By refusing to ratify the protocol for amendments of the Trade Facilitation Agreement by July 31 unless linked to stockholding foodgrains and an assured income for farmers, India has used its bargaining power to seek a permanent exemption that enables it to protect the livelihood security of its 600 million farmers against the onslaught of cheaper and highly subsidised food. By refusing to compromise the livelihood of its huge farming population at the altar of trade, India has demonstrated that it means business.
The way Prime Minister Narendra Modi remained defiant despite the last-minute efforts of the visiting US secretary of state, John Kerry, gives us hope. This is the first time an Indian prime minister has stood rock solid 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 ministers make the right noises and 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 conference in December, the then commerce minister, Anand Sharma, had refused to accept the ‘Peace Clause’, which 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 the better. India needed a permanent solution that allows for its sovereign and gigantic role to feed the hungry millions. Not realising that food security for any developed country, and that includes the US, 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.
Some 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 molehill. As if the livelihood security of 600 million farmers, almost double the population of the US, is insignificant. Some even went to the extent of saying that Indian farmers were the highest paid in the world by wrongly comparing FOB (free on board) prices with procurement prices and thereby ignoring the massive subsidies that farmers in the US and European Union get. Unlike in the US, Indian agriculture has become economically unviable 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% of the total value of the produce. According to 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, however, wasn’t acceptable to the US, the EU, Australia and Japan.
At the heart of the developed country non-negotiable stance were the commercial interests of its food exporters. Some 30 US farm commodity export groups had expressed concern at the “price support programmes, which have more to do with boosting farm incomes and increasing production than feeding the poor”. They had demanded the exemption for the subsidy outgo to be immediately scrapped so that they could export food to India to meets its food security needs. That’s it.
While India has rightly slammed the door, it has kept a window open for negotiations. When the WTO meets again in September after the recess, the real test for India’s trade diplomacy will come into focus. 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. There can be no compromise on a State’s sovereign role in feeding its poor.
(Devinder Sharma is a food policy analyst. The views expressed by the author are personal.)