Farm subsidies a ploy to stall WTO talks

EXIM MATTERS

Despite the Government's emphatic and repeated claims that it is stalling the negotiations at the World Trade Organisation(WTO) to protect the interests of 650 million farmers, it is worth asking whether by stalling the multilateral negotiations, the Government is, in effect, protecting some other interest groups.

"No negotiations unless the rich countries agree to substantially cut their farm subsidies upfront", says the Commerce Minister. But, will ourfarmers gain only from subsidy cuts in the rich countries?

The mid-term appraisal of the Tenth Five-year Plan by the Planning Commission says that the agriculture growth has decelerated sharply from 3.2 per cent from 1980-81 to 1995-96 to 1.9 per cent subsequently and that per capital income in agriculture sector has, in fact, gone down despite a GDP growth of 5% .

While the depressed world prices for farm products has been one of the reasons cited for the demand constraints that has contributed to the rural distress, the major problems, says the Planning Commission, are on the supply side.

The experts are unanimous that the problems of low productivity, declining investment in agriculture infrastructure, marketing bottlenecks, pricing of inputs, rural credit,declining soil fertility and other medium term problems have more to do with poor growth in the farm sector.

India does not have foodsurpluses waiting to be exported. Our own growing population will need enough food and better nutrition. Our idea of food quality is far different from that of richer countries. Even with contract farming by bigger companies, it will be some time before we can exploit opportunities that subsidy reductions can bring in.

Besides, our ownpolicy options to safeguard our farmers from cheaper imports or to continue subsidies at the present levels are not under threat at the WTO negotiations. Given our own medium term constraints, it is theCairns group of countries led by Brazil and Australia that have more to gain through market access, if the rich countries cut their farm subsidies.

So, why is the Government making even more noise than the Cairns group about farm subsidies with a view to block the negotiations? The answer is that harping on farm subsidies keeps the other issues likeindustrial tariffs and market access services away from the negotiating table.

The Government is worried that richer countries will push Singapore issues like trade and competition, transparency in government procurement, trade related investment measures, trade facilitation as also contentious issues of trade and environment and trade and labour standards on to the negotiation table.

The Government is also not too keen on binding commitments in the services sector that can take away its discretion to allow market access depending on the development needs. Failure of the multilateral trading system means more bilateral or regional trading arrangements.

Such preferential agreements put more discretionary powers in the hands of the ministers andbureaucrats. So, the efforts to stall the multilateral negotiations have something to do with gaining more discretionary powers too "� one reason why even the politicians in the opposition love stalling themultilateral negotiations.

No doubt, the rich countries must cut their farm subsidies, because better world prices for farm products can spur investment in agriculture. But, refusal to negotiate on other issues protects manufacturers, service providers and discretion of politicians and bureaucrats.

tncr@sify.com