Follow-up to my previous post....
INDIA TOGETHER
Tuesday 03 Jan 2006 The news that matters.
Zero tolerance for farm subsidies
Developing countries must take a collective stand on 'Zero-Tolerance to Subsidies' to protect their agriculture, says Devinder Sharma.
February 2003 - At the inaugural of the World Food and Farming Congress 2002, held recently in London, I found myself sandwiched at a dinner between the two poles - a former US Ambassador for Agriculture to WTO and Zimbabwe's Permanent Representative. Since this was the closest I had ever got to the trade negotiators, I picked up the courage to ask the former US Ambassador: "Tell me, how do you arm-twist developing countries into submission?"
The former US Ambassador, and obviously one of the toughest trade masters, was taken aback. "Who gave you this idea that we arm-twist developing countries?" he asked, adding "This is a propaganda, a figment of imagination of the international NGO community." Sensing the sensitivity of the question, I corrected myself: "You don't have to feel embarrassed. I am aware of how you have brought down India to its knees but tell me how do you do it to the other two giants -- China and Brazil?" And without flinching an eyelid, the ex-diplomat replied: "Actually, China and Brazil are not the problem. The real problem is India."
A few days later, the US Secretary of Agriculture, Ann Veneman, who had earlier served on the board of Calgene -- the first company to market genetically engineered foods to stores, was speaking at the International Food Policy Research Institute (IFPRI) in Washington D.C., "Some developing countries argue that they shouldn't have to open up markets until the developed countries first make domestic support reductions. This is a formula for failure." Echoing the same brand of hypocrisy, the World Bank Chief Economist Nicholas Stern, while traveling through India, denounced subsidies paid by rich countries to their farmers as "sin ...on a very big scale" but warned India against any attempts to resist opening its markets. "Developing countries must remove their trade barriers regardless of what is happening in the developed countries."
These words of 'economic' wisdom were strongly contested when India's Agriculture Minister, Ajit Singh, categorically said: "There is no way we can reduce tariffs on agricultural products unless the rich nations cut their domestic support and subsidies as well as export subsidies." He was speaking to journalists at the end of his four-day visit to Geneva in the month of January, a little ahead of the Doha deadline of agreeing on modalities of the agricultural negotiations by March 31, 2003. Agriculture negotiations under the Doha round are taking place in the Special Sessions of the Agriculture Committee. He met the WTO Director-General Supachai Panitchpakdi and his chef de cabinet and chairman of the Special Sessions of the Committee on Agriculture Stuart Harbinson, and other protagonists - the U.S., the EC, members of the Cairns Group and some of the African group countries - and said he had put forward India's position and stand, an outcome of countrywide deliberations and discussions.
Not only India, many other developing countries have time and again stood up against the hegemony of the so-called free trade regime. But tactical arm-twisting by the US, EU, Australia and Japan has always thwarted the rise of the collective power. In the process, what remain significant at the ongoing negotiations is not what the developing countries (in the absence of a collective stand) say but how does the EU react to the American proposals. Rest everything is reduced to insignificance. Even India, China and Brazil have had a history of giving up in the final stages of negotiations. The final outcome of the ongoing agricultural negotiations, despite its serious implications for several hundred million small-holder farmers, is not going to be any different.
It is therefore time to understand what is at stake. The introduction of the Farm Bill 2002 in the United States, for instance, providing an additional support of US $ 180 billion in the next ten years to its miniscule population of farmers, is an indication of how serious the industrialized countries are towards meeting the obligations of the Agreement on Agriculture. This also includes US $ 15 million to be spent every year on promoting genetically modified foods. With the OECD countries already providing a support of US $ 311 billion a year to its agriculture, the addition of US $ 180 billion raises the total budgetary support to agriculture in the rich countries to US $ 491 billion.
The sheer scale of 'green box' subsidies in the developed countries ensures that they distort trade because the money spent keeps producers afloat. For example, the US had spent $1.3 billion on income support for rice farmers in the 1999-2000 when its total rice production was worth $1.2 billion. Japan's subsidies to its farmers, on the other hand, are greater than the entire contribution made by agriculture to the nation's economy. The total transfers to agriculture amounted to 1.4 percent of gross domestic product in 2000, compared to the sector's 1.1 percent share of GDP. Like America and the European Union, Japan too defends its heavy use of agricultural subsidies, claiming it needs to protect its industry to ensure a degree of security if imports were disrupted for any reason. The country only produces 40 percent of what it needs and is the world's largest importer of food.
The US justifies the additional federal support saying that it remains committed to reducing the 'trade distorting' subsidies by five per cent a year. The European Union, which is not far behind in subsidizing agriculture, has used 'multi-functionality' of agriculture to justify its support, much of it by way of direct payments. 'Multi-functionality' is a camouflage for agriculture subsidies under the garb of protecting rural landscape and lifestyle, as well as the welfare of livestock, even if they are not efficient. EU has been desperately seeking India's backing for its 'multi-functional' agriculture.
Roberto Bissio of Uruguay, the global coordinator of Social Watch, which monitors the social policies of countries around the world, terms this is a hoax: "With European Union subsidies it would be possible to send every European cow around the world on a business class ticket." In any case, the amount of subsidy a cow in Europe and America receives day -- US $ 2.7 per cow -- is more than twice the average daily income of a small and marginal farmer in the Third World. Such are the glaring disparities that while each of the one million cows in the OECD countries are fed exactly according to its body needs, over 800 million people go to bed empty stomach in the majority world, a third of them in India alone. And yet the dairy subsidies are justified as it helps mitigate nutritional deficiencies in the developing world.
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