(Weekly Organ of the Communist Party of India (Marxist)
December 15, 2013
THE Indian media for
which the WTO meeting at
Bali was of no more than passing interest made out on December
7 that India had
achieved a great victory at that meeting. Even The Hindu’s headline read: “
against its own earlier stated
stand, the so-called “Peace Clause” that gave it just four
years during which
no objections would be raised against its food security
negotiations would take place on the issue. After these four
years, whatever is
agreed to in the interim will come into effect. Such
agreement, as things
stand, is likely to relate to details of WTO rules and what
violation of such rules. But the basic
principled position which India had been insisting on all
the time in the run
up to Bali, namely that the right of a nation to provide
food security to its
people should not become subject to WTO restrictions at all,
has been given up.
The fact that this abandonment of a basic principle has been
enshrined in a
draft prepared by
What is more, while
The opportunity was
excellent because the WTO
negotiations had made no progress since the
Prior to the World Trade Organisation (WTO) there was an arrangement called the General Agreement on Tariffs and Trade (GATT) which provided for negotiations between countries to fix their tariff rates, without tying their hands in any way. The WTO however invoked, and got the world to accept, a philosophy, namely that free trade is a desirable state of affairs. And herein lay its specificity.
This is the philosophy that had been invoked under colonialism. The colonising countries, having earlier protected themselves from cheaper third world imports and thereby launched their own industrial revolutions, had gone all over the world in search of markets, and had used this philosophy as a battering ram to break down all barriers to their (now cheaper) goods. They had used it in other words to cause the destruction of craft production (“deindustrialisation”) in the third world, after having rejected it when it had suited them.
The theoretical foundation for free trade is totally vacuous, so much so that John Maynard Keynes, the most outstanding modern-day bourgeois economist, had remarked in 1933 in The Yale Review: “I sympathize, therefore, with those who would minimise, rather than with those who would maximise, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national” (emphasis added).
The argument for
free trade assumes that
are always fully employed through the spontaneous functioning
markets (which entails inter
acceptance of Say’s Law, rejected by both Marx and Keynes,
that there can never
be insufficient aggregate demand in a capitalist economy). It
assumes in other
“deindustrialisation” as in colonial
It is an unequal arrangement because under it the advanced capitalist economies, both the US and the EU, can give subsidies to their agriculturists amounting to as much as half the GDP originating in agriculture, with no questions asked (since these are cash transfers); but, if a country like India provides subsidies to its agriculturists in excess of 10 percent of the GDP originating in agriculture, then that is not permissible (since such subsidies are given in the form of price support, even though in a country with more than 12 crore agriculture-dependent households there can be no other way of giving subsidies).
But even this is not all. The subsidy is calculated by comparing the actual price with an “international reference price” which is thoroughly antiquated and has not been changed since the 1980s. The reference price for rice for instance is a meagre 264 rupees per tonne, so that the CACP-recommended minimum support price of Rs 1310 per tonne for common-grade paddy for 2013-14 appears to involve Rs 1046 of subsidy per tonne. But in view of the enormous rise in costs of production since the 1980s, the actual subsidy is a trivial amount.
Even this unequal treatment of different nations however does not constitute the main issue, which relates to two other points: first, a nation must have absolute freedom to provide food security to its people, unhindered by any trade arrangement; and second, a nation’s parliament must be supreme in making laws, which no international body must have the capacity to override.
On this second
point of course it may seem invidious to blame the WTO.
But on the first of
these points the WTO arrangement itself must be faulted
(though the Indian
government cannot escape blame for accepting such a flawed
very idea of food being subject to free trade, instead of
being a matter of
national self-sufficiency, is wrong, since it exposes
countries to coercion by
however is necessary for an additional reason as well, quite
apart from the
issue of imperialist coercion. To insist that countries should
such crops where they have a “comparative advantage”, ie, they
should in effect
produce cash crops which cannot be grown in the advanced
countries and import
foodgrains from them in lieu of the export of such cash crops,
is flawed for
two obvious reasons: one, in the event of a collapse of cash
relative to foodgrains, the country pursuing such a strategy
would face a
famine. It would not have enough foreign exchange to import
For these reasons Keynes’ homily “let goods be home-spun” is particularly apposite in the case of food-grains: “let food be home-produced”. The flawed philosophy of free trade underlying the WTO is particularly flawed when applied to food-grains. Food security therefore must mean not only the provision of adequate food to everyone, but also the production of adequate food for everyone. At any rate, countries wishing to enlarge domestic food production, through whatever subsidies they choose to give, must not be hindered by the free trade philosophy of the WTO.
therefore must above
completely outside the purview of the WTO. The Indian
government has lost the
opportunity to press this point at Bali; but even if the present government has failed to do so, this
point must be pressed