WTO-DISCORD
30 MILLION TONS OF AGRO EXPORTS AT STAKE
FINANCIAL EXPRESS--29TH JULY 2014
http://epaper.
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WTO DISCORD—30 MILLION TONS OF AGRO EXPORTS AT STAKE
Tejinder Narang
The foremost trigger point of
WTO’s recent dispute at Geneva is the passage of Indian Food Security Act (FSA)
last year. FSA deepens India’s non-compliance of domestic support with WTO
guidelines. It will be bizarre to expect that WTO will ever endorse India’s
absurd act and more so because it is bound to intensify market distortions
within and outside India. Ideas of India endorsing its sovereignty unilaterally,
when it affects other sovereign nations are no longer tolerated in globally
connected world. More multilateral
hostility will be directed towards India if Trade Facilitation Agreement (TFA)
is linked to resolution of domestic support matters. Surely India is not in
breach of any “direct trade related subventions”.
FSA when implemented will lead to
excessive public procurement, starving local market, higher inflation thereby
making exports also unviable. If cereals are distributed with 50% leakages at
Rs 2-3 per kg, targeted beneficiaries are not helped but illicit diversion to
exports can take place. Non –supply of
information by India on domestic support under peace clause applicable till
2017 as agreed in Bali should not be violated.
At the same time developed nations are merely focusing at WTO compliant
local subsidies viz-a –viz India while ignoring any penalty or sanctions on
Black Sea countries for the criminality
of Crimea or for downing of MH17 or on act of terrorism elsewhere. Will WTO continue
to look other side when China rejects or defaults million tons of corn or soy
shipments under phyto- conditions or so called tainted GMO strains? Why Thailand
has not been reprimanded for grossly over invoicing paddy procurement, booking
unaccounted losses of billions of dollars and now distorting world’s
international rice trade? All these are trade related dilemmas and should be
comprehensively dealt by WTO.
Another reason for targeting India is its
export of around 54 million tons of agro-commodities in last two years and perception
of developed countries’ shrinking market slice.
The decline in share is due to abundantly cheap supplies of corn and soy
available from South America caused by extensive cultivation/yield of GMO
crops. Likewise cheaper shipments of wheat and corn from Russia/Ukraine have
captured their traditional markets with lower unit value realizations. Thus
affected nations will use all their might to ensure that rule book of WTO is
adhered to.
In 2014-15, Indian shipments may
be about 20 million tons (see graphic) due to weaker monsoon but quantum of
export may pick up in subsequent years. There
is no dumping of Indian agro items in international market, as alleged. On
the contrary India has strategized and exploited niche market conditions, while
supported by weaker currency. It’s MSP of wheat and rice is aligned with
international values. India’s top ranking in rice export, after 2011, is due to
messy non- Basmati rice policies of Thailand, logistical advantage with
Middle-East and Africa, development and acceptability of high yield pusa 1121
varieties of Basmati rice by IARI and rupee payment facilities with Iran (thrust
by USA sanctions). The entire rice export has originated from open market and
not from public stock holdings. Where is dumping?
Likewise wheat export is taking
place simultaneously both from private market and FCI at prices sometimes
better than US/EU/Black Sea/Australia. For exports from FCI, there is a full
transparency on export tenders awarded to the highest bidders. Even nominal
minimum export price (MEP) of FCI takes into account acquisition costs and
logistical expenses minus taxes. Local taxes are never exported and are in fact
subject to refund even to private exporters. Wheat export is at even keel with
private trade. Where is dumping?
In last 4-5 years corn production
has risen from 18 to 22-23 million tons and Indian exports of 3-4 million tons
per annum are feasible from private market. Soymeal and rape meal exports of
similar tonnages have been regular features by privates. Only hic-up is a short term decision of raw
sugar subsidy which is being reviewed.
Indian Government’s inflexible
position on FSA and therefore on TFA is in contradiction to the proclaimed
agenda of reform of BJP for PDS and FCI. Should penal provisions of WTO are applied,
about 30 million tons or more of India’s agro exports are at stake. An amicable
solution of offering cash transfers has already been made. In addition
dispensing arbitrary powers of cargo rejections (as seen in China) , penalising
acts of violence (as seen in Black Sea or elsewhere) and castigating those who
fix MSP much above market price (as done by Thailand) may also form part of
TFA/WTO.
INDIAN AGRO EXPORTS IN MILLION TONS
|
||||
ITEM
|
2012-13
|
2013-14
|
2014-15
(projected)*
|
|
1
|
Wheat
|
6.8
|
5
|
3
|
2
|
Rice
|
11
|
10
|
9
|
3
|
Corn
|
4.7
|
3
|
2.5
|
4
|
Soymeal
|
4.5
|
4.4
|
3
|
5
|
Rape
meal
|
0.9
|
0.75
|
0.8
|
6
|
Sugar
|
0.96
|
1.8
|
1.5
|
TOTAL
|
28.86
|
24.95
|
19.8
|
|
Source USDA, *projected, author
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