A N A L Y S I S

Trade and Geopolitics: Deliverance in Failure
Gobind Thukral

ANY chance of a major global deal on trade depends upon profits and geo political gains that each negotiating country could be making. It can not be “win- win” situations for all the countries as many votaries of free trade were urging the world to believe. The offer end of export subsidies by 2013, duty free trade, quota free access for all the products from the less developed world to developed world have all the strings attached. Allow access to industrial and agriculture products and services first was the demand.

Five years of protracted negotiations spread across continents and missed deadlines have not brought any success to Doha Round of Negotiations. The trade across nations is still bogged down in rules and regulations that favour the rich against the poor nations. It is neither free nor fair. The World Trade Organisation is struck in deep quagmire. For the poor the success is in its failure as most agreements are weighed in favour of the rich – the developed West. Developing nations often end up as net losers under the current global trade agenda because they do not have agricultural or industrial capability to compete with the United States, Japan, Europe or even China, the expected winners.

At the Geneva round where key ministers from 60 countries met for four days, the 149-member World Trade Organisation (WTO) witnessed a downhill journey. As  America and European Union clashed incessantly and failed to come to an agreement on farm subsidy cut, over 100 developing nations refused to buy their argument to first open their industrial and service sectors and then think of farm subsidy cuts that are a legend in the developed West.  While United Nations officially believe that failure by top trading powers to resolve their differences in global commerce negotiations augurs badly for the world's poor, yet a no agreement is better than an agreement that is heavily weighed in favour of the developed West.

There has been endless wrangling around the margins for these years without touching the substantial issues. In December 2005, the ministerial meeting at Hong Kong could make only a modest progress, although it was billed as a great success. Trade ministers from 149 countries that struggled for a week and spent millions of dollars were unable to produce any concrete trade agreement. They promised to come up with a definite plan by April 2006 and despite appeals to British Prime Minister Tony Blair and American president George Bush, nothing really materialising. Now the June meeting has ended with a promise for another meeting in July. Indian commerce minister Kamal Nath unlike his stand at Hong Kong where he was more accommodating to the demands of the West, this time virtually walked out as he found “no space for negotiations” due the adamant attitude of the rich countries. The poor could not commit suicide by agreeing to adverse terms of trade.

The major area of disagreement and perennial problem for negotiators ever since the birth of World Trade Organisation is the insistence of the powerful rich block of America and European Union that they would not cut down on farm subsidy while asking the less developed countries in Asia, Africa and Latin America to not only reduce subsidies which are not even a farthing of what the rich countries provide to its farmers, bur also open their markets to goods and services from the rich countries. This would keep these countries tied down to poverty.  This is called fair liberalised trade.

It is true that the rural and urban incomes in developing countries may take a prospective hit in terms of future growth with the failure to reach and agreement, yet to come under American or European pressure and offer concessions in trade liberalisation in case of industry and services without corresponding concessions in agriculture would be suicidal for the developing world. U S and E U provide billions of dollars in subsidy, both open and hidden to its rich farmers and agro business corporations that virtually monopolise food trade across the world. A fairer trade which is being opposed by America and European Union on one pretext or the other could certainly lift millions out of poverty.

Trade and Geopolitics

The United States took most of the flak in Geneva over billions of dollars in subsidies to American farmers, which allegedly allow US agribusiness to undercut its competitors. Washington at Hong Kong made what it said was a "bold" subsidy-slashing proposal, but many other WTO members claim it would only cut into permitted spending and not touch real payouts. US negotiators refused to budge during the Geneva talks. Rich countries want emerging economies such as Brazil and India to cut import tariffs on industrial goods.

French born WTO Director-General Pascal Lamy who had been warning that the June 2006 talks were the last realistic chance for countries to find agreement on lowering trade barriers in trade and manufactured goods, where disagreement has held up the talks for months, conceded that their efforts had yielded no progress. Lamy has now appealed to political leadership of major countries including America, EU, Brazil and India to come to the rescue of the talks in July before everything is lost. He feared that the failure of trading powers to hammer out a new global commerce pact would be a setback to succeeding in meeting the benchmarks for Millennium Development goal set by the United Nations by 2015.  Lamy wanted the United States to reduce the subsidies it pays to its farmers, while the European Union must also lower the duties on agriculture imports. Australian Prime Minister John Howard blamed the European Union by saying it was European intransigence on agricultural protection that was putting the negotiations at risk. It meant no liberalization of trade in agriculture, industry and services.

Increasing Washington's isolation, Brussels has inched towards the G20 [middle income countries] group of developing countries, led by Brazil and India. EU Trade Commissioner offered to go beyond its existing offer of a 46-percent cut in agricultural tariffs by moving closer to the 54-percent cut proposed by the G20 countries. America is all the time insisting on a 66-percent cut by the EU. Other countries like china, Japan and Australia are taking similar route.

A World Bank study showed that complete trade liberalisation across the board would increase world wide economic growth to the tune of $ 287 billion per year by 2015. But two third of the gains would go the industrialized world and countries which have a large farm surplus. Poor countries particularly those needing food grains would suffer and turn into beggars. It is a nightmare for them.

In the absence of free world trade, the countries have begun negotiating at the regional level or where a particular powerful country has to political leverage or can indulge in some arm twisting. In other words area of its hegemony or political influence.

One can readily agree with Sandra Polaski, whose book "Winners and Losers" that the so-called Doha Development Round, which launched the current trade World Trade Organisation talks, will not actually generate development benefits for poor nations as initially promised. "There are both net winners and net losers under different scenarios, and the poorest countries are among the net losers under all likely Doha scenarios."  This highly acclaimed research concluded with facts and figures. It is now for the poor nations to be tough negotiators as they do not have much to lose if the talks finally collapse. Bilateral negotiations could still help them. But this would be sad as WTO does provide a mechanism for better trade regulations.

