Never mind prime minister Manmohan Singh returned from the US with a “sense of satisfaction” after meeting president Barack Obama, thinking the latter is going to stand by India when it comes to the Food Security Act (FSA) vis-à-vis the World Trade Organisation (WTO) negotiations scheduled for December in Bali, Indonesia. That the commerce minister is also cosying up to the idea is so very astonishing given the situation on the ground, which, in reality, is akin to walking on a field laid with dynamite beneath. The belief that the US and European Union will stand by India’s interests at the G33 negotiations in Bali is nothing but living in a fool’s paradise which this author had warned about, while discussing the merits/demerits of the UPA’s most ambitious FSA (TNIE, August 15).
Without WTO’s sanction the UPA government cannot incentivise its grain farmers through a higher procurement price. That it is a pre-election (to five states now) temporary political ploy of the UPA to curry favour with the electorate hoping to rope in US and EU support, on one hand, and the backdrop of the impending general election in 2014 which it is desperate to win, at any cost to India’s sovereignty, through FSA, despite the long-term price that the nation would pay, on the other, can be seen through by anyone with an analytical mind.
Through these columns, this author had warned of the inherent dangers the Free Trade Agreement (FTA) will pose to Indian agriculture (TNIE, July 3).
Everything falls in place when one sees that, come December, the US, on the pretext of permitting India a safe passage for its FSA, alongside its commitment to WTO stipulations, will come out in its true colour and that is going to be the pressure for “trade facilitation”, which is nothing short of wanting India to open the gates completely for its products on a huge scale. And that includes Monsanto-controlled genetically modified seeds, and, the very recent recognition of Monsanto, giving it the World Food Prize, “facilitated” by an Indian scientist in Washington, speaks volumes for the nature of things to come. That is the real rub, a costly quid pro quo, whereby India will have no other option but to allow total opening up of its market to both the US and EU. And, in the entire game plan, it will be the poor Indian farmer, both grain and dairy, who will pay a real big price.
The commerce minister had, several months ago when the EU FTA was being negotiated, assured the Indian farmers that there was “nothing to worry” and India will “only gain”. That picture will completely change when cheap dairy products imported from the EU will edge out our beloved Amul, lovingly built up against the covert manipulations of both Indian and alien vested interests by that great “milk man” who put India on the world map of dairying, yes, the late Verghese Kurien (TNIE, July 3).
That import facilitation is nothing but the West asking us to open up our markets has been colourfully described by India’s permanent representative to the WTO, who said, “Trade facilitation is nothing but import facilitation.” The whole mantra of trade facilitation is “please open up your markets, don’t ask for anything in return. It is good for you”.
In fact, he should have added and advised the same to the entire emerging markets of the developing countries, which includes China and Brazil, as well, not to ask for anything in return. The West has simply fallen back on its promise to help improve the export potential of emerging markets.
The sinister game that the US is playing will be clear when one records with utter dismay that while it is running one of the huge domestic food aid programmes in the world, it has steadfastly opposed plans of the developing countries to provide food security to their poor. The underlying agenda is that we must import food, preferably from the US, to meet our FSA needs. This is because, without it, India can simply not manage the FSA. This author has clearly explained India’s incapability, as of now, given the present lacklustre grain production capability (R&D) to meet the huge needs of the FSA (TNIE, August 30). What better opportunity than India becoming a huge grain importer from the US/EU?
Newly-appointed director general of WTO Roberto Azevedo is on record to have said that India’s FSA will face problems given our commitments on the Agreement on Agriculture (AoA). This is because though the UPA will be desperate to shore up all the grains that Indian farmers produce at high minimum support price (MSP), India is still bound by the Aggregate Measurement of Support (AMS), which is just putting a cap on the price level, because, the WTO thinks it will be “trade distorting”, otherwise.
AMS is the difference between the procurement price and a fixed “external reference price” for a product, for example, wheat or rice, the principal staples needed for the FSA, multiplied by their total domestic production. That the AMS in principle is basically unjust is shown by the fact that the “external reference price” is pegged to the late eighties price levels, when inflation level and also grain prices were low.
During the late eighties and early nineties, both US and EU companies dumped enormous quantities of food grains on India, leading to distorted local prices. Hence, to base the current AMS on the late eighties price level is not merely irrational, but, totally unjust on the developing nations like India.
With the FSA and a general rise in food prices, it is for sure that India will breach the AMS ceiling this year. The US, EU and Japan simply slashed their procurement prices on paper during the late nineties without concurrent reduction in the level of subsidies given to their rich farmers. This simply does not happen in India.
The real test whether India can carry the day on its FSA will be in Bali, and the acid test will be centred on the AMS. Negotiators are exploring what they call the “Peace Clause” to restrain countries from initiating legal disputes. The US and EU stance is ominous Madame Sonia and Mr Singh have only their eyes set on 2014, but, the question is, at what price to the nation?
(The author is an international agricultural scientist and can be reached at drkppnair@gmail.com)