Friday, July 26, 2013

India's Engagement with Free Trade Agreements (FTAs)- Challenges and Opportunities” – Urge the Standing Committee to recommend scrapping of all FTAs that affect Agriculture

                                                                                                                                           JULY 26, 2013
Today, Bharatiya Kisan Union members met the Parliamentary Standing Committee of Ministry and Commerce on the issues of Free Trade Agreements (FTAs). Yudhvir Singh, Rakesh Tikait, Naveen Allahabad, and R. Tiwari were present, representing the voice of the Indian Coordination Committee of Farmers' Movements, an all-India alliance of independent farmers' organizations. They met the Committee Chairperson, Shanta Kumar, along with the MP members of the PSC at the Raya Sabha Annexe.
The subject of the meeting was the recent developments in Free-Trade Agreements that impact Indian farmers (India is curently in talks regarding 30 such agreements, and about 14 are already signed). BKU representatives strongly advocated that Free-Trade be opposed in Agriculture, citing that free trade favors developed-country agribusiness MNCs and foreign subsidised farmers over small local farmers, undermines the right to food and India's capacity to produce food, and will increase the trade defecit. These FTAs affect Indian farmers, are highly non-transparents, and will contribute to an already existing agrarian crisis in India.
Instead of FTAs, BKU members demand that protective measures are taken to promote small-scale Indian farmers. Centrally, they demand that the government change trade's exclusive focus on corporate agriculture and instead focus its policies on farmer-focused and low-cost, high-output biodiverse agroecological farming. This is embodied in Food Sovereignty, ICCFM's alterative to trade liberalization in agricutlure. Food sovereignty is ther ight of peopels to ehalthy and culturally-appropriate food produced by LOCAL FARMERS ine cologically sustainable methods.
The PSC responded well to BKU's demands and committed to taking them further. The suggestions will be sent to Parliament for debate.

Annex A: Letter to PSC from bku

Bhartiya kisan union
The Chairperson and Members,
Parliamentary Standing Committee on Commerce
Government of India,
New Delhi.

