Sommaire: "EU-India trade and Doha Round of WTO" - Speech by EU Commissioner Fischer Boel (6 March 2007: New Delhi)
Speech by Mariann Fischer Boel, Member of the European Commission responsible for agriculture and rural development, "EU-India trade and Doha Round of WTO" at a Conference organised by FICCI (Federation of Indian Chambers of Commerce and Industry), New Delhi
Your Excellencies, Ladies and gentlemen
It's a pleasure to join you at this event co-hosted by FICCI and by the European Commission. I would like to express my sincere thanks to the organisers for helping to make it all possible. I would also like to say what a great honour it is for me to be at the head of our delegation of twenty-eight business leaders, whose companies have a combined turnover of more than €54 billion a year.
This is my first visit to India, and I must say that I'm excited about it! Everyone knows that India is now a very tall figure on the world stage, economically and politically; and I myself have had the pleasure of dealing with your Minister for Commerce and Industry, Kamal Nath during days and nights of tough DDA negotiations. But nothing can replace a visit. I have been greatly looking forward to taking the pulse of your great country myself, and meeting as many people as possible.
Many things that I have already seen here will stay in my mind for a long time to come. One of these is your national emblem with its three visible lions symbolising power, courage and confidence.
Perhaps these handsome lions could also be emblems of the developing relationship between India and the European Union. In this case, the "power" in question would not be projected power, but rather the power to achieve things together through co-operation and trade as we strengthen our links with courage and confidence.
We already have an excellent foundation on which to continue building this relationship, in several respects.
First, we have an excellent political foundation. In 1963, India became one of the first countries to establish full diplomatic relations with what was then the European Economic Community. This long-standing relationship complements the excellent links which also exist between India and individual Member States of the European Union.
Secondly, we have an excellent foundation in respect of trade. The European Union is your biggest commercial partner: total trade between us grew from €26 billion in 2000 to almost €40 billion in 2005.
Thirdly, there is an excellent foundation in terms of investment. We are the largest foreign investor in India. And in recent years your companies have taken a growing interest in ours, making us the second-most-important destination for Indian capital.
So, we are used to trading and doing business together. And I have no doubt that there is huge further potential - especially in the agri-food sector, which is my particular responsibility.
Of course, trade and other business take place in a political context. It's probably best if that context is as invisible as possible; but it's always there, and we have to understand it. So I think it would be useful today if I explained certain aspects of that unfolding context from the European perspective.
As my starting-point, I will take the multilateral trade system, as set out in the rules of the WTO.
I do so for good reason.
For us, the multilateral system is what locks everything together. When it is strong and transparent, we know where we are, and we can reach agreement on important issues through negotiation rather than litigation.
It is also the best means of sharing the fruits of globalisation with those poorer countries for whom such fruits are often out of reach.
Bilateral agreements have their place, but they can only complement multilateral arrangements. Trade negotiations are never level playing fields. But this is much less of a problem when there are 150 teams on the pitch than when there are only two, of unequal strength.
Furthermore, there are issues which, by their very nature, cannot be addressed in bilateral talks. An obvious example in the agricultural sector is the trade-distorting subsidy which the US pays to its farmers - and which must be disciplined, just as we have disciplined our support systems.
For these reasons, the European Union is not only one of the biggest players in the Doha Round of WTO trade talks, but also its most enthusiastic backer. We have been stretching every muscle to bring success to these talks, and we will continue to do so in the months ahead.
In respect of the agricultural section of the talks, a lot of the muscle-stretching has actually taken place at home rather than at the negotiating tables of Geneva - and over a period of years. What I mean is this: it's because the European Union has carried through far-reaching reforms to its domestic agricultural policy that we have been able to play such an active game in the Doha Round.
Many people know that one of the oldest common policies of the European Union is its Common Agricultural Policy (CAP). Many people also know that this has frequently been criticised, especially because of its perceived impact on global trade.
The CAP has indeed been vulnerable to criticism in the past. For many years, it functioned primarily by maintaining relatively high domestic prices through a combination of import tariffs, export refunds, and public buying when markets came under pressure. There were valid reasons for this, which lay in post-War food shortages. But the chosen approach did not always present a friendly face to the outside world.
However, over the years, a number of reforms have scaled down or dismantled much of this apparatus, in response to various concerns.
The most recent cycle of reforms began in 2003. This is when we changed the basis on which we pay direct income support to farmers - "decoupling" this support from production, connecting it to various standards, and renaming it the Single Farm Payment.
To receive the Single Farm Payment, farmers do not have to farm a given product. The payment is based on past individual, regional or national receipts, and is linked to land. A farmer's Single Farm Payment is reduced - possibly even to zero - if he does not respect tough standards of environmental care, animal welfare and public health.
This frees farmers to follow market signals when making production decisions, and therefore avoids trade distortion.
It also gives farmers a strong extra incentive to provide the public goods that we want - pleasant fields, clean air and water, a reliable level of food safety.
We are extending these key principles of reform to more and more of the CAP, while also developing our policy for meeting the broader needs of rural areas, beyond those of agriculture.
This means that the emphasis of the CAP is shifting clearly away from productivity and towards competitiveness, high-quality production, public goods, and the health of the rural economy.
