2013 BALI Ministerial Meeting – Trade Facilitation Agreement on Goods was agreed to, by all the members of the WTO. But before the celebratory mood subsided, India informed that it would not sign the agreement unless a permanent agreement is made in the public food stock-holding ceiling limits. Then a peace clause had to be made which stated that unless a permanent ceiling is fixed, the countries are not restricted to public stock-holding.
Is it so important that India risked taking the wrath of the world community in opposing the global agreement for a sectoral issue? YES It is!!!
It is natural for the World Trade Organization, a representative body of the Globalization process, to try to open up the agricultural sector in all the countries to all the other countries. Whereas on the other hand, for a country like India, where still more than half of the population depends on agriculture for their livelihood, where around 195 million people lives with daily hunger, where around 60% of the agricultural land depends on the vagaries of the monsoon rainfall for its sustenance, where around 3,30,000 farmers have committed suicide since the formation of WTO, it is natural for her to stand up against the proposal to free up agriculture from the government interference.
What does India do that irks the WTO?
Four arrangements are there that creates disappointment to the foreign Corporates that invests in Agriculture in India. Minimum Support Price (MSP) assurance to the farmers restricting the market based pricing, Government procurement decreasing the possibilities for monopolization by the Corporates, Public Distribution System (PDS) distorting the demand in the market, National Food Security Act further legalising the market distortion by the Government.
WTO – Agreement on Agriculture – Issues:
Agreement on Agriculture stands on three pillars: 1.Domestic Support, 2.Market Access, 3.Export Subsidies.
In Domestic Support, the subsidies given to agriculture by countries are divided into Green Box, Blue Box and Amber Box subsidies.
Green Box Issues : The subsidies that does not impact the price of the output directly comes under Green Box and are allowed. For instance, Income support to the farmers, Payment under Environmental Programs, Research expenditure etc., do not directly affect the production and are hence allowed.This is a point of exploitation that the developed countries use, especially United States(around 90% of its agricultural subsidies comes under Green Box).
Imagine for instance, in a highly populated country like India, providing income support to the farmers will not satisfy the food grain demands of the population. Only product specific subsidies will help. Also in developed countries like U.S., the landholding of farmers is extensive and hence the research on advanced technologies will help the farmers in reducing the cost of production. But in India, around 80% of the agricultural land is under 2 hectares and hence research expenditure will not help farmers in cost cutting.
Blue Box Issues: Subsidies that are provided for limiting the production comes under Blue Box. This is allowed to have a Government interference in certain non trade activities like making the farmer to allot a particular piece of land for a specific purpose. But again India is not well versed in using this provision, Mainly European Countries utilize this provision.
Amber Box subsidies: This is where India`s concern lies. This involves the trade distorting subsidies that the WTO wants to get it reduced. For this purpose, a de-minimis provision was introduced, according to which the amber box subsidies should not exceed 5% of the overall agricultural production in developed countries and 10% correspondingly in developing countries. As of now, India`s amber box subsidies is within the 10% limit. But to adhere to that limit, the public stock-holding also will come into picture once the peace clause is extinguished. Also now it is not exaggerated to say that the Government is trying to cut down on the PDS distribution systems. As a pilot initiative in this regard, the PDS rationing has been stopped in the Union territories of Pondicherry and Chandigarh through a parliamentary legislation already, If this is imitated in the national scale, food security will be affected drastically.
As far as the Market Access and Export Subsidies are concerned, the agreement demands the developed countries to cut down on their export subsidies and the tariff by 36% and the developing countries by 24%. But the issue here is that the base level for this reduction refers to the 1986-90 levels. By that time most of the developing countries were not providing much subsidies compared to the high levels of subsidies provided by the developed countries. This created a base level discrimination for the developing countries.
After combined efforts of the developing countries in WTO, Doha Development Agenda was adopted in 2001 wherein the developing countries got a favorable calculation in opening up the agricultural sector. However, In the recent Nairobi meet in 2015, attempts were made to discard the Doha agenda, and focus was shifted towards the issues of importance for the developed countries such as e-Commerce, Investments promotion, Competition promotion. India tried its level best to bring a permanent agreement on the ceiling for public stock-holding for food security and Special Safeguard Measures. But agreement was not forged to the disappointment of the developing countries.
Again in the recently concluded 11th Ministerial meeting in Buenos Aires, there was no agreement reached to this extent. However unlike last time, this time WTO ended in a complete stalemate, that even proposals of the developed countries such as the elimination of the fishery sector did not pass through, This shows the deterioration of the power of the organisation to effectively bring in an action on the ground. In a recent Tamil film, a data was portrayed that for the past 10 years, for every half an hour, a farmer dies in India. This is not a random figure. This is the stark reality in India. Farmer suicides in the country rose by 42% between 2014 and 2015, according to the data from National Crime Records Bureau (NCRB). India has a long fight ahead in WTO to ensure that the support to agriculture is not curbed by an external pressure, rather there is much more needed to be done in supporting the livelihood of more than half our population.
– Arun Krishnan
(Arun Krishnan is a graduate in Petroleum Refining and Petrochemicals. He has a strong craze towards International Relations and also a seasoned writer)