Mr. Nath rightly defended interest of our farmers: FIEO
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Mr. Ganesh Kumar Gupta, President, FIEO (Centre) addressing the press conference. On his right is Mr. Subhash Mittal, Convenor, FIEO Committee on International Trade & Export Promotion and on his left is Mr. G Ganpathy Subramaniam, Trade Editor, Economic Times. |
FIEO complimented Commerce & Industry Minister Mr. Kamal Nath for staying firm on safeguarding the interests of India’s marginal and vulnerable farmers and taking care of the sensitivities of domestic industry in the WTO Mini-Ministerial Conference.
FIEO fully supports the Indian negotiating stand that there cannot be any compromise with policy space. Preserving the policy space is a ‘must’ for accommodating the concerns and interests of India’s all sensitive sectors whether it is our subsistence and resource-poor farmers or hugely employment-intensive MSME sector, FIEO President Mr. Ganesh Kumar Gupta said at a press conference organized by the Federation at New Delhi on 30th July. He summed up FIEO’s viewpoint on the issue in the following terms.
Nine-day long conference to proceed with Doha round of discussion ended in a deadlock due to sharp differences in perception between developed and developing countries. The US and EU were adamant to promote "commercial prosperity" as against the question of subsistence of million of farmers in LDCs and developing countries. US and EU, having just 2 million and 7 million farmers respectively, were insisting for greater market access for their agricultural products which are heavily subsidized by them. Countries like India with 300 million people living on less than US$ 1 a day and 600 million people living on less than US$ 2 a day can hardly agree to such proposal.
Addressing a
press Conference on the outcome of recently concluded WTO Ministerial
Conference at Geneva, Hon’ble Minister for Commerce & Industry Mr.
Kamal Nath rightly said: "While there would always be commercial
interests guiding trade, these interests cannot take primacy over the
livelihood interests of billions of poor and vulnerable farmers of the
developing world. In the context of the current food crisis and the abnormal
rise in food prices, it has become all the more important to preserve and
protect the livelihood security of poor farmers and the long-term food
security of developing
nations."
The deal broke down ostensibly over the proposal to protect farmers in developing countries from a surge in imports. The compromise paper proposed that countries could go above Uruguay Round level (Bound Rates) only if import went up by more than 40% over the average of preceding three years as against the formula proposed by India to increase the tariff by 25% if average import grew by over 15%. India rejected the offer rightly as in such a scenario action could be taken only after the farmers were ruined. 40% increase in their import would be a death-knell for millions of producers. In the words of Mr. Nath, "The trigger for an SSM is very important because it determines when a safeguard duty can be imposed. If the trigger is too high, the SSM loses its effect because it can only be used in the most exceptional circumstance. Thus the trigger has to be reasonable."
In respect of products like apple, the applied rate of duty is 50% while UR rate is 55%. Similarly, in dairy products, applicable duty is 30% while UR rate is 40%, thus giving very little flexibility to protect domestic producers. The real reason was the issue of agriculture subsidy particularly cotton subsidy amounting to US$ 3.5 billion which US was not willing to negotiate despite requests by four African cotton producing nations – Burkinafaso, Male, Penin and Chad. Since cotton issue is politically sensitive in US, which faces Presidential Election in November, US negotiator took a rigid posture.
Our government has reasons to be concerned about farmers. Nearly 70% of the population lives in the countryside and the vast majority of Indians derive their income directly or indirectly from farming, even though agriculture makes up less than a fifth of India’s almost trillion-dollar economy. "If the government were to agree to something which will kill our agricultural sector, then their political futures will be finished. Already, agriculture has been neglected in India, and that affects about 700 million people." Says M S Swaminathan, Director of India’s National Commission on Farmers.
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President, FIEO (extreme right) being interviewed by Mr. Akshay Singh from Zee News. |
In the past decade, economic reforms revitalized most of our developed sectors, but agricultural growth lagged, despite our GDP growing at a high rate. Unable to compete internationally on the cotton market, cotton farmers in Central India, have spent a decade falling deeper into debt. According to government estimates, more than 160,000 farmers have killed themselves because of those debts.
To an extent, WTO policies also added to the miseries of our farmers. Karkade Nagraj, an agricultural expert at the Madras Institute for Development Studies, says, "You can’t isolate what happens to Indian farmers because of WTO policies from what is happening in the world economy."
US introduced Farm Bill 2008-12 introducing Average Crop Revenue Election (ACRE), an income insurance programme to protect farmers against both drop in yield and fall in prices. In such a scenario, US was unwilling to discuss curtailment of trade distorting subsidies as Farm Bill is likely increase agriculture subsidies.
The talks exposed once again the faultiness running through the European Union, as French President Nicolas Sarkozy rallied the opposition to an emerging deal even as European Trade Commissioner Peter Mandelson was trying to negotiate it.
Implications of the deadlock
It has damaged the credibility of the multilateral system and will encourage greater reliance on regional trade deals. Intra-regional trade accounts for over 60% of world trade, which will go up in years to come.
Though there will be no immediate impact on trade flows, given the long implementation periods for the measures under discussion - typically five years for developed countries and 10 for developing countries, the failure may damage global business sentiment.
It may encourage protectionist behavior, an important factor in the Great Depression with its accompanying mass unemployment. US have already entered into stagflation while EU is under recession leading to sharp drop in world trade growth and India may not remain intact.
The talks reflected tilting balance of economic power in favour of emerging nations in Asia and Latin America. India is set to assume leadership of 100 odd LDCs and developing countries. Developing countries are expected to have greater say in future talks.
India will gain in services negotiations in future rounds due to concessions already offered by US and EU, particularly in Mode 4 where the latter has offered 80000 jobs. It will force the US to increase the present cap of 65000 H1 visas.
A new administration taking over next year in Washington after November’s election, changes next year in the European Union’s executive Commission could also set new priorities for trade. Talks may resume in first quarter of 2009.