Dear Sir/Madam,
Sub: “India's Engagement with Free Trade Agreements (FTAs)- Challenges and Opportunities” – Urge the Standing Committee to recommend scrapping of all FTAs that affect Agriculture
We are extremely concerned about the mushrooming of FTAs and other such economic agreements that the Indian government is negotiating in a secretive manner with various countries and formations around the world. Majority of Indian population is associated with farming, and within that, an overwhelming majority are smallholder farmers, whose capacity to engage with even the domestic market is minuscule. It is absolutely important that farming remain a viable option for our survival and for the food security of India. We cannot accept that such deals, that will have a significant impact on our agricultural economy, are being carried out with absolutely no information given to the general public including primary stakeholders like farmers.
We would like to point out that further liberalization of agriculture whether it is through the WTO, FTAs, BITs, CEPAs or any of the multiple channels that the Indian government seems so eager to enter, will exacerbate rather than resolve the food, agrarian and climate crises that loom upon our nation. Opening up agriculture to free trade will severely increase India's vulnerability as more than half of our population depends on the agriculture sector. We are a country where farmers commit suicide on an hourly basis, and to further push for agreements that will open up our agriculture sector to global market forces will be like a genocidal act against farmers by the Government of India. Agriculture is first and foremost a way of life in India, it is not a business and cannot be traded away to give foreign powers and MNCs more control of our food and farming systems.
  1. Free trade undermines India's capacity to produce food:
While India attempts to create its first ever Food Security Act, it seems to be undermining its own ability to feed Indian citizens while increasing dependency on imports. For example, India has become a net importer of edible oil and pulses despite being the largest producer of pulses, and despite having a significant turnaround in these crops after the National Oilseeds Mission and the like. This happened due to the slashing of import tariffs over the past years under the WTO regime and the new FTAs such as the Malaysia-India FTA which favours Malaysian agribusiness palm oil imports rather than supporting culturally appropriate substitutes produced by Indian farmers such as from oilseeds.
Free Trade also subjects local prices to international price volatility. When we become dependent on imports and global prices are high, then there are also balance of payments problems. During the global food crisis of 2008, we were able to prevent major national food crisis by putting export restrictions; however, FTAs demand an end to trade barriers thus undermining our ability to protect national consumers and producers. 
Furthermore free trade regimes force farmers to adopt more export and market oriented crops instead of much needed food crops in a country with the highest child malnutrition rate and one of the highest hunger and poverty rates in the world. Food production should be seen as a matter of sovereignty and policies designed accordingly.
  1. Free trade kills small farmers, favours developed countries’ agri-business corporations:
The WTO and FTAs lead to livelihood loss. Governments try to convince the public that farmers will benefit once free trade comes into place due to possibility of increased exports.
But it is well known that industrialized countries provide massive subsidies to their agribusiness, which overproduce and look for large markets to dump into. The EU-India FTA is an illustration for this.
This FTA wants to bring India's import tariffs down to zero or near zero levels on 90% of agricultural commodities. Projections show that EU will export much more of agricultural goods to India than India will to EU and this will increase India’s agricultural trade deficit. EU is estimated to increase trade by 321 and 150 million USD in agrofood and in products of animal origin by 2020. In comparison, India is estimated to gain only 83 and 1 million USD worth of trade. In cereals EU will gain 133 million USD while India will gain 1 million USD (CEP II-CIREM Study 2007).  The EU on the other hand will block Indian exports through technical barriers to trade such as sanitary and phytosanitary measures or traceability issues. EU is also trying to enter extremely socially sensitive areas like dairy which is self-sufficient and provides livelihood to a large majority of rural poor and especially women. Presently milk is said to be in the negative list, but the EU with its subsidized surplus production is pressing for opening up the Indian Market. Such agreements therefore set the stage for import surges that India will not be able to stop effectively under the agreements or even find out about in time. Import surges devastate farmers who depend on those crops for their livelihoods. Farmers start to move out of agriculture production overtime. According to the FAO, India and Bangladesh faced the largest number of import surges of agriculture products in Asia over a 25-year period.
  1. Intellectual Property rights of MNCs promote monopolies, undermine farmers’ apriori and other rights over germplasm, and endanger biodiversity – farmers’ freedom is at stake:
While the WTO demands stringent TRIPS-compliant IPRs, bilateral FTAs with the EU and Japan for example demand even stricter Intellectual Property Rights regime, which can be termed as “TRIPs-Plus”. These TRIPS agreements were drafted with strong inputs and participation from the agribusiness industry. These IPRs further the privatisation and commodification of seeds, despite them being an essential and critical input in agriculture, and intensify monopolies over seed, pesticides, fertilisers and animal vaccines. These not only violate farmers’ rights over resources like seed but also make farming unviable, in addition to jeopardising public sector research etc.
  1. Industrialized countries will continue to subsidize their agribusiness exports at the cost of our farmers and consumers:
This puts our farmers at a disadvantage as well as misleads our consumers by providing industrially mass-produced, low quality processed food. Under the current Doha Round, developed countries like the US will further increase their payouts to agribusiness lobbies, while developing countries will be forced to further reduce protections and increase market access, putting in danger their already vulnerable farming peoples. In the EU-India FTA, EU expects India to reduce import duties to zero not only on wines and alcoholic beverages but on cereals, dairy, poultry, fisheries and agro-processed goods as well. This imbalance threatens not only the livelihoods of India’s small farmers but their access to food, which is directly met from their production.
  1. Any so called 'safety mechanisms' for developing countries are Trojan Horses for the acceptance of trade deals:
Even the so-called “safety” mechanisms supposed to protect some aspects of developing country agriculture such as Special Products and Special Safeguard Mechanisms in the WTO are totally ineffective. In the WTO proposal for example, India can only protect eight or nine crops from tariff reductions. This is nothing in a country where scores of crops are being planted in over 15 agro-climatic zones! Moreover, these are highly ineffective and impractical mechanisms to prevent import surges in developing countries. These mechanisms like SSM don't deal with the chronic problems of low prices that the USA’s and EU’s subsidy regime create. Nor do they take into account that most developing countries do not have the ability to monitor volume-based import surges in time for the measure to be effective. Therefore, such “safety” mechanisms have absolutely no possibility to counterbalance the negative impacts of the increasing liberalization in agriculture.  
  1. Free Trade Agreements reduce farmers’ access to productive resources:
FTAs pave the way for foreign investors. They are seen to impact the patterns of land and water use. These aspects are often ignored while touting the so-called benefits of FTAs.
  1. There is complete lack of transparency:
The Indian Government has not taken any steps to inform us about the several rounds of talks in the various FTAs. Such FTAs go beyond what cannot be negotiated under the WTO and we are openly opposed to agriculture in the WTO and in the EPAs or FTAs. Agriculture is a state subject in federal India; however our state governments have not even been informed or consulted about proceedings of the various FTAs or EPAs. Such a centralizing trend to fast-track decision-making on controversial issues like free trade, GMOs and agriculture research is a disturbing trend. We reject all such secretively conducted FTAs as undemocratic underhand deals. 

