previous year. The Corporation is confident of surpassing the full year turnover and profit targets contained in the MOU for the year 2005-06 and hence payment of 15% interim dividend is being made, he said.

 During 2005-06, STC has undertaken some important initiatives that would go a long way in sustaining higher turnover and profitability in the coming years. The Corporation has entered into overseas steel operations in Philippines under which it is arranging supply of coke/steel raw material to a steel plant that has been taken over by an Indian company in Philippines. The goods supplied are being procured from India as also from other countries. The Corporation gradually plans to undertake similar operations in other countries as well. 

An arrangement has also been reached with Mysore Minerals, a Government of Karnataka Undertaking, as per which STC has been getting assured supplies of iron ore fines and the same is being exported to China and other countries. STC has also been granted mining lease over a large piece of land in Karnataka for a period of 30 years. Other diversification plans in hand include export of petro-products, imports of communication equipments and non-ferrous metals and venturing into lightweight bullet-proof vests for military and paramilitary forces and ballistic protection for vehicles.

NSD/MRS

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Index of Six Infrastructure Industries (Base: 1993-94=100) – November 2005

PRESS NOTE

The Index of Six core-infrastructure industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94 stood at 197.0 (provisional) in November 2005 and registered a growth of 3.0% compared to growth of 5.7 % in November 2004. During April-November 2005-06, six core-infrastructure industries registered a growth rate of 4.4% (provisional) as against 6.7% in the corresponding period of the previous year.

Crude Petroleum

Crude petroleum production (weight of 4.17% in the IIP) registered a negative growth of 8.6% (provisional) in November 2005 compared to 0.9% in November 2004. The Crude petroleum production registered a negative growth of 5.7% (provisional) during April-November 2005-06 compared to 3.3% in the same period of 2004-05.

Petroleum Ref. Products

Petroleum refinery production  (weight of 2.00% in the IIP) registered a growth of 1.3% (provisional) in November 2005 compared to a growth of 1.0% in November 2004. The Petroleum refinery production registered a negative growth of 0.7% (provisional) during April-November 2005-06 compared to 6.3% increase in the same period of 2004-05.

Coal

Coal production (weight of 3.22% in the IIP) registered a growth of 7.1% (provisional) in November 2005 compared to 7.3% in November 2004. Coal production grew by 5.6% (provisional) during April-November 2005-06 compared to an increase of 7.3% in the same period of 2004-05.

Electricity

Electricity generation (weight of 10.17% in the IIP) registered a growth of 2.7% (provisional) in November 2005 compared to 3.4% in November 2004. Electricity generation grew by 4.9% (provisional) during April-November 2005-06 compared to an increase of 6.7% in the same period of 2004-05.

Cement

Cement production (weight of 1.99% in the IIP) grew by 7.8% (provisional) in November 2005 compared to 11.4% in November 2004. Cement production grew by 10.6% (provisional) during April-November 2005-06 compared to an increase of 6.7 % in the same period of 2004-05.

Finished (carbon) steel

Finished (carbon) Steel production (weight of 5.13% in the IIP) grew by 5.3% (provisional) in November 2005 compared to 10.2% (estimated) increase in November 2004. Finished (carbon) Steel production grew by 7.2% (provisional) during April-November 2005-06 compared to 8.0% in the same period of 2004-05.

N.B: Data are provisional. Revision has been made where revised data were obtained from the sources.

Base Year: 1993-94

Source of data: Concerned Ministries/Departments/Organization(s)

N.B: Indices and Growth rates are provisional

Department of Industrial Policy & Promotion, Ministry of Commerce & Industry

New Delhi, 27^th December, 2005

NSD/MRS

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SAFTA COMES INTO EFFECT FROM 1^ST JANUARY 2006 – A HISTORIC MILESTONE FOR SOUTH ASIA, SAYS KAMAL NATH

 New Delhi: December 26, 2005

             Shri Kamal Nath, Union Minister of Commerce and Industry, has said that the South Asia Free Trade Area (SAFTA) Agreement which comes into effect from 1^st January, 2006 will be a historic milestone in the economic profile of South Asia.  The Agreement provides for free trade in goods amongst SAARC countries from 1^st January 2006.

             The signing of the Agreement on SAFTA two years ago at the Islamabad Summit was the culmination of a clear commitment arrived at in the Kathmandu Summit of 2002 for the creation of the South Asian Economic Union.

             On the significance of SAFTA, Shri Kamal Nath has said: “Our South Asian Region with its 1.3 billion people, constitutes one-fifth of the human race. One in every five human beings on this planet lives here. Yet, regrettably over 90% requirements of South Asian countries are still sourced from outside the region.  And, conversely, a major part of our exports are also destined for countries outside our grouping. Despite the limited concessions of SAPTA (South Asian Preferential Trade Agreement) so far, our regional trade has failed to register the kind of growth, which would give us satisfaction.  Implementation of SAFTA will help to correct this by further strengthening our trade with SAARC countries. South Asia is not only demographically the largest regional block on the planet, it is also one of the fastest growing regions for several decades – demographically, and now economically.  But the challenges it faces are perhaps also the most serious.  South Asia today is home to almost two-thirds of the world’s poor.  Nearly one out of every three people or over 600 million people, struggle to survive on less than $1 a day.  Wide income disparities exist within and between countries, which needs to be redressed”. 

            The SAFTA coming into effect from 1^st January, 2006 follows finalisation of the Agreement at the meeting of the Committee of Experts on SAFTA in Kathmandu earlier this month in order to resolve outstanding issues so as to complete the negotiations. 

            The objective of SAFTA, which will become fully operational by 2016, is to reduce existing tariffs to less than 5% within the stipulated time frame among the member countries of SAARC, namely, Bangladesh, Sri Lanka, Nepal, Pakistan, Bhutan, Maldives and India. At the same time, the sensitive tariff lines relating to agro-commodities have been kept in India’s Sensitive List (Negative List) under SAFTA. On items under Negative List, Trade Liberalisation Programme (TLP) under SAFTA would not be applicable.

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 FDI PROPOSALS ELIGIBLE FOR THE AUTOMATIC ROUTE ADVISED NOT TO APPLY FOR PRIOR APPROVAL

 PRESS NOTE

Under the extant policy, FDI up to 100% is permitted under the automatic route in most sectors/activities. Similarly, automatic route is also allowed for foreign technology collaboration where the payments are within 5% for domestic sales and 8% for exports. No approval of the Government is required in such cases.   

2.         Only cases not covered under the automatic route need approval of the Government through the Foreign Investment Promotion Board (FIPB) or Project Approval Board (PAB) for FDI and/or Foreign Technology collaboration respectively. It has been observed that sometimes proposals are submitted for prior Government approval even though the cases are eligible for the automatic route. 

3.         The investors are hereby advised to access the automatic route where the policy so permits.  Henceforth, whenever prior approval of the Government is sought for activities or royalty payments eligible for the automatic route, the investors would need to indicate specific reason for seeking prior Government approval while submitting their proposals.  

Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, New Delhi, dated 26^th December, 2005

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GOVERNMENT REFUTES BJP’S CRITICISM ON WTO

 New Delhi: December 22, 2005

           The government today refuted allegations by the Bharatiya Janata Party  (BJP) contained in a press statement issued by them yesterday that India had squandered its negotiating advantages and contracted agreements in the World Trade Organisation (WTO) to the detriment of farmers and industry.  “It is manifest that the BJP has not fully understood the implications of this matter for developing countries like India.  Both the July 2004 Framework Agreement and the Hong Kong Ministerial Declaration signed on by the Government are actually incremental steps in a continuum – from the Doha Ministerial Declaration in 2001 right until the time the WTO membership finally concludes the negotiations expectedly by end-2006”, the Ministry of Commerce & Industry, Government of India, has said in a statement released here this evening. 

 In a point-by-point rebuttal of BJP’s criticism, the Ministry has pointed out that:

1.       In agriculture, the July 2004 Framework, inter alia, agreed to incorporate two specific instruments of Special Products and Special Safeguard Mechanism in order to protect poor farmers in developing countries.  Incrementally, the Hong Kong Declaration has now agreed that developing countries shall have the right to self-determination of which products constitute Special Products.  Similarly, in respect of the Special Safeguard Mechanism, even though the tariff reductions have as yet not been defined, through concerted efforts by India, it has been now agreed that both volume and price triggers shall be available to developing countries to address an import surge or a dip in prices which typically result in lowering of incomes of farmers.  These are definite gains for India, whichever direction they may be viewed from. 

2.       A foremost objective of Government in the agriculture negotiations has been to safeguard the food and livelihood security and rural development needs of India’s poor farmers.  To this end, the Government has managed to secure that developmental assistance will get incorporated into the Green Box and subsidies provided through de minimis provisions remain unimpeded.   

3.       Equally, in respect of export subsidies the BJP has disregarded the fact that the Hong Kong Declaration has secured a commitment from heavy export subsidizers such as the European Communities to eliminate the substantial part of export subsidies half way through the Doha Round, and not at its fag end as alleged by the BJP.   Export subsidies on cotton will be eliminated in 2006.  At the same time, developing country export subsidies related to marketing and transport can continue for 5 years beyond the end date of all export subsidies. 

