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G.K. Nair

Kochi , Oct. 14

WHATEVER support the Union Government is lending to the country's agriculture sector at present is fully WTO compatible and hence, slashing it further would only worsen the plight of Indian farmers.

Under the prevailing global economic environment, any improvement in the Indian farmer's lot depends on a reduction in domestic support and export concessions enjoyed by wealthy farmers in the developed nations, according to knowledgeable sources.

Under the Agreement on Agriculture of the World Trade Agreement (WTA), developing countries are required to reduce the Aggregate Measurement of Support towards agricultural subsidies over the benchmark level of 1986 by 13.3 per cent every year.

The AMS involve two components — product- and non-product-specific domestic support. The de minimis level (below this level, a WTO member-country is not required to undertake any reduction commitment) is 10 per cent of the value of total agricultural production for both developing and developed countries.

The current level (2001) of non-product-specific subsidy is 7 per cent of the value of agricultural production in India. More so, the agricultural subsidy is only 0.71 per cent of the GDP or 3.8 per cent of the Union Budget. Hence, whatever supports the Government provide to agriculture are fully WTO compatible, Mr M.P. Sukumaran Nair, an expert with the fertiliser industry, told Business Line.

However in 2001, the developed countries in 2001 provided $311 billion as farm subsidy to agriculture. The highly subsidised agriculture of these countries drive down world prices of agriculture products and impose several trade restrictions harmful to the developing countries, he said.

The subsidy doled out to an Indian farmer stood at a meagre $66 as against $21,000 by the US, $17,000 by EU countries and $26,000 by Japan. And yet the developed countries are insisting that developing nations, including India, do away with such subsidies to pave way for free entry of their products. The tariff on agriculture imposed by the developed countries are 8-10 times higher than that on industrial goods where the competition from developing countries is insignificant, Mr Nair said.

In fact, a recent study of the International Food Policy Research Institute (IFPRI), Washington, revealed that the loss to India from the above protectionism is of the order of Rs 5,000 crore annually.

The WTA, he said, defines three categories of subsidies — prohibited, actionable and non-actionable. Subsidies that require recipients to meet certain export targets or to use domestic goods in place of imported goods are prohibited because they are likely to hurt other country's trade.

If the subsidy hurt a domestic industry in an importing country or hurt exporters trying to compete in the subsidising country's domestic market they are actionable upon a complaint from the affected country. Subsidies to R&D, developing underprivileged people and areas and support to meet new environmental regulations are non-actionable subsidies.

Policies and investments targeting the underprivileged such as investments in rural health, education, transport, land reforms, access to water, communications, agricultural research and other farmer support activities are all tenable under the WTA.

The key issues that are of great concern to India and the developing world in the WTO regime are those relating to agriculture, industry, services and environment and the implementation issues, he said.

The divide between the US-EU combine and the G-21 which assumed a battle-like situation at the recently concluded 5th Ministerial Conference of WTO at Cancum could be viewed as an attempt to subjugate the developing and poor countries by the rich. It might be the reason for the revised draft which proposed that India should slash its duty on certain agriculture products to 5 per cent or even zero. Had this been accepted, the plight of the Indian farmers would have further deteriorated further, he pointed out.

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