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K. P. Prabhakaran Nair

LONG before the formation of the World Trade Organisation (WTO), late President, Jules Nyrere of Tanzania, the committed socialist and visionary African leader, told the industrialised West "Do not give us `aid', instead, give our products (he meant primarily agricultural) a fair price".

To this day the US-European Union (EU) combine has only shown its unbridled intransigence at the pleas of the world's poor, on their rightful claims.

That Cancun failed essentially because of this mindset of the US-EU combine needs no special mention. There is a pervasive opinion in India that it was this country that could halt the onslaught of the US-EU combine and New Delhi haslaid claim to this dubious glory.

Contrary to this widely held view, it was Brazil that provided the intellectual leadership and strategic planning to the so-called G-22 group of nations, which had a great stake in agriculture, including some rich countries such as Australia and New Zealand (which generally echo the US-EU tune, but decided to join the bandwagon as they have large exportable surplus of both agricultural and dairy products).

Despite a little `bribe' (in terms of concessions to the leader of the group, that is Brazil), the country saw through the game only for the group to emerge larger than before and stronger in will. But alliances such as this can break up any time in the WTO, as each of the country involved has an agenda of its own.

There is an opinion being built up that India, in course of time, should come under the umbrella of multilateral trading system.

With a total global trade volume of less than one per cent or thereabout, India can never exert the kind of pressure — amount to bullying at times, as the US-EU combine, particularly the former, can especially when it comes to agriculture.

A sample of this bullying tactics is the tongue-in-cheek statement of the US Trade Representative, , Mr Robert B. Zoellick, who at the collapse of Cancun talks said: "Whether developed or developing countries, there were `cando' and `won't do' countries here. The rhetoric of the `won't do' overwhelmed the concerted efforts of the `can do'. `Won't do' led the impasse".

Obviously, the statement was primarily targeted at India, China and Brazil, in particular, as the G-22 combine frustrated the "concerted efforts" of the US-EU combine to bulldose the rest of the world on an agenda that suits it most.

But what is more significant is that Mr Zoellick went on to add that he would "no longer sit idle" while the `won't do' group of nations blocked the progress of the Doha Development Agenda (DDA); instead he would forge bilateral and regional trade deals with "can do" countries. Herein lies a threat, at the same time an opportunity. And one must examine both to obtain a proper perspective of the whole game.

It is important to remember that the US-EU combine put India in a terrible spot at Cancun to slash duties on some agricultural products to 5 or even zero per cent.

To understand the crucial implications of what the US, primarily, has set itself as an agenda, one must critically examine the price profile of agricultural commodities over the last more than two decades. This is very relevant in the context of the two-day General Council meeting of the WTO ahead and what would follow in Geneva, where senior officials (not ministers) would once again met to fine-tune the transactions.

If one makes a critical analysis of the global agricultural scenario, there are two segments — the grain-rich North and the cash-crop-rich South. This is a legacy of the colonial era. Obviously, the climatic differential of these two segments is vast, enabling the North to take two or even three grain crops in an year, such as a winter and a spring wheat and a summer maize, which are important staples of the world.

Cash crops, such as coffee, tea, rubber, and so on, which, in any case, cannot be grown in the cold climate of the North, have been pushed on to Africa and Asia and South America.

A look at the world trade in agriculture. For instance, the price fluctuation in a grain crop such as wheat and compare it with that of coffee. If, today, the Indian, African or Latin American coffee farmer goes bankrupt and commits suicide (as has happened in Colombia, a major coffee grower), it is because of the severe price plummeting over the years.

For instance, over the last two decades, coffee prices have plummeted more than 30 per cent, while during the same period, wheat prices have escalated by more than 130 per cent! The escalating wheat price is the result of what is popularly known (though not publicly admitted) production limiting measures.

Farmers in Europe and the US are paid huge subsidies to keep their fields fallow so that an artificial scarcity is created which results in steep price rise. This is something no state is Asia, Africa or South America can afford to do, because the majority of the farmers on these continents make do with small acreages.

For instance, India. There are 35 crops in India on each of which around five million people depend for their livelihood. More than 25 crops have an area of one million hectares each. What the US-EU combine is attempting to accomplish is to breach open the grain market in populous countries such as India and China while, at the same time, disallow a fair trade in cash crops originating from the developing countries.

An idea of the production-distorting and price-manipulating measures practised by the Organisation for Economic Development and Cooperation (OECD) countries, essentially European in structure, can be obtained, when one notes that in 1986 an enormous $258.7 billion was dished out as total support for agriculture which, as a percentage of the total value of agricultural production in the EU countries, comes to 52 per cent!

Since there is an established notion among the developing countries that it is in fact these trade-distorting subsidies which are at the heart of the problem, their reduction would bring relief to a number of developing countries.

It is worth noting that, while in June the EU decided to bring about a moderate reduction in domestic support, it did not, however, address the more crucial issue of market access, where the EU imposes very large Customs duties on most of the agricultural commodities. In fact, the measures by the EU could simply be dismissed as cosmetic.

There is urgency coupled with anxiety in the statement of Mr Perez del Castillo, Chairman of the General Council of the WTO, when he said "... there is a willingness on all sides to get back to work in line with the mandate agreed by Ministers at Cancun", while informally addressing the heads of delegations and went on to add "in line with the mandate given at Cancun, the primary focus of our work will be to concentrate on key outstanding issues.

In our judgment, backed up by our consultations, these are, first and foremost, agriculture, cotton, non-agricultural market access (NAMA) and Singapore issues".

India, in its anxiety to be the "blue-eyed boy" would be making a monumental mistake if it has any pre-conceived notions of its importance in the scheme of things and trips on the question of tariffs and, inadvertently, opens up its grain market to the US-EU combine.

If the EU and, to a smaller extent, the US, slash the farm subsidies and tariff mode, it will be the better organised and more efficient producers, such as, Argentina, Brazil, Malaysia, South Africa and Thailand, which will all stand to gain. India, as of now, is neither a partner of any major trading bloc, nor a regional bully like what China can hope to become.

At current estimates, India will import in excess of 40 million tonnes of foodgrains by the turn of 2020; this is a third of what we now produce. By any reckoning, the agricultural scientists have failed to provide a breakthrough in grain production, and India's output hovers around 200 million tonnes even with the best of monsoons.

Vast tracts of Punjab, Haryana and Western Uttar Pradesh, the "grain bowl" of India, have almost been rendered barren, because of mindless use chemical fertilisers and pesticides. Despite the hype, "organic farming" is only suitable for niche markets, such as spices. Grain farming will be chemical-dependent for a long time to come.

The "Production Limiting Measures" practised by the US and the EU, is a double-edged weapon. While limiting supply by restricting grain production, the fields that lie fallow also help in rejuvenation of the inherent fertility.

Most economists are oblivious to this advantage, a practice India can only ill-afford to do, because we need every inch of land to feed the burgeoning masses.

India's agricultural policy should be "grain-centred", supplemented by oilseeds and pulses. If the negotiators in Geneva have not already tripped and hold on till December and not let the grain market's rein into the hands of the US-EU combine, that would, indeed, be the greatest service to this nation.

The Commerce Minister, Mr Arun Jaitley, would do well to remember this when he sends his negotiators to Geneva.

(The author is a senior fellow of the Alexander von Humboldt Foundation.)

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