4.       On domestic support, the US has offered to cut its overall trade-distorting support by 53%, and the EU its support by 70%.  Nevertheless, India and the G-20 have continued to press for not only substantial cuts in the levels of Amber Box and overall trade-distorting support, including the Blue Box, but have also been insisting that stringent criteria must guide developed country domestic support programmes.  At Hong Kong, developing countries have been able to secure that the highest levels of cuts will be applied on the three heaviest subsidizers, namely, the EU, US and Japan, who together account for around US $ 250 billion of the annual domestic subsidies out of the global total of around US $ 350 billion.   

5.       Contrary to the understanding of the BJP, in industrial products, all proposals, including the Argentina-Brazil-India (ABI) proposal entailing multiple coefficients based on each country’s tariff average remain on the table.  Furthermore, all aspects of special and differential treatment for developing countries (S&D), including less than full reciprocity, and flexibilities to address sensitive sectors, remain entrenched in the Declaration.  Through paragraph 24 it has now been agreed that a high level of ambition must be our objective in tariff reductions in products of export interest to developing countries both in agriculture and in industrial products.  This provides us with a valuable route to secure market access opportunities, particularly in sectors where developed countries have continued to maintain tariff peaks and tariff escalations.   

          On the other hand, it is indeed a notable achievement that developing countries could rally themselves together to centralize the development dimension in every aspect of the Doha Work Programme, even though on the eve of Hong Kong the general mood of the WTO membership as it approached Hong Kong was pessimistic and expectations were cautious, the statement adds.

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SB/MRS

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EXPORT GROWTH IN DOUBLE DIGIT CONTINUES
NOVEMBER SLIPPAGE DUE TO SECTORAL SHORTFALLS
INDIA’S FOREIGN TRADE FOR APRIL- NOVEMBER, 2005-2006

 New Delhi December 22, 2005

India’s exports have continued on a double digit growth path with exports during April-November, 2005-2006 valued at US $ 57056.83 million which is 16.07% higher than the level of US $ 49156.24 million during April-November, 2004-2005. In rupee terms, the exports were Rs.251173.34 crore, during April-November, 2005-2006 which is 12.25% higher than the value of exports during April-November, 2004-2005.  

Exports during November, 2005 are valued at US $ 6163.92 million which is 11.38% lower than the level of US $ 6955.62 million during November, 2004. In rupee terms, the exports were Rs.28185.45 crore, which is 10.20% lower than the value of exports during November, 2004.  

The slippage in November is due to sectoral factors – the shortfalls being primarily in engineering goods, textiles & clothing and gems & jewellery.   The value realisation in respect of primary steel products was adversely affected due to fall in international prices of primary steel products.   According to engineering goods exporters, exports were also negatively impacted by service tax, fringe benefit tax etc.  In textile & clothing, manmade fibre exports were affected by uncompetitively high prices of raw materials, while in gems & jewellery tightening round tripping is reflected in the data. 

India’s Imports during April-November, 2005-2006 are valued at US $ 84700.13 million representing an increase of 29.32% over the level of imports valued at US $ 65496.60 million in April-November, 2004-2005. In Rupee terms, the imports increased by 25.07%.           

Oil imports during April-November, 2005-2006 are valued at US $ 27762.48 million which is 43.46% higher than oil imports valued at US $ 19351.49 million in the corresponding period last year.  Non-oil imports during April-November, 2005-2006 are estimated at US $ 56937.65 million which is 23.39% higher than the level of such imports valued at US $ 46145.11 million in April-November, 2004-2005.           

Imports during November, 2005 are valued at US $ 9906.34 million representing an increase of 8.68% over the level of imports valued at US $ 9115.51 million in November, 2004. In Rupee terms the imports increased by 10.12%. 

 The trade deficit for April-November, 2005-2006 is estimated at US $ 27643.30 million which is higher than the deficit at US $ 16340.36 million during April-November, 2004-2005.  

            Tables giving details of exports, imports and trade balance, according to the provisional estimates of Directorate General of Commercial Intelligence & Statistics (DGCI&S) are attached.
 

SB/MRS

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SPECIAL PRODUCTS, SPECIAL SAFEGUARDS TO PROTECT FARMERS MAJOR GAIN FOR INDIA IN WTO HONG KONG MINISTERIAL
INTENSE NEGOTIATIONS AHEAD
TEXT OF STATEMENT BY KAMAL NATH IN LOK SABHA

 New Delhi: December 21, 2005

           The securing of Special Products and Special Safeguard Mechanism (SSM) which will fully protect interests of farmers is a major gain for India in the Hong Kong Ministerial Conference of the WTO as India and developing countries including the G-33 had fought a long and hard battle for this in the trade negotiations, Shri Kamal Nath, Minister of Commerce and Industry, has said.   In a statement in the Lok Sabha today, the Minister said: “Developing countries will be able to self-designate an appropriate number of tariff lines as Special Products guided by indicators based on the criteria of food security, livelihood security and rural development.  To safeguard our farmers against surge in imports or fall in international prices, developing countries will have recourse to a Special Safeguard Mechanism with both import quantity and price triggers”. 

           Shri Kamal Nath has underlined that the Hong Kong Ministerial Declaration as finally agreed upon has addressed India’s core concerns and interests, with enough negotiating space for future work leading to modalities for negotiations in the coming months.    “The text has positive development content, which would need to be built upon and fully realized in the next stage of negotiations”, he said. 

          The coming months, Shri Kamal Nath said, would see intense negotiations as the modalities would be finalised.    He assured that “the government would continue its close engagement with various stakeholders in each of the areas, so that the best result could be obtained, fully protecting our farmers, industry, as well as promoting our national interests and core concerns”.  

          The following is the full text of the statement in the Lok Sabha by Shri Kamal Nath on the outcome of the Hong Kong Ministerial Conference of WTO member countries:  

          “Hon’ble Members will recall that I had made a statement in this House on 7^th December 2005 on the Hong Kong Ministerial Conference of the Commerce and Trade Ministers of 149 member countries from 13-18 December 2005.  The Ministers issued a declaration, copies of which have been placed in the Parliament Library.   

          During this Conference, India was proactive in articulating its position on issues of concern to us and other developing countries, especially in the 21 member G-20 alliance and 45 member G-33 alliance.  India played a key role in further strengthening the developing country coalitions by bringing together G-20, G-33 and G-90 groups of countries in a Grand Alliance to reinforce each others’ position on issues of mutual interest.  India also enabled the formation of NAMA 11 Group (countries such as India, Brazil, Argentina, South Africa, Philippines, Indonesia, etc.) to pursue and integrate meaningfully Special and Differential Treatment issues in Non-Agricultural Market Access matters. 

          As far as India is concerned, the Hong Kong Ministerial Declaration finally agreed upon, addresses our core concerns and interests and provides us enough negotiating space for future work leading up to modalities.  The text has positive development content, which would need to be built upon and fully realized in the next stage of negotiations. 

          The Declaration stipulates that the negotiations must be concluded by 2006 and establishes time-lines and targets in specific areas. Among other issues, in Agriculture and NAMA, we agreed that the modalities are to be established by 30 April 2006 and comprehensive draft schedules submitted by 31 July 2006.   

          The principal elements of the text represent significant gains for India.  In Agriculture, in Domestic Support, developing countries like India with no AMS (Aggregate Measurement of Support) commitments will be exempt from any cuts on their de minimis support.   Green Box criteria will be reviewed so that programmes of developing country members which have minimal trade distorting effect will be incorporated into the Green Box. All forms of Export Subsidies by developed countries and other export measures with equivalent effect (such as Export Credits, guarantees & Insurance in excess of 180 days, and to trade distorting practices of STEs and Food Aid) will be eliminated by the end of 2013, with the substantial part eliminated by the middle of the implementation period i.e. 2010.  Developing countries like India will continue to benefit from the provisions of Article 9.4 of the Agreement on Agriculture i.e. they shall be able to continue to provide marketing and transport subsidies for 5 years after elimination of export subsidies, i.e. upto 2018.  Developing countries will be able to self-designate an appropriate number of tariff lines as Special Products guided by indicators based on the criteria of food security, livelihood security and rural development.  To safeguard our farmers against surge in imports or fall in international prices, developing countries will have recourse to a Special Safeguard Mechanism with both import quantity and price triggers.   

          Specifically, on Cotton, export subsidies by developed countries will be fully eliminated in 2006; and trade distorting domestic support by developed countries will be reduced ambitiously over a shorter period than for other agricultural products.   

          On Non Agricultural Market Access (NAMA), the Declaration calls for a Swiss Formula with coefficients.  This formulations preserves the ABI formula submitted by Argentina, Brazil and India for multiple coefficients based on each country’s tariff average.  The Declaration reiterates that Special and Differential Treatment for developing countries be maintained through the principle of less than full reciprocity in reduction commitments and the flexibilities to exclude a certain percentage of tariff lines from tariff cuts.  The Declaration also recognizes the sensitivity attached to the unbound tariff lines by providing for a non-linear mark up before applying formula reductions.   It is agreed that tariff peaks, tariff escalations and high tariffs on products of export interest to developing countries be either reduced or eliminated.  It is also agreed that participation in the sectoral initiatives to reduce or eliminate tariffs will be on a non-mandatory basis. 

