Lamy says LDCs concern on textile exports 'largely belied'
20 Dec '06
5 min read
Fibre2fashion: Shouldn't WTO as an organization, assert itself and disallow hijack of its globally beneficial agenda by handful of countries, especially on the issue of agricultural subsidies and other trade issues, as the question of bringing in consensus is being dragged along for too long?
Pascal Lamy: The WTO is an Organization of its Member governments where all decisions of importance have to be taken by consensus. Any change to that rule would require consensus and a lot of Members, including those that do not support or protect agriculture, would vote against any such proposal. One area where consensus is not required is in dispute settlements. In these cases, the decision of the panel or, if the case is appealed the Appellate Body, are adopted automatically unless there is a consensus against the decision. Therefore, a Member government can always take a legal challenge against a subsidy used by another Member
Fibre2fashion: Last but a fundamental question on the issue of subsidies. If the respective countries do not support their farmers with subsidies, Sir, do you expect WTO or other developed countries to come to their (farmers) rescue when international markets fail to offer them remunerative prices for their survival?
Pascal Lamy: What is a "remunerative price"? Is this some single fixed price for an agricultural commodity that operates throughout the world or should it be established for each country or each region? The trouble with this concept is that it could quickly become an excuse to prevent trade because some farmer somewhere is producing at a price that is many times higher than another farmer somewhere else. Indeed, this concept was used in the EC to justify high tariffs, intervention (which led to butter and beef mountains and wine lakes) and export subsidies. The problem with these types of programmes is not only that they harm producers in other countries but that they are very inefficient (most of the benefits go to those that supply inputs to farms or processors that buy the output from farms) and inequitable (the biggest farmers, suppliers and processors gain the most). It is much more efficient and equitable to pay farmers directly in a way that is not related to price or production and these types of payments do not have to distort production or trade and do not have to be reduced because they come under the Green Box category in the Agreement on Agriculture and any Member can use this category. In terms of sudden shocks caused by price falls or import surges it has been agreed that developing countries will be able to use a Special Safeguard Mechanism that would allow them to charge higher import duties when import prices fall or there is a sudden surge in imports.
To view the full transcript please visit WTO website.
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