10 YEARS OF THE WTO: END OF AN ILLUSION
The predicted gains to developing countries from the WTO have proved to be empty promises. During 10 years of its existence, poverty and unemployment have spiraled in developing countries as income and welfare gaps between and within countries have widened further.
The hopes raised by the revival of the solidarity of the South with the emergence of the G20 (a group of developing countries led by Brazil, India, China and South Africa) at Cancun in 2003 have been belied since. The 2004 July Framework Agreement proved, once again, that development cannot be pursued within the WTO paradigm. The July deal forms the basis of negotiations towards Hong Kong. On the present indications, the only deal that can be inked at Hong Kong will be a deal that would force developing countries to make damaging concessions in agriculture, services and industrial goods.
The present UPA Government’s stance on WTO does not reflect any significant departure from the positions adopted by the previous NDA Government. Given the structural inequality and asymmetry that is built in the various WTO agreements, which favours the developed countries, India’s long-term interests are best served by calling for a radical re-think on the institution and making common cause with developing countries.
AGREEMENT ON AGRICULTURE: DEEPENING CRISIS
From all accounts, India is experiencing a deep agrarian crisis. Rising cost of inputs, non- availability of cheap rural credit and exposure to volatile global market price trends have squeezed the peasantry. The lack of alternative employment opportunities and income have resulted in an unprecedented reduction in the per-capita availability of food-grains for the rural poor, pushing, three quarters of the rural population below ’the poverty line’. The widespread phenomenon of farmers’ suicides is a cruel manifestation of this crisis.
The paradigm of the WTO’s Agreement on Agriculture (AoA) is biased in favour of capital-intensive and corporate agribusiness-driven agriculture. It is insensitive to the needs of the masses of peasantry and agricultural workers. It threatens the livelihood of the vast masses of the small and marginal farmers in India and other developing countries. It has led to peasant distress not only in India but also in all countries where agriculture is a livelihood issue. If we do not challenge and change the current AoA paradigm, we will end up by opening our markets for the highly subsidised and therefore artificially low-priced imports from the developed countries. Our food security will be endangered. The peasantry will be compelled to accept the entry of corporate agribusiness on its terms and subjugate or surrender their source of livelihood to the volatile dynamics of global agriculture market and the profit -calculus of the agri-business. This will pave the way for the decimation of the already beleaguered peasantry with unimaginable consequences for our polity.
Rather than highlight the fundamental issues confronting the peasantry and agricultural workers and question the very paradigm of AoA, the G20 has focussed on market access and the prevailing domestic support and export subsidies in developed countries. Developed countries have used the former as leverage to prise open markets of developing countries. And the latter will prove to be a wild goose chase: the experience of the last ten years has shown that the total quantum of such subsidies has indeed increased. It is well known that the quantum of agricultural subsidies given by the EU under the CAP (Common Agricultural Policy) will continue till 2013 and will not be reduced before that. Moreover US subsidies under the 2002 Farm Bill is for a period of 10 years i.e. till 2012.The offers of reduction being put forward on behalf of both EU and USA are misleading and, in fact, leave a comfortable margin for future increases in the total quantum over the currently applied levels of such subsidies!
NAMA: PRESCRIPTION FOR DE-INDUSTRIALISATION
Over the last couple of decades, the policy space available for the developing countries has shrunk dramatically. And if the developed countries have their way in the current NAMA (Non Agricultural Market Access) negotiations, it will shrink over the next decade or so to the extent that has not been seen since the days of imperialism, making industrialisation and economic development in the developing world all but impossible.
The livelihood of vast masses of poor people is also threatened by the ongoing negotiations in NAMA, most importantly of those involved in fishing. Any drastic changes in tariff or other rules of market access will have direct consequences for them. The Government must therefore give special consideration to this fact and any deliberation on NAMA must entail special discussions on the impact on employment and livelihood in such sectors.
Unfortunately the Indian government has virtually accepted the contents of the earlier discredited text as the basis for NAMA negotiations. The majority of WTO members in Cancun had rejected that text. Historically, all late industrialisers including the USA developed their industry behind high protection. The key issue concerning NAMA is that while developing countries protect their markets through higher tariffs, the main mode of protection for the developed countries is through Non-Tariff Barriers (NTBs), particularly through the use of technical barriers. Those barriers in the developed countries are not being discussed simultaneously or with the same priority. Therefore a further reduction in tariffs as is being negotiated in NAMA will not lead to any greater market access for the developing countries but will certainly ensure greater market access for the developed countries. And further steep reductions in tariffs on industrial products will accentuate the process of de-industrialisation, which has already commenced with tough import competition being faced by many sectors in small and medium industries.