People's Democracy(Weekly Organ of the Communist Party of India (Marxist) |
Vol. XXXIII
No.
34 August 23, 2009 |
The
FTA envisages total elimination of tariffs on a reciprocal basis and it
will
come into effect from January 1, 2010. This
agreement will result in elimination of
tariff on about 3,200 products by December 2013 while tariff on
remaining 800
products will be brought down to zero or near zero levels by December,
2016. This will cover more than 80 per
cent of the goods that are traded between
The
free trade agreement will adversely affect the interests of the
peasants who
are cultivating coconut, tea, coffee, pepper etc, fishermen and workers
who are
working in textiles and light manufacturing goods.
The FTA will adversely impact these sectors
in many states and is bound to open the floodgates for cheap imports
from the
ASEAN and hurt domestic growers of tea, coffee, cashew, coconut, oil
palm,
rubber, spices and other plantation items. For products not in the
negative
list, duties will be reduced in a phased manner and brought to zero by
2019. On
five items- tea, coffee, pepper, crude palm oil (CPO) and refined palm
oil
(RPO) which are on the highly sensitive list there will be a partial
duty cut
in 2009. The reports show that the reduction will be made from the
prevalent
2005 rate. The prevalent rate for CPO is
80 per cent, for RPO is 90 per cent, for coffee and black tea is 100
per cent,
for pepper is 70 per cent. As per
Normally,
in trade negotiations and also at the WTO level trade negotiations, all
tariff
cuts are based on bound levels of tariff rates and not on applied
levels. The bound tariff rate for palm oil
is 300 per
cent, raw coffee stands at 100 per cent, all other forms of coffee at
150 per
cent, raw pepper stands at 100 per cent and crushed and ground pepper
stand at
150 per cent and tea at 150 per cent.
The bound tariff rates show the magnitude of the reduction made
on these
products.
EFFECTS OF
REDUCING
TARIFF RATES
The implications are bound to be more severe
given the
fact that our country is characterised by low levels of productivity
and also
exorbitant costs of cultivation. This will make it near impossible for
our
farmers to compete against the cheap imports. The productivity level of
many of
the crops is far higher in many ASEAN countries. Pepper productivity in
Kerala
is around 320 kilograms while
The economy of states like Kerala, Karnataka
and others
involved with plantations sector and other commercial crops as well as
in fisheries
will be very seriously affected by the FTA.
Even though coconut is in the negative list, import of palm oil
is
liberalised. The import of palm oil had
already hit oilseeds production in
The import of cheap and inferior pepper
earlier had
depressed domestic prices and led to acute distress for farmers growing
pepper.
The 20 per cent duty cuts under the FTA for pepper will hit our farmers
badly.
The experience of the FTA with Sri Lanka on the Kerala economy
especially on
tea, pepper etc is an indicator of the possible consequences of the
FTA. It is
to be noted that the Wayanad region of Kerala which was hit by farmers�
suicides a few years back is heavily dependent on these crops and the
fluctuating fortunes also have direct impact on human lives in the
region.
Karnataka which accounts for 70 per cent of the coffee produced in
India is
also bound to face serious problems.
NO
PROTECTION WITH
SAFEGUARD
MECHANISM
The claim that the free trade agreement also
provides
a bilateral safeguard mechanism to address sudden surge in imports and
this
will give some protection is not realistic.
This safeguard mechanism of imposition of safeguard duties will
exist
only for a period of up to four years.
As per reports, one aspect of the negative list is that India
had to
maintain one consolidated negative list of 489 items for all ASEAN
countries,
but individual ASEAN country can hold a negative list of 489 tariff
lines as
per individual countries sensitivity to Indian imports.
This also limits the possibility of exports
from India. There are also reports that India has allowed to dilute the
rules
of origin (ROO) to 35 per cent. This
means that ASEAN members can add 35 per cent of the value to products
imported
from non-ASEAN countries and sell it in India. On the other hand,
India's free trade
agreements with ASEAN members like Thailand and Singapore have rules of
origin
pegged at 40 per cent. In fact, even
the China-ASEAN FTA has a 40 per cent ROO standard.
The dilution of ROO norms will adversely
affect the interest of India. Many
semi-processed products from non-ASEAN countries may undergo 35 per
cent
processing in ASEAN countries and will be eligible to be traded in
India including
agro-based products.
The UPA government is clearly sacrificing the
interests of the peasantry and the fishing community as well as a large
number
of workers in the textile and light manufacturing goods industry to
please the corporate
sector which is very keen to make investments in the ASEAN countries. The central government has signed this
agreement with ASEAN countries to give benefits to the big players in
the
services and investment sectors. There
are also reports that the government has approached the ADB for loan
assistance
to compensate industries that are likely to be hit by the FTA under the
Asian
Integration Adjustment Assistance Facility. However, similar concerns
have not
been exhibited towards the peasantry, workers and fishing community.
The Kisan Sabha demands that the UPA respect
its
mandate and safeguard the interests of Indian farmers, fishing
community and
workers, ensure full-fledged debate in parliament and come out with a
detailed impact
assessment document based on thorough study.
The central government should also take
immediate
steps to provide adequate relief and compensation to the peasants,
fishermen
and workers working in such industries who may suffer because of this
agreement.
The proposals for replacing senile coconut palms, improving social
infrastructure
in tea gardens, and to replace old coffee plants in plantations should
be taken
up on a war-footing. Additional assistance to deal with the mite
infestation in
coconut and also for pepper-wilt and other related problems as well as
transfer
of production-enhancing technologies is to be taken up immediately.
More
investments should be made by the central government for increasing
productivity/production in agriculture. Measures to strengthen the
competitiveness in agriculture sector, fisheries and other areas should
be
taken up.
In the absence of measures that will buffer
the impact
of the unequal trade agreement, the farmers already in distress due to
the
agrarian crisis as well as the impact of global recession will be
pushed deeper
into indebtedness. The earlier cycle of such policies had witnessed
suicides by
thousands of farmers, textile workers etc and in the event of the
repeat of
such a situation the UPA government will be culpable of perpetuating it.
No
Agreement that hinders the livelihood of thousands of our peasantry and
poor
will be acceptable and we shall uphold the interests of the affected
sections
to the core. The Kisan Sabha calls upon the peasantry and other
sections of
society to rise in protest against this abject surrender and compromise
of the
interests of Indian people.