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'WTO gains for India have been negligible'

Dr Devinder Sharma is a well-known analyst respected for his views on food and trade policies. He has researched on policy issues concerning sustainable agriculture, biodiversity and intellectual property rights, environment and development, food security and poverty, biotechnology and hunger, and the implications of the free trade paradigm for developing countries.

He has been a Visiting Fellow at the International Rice Research Institute, Philippines, a Visiting Fellow at the School of Development Studies at the University of East Anglia, Norwich, UK; and a Visiting Fellow at the University of Cambridge, UK.

Sharma chairs an independent collective in New Delhi, called the Forum for Biotechnology & Food Security. The forum is a collective of policy makers, agriculture scientists, economists, biotechnologists, farmers and environmentalists to examine and analyse the implications and fall-out of various policy decisions, both national and international.

He told Ramesh Menon how Indian farmers could be protected and food security ensured, and how India's anticipated gains were practically zero in agriculture after trade liberalisation.

The World Trade Organisation Doha ministerial has called for a 'phase-out of agricultural subsidies'. How does it help developing countries like India?

All that developed countries have done is to provide the developing countries with a lollipop. Returning from Doha, with promises to 'phase out subsidies' and to 'take into account the development needs, including food security and rural development', India -- like other developing countries -- has adopted a self-congratulatory attitude. It has been terming it as a 'victory' and a 'triumph of sorts'.

In essence, it is a futile exercise in self-deception. Six years after the WTO came into existence, the anticipated gains for India, where nearly 70 per cent of the population is directly or indirectly involved with agriculture and farming, have been almost negligible.

The WTO Agreement on Agriculture too had stipulated a phase-out of subsidies under a time-bound programme. For instance, the developed countries were required to reduce farm export subsides by 36 per cent and volume of subsidised export by 21 per cent during 1995-2000. But nothing like this happened. So how do you expect the subsidies to be substantially reduced after Doha?

Why are farming subsidies such an important and politically sensitive issue? What is the quantum of subsides being paid in western countries?

It is a politically sensitive issue. No country wants to lose its supremacy in agriculture. More so with the developed countries, which know very well that there is no better and effective weapon than food. The entire effort, therefore, is to build on and strengthen the supremacy in food.

In addition, this can only be done if they are able to continue with massive subsidies that these countries have been providing to its farmers.

Take, for instance, the United States. In the past three years, it has provided an additional subsidy of $26 billion to its 9,00,000 farmers.

As if this is not enough, it has promised to pay an additional $170 billion to its farmers in the next ten years under the new Farm Bill that has been cleared by the US Congress only recently.

And add to it the $12 billion it provides for market intervention operations abroad.

American agriculture is probably the most pampered. Yet, it asks the rest of the world to reduce or do away with agriculture subsidies.

The European Union is another culprit. In 1995, when WTO came into existence, it used to provide roughly $90-billion worth of subsidies to its 7 million farmers. Six years later, the subsidies have risen to $114.5 billion. This also includes the subsidies that are directly paid to farmers.

I know of farmers in the UK, for example, who till recently used to get an annual subsidy of £1 million for not growing anything.

Such subsidies are still being given. The amount of subsidy that a cow in the western countries receives is more than the annual income of a dairy farming family in India. So how can we ever compete?

Are there any other countries which also provide subsides?

Yes, the richest trading block -- Organisation for Economic Cooperation and Development (OECD) -- provides agricultural subsidies to the tune of $1 billion a day. Compare this with what 550 million farmers in India receive. We provide $1-billion worth of subsidies -- all indirect in form of cheap fertilizer, power and so on -- in a year.

What is worse is that we are being asked to do away our subsidies as we have also adopted the Structural Adjustment Programme of the IMF and the World Bank.

You met the EU Trade Commissioner Pascal Lamy recently. What was your meeting like?

Pascal Lamy categorically told a group of civil society groups that EU would not receive any domestic support for its 7 million farmers. He said that it was a political compulsion for them and so they were determined to maintain the high subsidy levels.

In fact, he asked us how would subsidy removal help Indian farmers? If EU reduces agricultural subsidies, the number of farmers will come down to some four million, the remaining having moved out of agriculture. So he wanted to know from us as to how would we gain if the number of farmers comes down in Europe.

I told Lamy that we were not interested in the number of European farmers. In fact, I said India has no objection if the number of European farmers rises to 17 million.

