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Guidelines for trade bargain

Print edition : Feb 14, 2003 T+T-
Cardamom harvesting in Idukki district of Kerala-K.K. MUSTAFAH

Cardamom harvesting in Idukki district of Kerala-K.K. MUSTAFAH

THE economy of Kerala has historically been tied to trade and export. The region's unique coastal geography shaped this aspect of its economy, while its topography and climate encouraged an agriculture that came to be characterised by a diverse mix of crops. The spice trade from the west coast originated as early as the 3rd millennium B.C., and continued to dominate the region's trade until fairly recent times. By the late 1930s, in addition to spices, the State was exporting coffee, rubber, tea, coir, coconut oil and other coconut products. The combined acreage of cash crops, by this time, equalled that of paddy, the major crop of the State.

For Kerala, therefore, the implications of India's entry into the World Trade Organisation (WTO) in 1995 as a signatory to the World Trade Agreement (WTA) are of particular significance. The implementation of the provisions of the Agreement on Agriculture (AoA) coincided with a price crash of serious proportions in Kerala's cash crop economy. The brunt of this was borne by the small and marginal farmers who constitute the major segment of the State's agricultural workforce. To help them manage the crisis and respond to the pressures on the State's agricultural trade arising from the new global trade regime, the A.K. Antony government in Kerala set up the Commission on WTO Concerns in Agriculture in July 2001 under eminent agricultural scientist M.S. Swaminathan. K.N. Shyamsundaran Nair, former Vice-Chancellor of the Kerala Agricultural University was its Vice-Chairman. The Commission carried out a wide-ranging consultative process involving agricultural experts, representatives from many commodity boards, representatives of the State government departments and agencies concerned, kisan organisations, representatives of political parties and the media, and others. Task forces were set up under the Commission to look into the economy of specific crops. Fisheries, an important sector of the State's economy, was also brought under the Commission's purview.

The Commission, in its five formal sittings, made several interim recommendations. The final two-part report was submitted to the Chief Minister in January 2003. In the report entitled "Building a Sustainable Agricultural Trade Security System for Kerala", the Commission has made a preliminary assessment of the adverse impact of the new WTO-regulated global trade regime for Kerala's agriculture and agricultural trade. It has suggested modalities by which the State's many strengths and achievements in the agricultural sector can be protected in an unfavourable trade environment. Can the State convert some of the challenges posed by the WTO-regulated trade regime into new opportunities? The Commission, in its report, believes it can. While the State government must necessarily provide the direction and, where feasible, the resources in managing and meeting this challenge, its role in a society as educated and politically conscious as Kerala's must be coordinated with other equally important players within the State's social spectrum - such as political parties, organisations of farmers and agricultural workers, political and civic groups and organisations, the media, women's groups, college and university teachers, research institutes, and, most importantly, the vibrant panchayat bodies.

"Under the conditions of Kerala, if agricultural trade goes wrong, nothing else will have a chance to go right," the Commission has noted. More than 80 per cent of Kerala's agricultural commodities are dependent on domestic and international markets. The State accounts for 45 per cent of the plantation crops in the country which provide daily employment to nearly four lakh workers. Nearly 20 per cent of its population depends on plantation crops for livelihood. The State's field crop mix includes paddy, tapioca, banana, rubber, coffee, cardamom, arecanut, cashew, pepper and coconut. It is the only State in the country that has a substantial stake in all the four major plantation crops - tea, coffee, rubber and cardamom. The State is also a major producer of marine products for the international market.

The report underlines the need to recognise the "special resources" with which the State is uniquely endowed, in order to build a new trade security system. "A new phase of economic development," the Report notes, "must take advantage of these special resources, namely, a rich and varied natural resource base, a basic land reform, an educated, skilled and politically conscious workforce, and unique achievements in the areas of health and education." The WTO-controlled global trading system within which Kerala must now seek to strengthen its agriculture and reorient agricultural trade is one that is "inherently asymmetric in its impact", says the Report. "The experience of the last eight years has shown that the WTO has no visible agenda for resource-poor farming families... It is clear that the AoA needs to be redesigned on a pro-poor, pro-small farmer, pro-livelihoods and pro-environment framework." The developing countries are seeking exemptions from WTO Agreement disciplines under various categories and the negotiations may well end in a "jungle of exemptions". "Thus, the time has come for insisting that rich nations should phase out trade-distorting subsidies and provide increased market access to predominantly agricultural developing nations."

