Opening up of agri markets may harm developing nations

Original Publication Date: 
25 February, 2007

NEW DELHI, FEB 25:  WTO director general Pascal Lamy recently admitted that US, the European Union and India are close to a compromise that would break the deadlock in WTO negotiations.

What sort of compromises are on the cards? Lamy has already indicated that US should reduce its farm subsidies, EU its farm tariff and India its farm and industrial tariffs. But by how much and in what ratio, future developments will tell.

Lamy made this disclosure on Wednesday. Interestingly, on the same day, agriculture minister Sharad Pawar echoed the view.

At the sidelines of a conference of vice-chancellors of state agriculture universities in Delhi, he told mediapersons: “I am in favour of a liberalised import and export regime in agriculture as farmers would get a better price for their produce.” He said with the present ban on export of pulses, wheat, oilseeds, maize and skimmed milk powder, the farmers were unable to reap the benefits of global prices. He also said if wheat production in the current season turned out to be good, he would try to initiate an open export-import regime in wheat. A day earlier, the government lifted the export ban on a variety of winter pulses—kabuli chana (dollar gram). The ban on sugar export was lifted in January this year.

The government had slapped a ban on export of some agri commodities as prices of essential commodities shot up in the domestic market. The government had facilitated easy import of wheat, pulses, sugar and vegetable oils. But price rise was due to several factors, including mismangement in demand-supply and hoarding of stocks and deliberate market manipulation.

Anyway, the writing on the wall is clear. The onus will fall on developing countries to open up their agriculture markets.

Lamy, of course, says US should reduce its farm subsidies and EU its farm tariffs. But by how much ? If any cosmetic reduction is done, it would not prompt the developing world to open up their markets. Pawar, while suggesting an open export-import regime in farm goods, had said the developed countries’ subsidies should be reduced and that commerce minister Kamal Nath was trying his best for it.

Lamy was also on a visit to Indonesia on February 21, trying to convince the Indonesian government to be flexible, particularly on the issue of Special Products and Special Safeguard Mechanism.

Indonesia is the leader of G-33, consisting of about 40 countries, which have defensive interest in agriculture. Indonesian farmers have reacted sharply to the proposal for any opening of the agriculture market.

Lamy is confident of taking EU on board despite France’s opposition to any move for farm tariff reduction. But Lamy dares not to call for a WTO ministerial meeting till concrete proposals are on the table.

Opening up of farm markets may lead to consequences for the developing world.

Pawar should read closely the admission made by former US Trade Representative Charlene Barshesky that the Doha round was never for development. India has already suffered on opening up for imports of vegetable oils and cotton. Thus the developing world should move with caution on the issue of opening up of agriculture, till global trade is free from any distortion.