It is intriguing that Canada, a country with a large and powerful Sikh population, has largely been silent on the Farmers dispute in India. Beyond an early statement by Justine Trudeau that farmers should have the right to protest, there has been almost no comment by him or the many Sikh MPs in his party.
They have excused themselves by saying that it is ‘an internal matter of India’. Internal issues of other countries have not stopped the messianic Prime Minister of Canada from making statements on many other countries. Canada has also legal-napped one of the most powerful CEOs of the 5G Chinese company Huawai, risking the lives of some Canadians who are now detained in China. So why has the ‘internal matter’ of India been such a hurdle.
It appears that Canada has been relentlessly raising the issues of subsidies for agriculture produce in India at the World Trade Organisation, even in 2020 when the farmers protest were well advanced. Canada, Australia and USA wanted the Minimum Support Price to stop or reduced dramatically.
The World Trade Organisation is an extremely important body that regulates rules of trade between countries. Countries have agreed to abide by the rules and further to accept the judgements by its Dispute Settlement Body.
The WTO has rules on subsidies on farm produce just as it has on agriculture trade between countries. The rules are that Governments should not distort the market. WTO does not like Governments subsidising agriculture produce. Subsidy for agriculture produce is called MPS in WTO terminology, meaning Market Price Support. It tolerates some possible minimum distortion to the market. It is called ‘de minimis’. Developed countries are permitted up to 5% subsidy over the cost of production. It goes a bit further for developing countries to whom it permits 10% subsidy over the production costs. Beyond 10% is considered as ‘market sin’ in the eyes of WTO.
What WTO does not do of course is insist on the maximum profit margin that traders (corporations) can make in the market. The system favours corporate and capitalist system.
India on the other hand has Minimum Support Prices (MSP) that gives up to 50% more than production of costs. This is not acceptable to WTO and many of its members, especially the very rich countries such as Canada, Australia and USA.
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Canada has been raising issues around subsidies since 2002 if not earlier. It is still complaining at WTO meetings on Agriculture that India’s subsidies regime is far beyond permissible levels. It did this on 28th July 2020, when it said, ‘In its 2018/2019 domestic support notification, India reported support for rice in excess of its de minimis level for rice. By doing so, India breached WTO domestic support commitment to limit its support for rice at 10% of its value of production. Please indicate what concrete steps India is taking to rectify the situation and fulfil its WTO domestic support commitment for rice in the future.’
In 2019, both Canada and USA raised objections to MSP, mentioned as MPS (Market Price support). They said in the conclusion that ‘It appears that India provides market price support for pulses in excess of what it has reported to WTO.’
India’s defence has been that it is not giving more than the 10% subsidy. It calculates the subsidy rather creatively when responding to WTO. That does not impress the countries who raise the question.
In 2018, the United States even accused India of sort of cooking the books. It said that while in its annual notifications, India reports that it is not subsidising more than the permissible percentage, it (the USA) has seen plenty of evidence in the open source internet that India is subsidising by far more. By a counter-notification it said ‘that India substantially under-reported its market price support (MPS) – government purchases of farm goods at guaranteed prices – for wheat and rice in its 2010-11 and 2013-14 notifications to the WTO’. The United States produced a table accusing India of pushing MPS upto 84%.
Table introduced by USA in its counter-notification
Apparent MPS as a percentage of the value of production for rice and wheat Commodity
|Commodity||MY2010/11||MY 2011/12||MY 2012/13||MY2013/14|
India defended itself by refuting these. While till then the objections have been in form of verbal and written statements, Australia moved an official notification in 2019 for dispute settlement by targeting Sugarcane, because India had admitted to slight increased MPS. The dispute is listed as DS 580. The dispute was supported by Brazil. On 22nd July 2019, Australia asked for a dispute Panel to be set up. This then becomes an official process of looking into what WTO calls market distortion. Australia would have done this with consent of Canada and USA as usually happens in these international arenas. Canada may have deliberately kept its name out of the official complaint as that would have exposed its hypocrisy. Canada is among some of the countries who have put their names to be in the panel to examine the dispute!
