USTR should first practise before preaching about free trade

Free trade has never been fair. Like the former ‘Fair & Lovely’ cream (now renamed as ‘Glow & Lovely’), free trade can be easily appealing to big businesses world over to make nations of the global south believe in its immense economic potential. The controversial ‘Fair & Lovely’ cream too did the same with the cosmetic product for skin-lightening. To equate ‘fair’ as beautiful and ‘dark’ as ugly was like ridiculing the people with dark skin, and eventually the company bowed to public pressure.

Increasingly, free trade is also coming under pressure. Massive farmer protests at the beginning of this year in Europe, with 24 of the 27 European Union (EU) countries facing protests at one stage or the other, called for ‘throwing-out’ free trade agreements (FTAs) that brought cheaper food, vegetables and fruits into Europe making it difficult for the livelihoods of domestic farmers to be protected. France alone imports 71 per cent of its fruit and vegetable requirement. In India, farmer protest 2.0 that primarily is demanding a legally-binding Minimum Support Price (MSP) for farm produces, and among its other demands includes asking India to withdraw from the World Trade Organisation (WTO).

This article will not be looking into the merits and demerits of free trade, but will try to analyse the tough position the US has taken more recently to seek a stronger market foothold in developing countries. This is not the first time. The US has always been fiercely seeking market access in developing countries, with focus obviously being on India considering the huge market it offers.

At a recent hearing of the US Finance Committee, responding to questions from Senators, the US Trade Representative (USTR) Katherine Tie said: “We are opening markets for hard-working American families and communities, especially our rural communities. Through negotiations, our administration has secured over US$ 21 billion in new agricultural markets access in the last three years,” and further added “that includes the 12 tariff categories with India, a growing market, growing opportunity for US exporters.”

The question that I would like to ask Katherine Tie is that while I can understand your interest in protecting the hard-working American families and rural communities by virtue of the job you hold, but in a globalised world shouldn’t you be also equally at the tens of thousands of farming livelihoods in India that get devastated by cheaper imports? I thought your advisors must have told you that for any country importing food is like importing unemployment. Ignoring it, isn’t therefore your aggressive stance in pierce opening the developing country markets for your farm products akin to the promise that the multinational corporation made when it marketed ‘Fair and Lovely’ cream?

Obviously, there is nothing fair when it comes to free trade.

I remember I had posed a more or less the same kind of question to German farmers, who had come to meet a small group of GATT exports at a dinner in a farm house in Landsfuhl in southern Germany (from my book: Gatt to WTO: Seeds of Despair. 1995. Konark Publishers, New Delhi). This was sometimes in the mid-1990s.

“Agreed you produce surplus food for which you are looking for a steady market in the South. But perhaps you do not realize that the surplus you produce here will drive away millions of small and marginal farmers from their farms in countries like India.”

Unlike the trade negotiators who spearhead the trade talks now, without being remotely concerned about the farm livelihoods that are getting destroyed, the answer I received from farmers there was overwhelmingly supportive. Expressing solidarity with Indian farmers they had unequivocally said that they were not aware that their surplus food will destroy livelihoods in India. German farmers could understand the pain Indian farmers would undergo, and therefore wanted corrective steps to be undertaken. I thought the USTR too should have known that after India withdrew 20 per cent additional import tariff on apples.

As per news reports, the US Senator Maria Cantwell and (strangely) the Indian Consul General Prakash Gupta too had joined the celebrations at Seattle Port for restoration of apple trade. Understandably, India offers $120 million market for Washington apples benefitting 68,000 apple-growing farmers in America. So far, reports say within a month after the partial withdrawal of import tariffs, Washington apples worth $ 19.5 million have been dispatched. Perhaps it would have made sense if a memorial ceremony for losing out on apple cultivation was held at Shimla, attended by thousands of apple growers, to show how cheaper imports of Washington apple would destroy the livelihood of growers in the hilly regions of the country (and that includes Kashmir and Uttarakhand also).

As expected, one of the Senators was quoted as saying that Indian wheat subsidies are distorting prices and thereby hurting American farmers. Another Senator talked about rice subsidies. He said that if the rice subsidies were within the WTO parameters, it would have opened up trade opportunities to the tune of $ 850 million for American rice farmers. If you have guessed it right, these Senators are questioning the MSP regime in India under which wheat and rice farmers, especially in Punjab and Haryana, benefit from high assured prices.

The US has repeatedly said that India violates the WTO obligations by exceeding the MSP payout to farmers over and above the de minis level.

That is why the US has always been vocal about the need to do away with ‘Peace Clause’ protection that offers temporary reprieve for India to assure its food security needs. Incidentally, the Organisation for Economic Cooperation and Development (OECD) has in a study made it clear that Indian farmers have been cultivating losses year after year since it began in the year 2000 to study producer subsidy support to farmers in the major economies. That is the reason Indian farmers have been demanding a guaranteed MSP for farm produce to ensure a decent living on the farm. There is nothing wrong in it, the US must understand. Strangely, these repeated charges are made by a country which has failed to do away with mammoth subsidies that it doles out to cotton growers at the detriment of cotton growers all over the world.

Just for the sake of comparison, the US provides a subsidy support of $117,494 per farmer to its 8,100 cotton growers. Against this, the Indian cotton growers, and their numbers exceed nine million, get a measly $27 per farmer. The contentious issue of cotton subsidies that US provides to its farmers and which is known to kill millions of farm livelihoods in countries of western Africa and even India, remains unresolved ever since it cropped up as a major issue at the failed Cancun WTO Ministerial in 2003.

I also find it strange when US Senators question child labour in Shrimp industry in India at a time when US agriculture is known to employ hundreds of thousands of children below age 18, and some at the tender age of 7, 8 and 10 years toil day and night on the US commercial farms. As everyone else, I am also against employment of child labour in agriculture anywhere in the world. US has no special protection when it comes to child labour.

My request to the USTR is to please set your house in order before telling the world what free trade means. Free trade in itself does not mean it is fair and lovely.

(The author is a noted food policy analyst and an expert on issues related to the agriculture sector. He writes on food, agriculture and hunger)