Wednesday, December 18, 2013

How India sold out to the WTO

Suman Sahai

After Bali we should expect an influx of heavily subsidised agri produce from outside. This will knock the stuffing out of Indian farmers already reeling under adverse domestic policies.

The Indian media is presenting a glorious conclusion of the Bali ministerial, saying the Indian stand had prevailed and that India had indeed bent the US and EU to its will. This is the exact opposite of what has actually happened.

First, India was isolated, partly by the machinations of the developed countries but also because it chose to go it alone rather than with the bloc of developing countries who it has rightly infuriated with its succumbing to US pressure. India giving in will have negative implications for all of them. All the bravado we heard from commerce and industry minister Anand Sharma days before about standing firm to defend our food security vanished in Bali.

It’s remarkable that India failed to bring to centrestage the unfulfilled issues of the Doha Round and no attempt was made to link compliance with outstanding issues there with new issues raised at Bali.

India fell into the trap of discussing subsidy limits and de minimis support in agriculture when it should have argued on the basis of welfare and human rights. The Aggregate Measure of Support (AMS) calculated under the Agreement on Agriculture applies to producer subsidies, that is subsidies to farmers, which heaven knows the Food Security Act does not touch since, in a masterly move, the FSA does not deal with the producers of food at all.

Any subsidy component under discussion here would be a consumer subsidy, not a producer subsidy. It should have been argued as a welfare measure based on human rights imperatives.

India should have argued that its appalling figures of hunger and malnutrition amount to gross violation of the people’s right to food and any attempt by the government to act on it cannot possibly be placed under the purview of WTO sanctions. There was strong support for the India case from the UN Special Rapporteur on Right to Food which the Indian team failed to build on.

As it stands, India has failed to get its position accepted and it has accepted an interim agreement, a peace clause, but with conditions. And it has ceded trade facilitation. What has it come back with from Bali?

w Indian negotiators have placed the country’s entire stockholding of food under external scrutiny and have lost sovereign control over decision-making regarding buffer stocks. They have allowed the WTO’s Committee on Agriculture (CoA) to monitor our grain stocks.

w India will have to freeze its minimum support price (MSP) and will be unable to either raise the MSP or add new crops to its stocks after it has submitted the complicated and embarrassingly detailed forms on public stocks held by Central and state governments.
w Enormous paperwork and implementation costs have been added to maintaining our public stocks, money that could have been spent more profitably elsewhere.

w India will have to freeze the structure and modalities of food procurement now and will be unable to make changes without the permission of the CoA. This is not only humiliating, it has introduced the dangerous precedent of foreign interference in our food security strategies. India after Bali has lost the right to use public food reserves as a plank of its food security.

w Having made a pig’s breakfast of the Bali negotiations, India has also effectively sealed off for itself any avenues to support its farm sector, improve food production and secure the livelihoods of its small and marginal farmers, without invoking howls of protest from the CoA and the denizens of the WTO.

And Trade Facilitation stays in place as what we have given away at Bali. This will mean “facilitating” the entry of foreign products into the Indian market. Opening India’s market to agricultural produce has long been the goal of the large agriculture exporting countries, especially the US and EU. That goal is close to being realised. India has so far managed to fend off large-scale dumping of agricultural produce but that may be coming to an end.

After Bali we should expect an influx of heavily subsidised agri produce from outside. This will knock the stuffing out of Indian farmers already reeling under adverse domestic policies and the utter neglect of the agriculture sector. Trade facilitation for genetically modified products will almost certainly be on the menu, if for no other reason than to break the back of the domestic resistance to GM crops and foods. But also because the major agriculture exporters are sitting on stocks of GM corn and soya and there are other products in the pipeline, all waiting for markets.

And the Indian farmer post-Bali? Unable to compete with the heavily subsidised farm products from the US, Canada, Australia and the EU, the Indian farmer will be forced to abandon his fields and swell the slums of cities. Apart from the supply to the open market, who will produce the stocks of cereals needed to keep the Food Security Act in motion? I can almost see the Cargills and Bunges smiling in the wings.

The ill-conceived and opportunistic Food Security Act has cost the country very dear. Together with the inept negotiations in Bali, it has put India in the dock, under public scrutiny, tied its hands behind its back and taken away options for the betterment of the farm sector and future food security. The pale silver lining around this very black cloud is that there are four more years of negotiations before a final settlement on the issue of public stock holdings is reached. India must put together its best brains to develop aggressive negotiating positions well in advance, try to win back the support of the developing countries it has ditched and face the next rounds of WTO discussions with the goal of recovering what lost ground it can.

Source The Asian Age; 14 December  2013,

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