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February 05, 2006
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February 05, 2006




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Home > 2006 Issues > February 05, 2006

Debate
WTO Hong Kong Ministerial Conference
A discourse of the North to South
By N.C. De

Sixth Ministerial Conference of WTO concluded on December 18, 2005, at Hong Kong with a compromise text. Our Commerce Minister returned to New Delhi. His sycophants received him with huge garlands as if he has won the world.

Let us now see what he has actually done in the Conference. Before departure for Hong Kong, Kamal Nath told again and again that tariff reduction is not the only pre-condition for market access. For real market access to accrue, it is also necessary that exports subsidies, domestic support and non-tariff barriers are eliminated. Hence, we will not bow to the pressure of developed countries to take on their issues as bargain for market access.

Had Kamal Nath kept his commitment to Indian people? If so, why had he accepted the ?Swiss formula? of lowering tariff on the industrial products of developed countries in the developing countries like India in lieu of simple promise of elimination of farm export subsidies by 2013? Clearly, the industrialised world had managed to force developing countries to accept the ?Swiss formula? for import duty reduction binding on industrial goods.

Actually, developed world did not lose anything except a simple promise of elimination of farm export subsidies in 2013. During this long spell of 7-8 years, they will dump our markets with their highly subsidised farm products endangering our farmers? existence who enjoy neither farm subsidies nor any other tariff and non-tariff shields. Our farmers cannot survive for eight years to enjoy the US and EU markets after 2013. Our farmers will either commit suicide or will beg on city streets. Indian agriculture will be an added attraction in our museum.

Research scholars say, the persons, who receive subsidies in America and EU, constitute only two per cent of the farmers. Actually, the number of farmers in America is less than one per cent of the population. But only two per cent of their farmers are so strong that their government can never dare to go against them. The assurances given by America and the EU countries are only lip services. They will never withdraw the farm subsidy scheme.

It should be kept in mind that our agriculture is not that of America and Europe. Our agriculture is basically for family sustenance but theirs is agri-business. Big corporate houses or persons hold their farms and 80 per cent of their farm subsidies go either to farmhouse lords or go to corporate houses. Only 20 per cent subsidies reach the small farmers. Queen of England gets Rs six crore subsidies per year. Prince Charles gets Rs 2.5 crore and the Duke of Westminster gets more than Rs 5 crore. Prince of Denmark, Prince of Monaco, the agriculture minister of the Netherlands, four of the 18 cabinet ministers in Denmark receive subsidies in the name of agriculture. In America even the richest men like Ted Turner and David Rock-Feller get subsidies. In Spain only 300 people corner 80 per cent of their subsidies.

Recently it has been disclosed in New York Times that ?developed world funnels nearly $1 billion a day in subsidies? which encourages over-production and drives down prices. Oxfam, an NGO, also accuses the rich countries of giving more than $300 billion annually in subsidies to agri-business. Even the World Bank President, Paul Wolfowitz admitted that the developed countries are expending $280 billion on support to agricultural producers. As a result of this lavish subsidies, the US and the EU countries are dumping their artificially cheap agri-products on Indian markets resulting in thousands of cases of farmer suicide all over the country. By keeping their borders secured, the US and the EU are advocating liberalised international trade. It is amply proved that the EU and US are not serious about actually promoting international trade. They are as such not violating the WTO agreements but they are certainly damaging the spirit of world trade.

Research scholars say, the persons, who receive subsidies in America and EU, constitute only two per cent of the farmers. Actually, the number of farmers in America is less than one per cent of the population. But only two per cent of their farmers are so strong that their government can never dare to go against them. The assurances given by America and the EU countries are only lip services. They will never withdraw the farm subsidy scheme. It is quite evident from a recent proceeding of US Congress that in the coming week a legislation is coming to extend US farm commodity subsidy programmes till 2011.

