Defending turf at Hong Kong

The prevalent mindset regarding the WTO puts a lot of pressure on the government to be defensive regarding its stance even where it can afford to be more aggressive

N Chandra Mohan Delhi

After the World Trade Organisation's (WTO) ministerial conference in Hong Kong in December 2005, there is still no clarity on whether India is a gainer or loser from this round of talks. Union commerce minister, Kamal Nath, for his part, states that India's concerns have been fully addressed at the WTO. But the left and Bharatiya Janata Party (BJP) disagree arguing that he has failed to protect the interests of India. What is the true position? One difficulty in examining such issues is the prevalent mindset that regards the WTO as a rich countries' club that thrusts iniquitous bargains on countries like India.

Instead of debating how India can negotiate aggressively to its advantage at the WTO, this mindset offers a more pessimistic prognosis of this encounter and advocates instead a more defensive negotiation stance. True to form, whatever the government does at these talks is considered a sell-out of India's national interests. But what is the national interest? The left and BJP do not offer much insight in this regard but they would much prefer that the government does not yield an inch at the WTO as it might have far-reaching and even irreversible consequences for India's economy.

Such opposition naturally puts whi-chever government is in power on the defensive so that it is not vulnerable to the charge of a sell-out. Kamal Nath's challenge in the months ahead is indeed to convince the left, on whose support the current UPA government depends for its political survival, and the BJP that he has given away nothing at Hong Kong. Their basic argument is that the minister has not adequately safeguarded the interests of millions of small farmers in the country and has left them open to predations of the big agricultural corporations masquerading as farmers in the developed world.

Agriculture is indeed the most controversial sector being negotiated at the WTO, thanks to the intransigence of the European Union (EU) in reducing subsidies and cutting tariffs. The draft text at the end of the Hong Kong ministerial mentions that all export subsidies will be ended three years later than earlier hoped, that is by 2103; that a substantial part of the cuts must take place in the first half of the implementation itself. The draft text, however, is also explicit that the cuts must come also in indirect subsidies to farm products like export credits, state trading enterprises and food aid.

The left-BJP criticism against Nath doesn't, however, take into account the fact that there is nothing in all of this for India. Unlike Brazil and Australia who are efficient exporters of agricultural goods, India's interests have always been dictated by the need to safeguard millions of small farmers who operate majority of farm holdings in the countryside. India may be a fast expanding and prospective economic power. Yet, it remains a very closed economy with some of the highest agricultural tariffs in the world. None of this will change, Hong Kong or no Hong Kong.

Citing food security concerns, India thus can be exempt from making any reduction commitments in terms of domestic support and from the obligation to provide any minimum market access in agricultural goods. That indeed is what the union commerce minister claims has been safeguarded: notably, that there is no restraint on the government's ability to provide domestic support to farmers. The agreement also protects countries like India from unfair competition from imports. India can raise duties on farm produce because of a surge in imports or because the import price was too low.