Lankan experts adopt strategies to safeguard agricultural sector

by Gamini Warushamana

Sri Lankan experts are adopting strategies to provide maximum safeguards to the agricultural sector of the country at WTO negotiations though the negotiations are deadlocked. The negotiations on agriculture were to be finalised by April 2006 but failed. At the beginning of this month trade ministers again failed to agree on the Doha round of negotiations as scheduled and the Director General of the WTO Pascal Lamy said that the negotiations are in a crisis.

Research Economist of the Department of Export Agriculture Dr. Anura Herath has proposed a formula to cut tariffs by weighted average 15% as proposed by the WTO. Accordingly we can still impose a maximum 50% tariff or the zero cut on special products so that we can protect local farmers. A 30% tariff cut will be imposed for products at the other end and a 12% tariff cut for the remaining products, Dr. Herath said.

At the Hong Kong round of the WTO, tariff bands were proposed to reduce tariffs. Sri Lanka and most of the developing countries have to comply with a weighted average tariff cut of 15%, a low level band.

Special products are determined by three criteria; food security, rural development and livelihood improvement. Under this classification 20% of our tariff lines could be designated as special products, he said. Rice, potatoes, B-onion, red onions, fresh milk, green gram and coconuts are some of the special products.

Today, agricultural sector negotiations at the WTO are on three pillars; Domestic subsidy, export subsidy and market access. The first two are not relevant to Sri Lanka, because the government of Sri Lanka is fully committed; not because of the WTO ruling but as the treasury does not have money to provide such subsidies.

Our domestic subsidies such as fertiliser subsidy are within the WTO limit or they are in the green box according to WTO literature. "We do not provide export subsidies, export credit at lower interest rates or export credit guarantees. Both these are offensive tools in international trade. Therefore we have to play only on the defensive pillar, the market access," Dr. Herath said.

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The agreement to cut our tariffs to a 50% single line at the Uruguay round of the multilateral trade negotiation is a serious error our negotiators have made and it is a good lesson that should be taken into account in future negotiations at the WTO, Dr. Anura Herath said.

Today we experience the negative consequence of this tariff cut in agriculture. Over the last few years our cereal production, specially green gram, kurakkan and maize have been declining continuously and some crops such as sogam have been wiped out from local farm lands due to cheap imports. This may be the reason behind the total collapse of our Chena economy in the rural areas, Dr. Herath said.

According to statistics the cultivated extent of other field crops (including all crops mentioned above) in Sri Lanka has declined by 37.5% from 320,000 hectares in 1995 to 200,000 in 2001.

At the Uruguay round in 1986-1994 the Agreement on Agriculture (AoA) was adopted and concluded in April 1994. It introduced new disciplines on trade on agricultural products and was implemented between 1995-2000.

Accordingly Sri Lanka agreed to cut tariffs for agricultural imports to 50% single line without considering strategic products we have to protect. It was not done by other developing countries. For example India enforces 300% tariff on some products. Their tariff line is not a straight line and there are peaks.

Therefore in today's negotiations in agricultural products, we are at a disadvantage, Dr. Herath said. Other countries have a massive advantage because the 15% weighted average tariff cut is applied to most of the developing countries and countries such as India can still apply a comparatively high tariff to protect their products.