          In Services, developing countries will have adequate policy space and necessary flexibility to pursue their developmental objectives.  The primacy of the Request – Offer process has been maintained. In Mode-1 and Mode-2 (including Cross Border Supply), commitments at the existing levels have been secured.  Members have agreed to offer enhanced commitments in Mode-4 (Movement of Natural Persons).  We agreed to removal or substantial reduction of the Economic Needs Test.  This has been one of the principal barriers to export of Services from developing countries, and has been a longstanding demand of India.  It was also agreed that the approaches to negotiations, which includes plurilateral negotiations, will follow the GATS Agreement and the Negotiating Guidelines and Procedures evolved in 2003.   The Declaration does not introduce any compulsion on developing countries for opening up service sectors.  Revised offers would be submitted by 31 July 2006, and final draft schedules would be readied by 31 October 2006.  

          The Declaration notes the amendment made a fortnight ago, spearheaded by the African Group and supported by India, to the TRIPS Agreement to incorporate the Public Health concerns.  On the Implementation Issues relating to TRIPS and the Convention on Biodiversity, and extension of the protection of Geographical Indications, the Declaration calls for intensification of consultations so that the General Council could take appropriate action by 31 July 2006.  

          India spoke not only for herself, but in the tradition established since the time of Pandit Jawaharlal Nehru and Smt. Indira Gandhi, we also lent a powerful voice to the concerns of least developed countries.  Through close co-ordination with the LDC Group and the Africa Group, we were instrumental in fashioning an LDC package.  

          As part of Special and Differential Treatment, the Membership agreed to five LDC specific proposals, including the one relating to provision of duty-free and quota-free market access in developed countries for products originating from LDCs.  We further directed that on the remaining proposals, recommendations be made by December 2006.   

          The contours of the Domestic Support reduction formula in Agriculture as also the tariff reduction formulae in Agriculture as well as NAMA have been given shape. The coming months will see intense negotiations, as the modalities are finalized. The Government will continue its close engagement with various stakeholders in each of the areas, so that the best result could be obtained, fully protecting our farmers, industry, as well as promoting our national interests and core concerns.”

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SB/MRS

INDIA SCORES - STRATEGY OF GRAND ALLIANCE OF DEVELOPING COUNTRIES PAYS OFF

FARMERS INTERESTS FULLY PROTECTED, SAYS KAMAL NATH - SPECIAL PRODUCTS AND
SPECIAL SAFEGUARD DEFENSIVE MECHANISM AGAINST SUBSIDISED IMPORTS IN
AGRICULTURE PACKAGE

INTERESTS OF INDIAN INDUSTRY SAFEGUARDED  -  FLEXIBILITIES FOR DEVELOPING
COUNTRIES IN NAMA ENSURED

POLICY SPACE IN SERVICES TRADE LIBERALISATION PRESERVED

DISCUSSIONS ON TRIPS-CBD ISSUE TO BE SPEEDED UP

POSITIVE OUTCOME OF HONG KONG MINISTERIAL CONFERENCE

 Hong Kong: December 18, 2005

The strategy of forging a grand alliance of developing countries has paid off, with India and other developing countries scoring in a big way in areas of key concern to them, including agriculture, non-agricultural  market access and development issues.    Mr. Kamal Nath, Commerce and Industry Minister of India, hailed the outcome of the Sixth Ministerial Conference of the World Trade Organisation (WTO) as a victory of the developing countries - G-20, G-33, the African-Caribbean-Pacific (ACP) countries, the least developed countries (LDCs), and the small economies - who for the first time in the history of the WTO, came together to push the development agenda in multilateral trade negotiations and coordinated their efforts in order to develop a common approach to issues of common interest.

Addressing a news conference in Hong Kong on 18th December 2005, Mr. Kamal Nath said that the interests of Indian farmers had been fully protected in the Hong Kong Ministerial Agreement.   Outlining the gains for India and many developing countries in agriculture obtained through tough negotiations at marathon, all night
Green Room sessions, in Hong Kong, the Minister said: "Firstly, we have  been able to secure agreement that WTO will not come in the way of Domestic Support given to farmers in developing countries like India, which has a preponderance of small farmers.   Therefore, all the programmes of the government aimed at benefiting farmers will not be subject to any WTO discipline.   Secondly, there is also an agreement that developing countries will be able to declare an appropriate number of Special Products on a self-selection basis.   These are agricultural products of concern to developing countries which would be outside the ambit of tariff reduction.  This will help our farmers in protecting their important crops from unfair international competition.  Thirdly, we will also have a Special Safeguard Mechanism which means that we will be able to raise import duties on agricultural products if there is a surge in their imports or there is a fall in their prices.   Our farmers would not have to worry about their income levels falling due to unfair competition from subsidized imports. And finally, agreement has been reached on complete elimination of Export Subsidies on all agricultural products by developed countries.  This will not only help in protecting our farmers from unfair competition in the domestic market, but will also open up new opportunities for export of agricultural products".

Regarding domestic industry, Mr. Kamal Nath said that the interests of Indian industry had been fully protected in the Hong Kong Ministerial Agreement.   "Preservation of adequate negotiating space was a goal and has been ensured for the future.  While building in necessary provisions to safeguard India's defensive interests, provision to promote our export interests too have been strengthened.  "A clear instruction to focus on reduction of tariffs, especially tariff peaks and tariff escalation, on products of export interest to developing countries has been included in the Declaration.  The concept of less than full reciprocity in reduction commitments by developing countries has been firmly reiterated and incorporated in the paragraph relating to the formula. It has been ensured that flexibilities for developing countries will be included in the final package.  This reinforces the paragraph 8 provisions of the July Framework Agreement allowing exemption of a specific number of tariff lines from formula cuts", he said. The Ministerial Declaration call for a Swiss Formula with co-efficients preserves all the proposals on the table, including the one submitted by Argentina, Brazil and India (ABI), which envisages a multilple co-efficient Swiss Formula based on each country's tariff average.

In services, the policy space essential for developing countries  including India has been fully preserved, Mr. Kamal Nath said, adding that the primacy of the Request-Offer process has been maintained and the architecture of the General Agreement on Trade in Services (GATS) remains intact.    Explaining this, the Minister said:   "Given that the flexibility for developing countries has been fully preserved, each member including India, can decide on the level of commitments that they would take commensurate with their levels of development and national policy objectives.  In other words, there is no compulsion on developing countries to open up service sectors".  Market access in services areas of export interest to India like Mode 4 categories of contractual service suppliers and independent professionals of developing countries has been assured, while commitments at the existing levels in respect of cross border supply (Modes 1 & 2) which include business process outsourcing (BPO) and e-enabled services have been secured.   Referring to the issue of trade-related intellectual property rights (TRIPs) - Convention on Bio-Diversity (CBD) which was taken up strongly by India during the Hong Kong deliberations, Mr. Kamal Nath said that the Ministerial decided to further intensify discussions in the two areas of interest to India and other developing countries namely, Geographical Indications and Biological Diversity so as to complete the work by June 2006.   "In TRIPs and CBD, this should enable us, by the end of the Doha Round, to create a balance between private intellectual property rights and rights of communities over genetic material and traditional knowledge.   The benefit from an extension of the higher level of protection for geographical indications to products of interest to developing countries would increase the welfare of farmers and artisans, by enabling them to get better price realization, and more markets, for agri-products and handicrafts, like Darjeeling tea, Basmati rice, Alphonso mangoes, Pochampalli silk and other such items".

Mr. Kamal Nath welcomed the package for LDCs, stating that this should be taken by logical conclusion and implemented in its true spirit, as it would bring substantial benefits to the LDCs and give them greater stake in the multilateral trading process.   The Minister concluded by emphasizing that while forging a consensus in multilateral trade talks was not an easy task, "the development focus of these trade talks makes it imperative for all of us to do our utmost so that the development aspirations from this Round can be realized".

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DEVELOPING COUNTRIES SHOW UNPRECEDENTED UNITY AT WTO HONG KONG MINISTERIAL CONFERENCE
NOT MERE POSTURING – SAYS KAMAL NATH

 Hong Kong: December 16, 2005

           In an unprecedented show of unity all the developing country groupings, for the first time in the World Trade Organisation  (WTO), held a Ministerial Meeting in Hong Kong during the Sixth Ministerial Conference where the G-20, the G-33, the African-Caribbean-Pacific (ACP) countries, the least developed countries (LDCs), the Africa group and the Small Economies came together on a single platform and decided to better coordinate their efforts in order to develop a common approach to issues of common interest.   At a press conference where he shared the platform with trade ministers of other developing countries, Mr. Kamal Nath, Minister of Commerce & Industry, said the coming together was not mere posturing, but a genuine reflection of developing countries’ resolve to take multilateral trade negotiations forward in a manner that would ensure that global trade was not only open but also equitable and fair.     

          In a joint statement reiterating their shared interest in the development dimension of the current Doha Round and their expectations of the comprehensive development outcome, the Ministers of all the developing countries agreed as follows: 

1.    The round must result in the removal of the distortions that inhibit the export growth of developing countries and the provision of adequate policy spare to ensure their sustainable socio-economic development.    To this end, they agreed that developed countries must eliminate export support measures by 2010 while addressing specific needs of LDCs and also substantially reduce trade distorting domestic support.

