Farm livelihoods: beware of RCEP

It was always known, but when a United Nations Food and Agricultural Organisation (FAO) report in 2003 explained in detail how devastating cheaper imports of agricultural commodities and products have been to domestic production, and presented a chart detailing out how a surge in imports acted as a strong blow to the local economy, I thought the world would sit back and take notice.

On the contrary, international trade negotiations have now taken a more aggressive stance. More and more opening up of the trade barriers has destroyed millions of livelihoods in the bargain.

Let’s examine what is at stake. Over the past few decades, especially after 1995 when the World Trade Organisation (WTO) came into existence, the effort has been to force developing countries to remove trade barriers and import duties.

According to FAO, when imports of tomato paste increased by 15 times in Senegal, local production declined by 50%; when vegetable oil imports doubled in Jamaica, it recorded a 68% cut in domestic production.

In India, too, when imports of vegetable oils surged between 1993-94 and 2015-16 following a systematic reduction in import duties over the years, India turned from a position of self-sufficiency to become the world’s second biggest importer of edible oils.

What was attempted initially through the WTO was aggressively pushed under bilateral Free Trade Agreements (FTAs) and regional trade pacts. While numerous studies have shown that India has hardly gained from the opening up of the domestic market, the damage done to agriculture has been enormous.

As if this is not enough, a Regional Comprehensive Economic Partnership (RCEP) treaty, which concluded its latest round of negotiations in Hyderabad in July, is considering removing import duties on 92% of all traded commodities. Worse, it is believed that a draconian provision whereby the import duties that will be reduced to zero under the treaty cannot be raised later, is being considered, a provision that even the WTO did not impose.

In other words, the RCEP treaty, if India agrees to sign, would open up the Indian market for zero import duty for all times to come. It will take away the right from India to protect and ensure the livelihood security of its 600 million farmers. The treaty is being negotiated between 16 countries, including South Korea, Japan, Australia, New Zealand and China.

Surprisingly, every time India enters into a trade negotiation, it seeks ‘greater market access for its services, including easier norms for its professionals to move across borders for short-term work’.

While this is certainly important, one fails to understand why agriculture is being deliberately sacrificed in the bargain. After all, domestic agriculture, which entails the livelihoods of 600 million farmers, cannot be placed on the chopping block of international trade.
Grim prospects

Take the case of the dairy sector. According to Jayan Mehta, senior general manager of Amul dairy cooperatives, the livelihoods of 150 million people engaged in dairy farming will be severely if RCEP negotiations continue on current lines.

India is the biggest producer of milk in the world. Presently, the import of milk and milk products are allowed with an import duty ranging from 40% to 60%. This provides enough protection for the local dairy industry to build its competitiveness.

Opening up the flood gates will inundate India with cheaper milk flowing in from Australia and New Zealand. Let us not forget that while Australia, with only 6,300 dairy farmers and New Zealand, with 12,000, are pushing aggressively to protect the economic interests of their small dairy farming communities, India is willing to sacrifice the livelihoods of 150 million dairy farmers.

Since India has a huge domestic demand for milk, it doesn’t have the kind of export surplus that Australia and New Zealand have. Just because those countries are willing to provide greater access to Indian IT professionals, should India jeopardize the livelihoods of 150 million dairy farmers?

Dairy is not the only commodity for which the market is to open up. India will have to open up for all kinds of fruits, vegetables, pulses, potatoes, spices, plantation crops, seeds, silk, processed foods, etc.

Although India is still insisting on allowing zero tariff import on only 80% of the traded goods, and is seeking a three-tier structure, the negotiations are led by the dominant and aggressive stance of countries like China, Australia, New Zealand, Japan and South Korea, which will eventually have their say.

It has taken so many years for the world to understand that the WTO was designed to serve the commercial interests of only the top 1%. The RCEP treaty, being negotiated without drawing any lessons from the WTO experience, would strike a much severe blow. What was negotiated in the Hyderabad round of talks has not been made public. It is being done in complete secrecy.

A few people sitting in heavily guarded negotiations take decisions which eventually impact the future of 99% of the population. This is grossly unfair.