Indian subsidies have been under intense pressure. The WTO news briefing of 26 June 2019 states that India received most questions on Agriculture subsidies at the WTO. The list of questions are also on WTO site.
It would appear that India has been under a lot of pressure at the World Trade Organisation to put an end to the MSP that Punjab and Haryana farmers are protesting to have put in law. The pressure increased in 2019. The complaints have been led by Canada, Australia and USA mostly with Canada having started as long ago as 2002 and still raising issues in 2020. The evidence is all over at WTO website.
What is further intriguing is why PM Modi has been silent on this. Why didn’t he square with the farmers that their country, India, is under a great deal of pressure to reform farm produce subsidies instead of his government accusing them of being anti national. He or at least MPs from his party could have turned to all those Sikh farmers trekking on tractors to Delhi, that they would be best advised to call their relatives resident in Canada to ask their ‘Apne MPs and ministers’ why Canada is pushing India to stop giving MSP to farmers in Punjab!
Breaching WTO rules in one field and refusing to abide by adjudications can have implications in other sectors of trade. Despite sovereignty and all that power countries claim to have, international institutions can still influence domestic policies to a great extent.
The Government is in a fix. If it agrees to WTO ‘de minimis’ rule then MSP will have to come down to 10% above costs and not the 50% as it seems to be now. Farmers will lose a lot of money and many pushed into poverty. The alternative is to sell in the open market and have an income support system as is permissible under WTO. This has been proposed by the Modi Government.
By taking away the current MSP, Mandis will not be able to sustain themselves. Mandis and Artiyas take some 7% of the price which a farmer sells at. This 7% of 150% production cost and 7% of 110% production cost lead to vast differences in revenue for the state governments. So the Indian Government proposed the private sector to come and compete. They can buy at 300% above or 50% below production costs as they want.
Why has PM Modi not put the cards on the table to the farmers is a mystery. Why weren’t they invited to a dialogue where facts and pressures explained and the two sides to have worked a mutually agreed solution. Perhaps Modiji is too proud to appear weak in front of the international community and his own citizens. Having promoted a rhetoric of India as superpower etc and himself as an invincible leader, it would have appeared a bit weak to say the WTO now decides what sovereign Bharat can do with MSP?
Perhaps the details of the talks between farmer leaders and Modi Government are not known fully. But it seems a bit of transparency, rather than unconvincing salesmanship on how the new laws will make farmers into ‘millionaires’ might have led to a different dynamics of the year and half of protests and led to a better solution.
It seems the farmer protests are directed at the wrong target. It doesn’t appear that the Government of India has much scope to manoeuvre. It can either appease the farmers and breach international trade agreements with knock on effects on an already weak economy, or it can implement WTO rules as demanded by Canada, Australia and USA.
Farmers will be better making angry calls to their relatives in Canada, to all those self bloated Sikhs who think they own the Government in Canada, and ask them why are Sikh ministers and MPs pushing for removal of MSP in Punjab and Haryana.
It is in the end the inaction if not co-option of the Sikh MPs of Canada that is driving their relatives in Punjab into poverty. It is these MPs who bear most responsibility and perhaps the banner of hypocrisy as they gingerly join protests in Canada against Farm Laws, but support their Government to push for end to MSP at WTO.
It is one thing to rhetorically claim to own levers of power, but it is another to be able to exercise power. Why don’t Sikhs in Canada ask Harjit Sajjan, the defence minister to walk into Trudeau’s office and demand Canada lay off the WTO pressure?
The protesting farmers also need to call their relatives in USA and Australia to lobby their governments to back off. If Sikhs in USA have any influence, then this is the time to show. Otherwise like many other times American Sikhs engage in more gas and tamasha than substance.
But most appropriately, it would be better if farm leaders also explain to the many farmers who is really behind all their problems. They would be better advised to protest infront of Canadian and Australian High Commissions and US embassies rather than Singhu border or Indian Parliament. But then they also want visas to go and settle in these countries. Modi is an easier target.