2.    Market access for products of export interest from developing countries in developed country markets must improve substantially and concerns of preferences receiving countries must be addressed.

3.    Emphasizing the importance of special & differential (S&D) treatment in all the three pillars of agriculture negotiations, they stressed the role of Special Products (SPs) and Special Safeguard Mechanism (SSM) as a means of addressing the food security, rural development and livelihood means of developing countries in the area of agricultural market access.

4.    They reaffirmed their support for LDC demands for duty-free and quota-free (DFQF) market access and called for a concrete outcome in Hong Kong on this issue.

5.    They stressed the need for a commitment at Hong Kong to address the issue of cotton ambitiously, expeditiously and specifically.

6.    The specific measures should be adopted to address trade-related issues raised by the small, vulnerable economies.

7.    Vowing to intensify the dialogue while recognizing the diversity of their situations and perceptions, they reiterated their commitment to a successful conclusion of the Doha Round by the end of 2006.

  Meanwhile, the Federation of Indian Chambers of Commerce and Industry (FICCI) in a statement has welcomed the unprecedented alliance among a large number of developing and least developed countries having diverse interests and termed this as being among the most significant developments so far in the Hong Kong Ministerial Conference.  They complimented Mr. Kamal Nath for his efforts towards coalition building in Hong Kong which, they said, could be a vital input in achieving a pro-development outcome from the Doha Round.    

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INDIA WILL NOT MOVE IN WTO FARM TALKS AT HONG KONG WITHOUT END DATE FOR REMOVAL FOR AGRI
EXPORT SUBSIDIES BY DEVELOPED COUNTRIES, SAYS KAMAL NATH
RULES OUT MOVEMENT IN INDUSTRIAL TARIFFS WITHOUT FLEXIBILITIES
TO PROTECT DOMESTIC INDUSTRIES

 Hong Kong: 16^th December, 2005

             Mr. Kamal Nath, Minister of Commerce and Industry of India, today indicated that India will not move in the agricultural negotiations at the Hong Kong Ministerial Conference of the World Trade Organisation (WTO) unless the developed countries set a definite end date for elimination of all forms of export subsidies in the agriculture sector.  At an informal news briefing on the Green Room deliberations of last night, the Minister explained how such subsidies kept the prices of agricultural products in the international market at artificially low levels and adversely impacted on the interests of poor farmers in developing countries like India who were not able to get remunerative returns for their produce.   He further said that there would be no movement as far as India was concerned in the area of industrial tariffs (i.e., non-agricultural market access – NAMA) either, without the flexibilities in tariff reduction commitments that were required to protect domestic industries in India.  

             India is standing firm on the issues of interest to it in the key sectors of Agriculture and NAMA, Mr. Kamal Nath said. 

             In order to safeguard the interests of Indian agriculture in the ongoing Doha Round of negotiations on agriculture, the G-20 – of which India is a founder member – has also sought elimination of all forms of export subsidies by a credible end date.  Further, under the Special & Differential (S&D) Treatment provisions for developing countries, the July Framework of 2004 (that set out the guidelines and principles on modalities for further negotiations post-Cancun) provides that developing countries will continue to benefit from provisions that allow subsidies for marketing and transport of exported goods for a reasonable period even after all agricultural export subsidies have been phased out. 

            On NAMA or industrial tariff negotiations, Mr. Kamal Nath said he had made it amply clear during Green Room discussions last night that it would not be possible for India to move forward in the negotiations without the flexibilities that developing countries needed to protect their domestic industries, such as offering less than the formula reduction or making no reduction at all on a specified number of tariff lines covering their sensitive items / sectors.  “This is absolutely vital for countries like India in order to be able to safeguard the interests of small and medium enterprises which provide livelihood to millions of industrial workers”, he said.

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KAMAL NATH BRINGS CHHINDWARA TO THE WTO GREEN ROOM

 Hong Kong: 16^th December, 2005

           Chhindwara – a district in Central India which is primarily agricultural with small and marginal farmers, many of them cotton growers and a significant tribal population – today entered the Green Room discussions of the World Trade Organisation (WTO) on Development at the Sixth Ministerial Conference in Hong Kong, thanks to Mr. Kamal Nath, Minister of Commerce and Industry of India.   

           While arguing for elimination of all forms of agricultural export subsidies by the developed countries in general and cotton subsidies in particular, Mr. Kamal Nath cited the case of Chhindwara as an example where the heavy subsidies given by developed countries were adversely impacting farmers including those dependent on cotton and pushing them to the margins of impoverishment.     

          Mr. Kamal Nath’s intervention generated a lot of interest among trade Ministers of the world present in Hong Kong about Chhindwara, which is Mr. Nath’s constituency. 

          Earlier, in a statement on the cotton issue delivered on 14^th December, the Minister had expressed India’s full support for putting the African initiative on cotton on priority in the WTO negotiations.  Referring to the adverse effects of persistent and high levels of subsidization by developed countries, Mr. Kamal Nath said:  “In other countries too where cotton is a major crop, such as India, this phenomenon has caused large scale loss of livelihoods, leading to thousands of farmers becoming indebted and even committing suicide.   It is not merely an economic or commercial issue – but an urgent and serious human imperative that should be addressed effectively, expeditiously, and with all honesty”.   

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INDIA RAISES ISSUE OF TRIPS AND CBD
KAMAL NATH AT THE HONG KONG MINISTERIAL

 Hong Kong: December 15, 2005

             India today raised the issue of trade-related intellectual property rights (TRIPs) Agreement and Convention on Bio-Diversity (CBD) at the Hong Kong Ministerial Conference of the World Trade Organisation (WTO) during a meeting this morning with the Facilitator Mr. Walker, Minister of Chile on “Other Issues” which include TRIPs and environment-related matters.   Mr. Kamal Nath, Commerce & Industry Minister of India, has underlined the importance of the issue, stating that harmonizing the WTO TRIPs Agreement with CBD was vital for preventing bio-piracy and the rich traditional knowledge of developing countries.  

             Describing the imbalance in the TRIPs Agreement between private intellectual property rights (IPRs) and the intellectual heritage of indigenous communities as part of the unfinished agenda of development inherited from the Uruguay Round, Mr. Kamal Nath had pointed out in his statement at the plenary session yesterday: “There is growing popular discontent among developing countries over bio-piracy and the misappropriation of their traditional knowledge for commercial gain. The Hong Kong Ministerial must pave the way for the launch of negotiations on the issues pertaining to the relationship between the TRIPs Agreement and the Conventional on Bio-Diversity”. 

            On the issue of trade in environmental goods & services, India has opposed the “list approach” for seeking tariff reduction on environmental goods as it is not beneficial for developing countries. The “list approach” focuses only on goods and is, in fact, seen as a backdoor method to bring in NAMA.   India has submitted an alternate approach called “environmental project approach” proposing that all environmental goods and services in the project should get tariff concessions.     

 Background on TRIPs & CBD    

            India along with a number of other developing countries, rich in bio-diversity, has proposed an amendment in the TRIPs Agreement to address prevention of bio-piracy and check misappropriation of traditional knowledge.   This amendment would pave the way for an international legally binding regime.    This is an implementation issue under Para 109 in pursuance of Para 12 of the Doha Ministerial Declaration. 

            India believes that to prevent bio-piracy of genetic resources and misappropriation of traditional knowledge, the TRIPs Agreement needs to be amended, and three elements, “disclosure of country of origin”, “Prior Informed Consent”, and “Benefit Sharing” arrangement – together called “disclosure requirements”, can be incorporated in the TRIPs Agreement.

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DOHA ROUND SHOULD NOT PERPETUATE GLOBAL TRADE INEQUITIES –
TRADE RULES MUST BENEFIT THOSE WHO NEED IT MOST
KAMAL NATH ADDRESSES HONG KONG MINISTERIAL PLENARY

 Hong Kong: December 14, 2005

          Making a strong pitch for development, Mr. Kamal Nath, Minister of Commerce and Industry, today said that the Doha Round of multilateral trade negotiations should not perpetuate the inequities of global trade.   The ambition of developed countries cannot and must not trample on the aspirations of four-fifths of humanity, he said.  In his address at the Plenary Session of the 6^th Ministerial Conference of the World Trade Organisation (WTO) in Hong Kong this afternoon, he said: “In the name of completion, if the content of this round only perpetuates the inequities of global trade, then it will be no round.   To redeem the pledge we made at Doha, let us resolve to make this a round for those who need it.   Let us make this a round that truly reflects the development dimension in its most beneficial and most effective sense”. 

           He said that the Doha mandate was to correct the “development deficit” left by the Uruguay Round and pointed out that negotiations in Hong Kong will have failed if they do not contribute towards creating a rule-based, world order, which not only makes trade free, but also make trade fair.

           He indicated that  there would not be any agricultural agreement without Special Products and Special Safeguard Mechanism which were needed to ensure the livelihood and food security of millions of farmers and if effectively applied, could be the bedrock of any agricultural outcome of the current Doha round.  Stressing that agriculture was the structurally most flawed sector of international trade, Mr. Kamal Nath reminded the world trade body that it was in agriculture that the development outcome of Doha would be most critically judged.   It was also in agriculture again that many developing countries had natural comparative advantage, but they were shut out from world markets by a complex edifice of protection, built on high tariff walls, domestic and export subsidies, and an intricate maze of non-tariff barriers, he said, while emphasising that in many developing countries, including India, hundreds of millions of low-income and subsistence farmers eked out a precarious livelihood from agriculture.   “Unless the playing field is completely leveled, they cannot enter the arena of international competition.    Our farmers are quite willing to deal with trade flows – but not with an avalanche of subsidy flows from developed countries” he said.  

