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Should India Sacrifice Agriculture For Trade?

Should India Sacrifice Agriculture For Trade?

By Shobha Shukla
22 September 2014

Well, any right-minded person would say NO. But the global, as well as the local media, has castigated India for not ratifying the Protocol of Amendment for the Trade Facilitation Agreement (TFA) at the recent World Trade Organization (WTO) negotiations in Geneva in July 2014, and for linking it to discussions for a permanent solution to the G-33’s Food Security Proposal. India’s refusal to tow the line of developed countries has caused worldwide uproar.

However, India’s stand to block the ratification of TFA unless other elements of the Bali Outcome, including a permanent solution to food security proposal and the LDC package are advanced, was supported by developing countries like Venezuela, Cuba and Bolivia, and drew appreciation from global civil society, farmers and food rights groups.

Analysts have shown that the TFA’s overall benefits are vastly exaggerated as it eases entry for imports from developed countries only while developing countries are left with economic and social costs of compliance. There seems to be a meticulous campaign orchestrated by the WTO Director General’s office to ensure that India is forced to relent on its position, thus sealing all hopes of a good outcome on the food security proposal or in getting even a basic minimum enforceable LDC package through.

The issues indeed are complex and one needs to understand the political dynamics at play in order to engage with the Government of India to ensure support for consolidating India’s position. With this objective, a workshop on ‘India at the WTO: The Battle between Food and Trade’ was recently organized in Delhi, jointly by Third World Network, South Solidarity Initiative –ActionAid India, and Focus on the Global South Centre for WTO Studies (IIFT) that brought together government representatives, researchers, farmers groups, industry and civil society activists, so as to build a comprehensive understanding at the grassroots level and explore ways to move forward in a cohesive manner.

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In his keynote address Jayant Dasgupta, former Ambassador to the WTO, GOI, admitted that, “It is the business lobby, wanting to enter new markets, that drives trade negotiations at the WTO. The agenda is exporter driven. So developed countries like USA and those in the European Union (EU) share a commonality of interest and still lead. Although trade involves export and import, but TFA, as of now, is all about making changes in import procedures and there is nothing about exports. Also USA and EU are not making changes in their own trade facilitation around their imports. Smaller countries will not benefit from this agreement.”

Amit Sengupta of the People’s Health Movement, has explained the real issue very succintly. In one of his articles he says that, “In Geneva, India had simply asked that the passage of the proposed TFA be made contingent to finding a permanent solution to the issue of food subsidy that addresses the needs of the poor, but USA and its allies were unwilling to reverse a clause in the Agreement on Agriculture (AoA) that prevents developing countries from ensuring food security to its people. At the last WTO Ministerial meeting in Bali in 2013, G-33 (a group of 46 developing nations) had proposed that TFA should go forward only if WTO reverses the clause in AoA under which countries have to limit their support to agriculture in the form of public stockholding of foodgrain to a maximum of 10% of production. Such support includes procurement of food grain for food subsidy programmes and provision of minimum support price for agricultural commodities. Also subsidies (like procurement price) were unjustly calculated on the basis of agricultural commodity prices of 1986-88. Simply put, this would mean that while US invokes no penalty if it provides 385kg/person as food aid under various programmes, India cannot provide even 60kg/person of foodgrains under its Food Security act.”

There was an overwhelming consensus in the workshop on the importance of minimum support price (MSP) and public distribution system (PDS), which despite their inadequacies, still form an important food security network in India. While MSP protects the farmers from distress sales and also procures food grains for public distribution, PDS distributes subsidized food grains to India’s poor. If agricultural subsidies and public food stockholdings are reduced in India, it will endanger food security and push farmers further out of agriculture. As it is, even MSP and PDS have not helped in curbing the huge migration from rural to urban areas. But lifting them could destroy the agriculture sector completely. Yes, the PDS and MSP are in no way ideal and both need to be streamlined. But till we replace them with a better system, they should remain and the subsidy system should not be replaced by direct cash transfers.

Before the Bali meeting, the G-33 had proposed that public stockholding should be freed of conditionalities and countries should have the freedom to increase such stockholding to any level that the domestic situation may demand. The developed countries rejected this and instead proposed a ‘peace clause’ that put a moratarium of 4 years on any retaliatory action if countries went above the 10% support in case of public stockholding. Thus while India had sought to secure subsidies to farmers through the G-33 Food Security Proposal, it eventually settled for the Peace Clause which allowed such subsidies for a temporary period while the developed countries pushed the TFA which is a permanent agreement.

