By Afsar H. Jafri

The Agreement on Agriculture (AoA) is acting as an engine of the ongoing negotiations at the World Trade Organisation (WTO) and has the potential to make or break the forthcoming Ministerial in Hong Kong in December 2005. The objective of the AoA is to reduce barriers to trade (such as import duties, quotas and subsidies) thereby making domestic and global agricultural sectors more market-oriented. The justification for this is that the removal of such trade-distorting measures will increase the volume in trade from which all countries, including developing countries like India, will benefit.

However, in last 10 years after signing of the WTO in Marrakesh, there is no sign that more international trade means less hunger, more employment, less dumping from the North and more development of the South. Instead we witnessed increased hunger and priority given to export then to feed the local population, increased unemployment and exodus from rural areas to slums in metros, decreasing farm gate prices, dumping in the international market and surge in imports, industrialisation of production and all these continue to deepen agricultural crisis in developing countries including India.

The AoA is based on a paradigm, biased in favour of capital-intensive, corporate agribusiness-driven and export-oriented agriculture. It is clearly detrimental to the interests of millions of small and marginal farmers, largely dependent on subsistence farming. The promises made under the Uruguay Round AoA of increased trade, greater access to markets and higher prices for farmers has no meaning today. In fact, higher and fair prices for farmers seem further away then ever. The subsidised dumping from developed countries caused depression in not only international commodity prices but also farmgate prices at the domestic market. The benefits of AoA have mainly been accrued to the northern agribusiness for whom market access means more profit. Evidently, the inherent objective of the AoA, or of the WTO, is to capture market in the developing countries and to favour the export interest of the big corporations. It is a well-known fact that the US biggest agribusiness Cargill  played a key role in the formulation of the AoA.

Despite the negative impact of AoA/ WTO policies on the developing countries including India, the developed countries are still pushing them to further open their market under the Doha Development Round (DDR), launched at the WTO’s 4th Ministerial in Doha in 2001 while at the same time they continue to protect their farmers and farming through trade distorting subsidies. With the completion of the DDR, supposedly by 2006, the market access agenda of the developed countries would be accomplished to a great extent, leaving agriculture in the developing and least developed countries (LDCs) at the mercy of northern agribusiness.

During the General Council meeting in October 2005, a series of proposals were submitted in the WTO by US, EU, G10 and G20 to speed up the negotiations. This is considered to be an attempt to confuse the majority of the developing countries in the quagmire of proposals in order to strike a deal for the success of forthcoming Ministerial. Ironically, among the 148 member states in WTO, the key negotiations on AoA is happening in the Five Interested Parties (FIPS) which include three from the developed world, US, EU and Australia while India and Brazil are “supposedly” representing G20, a coalition of developing countries on agriculture formed during the last Ministerial in Cancun in September 2003 . This exclusive process has been criticized by majority of the developing countries, and they are upset by how the negotiations not only of agriculture but the whole Hong Kong package seem to depend on the exclusive talks among the FIPS and their Ministers. It brings into the limelight, once again, the undemocratic and non-transparent nature of WTO negotiations, a key reason for the Seattle and Cancun Ministerial failures.

The emergence of G20 was considered to be a very positive step to counter the market-oriented approach of the developed countries and raised some hopes for a better deal for the third world. But it failed to protect third world interest and got mired into the same market access approach of the AoA that privileges the export led model, permits protection in the developed north and opens markets in the developing south. Market access will primarily benefit agri-business interests and will do little to solve the agrarian crisis in the south.

Despite the serious impact of the 10 years of AoA resulting in the deep agrarian crisis in almost every developing countries, the recent G20 proposal of 12th October 2005 submitted to the WTO's Trade Negotiations Committee (TNC) furthers the market access approach. It has proposed that the developed countries will undertake a formula cut of at least 54%, on average, while developing countries will be subject to a maximum tariff cut of 36%, on average. In order to accomplish that the G-20 proposed a formula with two different set of bands as well as two sets of tariff reduction rates for developed and developing countries.

The developed countries would have four bands, with thresholds of 0-20%, 20-50%, 50-75% and above 75% and tariffs within the bands would be subjected to linear cuts of 45%, 55%, 65% and 75% respectively. The developing countries would also have four bands, with thresholds of 0-30%, 30-80%, 80-130% and above 130% and tariffs within the bands would be subjected to linear cuts of 25%, 30%, 35% and 40% respectively. There would be a cap of 100% on tariffs for developed countries while a cap of 150% on tariffs for developing countries.

If agreed, this proposal would be quite disastrous for third world agriculture because they would be required to lower their tariff protection. For countries like India, tariff is the only protection available in the absence of quantitative protection, special safeguard mechanisms and the non-trade barriers and a drastic cut of 30-40% on the import duties and capping of tariffs at 150 percent will lead to dumping of cheap subsidized imports from developed countries. Moreover, this would limit our ability to freely change tariffs in future and jeopardize our self-sufficiency, and increase our dependency on agricultural imports.

The G20 proposal also proposes reduction of subsidies by the developed world but the truth is there will be no reduction of subsides by EU and US at least till 2012-13. It is well known that agricultural subsidies given by the EU under the CAP (Common Agricultural Programme) will continue till 2013 and cannot be withdrawn before that while the subsidies by US under the Farm Bill 2002 is for a period of 10 years i.e. till 2012. Though US and EU proposals of October 2005 provides for “impressive reduction” of their domestic trade-distorting agricultural supports but in reality both the US and EU have tried to shift their domestic support from ‘Amber box’ to ‘Blue box’ and ‘Green box’ and in effect maintain ‘status quo’ in domestic support. In return they tries to prompt developing countries to make parallel offers on the opening of their markets to the EU and US exports of services and non-agricultural products.

Continuance of subsides is quite important for the survival of agriculture in US and EU which not only supports production but also equips them to capture market in developing countries. So fare the G20 have failed to get tangible commitments from the EU and US on the elimination of trade distorting subsidies and provide market access for commodities from the south. Therefore it is imperative for the G20 to adopt a protectionist approach in the form of either tariff protection or quantitative restrictions. There should not be any further commitment for the reduction in tariff and capping of tariff unless developed countries bring down their domestic support to zero. 

For India, reinstating quantitative restrictions on import of agricultural products is currently the only viable solution to protect its agriculture from import surge and safeguard the livelihood of two third of its people who are dependent on agriculture. The increasing phenomena of farmers’ suicides is the real barometer of the 10 years of AoA/ WTO and there must not be any further liberalisation and commercialization of agriculture until and unless the government of India succeed in addressing the current agrarian crisis. 

10 years of operation of AoA has had enough damaging impact on the farmers and farming of India and other developing countries. It is time to review its costs and benefits to its member countries, before any further negotiations. No Deal in the Hong Kong Ministerial can be the only viable approach than committing to a bad deal, which would forever enslave our agriculture and leave it at the mercy of agribusiness.