Trade liberalisation must be accompanied by increased investment in agricultural and rural development. Arguing that the State cannot withdraw in the new WTO-regulated phase of international trade, the Report calls for major investments by both the Central and State governments in soil and water conservation, rural infrastructure (roads and irrigation), post-harvest technology and markets, research and dissemination of ecotechnologies, education and health. In its recommendations, the Commission has drawn a distinction between those that are to be implemented by the Government of India and those that fall within the domain of the State government.

For the Government of India, the Commission has suggested specific negotiation modalities that India should adopt in the wake of the post-Doha negotiations (of November 2001) on the revision of the AoA. The revised AoA will be finalised at a ministerial meeting of the WTO in Cancun, Mexico, in September 2003. The domains on market access, domestic support and export subsidies have a direct impact on Kerala, as do the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) and the Agreement on the Application of Sanitary and Phytosanitary Standards (SPS). The Kerala-specific recommendations are largely inventionary and include a set of measures that will protect the incomes and livelihoods of vulnerable sections, along with measures that will strengthen and expand agriculture and the opportunities for trade.

For the Government of India, the Commission has put forth a set of guidelines for negotiations on domestic support, market access, TRIPS, and geographical indications. On the issue of domestic support, it has first recommended that India argue for the abolition of the green, blue and amber box measures under which developed countries seek exemption for their subsidies. It recommends: "All boxes may be abolished and the dos and don'ts with reference to trade distortion and unfair trade practices may be spelt out in clear and unambiguous terms." Second, as an "alternative negotiating principle, a fourth box relating to sustainable livelihoods (Livelihood Security Box) may be proposed, which will empower developing nations facing the challenge of providing livelihoods to the rural population to place restrictions on imports, where there is convincing evidence that such imports will erode job/livelihood opportunities in their countries."

Further concretising this recommendation, the Commission suggests that the criterion for eligibility in using the provisions of the Livelihood Security Box is to be determined by the percentage of the population dependent on agriculture. "The minimum could be 50 per cent of the population," the Report notes. Second, it has recommended that India avoid using the term "subsidy" to refer to the range of domestic support measures that provide very modest help to millions of small farm families. This should instead be presented as "support for sustainable farming and rural livelihoods".

On market access, the Commission has suggested that non-tariff barriers coming in the way of access to the markets of industrial countries be reviewed. India and other developing countries must become a part of the process, by which sanitary and phytosanitary standards are set. These are often used by developed countries to create trade barriers against developing country exports. India must argue against obligatory, across-the-board tariff reductions. For example, in the case of soya oil, the bound rate is only 45 per cent. This needs to be increased, particularly in view of the fact that the overall bound rate for edible oils is 300 per cent. Developing countries must be allowed to place quantitative restrictions on imports wherever there is clear evidence that imports will erode or destroy the livelihoods of asset-poor groups. The Commission has demanded that the TRIPS agreement be made compatible with the equity and ethics provisions of the Convention on Biological Diversity and the Food and Agriculture Organisation (FAO) treaty on Plant Genetic Resources for Food and Agriculture.

India must also press for an objective system of seeking protection for its resources under the geographical indications list. The historical antiquity of names, such as Malabar pepper, should be an important criterion for eligibility to be included in such a list. Yet another recommendation of the Commission seeks to prevent the misuse of the principle of Multifunctionality of Agriculture, which is being used by developed countries to enhance subsidies and create non-tariff barriers to trade. "In the alignment of countries at the negotiating table, it will be prudent for India to work with those on the side of poverty reduction and rural well-being," the Report says. An important national-level recommendation of the Commission is to "restructure and re-tool" Commodity Boards in tune with the new trade environment. It has recommended that the Government of India set up a high-level committee to review the work of the Commodity Boards and suggests ways by which they can strengthen sections adversely affected by the new trade regime.

THE Commission has made 19 Kerala-specific recommendations. As they are wide-ranging and multi-sectoral in their sweep, the implementation of these recommendations would require a high-level, yet fully representative, coordination body that must function, in the words of the Report, "like a symphony orchestra". The Commission has therefore recommended the constitution of a Standing Committee on Agricultural Trade, which is to be chaired by the Chief Minister, with the Minister for Agriculture as the co-chair. The Committee must represent the principal stakeholders within agricultural trade. It must coordinate programmes, provide policy direction, monitor trade, initiate pro-active action, promote trade and Intellectual Property Rights (IPR) literacy, and generate ideas and action to promote agricultural trade.

As a response to the extreme distress faced by plantation labour owing to the crisis in the plantation economy, the Commission, in one of its first interim recommendations, asked the Government of India to initiate a "Food for Wage and Employment Stabilisation in Plantation Crops Programme" under the Sampoorn Gramin Rozgar Yojana. The Kerala government acted on this recommendation. The Commission has proposed that a range of domestic support measures be created to offer income support to small and marginal farmers. These include:

* Statutory Minimum Support Price (MSP) to field and plantation crops, a measure that is fully WTO-compatible.