It is not new to America and Europe to break their own promises. During Uruguay Round of Discussion America advised all countries to frame their internal laws at par with WTO rules for the sake of global liberal trades but just after Uruguay Round, America passed a law, called ?The Uruguay Round Agreement Act.? Section 102 (a) of this Act clearly states that ?if there are inconsistencies between the provisions of WTO Multilateral Trade System and the US laws, the latter will prevail.? The most important promise was to dismantle the Multi-Fibre Agreement concerning trade in textiles by January 1, 2005, after that all textile trade would be off quotas. While the developing countries lifted the quota system within the time frame, both USA and EU postponed the issue by using simple arithmetic and lame excuses. For the sake of eye washing, they brought those textile and clothing items out of quotas that do not fall within the export quality of developing countries. Regarding their obligation in respect to the international agreement like Agreement on Textiles and Clothing (ATC), they pretended not to harm the exports of less competitive developing countries by scuttling the ATC. But what actually had happened? See the comments of our Textile Minister Shankarsinh Vaghela in Rajya Sabha in a written reply to a question that ?The textile exports to the US are facing some non-tariff barriers like labelling and marking requirements, compliance with labour and environmental standards, security parameters and verification of visas among others.?

Our farmers cannot survive for eight years to enjoy the US and EU markets after 2013. Our farmers will either commit suicide or will beg on city streets. Indian agriculture will be an added attraction in our museum.

This is the story of our victory at Hong Kong being trumpeted by our Commerce Minister. On the one hand, we are losing our export markets in the developed countries like US and EU due to various tariff and no-tariff barriers and on the other, our markets are on the threshold of being flooded with industrial products due to withdrawal or drastic reduction of all kinds of tariff and non-tariff barriers allowing indiscriminate market access to industrialised nations. It is to be noted that throughout its industrial development the US was more protectionist than other early industrialised country. Bairoch Paul described it as ?the mother country and bastion of modern protectionism?. It was only after the Second World War that the US started to move to sustained trade liberalisation, having successfully established its industrial dominance behind protectionist barriers. From several evidences put forward by many economic experts, it is a well-established fact that there was a strong correlation between protectionism and economic growth in the US throughout the 19th century until the Second World War. While the US was protectionist across a wide range of industries, Japan like Germany and Sweden was more selective, providing high levels of protection to capital-intensive and high value-added sectors. Korea followed in the footsteps of Japan, except that it was less willing to move to free trade. According to World Bank observations, ?even by 1983, when Korea?s success had become an established fact, most sectors were still protected by some combination of tariffs and non-tariff barriers?.

Does our Commerce Minister think India has become so much industrially developed that it does not require any protectionist barriers? If not, why did he go on to support the EU demand that the date for the end to agricultural export subsidies be set at 2013 instead of 2010? Where was his high-flown intransigence against US and EU of not allowing them to link the issue of subsidy with that of market access? It is thus an established fact that the developing countries, despite the grouping having reached to 110, have not been able to prevail over the WTO Secretariat and the rich trade majors. Based on these facts, while condemning the compromise text as a ?betrayal? of development promises, the Oxfam said, ?The proposal that emerged after all night negotiations reflected rich countries interest far more than those of developing countries and would not deliver the reforms poor countries needed.? It also said that ?small progress in agriculture is more than cancelled out by extremely damaging agreements on services and industry?.

As regards Kamal Nath?s claim of holding the unity of developing countries, it cannot be denied that Kamal Nath has shattered the unity, which was fostered by Murasoli Maran at Doha. Developing countries have been divided into several groups, viz. Group of 20 (G-20), Group of 90) (G-90), Asia-Pacific Caribbean and small Economics Group, Less Developed Countries (LDCs) Group etc. Developed countries had managed to divide the house of developing countries by conceding the demand of LDCs because developed countries had nothing to lose by supporting the LDC demand. Some of the more powerful LDCs like Bangladesh will gain a lot from duty-free and quota-free access to Indian markets.

It may be claimed that due to India?s weak role in leading the developing countries, developed world has gained the numbers it needed in the WTO in its favour by winning over the LDCs.




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