           On industrial tariffs or non-agricultural market access (NAMA), Mr. Kamal Nath reiterated that market access was not about tariffs alone, as non-tariff barriers such as abuse of both anti-dumping and technical standards hindered market access for developing countries. “If we are to pursue the so-called ‘real’ market access in the NAMA negotiations, the boot is surely on the other foot…. It is no use having zero duty levels of aeroplanes, while maintaining a 30% duty on leather handbags!” he said while flagging trade barriers by India’s traditional industries as textiles, clothing, leather products, footwear and a range of other medium technology products, involving livelihood of hundreds of millions of industrial workers of small and medium enterprises in developing countries.   

           Similarly, access to overseas markets in services could be a powerful instrument to banish poverty in developing countries by giving stimulus to economic growth, Mr. Kamal Nath said and pointed out that: “This is why the liberalization of professional services trade in Modes 1 & 4 needs to figure high on the development agenda.  It is also, of course, a paramount need of businesses everywhere in a globalised economy.   The services negotiations need a clear direction, without undermining the flexibilities available to developing countries under the GATS architecture”.   

           He called upon the Hong Kong Ministerial to pave the way for launch of negotiations on issues relating to the TRIPs Agreement and the Convention on Bio-diversity (CBD) that is required to prevent bio-piracy and preservation of the vast bio-diversity of developing countries and also to finalise, without hedging, the proposal for duty-free, quota-free access for exports of least developed countries (LDCs) to developed country markets.

           Besides making the important statement at the Plenary, Mr. Kamal Nath had a busy schedules of bilateral meetings today with – Mauritius Minister of Foreign Affairs & International Trade, Mr. Dulloo; Minister of Agro Industries & Fisheries, Mr. Boollel; and Minister of Industry and Commerce, Mr. Jeepah; and the Japanese Economy, Trade and Industry Minister Mr. Toshihiro Nikai and Agriculture, Forestry and Fisheries Minister Mr. Shoichi Nakagawa.        He also had a meeting with Mr. Clement Rohee, who is the Facilitator on Development Issues.

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KAMAL NATH CALLS FOR ROADMAP FOR ELIMINATION OF TRADE DISTORTING FARM SUBSIDIES
BY DEVELOPED COUNTRIES
 SAYS ONE DOLLAR PER DAY VERSUS ONE BILLION DOLLAR PER DAY THE REAL ISSUE

 Hong Kong: December 13, 2005

             Mr. Kamal Nath, Minister of Commerce & Industry, has called upon developed countries to come forward with a roadmap for total elimination of trade distorting agricultural subsidies which depress international prices of agricultural produce, thereby hurting farmers in developing countries like India. Addressing the international non-governmental organisations (NGOs) and a Press Conference ahead of the opening of the Sixth Ministerial Conference of the World Trade Organisation (WTO) in Hong Kong today, Mr. Kamal Nath emphasised that the real challenge before trade negotiators was the paradox of “one dollar per day versus one billion dollars per day”, referring to the fact that the vast majority of the poor in developing countries were subsisting on one US dollar per day or less as against agricultural subsidies as high as US $ 1 billion per day in developed countries.

             “Hong Kong must address the issues of the least developed countries (LDCs), vulnerable economies, small states and must provide a level playing field for all.   In agriculture, if we are to correct the existing structural flaws, export subsidies must go on a date to be negotiated.  On domestic support, there must be a roadmap for reduction and eventual elimination.  (Agricultural) tariff is the only defensive mechanism available to the developing countries to guard against subsidized imports.   For example, tariff on cotton in India is only 10% whereas the US subsidy for cotton is over 42%.  We are not against trade flows but against subsidy flows”, he explained.

             Replying to questions on non-agricultural market access (NAMA) or industrial tariffs, the Minister said what was important was not the formula but what it actually translated into in real terms.    Criticising the latest NAMA proposal put forward by the European Union (EU) at the G-4 meeting last night, Mr. Kamal Nath pointed out that the EU proposal for Swiss co-efficient of 10 for both developed and developing countries would translate into industrial tariff reduction of 77% for India while the EU would reduce only by 24%!   He described this as special & differential (S&D) treatment in reverse and rejected the proposal outright as unacceptable.   He said the EU must come forward with specific proposals for reducing its tariffs, before developing countries were asked to reduce by even two-thirds of that, in keeping with the principle of proportionality implicit in the S&D provisions for developing countries in WTO agreements. “Market access for India in NAMA means elimination of tariff peaks and tariff escalation in developed country markets, end to abuse of anti-dumping laws and removal of non-tariff barriers (NTBs) all of which adversely affected trade flows from developing countries.    Market access is not an issue of tariffs alone”, he added.

             The Minister appreciated the crucial role played by NGOs post-Uruguay Round in creating awareness about global trade issues and providing critical inputs for negotiators.  He also told NGOs that the issue of harmonizing trade related intellectual property rights (TRIPs) Agreement with the Convention on Bio-Diversity (CBD) was important for the prevention of bio-piracy and preservation of the rich bio-diversity of many developing countries.  He reiterated that India stood by the LDCs and would continue to do so in the Doha Round negotiations which must be brought back on the development track.  Later today, Mr. Kamal Nath is scheduled to have bilateral meetings with the trade ministers of South Africa and China.

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G-20 STANDS UNITED – WANTS AGRICULTURE TO MOVE FOR OTHER AREAS TO PROGRESS
 G-20 MINISTERIAL DECLARATION IN HONG KONG

 Hong Kong: December 13, 2005

           G-20 – the coalition of developing countries in the World Trade Organisation (WTO) agriculture negotiations – stands united on the issue of agriculture and has said today that member countries must move in agriculture for the other areas of negotiations to move forward.    The G-20 Ministerial Declaration issued in Hong Kong today states that “In its effort to break the stalemate in the current phase of the process, the G-20 has presented balanced and middle ground proposals in all areas of the negotiations.  These proposals remain on the table and provide a credible appropriate basis for a successful completion of the Round.    We must move in agriculture for the other areas to move.  The G-20 is prepared to negotiate agriculture here in Hong Kong. We hope that others are prepared to do likewise”.  

           The G-20 Ministerial Declaration was released at a Joint Press Conference addressed in Hong Kong this afternoon by five G-20 Ministers – Mr. Kamal Nath, Commerce & Industry Minister of India and Mr. Celso Amorim, Foreign Minister of Brazil along with the Trade Ministers of Argentina, Egypt and South Africa.    

           “Ministers recall the G-20 proposals submitted so far in the three pillars reflect proportionality of commitments between developed and developing countries.  At the heart of all these proposals is the imperative to ensure substantial reductions in trade-distorting domestic support through both reductions and disciplines.   In addition, these proposals seek the elimination of all forms of export subsidies by 2010, complemented by relevant disciplines.    As export subsidies are the most distorting form of support, Ministers in Hong Kong should agree to an immediate standstill on the use of these measures, based on existing commitments. The Group’s proposals also call for substantial improvements in market access, while at the same time securing the necessary policy space through special and differential treatment for developing countries in accordance with the Mandate. The Group is determined to make operational and effective the provisions on special and differential treatment in the framework, in particular on Special Products (SPs) and Special Safeguard Mechanism (SSM), so as to safeguard food security, rural development and livelihood concerns of millions of people”, the Ministers said.

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INDIA WILL NOT BE RUSHED INTO ANY DEAL, KAMAL NATH CAUTIONS ON THE EVE OF
WTO HONG KONG MINISTERIAL

 Hong Kong, dated 12^th December, 2005

 India will not be rushed into any global trade deal that displaces millions of its farmers and does not give greater market access to products of export interest to India, Mr. Kamal Nath, Commerce and Industry Minister, said on the eve of the sixth Ministerial Conference of the World Trade Organisation (WTO) opening in Hong Kong tomorrow. Immediately on his arrival in Hong Kong last night at the head of the Indian delegation, the Minister plunged into a hectic schedule of meetings with trade ministers of several countries. He met Mr. Celso Amorim, Foreign Trade Minister of Brazil; Mr. Peter Mandelson, the European Trade Commissioner; and Mr. Humayun Akhtar Khan, Commerce Minister of Pakistan, besides meeting Mr. Pascal Lamy, Director General/ WTO. Participating in a meeting of the G-20 – a coalition of member countries in agriculture negotiations – Mr. Kamal Nath exhorted member countries to think and strategise also in the context of the developing country membership of the WTO as a whole and underlined the need to remain united in the negotiations.

  Addressing the Asia Society, Hong Kong, organized by the Confederation of Indian Industry (CII) later in the day, on “India: The New Paradigm”, Mr. Kamal Nath said India was poised on the verge of greater integration with the rest of Asia – South Asia (through the South Asia Free Trade Area – SAFTA), and with South East Asia as well as East Asia through the proposed India – ASEAN FTA.   “Our great East Asian neighbour is China.  Most people think of India and China as rivals; few people realize that China is today India’s second largest trading partner after the USA.   Ten years ago India-China trade was a billion US dollars a year; last year it was a billion US dollars a month”, he said.