* The use of variable tariffs to protect cultivators against sharp fluctuations in international prices and import surges.

* Re-imposing quantitative restrictions within the framework of a Livelihood Security Box.

* Introducing policy measures like crop insurance, imaginative rural credit services, new forms of agricultural extension; providing facilities for marketing, storage and processing, and so on.

* Initiating multi-disciplinary policy research on various forms of domestic support and their feasibility.

* Initiating a massive programme of replanting and rehabilitation of all perennial crops such as coconut, cashewnut, rubber, tea, coffee and cardamom.

The Commission has drawn special attention to the revitalisation of fisheries, where it has called, among other changes, for

* A movement to enhance the quality of domestically consumed fish.

* A multi-stakeholder study of the current subsidies in the fisheries sector so that support that is non-actionable under the relevant WTO agreements can be provided to the sector.

* Aquarian reform that will restrict the rights to own fishing vessels to those who actually fish.

* New measures for environmental protection and sustainable management of fishing grounds.

While the Commission has made a blanket recommendation to the Government of India to review periodically issues such as Quantitative Restrictions (QRs), variable tariffs and statutory MSP in respect of all cash and plantation crops, it has also made specific recommendations in respect of each of these crops which have experienced sharp price declines in recent years. It has recommended that the government make efforts to have rubber re-categorised as an agricultural crop so that it can be brought within the AoA. To avoid distress sales and price manipulation in plantation crops, it has called for participatory buffer stocking through a modification of the Rural Godown Scheme of the Government of India. Such a system is best maintained by farmers' unions/cooperatives.

Herbal medicine and ayurveda, along with tourism, are potential high-growth areas which the Commission has identified as deserving of special attention. The growing global demand for traditional systems of healthcare presents great opportunities for Kerala but it also puts enormous pressure on the resource base of medicinal plants, which must be safeguarded by the groups concerned. The Commission has called for quality control and certification for ayurvedic medicines and the formation of medicinal plants growers associations, each covering about 100 hectares, for the cultivation and marketing of medicinal herbs. Areas rich in herbal plants can be developed into herbal sanctuaries. The Commission has recommended that the region from the Silent Valley Biosphere Reserve up to Wayanad be denoted a Herbal Biovalley. "The Herbal Biovalley should provide the biological software essential for a dynamic medicinal plant industry," the Commission has noted. The tourism sector must be reoriented to cater to health (ayurveda), spirituality, and nature tourism.

Unique to this Commission is its recognition of the media as playing an important role in meeting the challenges of the new trade dispensation. This is particularly so in a State where newspaper readership and media consumption are so widespread and the media so sensitised to livelihood concerns. The Commission has recommended the setting up of a WTO Media Cell that could perform the function of a clearing house of information pertaining to the WTO and Kerala. The Media Cell should work closely with yet another body that the Commission has recommended that the State government set up, namely, a Virtual University for Agricultural Trade. This is vital if Kerala is to become competitive in trade, knowledge and information empowerment for farm families, traders, consumers and exporters. "A computer-aided and Internet-connected Virtual University can be established on a hub and spokes model. The hub can be located at an appropriate location like the Kerala Agricultural University, with the spokes located in every district. The hub and spokes can be linked to television channels and community radio stations, so that relevant information reaches every farm family every morning," the Report notes. The Commission has called for a meeting of data generators and providers (the Indian Space Research Organisation, the India Meteorological Department, the Kerala Agricultural University, the National Dairy Development Board, the many Commodity Boards, Ministries and departments of the State and Central governments, and so on); data seekers (farm families, traders, consumers, exporters); and information managers (information technology or IT specialists, media representatives, extensions specialists, and so on) to work out a plan for the proposed university.

Writing 60 years ago, E.M.S. Namboodiripad had this to say in an essay entitled "From Militarist to Colonial Economy": "It is thus clear that agriculture in Kerala is directed towards the production of cash crops to be sold in the world market and that only the barest minimum of goods are produced for the purpose of local consumption. Every peasant is today dependent on the condition of the world market in a two-fold way: he has to buy commodities produced abroad; he has to sell his own produce abroad." Although the economy and society of Kerala have seen radical transformation since then, EMS' observations on the predicament of the peasantry appears almost prescient. If the peasant's dependence on the world market during colonial times was dictated by the requirements of British colonialism, the Kerala peasantry is today caught in a modern-day global trade regime that is unfavourably weighed against it. The impact of this has been particularly hard on producers in Kerala and it will perhaps require a nationalist movement of a different kind to set right the iniquities of the new global trade regime.