This article originally appeared in The Financial Express (July 12, 2006). The author is is head, Global Trade Team, Oxfam , UK . The views are personal.
For over 600 million people in India, it is the primary source of livelihood. For millions more, it is a way of life. Yet, agriculture in India is today steeped in crisis. The tragedy of suicides is manifesting itself among farmers producing crops such as cotton, oilseeds and spices, which are all produced for the market.
Farm negotiations in WTO, spanning trade-distorting subsidies of developed countries, market access issues, to those on the need for ‘special products’ have a critical bearing on not only livelihoods, but lives, of millions of farmers who are increasingly being deprived of vital state-support on the one hand, and simultaneously exposed to dumping of subsided products in an unrestricted import regime on the other.
WTO simulations show that the current US proposal would allow it to increase farm spending from $19.6 billion (approximately) to $22.5 billion by re-categorising payments. The EU’s proposal similarly could lead to $36 billion (approximately) in spending as opposed to the level which is “only” $22.9 billion. So the EU would gain $13.3 billion to spend on dumping!
On the other hand, the developed countries have chosen to give precedence to large agri-business interests over the meagre livelihoods of millions of farmers in the developing world. They are asking developing countries to open their home markets to dumped exports from developed countries through massive reduction in tariffs, disproportionate to tariff reductions in developed countries.
The current proposals would allow the developed countries to protect hundreds of their tariff lines under ‘sensitive products’ category, while trying to massively curtail ‘special products’ that developing countries would need to protect their producers on grounds of food security, livelihood and rural development.
Linking sensitive products with special products is like comparing oranges with apples. Sensitive products are a tool of protection, whereas the special products are a tool of development. Moreover, given that most of developing countries can either not afford subsidies, or have already committed to zero levels of trade-distorting subsidies, tariffs remain the only tool of import regulation.
In this context, developed countries have questioned the need for large tariff overhang—also called ‘water', which is the difference between bound and applied tariffs. It must however, be pointed out that first, countries need to preserve that policy space, even when it is large. Prices in agricultural commodities are so volatile that all the water can be squeezed from a tariff, using up all that policy space.
Yet another argument advanced against the need for special products is that it limits South-South trade. In fact, developing country farm exports outstripped world trade growth between 1990 and 2003 by 66 per cent According to WTO, South-South trade, as a share of developing country total agricultural export trade, increased from 32% to 46% between 1990 and 2003.
This Doha deal was supposed to usher in a new set of global rules to make trade fair and help lift millions of people out of poverty. Unfortunately however, the current offers remain riddled with flaws and the concept of development stripped almost completely away. That must not be an excuse, however, for failing to conclude a development-friendly deal as early as possible.
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