WTO`s Bali Conference: VICTORY OR COMPROMISE This article was published in January issue of `` Insurance Worker``,the monthly journal of All India Insurance Employees association. INTORDUCTION Recently, the World Trade Organisation’s (WTO) 9th Ministerial Conference has been completed in Bali of Indonesia in a milieu of acrimony, altercation, squabble and arguments among the representatives of 159 countries. But in contrast, it has been propagated that the WTO has reached its first ever major global reform deal since the organization was established in 1995 as a reincarnation of General Agreement on Tariffs and Trade (GATT). While announcing a final agreement in Bali, head of the WTO, Roberto Azevedo, announced: “For the first time in our history, the WTO has truly delivered.” Impression is also created by media that India has done pretty well in the Bali negotiations. It buttressed the government to claim that it achieved a great victory on the maintenance of food subsidies and Bali outcome will not impact Food Security plan. But this is illusory and deceptive. The pungent truth is that India accepted, against its own earlier stated stand, the so-called “Peace Clause”. Indeed, the Bali meeting yielded a flawed trade facilitation agreement that still mostly benefits international trade firms and the peace clause that is accepted without stiff opposition will imperil the food security of developing countries including India. Startlingly, it is not only people from India but activists, economists from advanced countries, say what the deal is certain to “deliver” is more pain and suffering for the world’s poorest people and farmers so as to further the interest of the world’s largest and most powerful nations and corporations. HUMBUG OF TRADE FACILATION Trade facilitation and food subsidy were the two main issues at the Bali ministerial conference. While developed countries pushed for an ambitious trade facilitation agreement, G-33 (India is a member) countries wanted adequate safeguards to run their food security programmes. But the trade facilitation component has been made legally binding agreement for members` countries. As per the trade facilitation pact, India and developing countries have to improve infrastructure at ports, and speed up port clearances, put in place systems to facilitate faster custom clearances and invest in automation, computerisation and homogenous documentation to facilitate faster movement of goods. In brief, developing countries like India will have to create conducive atmosphere so that multinational companies can do their business or can make their investment there without any encumbrances or hurdles-both infrastructural and legal. Tragically, our government is projecting it as being of great help to India because trade facilitation will lead to an incremental global trade of $1 trillion over a period of time, though our size of trade is much smaller in comparison to advanced countries. Further, India will have to go for a lot of legislative action to implement trade facilitation. It will have to change export and import control rules too to the benefits of multinational companies. It is argued that trade facilitation will lead to rise of our exports. But exports are not merely dependent on trade facilitation. They are dependent on a number of other factors such as state of the world economy, growth of international trade and competition in various markets. Really, through trade facilitation, the developed countries stand to gain much at the expense of developing countries. POLITICS OF SUBSIDIES The WTO Agreement on Agriculture ( AoA) negotiated in the Uruguay Round (1986–1994) classify the of subsidies into ‘boxes’ depending on their effects on production and trade which perpetuates iniquitous trade favouring rich and advanced countries at the cost of poor. The first one is amber box subsidy which is directly linked to production levels and considered as trade distorting and needs to be controlled, that is, maximum 10% the value of production in the case of developing countries. Other two are Blue box (production-limiting programmes that still distort trade) and green box (causing not more than minimal distortion of trade or production). which are considered non-trade distorting or less distorting and not subject to WTO restriction. The USA and EU continue to channel billions in subsidies to their richest farmers through blue or green box subsidies, yet seek to destroy other countries’ right to protect their poorest citizens from starvation which have no resources to give under above heads.. The effect of these subsidies is to flood global markets with below-cost commodities, depressing prices and undercutting producers in poor countries – a practice known as dumping. This is one of reason for distress sale which causes farmers` suicide in India. The US subsidies are considered non-“market-distorting” because the US gives the bulk of its subsidies in the form of cash transfers to the agricultural sector or food aid under several programmes like the food coupons, child nutrition programmes etc. In contrast, in India subsidies are provided through offering remunerative prices or cheap inputs which, because they involve interference with “free market prices”, constitute according to the WTO “market-distorting subsidies” and need to be controlled. It is an unequal arrangement because under it the advanced capitalist economies, both the US and