Prime Minister Narendra Modi is absolutely right. What India had signed at the Bali WTO Ministerial in Dec 2013 would have surely compromised the future of India’s 600 million farmers.
The then Commerce Minister Anand Sharma definitely knew what was at stake. Despite calling the Prime Minister’s statement as ‘incorrect and false’ the fact remains that he deliberately mortgaged poor farmers’ interest.* He had agreed to an interim protection of four years for the Minimum Support Price (MSP) that farmers get. The reason was simple. India wanted to ensure that the Bali Ministerial succeeds even if it means destroying the livelihood of farmers. I don't know how could UPA think of destroying a majority of 600 million farm livelihoods just to keep the Bali WTO Ministerial afloat? How does India gain by help creating jobs in the rich countries at the cost of its poor millions?
Anand Sharma knew that numerous US farm groups had written to the US Trade Representative Michael Froman as well as the US Agricultural Secretary Thomas Vilsack objecting to linking food aid with price support programs. Not finding anything wrong in legitimate domestic food aid programs, 30 farm commodity export groups had however expressed concern at the “price support programs, which have more to do with boosting farm incomes and increasing production than feeding the poor.”
These US farm commodity export groups, which ironically receive monumental federal support every year, had questioned the need to provide any relaxation in current discipline even on a temporary basis. Accordingly, such an exemption will result in more subsidy outgo and result in further damage to US trade interests. Against this, it's very clear that the Bali Ministerial had failed to find a permanent solution to India’s price support for farmers. If a the tough stand was taken by India at the Bali Ministerial, the present crisis would not have erupted.
By refusing to ratify the protocol for amendments of the Trade Facilitation Agreement (TFA) by July 31 unless linked to a permanent guarantee for stockholding of foodgrains and an assured income for farmers, India has demonstrated a shift in power equation since the days of the Uruguay Round of the World Trade Organisation. Not only protecting its food security concerns, and the livelihood security of 600 million farmers, India’s decisive position will hopefully herald a new era in trade diplomacy.
The way Prime Minister Narendra Modi remained defiant despite the last minute efforts of the visiting US Secretary of State John Kerry gives me hope. This is the first time an Indian Prime Minister has stood like a solid rock behind his team of negotiators. Quite a departure from what we have witnessed in the past 20 years of trade negotiations. We have seen India’s successive trade minister make the right noises, dominate the global media space, but in the final hours sign on the dotted line. India had always behaved like a mouse that roared.
If only at the Bali WTO Ministerial in December, the then Commerce Minister Anand Sharma had refused to accept the ‘Peace Clause’ – that gives India a four-year reprieve from being dragged into the dispute panel for violation of the WTO farm subsidy obligations – the entire trade dimensions would have changed for better. India needed a permanent solution that allows for its sovereign and gigantic role to feed the hungry millions. Not realizing that food security for any developed country, and that includes the United States, has always taken precedence over the trade benefits, India had failed to stand up.
The US has never been worried about torpedoing the trade negotiations. It has stalled decision making in some 30 instances, always keeping its national interests supreme. It has refused, for instance, to do away with cotton subsidies all these years.
Capitulating voices within the country had added on to the fears that a tough stand will isolate India. These economists had more or less blamed India for making a mountain out of a mole-hill. As if sacrificing the livelihood security of 600 million farmers, almost double the population of US is a mole-hill, wrong statistics were flaunted. Some even went to the extent of saying that Indian farmers were the highest paid in the world by wrongly comparing fob prices with procurement prices and thereby ignoring the massive subsidies US/EU farmers get. Unlike in America, Indian agriculture has become economically non-viable with close to 300,000 farmers committing suicide in the past 15 years.
What the WTO had wanted was the minimum support price that farmers are paid be either dismantled or capped at 10 per cent of the total value of the produce. As per the WTO pricing calculations, worked out in 1986-88, the present rice procurement price of Rs 1,360 per quintal would need to be reduced to about Rs 600 a quintal. All that India wanted was revision of the outdated pricing formula to a more realistic base period of 2010-12. This wasn’t however acceptable to the US, EU, Australia and Japan.
Reducing the MSP by roughly 50 per cent to meet WTO obligations or by agreeing to dismantle the procurement prices would have brought the farmers onto the streets. The political ramification for any present government would have been disastrous.
While India has rightly slammed the door, it has kept a window open for negotiations. When WTO meets again in September after the recess, the real test for India’s trade diplomacy will come into focus. This will be the time to asset on the need for a ‘food security box’ for developing and least developing countries. On the lines of the green box, amber box and blue box, which provide protection to agricultural subsidies in the developed countries, the ‘food security box’ should provide protection to each country to feed its hungry population and at the same time ensure that small farmers are adequately protected against the tyranny of the markets. There can be no compromise on the state’s sovereign role in feeding its poor. India cannot afford to forgo the policy space to maintain food self-sufficiency. #
*Did the UPA mislead the country on Bali pact? in Mint Aug 11, 2014. http://www.livemint.com/Politics/V580QjRAitbDuqD1tl4TlM/Did-the-UPA-mislead-the-country-on-Bali-pact.html