US Farm Bill can slowdown WTO negotiations: FICCI

New Delhi, Feb 2 (UNI) Industry chamber FICCI has expressed concern over shifting of farm subsidy by the US in its recently announced farm policy from 'amber' and 'nlue' box to 'green' box and said it will lead to trade distortions.

Amber and blue box subsidies under WTO will be subject to reduction commitments as they are trade distorting, unlike green box support which is considered to have minimal trade distortion, the chamber said.

''In its proposal, the US has not reduced the farm support level significantly and has mainly shifted its support from one box to another in order to comply with WTO rules,'' FICCI President Habil F Khorakiwala said.

This underscores the need for strengthening and tightening of WTO disciplines for the green box under the agreement on agriculture, which are exempted from any kind of reduction, he added.

The proposed changes in the Farm Bill will give the US enough flexibility to accept reduction in trade distorting support while at the same time increasing its level of the so called non-trade distorting support, observed FICCI.

It noted that the support under the direct payment programme (DPP) of US Farm Bill, which is one of the main support programmes of the US administration, has been increased by 5.5 billion dollars over a period of 10 years. The criteria for availing support under DPP has been revised to make it WTO-compliant under the Bill.

Under the previous US Farm Bill (2002), these direct payments under the DPP were given on base area and yield. However, it allowed the producers to update base area and yields resulting in direct linkage between the production and increased level of subsidy to farmers, thereby distorting markets.

FICCI pointed out that the support level for cotton is likely to increase under the direct payment programme of the Bill, which will go against the spirit of Hong Kong Ministerial Declaration that explicitly calls for addressing all trade distorting policies affecting the cotton sector.

The US has also introduced an additional category of direct payments for new farmers, noted FICCI. Some of the key trade distorting programmes for dairy remains virtually untouched thereby perpetuating the distortions in international trade. This could slowdown the pace of negotiations in Geneva, Mr Khorakiwala said.

UNI