           Replying to questions from the floor at the Asia Society Meeting, Mr. Kamal Nath reiterated that India’s priorities were to ensure greater market access for its industrial products through the elimination of tariff peaks and tariff escalation in developed countries; ensuring level playing field for its agricultural produce through real cuts in the heavy farm subsidies given by developed countries; liberal market access for its professionals and other services under Mode 1 and Mode 4 and resolving Implementation Issues relating to the development dimension of WTO talks.   

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Press Information Bureau
Government of India

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OVER 5 MILLION FARMERS REACH OUT TO KAMAL NATH ON THE EVE OF HONG KONG – PRESENT SIGNATURES ON PRO-FARM DEAL

 New Delhi: December 08, 2005

           Over five million small and medium farmers reached out to the Union Minister of Commerce & Industry, Shri Kamal Nath, here today urging him to protect their livelihoods at the forthcoming WTO ministerial conference slated to be held in Hong Kong next week.  Farmers’ and several civil society group representatives handed over the signatures to the Minister as part of a global public petition, an Oxfam-initiated `Big Noise’ signature campaign which brings to the fore voices of millions of people urging the decision-makers at Hong Kong to change the unfair global trade rules so that the poor producers in the developing countries are able to share the benefits of trade. The Big Noise petition is currently being presented around the world at the country-level to heads of country trade delegations as they prepare for the WTO ministerial. 

           Last week, world renowned actor, Colin Firth, handed over 10 million signatures to the EU Trade Commissioner Peter Mandelson ahead of the Hong Kong meet. While 80% of these signatures are from poor farmers and garment workers in developing countries, the rest are from concerned individuals in developed nations, including Live 8 concert goers. India tops the list of signatures from a single country. 

          The current phase of the mobilisation for the “Make Trade Fair” campaign in India began in October in four states and was a success in spreading awareness and reflecting concerns of small and marginal farmers on the urgent need for sovereign nations to have the power to decide, at multilateral fora, the fate of their poor producers. Several civil society group networks like CECOEDECON in Rajasthan, Ekta Parishad in Madhya Pradesh, CCD in Tamil Nadu and YUVA in Maharashtra took the lead to organise colourful and informative road shows and rallies covering hundreds of villages across several districts in their states. 

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SB/MRS

Press Information Bureau
Government of India

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KAMAL NATH TO ATTEND THE AEM-INDIA CONSULTATIONS AND ASEAN-INDIA MINISTERIAL MEETING
IN KUALA LUMPUR ON 9-10 DECEMBER, 2005

 New Delhi: December 08, 2005

           Shri Kamal Nath, Union Minister of Commerce and Industry, has been invited to attend an informal AEM (ASEAN Economic Ministers) – India Consultation on 9^th December, 2005 on the sidelines of the ASEAN Summit being held from 12-14 December 2005 in Kuala Lumpur.  The main objective of the informal consultations is to discuss the progress of negotiations on ASEAN-India Free Trade Agreement (FTA).

           Framework Agreement on Comprehensive Economic Cooperation Agreement (CECA) between ASEAN and India was signed on 8^th December, 2003 in Bali, Indonesia.

           Under the “Framework Agreement on Comprehensive Economic Cooperation between ASEAN and India” the ASEAN-India Trade Negotiating Committee (AITNC) has been mandated to negotiate the various components to realise the ASEAN-India Free Trade Area (AIFTA).

           Due to India’s stand on the issue of Rules of Origin, the negotiations by the AITNC were not progressing as scheduled.   The matter has now been resolved and the AITNC is expected to conclude the negotiations in the near future.

           Prime Minister Dr. Manmohan Singh has also directed that Shri Kamal Nath would represent India at the India-ASEAN Ministerial Meeting scheduled to be held in Kuala Lumpur during the same period.

           Besides this, Shri Kamal Nath is likely to attend the inauguration of the East Asia Business Exhibition (EABEX) being organised by Malaysia External Trade Development during 10-14 December 2005 concurrent with the 11^th ASEAN Summit.   India is also participating in this event.  

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SB/MRS

Press Information Bureau
Government of India

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AGRICULTURE THE KEY ISSUE – FARMERS INTEREST TO BE FULLY PROTECTED AT HONG KONG MINISTERIAL, SAYS KAMAL NATH
  STATEMENT BY COMMERCE AND INDUSTRY MINISTER ON STATE OF PLAY AND ISSUES AT THE WTO MINISTERIAL CONFERENCE

 New Delhi: December 07, 2005

             Agriculture is the most important sector for India in the ongoing World Trade Organisation (WTO) negotiations and farmers interests would be fully protected at the Hong Kong Ministerial Conference beginning 13th December 2005, Shri Kamal Nath, Union Minister of Commerce & Industry, said here in a statement made during discussion in Rajya Sabha on the subject of WTO today.  He said agriculture was not commerce and that for a vast majority of Indian farmers, it was a matter of livelihood.   

             Stating that agriculture is structurally the most imbalanced among all trading sectors due to the huge subsidies given to farmers and agri business by developed countries which depress international prices of agricultural produce and hurt farmers, Shri Kamal Nath explained that in the current Doha Round of WTO trade talks it had been agreed that all export subsidies in agriculture would be eliminated and there would be substantial reduction in trade distorting subsidies by the developed countries.

             In respect of non-agricultural (industrial) goods market access, India has been stressing that developing countries would offer less than full reciprocity in reduction commitments. In services, he said, India had a strong comparative advantage.    “It is this strength and global competitiveness that has guided our stance in the services negotiations at the WTO. Our core objectives in this area are liberalisation of Modes 1 (Cross Border Supply) and Mode 4 (Movement of Natural Persons) and disciplining of domestic regulations, which act as barriers to effective market access for service providers from India”, the Minister said.

             Following is the full text of the Minister’s statement:

             “Mr. Speaker Sir,

 1.               Commerce and Trade Ministers of 148 WTO member countries are scheduled to meet at Hong Kong from 13 – 18 December, 2005 to discuss and negotiate on the Doha work programme (also called the Doha Development Agenda) and July Framework Agreement of 2004. Members of the House would recall that I had made a statement in this House in August, 2004 after the framework agreement was negotiated. Since then there have been constant negotiations at the official as well as at ministerial levels. India has been proactive in its participation in the negotiations in the WTO. India has participated in various formal and informal meetings not only for highlighting our development concerns but also submitted a series of proposals on various issues. The proposals submitted are on issues of concern to India and also other developing countries.

 2.                  India is a member of various coalitions and groups with common interest in issues under negotiations. India is a member of the G-20, which has been at the forefront to bringing about a more equitable order in agriculture. India is also a member of G-33, a group of 44 developing countries that focuses on special and differential treatment for developing countries to address their food security, livelihood security and rural developmental needs. India has been closely working with important groupings such as Africa Group, LDCs and ACP (Africa, Caribbean and Pacific) countries. I have attended meetings of the ACP Group and the G-90, to coordinate our positions in the common interest of developing countries. Only last week, I attended the meeting of the G-90 Ministers at Brussels and a meeting of G-4 at Geneva.

 3.                  In non-agricultural market access negotiations India has co-sponsored a proposal with Brazil and Argentina and also co-authored with 8 other developing countries, namely Argentina, Brazil, South Africa, Pakistan, Namibia, Indonesia, Philippines and Venezuela, a paper that highlights the need for a ‘development focus’ in all aspects of the Doha negotiations.

 4.                  India, along with a number of developing countries including the group of Mega-diverse countries, has sought amendment in the TRIPS Agreement for including “disclosure requirements” in the patents applications to prevent piracy of biological material, and misappropriation of traditional knowledge. Bio-piracy and misappropriation seriously affects the developmental benefits, environmental benefits, and the economic benefits of the poor & under-privileged community who are holders of biological material and associated Traditional Knowledge. We want that granting of patents on products out of the biological material and processes based on Traditional Knowledge should not overlook the interests of the holders of such biological material and knowledge as that undermines the prospects of conservation and sustainable use of genetic resources and associated Traditional Knowledge. Disclosure of the source and country of origin of the biological resources and traditional knowledge in the patent applications along with prior informed consent and equitable benefit sharing would be a fair & equitable way to address the shortcomings in the TRIPS Agreement.

 5.                  On the Singapore issues, India is a member of the core group which was instrumental in ensuring that the issues of investment, competition policy and transparency in government procurement were dropped from the Doha Round, leaving just ‘trade facilitation’ on the table, since it potentially has a development dimension.

 6.                  In the Services negotiations, India co-chairs with US, a core group of 14 countries which was set up to give momentum to the Service negotiations which are of importance to India considering that 52% of India’s GDP comes from the services sector.

 7.                  For the Doha negotiations, extensive preparatory measures have been undertaken to finalise India’s position on various issues in the WTO - positions that reflect both the domestic consensus on issues and that which best protect our interest. The domestic preparatory process has included wide ranging inter-ministerial and inter-departmental discussions. Inter-departmental delegations have been participating in the actual negotiations at Geneva as well as at other centres. Discussions have been conducted with the State Governments through regular information sharing and information gathering meetings. Workshops and seminars have been held in various cities in India on the ongoing negotiations.

