State trading of farm produce angers WTO

State trading of farm produce angers WTO

JAKARTA (JP): The trade of farm produce by state agencies has
been criticized by some members of the World Trade Organization
(WTO) for creating trade distortions, a WTO executive said here
yesterday.

"Now, more focus is being put on state trading because ... in
the view of some countries, state trading creates distortions,"
WTO Deputy Director General Anwarul Hoda said.

Hoda is here to attend a three-day, Asia-Pacific, senior
officials meeting which ends today. The meeting is to prepare the
way for an inaugural WTO ministerial meeting in Singapore in
December.

Some countries have expressed great concern over the problems
of state trading and have even proposed that it be "looked into
in greater detail in the next round (of agricultural negotiations
in 1999) or even before that," Hoda said.

He did not refer to any countries which maintained problematic
state trading practices. However, there is state trading of
agricultural commodities in Indonesia through the National
Logistics Agency.

As part of the government's import substitution drive, the
import and distribution of some agricultural products, including
sugar and wheat, are still monopolized by the agency.

The WTO agreement on agriculture, to be implemented mostly
between 1995 and 2000 for developed countries and between 1995
and 2004 for developing countries, does not mention state
trading. The agreement has three main components: reductions in
farm export subsidies, increases in import market access and cuts
in domestic producer subsidies.

To comply with the agreement, signatory countries are required
to reduce their farm export subsidies to one fifth lower than
they were in the late 1980s. Budgetary expenditure on export
subsidies is to be lowered by 36 percent for developed countries
and by 24 percent for developing countries.

In terms of market access, member countries are required to
convert their non-tariff import barriers into tariffs, which are
then to be reduced by 36 percent for developed countries and by
24 percent for developing countries.

Japan and South Korea have managed to get concessions on the
agreement. They are allowed to delay their tariff reductions on
rice. Developing countries are also exempted from reducing their
tariffs on products which are staples in traditional diets.

The chairman of the meeting, Soemadi D.M. Brotodiningrat, said
yesterday that Japan remained reluctant to discuss market access
for farm commodities.

"In Japan, agriculture is a sensitive issue. Although the
number of farmers is small, they are very influential," Soemadi
said. "Even for preparatory meetings for the next round of talks
on agriculture, Japan is reluctant to endorse it because its
farmers are very emotional."

In terms of subsidies, member countries are required to reduce
their aggregate levels of domestic support for farmers to four
fifths of their levels in the late 1980s for developed countries
and to 87 percent for developing countries.

Hoda revealed yesterday that during the meeting, India had
raised concerns over the domestic subsidies issue, arguing that
India, with its large population, could not depend on the
international market alone to feed its people. So it should be
given flexibility in meeting its food requirement.

"I personally feel that the agreement on agriculture already
contains flexibility for developing countries to do enough for
its agriculture," Hoda said.

Meanwhile, Minister of Agriculture Sjarifudin Baharsjah said
in Semarang, Central Java, yesterday that Indonesia's policies on
agriculture have been adjusted to conform with WTO principles.

Sjarifudin said that Indonesia is committed to liberalizing
trade for 1,341 agricultural items through reducing tariffs and
trade ceilings in accordance with the Final Act and Modalities
for the Establishment of Specific Binding Commitments under the
state's reform program.

"We have been committed to reducing import tariffs on each
agricultural item by at least 10 percent. It means that the
average of our tariff reductions on farm products is higher than
the set 24 percent," Sjarifudin said.

He also said that Indonesia would continue implementing all of
its commitments to the WTO, including those on market access.
Indonesia, he said, is committed to opening its market for rice
-- the main staple diet for most Indonesians -- and diary
products to 70,000 tons and 414,700 tons a year respectively.
(har/rid)