Our reforms are already paying dividends at the domestic level. And as I have already said, they have also put us in an excellent position to lead from the front in the Doha Round agriculture talks.
In respect of domestic support, we have proposed a huge cut of 70 per cent to our ceiling on trade-distorting subsidy.
This has been possible because the Single Farm Payment does not affect production decisions and therefore fits into the WTO's Green Box of least-trade-distorting support.
With regard to export competition, we have offered to phase out our export refunds by 2013. Once again, this has been possible because we have done our homework - by moving away over the years from a CAP, which essentially met its objectives through price support.
The offer of a phase-out goes far beyond what we have seen on export support from any of our trade partners. It gave fresh momentum to the Doha negotiations in Hong Kong in December 2005.
We have also shown considerable ambition on market access. According to the offer, which is formally on the table at this time, we would halve our average agricultural import tariff from 23 per cent to 12 per cent.
Taken together, these three elements of our agricultural offer make a very attractive whole. They would slice many billions of euros off our farm sector receipts, handing corresponding gains to others.
We are prepared to accept this - but only as part of a balanced agreement in the Doha Round.
That means, first, balance in terms of agriculture. All the big players must get serious about cutting trade-distorting domestic support. There must also be real disciplines on all forms of export subsidy.
It also means balance between agriculture and other sections of the Doha Round talks. We cannot brush the issues of market access for services and industrial goods to one side. Within the framework agreement for this Round we are clearly committed to showing the same ambition in these sectors as in agriculture. I think that India and the EU have the same interest in a strong/broad and balanced deal covering all sectors.
The need for balance is also among the points that I emphasised during a recent visit to the United States. And I'm glad to report that I found at least some awareness of what is required to get the Doha Round across the finishing line.
On the other hand, I think we need more from the US than we are actually seeing in practice just now. The current draft of the new Farm Bill pushes in the right direction, but not far enough. I hope to see a final version which really reins in trade-distorting domestic support programmes in the US - one of the main stumbling blocks for the successful Doha Round at present.
I would also ask for more from the Indian government on certain issues.
We understand that India has sensitive sectors, like many other countries, and needs special treatment for some of them. This is a point which I have come to understand more clearly after my field visits yesterday where I had a good first hand impression of rural India. Nevertheless, allowing further, real agricultural market access where possible would oil the wheels of progress in the Doha Round.
So, too, would signing up to genuine gains in access for services and industrial goods.
As I said earlier, I want the world to understand the depth of the European Union's commitment to the multilateral trade system. But although our trade relations begin there, they do not end there. Bilateral agreements are a vital complement. And one of our foremost objectives at present is a deeper commercial relationship with India.
We have a lot of common ground.
You are one of our most important and valued partners in Asia, with whom we have an excellent mutual understanding.
The European Union is open for business with Indian companies. There is enormous potential for joint ventures of many kinds. And with the right framework in place, there ought to be more opportunities on our territory for your service providers.
We complement each other particularly well in the agri-food sector. Unlike the US, the European Union has been moving away from bulk production over the years, and into high-quality markets. So the business representatives who have come here are not spearheading an assault on your domestic commodity markets.
With this in mind, our bilateral agri-food trade has potential to grow from its current level. This is true for your exports, which were worth about €1.2 billion in 2005; and I feel it's particularly true of ours, which are currently very modest, at €200 million in 2005.
Both sides have an interest in greater openness and trade, and we must translate these aspirations into policy. This means pushing ahead with our negotiations for an improved broad based bilateral trade and investment agreement. We look forward to launching these as soon as possible, following some very encouraging progress.
There are a number of specific issues that we could look at. One of them is your very high import tariffs for agri-food products.
For example: I think we could have a useful discussion about Additional Duties and taxes. Adding these to the existing duties of 100 per cent on wine and 150 per cent on spirits in some cases gives you total duties up to 500 per cent. These products are not staples, and European exporters have a legitimate interest in being able to supply the Indian market. Could we not leave it up to Indian consumers to decide when to buy domestically produced wines and spirits, and when to try something
different?
There also remain a number of non-tariff barriers to European agri-food products. We welcome the progress that India has made in dismantling these, and we would like to see those efforts stepped up.
A final area in which we could hold useful discussions is that of Geographical Indications (GIs).
Much of the European agri-food sector stands or falls by its reputation for quality. For many of our high-quality products, GIs are essential badges for communicating their qualities to the consumer.
Where producers have painstakingly built up a reputation for a product over centuries of hard work, and where that reputation has become associated with the name of a place, we believe that this association should be protected. We believe that Champagne should really come from the Champagne region, just as Darjeeling tea should come from Darjeeling. This is about being honest with the consumer.
I know that the Indian government has some sympathy for our position, but I think we could talk further about how we can help each other through effective and appropriate protection for GIs on our respective markets.
I will end my comments where I began them - with the three Indian lions symbolising power, courage and confidence.
I think they express the attitude that we should take in our unfolding relationship. We should make our horizons as wide as possible. India and the European Union are both big agricultural producers and traders, with big hearts. So let's think big together, and make globalisation work in our favour.
Thank you for your attention.
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