 8.                  For analytical back up, various academic and research institutions were identified early on and asked to carry out research studies. This has helped create centres of excellence on specific WTO issues. The inputs from the studies conducted by these institutions and reports received from various other organizations have been used for formulating India’s proposals. We have also held wide stakeholder consultations – with business operatives, farmer groups, industry associations and civil society. These have been held together with a large number of organizations/ NGOs working in the field on these issues. These meetings have been both informative as well as educative.

 9.                  Finally, we have ensured that Parliament and all parties are fully kept informed about these negotiations. I have met my colleagues from different political parties to brief them about the issues involved in the negotiations.

 10.              Coming to India’s position in the issues under negotiations the most important sector is agriculture. As far as India is concerned, agriculture is not commerce for a vast majority of Indian farmers, it is a matter of livelihood for millions of Indian farmers and their interests are to be fully protected. Members are aware that agriculture is the most structurally imbalanced among all the trading sectors primarily due to the huge subsidies given to the farmers/agri business in the developed world. In this round it has been agreed that all export subsidies in agriculture would be eliminated, only the end date is to be negotiated. India’s priority is to obtain substantial reduction of trade distorting subsidies and domestic support by the developed countries. The G-20 has put forward its position inter alia indicating that the overall trade distorting support is reduced by 83% highlighting the importance of agriculture. The G-20 has also stated that developed countries should cut their tariff by at least 54% of their bound rates on average, and that developing countries should not have to cut more than two thirds of what the developed countries do. In addition, appropriate provisions to safeguard food security, livelihood security and rural development needs would be obtained through designation of an appropriate number of special products and a simple special safeguard mechanism which would guard against import surges and price falls in agricultural commodities. We have also stated categorically that developing countries like India which allocates almost all its domestic subsidies to subsistence and resource poor farmers should not be called upon to make any reduction in their de minimis entitlements.

 11.              As far as non-agricultural goods are concerned there is a broad consensus on the application of a Swiss formula, only its structure and flexibilities for developing countries are yet to be finally negotiated. India has repeatedly stressed that as per the July framework agreement, developing countries would offer less than full reciprocity in reduction commitments and that any formula finally negotiated must respect this. Developed countries have yet to respond. While undertaking tariff cuts, we have also provided for adequate flexibilities to protect small scale industries, infant industries and sensitive sectors. The issue of binding all non-agricultural tariff lines is also under negotiation.

 12.              India has a strong comparative advantage in services. It is this strength and global competitiveness that has guided our stance in the GATS negotiations at the WTO. Our core objectives in this area are liberalisation of Modes 1 (Cross Border Supply) and Mode 4 (Movement of Natural Persons) and disciplining of domestic regulations, which act as barriers to effective market access for service providers from India. In making our conditional offers we have not gone beyond the level of autonomous liberalization in any of the sectors, while expanding sectoral and modal coverage as compared to our Uruguay Round commitments. The efforts from the developed countries have so far been disappointing. However, the negotiations on this are expected to continue well into the year 2006 and final results would be available only at the end of 2006.

 13.              India has been at the forefront of recognition of the principles of “access to medicines for all at affordable prices” and was instrumental in getting all the WTO members to agree to introduce certain flexibilities in the TRIPS Agreement to realize this goal. India is committed to seeing through that the flexibilities agreed in the August 2003 decision are fully preserved in the eventual amendment to the TRIPs agreement so that the development goals of countries which have inadequate or no manufacturing capacity are not undermined.

 14.              In the negotiations on trade & environment, we want to address the environmental concerns in a manner that we retain appropriate national policy space without undermining our common global responsibilities. We also want that the negotiations under trade & environment bring out the environmental benefits, the developmental benefits and the economic benefits in a “win-win-win” manner, rather than only an increase in market access.

 15.              In the negotiations on WTO rules such as on anti-dumping, subsidies and countervailing measures including fisheries subsidies, while India is not seeking to straitjacket disciplines to an extent that WTO Members can not check unfair trade practice, India seeks strengthening of disciplines consistent with the Doha mandate in order to limit the unwarranted use of these measures, particularly against the exports from developing countries, including India.

 16.              On trade facilitation, the last ‘Singapore Issue’ still remaining on the Doha agenda, the negotiations have been far less contentious. It potentially has a strong development dimension. So far a large number of proposals have been made on issues concerning import and export procedures. India is actively participating in the negotiations and has submitted proposals for an effective cooperation mechanism between the customs administrations of the WTO Members. Technical assistance and capacity building in developing countries is another area where Members are focusing their energies.

 17.              On developmental issues, developing countries have put forth several constructive proposals.  These include the implementation issues which are of considerable significance to us. We are seeking substantive progress on these issues both in the run up to and at Hong Kong. It is important that the WTO Members agree on an S&D package for the Least Developed Countries as well as ensure that effective special and differential treatment is provided for developing countries in all areas of the negotiations. India is also looking to provide additional market access to the products of the least developed countries. 

 18.              One other issue that has to be meaningfully addressed in this Round to make it a truly development Round is the concern regarding preference erosion. There are several developing countries that are dependant on a majority of their exports to the developed markets through systems of unilateral preferential tariffs.  The reduction in tariffs following from this Round of negotiations will adversely impact the preference margins that these countries now enjoy thereby constricting their exports. This issue has to be handled carefully without in anyway slowing down the multilateral liberalization process.

 19.              The draft ministerial text has been released in the WTO. It would be seen that there are wide divergences on a large number of issues, especially in agriculture and other goods. Our efforts would be to try and seek convergence on many of the outstanding issues. It is believed that full modalities in agriculture and other goods would not be possible in Hong Kong and that there may be a need for another ministerial meeting earlier next year to complete this stage of the negotiations. Hong Kong is therefore a staging post to bringing about greater convergence so that full modalities could be achieved in 2006. India looks forward to the successful completion of the Doha Development Round by the end 2006.”

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SB/MRS

Press Information Bureau
Government of India
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GOVERNMENT PLANS INVESTMENT TO TAP POTENTIAL OF INDIAN AUTOMOTIVE INDUSTRY -- KAMAL NATH
ADDRESSES AUTOMOTIVE ROUNDTABLE

 New Delhi: December 07, 2005

           The government realises the tremendous potential available for the Indian automotive industry due to the internationalisation of the auto industry and, therefore, plans to invest in testing centres to facilitate the process of manufacturing and product development, Shri Kamal Nath, Union Minister of Commerce & Industry, said while addressing the Tenth  “Asia Pacific Automotive Industry Roundtable” organised by the Economist Corporate Network, here today.      

          He noted that while the Indian auto industry had registered impressive growth, the growth pattern had not been uniform over all segments. “While cars are doing well, and account for three-fourths of the total exports, the other sectors require to be looked at more closely if India is to become an Automotive Hub – something which we are determined to achieve….  India top three destinations are Sri Lanka, Bangladesh and Nepal.  We must now focus on Europe, the Middle East and Africa.  Components would find a good market in the USA as well.  Despite the uneven growth, every segment of the industry has been meeting the aspirations of the customers by offering a wide variety of quality products whilst simultaneously measuring up to meet accelerated emission and safety standards”, he said.    

          The Minister mentioned that globalisation of automotive industry had impacted on the component industry also and noted that the component industry had faced considerable restructuring in the 1990s as a result of changes in the relationship between suppliers and assemblers.  “I was reading an article recently about the ‘international toothbrush’ – a case study on how the various parts of an electric toothbrush was manufactured in five countries over three continents, because that is what made it cost-effective.    This new globalised paradigm is something we must take full advantage of”, he added. 

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Press Information Bureau
Government of India
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KAMAL NATH TO LEAD INDIAN DELEGATION AT WTO SIXTH MINISTERIAL CONFERENCE (DECEMBER
13-18, 2005) IN HONG KONG

 New Delhi: December 06, 2005

           Shri Kamal Nath, Union Minister of Commerce & Industry, will be leading the Indian delegation to the Sixth Ministerial Conference of the World Trade Organisation (WTO) scheduled to be held in Hong Kong (China) from 13^th to 18^th December, 2005.    Senior officials of the Ministry of Commerce & Industry; Ministry of Agriculture (Department of Agriculture & Cooperation); Ministry of Textiles; Ministry of External Affairs; and the Ministry of Finance (Department of Revenue) will be accompanying Shri Kamal Nath.  Representatives from apex trade and industry associations including the Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (FICCI), Associated Chambers of Commerce & Industry of India (ASSOCHAM) and the Federation of Indian Export Organisation (FIEO) will be joining the Ministerial delegation in Hong Kong.    

          The agenda for the Hong Kong Ministerial Conference includes negotiations on agriculture, services, non-agricultural (industrial goods) market access (NAMA), trade-related intellectual property rights, trade & environment, trade facilitation, and other issues covered under the Doha Ministerial Mandate.    