the EU, can give subsidies to their agriculturists amounting to as much as half the GDP originating in agriculture, with no questions asked (since these are cash transfers); but, if a country like India provides subsidies to its agriculturists in excess of 10 percent of the GDP originating in agriculture, then that is not permissible (since such subsidies are given in the form of price support. unfortunately ,in a country with more than 12 crore agriculture-dependent households ,there can be no other way of giving subsidies. Further, the subsidy is calculated by comparing the actual price with an “international reference price” which is thoroughly antiquated and has not been changed taking inflation in to account since the 1980s (1986-88). The reference price for rice for instance is a meagre Rs 264 per tonne. As the Commission for Agricultural Costs and Prices (CACP) recommended minimum support price of Rs 1310 per tonne for common-grade paddy for 2013-14 appears to involve Rs 1046 of subsidy per tonne. But in view of the enormous rise in costs of production since the 1980s, the reference price should have been above Rs1000 instead of Rs 264 per tonne. Hence, actual subsidy will be a trivial amount say around (Rs 1310-Rs 1000) = Rs 210 instead of (Rs 1310- Rs 264) = Rs 1046. Surprisingly, the US and other developed countries refused to update the reference point, arguing that they didn’t want to reopen any part of the Agreement on Agriculture. PEACE CLAUSE: SOVEREIGNTY UNDERMINED Under Public distribution system (PDS), the Union government procure food grains from farmers at minimum support price (MSP) and sell at cheap rates to beneficiaries. The Minimum Support Price (MSP) is deemed as support to farmers under Agreement on agriculture (AoA) and under the current WTO rules and such support has to be kept within a limit of 10 percent of the value of production of a product. The food security legislation passed by the parliament, even though it does not have universal coverage but provides truncated food security to only 67 percent of the population, will imply procurement of food-grains on a scale and at prices that would almost certainly mean exceeding the 10 percent limit on the so-called “market distorting” subsidies. Before the forthcoming Bali meeting of the WTO, India, leading a group of 46 developing countries (the so-called G-33), has been pressing that the 10 percent cap should be made inoperative for countries trying to achieve food security for their populations. But this was not acceptable to the advanced countries like the United States and the European Union. And under their pressure and coercion, G-33 cowed to accept peace clause. A ‘peace clause’ means that the use of measures to procure food-grains by developing countries to promote food security would continue to be deemed illegal but WTO Members will not go to dispute settlement for a certain period. Such a ‘peace clause’ will be effective only for four years as per Bali agreement and does not guarantee that a permanent solution will eventually be negotiated. After these four years, whatever is agreed to in the interim will come into effect. So, it is four years whether we like it or not. It is not indefinite. As per peace clause, countries are also to provide information on their administered prices and the volume of stocks purchased and other information on subsidies. What was always considered to be within our sovereign realm will be exposed to the international community. We will be putting to global scrutiny our agricultural subsidy programme. The powers to decide what is right for farmers and poor people of the country would no longer reside in the Indian Parliament. It would be dictated by what the rest of the world perceives to be right. This can, needlessly, cripple our domestic policies impinging on India’s sovereign rights. CONCLUSION Surprisingly, when small country like Cuba could dared to object to the hypocrisy of a “trade facilitation” that ignored the United States’ discriminatory treatment of the island nation under the US trade embargo, present UPA government failed miserable to do so like its previous NDA government. It is not victory, rather India’s food security and farmer’s livelihoods have been compromised. The agreement will threaten expansion of the present programme of food security and price support to farmers as well as universalisation of PDS. Actually, food security is not only the stipulation of adequate food to everyone, but also the production of adequate food for everyone. Procurement on grounds of food security or support for poor and marginal farmers must be free from all restrictions. Hence, at any rate, countries keen to expand domestic food production, enhancing food security through whatever subsidies they decide to give, must not be mired or plagued by the free trade philosophy of the WTO. It must be absolutely outside the domain of the WTO. The WTO is an institution that has lost any claim to be neutral, impartial and legitimate. It is high time to stop the WTO hypocrisy to once and for all. The developed countries’ domestic and export subsidies in the green Box, blue box should be challenged and obliterated. India should be vanguard in uniting all the developing and third world countries to streamline and capsize the unequal WTO regime. . Email: skmohapatra67@gmail
Posted on: Thu, 27 Feb 2014 15:35:07 +0000
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