Agricultural Trade Negotiations 2017 – Make or Break for India
Waning quantum of Indian agricultural exports in past couple of years is
enervating the India’s position as a net food exporter. With tad value addition in
agricultural exports, Indian manufacturers are unable to compete with the agro-
processing industries of developed countries like Australia, Canada and economies
of EU. Affordability of subsidies undoubtedly is a matter of concern for developing
economies like India, but it cannot be an excuse from facing the audacious
bargaining process in WTO ministerial meetings.
The eleventh ministerial of the World Trade Organisation (WTO) is currently
being scheduled is a crucial test, at least on three counts. One, it will be a test for the
continuation of the Doha Development Round. Two, related to this, it will be a test for
the very future of the rules-based multilateral trade regime. And, three, closer home,
it will be a test for Indian policy makers who will be negotiating, for ensuring India’s
interests as well as continuing the Doha Round.
In India, the farmers are already battling with the issues related to increase in
the input cost and reducing margins along with shrinking size of the fields. EU led
developed countries are putting pressure on limiting the subsidies government to 10
percent of GDP of agriculture. India is constantly disputing the way these subsidies
are being calculated, along with the Aggregate Measurement of Support, or AMS
extended by the US and EU as food aid. It doesn't make any sense to accept the
food procurement price to stay below the external reference price-which is
determined in 1986-88. Since then the food prices have increased many fold. This
artificially inflates subsidy figures in a pseudo approach with no logical
understanding. This is been stonewalled by the western world. For example, in case
of soybean production in India, ironical situation arises many a times where
importing seems more convenient than cultivating uncompetitively.
At this stage India cannot afford to make concessions on the issue of getting
developed economies reduce their agricultural subsidies. The high level of subsidies
these countries give exposes Indian farmers to cheap imports and India still does not
have sufficient firepower in terms of safeguard measures. Some countries like Brazil
and Argentina, which were aligned with India earlier, may break ranks with it on this
issue. Asia and Africa are two such giant continent which can fetch immense
economic growth through agricultural trade if the emancipation is facilitated
supporting the native farmers.
Talking about Special Safeguard measure (SSM), it is an instrument which
would support developing countries to deal with import surges and price dips as a
result of high subsidies provided by the developed countries to agriculture products.
An agreement on SSM is important for India as the applied customs duty on some of
the agriculture products is at the bound rate, meaning it can’t be raised further.
These include products such as chicken legs, apples, olive oils and rice. For Indian
agricultural exports, market access and SPS (Sanitary and Phytosanitary) measures
are obfuscating pillars too, which are camouflaging India’s position as a global leader
in agricultural trade.
Recently US has refused to support a decision on a permanent solution for
public stockholding subsidies sought by India and other developing countries, has
aggravated India’s scenario with respect to agricultural trade. Now maintaining the
food stockpile will be irrelevant for India which till now had been the most sorted
approach. Slowly and gradually India is losing its position as a global negotiator.
Anything which is certain and robust for India is its pragmatic domestic trade
policies and up gradation on NTBs which are widely applied. There is huge scope for
exports of processed agricultural products, but for that we need effective cold chains.
The government needs to put in money to push infrastructure if exports have to be
increased. Improvement and amelioration in warehousing infrastructure would also
counter inflation concerns due to seasonal factors such as poor monsoon rains.
Between 2013-14 and 2016-17, agricultural exports fell by 22% while imports
increased by 62%. As a result, the trade surplus has fallen by 70%, which is
seriously a discouraging signal especially for a net agriculture exporter.
Do we really need to bring a paradigm shift in Indian agricultural trade, is what
our policy maker needs to think?