          Shri Kamal Nath has held wide-ranging consultations with all stakeholders in the run-up to Hong Kong including representatives of political parties, farmers associations and other non-governmental bodies, industry & trade bodies, research institutions including experts on agriculture, services, NAMA, environment, trade facilitation etc.  Shri Kamal Nath had interacted so far with representatives of the Left parties (CPI-M, CPI, RSP, Forward Block); Bharatiya Janata Party (BJP); Shiv Sena, Biju Janata Dal (BJD); AIADMK, Janata Dal (U) etc. and is scheduled to have meetings later today with DMK, The Nationalist Congress Party (NCP), Bahujan Samaj Party (BSP); Rashtriya Janata Dal (RJD); and Samajwadi Party (SP) besides trade unions viz., Indian Trade Union Congress (ITUC); All India Trade Union Congress (AITUC), Bharatiya Mazdoor Sangh (BMS) and Centre of Indian Trade Unions (CITU). 

          India’s position in the ongoing negotiation has been evolved on the basis of these consultations. 

          India has been actively participating in the ongoing negotiations on various issues in the Doha Work Programme arising out of the Ministerial Declaration adopted at the Ministerial Conference at Doha (Qatar) in 2001.    Shri Kamal Nath has consistently emphasised that the Doha Round is intended to secure a pro-development outcome for developing countries and at the same time, to make the international trading system more open based on fair and equitable rules and disciplines for international trade.    India has engaged in the Doha negotiations to ensure that its core concerns and interests continue to be adequately addressed as negotiations proceed from one stage to another.  “Our approach to the negotiations is being dictated by our national interests, especially our concern for the millions of farmers who are dependent for their livelihood on agriculture, as also our objective of stimulating economic growth and development through export of our goods and services”, the Minister said.   

          In order to ensure that its negotiating objectives are duly reflected in the outcomes, India has been active in various coalitions such as the G-20 in agriculture, G-33 on Special Products and Special Safeguard Mechanism; and has also been working closely with the Africa Group, the ACP (Africa-Caribbean-Pacific) countries and the Least Developed Countries (LDCs), besides the FIPs, G-4 and others. 

          The Ministerial Conference is the highest decision making body of the WTO. So far, five Ministerial Conferences of the WTO have been held – Singapore (1996); Geneva (1998); Seattle (1999); Doha (2001); and Cancun (2003).  

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Press Information Bureau
Government of India
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DRAFT WTO MINISTERIAL TEXT DISAPPOINTING, SAYS INDIA
STATEMENT BY COMMERCE SECRETARY AT TNC MEETING IN GENEVA

 New Delhi: December 01, 2005

            India has expressed disappointment over the First Draft Text for the Hong Kong Ministerial Conference.  In a statement made at the Trade Negotiations Committee (TNC) Meeting at the World Trade Organisation (WTO), Geneva last evening, Shri S.N. Menon, Commerce Secretary, said that India had noted with a sense of disappointment a serious and growing development deficit in the Doha Round.   “Paragraphs 17-20 of the draft text on special and differential treatment are clear evidence of this fact.  There has been virtually no progress in the Doha Mandate on special and differential treatment (S&D), calling for provisions to be made more effective, precise and operational.  Even the 5 prioritised S&D proposals of the LDCs have not been agreed to. There is a similar lack of emphasis on development issues in Agriculture, NAMA and TRIPs. Urgent action is required to rectify this if the outcome of the Round is to have any credibility and relevance for developing countries”, the statement added.    

          Highlighting some of the important issues that were causing discomfort and on which substantial progress is expected in Hong Kong, the Commerce Secretary said:  “On Agriculture, it will be extremely difficult for my delegation to go back home without convergence on issues such as specification in proportionality of cuts or thresholds of tariff reduction formula for developing countries.  Other issues that remain of concern to developing countries are: (i) agreement on designation and treatment of Special Products; (ii) product coverage, price and volume triggers and remedies in the Special Safeguard Mechanism; and (iii) exemption from any form of cuts to the de minimis in the domestic support pillar.  On NAMA, we are concerned with attempts to dilute less-than full reciprocity (LTFR) in reduction commitments which requires that developed countries must undertake greater percentage reductions as compared to developing countries. This is the mandate and we cannot accept interpretations which measure LTFR against S&D provisions”.

          “India will continue to play a constructive role to ensure that the Hong Kong Conference is a meaningful staging post for the successful completion of the Development Round”, the statement said.

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 Press Information Bureau
Government of India
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DEVELOPMENT IMPACT TO BE THE YARDSTICK FOR JUDGING WTO OUTCOME, KAMAL NATH TELLS G-90
AFRICAN LDCS HAIL INDIA’S OFFER OF DUTY-FREE ACCESS

 New Delhi: December 01, 2005 

          Shri Kamal Nath, Minister of Commerce & Industry, has said that “development impact” will be the touchstone against which the ongoing Doha Round negotiations of the World Trade Organisation (WTO) will be judged.  Addressing the G-90 Summit of the African-Caribbean-ACP (ACP) countries in Brussels last evening, he said that “if the impact on development is adverse, it should be forthwith discarded and a positive, pro-development solution should be found”.  He underlined that the significance of this historic Summit lay in the fact that the vast majority of countries for whose development the Doha Round was launched in 2001 had assembled together to discuss issues in order to ensure a fair and equitable world trading system, on the eve of the Hong Kong Ministerial Conference. 

          “The perverse impact of policies in developed countries may bring financial benefits to a section of their people, but extract its price in blood from elsewhere.  The high subsidies in cotton alone for rich farmers in developed countries are responsible for the devastation of the livelihoods of millions of poor farmers….  I am disturbed by some of the proposals that we have seen presented by some our developed trading partners.  We are being asked to accept steep market access commitments as a quid pro quo for their own commitments towards reducing their domestic support.  This totally disregards the fact that while tariffs are the only means of protection of vulnerable farming communities in developing countries, and are legitimate economic instruments, domestic support & export subsidies are grotesquely distorting”, he said. 

          The G-90 countries, who were critical of the US and the EU, warmly applauded India’s position. They specially welcomed India’s move to unilaterally grant duty-free quota access to the Least Developed Countries (LDCs) of Africa.  They were particularly appreciative of Shri Kamal Nath’s statement at the G-90 that: “A point of over-arching relevance is that all developing countries, particularly the small, weak and vulnerable countries and LDCs will face significant transitional costs. The issue of preference erosion is a real challenge. We fully recognize that the particular development challenges of small, weak and vulnerable countries need to be addressed if the development outcome of the Doha Round is to be a reality”.  Shri Kamal Nath also suggested that a fund be created to assist countries to manage the impact of preference erosion. 

          On non-agricultural market access (NAMA), Shri Kamal Nath stressed that “the modalities for liberalisation in NAMA must accomplish two things simultaneously: (i) ensure that the remaining high tariffs, tariff peaks and tariff escalations in developed countries is eliminated in this Round, and (ii) ensure that sufficient flexibility that accommodates the sensitive sectors and adjustment needs of developing countries is provided for.  These flexibilities are ‘stand alone’, and cannot be traded off against the tariff reduction formula”. 

          He called upon developing countries to be ever persistent and ever vigilant – “Persistent, till our developmental goals are met, and vigilant that this is achieved without sowing division amongst developing countries. The fact that South-South trade is rapidly growing points out correctly that we are capable of aiding each other while maximizing our own benefit and advantage”, he said.  

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Press Information Bureau
Government of India
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SAFTA FINALISED: KAMAL NATH

 New Delhi: December 01, 2005

 The South Asian Free Trade Area (SAFTA) Agreement has been finalised, Shri Kamal Nath, Minister of Commerce & Industry, has indicated.    The Minister, who is in Brussels in connection with G-90 Summit as a Special Invitee, indicated this in a message on receiving intimation from Kathmandu about the deliberations of the Committee of Experts on SAFTA which met there from 29^th November-1^st December 2005 to resolve the outstanding issues on SAFTA so as to complete the negotiations.   Senior officials of the Commerce & Industry Ministry participated in the meeting.       

SAFTA, signed during the 12^th SAARC Summit held at Islamabad, Pakistan, in January 2004 is scheduled to come into force on 1^st January 2006 and to be fully operational by 2016.  

“ Implementation of SAFTA will further strengthen our trade relations with the SAARC countries”, Shri Kamal Nath said.  

 A Committee of Experts (COE) consisting of delegates from all Member States, has been negotiating on all outstanding issues pertaining to SAFTA, namely (1) Rules of Origin (2) Sensitive List (3) Mechanism for Compensation of Revenue Loss (MCRL) for the Least Developed Contracting States (LDCS) and (4) Technical Assistance to LDCS (Technical Assistance).   Matters regarding Technical Assistance had been finalised earlier.  

Background  

            Under Article 7 of SAFTA, a phased tariff liberalisation programme from the date of its coming into force, is envisaged. In first two years, non-LDCS (non-Least Developed Contracting States) will bring down tariffs to 20%, while LDCS will them down to 30%.   Non-LDCS will then bring down tariffs from 20% to 0-5% in five years, Sri Lanka (which a non-LDCS) in six years and LDCS (from 30% to 0-5%) in eight years.  Moreover, non-LDCS will reduce their tariffs for LDC products to 0-5% in three years.  This tariff liberalisation would not be applicable to the tariff lines included in the Sensitive Lists to be incorporated in this Agreement as an integral part.   

India’s total trade with SAARC countries increased from US $ 4816.88 million in 2003-04 to US $ 5205.57 million in 2004-05 registering an increase of 8.07%.   

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