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Agro Chemicals: the Bane of Indian Farmers
Joginder Singh and Gurinderjit Singh

THE rapid technological transformation in agriculture during the past four decades made possible by the increased use of seeds of high yielding varieties, fertilizers, pesticides, irrigation and mechanization is proving tough for the farmers. Use of inorganic fertilizers and pesticides is a necessary evil to raise the productivity of high yielding variety crops which are highly responsive to soil nutrients and palatable to attract serious pests. The contribution made by agro-chemicals- fertilizers and pesticides to boost crop yields has been enormous. Thus there is trend towards the fast increase in the use of inorganic fertilizers and pesticides. The average use of fertilizers per hectare in India and the world stands at 101 kg/ha while in some countries like Egypt, New Zealand, Korea the use is as high as four times the world average. Similar is the case with the use of pesticides. But the increasing use of agro-chemicals is leading a number of human diseases pertaining to respiratory, allergy, sexual, kidney, liver, heart and even cancer. The effects have been realized at the stage of manufacturing, sale and application and consumer level. That is why the increasing stress on maintaining international trade standards through organic farming is being increasingly advocated world over.

Trend of fertilizer use:

The traditional agriculture in the country was characterized by the use of organic manures like farm yard manure, green manure and compost. Moreover, the requirement of local crop varieties was also very low. An inter-temporal picture of fertilizer use in Punjab and comparative situation in the country depicts that the use of nitrogenous fertilizers during the past two and a half decades has almost more than doubled but the phosphates fertilizers have increased by about 50% and the use of potash has reached at the level of 44 thousand tones after going down to 14 thousand tones in 1990-91. This was primarily due to violent variation in the prices of potassic fertilizers as the country has to depend mainly upon imports.     It is interesting to note that the consumption of potassic fertilizers has not increased pro rata due to the fact that Punjab soils do not respond much to potash because of already high built up. The fact has been brought out by large scale soil testing, increase in the level of literacy and extension efforts to educate the farmers in this regard. Still about 196 kg of soil nutrients per hectare are used in state, almost double the use in the country as a whole. Thus fertilizers together accounted for about one-fourth of the total operational costs in case of wheat and paddy crops and 5-10% in case of cotton.

Due to mono-culture of Rice-Wheat system, the use of micro-nutrients has also gone up. Prior to large scale cultivation of rice in the state till early seventies, micro- nutrient deficiencies were rarely felt. But in 2003 the use of zinc sulphate, was as much as 29715 tonnes. Similarly, the use of ferric sulphate started in 1991 touched a level of 4621 tonnes in 2003 and manganese sulphate emerged as an important micro-nutrient in 2001 is also on the increase.

Trend in Pesticide use:

The pesticides account for 8-10% of the operational cost in wheat and paddy crops and more than 35% in case of cotton crop. The overall use of pesticides in Punjab agriculture has gone up from 624 thousand tones of technical grade material (TGM) in 1960-61 to 6490 thousand tones in 2004-05. This accounts for 17% of pesticides used in the country. The insecticides, fungicides, herbicides and rodenticides comprise 76, 14, 8 and 2 per cent of the total pesticides used respectively. In 1960-61 only 48g/ha of pesticides were used in Indian agriculture which increased to 250g/ha in 2002-03 while in Punjab the increase was from 132g/ha to 806g/ha during this period. The use of pesticide on the cotton crop has been much higher as compared to other crops. One main reason for higher use of pesticides in Punjab is that the state accounts for about 11 per cent of the country’s cotton production. The high wage rate of labour also helped in enhancing the use of herbicides on major crops like wheat and rice. The regression analysis brought out that the area under cotton crop, area under high yielding crop varieties, wage rate and level of literacy were the important determinants of pesticide use.

Factors responsible

The fertilizer demand was affected by the area irrigated and cropping intensity. Apart from these factors, the price of fertilizers in relation to food grain prices and extension contacts of farmers turned out to be the significant factors to effect the consumption of fertilizers in Indian agriculture. To check the trend of excess and imbalanced use of agro-chemicals, it is not possible to discourage the progressive variables, which are highly associated with agriculture development as well. However, there is a need to create awareness among farmers and consumers about the ill-effects of excessive use of agro-chemicals through extension efforts and increasing the general level of literacy. For example, indiscriminate use of pesticides and even fertilizers is generally made which could be minimized. Even pesticides such as BHC, DDT, Aldrin, Heptachlor banned long back are still being used. Further the population of predators insects and birds has gone down due to which biological control has become impossible.

 The crop residue, green manuring, compost can be effectively used as a substitute for fertilizer use. About 50% of the 33 million tones of animal dung produced in Punjab used as fuel and about 3 million tones of compost which if recycled in the soil can be quite helpful in minimizing the fertilizer use and improving the soil health even otherwise. Crop specific approach through IPM can also be quite helpful apart from a number of cultural practices. Moderate and safe pesticides are to be used in case of crops like fruits and vegetables which are normally consumed as raw. There is essential qualification of Pharmacy degree for opening a Chemist shop but there is no specific qualification of pesticide dealers. This is highly important towards which the attention of policy makers needs to be drawn so that exploitation of farmers by selling them undesirable pesticides is minimized and they are advised about the proper procedure of administering the poisonous chemicals. Strict legislation and  quality research on Bio-pesticides  is the urgent need of the farming community.

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