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This refers to some factual inaccuracies contained in the article on "Lankan and Asian paddy cultivators exploited by WTO regulations" which appeared in Daily News of 18th March 2004.

Playing vital role - the farming community.

The first and eighth paragraphs carry a statement made by a representative of Humanist Institute for Co-operation with Developing Countries (HIVOS) that the rules and regulations under WTO exploit Sri Lankan and Asian paddy cultivators and that the WTO influences paddy and fertilizer subsidy. These statements have been made without carefully assessing an array of flexibilities provided by the WTO Agreements, particularly Agreement on Agriculture (AOA).

The AOA recognises that the government measures of assistance, whether direct or indirect, to encourage agricultural and rural development are an integral part of the development programmes of developing countries. Accordingly, it provides the following flexibilities particularly to the developing countries:

* Reductions in customs duties from 1985 applied level to the 1995 agreed bound level were to be implemented over a period of ten years w.e.f. 01.01.1995, where as developed countries received only five years for the same purpose;

For example, Sri Lanka has bound its customs duties on products covered in the AOA at 50% ad valorem.

* Sri Lanka could continue to maintain export subsidies to exporters to reduce their costs on marketing agricultural exports and the payment of international and internal transport and freight charges on export shipments during the implementation period of the AOA;

* Sri Lanka could continue to provide domestic subsidies, under green box subsidies which have become very useful for countries who can finance programmes as the scope under this provision is very wide;

* Sri Lanka could continue to provide investment subsidies and agricultural input subsidies to low-income or resource-poor producers, which is exempt from reduction commitments.

Within the available flexibilities developing countries like Sri Lanka is able to pursue its legitimate objective of enhancing the basic food production, particularly rice production and improving the livelihood of the agriculture community in the country.

The domestic and export subsidy programmes that are in force at present in Sri Lanka are very well within the permissible limits (for domestic support 10% of the total agricultural production) and there is still considerable room available for SL to introduce new programmes aiming at the agriculture sector, provided that the necessary funds are available for their implementation.

It is therefore factually incorrect to state that the WTO influences the subsidies that can be provided by developing countries, like Sri Lanka.

What the current framework of the AOA does not provide for Sri Lanka at present is the required flexibility in market access area, where Sri Lanka can adjust its bound customs duties, when the need arises. This concern, which is of significant importance to Sri Lanka, is being addressed at the ongoing negotiations, on which Sri Lanka has submitted a proposal.

Securing market access in Developed Country markets:

The Press article also mentioned about the market access opportunities for developing countries in the developed markets. While agreeing to the statement that there still remaining barriers, both tariff and non-tariff in developed country markets, it is factually incorrect to mention that developing countries have substantially reduced customs duties on rice and when rice is imported into their countries that it will enter duty free.

When carefully analysing the market access schedules of most developing countries, the bound rates of the most sensitive agricultural items are high. For example, Sri Lanka has bound customs duty on rice at 50%, though it applies a low rate of Rs. 9 per kg at present. When rice is imported into Sri Lanka, it will not enter duty free and the applicable duty will be levied.

Due to frequent fluctuations in supply of rice (and also other agricultural products) at national level, most of the rice producing countries apply seasonal duties and those duties are maintained well within the bound levels.

Certain developing countries which could impose additional duties under Special Safeguard Provision of (AOA) (Article 5) and Annex 5 of AOA in addition to ordinary customs duties, are able to exercise the kind of flexibilities legitimately available to them under AOA. At present, these flexibilities are not available to Sri Lanka and the need to provide such flexibility is accepted in the ongoing negotiations.

Sri Lanka's approach in respect of protecting the weaker section of the agricultural community:

There also appear to be a number of misconceptions about the ongoing negotiations on agriculture in the WTO. The outcome of the Doha Trade Round certainly will have long-term impact on the livelihoods of local agricultural communities.

This is particulary true for communities in most developing countries like in Sri Lanka, where agriculture remains the dominant economic sector, accounting for more than 70 per cent of employment, compared with 30 per cent in middle income nations and a mere 4 per cent in high-income countries.

The Ministry of Commerce and Consumer Affairs has therefore recognised it is critical for small farmers in Sri Lanka to have adequate protection from drastic liberalisation measures, since the market does not work in their favour. Our trade policies have therefore aimed at providing small farmers and the rural poor in Sri Lanka the protection needed to ensure the continued viability of their livelihoods.

The Ministry has also recognised that they also need support from the government to increase their production and productivity to market their production and need protection against dumping and unreasonable competition from subsidised producers' abroad, thereby providing them with a level playing field.

Though Sri Lanka is a supplier of major commodities, such as tea, rubber and coconut, it is categorized in the WTO as a food deficit country, which heavily relies on imports to satisfy its basic food consumption needs. Sri Lanka is therefore a Net Food Importing Developing Country in the WTO context. This situation warrants Sri Lanka to adopt a somewhat different position in the ongoing agriculture negotiations, compared to other developing countries in the region.

Safeguarding the country's interest in the ongoing negotiations

An Inter-Ministerial Sub-Committee on the implementation of AOA, has been established to overlook the implementation of WTO AOA. This Committee among other things, has recently recommended broad negotiating positions which Sri Lanka should take in the ongoing negotiations, after a careful analysis of SL's existing WTO commitments and what is required in the future for safeguarding the interests of the agriculture sector.

Keeping the above objectives the officials of the Department of Commerce under the direct guidance of the Ministry of Commerce and Consumer Affairs have actively engaged in all stages of negotiations, and presented a number of proposals with a view to safeguarding the interests of the small farming community in this country. The main objectives of the proposals in market access area are-

* To obtain required flexibility for Sri Lanka to adjust the bound custom duties at times of import surges thereby removing negative affects of low international market prices on small farmers through a special safeguard mechanism. Through this mechanism, Sri Lanka would be able to levy additional duties on agricultural products over an above the current bound level, at times of import surges;

* To maintain the current level of bindings (50%) with respect to "sensitive agricultural products" due to their relevance to achieving country's food security, rural development and rural employment objectives;

* To obtain longer time period for implementing further reduction commitments in the current bound levels on 'non-sensitive agricultural products';

Similar efforts are also under way in identifying products of export interest to Sri Lanka to secure market access in both developed and developing countries. Though Sri Lanka does not export rice in more organised manner at present, it is a commodity which may have great potential.

Similarly there are other agricultural products which have shown potential. When developing countries, like Sri Lanka are requested to provide special requests for enhanced market access, which will be over and above the normal level to be agreed under the new framework, it is SL's intention to submit requests to other WTO members for further reduction of duties and for removal of non-tariff barriers affecting market access.

Sri Lanka delegation to the WTO in Geneva approaches the ongoing negotiations seriously to assure that the framework to be agreed by the WTO Members includes elements that address the above concerns.

Harsha Wickremasinghe, Secretary, Ministry of Commerce and Consumer Affairs.

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