Cant cede policy space by agreeing to ban export taxes,freezing import duties

Developed nations pushing such proposals in the garb of eliminating protectionism: Khullar.

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Fearing New Delhi may end up ceding policy space at the G20 leaders meeting at Cannes,the department of commerce has written to the Prime Ministers Office and the Cabinet Secretariat that the government must not accept any prescription of developed countries that will require India to freeze import tariffs at existing levels and stop it from imposing export taxes or restrictions.

The department of commerce has recently communicated to the PMO and the Cabinet Secretariat about its note sensitising key economic ministries including those dealing with natural resources and the agricultural sector about such an initiative by developed nations. The developed nations plan to move a resolution in the G20 meeting seeking all member countries to ban export restrictions and export taxes in perpetuity and also provide for a standstill on import tariffs. Such a resolution was being pushed by the developed nations in the garb of promoting food security and eliminating protectionism,said a commerce department official.

For instance,to disincentivise iron ore exports,India has levied a 20 per cent export duty on both lumps and fines. Similarly,it has the flexibility to introduce import and export duties on a variety of agricultural products depending on domestic demand and supply situation. At times of high food inflation or drought,the government can eliminate import duties to allow faster and cheaper imports of food items. Agreeing to the proposal of the developed nations will not only require the government to freeze the duties at current levels and also do away with the export duty on iron ore.

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In a letter to various economic ministries on September 30,Commerce Secretary Rahul Khullar said,In actuality,it is nothing but a self-serving move to promote developed countries commercial interests.

Citing a meeting in June,Khullar said that G20 agriculture ministers had agreed to abandon export restrictions and extraordinary export taxes against procurements by the World Food Programme for non-commercial and humanitarian purposes. They also decided to recommended consideration of the adoption of a specific resolution by the WTO in its Eighth Ministerial Conference slated in December. But the text that is being proposed by them seeks to extend this beyond WFP and seeks to proscribe all export restrictions and export taxes in perpetuity, he noted.

According to Khullar,some developed nations such as Canada,Japan,US and the EU have mooted a proposal to standstill tariffs,which in effect seeks commitments from other countries not to raise import tariffs above their current applied levels. This will have serious ramifications for public policy in domestic food security. Can we commit to keeping it at zero even when we have a drought, asked an official.

What developed nations are trying to do is bypass the Doha agenda and obtain tariff reduction from developing countries without offering anything in exchange. This is simply unacceptable, Khullar said in his letter.

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