8.    We should not venture into areas where there is no level playing field:
1) Developed countries have huge agricultural subsidies which makes their products cheaper and easy to dump in developing country markets. In EU 40% of the budget is spent on “Common Agricultural Policy” (CAP). India cannot negotiate subsidies under an FTA as it is supposed to be a “multilateral” issue. In 2001, according to EU’s own notification to the WTO, the overall trade-distorting domestic support (OTDS) was 110.305 billion euros.
2) High standards and other non tariff barriers in developed countries such as the EU, is a very effective barrier for export of Indian products to the EU. Indian agricultural exports can hardly get into these markets.
3) Indian producers suffer from lack of access to credit and infrastructure such as irrigation, electricity, marketing, storage and transport.
4) Under FTAs duties are reduced to 0, which is different from WTO where maximum duties are fixed. This is much more aggressive form of trade opening. Import duties are India’s only protection as it can neither use subsidies nor high non tariff barriers. But under the FTA Indian tariffs are attacked while developed countries’ subsidies, NTBs, other safeguards are still in place. In all, the agricultural negotiations with developed countries makes no sense as India gives market access and opens unfair competition without getting any benefit in return.

Projections for EU-India FTA support this argument. Difference in bilateral trade between 2020 projections and 2006, from a study commissioned by the European Commission, shows that India loses in every single segment of agricultural trade. The Study by CEPII-CIREM (2007) “Economic Impact of a Potential Free Trade Agreement (FTA) Between the European Union And India”, also shows that India’s share in EU’s agricultural market will remain almost constant while EU’s share in Indian market will increase significantly.

9.     No reason why India should open up critical sectors such as dairy and agriculture (essential for food security and livelihoods) for getting gains in other sectors like Service:

The rationalisation around obtaining gains in Services sector at the expense of agriculture is objectionable. This is the case in the EU-India FTA negotiation also. Mode 4, movement of professionals to work in EU and in other developed countries is India's main interest in services but this is for middle class educated urban elite alone. That is not for broad based welfare. In any case, given the current economic crisis in Europe, they cannot take our workers now nor can they offer any market. Agriculture still accounts for 52.9% of India’s employment and the entire service sector accounts for only 25.4%. Indian agriculture is not just to be frivolously traded away for flimsy gains just for a limited no of people in other sectors. Less than 1% are employed in the high skilled services like IT for which there may be a demand in the EU.

10.  The process of signing FTAs is undemocratic and unconstitutional:

The Trade and Economic Relations Committee (TERC) in the Union Government takes main decisions regarding FTA. TERC consists of nine members: the Prime Minister, the Finance Minister, Commerce & Industry Minister, External Affairs Minister, Deputy Chairman of the Planning Commission, Chairman of the Economic Advisory Council, Chairman of the National Manufacturing Competitiveness Council, National Security Adviser and the Principal Secretary to PM. Out of these 9 members, 5 are not elected representatives of the people and therefore there is no accountability to the Parliament. As far as we know, decisions related to FTA including the decision to launch negotiations as well as strategic directions are not discussed even in the cabinet.

There is no process of ratification by the national parliament. This is unlike in most other countries where parliamentary ratification is mandatory for an FTA to pass.
There is no process of consultation and ratification by state governments even on subjects like agriculture which are under the constitutional purview of the state governments.

According to our information, no impact assessment study has been conducted on agriculture. There is no clear understanding of what impact will agriculture sector face in the light of these FTAs, which are the barriers faced by farmers, and the clear impact on livelihood and income losses.

In spite of being a large and influencial farmers’ association, BKU has not been invited for any consultation on any FTA so far. The same is true of other farmers’ associations across the country.

11.  India cannot lock in damaging intellectual property rights and FDI in service sector (such as retail) that have damaging impact on agriculture sector:

India is now entering into FTAs which cover many chapters such as Intellectual property rights and service trade. For example, India has liberalised FDI in multi-brand retail. But from our information, the EU is asking India to lock in such liberalisation under the FTA. This means that if, for example, if it is found that retail FDI is having an adverse impact on small farmers, the measure cannot be rolled back as it will be locked in under the FTA.

