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No grandstanding on the Ricardian principles of trade is possible so long as the world's most powerful countries continue to protect their farms so blatantly. This, Europe and the US seem to have discovered, going by their recent commitment---as part of the Doha Round's framework agreement struck on 31 July 2004 at Geneva---to start slashing export subsidies on farm produce. Note, however, that subsidies are of assorted kinds. And export subsidies, which are to be eliminated entirely, are just part of the whole protection edifice. Their going away is good news. It would mean that Western exports would no longer have a turbo-boost provided by their taxpayers. But it still does not guarantee Indian farmers easy access to Western markets. This is because the rest of the subsidy structure---which is proving far harder to chip away---would still help their farms flood their own markets with stuff at prices that Indian farmers may be unable to compete with. Yes, there has been some progress on market access. Western tariffs are to be reduced, and so also trade-distorting domestic subsidies (which put money into rich-world farmers' pockets to grow stuff for local consumption). But, by most calculations, that would still leave Western farm products quite happily mollycoddled in their own markets. Of course, whether Indian farms can actually compete with Western farms---even if unsubsidised---is something few experts are willing to wager anything on. India's agri-exports, at $3 billion, are still a little morsel in a grain-mound. Moreover, agriculture is so riddled with distortions everywhere in the world that nobody knows anything with much clarity. The current scenario, however, need not be the forever scenario. The smart strategy, still, is to assume that an edge can be created (if one doesn't already exist) in a free market scenario, and align all domestic variables to such an eventuality---however long it takes. Meanwhile, the game is to secure India's own short-term interests. This is done by using the Special Products (SP) and other such WTO 'leeway' provisions to ensure that reduction of India's own tariffs doesn't throw the country into chaos. So long as this is just a stabilisation programme, operating within a long-term strategic framework based on the assumption of a future global market, this is good. Unhappy local farmers spell trouble everywhere in the world; in agrarian India, they spell trouble with a capital T. Yet, looking after India's farm interests involves thinking much further ahead; and thinking of the country as a potential export success. On this, an unresolved issue concerns the non-tariff barriers that Western markets have that keep Indian products out. These typically resort to 'phyto-sanitary' criteria to disqualify developing country products. Stripped of jargon, this spells a 'No Entry' to products that could pose a health risk to consumers. Sounds fair enough, but in actual practice, plenty of stuff from tropical countries gets shut out. And could keep getting shut out. Now, tropical countries are indeed germ-infested, and while locals have acclimatized their immune systems to the domestic environment, European and American diners most certainly haven't (and they aren't particularly keen on getting Delhi Belly right there in the safety of their own temperate-zone homes). Some Indian farm exporters, however, complain that these non-tariff barriers are being used as an excuse to keep Indian products out in perpetuity. Their allegation: the sanitary standards imposed by Europe in particular are much too strict, having been calibrated to block Indian output rather than keep consumers healthy. If that's the game, beating European food on contaminants per milligram, then Indian farms have little hope of ever earning the fat dollars in a globalised world. What's the real picture? Just how hygienic a product needs to be is for the specialists to answer. Circumstantially, India's complaining farm exporters do have a case. The West's obvious reluctance to let its over-cocooned farms face global competition suggests two things. One: there is something romantic the West sees in having all those wonderful farms colouring the landscape of the countryside. Two, the more likely: for all its economic advancement, the West still retains a vestigial urge for 'food security'. For cars, computers and clothes, let there be specialization and global trade. That's what is most efficient, every country going by its comparative advantage. But if it's food---safety is defined by a crop in one's own backyard. Just in case. So much for free trade. That may not be the case, admittedly. Indian farm products might actually send Europeans into spasms of belly-held groans, for all you know. What India must do, then, is deploy all the scientific resources at its disposal to crack the health game. That, indeed, would be true market-orientation. Analyse the Western markets in-depth, medical tolerance and all, and work out the best way to deliver on quality (yes, this means protein-adequacy and so on, too). While that gets underway, it would help to market India's case in the West. Access-seekers could argue that decisions of quality are best devolved to the millions of teeming consumers who make up the market. It is for them to make value-for-money evaluations, not governments. Sure, the government could claim a legitimate role in public health (people may not know better). But this role, arguably, should be one of setting standards of information disclosure, not active interference in global trade. If an American housewife wants to mash low-priced Indian potatoes, let her. But yes, the package could have a label with elaborate details of what exactly the potatoes have in them. In any case, a controversial dietician called Atkins has scared people off this poor little veggie. 'Carbs' are almost considered evil (y'know, 'evil'?) in some parts of America. But nobody has stopped anyone from gorging themselves silly on all the carbs they want. If it's a free world they want, a free world it should be.
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The
Doha Round is no longer looking like a Ha-ha round. The Western world,
which subsidises its farmers to the tune of a sum almost two-thirds of
India's GDP, has finally admitted that this makes a grand mockery of the
very idea of Free Trade.