But what worries us is as to how will we protect our farmers who will be inundated with cheap and highly subsidised imports. And importing food is like importing unemployment.

He was certainly not interested in the future and survival of Indian farmers. He said that it was the Indian government's job to protect its farmers.

But isn't he right?

No, he is not. The WTO is a rule-based organisation under which we have to follow the stipulated norms. We were asked to phase out or remove our quantitative restrictions or trade barriers by April 1, 2001.

We have done it accordingly, removing or phasing out trade barriers on some 824 agricultural commodities and products. So we have become vulnerable to subsidised import dumping. Whereas, the western world maintains its subsidies and protects its agriculture.

Indian government has little choice now. But it is aware of the growing disenchantment over its WTO policies. That is why the Commerce Minister, Murasoli Maran, had maintained a tough stand at the Doha ministerial. Still, at the Doha meet, the big boys have done it again. And done it so effectively.

Once again, agriculture and farm trade has for all practical purposes been kept out of the rule-based World Trade Organisation as far as the rich and industrialised countries are concerned. It is in agriculture -- the most contentious of the issues -- that the rules of the game are heavily tilted against the developing countries.

In fact, it is in agriculture alone that the rules have been so tailored that the developing countries are bound to lose. What is promoted as a 'win-win' situation for all is in reality a foregone conclusion.

The AoA has, in reality, further exacerbated the process of marginalisation of agriculture and farming communities in the developing world.

Are you saying that there were few gains for India from the WTO's Agriculture Agreement?

The anticipated gains from the trade liberalisation process in agriculture are practically zero.

The Indian government has also admitted that the hopes of an international regime that talked about establishing a fair and market-oriented agricultural trading system have all been beguiling. And here lies a lesson for the developing world.

The WTO's Agreement on Agriculture had incorporated three broad areas of commitment from member states, namely in market access, domestic support and export subsidies. The underlying objective was to correct and prevent restrictions and distortions in world agricultural markets.

Six years later, it is now established that these measures have only protected the farmers and the farming systems of the developed countries.

On the other hand, the trading regime has ensured that developing countries take time-bound initiatives to open their domestic markets for cheap and highly subsidised imports of agricultural commodities.

What about farm exports?

There has been hardly any change in the volume of farm exports. Tariff peaks or in other words high import duties continue to block exports from the developing countries. Tariffs still remain very high, specially in case of cereals, sugar and dairy products.

Sanitary measures enforced to ensure quality of the imported products actually continue to be a major barrier in diversifying exports in horticulture and meat products.

Selective reduction in tariffs by the developed countries have also blocked the exports from developing countries. And on top of it, only 36 countries (all developed) have the right to impose special safeguard provisions if agriculture imports distort their domestic market.

India was forced to either phase out or eliminate the quantitative restrictions on agricultural commodities and products latest by April 1, 2001.

India, thus, opened its market and in turn made the farming community vulnerable to the imports of highly subsidised products.

Already, cheaper imports of skimmed milk powder, edible oils, sugar, tea, arecanut, apples, coconut, etc have started flooding the market.

It was expected that with the removal of trade-distorting measures, agricultural exports from the developing countries would increase. This did not happen. On the contrary, prices of most agricultural commodities are declining in the world markets.

It was also anticipated that due to reduction in domestic support in developed countries, cereal production would shift from developed countries to developing countries. Empirical evidence, however, shows that such a trend is not at all visible.

What should be done now to protect our farmers and food security?

Among the numerous measures being suggested in the on-going review of agriculture agreement, much of the emphasis is on creating yet another box for food security or a 'development' box as a mechanism for safeguarding developing country's vulnerability to cheaper imports.

By asking for a 'development' or a 'food security' box, developing countries will only be playing into the hands of the food exporting giants, which continue to protect the massive subsidy support under a shade of 'green', 'amber' and 'blue' boxes.

No amount of tinkering with suitable clauses on market access, domestic support and export subsidies are going to serve the food security needs of the developing countries. What will protect the food security needs of the developing countries is ensuring that removal of quantitative restrictions is linked to the removal of subsidies.

At the same time, developing countries must call for the elimination of all kinds of boxes -- green, blue and amber -- which protect all kinds of agricultural subsidies.

Failure to do so would further push the developing countries into a tight box, leaving the field open for the rich industrialised countries.

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