Similarly, the EU is asking for data exclusivity on agro chemicals. This will raise the price of pesticides for Indian farmers and make their product in-competitive. Many small farmers are already pressurised by high input cost, will be further squeezed by such provisions. These damaging provisions can come in and get locked under the FTAs.

Our Demands:
  1. The very first thing that BKU demands from the government is that all documents and information related to all FTAs under consideration/negotiation to be put out in the public domain. The opaqueness with which negotiations are taking place is against democratic principles that should govern such decisions. We also urge this Standing Committee to strongly recommend for the same.
  2. Keep agricultural products out of FTAs with developed countries since there is no level playing field between many other, and Indian producers in agricultural products.
  3. In the case of other developing countries with whom FTAs are being negotiated also, agriculture should be kept out of such agreements, since it is matter of protecting our farm livelihoods, while these FTAs are foreclosing policy options for protecting such livelihoods.
  4. India should not open up critical sectors such as dairy and agriculture (essential for food security and livelihoods) for getting gains in other sectors like services. Agriculture should be opened up only if there are gains in agriculture sector itself. India cannot afford to give up livelihoods of 70% of its population for gains for less than 2% of its population.
  5. The process of signing FTAs is defective and undemocratic and should be immediately suspended.

·         No FTA should be signed till the Report of the Parliamentary Standing Committee on Commerce is final and tabled in the Parliament for discussion.
·         No FTA with an agriculture chapter should be signed without ratification by national parliament and state governments (since agriculture is a state subject).
·         No FTA should be signed without broad public consultation with farmers’ groups.
·         No FTA should be signed without first making public impact assessment studies on agriculture sector and its open discussion with farmers’ groups.
  1. Increase the import duties on all agricultural products to stop the inflow of subsidized imports and import surges to protect the national food sovereignty and farmers lives. 
  1. Do not reduce agricultural tariffs
  2. Reinstate Quantitative Restrictions (QRs) to prevent dumping of subsidised products, destroying farmers' livelihoods and the nations' food security; QRs are a right to defend ourselves from perverse dumping.
  3. Change trade's exclusive focus on corporate agriculture and instead focus its policies on farmer- centered and earth-centered low-cost high-output bio-diverse agro-ecological farming;
  4. Ensure that the Indian negotiators must not give up agriculture for some concessions in other areas;
  5. Ensure Indian farmers a fair and just price and income for the vital function of providing food security for the nation. Fair prices require a reintroduction of QRs, given the high levels of subsidies rich countries give for dumping agricultural products. Fair prices also require a minimum purchase price (MPP) independent of whether the buyer is the government, private traders or global MNCs. Price regulation is the responsibility of the government. Just, remunerative and fair prices are a right of farmers.
Food Sovereignty is our alternative to trade liberalization in agriculture.
Food sovereignty is the right of peoples to healthy and culturally appropriate food produced by LOCAL FARMERS in ecologically sustainable methods. It's in total contradiction with the WTO and FTA rules that put the demands of markets and corporations at the heart of food systems and policies. To reach a real reduction of global poverty, hunger and malnutrition, not only do we ask you to take agriculture out of the WTO and FTAs deal but we also urge the Indian government to support the following concrete proposals:
  • Strong protections and support for small holder food production for domestic consumption on the national level that must be allowed for within the global trading system.
  • A global trading system that disciplines corporate behaviour, and puts an end to dumping. A clear prohibition of any speculation on food.
  • New regulations on the markets - policy of production control (supply management) to stabilize agricultural prices.
  • Real agrarian reforms to assure that farmers who produce food for the population have access to agricultural resources (lands, territories, waters, seeds, livestock and biodiversity) rather than big businesses which produce for export.
  • These measures, taken together, would truly start a strongly needed transformation of our food system, and deliver important progress towards the achievement of Food Sovereignty, farmers livelihoods and environmental protection.
  • Signed by:
  • Rakesh Tikait, Bhartiya Kisan Union, UP
  • Yudhvir Singh, Bhartiya Kisan Union, Delhi
  • Dharmendra Malik, Bhartiya Kisan Union, UP
  • Gurnam Singh, Bhartiya Kisan Union, Haryana

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