The farm support plans announced by India and the United States have created a lot of noise, mainly among the developed nations with surplus agriculture produces. These are under the scrutiny by the World Trade Organization members in WTO’s quarterly agriculture committee meeting on June 25-26. Specifically the European Union and Australia has asked India to explain the Modi’s proposal to spend Rs 25 lakh crore on agriculture and rural development and doubling farmers’ incomes by 2022 as part of Rs 100 lakh crore, five-year infrastructure development plan. Even the US is out asking questions about India’s 5% export subsidy for non-Basmati rice as well as increasing purchase of wheat at higher minimum support prices by the Indian Government even when India has record wheat stockpile.
It seems that the USA, Australia, European Union and other nations are considering the purposed ‘transport and marketing assistance’ for agriculture as an export subsidy and these countries are of view that after the implementation of this plan, India will breach the allowed ‘product specific’ ceiling of 5% of the value of production. These countries think that India’s plan is a trade-distorting subsidy with goal to dump its surplus stock in foreign markets. They fear that it will have negative impact on competitors in international market. So they want every detail of this purposed plan as the WTO has strict rules about the size and nature of payments.
On first sight it seems to be a setback for India at international forum but there is no need for the Government of India to come under any kind of pressure on farm issues at all. First of all under this scheme, a few specific agriculture products would qualify for the assistance and the reimbursement would be provided only if the freight cost is paid by Indian exporters. Also the level of support will change from region to region and to specific export destinations only along with many other conditions (PIB, 2019). Considering every term and condition as well as the volume of total production of those specific agriculture products, the assistance is not expected to cross the product specific ceiling of 5% on the total value of the production.
It was well expected that there would be questions at World Trade Organization (WTO) by members as is the tradition. European Union countries before asking any question to India, EU must ask its members' countries about the farm subsidies both size and nature per capita that they are providing through different means and ways as well as many other market imperfection that they intentionally maintain just to remain competitive over many countries; inside as well outside the EU. So they hardly have any moral ground to question India’s efforts to revive distressed farm sector. As per the World Bank database, the size and nature of the subsidies provided by EU members (European Union, 2019) as well as other developed countries, India’s subsidies are far below than these countries in the both the cases per farmer/acres as well as gross amount (World Bank, 2019).
However, prior to everything, the first priority of any government is its own people before it starts thinking about the interests of other countries in the name of international cooperation or globalization. India is obliged by law to provide ultra-cheap food to its populace as under the Constitution of India Right to Food is a fundamental right of citizens (NHRC, 2019). Apart from this legal aspect, there is no evidence so far which can suggest that India has been dumping its agriculture produces in global market. So any accusation of distorting trade practices by India is presumption.
The fact is that in case of farm sectors, EU countries need market to sell their excess farm produce and India and many other developing countries are their prospective markets. For example in 2018, only 15 countries exported 93.3% of total global wheat exports by value and of these apart from Russia, the USA, Canada and Australia, most are EU countries however the top producers are China and India. This is not true just in case of wheat but in case of most of the farm produces (International Trade Centre, 2019). So any serious farm sector changes in India will jeopardise the interests and have grave consequences for many overproducing countries in times when the risk in the global economy is on higher side. If India starts increasing the production of those farm products which it imports by making those produces more promising for the farmers through minimum support price and starts giving assistance on exports on those farm products which it overproduce, it will upset the dynamics in global market. These are their real concerns which are forcing these countries to pressurize India and so they are trying to use WTO platform to further their own cause. So government must not heed to WTO or member countries. Rather it should present the real data on agriculture sector to beat down the assumptions at WTO. India has already done this in case of WTO's Trade Facilitation Agreement (TFA) in 2014 through economics as well as diplomacy (Upadhyay, 2014).
Globalization is about free trade which must benefit all parties and should not be used to force other countries to blink (Upadhyay, 2015). This is a way of arm twisting at WTO and not about fair trade practices. Basically it is the tool of geopolitics and many players like China, Russia, EU and other countries from back door are trying to safeguard their position in this world trade game which may also turn into trade war. Mainly China is using this opportunity to arm twist India as well as the USA to settle on many accounts.
Bibliography
- European Union. (2019). Income support. Retrieved from https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultural-policy/income-support_en
- International Trade Centre. (2019). Export. Retrieved from https://www.trademap.org/Country_SelProduct_TS.aspx?nvpm=1%7c%7c%7c%7c%7c1001%7c%7c%7c4%7c1%7c1%7c2%7c2%7c1%7c2%7c1%7c
- NHRC. (2019). Right to Food - a Fundamental Right. National Human Rights Commission.
- PIB. (2019). Transport and Marketing Assistance (TMA) for Specified Agriculture Products Notified .
- Upadhyay, R. (2014). Has India done it Right by not Ratifying WTO’s TFA? Retrieved June 26, 2019, from The Deliberation: https://www.deliberation.in/2014/08/has-india-done-it-right-by-not.html
- Upadhyay, R. K. (2015). PARADIGM SHIFT IN THE CONCEPT OF SUSTAINABLE DEVELOPMENT IN TIMES OF GLOBALIZATION. Abhinav National Monthly Refereed Journal of Research in Commerce & Management, 4(3), 87-92.
- World Bank. (2019). Subsidies and other transfers. Retrieved from https://data.worldbank.org/indicator/GC.XPN.TRFT.CN?view=chart
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