Sri Lanka is pushing for special concessions for agricultural goods at world trade talks, to help domestic farmers. “Sri Lanka has been categorised as a small and vulnerable economy and is eligible for certain concessions. These can help food security, livelihood protection and rural development,” said the Director General of Commerce, N. C. Magedaragamage during the National Food Week programme at the Commerce Department last week.
“We are negotiating for a list of Special Products and a Special Safeguard Mechanism at the WTO (World Trade Organisation),” said Mr Magedaragamage.
The Special Safeguard Mechanism is to protect local farmers from import surges. An import surge, or a sudden large inflow of an agricultural product, can hurt local producers by suddenly making locally produced goods uncompetitive in the local market. But the Special Safeguard Mechanism, if available, will allow the government to increase import duties on the relevant goods, during a surge, without violating WTO rules. This will prevent prices of locally produced goods from crashing and will ensure local producers are not hurt.
The second concession is a list of Special Products. The government will be able to avoid drastic import duty cuts on these selected agricultural goods. This is again to protect local farmers. Sri Lanka already has relatively low import duties on agricultural goods compared to many other countries, so reducing duties a lot more will make it easier for low-cost imports to push out local producers from local markets.
The Commerce Department says these concessions are important because a majority of Sri Lanka’s rural populations are dependent on agriculture for food and employment.
Unlike many developed countries Sri Lanka also does not invest in large-scale agricultural subsidies to help local producers. “Many developed countries give large agricultural subsidies to their agriculture sectors. Our governments cannot afford to do this. So we are looking at other ways to help domestic agriculture,” said Mr Magedaragamage.
Although, giving agricultural subsidies go against WTO rules, rich countries give billions of dollars worth of subsidies to their farmers every year. According to OECD estimates in 2004, the EU gave US$ 114 billion worth of subsidies to European farmers. In the same year the US gave US$ 40 billion in subsidies to US producers while Japan and Canada put US $ 46 billion and 5 billion as subsidies into their agricultural sectors.
Rich countries have agreed to phase out subsidies that are considered trade distorting but billions of dollars in subsidies are still pouring into agricultural sectors in developed countries. For instance, this year, both the US and the EU re-introduced export subsidies for dairy producers in the EU and the US. The export subsidies were re-introduced to help US and EU dairy producers that are hit by the global down turn.
Developing countries say these subsidies allow farmers in rich countries to produce goods at lower costs than farmers in developing countries. The subsidies are said to make developing country agricultural goods uncompetitive in world markets and of helping to keep developing country farmers in poverty.
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