Free Trade Agreements May Further Aggravate Injustice in International Trade

farmers India

          In recent years a fierce debate has erupted in several countries regarding the impact of various free trade agreements. It is increasingly realized by people that what was publicized in glowing terms to them has turned out to be very harmful for them while some powerful interests may have gained. People are also realizing how big multinational companies often play an important role in pushing these agreements to advance their own narrow interests. On the other hands small farmers in developing and poorer countries generally feel cheated and further marginalized by such agreements.

At the time of the formation of the World Trade Organisation (WTO) and the related international agreements such as Trade-Related Intellectual Property Rights (TRIPS), serious apprehensions had been expressed about the adverse impacts on people’s livelihoods, health and food security. These apprehensions have by and large turned about to be correct.

While there is a growing need for a proper assessment of all the adverse impacts of the WTO regime and renegotiations based on such an assessment, there is instead a contrary trend of going in for more and more  free trade agreements (FTAs) without even first properly assessing and  the full impacts of the earlier changes in foreign trade, and then trying to reduce the more harmful ones

Whereas international trade agreements despite all their inequities at least have the principle of differential treatment for developing countries, FTAs are much less likely to recognise this. Any agreement between a developing and a developed country can therefore be even more unequal. This possibility increases all the more because in some important respects like tariff reduction and TRIPS some FTAs have shown the tendency to adopt WTO-plus measures. In other words, some important provisions of these agreements may be even more sweeping compared to what has been agreed to in the WTO regime.

In the case of imports, FTAs are likely to offer much steeper and broader reduction of tariffs. Hence the chances of cheaper imports harming the livelihoods of farmers can be higher. This is particularly true in the case of farm imports from those developed countries where heavy farm subsidies are available. Cheap dairy imports, for example, can have a very adverse impact on small scale dairy farmers of developing countries. Income from sale of milk is an important source of subsistence for many poor families.

Similarly cheap imports can threaten the survival of many micro, small and medium industries,  including food-processing industries.

As a result of the implementation of TRIPS-plus proposals the price of essential medicines can rise steeply and the availability of cheaper generic medicines can decline significantly. The seed rights of farmers can be significantly affected while the grip of multinational companies on agriculture can increase. The share of foreign companies in government purchases can increase and any obstacles in the path of rapid spread of multinational companies are likely to be dismantled. One of the impacts of FTAs is likely to be that  large-scale onslaughts on natural resource base are likely to get more approvals.

Coming now to the specific context of India, earlier there was a lot of concern regarding the adverse impacts of a free trade agreement with the European Union. There were prolonged negotiations but finally a deal could not be clinched, one of the reasons being widespread concerns about the adverse impacts of a free trade agreement on farming, dairying and related activities in India.

However while the question of a free trade agreement with the European Union has still been kept open at some levels now there are greater chances in the context of India of a free trade agreement being reached with the USA , perhaps in phases, which may have even more adverse impact given the more aggressive pursuit of their narrow high profit and domination interests by leading USA agro-business companies. In particular there is concern regarding the adverse impact on domestic production of dairy and poultry products, and several farm products particularly soybeans and maize.

Another adverse impact may be the increasing pressure on India to be more accommodative to the interests of these multinational companies, to the extent of changing laws to accept GM food imports from the USA. Ultimately pressures may extend to getting approval for GM food crops in India, which is likely to be very, very harmful and will also be opposed strongly.

Clearly there is a need to be very cautious regarding any future free trade agreements and in particular for protecting the critical interests of vulnerable groups like small farmers. Any negotiations for free trade agreements should be conducted in conditions of transparency and people should be very well-informed about the various important provisions and their implications.

 Bharat Dogra is a journalist and author. His latest books include When the Two Streams Met ( on the freedom movement of India) and Man Over Machine ( Gandhian Ideas for our times).



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