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J. George
Rajesh Mehta

THE contrast could not be sharper. The latest annual Exim Policy document is all optimism. But there is much pessimism where exports of agriculture and allied products are concerned.

One needs to take a close look at the destination of agriculture and allied products export before rejoicing over the double-digit level annual growth rate in the aggregate. The confirmatory assurance, however, would be provided by the export performance in the processed food category.

Developed countries are using provisions of scientific merit to deny market access to food exports from many developing countries. The crafty way that the importing developed countries restrict trade on technically-allowed and WTO-compatible ground, namely, "legitimate scientific grounds", is indeed intriguing and interesting.

This is also a route to circumvent the most favoured nation (MFN) foundational clause of the multilateral trade agreement. The story thus far is a classic case of alliance between capricious trade managers and scientist cohorts to deny legitimate market access to developing country food exports.

Post-WTO, all agricultural exports have to comply with the sanitary and phytosanitary (SPS) measures. SPS agreement, although bilateral in operational terms, follows from a set of agreements that are part of the larger WTO set signed by India. Whereas most WTO agreements consent to the use of health as a valid ground for exception, all require that health measures be no more trade restrictive than necessary. However, SPS measures, in comparison to tariff barriers, use a soothing phrase "based on scientific principles and is not maintained without sufficient scientific evidence".

Notwithstanding requiem of a scientific temper, India has repeatedly failed to leverage the long-standing expectations of the agricultural sector on which the food processing industry relies so much. Perhaps, the significance of the "kitchen diplomacy" is obscured by the "coercive diplomacy" following the war against global terrorism.

The cost of such obscuration is indeed high. However, the road to Cancun after the failure of the agriculture modalities, argues forcefully for greater attention to non-tariff barriers primarily in the guise of sanitary and phytosanitary measures, and must take up cudgels on behalf of the developing countries Since the new order of trade requires planned and sustained exports, there is no gainsaying that quality consciousness and related technical competence, especially in the food processing sector, would show ascendancy across the spectrum of `farm to table'. Hence the "kitchen diplomacy" in the contemporary world is on the ascendancy.

The "ready to eat" segment of the agribusiness is setting this new trend in the "kitchen diplomacy". Against this backdrop, the announcement in September 2002 about the establishment of a new fund — Standards and Trade Development Facility — by the World Bank and the WTO and the expectations of a wider support from other international standards-setting institutions as well as G-8 countries assume importance for any discussion on SPS. It is claimed that the new facility of fund will bring about a `win-win outcome' for the developed and developing countries. A close look at the ground realities indicate that this outcome will never be achieved since the developed countries keep raising the standards bar, under the legitimate clause of `scientific evidence'.

This may be an understatement against the remark of the US delegation head, Mr John Turner, at the World Summit in Johannesburg sometime ago, that "we leverage our assistance to our expectations". SPS measures thus can be said to have emerged as an instrument to control trade flows in a WTO compliant manner where the emphasis of reduction of subsidies and removal of tariff and non-tariff barriers have become the prime concerns.

The expectations of agricultural exporters from India is a function of the food habits in the importing countries and the level of marketable surplus in the exporting country as also the processing capabilities; of course, with other factors remaining unchanged.

One of the dominant factors remaining unchanged is the level of tolerance for the prescribed scientific rigour. Agricultural exports averaged nearly 17 per cent of the total exports from India during the period 1990-2001.

The share of agricultural exports to total exports during 1996-97 was about 20 per cent and is reported to have consistently declined to record about 13.88 per cent during 2000-01 and probably to about 12 per cent in 2002-03. Any further normalisation of the data set, given the drought inflicted agricultural sector, may not show a northward shift.

Therefore, the expectation of any sizeable increase in the agricultural exports in the immediate past has proved completely untenable. However, the share of processed food exports within these untenable expectations did show rising tendencies, thanks entirely to the markets in West Asia and some of the East Asian nations. India has been trying to make the processed food exports more sustainable and remunerative into the developed nations market. The pregnant question therefore to be probed is how far SPS is used to thwart attempts at gaining better access in these countries.

Primary products from the agriculture and allied sector lend themselves to a series of opportunities to create various utilities such as time, form and space, thereby bringing into sharper focus the singular importance of agro-processing dimensions with a strong forward and backward linkage mechanism to the industrial sector.

Moreover, search for alternatives has indeed gained momentum because of the income effects on the food habits as well as the composition of the food basket of the consumers.

The developing countries have been strongly arguing, both at the Doha Ministerial Conference and afterwards, that in the area of SPS measures, standards set in the developed nations are trade distorting. For example, a cursory glance at any request for consultations filed by a developing nation with the dispute settlement board of WTO post-1996 clearly indicates SPS as a main cause of the plaint.

The Codex Alimentarius Commission (CAC), a body jointly supported by the FAO and WHO, has in effect given a ruling in March 2002 that it would be a trade violation to embargo genetically modified (GM) produce. While CAC standards, guidelines and recommendations are voluntary, they are officially taken by WTO as reference points in international trade disputes.

SPS norms can be broadly looked at from three perspectives — microbiological, physical and chemical — to appreciate the economics of ground reality. This can at best be called the shifting (goal)-post syndrome. A few recent controversy can be cited here to echo the shifting post syndrome.

The following instances merely indicate tip of the iceberg. European countries banning import of fish from many African countries; seafood exports to the EU from India and Thailand on grounds of drug residues; frequent raising/shifting of acceptable levels of chemical elements and foreign bodies in the food commodities; exceptionally high standard not based on any scientific evidence especially for the processed fruits and vegetables, etc.

There are instances in EU of 100 per cent testing of imports from selective countries while only a few sample testing is done for few countries. These restrictions not only push up the cost of exports, but also adversely impact on the competitiveness and value-volume trade off amongst different product lines. The need, therefore, for ingenious SPS mechanism to be devised by the developed countries to stay as global leaders of agricultural trade.

There is no denying that available food should be safe, hygienically produced, and wholesome with right nutritional configuration, free from infection causing bacterial contaminants and other adulterants.

A growing volume of international trade in agricultural products in the post-WTO period has made it abundantly clear to India that vulnerability to food based health problems, be it to humans, plants or animals, is indeed serious. Therefore, for a "win-win outcome" in agricultural trade between the rich and poor nations, the short-to-medium term temptations of the richer nations, namely, to prescribe more stringent standards on dubious scientific evidence, must be avoided.

The harmonisation, equivalence and transparency principles enunciated in the SPS agreement has to be rescued from being merely slogans for rich nations. Simultaneously, on the domestic front, a greater urgency needs to be exhibited towards scientific fundamentals. Many alliances at different levels may be required between those possessing scientific temper and infrastructure as well as the decision making executive cohorts.

This point cannot be overemphasised in India. If there is scientific as well as traditional knowledge merit in the saying, "prophylaxis is better than therapy", the risk assessment dimensions, as enshrined in Article 5 of SPS agreement, can neither be relegated into the background nor left in the hands of ill-equipped food inspectors with grossly outdated operating manual.

Perhaps, scientific institutions of higher education category that now claim NAAC certification could play a vital role in capacity-building in a decentralised fashion. These institutions need to get out of the scientific pedestrian syndrome to take on the shifting (goal) post-syndrome (SPS) being practised by many importing developed countries.

(Prof J. George is a Senior Consultant and Dr Rajesh Mehta is a Senior Fellow with the Research and Information System for the Non-Aligned and Other Developing Countries, RIS, New Delhi. Both are involved with an International Research Project on Economics of the Food Safety Standards. Their views are personal.)

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