Dr Abhijit Das, Head Centre for WTO Studies, although disappointed at the anti food security bill sentiments in the Geneva meet, was happy to note that the level of awareness in farmers’ groups has increased and farmer leaders have become important on the negotiation table. “It is not an easy fight, but we do need a permanent solution to the problem. We have to take this battle between food and trade outside India and reach out to counterparts (farmer groups and CSOs) in other countries to force negotiators that livelihood and food security should not be sacrificed”, he said.

During the last 20 years there seems to have been a political consensus globally to push for a certain kind of development that is based on trade, at the cost of agriculture. Biswajit Dhar, Professor, Centre for Economic studies and planning, JNU called TFA as the most imbalanced agreement around subsidy, market taxes and exports. It seems as if WTO has two standards on food security—one for USA and the other for small nations.

Amit Sengupta said that, “It has been reported that if TFA is not approved it would prevent a massive expansion in global trade and that $1 trillion would be lost. But who would actually benefit from this massive trade expansion? Of course the US, EU and other developed countries as they dominate the global trade and not the developing countries.”

TFA purports to simplify, harmonize and standardize border procedures such as custom regulations. But developing countries currently face trade barriers not because of lack of harmonized border rules but because they lack capacity to export products and to overcome the barriers they face in the markets of developed countries--issues which will not be addressed by TFA. An expanded global trade could further the negative trade balance of small countries as their imports would increase faster than exports.

Farmers’ groups strongly believe that India’s main interest should be protection of farmers’ livelihoods and domestic production of food in order to meet the right to food of its people, and that India should not dilute its position of linking TFA with livelihood and food security. However they are scared at the conflicting reports of India being ‘fully committed to the Bali package’ thus giving the impression that it may agree to finalization of protocol on TFA without finalization of the Doha round, especially on the issue of food security.

65% of India’s population subsists on agriculture as compared to 2% of USA and 6% of EU where, unlike India, agriculture is a profession. PDS subsidy is for consumers and should not be treated as linked to agriculture. MSP is not a fair price at all and hence not a subsidy. It does not even cover the input cost of farmers.

Strategies need to be backed by political will. With 24 crore Indians being underfed there is no food security in the country. We have 11.5 crore landholders out of which 2 crore 40 lakh have 2-4 hectare and 6 crores have less than 2 hectare land each. Farmers’ suicides continue unabated.

We have a kheti bachao andolan (save the farming campaign) fighting against the concept of development of smart cities. Instead of minimum support price farmers should be given fair prices.

More is the production, less is the remuneration to the farmer. Recently there were 5 farmer suicides in Baghpat—an agriculturally fertile area. One of them had grown sugarcane and the factory did not pay him till to date. Who will fix the price for the farmer and how? Farmers will have to be connected to subsidy directly otherwise there will be more suicides and greater exodus from villages to the cities.

The trade off at WTO is between livelihood and trade. The government has chosen to safeguard livelihood by safeguarding food security. Agriculture is passing through crisis with a growth rate of 1%-3%. If government lifts MSP, it will collapse totally. It is said that TFA will create 21 million jobs, but for whom, is anybody’s guess.

The next WTO Ministerial meeting will be held in 2015 when the battle between food and trade will see its final outcome. The desperate attempts by the developed countries to get the TFA ratified, leaving all other issues aside, seems to confirm concerns that neither is the TFA for development as is being publicized, nor will the developed countries be interested in allowing a balanced outcome to the developing world. This seems to be a contest between two groups—one that gains from trade expansion and the other who does not understand trade but understands hunger.

Let us hope that Geneva does not remain a flash in the pan and that India sticks to its stand.


Shobha Shukla, Citizen News Service (CNS)
(The author is the Managing Editor of Citizen News Service - CNS. She is a J2J Fellow of National Press Foundation (NPF) USA and received her editing training in Singapore. She has earlier worked with State Planning Institute, UP and taught physics at India's prestigious Loreto Convent. She also co-authored and edited publications on gender justice, childhood TB, childhood pneumonia, Hepatitis C Virus and HIV, and MDR-TB. website: www.citizen-news.org)

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