Tuesday, June 10, 2008

Doha negotiations in the wake of food crisis

5th May 2008

Once again food has proved to be capable of generating valuable insights in everyone around the world. Only that, this time it's the lack of it that has provided us with valuable thoughts. For a discerning mind, it's also time for a few key lessons in economics. Addressing the Global Agro Industries Forum in New Delhi in April, Prime Minister Dr. Manmohan Singh said: “... for the first time, there is a direct linkage between oil prices and food prices. Food markets have got interlinked to oil markets, making food policy-making extremely complex as well as uncertain.” We may very well add to it, cost of fertilizer as well as transportation, which adds to the complexity of the problem.

While global bigwigs did several statement somersaults in the last fortnight, the world saw 21st century economic understanding of some developed nations stoop down to the level of outright bargaining and blame-game. US and other rice-importing countries urged the rice-exporting nations not to put curbs on food grains exports. Equally amateurish were Bush's as well as US State Secretary's now controversial “improvement in the diets of people in India and China” statement. That proponents of free trade are not aiming at the welfare of all stakeholders involved was also evident from a motion introduced by a Conservative MP from Shipley, north England, in Britain's House of Commons last week. MP Philip Davies wanted to address the grievances of Indian restaurant industry in his constituency as well as in Bradford. But his motion ended up saying, “(this House) condemns the EU for imposing tariffs of up to 65 euros per ton on basmati rice from Thailand, Egypt, Uruguay and the US; believes in the principle of free trade; and therefore calls on the government to regain trade policy from the EU and abolish these tariffs for the benefit of these restaurants, takeaways and the customers they serve.” (italics mine) Does free trade mean unrestricted availability of goods and grains even when they are scarce and dearer in the global market?

Ethanol was once the champion among environment friendly automobile fuel and was considered the sustainable fuel source of the future, which is capable of substituting petrol to a large extent. On the wake of food crises, the question has now changed to “how feasible is the idea of shifting to ethanol based fuel if it risks the food security of millions.” Brazil from the BRIC block is one of the countries that have profited heavily from the fuel changeover to ethanol. World's largest producer of sugar cane, Brazil now runs most of its cars with ethanol, produced from sugar cane. But in a matter of months the world became sceptical about the new invention. UN agricultural scientists, who had supported the biofuel programme until last year, changed stance in a matter of months. Jean Ziegler, United Nation's Special Rapporteur on the Right to Food, called the changeover to ethanol a 'crime against humanity'. Olivier de Schutter, a law professor and human rights campaigner from France, joins the debate pointing fingers at the interests of certain lobbies involved in the changeover to biofuels. In an interview to Le Monde in April, Shutter says: “The ambitious goals for biofuel production set by the United States and the European Union are irresponsible.” Billions of dollars have already been poured into the biofuel project in countries like the US, Brazil, Canada and in Europe. In such a situation, can anyone expect the biofuel projects be scrapped in these countries until and unless the amount invested in them is recaptured with profit? No. On the other hand, there will be attempts to apportion the policy flip-flops the developed countries face domestically with the developing countries in international forums. This is where we need to be cautious.

The major twist for the whole story is kept in pending for the Doha rounds. Here again US is far-sighted than many of our policy makers. If we can read between the lines of US Trade Representative Susan Schwab, who hinted at the changing US stance on May 4th while talking to media persons on the sidelines of Southeast Asian trade meeting on the Indonesian resort of Bali, we can make one thing out: Global food crisis is a time for overall trade regulations; is a time when self-sufficient countries restrict their global food trade so as to make domestically produced food available for its own people; is also a time to, theoretically, deregulate imports so as to allow cheaper foods from anywhere in the world to come to your country so that you can quell food scarcity. This itself is what US wants from the Doha rounds. Global food crisis is the best time for the US and other developed countries to negotiate with the developing countries to open up their market. New trade distortions could emerge from worries over access to food, which, according to Schwab, “really would hurt the Doha round, because it flies in the face of what you should really be doing, which is really eliminating as many distortions as you can so you have a free flow of food.”

Food stocks are depleting in many countries, many are unable to meet the stock targets of the year (Fortunately India will be meeting the procurement target for this year around, but fears are not totally out of place for the long term.). Everywhere in the world there is growing concern over 'tomorrow's bread'. Taking advantage of this situation, US can highlight a new set of expediencies in the May 19th (or 26th) key Geneva meeting of World Trade Organization ministers to push through its interests. While US negotiators are keen to make use of the emerged food situation across the world, has India done its homework in the changed scenario? In the panic of feeding the hungry, or ensuring food for its millions for tomorrow, developing countries are likely to put the economic interest of the farmer under the carpet. Remember, countries have least concern about others, less so when the whole world is negotiating with the same monster issue – global food crisis.